Q2 2025 Omnicom Group Inc Earnings Call
Quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star one on your telephone keypad.
Hello and welcome to the Omnicom second quarter 2025 earnings call all lines have been placed on mute to prevent any background noise.
I would now like to turn the conference over to Greg Lundberg, Senior Vice President of Investor Relations. You may begin. Thank you for joining our second quarter earnings.
After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad,
Speaker Change: I would now like to turn the conference over to Greg lunberg senior vice president of investor relations you may begin.
With me today are John Wren, Chairman and Chief Executive. Philip Angelastro, Executive Vice President and Chief Financial Officer, and Paolo Uvienco, Chief Technology Officer. On our website, omnicomgroup.com, you will find a press release and a presentation covering the information that we'll review today.
An archived webcast will be available when today's call concludes.
Before we start, I'd like to remind everyone to read the forward-looking statements and non-GAAP financial and other information that we've included at the end of our investigation. Certain of the statements made today may constitute forward-looking evidence.
Greg Lunberg: Thank you for joining our second quarter earnings call with me today. Are John Wren, chairman and Chief Executive Officer, Phil Angel, Astro, Executive Vice, President and Chief Financial Officer, and Paulo ueno Chief technology officer on our website, Omnicom group.com. You will find a press release and a presentation, covering the information that will review today and archived webcast will be available when today's call concludes.
Please represent our present.
Thank you. relevant factors that could cause actual results to differ materially are listed in our earnings and in our SEC filings, including our 2024 Form 10-K. During the course of today's call, we will also discuss certain non-GAAP measures. You can find the reconciliation of these to the nearest comparable GAAP measures in the presentation.
Greg Lunberg: Before we start, I'd like to remind everyone to read the forward-looking statements and non-gaap financial and other information that we've included at the end of our investor presentation, certain of the statements made today May constitute forward-looking statements these represent our present, expectations, and relevant factors. That could cause actual results to differ materially are listed in our earnings materials. And in our s,
After our prepared remarks, we will open up the line for your questions, and I'll now hand the call over to John. Thank you, Greg. Good afternoon, everyone. And thank you for joining us. We're pleased to share our second quarter results. Organic growth was a solid 3% for the quarter, in line with our expectations. Non-GAAP adjusted EBITDA margin was 15.3% for the quarter and flat to last year. Non-GAAP adjusted net income per share, which excludes the after-tax effect of the amortization of acquired and strategic platform intentions. repositioning costs. and acquisitions cost was $2.05. up 5.1% versus the comparable amount in 2020.
Greg Lunberg: Margin was 15.3% for the quarter and flat to last year.
Greg Lunberg: Non-gaap adjusted net income per share, which excludes the after tax effect of the amortization of acquired and strategic platform intangibles repositioning costs.
And Acquisitions costs was 2005.
Greg Lunberg: Up 5.1% versus the comparable amount in 2024.
Our cash flow continues to support our primary uses of cash, dividends, acquisitions, and share repurchases, and our liquidity and balance sheet remain very strong. During the first half, we used $223 million in cash to repurchase shares and are on track to repurchase $600 million in shares in 2025. After a solid first half of the year, we are maintaining our guidance for the full year 2025 organic growth to be 2.5% to 4.5% and adjusted EBITDA guidance to be 10 basis points higher than the 15.5% we achieved in 2024.
Greg Lunberg: Our cash flow continues to support our primary uses of cash.
Greg Lunberg: Dividends Acquisitions and share repurchases, and our liquidity and balance sheet remained very strong.
Greg Lunberg: During the first half, we used 223 million in cash to repurchase shares and are on track to repurchase 600 million dollars in shares in 2025.
Turning now to our key initiatives, I'd like to begin with an update on our proposed acquisition of Interpublic. In June we reached a major milestone when we received antitrust approval to close the transaction in the United States, bringing the total number of approved jurisdictions to 13 out of the 18 required for closing. We remain fully on track to complete the transaction in the second half of this year. As we progress through the regulatory approval process, Philippe and I have continued to speak with our clients and our people. The response has been overwhelmingly positive. There's a genuine sense of anticipation and excitement about the opportunities our combined company will create that has only intensified as we approach the close.
Greg Lunberg: After a solid first half of the year, we are maintaining our guidance for the full year, 2025 organic growth to be 2.5% to 4.5% and adjusted. Even our guidance to be 10 basis points higher than the 15.5%. We achieved in 2024,
Greg Lunberg: Turning now to our key initiatives, I'd like to begin with an update on our proposed, acquisition of into public.
By combining our complementary strengths, the new Omnicom will be equipped with industry-leading resources to drive a bold era of growth for our people, delivering superior outcomes for our clients, and generating significant long-term value for our shareholders. Omnicom and IPG have dedicated teams at both corporate levels, working closely with our merger consultants, leading the process to ensure a seamless and successful close. Contrary to the early speculation that the transaction might distract our professional staff, our agencies remain fully focused on delivering exceptional service to our clients and securing new business. Recent wins include Under Armour, Bimbo Global, and Asda, just to name a few.
Greg Lunberg: In June, we reached a major Milestone. When we received antitrust approval, to close the transaction in the United States, bringing the total number of approved jurisdictions to 13 out of the 18 required for closing. We remain fully on track to complete the transaction in the second half of this year as we progress through the regulatory approval process for leap. And I have continued to speak with our clients and our people, the response has been overwhelmingly positive. There's a genuine sense of anticipation and excitement about the opportunities are combined company. Will create that has only intensified as we approach the closing.
By combining our complimentary strengths, the new Omnicom will be equipped with industry-leading resources to drive a bold error of growth for our people, delivering Superior outcomes for our clients and generating significant long-term value for our shareholders Omnicom, and ipg have dedicated teams at both corporate levels, working closely with our mergers, Consultants leading, the process to ensure a seamless and successful closing.
We continue to refine our analysis and identification of synergies to achieve our $750 million run rate target following the closing. We are highly confident that we will achieve this level of synergies, and we continue to identify further opportunities beyond our target as we move forward with the evaluation. We've also taken steps to align our existing portfolio, ensuring that we can immediately deliver the benefits of the combined company to our clients. particularly in relation to our operating platform strategy. To that end, effective July 1st, Omnicom reorganized our most advanced data and technology assets, Omni, Omni AI, Artbot, and the Flywheel Commerce Cloud into an end-to-end platform organization to drive our strategy forward.
Contrary to the early speculation that the transaction might distract a professional staff, our agencies remain fully focused on delivering exceptional service to our clients and securing new business. Recent wins include Under Armour, bimbo Global and Asda, just to name a few, we continue to refine our analysis and identification of synergies to achieve the r. 750 million dollar, run rate, target following the closing. We are highly confident that we will achieve this level of synergies. And we continue to identify further opportunities beyond our Target as we move forward with the evaluation. We've also taken steps to align our existing portfolio, ensuring that we can immediately deliver the benefits of the combined company to our clients.
Greg Lunberg: Particularly in relation to our operating platform strategy.
Greg Lunberg: To that, end effective, July 1st Omnicom, reorganized our most advanced data and Technology assets. Omni Omni AI art bot.
This move is designed to directly support our clients marketing and commercial ambitions while accelerating our own growth trajectory. with the proposed acquisition of IPG. Our new platform will be significantly enhanced by the addition of Kineso and Axiom, recognized as the world's highest fidelity data platform, as well as RealID, the most comprehensive customer identity solution available. These assets will enable us to deliver an even greater value and innovation to our clients.
Greg Lunberg: And the flywheel Commerce club into an end-to-end platform organization to drive our strategy forward.
This move is designed to directly support our clients marketing and Commercial Ambitions. While accelerating our own growth. Trajectory
Greg Lunberg: With the proposed acquisition of ipg.
Our new platform will be significantly, enhanced by the addition of queso and Axiom recognized as the world's highest Fidelity data platform, as well as real ID, the most comprehensive customer identity solution available.
The new platform organization will be led by Duncan Painter, who's experienced in building well-established tech platforms across Flywheel, EDS, Experian, and Sky, and makes him uniquely suited for this role. Our long-standing strategy has always been rooted in the belief that data and technology supercharge creativity. In today's world, especially with the rise of generative AI, breakthrough creativity is more valuable than ever. I'm proud to share that our agencies returned from this year's Cairns Lion Festival of Creativity with two of the industry's highest honors. OMD Worldwide won Media Network of the Year and DDB Worldwide won Network of the Year.
These assets will enable us to deliver an even greater value and Innovation to our clients. The new platform organization will be led by Duncan painter, whose experience in building well established Tech platforms, across flywheel.
Greg Lunberg: EDS, Experian and sky, and makes him uniquely suited for this role.
Greg Lunberg: Our long-standing strategy is always been rooted in the belief that data and Technology supercharged creativity in today's world, especially with the rise of generative, AI breakthrough. Creativity is more valuable than ever.
Greg Lunberg: Cannes, lion Festival of creativity with 2 of the industry's highest honors.
Our ability to excel in both creative and media underscores the strength of Omnicom's end-to-end capabilities and the outstanding work we deliver for our clients. The recognition also follows Omnicom being named most effective holding company for the second consecutive year by the 2024 Effie Index. Demonstrating that our people and agencies continue to stay ahead of the curve, consistently delivering work that drives real business impact.
OMD worldwide won media network of the year and ddb worldwide 1 network of the year.
Greg Lunberg: Our ability to excel in both creative and media, underscores the strength.
Greg Lunberg: Of Omnicom end-to-end capabilities and the outstanding work we deliver for our clients.
The recognition also follows omnicon being named most effective holding company for the second consecutive Year by the 2024 Fe index.
Greg Lunberg: demonstrating that our people and agencies continue to stay ahead of the curve, consistently delivering work that drives real business impact
Lastly, I want to highlight a key addition to our leadership. In May, we welcome Susan Catalano, our new Chief People Officer in the United States. Susan brings a wealth of experience in organizational redesign, talent operations, and management. and has successfully guided global organizations through transformational change. Susan will play a key role in bringing Omnicommon into public together, creating a world-class HR organization that attracts and develops the industry's best talent.
Greg Lunberg: Lastly.
Greg Lunberg: I want to highlight a key addition, to our leadership team.
Greg Lunberg: In may we welcome Susan Catalano. Our new Chief people officer in the United States.
Susan, brings a wealth of experience in organizational, redesign Talent operations, and management.
Greg Lunberg: And has successfully guided Global organizations through transformational changes.
Greg Lunberg: Susan will play a key role in bringing Amy common into public together, creating a world-class HR organization that attracts and develops the industry's best talent.
In closing, we're pleased with our first half financial results, our progress on key strategic initiatives, and the integration planning underway for Interpublica. As we look to the second half of the year, we remain confident in achieving our full-year organic growth and margin targets. Our focus will remain on delivering for our clients and successfully completing the interpublic transactions.
Speaker Change: In closing, we're pleased with our first half Financial results. Our progress on key strategic initiatives and the integration planning underway for interpublic.
Now I want to introduce and turn the call over to Paolo Uvianco, our Chief Technology Officer. who is joining us today to explain how we are making generative AI accessible to all our colleagues and clients across the organization. Paolo. Thanks, John.
Speaker Change: As we look to the second half of the year, we remain confident in achieving our full year, organic growth and margin targets. Our Focus will remain on delivering for our clients and successfully completing the interpublic transaction.
I want to now spend a few minutes on what we think is one of our most significant competitive differentiators, how we're deploying generative AI and agentic capabilities through our Omni platform and data assets to fundamentally reshape how we create value for clients. Back in 2022, we made the strategic decision to be an early adopter of generative AI, recognizing the transformative potential ahead of many of our competitors and clients. Initially, our focus was on the obvious applications, using generative AI for ideation and content creation and copy generation, as well as distilling insights from audiences. While these delivered immediate productivity gains, they represented only the first phase of our AI strategy.
Now I want to introduce and turn the call over to Paulo UV anko, our chief technology officer who is joining us today to explain how we are making generative AI accessible to all our colleagues and clients across the organization. Paulo thanks John.
Speaker Change: I want to now spend a few minutes on what we think is 1 of our most significant competitive, differentiators how we're deploying generative, Ai and agent to capabilities through our Omni platform and data assets to fundamentally reshape how we create value for clients,
Speaker Change: Back in 2022, we made the Strategic decision to be an early adopter of generative. AI recognizing the transformative potential ahead of many of our competitors. And clients
Speaker Change: Initially, our Focus was on the obvious applications using generative AI for ideation and content creation and copy generation, as well as distilling insights from audiences.
Speaker Change: While these delivered immediate productivity gains, they represented only the first phase of our AI strategy.
What is driving the latest phase of our continuous transformation has been the development and deployment of our agentic framework. Over the last year, we have been aggressively and systematically rolling out AI agents throughout our workflows, where we can deploy multiple AI agents that collaborate seamlessly. to deliver comprehensive solutions. Rather than isolated AI tools addressing individual tasks, we can now orchestrate intelligent agents across campaign life cycles, simultaneously analyzing data, optimizing strategies, and refining creative elements. This capability is powered by a proprietary data asset and institutional knowledge, democratizing access to our industry-leading consumer intelligence. Encompassing Behaviors, Demographics, Cultural Insights, and Transactions.
Speaker Change: What is driving the latest phase of our continuous transformation has been the development and deployment of our agentic framework over the last year, we have been aggressively and systematically rolling out AI agents throughout our workflows where we can deploy, multiple AI agents. That collaborate seamlessly to deliver comprehensive Solutions, rather than isolated AI tools, addressing individual tasks. We can now orchestrate intelligent agents across campaign life, cycles simultaneously analyzing data optimizing strategies and refining creative elements.
this capability is powered by a proprietary data asset and institutional knowledge democratizing access to our industry-leading consumer intelligence,
Additionally, we are fine-tuning and grounding the market-leading foundational and frontier models, effectively encoding our strategic expertise into our scalable AI system. Most importantly, we are orchestrating complex, multi-stage workflows that previously required extensive human resources.
Speaker Change: Encompassing behaviors, demographics, cultural insights, and transactions.
Examples of this cover the entire spectrum of our workforce. For instance, our strategy and creative teams across all our agencies are incorporating synthetic audience agents that are grounded in the Omni datasets, allowing teams to conduct synthetic focus groups for ideation, personalized content creation, and pre-launched testing and scoring of campaigns and assets. In our health group, the teams have been able to create a multi-agent reasoning engine that helps in recalibrating campaigns and assets at significantly greater speed when the market conditions change by simulating market scenarios, model stakeholder responses, and synthesizes existing signals. Within our digital commerce group, the teams have crafted numerous agents that assist in new product launches, helping to optimize strategies by surfacing actionable insights from sales trends, market data, and competitor analysis.
Additionally, we are fine-tuning and grounding the market-leading foundational and Frontier models. Effectively encoding, our strategic expertise into our scalable AI system. Most importantly, we are orchestrating complex, multi-stage, workflows that previously required, extensive Human Resources, examples of this cover, the entire spectrum of our Workforce. For instance, our strategy and creative teams across all our agencies are incorporating synthetic audience. Agents, that are grounded in the Omni data sets allowing teams to conduct synthetic, focus groups for ideation, personalized, content creation, and pre-launch, testing, and scoring of campaigns and assets.
Speaker Change: In our health group, the teams have been able to create a multi-agent, reasoning engine, that helps in recalibrating campaigns and assets at significantly greater speed when the market conditions change by simulating market scenarios model stakeholder responses and synthesizes existing signals.
This all represents far more than operational efficiency, though those benefits are significant. We are building differentiated capabilities through our data and technology stack. This positions Omnicom to capture value as the industry evolves and strengthens our long-term competitive positioning.
Speaker Change: Strategies by surfacing actionable, insights, from sales Trends Market data, and competitor analysis.
Speaker Change: This all represents far more than operational efficiency though. Those benefits are significant,
Now I'm going to hand it back to John, but I'll be available for our Q&A session later on the call. Thanks, Paulo.
we are building differentiated capabilities through our data and Technology stack. This positions Omnicom to capture value as the industry evolves and strengthens our long-term competitive positioning. Now, I'm going to hand it back to John, but I'll be available for our Q&A session later on the call.
I hope that gives you a better sense of how we are embedding generative AI across the I'll now turn the call over to Phil for a closer look at our financial results. Thanks, John. In an uncertain market, our performance through the first half was solid. with Organic Revenue Growth near the midpoint of our annual guidance. and are just at EBITDA margin levels flat. As we begin the second half, less uncertainty in the macro environment may allow marketers to normalize spending. Although it is still too early to say that the uncertainty in the macro environment has been eliminated.
Thanks Paula. I hope that gives you a better sense of how we are embedding generative AI across the Enterprise.
I'll now turn the call over to Phil for a closer. Look at our financial results. Phil, thanks John in an uncertain Market. Our performance through the first half was solid.
Speaker Change: With Organic Revenue growth near the midpoint of our annual guidance.
Speaker Change: And our adjusted, even our margin levels, flat.
Speaker Change: As we begin the second, half less uncertainty in the macro environment.
Speaker Change: May allow marketers to normalize spending levels.
Speaker Change: Although it is still too early to say that the uncertainty in the macro environment has been eliminated.
The larger parts of our business continue to perform very well. We continue to invest in our technology platforms and tools that differentiate us in the market. and at the corporate level, as John said. We are focused on planning for the integration of IPG.
Speaker Change: The larger parts of our business continue to perform very well.
Speaker Change: And we continue to invest in our technology platforms and tools that differentiate Us in the marketplace.
Speaker Change: and at the corporate level, as John said,
Speaker Change: we are focused on planning for the integration of ipg.
so we can hit the ground running.
Speaker Change: So we can hit the ground running.
Let's now review our results in more detail, beginning with changes in revenue on slide 3. Organic growth in the quarter was 3%. The impact on revenue from foreign currency translation increased reported revenue by $1.1 The U.S. dollar weakened relative to most currencies throughout the If rates stay where they are, we estimate the impact of foreign currency translation on revenue. approximate positive 1% for Q3. Positive 2% in Q4. which would result in a benefit from foreign exchange. approximately 1% for the full year 2025.
Speaker Change: Let's now review our results in more detail, beginning with changes in revenue on slide 3, organic growth in the quarter was 3%.
Speaker Change: The impact on revenue from foreign currency translation increased reported Revenue by 1.1%
as the US dollar weakened relative to most currencies throughout the quarter,
If rates stay where they are, we estimate the impact of foreign currency translation on Revenue. Will approximate positive 1% for Q3.
And positive 2% in Q4.
Which will result in a benefit from foreign exchange of approximately 1% for the full year. 2025
The Net Impact of Acquisitions and Dispositions on Reported Revenues Positive 0.1%. At this time, we expect the impact of acquisitions and dispositions completed to date will be minimal for the full year 2025.
The net impact of Acquisitions and dispositions on reported Revenue was positive. 0.1%
Speaker Change: at this time, we expect the impact of Acquisitions and dispositions completed to date will be minimal for the full year 2025
Let's now turn to slide four for a summary of our income statement. This table shows our reported numbers on the left and non-gap adjusted numbers on the right. Adjusting for acquisition-related expenses and repositioning costs, our Q2 2025 non-gap-adjusted EBITDA grew 3.7% to $613.8 million. with a margin of 15.3%. and our non-gap adjusted diluted EPS grew 5.1% to $2.05.
Speaker Change: Let's now turn a slide 4.
For a summary of our income statement.
Speaker Change: This table shows our reported numbers on the left.
And non-gaap adjusted numbers on the, right.
Speaker Change: adjusting for acquisition related, expenses, and repositioning costs are Q2 2025 non-gaap adjusted even a
Speaker Change: Crew 3.7% to 613.8 million.
Speaker Change: With a margin of 15.3%.
Speaker Change: And our non-gaap adjusted diluted EPS, grew 5.1%.
To $25.
I highlight the two adjustments made to operating expenses. First is an increase in Q2 of acquisition-related expenses. related to both regulatory approval work. and an acceleration or integration planning. The second relates to repositioning actions, primarily severed. took to optimize Omnicom Advertising Group and Omnicom Production Group. as well as to align our businesses and markets more broadly to recent changes in market conditions and client demand. related to the challenging macro environment.
Speaker Change: To highlight the 2 adjustments, made to operating expenses.
Speaker Change: The first is an increase in Q2 of acquisition related expenses.
Speaker Change: Related to both regulatory approval work.
Ends in acceleration in our integration planning work.
Speaker Change: the second relates to repositioning actions, primarily severance
We took to optimize Omnicom advertising group and I'm the account production group.
As well as to align our businesses and markets. More broadly to recent changes in market conditions and client demand.
Please turn to slide 5 for reconciliation of these items in detail. Acquisition related costs of $66 million in Q2 2025 increased from the $34 million we incurred in Q1 of 2025. and repositioning costs were $89 million during Q2 of 2025.
Speaker Change: Related to the challenging macro environment.
Please turn to slide 5 for reconciliation of these items in detail.
Speaker Change: Acquisition related costs of 66 million in Q2 2025?
Increased from the 34 million, we incurred in q1 of 2025.
Speaker Change: And repositioning costs were 89 million during Q2 of 25.
Continue to expect our non-gap adjusted EBITDA margin for the year to be 10 basis points higher than our 2024 results of 15.5%. As we get closer to closing the acquisition of IPG. We'll be evaluating ways to accelerate savings opportunities prior to the closing. We continue to expect to achieve our cost savings target of $750 million.
Speaker Change: We continue to expect our non-gaap adjusted even on margin for the year.
Speaker Change: To be 10 basis points higher than our 2024 results of 15.5%.
Speaker Change: as we get closer to closing the acquisition of ipg,
Let's now turn to slide 8 and review Organic Revenue Growth in more detail, beginning with our discussion. Media and advertising was up 8%, with solid growth in most geographies. Overall results were driven by strong growth in our media business.
Speaker Change: we'll be evaluating ways to accelerate savings opportunities prior to the closing date. We continue to expect to achieve our cost savings Target of 750 million.
Speaker Change: Let's now turn to slide 8.
Speaker Change: And review, organic Revenue growth in more detail, beginning with our disciplines.
Speaker Change: Media and advertising was up 8% with solid growth in most geographies.
and Mixed Performance and Advocacy. Precision marketing grew 5%, including strong performance in our digital, CRM, and experience design agencies in the U.S. Offset by Mixed Performance International Public relations declined 9%, primarily in the U.S., due largely to weaker performance in our global networks, and some reduction relative to the benefit in 2024 from national election fraud.
Speaker Change: Overall results were driven by strong growth in our media business.
Speaker Change: Precision marketing, grew 5%, including strong performance in our digital CRM and experienced design agencies in the US.
Speaker Change: Offset by mixed performance internationally.
Speaker Change: public relations, decline, 9% primarily in the US, due largely to weaker performance in our Global networks and some reduction relative to the benefit in 2024 from national election spend,
We expect to see a difficult comp for the rest of 2025. Healthcare revenues are down 5%, and this includes our having now cycled through a large prior period client loss. as well as work winding down on brands that are close to loss of patent. We continue to expect improved performance as the year progresses.
Speaker Change: We expect to see a difficult comp for the rest of 2025.
Speaker Change: Healthcare revenues are down 5%. And this includes our having now cycled through a large prior period client loss.
As well as work winding down on brands that are close to the loss of patent protection.
Speaker Change: We continue to expect improved performance as the year progresses.
Branding and retail commerce was down 17%. Branding experienced continued pressure from uncertain market conditions, impacting both new brand launches and rebranding projects. as well as continued slow M&A activity. while retail commerce in the quarter slows. Experiential grew 3%, driven by good performance in the U.S., offset by a challenging comparison to last year with the Olympics, as well as declines in the Middle East and China. Lastly, execution and support increased 1%, driven by strong growth in the U.S. offset by negative performance in the UK and continental Europe.
Speaker Change: Branding and Retail commerce was down. 17% branding experience. Continued pressure from uncertain market conditions. Impacting both new brand launches and rebranding projects.
As well as continued. Slow m&a activity.
Speaker Change: While retail Commerce in the quarter slowed.
Speaker Change: Experiential grew 3%, driven by good performance in the US offset by a challenging comparison to last year with the Olympics.
Speaker Change: As well as declines in the Middle East and China.
Lastly, execution and support increased. 1% driven by strong growth in the US.
Speaker Change: Offset by negative performance in the UK and Continental Europe.
Turning to Organic Revenue Growth by Geography on slide 9. We saw growth across all of our regions, with the exception of the UK, where strength in media and advertising was offset by other difficulties. Our largest market, the U.S., had organic growth of 3%.
Turning to organic Revenue growth by geography on slide 9.
Speaker Change: We saw growth across all of our regions with the exception of the UK, where strength and median advertising was offset by other disciplines.
and Asia Pacific also posted solid growth, as well as continental Europe, although mixed by more.
Speaker Change: Our largest market, the US had organic growth of 3%.
Speaker Change: And Asia Pacific also posted solid growth as well as Continental Europe, although mixed by market.
Slide 10 is our Revenue by Industry section. Year-to-date relative to 2024, there are various small changes in the categories we track. The auto category increased year over year, reflecting new business which were offset by some client spend reductions.
Slide 10 is our Revenue by industry sector.
Speaker Change: Year to date relative to 2024. There are various small changes in the categories we track.
Now let's move down the income statement and look at our expenses on slide 11. In the quarter, salary-related service costs are largest expense. down on a reported basis and as a percentage of revenue.
The auto category increase year-over-year reflecting new business wins which were offset by some clients. Been reductions.
Speaker Change: Now, let's move down the income statement and look at our expenses on. Slide 11.
In the quarter salary related service costs. Our largest expense
Driven by our continued efficiency initiatives and ongoing changes in our global employee . Third-party service costs grew in connection with the growth in revenue, primarily in the media and advertising. Third-party incidental costs, which are out-of-pocket costs billed back to clients at our cost, also grew in connection with revenue. Occupancy and other costs increased just under 4%, but decreased as a percentage of revenue. These include office rent, other occupancy, and general office expenses. as well as technology.
Speaker Change: we're down on a reported basis and as a percentage of Revenue,
Speaker Change: Driven by our continued efficiency initiatives and ongoing changes in our Global employee mix.
Speaker Change: Third party, service costs grew in connection with the growth and revenue primarily in the media and advertising discipline.
Third party incidental costs which are out of pocket cost, build back to clients at our cost.
Also, grew and connected with Revenue growth.
Speaker Change: Occupancy and other costs increased just under 4%, but decreased as a percentage of Revenue.
Speaker Change: These include office rent, other occupancy and general office expenses as well as technology expenses.
SG&A expenses increased primarily due to the $66 million of IPG acquisition related costs in the second quarter of 2025. Excluding these costs, reported SG&A expenses declined by $6.5 million.
sgna expenses, increased primarily due to the 66 million of ipg acquisition related costs in the second quarter of 2025,
Excluding these costs reported at sg&a, expenses declined by 6%.
Turning to slide 12, you can see a presentation of our income statement that adjusts for the items that are not part of our normal course operations. As I mentioned earlier, when excluding both the acquisition-related and repositioning costs from the second quarter of 2025. Non-gap adjusted EBITDA grew 4.1% and the related margin was flat at 15.3%. Net interest expense in the second quarter of 2025 was flat. reflecting a decrease of 1 million to 40.7 million.
Speaker Change: Turning to slide 12. You can see a presentation of our income statement that adjusts for the items that are not part of our normal course, operations.
Speaker Change: As I mentioned earlier, when excluding both the acquisition related and repositioning costs from the second quarter of 2025.
Speaker Change: Non-gaap, adjusted debt grew 4.1% and the related margin was flat at 15.3%.
Speaker Change: Net, interest expense in the second quarter of 2025 was flat.
Speaker Change: Reflecting a decrease of 1 million to 40.7 million.
We estimate that net interest expense will increase by approximately $4 million in Q3 and by $5 million in Q4. Our reported income tax rate was 30.2% in Q2 of 2025. compared to 26.4% in the prior year. The increased rate is primarily due to the non-deductibility of certain acquisition related costs in 2025. On an adjusted basis, our Q2 2025 rate was 26.5%. up slightly from Q2 of 24, which was 26.3%.
Speaker Change: We estimate that net interest expense will increase by approximately 4 million in Q3.
Speaker Change: And by 5 million in Q4.
Speaker Change: Our reported income tax rate was 30.2% in Q2 of 2025.
Compared to 26.4% in the prior year.
The increased rate is primarily due to the non-deductible of certain acquisition related costs in 2025.
Speaker Change: On an adjusted basis. Our Q2 20225 rate was 26.5%
Speaker Change: up slightly from Q2 of 24, which was 26.3%
full year 2025 we expect the rate on an adjusted basis. to be between 26.5% and 27%. Average diluted shares outstanding were down 1% from Q2 2024 due to net repurchase activity. Our reported diluted earnings per share were down 21% on an adjusted non-gap basis. As discussed, it increased 5% to $2.05 per share.
For full year 2025, we expect the rate on an adjusted basis to be between 26.5% and 27%.
Speaker Change: From Q2 2024 due to net repurchase activity.
Speaker Change: Our reported diluted earnings per share were down 21% on an adjusted non-gaap basis.
Speaker Change: As discussed, it increased 5% to $2.05 per share.
Now please turn to slide 12 for a look at year-to-date free cash The year-over-year decline was driven primarily by the reduction in net income resulting from the impact of both the acquisition-related costs and the repositioning. As you know, our free cash flow definition excludes changes in operating capital. As you can see in the appendix on slide 8. We had an improvement of approximately $250 million. and the use of operating capital in the first six months of 2025.
Speaker Change: Now please turn to slide 12 for a look at year-to-date free cash flow. The year-over-year decline was driven primarily by the reduction in net income. Resulting from the impact of both the acquisition related costs
Speaker Change: And the repositioning costs.
Speaker Change: as you know our free cash flow, definition excludes changes in operating capital
Speaker Change: as you can see in the appendix on, slide 18,
prepared for last. It's worth noting that, on a 12-month basis... Our change in operating capital is once again positive.
We had an improvement of approximately 250 million in the use of operating capital in the first 6 months of 2025.
Compared to the last year.
Speaker Change: it's worth noting that on a 12-month basis, our change in operating capital is once again positive
Regarding our primary uses of free cash flow. We used $277 million of cash. pay for dividends to common shareholders. and another $34 million for dividends and non-controlling. Our capital expenditures were $72 million. As we've discussed, they are a bit higher than our historical average due to ongoing investments in our strategic technology platform. Total acquisition payments were $48 million. Including earn out payments and the acquisition of additional non-controlled down significantly from last. Included the acquisition of Flywheel, net of cash required.
regarding our primary uses of free cash flow.
Speaker Change: For the 6 months ended June 30th.
Speaker Change: We used 277 million of cash.
To pay for dividends to come and shareholders.
Speaker Change: And another 34 million for dividends to non-controlling interest shareholders.
Speaker Change: Our Capital expenditures were 72 million.
As we've discussed, they are a bit higher than our historical average due to ongoing investments in our strategic technology platform initiatives.
Speaker Change: Total acquisition payments were 48 million, including earnout payments and the acquisition of additional non-controlling interests.
Finally, our share of purchase activity. $223 million. Excluding Proceeds from Stock Plans of $13,000. This included sharer purchases of $142 million in Q2. $81 million in Q1. We still expect repurchase activity of approximately 600 million in total.
Speaker Change: This is down significantly from last year which included the acquisition of flywheel. Net of cash acquired.
Finally, our share of purchase activity was 223 million.
Speaker Change: Excluding proceeds from stock plans of 13 million.
Speaker Change: This included share or purchases of 142 million in Q2.
And 81 million in q1.
Slide 13 is a summary of our credit, liquidity, and debt maturity. At the end of Q2 2025. The book value of our outstanding debt was $6.3 billion. flat with the same prior year.
Speaker Change: We still expect repurchase activity of approximately 600 million in total for the year. Slide 13 is a summary of our credit liquidity and debt maturities.
Speaker Change: At the end of Q2 2025.
Speaker Change: The book value of our extending debt was 6.3 billion.
We have no maturities in 25. However, you will note that our $1.4 billion April 2026 maturities are now classified as current on our balance sheet. We will address these in due course. Cash equivalents and short-term investments at the end of the quarter were $3.3 billion. continue to maintain an undrawn $2.5 billion revolving credit. Backstops are a $2 billion U.S. commercial paper.
Speaker Change: Flat with the same prior year period.
Speaker Change: We have no maturities in 25.
However, you will note that our 1.4 billion April 2026 maturities are now classified as current on our balance sheet.
We will address these in due course.
Speaker Change: Our cash equivalents and short-term Investments at the end of the quarter, with 3.3 billion.
We continue to maintain an undrawn 2.5 billion revolving credit facility which backs stops our 2 billion US commercial paper program.
Slide 14 presents our historical returns on two important performance methods.
12 months ended June 30, 2025. Omnicom's return on investment capital was 18% and our return on equity is 34%. both of which reflect our strong performance and strong balance. Year-over-year change is driven by the IPG-related acquisition.
Speaker Change: Slide, 14 presents, our starco Returns on 2, important, performance metrics, for the 12 months, and the June 30th 2025.
Speaker Change: On the comms return, on investment Capital was 18% on our return on Equity is 34%.
Speaker Change: Both of which reflect our strong performance at strong balance sheet.
The repositioning costs incurred in the 12 months ended June 30, 2020.
Year-over-year change is driven by the ipg related acquisition costs.
Speaker Change: And the repositioning costs incurred in the 12 months. Ended June 30th 2025.
I will now ask the operator to please open the lines up for questions and answers. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Please ensure you are not on speakerphone and that your phone is not on mute when called upon. Thank you.
I will now ask the operator to please open the lines up for questions and answers.
Speaker Change: Thank you.
Speaker Change: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad, if you would like to withdraw your questions, simply press star 1 again.
Speaker Change: Please ensure you are not on speakerphone and that your phone is not on mute when called upon thank you.
Your first question comes from David Karnovsky with J.P. Morgan. Your line is open. Thank you, John. You noted the ongoing macro uncertainty in your remarks.
Speaker Change: Your first question comes from David karnowski with JP Morgan. Your line is open.
Can you speak to the progression of things since you last updated in April, just given one of your competitors had noted a worsening trend in June, and then how should we view the low end of the guide and what's your thinking to maintain that in the context of the over 3% growth in the first Sure. Other than some specific client. Cabinet Issues with them being more impacted by proposed tariffs than not. In general, I don't think the environment's changed all that much since the last time we spoke. I think the Trump administration hasn't issued final guidelines nor conclusions about some key markets that our clients operate in.
Thank you, John. Uh, you noted the ongoing macro uncertainty in your remarks, um, can you speak to the progression of things since you last updated in April? Just given 1 of your competitors, had noted, a worsening trend in June and then how should be viewed, the low end of the guide and, and what's your thinking to maintain that in the context of the over 3% growth to the first half?
Speaker Change: Sure. Um,
Speaker Change: Other than some specific.
Client.
Speaker Change: To have the issues.
Speaker Change: With them being.
Speaker Change: More impacted by proposed tariffs than not. Um, in general, I don't think the environment's changed all that much since the last time we spoke, um,
Speaker Change: I think, um, the Trump Administration has hasn't issued final guidelines um, nor conclusions about some
And so I think it's business as usual for the most part. I think on all of our major clients, and they'll be even more significant to us after this transaction closes. They are long-term partners of ours. And so to the extent that there's a little bump in the road someplace, it's nothing more than just that, and we will collectively get through it together in a very constructive way. So, Yeah, there are macro concerns. I would imagine there are macro concerns of different slides almost every year. But These seem to be controlled by decisions coming out of Washington, for the most part, and I think they're going to settle down as we get through the balance of the year.
Speaker Change: our clients operate in and so,
Speaker Change: I think it's business as usual for the most part.
Um, I think on
all of our major clients and they'll be even more significant to us after this transaction closes.
Their long-term partners of ours.
Speaker Change: and so, to the extent,
Speaker Change: That there's a little bump in the road someplace, it's nothing more than just that and we will collectively get through it together in a very constructive way. So,
the other macro concerns, I would imagine the macro concerns of different so it's almost every year but, um,
Speaker Change: These seem to be.
Speaker Change: Controlled by decisions, coming out of Washington, for the most part. And I think they're going to settle down as as we get through the balance of the year.
And, you know, if you have more something specific you want to know, I'd be happy to answer you, David. No, just any more thinking, John, on the low end of the range, maintaining in the complex. No, no, no, no, no. What we did is with the uncertainty, we made our comments earlier in the year. We're still operating well within that range. And we have no reason At this point, to think it's going to be any lower for any circumstance, and so everything should be upside from the bottom, but until we get further and further into these decisions that are being made by third parties, we really can't measure that impact.
Speaker Change: and you know, if you're more something specific you want to know be happy to
Speaker Change: answer you David, but
David Karnowski: No, just, um, any more thinking, John on, on the low end of the range, uh, maintaining in the in the context. No, no, no, no, no, no, no, no. Um, what we did is with the uncertainty, we made our comments earlier in the year, um, we're still operating well within that range and we have no reason.
David Karnowski: at this point, to think it's going to be any lower for any circumstance and so everything should be upside from the bottom, but
until we get further and further into these decisions that are being made by Third parties,
we really can't measure that impact.
Okay, just one more if I can. Your third party principal cost increases in the quarter would indicate, you know, continued strong contribution from principal trading.
Just for this offering, how do we think about the sustainability and growth here and kind of maintaining that strong performance overall for media and advertising? Sure, I mean, media is probably the strongest area. within the industry. And our third party, what you referred to as third party costs, as you can see from our disclosures that you can't see from any of our competitors, it's a product we have. It's a product we've had for a long time. It's a product that continues to grow. And I can see very clearly that it's going to continue to grow into the future.
Speaker Change: Okay, just 1 more if I can um your third party. Principal cost increases in the quarter. Would indicate you know continued strong contribution from Principal trading just for this offer and how do we think about this is growth here in kind of maintaining that that strong performance overall for uh media and advertising.
Speaker Change: Sure. I mean media is probably the strongest area.
Speaker Change: Within the industry and our third party what you refer to as third party cost. But you see from our disclosures that you can't see, from any of our competitors, it's a product we have,
Speaker Change: It's a product we've had for a long time. It's a product that continues to grow and I can see very clearly.
So it isn't as unicorn by any standard, other than the fact that everybody else that you speak to in the industry doesn't tell you the truth. So it is what it is. It continues to grow. It is a product.
Speaker Change: Uh that it's going to continue to grow into the future. So it isn't as unicorn by any standard other than the fact that everybody else that you speak to in the industry, doesn't tell you the truth.
The reason it's revenue is for all sorts of accounting reasons that Phil can probably better explain. But it's a product that our clients opt into. We plan with them and then we execute against it and the client gets a better deal and we get incremental revenue with an incremental margin.
Speaker Change: Um so it is what it is. It continues to grow. It is a product. The reason its revenue is for all sorts of accounting reasons, I feel comparable, we better explain.
But it's a product that our clients opt into
Speaker Change: we plan with them and then we execute against it and the client gets a better deal.
Thank you, John.
And we we get incremental Revenue with an incremental margin.
John Wren: Thank you, John.
The next question comes from Steven Cahall with Wells Fargo. Your line is open. Thanks.
The next question comes from Stephen kahal with Wells, Fargo. Your line is open.
I want to follow up on David's question, but focusing on the creative side within media and advertising. And Phil, I think last quarter, you said creative was flattish in Q1 and might pick up during the year. So I'm just curious if you've seen any pickup on the creative side of things. And then relatedly, you know, as David pointed out, it does look like the media business is growing strong. John, you said that you think that'll continue to the future. Is there any benefit or shift that we should think about as media becomes kind of this longer-term tailwind and becomes a bigger and bigger piece of revenue ahead?
Stephen kahal: Thanks. Um, I want to follow up on David's question, but focusing on the creative side within media and advertising, and Phil. I think last quarter you said creative was flattish in q1 and might pick up during the year. So I'm just curious if you've seen any pickup on on the creative side of things, um, and, and then relatedly, you know, as, as David pointed out, it does look like the media business is growing strong. John, you said that, you think that'll continue to the future? Is there any margin mix benefit or shift that we should think about? Um, as media becomes kind of this longer term tailwind and and becomes a bigger and bigger piece of uh of Revenue ahead?
Well, let me go to the second part, and then Phil can talk to the first part. Yeah, media is a very, very strong area, which continues to grow. I think our increased size will benefit us as we move forward and complete the transaction. Also, the unique attributes of what's in our platform, that we gather information which allows us to gain insights to help target. How clients spend their money and how to optimize that spend improves every single day. Paolo spoke to generative AI and the benefits it has to the tools that we're providing both our creative people and our media people.
Phil Angel: well, let me deal with the second part and Phil
Speaker Change: Can talk to the first part. Sure. Um yeah media is a very, very strong area which continues to grow. I think our increased size will will benefit us as we move forward and complete the transaction also.
The unique attributes of what's in our platform of that. We gather information which allows us to gain insights to help Target.
That continues to happen at a breakneck pace, and he's available, by the way, to answer more specific questions because I'm a generalist. And yeah, there are increasing opportunities that are being developed in terms of different products, different opportunities to increase margin, different ways to process. media transaction. So, to me, That is very, I'm very optimistic about that. And it's continued growth. I know some You know, I think if you objectively look at the industry, at least for the last two years, Out of the people who we consider competitive in the set, two of us continue to win and the others continue to suffer at one pace or another.
Speaker Change: How clients spend their money and how to optimize that spend improves every single day? Follow spoke to generative Ai and the benefits. It has to the tools that we're providing both our creative people and our media people.
Speaker Change: That.
Speaker Change: Um, and yeah, their increasing opportunities that are being developed in terms of different products, different opportunities to increase margin.
Speaker Change: Different ways to process.
Speaker Change: Media transaction. So to me,
Speaker Change: That is very, I'm very optimistic about that and it's continued growth. Um, I know some
Speaker Change: you know, I think if you objectively look at the industry um at least for the last 2 years,
out of
Speaker Change: the people you would consider competitive in the set 2 of us continue to win.
By the way, those are the same two that I tried to merge with a decade ago. So I wasn't wrong, and probably won't be wrong this time.
Speaker Change: And the others continue to suffer at 1 Pace or another.
Speaker Change: By the way, those are the same 2 that I tried to merge with a decade ago. So I wasn't wrong, then it probably won't be wrong this time.
On your first question, Steve, the, um... Created business was basically flat to slightly down in the quarter, performance was stronger outside the U.S. In many international markets, not every international market, but many relative to the US. So, so performance is okay. It's been better in the past, but but Not that difficult.
Speaker Change: Um, you want yeah, on your first question. Steve the the um,
The create a business was was basically flat to slightly down in the quarter. Um performance was was uh Stronger outside the US
Speaker Change: In many International markets, not every International Market, but many um relative to the US. So
so performance was okay, it's been better in the past but but, um,
I think some of the... Some of the macro probably had a little more of an impact on the creative business this quarter.
Speaker Change: Um, not not, not that difficult. I think some of the um,
some of the, some of the macro, probably add a little more of an impact on on the creative business, this quarter
It's certainly easier to move from quarter to quarter or from month to month than some of the media commitments that you have to make if you're, you know, standing at 20,000 feet and dissecting our business. Thank you. Sure.
Speaker Change: It's certainly easier to move from quarter to quarter, or from month, to month, then some of the media, commitments, this you have to make, if you, you know, standing 20,000 ft and dissecting our business.
Speaker Change: Thank you.
Speaker Change: Sure.
The next question comes from Cameron McVeigh with Morgan Stanley. Your line is open. All right, thanks.
Speaker Change: The next question comes from Cameron. McVey with Morgan Stanley, your line is open
I wanted to ask about the AI agents and where you expect to see the biggest immediate value add, and then long term, how you may expect that to evolve. And then secondly, on that point, yeah, how you expect that to impact your financials? Do you see this more enabling share gains in cross-selling, so more of a top-line growth driver? Or is this more for an operational efficiency standpoint and, yeah, to help with margins? Or maybe both? Thanks.
Cameron McVey: Hey thanks. Um, I wanted to ask about the, the AI agents in where you expect to see, you know, the biggest immediate value add and then long term, you know how you would expect that to evolve.
Cameron McVey: And then, secondly, on that point. Um, yeah, how you expect that to impact your financials and do you see this more enabling share gains and and cross-selling. So more of a top-line growth driver or is this more for an operational efficiency standpoint and yeah the help with margins or maybe both thanks.
I'm going to let Paolo take a lead on the question, and then I have some opinions, and I don't think there are more than that, on what the impacts of it are going to be financially, but Paolo? Sure. So, as John articulated earlier, we believe that we sit on, effectively, the most elite data set in the industry, and our generative AI strategy is grounded in this notion of an agentic framework, and what those agents are allowing us to do is to effectively infuse the intelligence of our elite data set into every facet of the marketing workflow.
Speaker Change: I'm gonna Apollo take the lead on the question and then I have some opinions. I don't think they're more than that.
So every discipline, all the teams across Omnicom now have the capability to drive deeper intelligence and a deeper understanding into every part of the work that they're doing for clients. This not only connects our capabilities, but also drives a better understanding of consumers at every touchpoint.
Speaker Change: Um on what the impacts of it are going to be financially but Paula sure. Um so as John articulated earlier, we believe that we sit on effectively the most elite data set in the industry and our general, AI strategy is grounded in this notion of an agentic framework and what those agents are allowing us to do is to effectively Infuse, the intelligence of our Elite data sets into every facet of the marketing workflow. Uh, so every discipline, all the teams across Omnicom now have the capability to drive deeper intelligence in a deeper understanding into every part of the work that they're doing for clients. This not only connects our capabilities, but also drives, you know, a better understanding of consumers at every touch point.
In terms of the financial impact. There's a book yet to be written. The immediate benefit that we get. is we're putting tools in the hands of our employees and colleagues all over the world in just about every practice area that we function in.
Speaker Change: in terms of the
Speaker Change: Financial impacts.
This is a book yet to be written. Um,
The immediate benefit that we get.
Is we're putting tools in the hands of our employees and colleagues all over the world and just about every practice area that we function.
What. Hasn't Adoption of that is going to be dependent upon You know, widespread use of many of these tools by large enterprise clients, which happen to be the clients that we serve, will happen at a slightly different pace than, say, the smaller self-service clients that somebody like Facebook looks to. Now, what hasn't been factored into this future state, as you get more productive and possibly need fewer people, there's going to be a cost which hasn't been fully loaded in by these people developing all these breakthrough, wonderful technologies. The cost to compute, the cost to store, all those things haven't hit the headlines yet, so they haven't been factored into the decision-making process.
Speaker Change: Um, what?
Speaker Change: Hasn't.
Speaker Change: Adoption of, that is going to be dependent upon.
Speaker Change: you know, widespread use
Speaker Change: of many of these tools.
By large Enterprise clients which happen to be the clients that we serve.
Speaker Change: will happen at a slightly different pace than say, the smallest self-service clients that somebody like Facebook looks to
Speaker Change: Um, now what hasn't been factored in to this future state?
As, as you.
Speaker Change: get more productive and
at a client level as to it's better to use The most, the fanciest product that's on the market, or to do it in a more traditional fashion, that's all it's, that's going to play out over the course, I think, of the next 24 to 36 months. What's key to us is to make sure that we have all the tools and make all those tools available to the The incredible group of over 100,000 professionals that we have around the world, they're still going to help us invent new things and to do things in ways that, sitting here and at our corporate headquarters, we can't yet imagine, which I think is going to be a great benefit.
possibly need fewer people. There's going to be a cost which hasn't been fully loaded in by these people developing all these breakthrough, wonderful Technologies, the cost of compute, the cost of store, all those things haven't hit the headlines yet, so they haven't been factored into the decision making process.
It's better to use.
Speaker Change: The mo the fanciest product that's on the market or to do it in a more traditional fashion. That's all it's that's going to play out.
Speaker Change: over the course I think in the next 24 to 36 months,
Speaker Change: what's the key to us is to make sure that we have all the tools we make all those tools available to
Speaker Change: The incredible group of over 100,000 professionals that we have around the world, but they're going to help us invent new things.
And to do things in ways that sitting here.
And we'll figure out ways to efficiently Deliver these services to a client in a way that they're going to get a return on investment and they're going to optimize the dollars that they spend in media, earned and unearned.
Speaker Change: In our corporate headquarters, we can't yet. Imagine, um, which I think is going to be a great benefit.
Speaker Change: And we'll figure out ways to efficiently.
Speaker Change: Deliver these services to a client in a way that they're going to get a return on investment and they're going to optimize the dollars that they spend in media earned and unearned.
Did that quite do it for you or I can expand? That's helpful. Thank you.
Speaker Change: Did that quite do it for you or I can expand.
That's helpful. Thank you.
You're living an interesting time, as we all are. So it's it's wonderful. I'm very optimistic.
Speaker Change: You're living in an interesting time as we all are. So it's, it is. It's wonderful because I'm very optimistic about it.
The next question comes from Adam Berlin with UBS. Your line is open. Yeah, good evening. I've got three questions. The first question is... If macro conditions remain the same for the rest of the year, as we've seen in H1, is it reasonable to assume growth improves in H2 because of the ramp up of the Amazon revenues from the win last year? That's the first question. Do you want to ask all three of them, or do you want me to ask them one at a time? Yeah, I can... whatever it is. I'll ask the others then.
The next question comes from Adam Berlin with UBS, your line is open.
Adam Berlin: Hey, good evening. Um, I've got 3 questions. The first question is
If macro conditions remain the same for the rest of the year, as we've seen in H1, is it reasonable to assume gross improves in H2 because of the ramp up of the Amazon revenues from the win last year. That's the first question.
The second question is... Yeah, go on, please. The repositioning costs that you talked about in Q2, the $89 million... When do we see the benefit of those? Is that in H2 or is that more 2026? And is that already in the 10 bits of guidance that you've given for margin improvement this year? And the third question is, can you tell us how Flywheel performed in Q2?
Adam Berlin: You want to ask all 3 of them? Are you want me to answer 1 of the time? Yeah, I can whatever it is. I'll ask the others. Then, um, the second question is yeah, the repositioning costs that you talked about in Q2 the 89 million.
Adam Berlin: When do we see the benefit of those? Is that in H2? Or is that more 2026? And is that already in the 10 bits of guidance, that you've given them for margin improvements this year?
Adam Berlin: And the third question is, can you tell us um, how flywheel performed in Q2?
I'll take a shot at it and Phil will back me up with facts. Um, you know, hypothetical macro conditions, you know, it's tough for me to project. What I do know... is I do know that I have a very long history within Omnicom that we're quite flexible and agile in adjusting to whatever the conditions are. and Never Lose Sight. that we're not doing things simply transactionally. We're entering into longer term relationships trying to grow clients brands. So a blip of, you know, Small numbers in a particular quarter or a particular moment in time are really irrelevant to the long-term health and continued growth of our business.
Speaker Change: Oh, I'll take a shot at it until well back me up with back.
Adam Berlin: um,
Adam Berlin: you know, hypothetical macro conditions
Adam Berlin: You know, it's tough for me to project.
Adam Berlin: Um, what I do know.
is, I do know that I have a very long history Within
Adam Berlin: Omnicom, that were quite flexible and agile and adjusting to whatever the conditions are.
Adam Berlin: And never lose sight.
Adam Berlin: That we're not doing things simply transactionally. We're entering into longer term relationships. Trying to grow clients Brands. So
Adam Berlin: a blip of, you know,
Adam Berlin: small numbers in a particular quarter or a particular Moment In Time.
So I'm not, we're very, as we said earlier, we're very comfortable with the guidance that we previously have given you and we're sticking with it. We don't see, we don't plan based upon. You know, wonderful macro conditions suddenly changing overnight. We think there's still going to be some challenges as we go forward. I think Washington will bring a lot of clarity to this over the over the rest of this quarter, and then we'll be able to plan better as we move into the fourth quarter and into the future.
Adam Berlin: A really irrelevant to the long-term health and continued growth of our business. So I'm not, we're we're very as, as we said earlier, we're very comfortable with the guidance that we previously had given you and we're sticking with it. Um,
Adam Berlin: we don't see we don't plan based upon
So that's how I would respond to the first one.
Adam Berlin: You know, Wonderful macro conditions suddenly changing overnight, we think they're still going to be some challenges as we go forward. I think Washington will bring a lot of clarity to this over the over the rest of this quarter and then we'll be able to plan better as we move into the fourth quarter and into the future.
Phil can talk a little bit more about Reposition Plus, but I just have one comment before he does. Many of the changes that we've made or we've insisted on making Almost since July of last year, starting with production, then OAG, then a few, and then now the delivery platform that Duncan's going to... going to continue to build out for us required some. anticipated reorganization. So the host being Omnicom is ready when this closes in just a few months to absorb Those activities in a very productive way, which allows us to achieve and possibly exceed the 750 we discussed at the time we announced the merger.
Adam Berlin: So that's our response to the first 1. Phil can talk a little bit more about reposition. Yeah, I'll talk but but I just have 1 comment before he does. Um,
Phil Angel: many of the changes that we've made or we've insisted on making,
Phil Angel: Almost since July of last year starting with production then O A G, then a few. And then now the delivery platform with the Duncan's kind of
Adam Berlin: going to,
Adam Berlin: um,
Adam Berlin: continue to build out for us required. Some
Adam Berlin: Anticipated reorganization.
Speaker Change: So, the host being Omnicom is ready when this closes in just a few months to absorb,
Adam Berlin: those activities in a very productive way, which allows us to
So we're not standing still during this period of time. We're planning the integration. And where we have to reorganize ourselves to make it easier to to ingest our new colleagues. That's what we're doing.
during this period of time, we're planning the integration and where we have to reorganize ourselves to make it easier to
Now, Phil can have a lot more specific. answers on the repositioning costs. But that's the reason behind why we're incurring. Sure, as far as the actions we took in the quarter, Adam. A couple of clarifications. They certainly weren't part of the actions we expect to take to meet our $750 million synergy target that we talked about post-close. We continue to expect to achieve the $750 million synergy target, and we're certainly working on plans to exceed it as well, as John had mentioned in his prepared remarks. We took the actions in the second quarter, as we said, to optimize the OAG and Omnicom production units, which will help us, certainly, in the IPG integration process, and as I said in my prepared remarks, you know, all of this has been considered in our 10 basis point improvement for the year, as we reiterate our guidance .
Adam Berlin: to ingest our new colleagues. That's what we're we're doing now. Phil could have well more specific.
Adam Berlin: Answers on on the repositioning cost but but that's the reason behind why we're incurring them.
Speaker Change: sure, as far as the axis we took in in the quarter, Adam, um,
Yeah, couple couple clarifications they they weren't they certainly weren't part of. Um,
Speaker Change: The actions we expect to take to to um meet our 750 million Synergy Target uh that we talked about uh post close.
Speaker Change: Um we continue to expect to achieve the 750 million Synergy Target and we're currently working on plans to to exceed it as well as John had had mentioned in his prepared remarks.
Speaker Change: um,
Speaker Change: we took, we took the actions in the second quarter. Um, as we said to optimize, uh, the oag and Omnicom production units which, which will help us certainly in the ipg integration process.
um, and as I said in my prepared more, um,
As far as Flywheel goes, you know, we haven't and aren't going to provide individual numbers for, or specific numbers for individual businesses, but the Flywheel business continues to perform well, especially in the U.S., and it certainly continues to enhance our broader portfolio, including the Omni platform and our AI and data strategies, and, you know, Duncan's been invaluable both in integrating Flywheel into our business, as well as the additional role that he's going to take on that John referred to in his prepared remarks.
Speaker Change: You know, all this has been considered in our uh, 10 basis, point Improvement, uh, for the year. Um, as we reiterate uh, our guidance
Speaker Change: um, as far as flywheel goes, um,
Speaker Change: You know, we we haven't and and uh aren't going to provide individual numbers for individ or specific numbers for individual businesses, but the flywheel business continues to perform well special in the US.
Um, and it's certainly continues to enhance our broader portfolio, including, uh, the Omni platform and our Ai and data strategies. And, and um, you know, Duncan's been invaluable, both in integrating flywheel into our business as well as, um, the additional role.
Um I think that addresses it, but happy to clarify any follow-up items. And one other positive thing about Flywheel, if you look historically at the portfolios of Omnicom and Interpublic, into public had as deeper relationships with many CPG companies that haven't been traditionally part of our growth and portfolio that's going to introduce flywheel to even more opportunities to to provide service.
Speaker Change: That he's going to take that, take on that John, referred to in his prepared remarks. So
um,
I think I think that uh that addresses it but but happy to clarify anything, any follow-up items and 1 of the positive thing about flywheel.
Speaker Change: If you look historically at the portfolios of how many common in public,
Speaker Change: In public had has deeper relationships with many cpg companies.
Speaker Change: That.
Speaker Change: Haven't been traditionally part of our growth and portfolio that's going to introduce flywheel.
Speaker Change: To even more.
Speaker Change: Opportunities to, to provide service.
All right, thank you very much.
Speaker Change: All right. Thank you very much.
Your next question comes from Adrien de Saint-Hilaire with Bank of America. Your line is open. Thank you very much, John. One of your competitors was talking about a smaller pipeline, smaller opportunities right now. I was just wondering what your thoughts were around that.
Your next question comes from Adrian dessaint. Hiller with Bank of America, your line is open.
Um, thank you very much, John John Hill at the for taking the questions please. So I've got a few of them. Um, 1 of your competitor was talking about a a smaller pipeline, smaller opportunities, right now is just wondering what your thoughts were around this.
Secondly, maybe your house. Transcripts provided by Transcription Outsourcing, LLC.
Speaker Change: Um, secondly, maybe your housekeeping question but how much repositioning and acquisition related costs? Should we model for for the year and then sticking to that topic? Um is there some pull forward in that number? Um, from the 750 million dollars of cost savings that you've planned from the ipg combination, or, or, or, or those these uh, actions in 25. Come on top of that number.
I'll take the latter person and then we can go back to your first question on the Repositioning Charges. They were not, as I said earlier, they were not part of the 750 Synergy Target. We continue to expect to achieve the 750 and beyond, but those charges were not part of the 750. Yeah, I think it's safe to say we don't intend to take any further repositioning charges. in the third quarter. I think there are some actions we're going to be taking in connection with when the deal closes. We don't have a precise date, but we expect and believe it'll continue to close in the second half.
Speaker Change: I'll I'll, um, take the ladder first. And, and then, um, we can go back to the, your, your first question on on the, um,
Speaker Change: Uh repositioning charges they they they were not. Um as I said earlier, they were not part of the 750 uh Synergy Target. Um, we continue to expect to achieve the 750 and Beyond. Um,
but those charges were not part of the 750 and, um,
Speaker Change: you know, I think it's safe to say we we don't intend to take
Speaker Change: uh, any further repositioning charges.
Speaker Change: Um,
Speaker Change: in uh, the third quarter. Um, I think there are some actions, we're going to be taking in connection with
And when it does, certainly to achieve the 750, there are going to be some actions that we need to take that are going to result in charges. which I think we've made clear prior, but when we get there, we'll certainly provide some more information and disclosure around that.
Speaker Change: When the deal closes. Um, we don't have a precise date, but we expect and believe it'll continue to close in the second half. Um,
And and when it does certainly to achieve the 750 there are going to be some uh actions that we need to take that are going to result in charges.
and,
On your first question, I... I typically reading follows very much what my competitors are saying. I don't recall That particular quote, referring to smaller opportunities. So maybe you can provide some clarity and maybe I just don't fully understand the question. I do think that because of some of the uncertainties that are out there, that some decision processes have gotten... Delayed or a little slower than what we might have expected in prior years, but again, that's a temporary phenomenon from from my perspective. I mean, could you give me a little bit more clarity? Maybe I can be a bit more help.
Speaker Change: On your first question.
Speaker Change: I,
Speaker Change: I typically.
Read and follow very much what my competitors are saying. Um, I don't recall.
Speaker Change: That particular quote referring to smaller opportunities. Um,
Speaker Change: So maybe you can provide some clarity maybe I just don't fully understand the question. I do think that because of some of the uncertainties that are out there that some decision processes have gotten
Speaker Change: Delayed or a little slower um, than what we might have expected in Prior years. But again, that's a temporary phenomenon from from my perspective. Um,
Yeah, in terms of that first question. Sure, sure. So I think they were specifically calling out the fact Oh, yeah, that... I don't know if that's true or not. I mean, it's certainly inconsistent with all the projections everybody was making about all the disruption I was going to have in my business when I announced the deal, because that hasn't occurred. But we continue. Along with at least one competitor to be invited to I think every single pitch of any size because clients are curious about how our services differ from those of may be one other in the group, you know, primarily.
Speaker Change: I mean, could you give me a little bit more clarity? Maybe I can be a bit more help. Yeah, in terms of that first question,
Sure, sure, sure. So I think they were specifically calling out the fact that there isn't a lot of pictures basically going on at the minute. Um, in media specifically
Well, yeah. That
Speaker Change: I don't know if that's true or not. I mean, it's certainly inconsistent with all the projections everybody was making about all the disruption I was going to have in my business. Um, when I announced the deal because that hasn't occurred. So but we can we continue?
Speaker Change: Um, along with at least 1 competitor to be invited to I think every single pitch of any size. Um, because clients are curious about how our services differ from those of
maybe 1 other in the group, um, you know, primarily
So It's business as usual, I think. And, and also, there are some active pitches going on during the summer. That I find somewhat unusual, because people typically delay some of those decisions until the autumn. So, there isn't... I wouldn't say quantity a lot, but there's a few big opportunities that we're currently in the process of having conversations with clients. Thank you.
Speaker Change: um, so
Speaker Change: um,
it's this is evil, I think. Um, and and also there are some active features going on during this summer.
that I find somewhere unusual because people typically delay,
Speaker Change: Some of those decisions until the Autumn. So there is
Speaker Change: I wouldn't say Quantity a lot, but there's a few big opportunities that we're currently in the process of having conversations with clients about
Speaker Change: Thank you very much.
Speaker Change: Thank you. Thank you.
The next question comes from Jason Bazinet with Citi. Your line is open. Can I just ask a quick question about your philosophy regarding buybacks? The reason I ask is that the 600 million that you called out for the year seems, you know, very consistent with what you've done in terms of buybacks over the last 10 years, with a few exceptions, but your multiple seems as low today, you know, anytime, you know, maybe X the GFC back in 08 and maybe X COVID in 2020. So what I guess the inference of the 600 million is you don't really think about buying back more stock if your stock is cheap and less if you think it's expensive.
Speaker Change: The next question comes from Jason bezzy with City. Your line is open.
Jason bezzy: Can I just ask a quick question about your um philosophy regarding BuyBacks. Um,
Jason bezzy: The reason I ask is that the 600 million that you called out for the year. Seems, you know, very consistent with what you've done in terms of BuyBacks, over the last 10 years with a few exceptions. Um, but your multiple seems
As loaded a, you know, anytime you know, maybe X the GFC.
Back in 08 and maybe xco in 2020. So
It's just a pretty consistent sort of capital return independent of the price of your stock. Is that a fair characterization?
Jason bezzy: what I guess the inference of the 600 million is you don't really think about buying back more stock. If your stock is cheap and less, if you think it's expensive, it's just
No, it wouldn't be. And the reason is back on December the 8th, as we were announcing the transaction to purchase into public. We were acquiring them, and we had to come up with a decision as to how much we would permit them to buy back until the transaction closed. And since we were insisting that they would be limited, they very respectfully asked us to define what we would do. And at the time, again, remember we were coming off COVID, last year we were coming off of having purchased Flywheel, and so we agreed arbitrarily to two numbers, a number for them which I'll allow them to tell you what it is.
A pretty consistent sort of capital return, independent of the price of your stock. Is that a, is that a fair characterization?
Jason bezzy: No, it wouldn't be. Um,
Jason bezzy: And and the reason is back on December, the 8th as we were announcing the transaction to purchase into public.
Speaker Change: Yeah, we were requiring them and we had to come up with a decision.
Speaker Change: as to how much we would permit them to buy back during
Until the transaction closed. And since we were insisting that they would be limited. They very respectfully asked us to
on their call and $600 million for us. By all means, if it weren't for this. Agreement. We would probably be a lot more active in the market than we are currently, but we are respectful of the merger agreement that we signed.
Speaker Change: Define what we would do. And at the time again, remember we were coming off Co last year we were coming off of having purchased flywheel. Um, and so we agreed arbitrarily to 2 numbers a number for them, which I'll allow them to tell you what it is.
On their call and 600 million for us.
Speaker Change: By all means, if it weren't for this.
Speaker Change: Agreement.
The good news is I expect that to be completed sometime in the next four months, at which point we'll be a lot more flexible and free to react to whatever the conditions are. But that that's an arbitrary decision that was taken seven, eight months ago, that we were honoring. So it's not business as usual. And it's not because we don't see the same opportunities that you just mentioned.
Um, we would probably be a lot more active in the market than we are currently, but we are respectful of the, you know, of the merger agreement that we signed the good news, is I expect that to be completed sometime in the next 4 months?
At which point we'll be a lot.
More flexible and free to react to whatever the conditions are. But that that's a
Speaker Change: We're honoring.
Speaker Change: So it it's not business as usual and and it's not because we don't see the same opportunities that you just mentioned.
Okay, thank you.
That's very helpful. The next question comes from Michael Nathanson with Moffitt Nathanson. Your line is open. Thanks, John. I have two.
Speaker Change: Okay, thank you. That's very helpful.
Speaker Change: The next question comes from Michael Nathanson with Moffett Nathanson. Your line is open.
Firstly, I just want to ask you about RFK Jr. and potentially changes in health care advertising. I know Interpublic's got a very good, and you do as well, health care business. How are you thinking about potentially the risks to any changes in marketing regulations?
Thanks. Hey John. I have I have 2? Firstly, I just want to ask you about RFK Jr. And potentially changes in healthcare advertising. I know into Publix that have a very good and you do as well. Health care business,
And then secondly, I just wanted to ask, I guess, Paolo, we've seen VO3 launch from Google, and it looks pretty good, and Sora's out there as well. I guess the chief concern about those products is it allows people to create great content at the click of a switch, more efficient, more messaging, more efficiently, less people. I think the inherent risks for people is, look, it looks like it's actually cannibalistic to how people get paid in the agency world. So help us square the circle why these tools that create great efficiency and great content is a creative to the business model versus being dilutive.
Speaker Change: How are you thinking about potentially the the risks to any changes in marketing regulations? And and and then secondly I just wanted to ask I guess Paulo
Speaker Change: On, you know, we've seen vo3 launch from Google and looks pretty good and Soros out there as well. I guess the chief concern about those products is it allows people to, to create great content at the click of a switch. And, you know, more efficient, more more messaging, more efficiently, less people. But I think the inherent risks for people is look, it looks like it's actually cannibalistic.
To how people get paid in the agency world. So help us Square the circle. Why these tools that create great efficiency and great content uh is a creative to the business model versus being diluted.
Yeah, there's a lot. There's a lot there to unpack.
First was RFK. All right. Yep. I think what you've heard is The third episode of a reality TV show. As opposed to anything substantive, there seems to be a lot of complexity in conversation and very little change your accent, y'all. And many of the things that are being suggested. don't seem to. Everything's possible, but don't seem to have caught much traction in terms of The way behavior is occurring. with pharmaceutical companies and with just the general public seeking better information about therapeutic answers to problems that they might individually have. So the medium possibly could change in which that information gets relayed.
Yeah. Um, there's a lot there's a lot there to unpack first is RFK.
Speaker Change: All right. Yep. I think what you've heard.
Speaker Change: Is.
Speaker Change: The third episode of the reality TV show.
Speaker Change: um as opposed to anything substantive it seems to be a lot of complexity and conversation and very little
Speaker Change: change or action going on.
Um, okay. And many of things that are being suggested.
Speaker Change: um,
Speaker Change: Don't seem to have.
Speaker Change: Every anything's possible but don't seem to have caught much traction. Um, in terms of
The way behavior is occurring.
Speaker Change: With pharmaceutical companies and reduce the general public seeking better information.
Speaker Change: About.
But the need to get that information to the consumer that only gets more complex every day. And that benefits us. So, that's on RFK, and I wish that it only does the right thing for the American people.
Speaker Change: Therapeutic answers to problems, that they might individually have so the medium possibly could change in which that information gets relayed but the need to get that information to the consumer.
Speaker Change: That only gets more complex every day and that benefits us.
Um, so
that's on RFK and I wish that he only does the right thing for the American people. Um,
In terms of your other question, I think we need you to repeat it. I mean, I'm sorry, if you don't mind. The question is just more broadly as to Paul, too. It's like when you look at the The, you know, the next generation. you know, video products being launched by the likes of Google, like VO3, or Soro, like the quality, sorry, the quality of AGI is getting better and better for video. So we all worry that because of just the efficiency of what they're producing, it actually eats into your business, and it's not creative, it's dilutive, just because it effectively allows people to make more and more messaging, or create messages at less and less amount of time, right?
In terms of your other question, I think we need you to repeat it. I mean, I'm sorry if you don't mind if you don't mind. The question is just more, broadly. It's the Paul too. It's like when you look at the the you know, the, the Next Generation,
So, so it looks like it's a dilutive set of tools to businesses that are based on, you know, billing hours on creative. So that's, that's the circle we need to square, like these tool sets are getting better, and it feels like creating content getting more efficient. And isn't that a problem for businesses that are, are billing based on, you know, time spent creating messages?
Speaker Change: You know, video products being launched by the likes of Google like vo3 or sorrow like the quality as far as the quality of AGI is getting better and better for video. So we all worried that because of just the efficiency of what they're producing, it actually eats into your business and it's not a creative, it's dilutive. Just is it effectively allows people to make more and more messaging or create messages that less and less amount of time, right? So so it looks like it's, it's a dilutive set of tools to businesses that are based on, you know, billing hours on Creative. So that's, that's the circle. We need to square. Like these tools sets are getting better, and it feels like creating content is getting more efficient. And isn't that a problem for businesses that are are billing based on, you know, time spent creating messaging,
Well, I'm going to let Paolo answer the question more specifically, but I just have two things, two things to add to it. Just so you can understand is we're not caught in Time. incapable of changing our compensation models as the tools improve and our efficiency improves and the ROI to our clients improves. And we've, you know, historically, it's happened quite a bit over Over my career. But the biggest seismic move, I guess, you know, in the industry is when we move from getting paid on media commissions to getting paid in another fashion, it will increasingly Our compensation models will increasingly shift, I think, to outcomes.
Speaker Change: Well, I'm gonna let Paulo answer the question more specifically, but I just have okay, 2 Things 2 things to add to, it just so, okay, you can understand is we're not caught in.
Speaker Change: Time.
Speaker Change: Incapable of changing, our compensation models, as the tools improve and our efficiency, improves and the ROI to our clients improve.
And we've, you know, historically this happened to
Speaker Change: quite a bit over.
Speaker Change: Over my career but the biggest seismic move. I guess, you know in the industry is when we move from getting paid on media commissions to getting paid in another fashion it will increase.
Our compensation models will increasingly shift.
I think to outcomes.
However defined, and that's a big word and we don't have enough time to do it. That's number one.
Speaker Change: However, defined and that's a big word and we don't have enough time to do it.
And number two, Paolo can talk to just the unbelievable capabilities that are being released every day. But I'll give you one example of something that nobody would have thought of. And a very small user of a Google product wouldn't care about, but a big company did. We created an advertisement, which we were able to create in minutes. And it included an animal. And that animal, as it was depicted in the content, had a hat on it. And as a result, the attorneys from that very large enterprise company wouldn't allow us to use the tools because it's illegal to put a hat on a cat.
Speaker Change: released every day, but I'll give you 1 example of something that nobody would have thought of and it's very small user of a Google product, wouldn't care about, but a big company did
Speaker Change: We created an advertisement which we were able to create.
Speaker Change: In minutes.
Speaker Change: And it included an animal.
And that animal, as it was depicted in the content had a hat on it.
And I'm not Dr. Seuss, but Paolo can now talk to the technical part of it.
Speaker Change: And as a result the attorneys from that very large, Enterprise company wouldn't allow us to use the tools because it's illegal to put a hat on a cat.
Yeah, I think, so Michael, the first thing to note is that we incorporate all those major models, including VO3. We get early access to all these models, and we've integrated them into our agentic framework for use across all the workflows for all of our teams. So that's the first thing. We partner very closely with those model providers. The other thing to note is that It is not just about driving efficiency. And as I said earlier, it's absolutely driving a certain degree of efficiency as it relates to content creation. John noted a specific example for one of our clients where we were able to realize those efficiencies very quickly.
Speaker Change: And I'm not Dr. Zeus. Um, but probably can now talk to the technical part of it. Yeah, I think. Um, so Michael the first thing to note is that we incorporate all those major models, including vo. Um 3 we get early access to all these models and we've integrated them into our agentic framework for uh, use across all the workflows for all of our teams. So that's the first thing. So we partner, very closely with those model providers.
the other thing to note is that
But what we see, at least today and for the future, is that it's allowing our creative teams to explore really more and more creative territories, uncharted creative territories. And that is really expanding the aperture of our creativity that we already believe that we have an unfair share of within Omnicom. So, remuneration models aside, I think that all of the advancements in this technology is supercharging our capabilities and actually adding greater value to what we deliver for our clients, which are outcomes on a regular basis. Thanks, Paula.
It is not just about driving efficiency. And, as I said earlier, it's absolutely driving. A certain degree of efficiency as it relates to content creation. John noted, a specific example for 1 of our clients where we were able to realize those efficiencies very quickly.
Speaker Change: But what we see at least today and, and for the future is that it's allowing our creative teams to explore, really more and uh, more creative territories unchartered creative territories, and that is really expanding the aperture of our creativity that we already believe that we have an unfair unfair share of, uh, within Omnicom. So
Speaker Change: You know remuneration models aside. I think that all of the advancements in this technology is supercharging our our capabilities and actually adding greater value to what we deliver for our clients which are outcomes on a regular basis.
Okay. Thanks. Paulo.
The next question comes from Craig Huber with Huber Research Partners. Your line is open. Great, thank you. Just to follow up on those questions there on AI. So the potential cost savings using AI and generative AI on behalf of your client. Those cost savings for your clients. Where do you think those dollars go? Do they get plowed back into into activities through an Omnicom? Or do they come outside of the ecosystem, you actually lose the dollars? Anything that plays out here?
Speaker Change: The next question.
Speaker Change: The next question comes from Craig Huber with Huber research Partners, your line is open.
Uh, great. Thank you. Um, just follow up on those questions there on AI. So the the potential cost savings will use Ai and generative, AI on behalf of your clients, those cost savings for your clients. Where do you think those dollars go? Do they get plowed back into into activities? Through an Omnicom or they come outside of the ecosystem?
Speaker Change: Let me actually lose the dollars. I think that plays out here.
Well, I think initially, I think it makes us more efficient, right, and it allows us to be more creative because we can test more ideas to find out whether or not they're really great ideas or not such great ideas. So it's been my experience. that anytime that we can become more efficient, clients typically will reinvest that money in the brand itself. and I think You know, if you were to do a survey, as I probably have, and I won't use the client's names, industries like the auto industry, which is currently in all sorts of Chaos because of terrorists, because of electric cars versus non-electric cars.
Speaker Change: Well.
Speaker Change: I think initially any, I think it makes us more efficient right. And, and, um, it allows us to be more creative because we can test
Speaker Change: More ideas to find out whether or not.
They're really great ideas are not so great ideas so it's been my experience.
Speaker Change: That anytime that we can become more efficient.
Speaker Change: Clients typically.
Will reinvest that money in the brand itself.
Speaker Change: and I think,
Speaker Change: you know, if you were to do a survey as I probably have, I won't use the client's names.
Speaker Change: Um,
Speaker Change: Industries, like the Auto industry, which is
Speaker Change: currently, in all sorts of
But when you cut through all those tactical noise and companies adjust. One of the things I think most major brands have realized is that with the savings and The improvement that they saw in their businesses during COVID. which declined or challenged a little bit post-COVID. What they forgot to do as they were enjoying those savings was to continue to invest in the brand. and that awareness. which you might think is obvious, really hasn't really occurred to people until very recently. And increasingly, more and more of my conversation... have to do with how are you going to protect this brand that you've invested in over the last 50 or 100 years?
Chaos for the tariffs because of electric cars versus non electric cars. But when you cut through all those tactical noise and companies, adjust
Speaker Change: 1 of the things. I think most Major Brands have realized
is that with the savings and
Speaker Change: the Improvement that they saw in their businesses during Co
Speaker Change: Which declined or challenged a little bit postco. What they forgot to do is they were enjoying those savings was to continue to invest in the brand.
Speaker Change: and that awareness,
And isn't that what differentiates your automobile, in my example, you know, from the next guy? So If passed this precedent at all, any savings that we get will get reinvested in the brand itself or in tactics which will drive sales. As a general statement, I believe that to be true. You know, and Carl will then talk to the tools, but again, you know, Microsoft's investing in Three Mile Island for a reason, right, because somebody's going to need electricity to power all this great stuff when it starts to get into wide use, right? I think generally speaking that, you know, with every technological revolution, the expectations of consumers typically moving faster than brands can keep up with, and the only way that brands can keep up is to actually create more personalized content that can deliver on what they're trying to ultimately sell.
Which you might think is obvious really. Hasn't really occurred to people until very recently and increasingly more and more of my conversations have to do with. How are you going to predict protect this brand that you've invested in over the last 50 or 100 years? And isn't that what differentiates your automobile in my example?
Speaker Change: Um, you know, from the next guy. Um, so
it passed his precedent at all.
Any.
Savings that we get will get reinvested.
Drive sales.
Speaker Change: As a general statement, I believe that could be true. Um,
Speaker Change: you know, and K will then talk to the tools but again you know Microsoft's investing in 3 Mile Island for a reason.
So, with that, there's more and more content that needs to be created and generated, so it's not necessarily about creating the same content for cheaper, it's about being able to create more content to drive true mass personalization at scale. So, so what you're, what you're suggesting then is if hypothetically you save, say customer saves 10% because of using AI tools. A lot more of that extra 10% savings are going to plow those dollars back into market. and therefore you as your company. see the same dollars. So you're not going to lose out that we In general terms, yes, for the reasons that Paolo expressed, plus our media products get more and more sophisticated every single day, and we're able to optimize them better and And we're able to identify the audiences that we should be talking to with this content.
Speaker Change: Right? Because somebody's going to need electricity to power all this great stuff when it starts to get into a wide use, right? I I think generally speaking that, you know, with every technological Revolution, the expectations of consumers, typically, um, moving faster, uh, than Brands can keep up with. The only way the brands can keep up is to actually create more personalized, uh, content that can deliver on what they're trying to ultimately sell. So with that, there's more and more content that needs to be created and generated. So it's not necessarily about creating the same content for cheaper. It's about being being able to create more content, to drive, true Mass personalization at scale.
Speaker Change: So, so what you're, what you're suggesting then is if hypothetically, you save, say the customer saves 10% because they're using AI tools through your company. A lot, more than that extra 10%. Savings are going to plow those dollars back into marketing and advertising.
Speaker Change: And therefore you as your company or are going to see the same dollars, if you're not going to lose out, is that what you're suggesting?
In general terms. Yes, for the reasons that power expressed Plus
People will reinvest in, if I ask you to spend a dollar, but I kind of can prove to you that you're going to get $2.20 back for it, you're going to reinvest that money. And the more, the more. More of those scenarios there are where he can prove the return. The more comfortable clients are going to be spending more to generate that return.
Speaker Change: Our media products, get more and more sophisticated every single day and we're able to optimize them better and better and we're able to identify the audiences that we should be talking to with this content.
People will reinvest in because I asked you to send a dollar but I kind of improved to you that you're going to get 2,020 cents back for it.
You're going to reinvest that money.
and the, the, the more, the more, um,
More of those scenarios. There are where you can prove the return.
Speaker Change: Um, the more comfortable clients are going to be spending more to generate that return.
Okay, then my next question I want to ask you on the tariff. touch on this a little bit here. Three months ago, everybody's waking out about tariffs and so forth. How are your clients feeling right now about the tariff potential impact out there on their business? Well, Phil can speak to the first 3,500 clients of ours, I'll speak to the balance. Go ahead. I'm only joking. Go ahead. I, you know, I, I, I think there's a lot of, there's a lot of variables in terms of, you know, how clients feel about it. You know, it depends on what industry they're in.
okay, my next question, I want to ask you on the tariffs
Speaker Change: You touched on this a little bit here but I mean 3 months ago, everybody's waking out about the tariffs and so forth. How are your clients feeling right now? About the Tariff potential impact out there on their business in the macro side of things?
Speaker Change: Well, Phil can speak to the first.
Speaker Change: 3500, clients of ours, I'll speak to the balance, right? I'm I'm only joking, go ahead.
It depends on what, what, you know, what they're trying to sell, what their goals are, etc. Some of them certainly probably paused a little bit when the first round of tariffs came out in early April and reassessed the landscape. Some of them, though, at the same time, decided to pull forward some investment spend depending on what their objectives were. So it really runs the gamut. And, yeah, I think it also has a bunch of different answers depending on what geographies they're operating in and what their tactics really are. Um, I think I think you've had a number of broad responses based on a lot of different facts and circumstances.
I, you know, I I I think there's a lot of, there's a lot of variables in terms of, um, you know, how clients feel about it meant, you know, depends on what industry they're in, it depends on what
Speaker Change: what, um,
Speaker Change: You know what, they're trying to sell what their goals are Etc. Some of them certainly. Um,
Speaker Change: Probably paused a little bit, uh, when when the first, um, you know, rounded Towers came out in early April and, and reassessed the landscape.
Speaker Change: Um, some of them though, at the same time,
Decided to pull forward, some investment spend, um, you know, depending on what their objectives were. So it really runs the gamut and um you know, I think it also it also, you know, there's a bunch of different answers depending on what geographies they're operating in. Um and what they're what what their tactics really are so
Speaker Change: um, I I think I think you've had
And it's hard to say, you know, here's the answer as applies to a broad contingent of clients.
a number of broad responses based on a lot of different facts and circumstances that it's hard to say.
But I'll give you one real life. very important observation. And other people in the room with me, Greg, who you know, was there too. At Cannes this year, and there were approximately 37,000 people making up. Professionals in the industry making up clients and making up an awful lot of people from tech and from media. I didn't hear and I was shocked. for the whole week. I didn't hear the word tariff once. People were looking past this current situation to the future and to running their business and the implications of how we go about doing it.
Speaker Change: You know, here's the answer as it applies to a broad contingent of clients, but I'll give you 1 real life.
Very important um observation and other people in the room with me. Um Greg who you know was was there too at con this year and there were approximately 37,000 people making up.
Professionals in in the industry making up clients and making up an awful lot of them people from Tech and from media.
Speaker Change: I didn't hear and I was shocked.
Speaker Change: For the whole week.
Speaker Change: I didn't hear the word tariff once.
I mean, it was so noticeable that it wasn't a word that was being bantered around. It was kind of refreshing. So I take some optimism. And we will get through this phase. with whatever industries are currently being impacted. And that the 37,000 people I was with Three weeks ago in the south of France were probably a better indication of the future than today's headlines. And thank you for that.
Speaker Change: People were looking past this current situation to the Future and to running their business and the imple implications of how we would go about doing it. I mean, it was so noticeable that it wasn't a word that was being bantered around.
Speaker Change: It was kind of refreshing.
Speaker Change: So, I take some optimism.
And we will get through this phase.
Speaker Change: Contacted. And that the 37,000 people I was with
3 weeks ago in, in the south of France.
Speaker Change: Were probably a better indication of the future than today's headlines.
My final question, just real quick, you said 13 out of 18 jurisdictions or countries around the world. approved your acquisition merger with IPG. Who are the remaining five? I have passports for all of them, no, go ahead, Phil, you want to? The largest one is certainly the EU. I think, you know, other than that, we're not going to name names. You know, I think each one is a little different and is a little, you know, at a little different phase of the review process. But we certainly expect to close in the second half of the year.
Speaker Change: And thank you for that my final question. Just real quick, you said, um, 13 out of 18 jurisdictions for countries around the world have been approved. Your acquisition merger with ipg, who are the remaining 5 just are on the same page.
Speaker Change: I have passports all know. Um, go ahead failure on. So the the the largest 1 is certainly the EU, I think um you know, other than other than that, we're not going to name names that, you know, I think.
We don't see any issues that would change that conclusion. And we're going to do our best to. to get through the rest of these reviews. I would just echo that with the confidence that I mentioned before, we can, it's summertime so we expect, we don't expect as much activity in July and August as we had prior to this, you know, as people go on holiday, but we're pretty damn confident, we are confident that we're well along in the process with all of these remaining operations. Getting through the United States. was probably the biggest hurdle, not hurdle, but question, and I think a lot of these remaining governments look to see the U.S.
Speaker Change: I think each 1 is a little different and and and is a little um you know, at a little different phase of of the review process but we certainly expect to close in the second half of the year. We don't see any issues
um, that would change that conclusion and and uh, we're going to do our best to um,
Speaker Change: To get through the rest of these reviews.
Great, thank you. I, I was just, I was just Echo that with the confidence that I mentioned before we can.
We're it's summertime. So we expect we don't expect as much activity in July and August as we had prior to this, you know, it was people going on holiday but we're pretty damn, we are confident that we're well along in the process with all these remaining.
Operations getting through the United States.
has improved it before they finalize whatever their decisions are. Great. Thanks, Phil. Thanks, Sean. Sure. Great. Thank you.
Speaker Change: Um, was probably the biggest hurdle. I'm not hurdle, but question and I think a lot of these remaining governments. Look, look to see the us as improved. It
Speaker Change: Before they finalize, whatever is their decisions are. But
Speaker Change: Great, thanks. Phil. Thanks, Sean.
Speaker Change: Sure, great. Thank you.
Speaker Change: Thank you.
That is all the time we have for questions. This concludes today's conference call. Thank you for joining. You may now disconnect.
Speaker Change: That is all the.
Today's conference call, thank you for joining. You may now. Disconnect