Third-quarter revenue rises modestly as integration and costs weigh on profits
Omnicom Group reported third-quarter revenue of $4.04 billion, up 4% from a year ago, driven by modest organic growth and favorable currency movements, as the advertising giant prepares to finalize its acquisition of Interpublic Group (IPG) next month.
Profit Figures
Net income for Q3 fell 11.6% to $341.3 million compared to the same period in 2024. On an adjusted, non-GAAP basis, net income was $436.4 million. Diluted earnings per share dropped to $1.75 from $1.95 a year earlier, while adjusted EPS rose to $2.24.
John Wren, Chairman and CEO of Omnicom, said, “We expect to close the Interpublic acquisition next month, creating the world’s leading marketing and sales company. Together, we will emerge with the industry’s most talented team and a powerful platform designed to accelerate growth through strategic advantages in data, media, creativity, production, and technology.”
Wren added that both companies were experiencing “strong momentum with significant new business wins” and that the merger would position Omnicom for stronger revenue growth, greater efficiency, and long-term shareholder value.
Mixed Growth Across Business Lines
Organic revenue rose 2.6% year-on-year, with performance varying across segments:
- Media and advertising: +9.1%
- Execution and support services: +2%
- Precision marketing: +0.8%
- Healthcare: -1.9%
- Public relations: -7.5%
- Experiential marketing: -17.7%
- Branding and retail commerce: -16.9%
By region, growth was strongest in Latin America (27.3%) and Middle East & Africa (5.9%), while the US rose 4.6%and the UK 3.7%. Revenue fell slightly in Asia Pacific, other parts of North America, and Europe.
Rising Costs and Integration Expenses
Operating expenses climbed 6.8% to $3.51 billion, including $60.8 million in acquisition-related costs tied to IPG and $38.6 million in repositioning charges, mainly severance.
Salary and service costs increased 4.5% to $2.92 billion, reflecting higher third-party services offset by lower direct compensation. Occupancy and other costs fell slightly to $322.7 million, while selling, general, and administrative expenses jumped 64.3% to $163.5 million, largely due to acquisition costs.
Operating income declined 11.7% to $530.1 million, with margins narrowing to 13.1% from 15.5%. Acquisition-related and repositioning costs reduced margins by 2.4 percentage points.
Adjusted EBITA rose 4.6% to $651 million, a margin of 16.1%, while GAAP EBITA fell 11.4% to $551.6 million. Net interest expense increased slightly to $43.2 million, and the effective tax rate rose to 27.2% from 26.8% due to non-deductible acquisition costs.
Economic Outlook
Omnicom warned that global macroeconomic risks – including inflation, geopolitical instability, and potential disruptions to supply chains and credit markets – may create volatility in upcoming quarters. The company is monitoring client spending closely and will adjust its cost structure as needed.
Despite short-term pressures, Omnicom expressed confidence in its growth trajectory. Wren noted that the Interpublic deal will strengthen “our confidence in the future – for our clients, our people, and for long-term shareholder value.”
