Omnicom Group Q4 Earnings Call Highlights

Key Points

• Omnicom closed the Interpublic acquisition on November 26, 2025 and immediately began integration—creating a new connected capabilities organization, Growth and Solutions team and combined data/identity platform—while realigning its portfolio by selling or exiting about $2.5 billion of non‑strategic revenue and moving roughly $700 million of smaller‑market revenue to minority ownership (more than $800 million already sold/exited).
• Management raised expected annual run‑rate synergies to $1.5 billion (from $750 million) over ~30 months with about $900 million targeted in 2026, driven mainly by ~$1.0 billion in labor reductions, $240 million from real‑estate consolidation and $260 million from G&A/IT/procurement savings.
• Q4 included substantial integration charges—$1.1 billion severance/real‑estate, $543 million loss on dispositions and $187 million transaction/integration costs—yet adjusted EBITDA was $929 million and adjusted EPS $2.59; the board authorized a $5 billion buyback (launching a $2.5 billion ASR plus another $500M–$1B), expecting shares outstanding to fall ~9–11% by end‑2026, with year‑end debt of $9.1 billion and cash/short‑term investments of $6.9 billion.

Omnicom Group NYSE: OMC executives used the company’s fourth-quarter and full-year 2025 earnings call to detail early integration steps following the acquisition of Interpublic, outline a portfolio reshaping plan, and update investors on expected cost synergies and capital return plans.

Early integration steps after the Interpublic acquisition

Chairman and CEO John Wren said it has been 11 weeks since Omnicom closed the acquisition of Interpublic, describing strong momentum and emphasizing that integration planning during the approval process enabled the company to “move more decisively and with strategic clarity on day one.” The deal closed on November 26, 2025, with Interpublic results included only for December 2025 in the quarter and full-year figures discussed on the call.

Wren said Omnicom has announced a new connected capabilities organization and leadership team, and created a Growth and Solutions team to drive new business while expanding the Client Success Leaders group to deepen existing client relationships. The company also formed a combined platform organization and launched the next generation of Omni, integrating Acxiom’s Real ID, Flywheel’s Commerce Cloud, and Omni’s proprietary data while strengthening talent in data, identity, and AI.

Management said operations integration has begun across areas including real estate, IT, shared services, and procurement, with the goal of delivering operational improvements and cost efficiencies.

Portfolio realignment: exits, sales, and minority positions

As part of a simplification effort, Wren said the company identified smaller markets and operations that it considers not strategic and plans to sell or exit certain activities while moving from majority to minority-owned positions in some smaller markets. The smaller-market shift to minority ownership represents about $700 million in annual revenue, according to Wren.

Separately, Omnicom identified non-strategic or underperforming operations totaling approximately $2.5 billion in annual revenue that it plans to sell or exit. Wren said the company has already sold or exited businesses representing more than $800 million in annual revenue, and expects to complete the remaining actions over the next 12 months.

On the Q&A, CFO Phil Angelastro added that the smaller-market minority-position actions are driven by simplicity and compliance considerations rather than business weakness, and that Omnicom expects to continue servicing clients in those markets through ongoing ownership in the agencies. He also cited the sale of an experiential business within the former Interpublic portfolio, Jack Morton, saying the transaction closed during the week of the call.

Wren said the retained portfolio generated revenue of $23.1 billion for the 12 months ended September 30, 2025.

Synergies raised to $1.5 billion and key cost categories

Management said synergy expectations increased materially versus the initial estimate shared when the Interpublic acquisition was announced. Omnicom now expects annual run-rate synergies to double from $750 million to $1.5 billion over the next 30 months, with $900 million of savings expected in 2026.

• $1.0 billion from labor reductions tied to eliminating duplicative corporate and operational functions, streamlining structures, and optimizing utilization through a more unified resourcing model, including accelerated outsourcing and offshoring; management also referenced evaluating automation and AI across the business.
• $240 million from real estate consolidation.
• $260 million from G&A, IT, procurement, and other operational savings.

In response to questions about whether AI is increasing workforce reductions, Angelastro said AI was “not necessarily the primary driver” of the labor-related synergy estimate, pointing instead to duplicated roles created by combining two public companies as well as efficiencies in areas like shared services and outsourced functions.

Quarter results, charges, and select operating metrics

Angelastro said fourth-quarter and full-year 2025 results include only one month of Interpublic. He also separated several integration-related impacts in the quarter, including:

• $1.1 billion of severance and repositioning costs, related to severance, real estate impairment charges, and contract exits.
• $543 million loss on planned dispositions for businesses being held for sale, recorded at net realizable value.
• $187 million of acquisition-related transaction and integration costs.

Excluding those items, adjusted operating income (EBIT) for the fourth quarter was $876 million, and adjusted EBITDA was $929 million, representing a 16.8% margin, up 10 basis points from the prior year.

Angelastro said the non-GAAP adjusted tax rate on fourth-quarter pre-tax income was 25.8%, flat with the prior-year non-GAAP adjusted tax rate, while the reported effective tax rate on the operating loss was 12.7%, reflecting a lower tax benefit associated with certain charges that were not deductible in some jurisdictions. For planning purposes, he said the company expects a similar 26% tax rate in 2026.

Non-GAAP adjusted diluted EPS was $2.59, based on weighted average shares outstanding of 233.8 million. The company ended 2025 with 313.1 million shares outstanding, which Angelastro said reflected shares issued for the Interpublic acquisition.

On revenue, Omnicom did not include its usual organic revenue growth metrics in the slide deck due to the size of the acquisition and the planned portfolio dispositions. Angelastro said that if organic growth were calculated consistent with prior practice—but excluding planned dispositions and assets held for sale—organic growth in the fourth quarter would have been approximately 4%. In Q&A, he clarified this calculation included December results from Interpublic.

Angelastro also said foreign exchange increased revenue by about 2% in the quarter and a little less than 1% for the year, and that FX is expected to remain a positive factor in 2026, benefiting reported revenue by more than 2% if recent rates hold.

Cash flow, balance sheet, and capital returns

Angelastro said free cash flow increased versus the prior year, driven by improved performance and the addition of Interpublic in December. He said the change in operating capital was a positive of approximately $700 million for the year, representing an improvement of more than $900 million from 2024, with part of the improvement attributed to Omnicom’s businesses and the remainder tied to the Interpublic closing timing and working capital in December.

He said 2025 uses of free cash flow included $550 million in dividends to common shareholders and $83 million to non-controlling interest shareholders. Capital expenditures were $150 million. Net acquisition and disposition payments were a source of cash of $914 million, including $1.1 billion of net cash received from the Interpublic acquisition, partially offset by acquisition-related payments.

On the balance sheet, Angelastro said year-end debt was $9.1 billion, including approximately $3 billion of assumed Interpublic debt. He noted Omnicom’s $1.4 billion April 2026 notes are classified as current liabilities and said the company will address the maturity “in the near term.” Cash equivalents and short-term investments were $6.9 billion at year-end, and Omnicom also has an undrawn $3.5 billion revolving credit facility supporting its commercial paper program.

Wren said the board authorized a $5 billion share repurchase program, and management announced it was launching a $2.5 billion accelerated share repurchase (ASR) program. Angelastro said the company also plans to repurchase an additional $500 million to $1 billion of shares during the balance of 2026. Based on those plans, Omnicom estimates shares outstanding will decline about 9% to 11% by the end of 2026 versus the December 31, 2025 level, with weighted average shares outstanding reduced about 7% to 8% for the year.

Looking ahead, Angelastro projected net interest expense will increase by approximately $210 million in 2026 compared with 2025, citing factors including assumed Interpublic debt, refinancing of the April 2026 bond, incremental commercial paper borrowings related to share repurchases, and lower expected interest income.

Management said it will provide additional details on 2026 expectations at an Investor Day on March 12, noting it has not completed the 2026 planning process given the recent close of the Interpublic acquisition.

About Omnicom Group NYSE: OMC

Omnicom Group Inc NYSE: OMC is a global marketing and corporate communications holding company headquartered in New York City. Founded in 1986 through the merger of the BBDO, DDB and Needham Harper agencies, Omnicom has built a portfolio of leading brands and networks serving clients across diverse industries.

The company's primary business activities encompass advertising, strategic media planning and buying, digital and interactive marketing, direct and promotional marketing, public relations, and customer relationship management.

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