filings.toolsItem 16. Form 10-K Summary
202K characters. Original on sec.gov · Markdown
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| O****MNICOM G****ROUP I****NC. | ||||||||
| February 20, 2026 | BY: | /s/ PHILIP J. ANGELASTRO | ||||||
| Philip J. Angelastro Executive Vice President and Chief Financial Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||||||
| /s/ JOHN D. WREN | Chairman and Chief Executive Officer and Director (Principal Executive Officer) | February 20, 2026 | ||||||
| John D. Wren | ||||||||
| /s/ PHILIP J. ANGELASTRO | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | February 20, 2026 | ||||||
| Philip J. Angelastro | ||||||||
| /s/ ANDREW L. CASTELLANETA | Senior Vice President, Chief Accounting Officer (Principal Accounting Officer) | February 20, 2026 | ||||||
| Andrew L. Castellaneta | ||||||||
| /s/ PHILIPPE KRAKOWSKY | Co-President, Co-Chief Operating Officer and Director | February 20, 2026 | ||||||
| Philippe Krakowsky | ||||||||
| /s/ MARY C. CHOKSI | Director | February 20, 2026 | ||||||
| Mary C. Choksi | ||||||||
| /s/ LEONARD S. COLEMAN, JR. | Director | February 20, 2026 | ||||||
| Leonard S. Coleman, Jr. | ||||||||
| /s/ MARK D. GERSTEIN | Director | February 20, 2026 | ||||||
| Mark D. Gerstein | ||||||||
| /s/ RONNIE S. HAWKINS | Director | February 20, 2026 | ||||||
| Ronnie S. Hawkins | ||||||||
| /s/ DEBORAH J. KISSIRE | Director | February 20, 2026 | ||||||
| Deborah J. Kissire | ||||||||
| /s/ GRACIA C. MARTORE | Director | February 20, 2026 | ||||||
| Gracia C. Martore | ||||||||
| /s/ PATRICIA SALAS PINEDA | Director | February 20, 2026 | ||||||
| Patricia Salas Pineda | ||||||||
| /s/ LINDA JOHNSON RICE | Director | February 20, 2026 | ||||||
| Linda Johnson Rice | ||||||||
| /s/ CASSANDRA SANTOS | Director | February 20, 2026 | ||||||
| Cassandra Santos | ||||||||
| /s/ VALERIE M. WILLIAMS | Director | February 20, 2026 | ||||||
| Valerie M. Williams | ||||||||
| /s/ PATRICK MOORE | Director | February 20, 2026 | ||||||
| Patrick Moore | ||||||||
| /s/ E. LEE WYATT JR. | Director | February 20, 2026 | ||||||
| E. Lee Wyatt Jr. |
MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for the preparation of the consolidated financial statements and related information of Omnicom Group Inc., or Omnicom. Management uses its best judgment to ensure that the consolidated financial statements present fairly, in all material respects, Omnicom’s consolidated financial position and results of operations in conformity with generally accepted accounting principles in the United States.
The financial statements have been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board. Their report expresses the independent accountant’s judgment as to the fairness of management’s reported financial position, results of operations and cash flows. This judgment is based on the procedures described in the fourth and fifth paragraphs of their report.
Omnicom management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rule 13a-15(f). Management, with the participation of our Chief Executive Officer, or CEO, Chief Financial Officer, or CFO, and our agencies, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our CEO and CFO concluded that our internal control over financial reporting was effective as of December 31, 2025.
Omnicom management excluded IPG from its assessment of the effectiveness of Omnicom’s internal control over financial reporting as of December 31, 2025, in accordance with SEC staff guidance allowing management to exclude a recently acquired business from management’s report on internal control over financial reporting. IPG constituted 6% of total revenue for the year ended December 31, 2025 and 31% of total assets, excluding acquired goodwill and other intangible assets, as of December 31, 2025.
There have not been any changes in our internal control over financial reporting during our fourth fiscal quarter that have materially affected or are reasonably likely to affect our internal control over financial reporting.
KPMG LLP, an independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on Omnicom’s internal control over financial reporting as of December 31, 2025, dated February 20, 2026.
The Board of Directors of Omnicom has an Audit Committee comprised of five independent directors. The Audit Committee meets periodically with financial management, Internal Audit and the independent auditors to review accounting, control, audit and financial reporting matters.
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
Omnicom Group Inc.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Omnicom Group Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement schedule II (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
The Company acquired The Interpublic Group of Companies, Inc. during 2025, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, The Interpublic Group of Companies, Inc.’s internal control over financial reporting associated with 6% of total revenue and 31% of total assets, excluding acquired goodwill and other intangible assets, included in the consolidated financial statements of the Company as of and for the year ended December 31, 2025. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of The Interpublic Group of Companies, Inc.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
F-2
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it relates.
Evaluation of the sufficiency of audit evidence over revenue recognition
As discussed in Note 3 to the consolidated financial statements, the Company provides an extensive range of marketing and sales solutions through its networks, connected capabilities and agencies, which operate in all major markets throughout the Americas, EMEA and Asia Pacific regions. Consolidated revenues across all disciplines and geographic markets was $17,271.9 million for the year-ended December 31, 2025.
We identified the evaluation of the sufficiency of audit evidence over revenue recognition as a critical audit matter. Revenue is recognized from contracts with customers that are based on statements of work which are typically separately negotiated with the client at a local agency level and local agencies execute tens of thousands of contracts per year. Evaluating the sufficiency of audit evidence obtained required a high degree of auditor judgment because of the volume of contracts entered into across the networks and agencies for which revenue was recorded. This included selecting the locations where testing would be performed and the supervision and review of procedures performed at those locations.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the scope of agencies at which we performed audit procedures and the nature and extent of the procedures performed at each location. At each agency where procedures over revenue were performed, we (1) evaluated the design and tested the operating effectiveness of certain internal controls over revenue recognition, including controls to check that local agencies recorded revenue in accordance with the Company’s accounting policies and billings were recorded and presented in accordance with client agreements, (2) examined a selection of contracts and assessed that the Company’s accounting policies were applied consistently and accurately, and (3) assessed the recording of revenue by selecting certain transactions and comparing the amounts recognized for consistency with the underlying documentation including contracts with customers. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed over revenue recognition.
Fair value of tradenames and customer relationships intangible assets acquired in The Interpublic Group of Companies, Inc. transaction
As discussed in Note 5 to the consolidated financial statements, on November 26, 2025, the Company completed its merger with The Interpublic Group of Companies, Inc. (IPG), with IPG surviving as a wholly owned subsidiary of Omnicom Group Inc. (Omnicom), which was accounted for as a business combination. Each share of IPG common stock was converted into 0.344 shares of common stock of Omnicom, plus cash in lieu of any fractional shares of Omnicom common stock that otherwise would have been issued. The purchase price was $8,893.5 million, of which, a preliminary estimated fair value of $792.0 million and $3,616.0 million was allocated to tradenames and customer relationships intangible assets, respectively. The fair value measurements of the tradenames and customer relationships intangible assets were determined using the relief-from-royalty method and the multi-period excess earnings method under the income approach, respectively.
F-3
We identified the evaluation of the acquisition-date preliminary fair values of certain acquired tradenames and customer relationships intangible assets (intangible assets) as a critical audit matter. Subjective auditor judgment, including specialized skills and knowledge, were required to evaluate the royalty rates, customer attrition rates, and discount rates applied. Changes in these assumptions could have a significant effect on the intangible assets’ fair values.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process. This included controls related to the determination of the royalty rates, customer attrition rates, and discount rates used in the Company’s models. We involved valuation professionals with specialized skills and knowledge who assisted in:
-
assessing the reasonableness of the royalty rates by comparing them to observable market royalty rates and evaluating the nature of the tradenames acquired
-
evaluating the customer attrition rates by comparing them to historical attrition rates and industry information
-
evaluating the Company’s discount rates by comparing them to an independently developed range of discount rates using publicly available market data for comparable entities.
/s/ KPMG LLP
We have served as the Company’s auditor since 2002.
New York, New York
February 20, 2026
F-4
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except per share amounts)
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 6,881.1 | $ | 4,339.4 | |||||||
| Accounts receivable, net of allowance for doubtful accounts of $11.9 and $15.0 | 14,398.0 | 9,242.0 | |||||||||
| Work in process | 3,408.9 | 1,622.2 | |||||||||
| Assets held for sale | 1,012.2 | — | |||||||||
| Other current assets | 1,765.2 | 1,019.4 | |||||||||
| Total Current Assets | 27,465.4 | 16,223.0 | |||||||||
| Property and Equipment at cost, less accumulated depreciation of $1,386.8 and $1,096.9 | 1,010.3 | 824.7 | |||||||||
| Operating Lease Right-Of-Use Assets | 1,379.8 | 1,043.6 | |||||||||
| Equity Method Investments | 65.9 | 59.0 | |||||||||
| Goodwill | 18,641.4 | 10,677.4 | |||||||||
| Intangible Assets, net of accumulated amortization of $903.2 and $832.3 | 5,101.0 | 522.0 | |||||||||
| Other Assets | 751.5 | 271.0 | |||||||||
| TOTAL ASSETS | $ | 54,415.3 | $ | 29,620.7 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Accounts payable | $ | 20,659.5 | $ | 12,484.4 | |||||||
| Customer advances | 1,727.6 | 1,336.1 | |||||||||
| Current portion of debt | 1,399.5 | — | |||||||||
| Short-term debt | 62.0 | 21.3 | |||||||||
| Taxes payable | 264.9 | 402.5 | |||||||||
| Liabilities held for sale | 1,261.0 | — | |||||||||
| Other current liabilities | 4,163.7 | 2,056.0 | |||||||||
| Total Current Liabilities | 29,538.2 | 16,300.3 | |||||||||
| Long-Term Liabilities | 1,099.5 | 804.2 | |||||||||
| Long-Term Liability - Operating Leases | 1,617.0 | 814.2 | |||||||||
| Long-Term Debt | 7,655.0 | 6,035.3 | |||||||||
| Deferred Tax Liabilities | 1,449.4 | 491.8 | |||||||||
| Commitments and Contingent Liabilities (Note 19) | |||||||||||
| Temporary Equity - Redeemable Noncontrolling Interests | 363.2 | 429.0 | |||||||||
| Equity: | |||||||||||
| Shareholders’ Equity: | |||||||||||
| Preferred stock, $1.00 par value, 7.5 million shares authorized, none issued | — | — | |||||||||
| Common stock, $0.15 par value, 1.0 billion shares authorized, 421.6 million shares issued, 313.1 million and 196.4 million shares outstanding | 63.2 | 44.6 | |||||||||
| Additional paid-in capital | 9,424.4 | 472.1 | |||||||||
| Retained earnings | 10,782.4 | 11,500.5 | |||||||||
| Accumulated other comprehensive income (loss) | (1,265.8) | (1,475.9) | |||||||||
| Treasury stock, at cost, 108.5 million and 100.8 million shares | (6,958.4) | (6,347.8) | |||||||||
| Total Shareholders’ Equity | 12,045.8 | 4,193.5 | |||||||||
| Noncontrolling interests | 647.2 | 552.4 | |||||||||
| Total Equity | 12,693.0 | 4,745.9 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 54,415.3 | $ | 29,620.7 |
The accompanying notes to the consolidated financial statements are an integral part of these statements.
F-5
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Revenue | $ | 17,271.9 | $ | 15,689.1 | $ | 14,692.2 | |||||||||||
| Operating Expenses: | |||||||||||||||||
| Salary and service costs | 12,644.0 | 11,432.5 | 10,701.2 | ||||||||||||||
| Occupancy and other costs | 1,366.7 | 1,274.4 | 1,168.8 | ||||||||||||||
| Severance and repositioning costs | 1,247.0 | 57.8 | 191.5 | ||||||||||||||
| Loss (gain) on assets held for sale and dispositions | 547.1 | — | (78.8) | ||||||||||||||
| Cost of services | 15,804.8 | 12,764.7 | 11,982.7 | ||||||||||||||
| Selling, general and administrative expenses | 745.7 | 408.1 | 393.7 | ||||||||||||||
| Depreciation and amortization | 276.7 | 241.7 | 211.1 | ||||||||||||||
| Total Operating Expenses | 16,827.2 | 13,414.5 | 12,587.5 | ||||||||||||||
| Operating Income | 444.7 | 2,274.6 | 2,104.7 | ||||||||||||||
| Interest Expense | 263.4 | 247.9 | 218.5 | ||||||||||||||
| Interest Income | 96.9 | 100.9 | 106.7 | ||||||||||||||
| Income Before Income Taxes and Income From Equity Method Investments | 278.2 | 2,127.6 | 1,992.9 | ||||||||||||||
| Income Tax Expense | 242.2 | 560.5 | 524.9 | ||||||||||||||
| Income From Equity Method Investments | 7.7 | 6.9 | 5.2 | ||||||||||||||
| Net Income | 43.7 | 1,574.0 | 1,473.2 | ||||||||||||||
| Net Income Attributed To Noncontrolling Interests | 98.2 | 93.4 | 81.8 | ||||||||||||||
| Net Income (Loss) - Omnicom Group Inc. | $ | (54.5) | $ | 1,480.6 | $ | 1,391.4 | |||||||||||
| Net Income (Loss) Per Share - Omnicom Group Inc.: | |||||||||||||||||
| Basic | $(0.27) | $7.54 | $6.98 | ||||||||||||||
| Diluted | $(0.27) | $7.46 | $6.91 |
The accompanying notes to the consolidated financial statements are an integral part of these statements.
F-6
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net Income | $ | 43.7 | $ | 1,574.0 | $ | 1,473.2 | |||||||||||
| Other Comprehensive Income (Loss): | |||||||||||||||||
| Cash flow hedge: | |||||||||||||||||
| Amortization of loss included in interest expense | 5.4 | 4.4 | 5.6 | ||||||||||||||
| Income tax effect | (1.7) | (1.3) | (1.6) | ||||||||||||||
| Cash flow hedge, net of tax | 3.7 | 3.1 | 4.0 | ||||||||||||||
| Pension and other postemployment benefits: | |||||||||||||||||
| Unrecognized actuarial gains (losses) and prior service cost for the period | (25.5) | 18.7 | (6.8) | ||||||||||||||
| Amortization of prior service cost and actuarial losses | 3.3 | 5.8 | 4.8 | ||||||||||||||
| Income tax effect | 7.5 | (7.3) | 0.6 | ||||||||||||||
| Pension and other postemployment benefits, net of tax | (14.7) | 17.2 | (1.4) | ||||||||||||||
| Foreign currency translation adjustment | 228.4 | (171.7) | 98.9 | ||||||||||||||
| Other Comprehensive Income (Loss) | 217.4 | (151.4) | 101.5 | ||||||||||||||
| Comprehensive Income | 261.1 | 1,422.6 | 1,574.7 | ||||||||||||||
| Comprehensive Income Attributed To Noncontrolling Interests | 105.9 | 80.3 | 83.0 | ||||||||||||||
| Comprehensive Income - Omnicom Group Inc. | $ | 155.2 | $ | 1,342.3 | $ | 1,491.7 |
The accompanying notes to the consolidated financial statements are an integral part of these statements.
F-7
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In millions, except per share amounts)
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning Common Stock, shares | 297.2 | 297.2 | 297.2 | ||||||||||||||
| Acquisition of IPG | 124.4 | — | — | ||||||||||||||
| Ending Common Stock, shares | 421.6 | 297.2 | 297.2 | ||||||||||||||
| Common Stock, par value | $ | 63.2 | $ | 44.6 | $ | 44.6 | |||||||||||
| Additional Paid-in Capital: | |||||||||||||||||
| Beginning balance | 472.1 | 492.0 | 571.1 | ||||||||||||||
| Acquisition of IPG | 8,872.9 | — | — | ||||||||||||||
| Net change in noncontrolling interests | (38.6) | (9.9) | (88.1) | ||||||||||||||
| Change in temporary equity | 93.9 | (24.0) | (27.2) | ||||||||||||||
| Share-based compensation | 100.8 | 91.4 | 84.8 | ||||||||||||||
| Common stock issued, share-based compensation | (76.7) | (77.4) | (48.6) | ||||||||||||||
| Ending balance | 9,424.4 | 472.1 | 492.0 | ||||||||||||||
| Retained Earnings: | |||||||||||||||||
| Beginning balance | 11,500.5 | 10,571.5 | 9,739.3 | ||||||||||||||
| Net income (loss) | (54.5) | 1,480.6 | 1,391.4 | ||||||||||||||
| Common stock dividends declared | (663.6) | (551.6) | (559.2) | ||||||||||||||
| Ending balance | 10,782.4 | 11,500.5 | 10,571.5 | ||||||||||||||
| Accumulated Other Comprehensive Income (Loss): | |||||||||||||||||
| Beginning balance | (1,475.9) | (1,337.6) | (1,437.9) | ||||||||||||||
| Other comprehensive income (loss) | 210.1 | (138.3) | 100.3 | ||||||||||||||
| Ending balance | (1,265.8) | (1,475.9) | (1,337.6) | ||||||||||||||
| Treasury Stock: | |||||||||||||||||
| Beginning balance | (6,347.8) | (6,154.2) | (5,665.0) | ||||||||||||||
| Common stock issued, share-based compensation | 102.8 | 179.1 | 86.0 | ||||||||||||||
| Common stock repurchased | (713.4) | (372.7) | (575.2) | ||||||||||||||
| Ending balance | (6,958.4) | (6,347.8) | (6,154.2) | ||||||||||||||
| Shareholders’ Equity | 12,045.8 | 4,193.5 | 3,616.3 | ||||||||||||||
| Noncontrolling Interests: | |||||||||||||||||
| Beginning balance | 552.4 | 608.8 | 524.3 | ||||||||||||||
| Acquisition of IPG | 211.3 | — | — | ||||||||||||||
| Net income (loss) | 98.2 | 93.4 | 81.8 | ||||||||||||||
| Other comprehensive income (loss) | 7.6 | (13.1) | 1.2 | ||||||||||||||
| Dividends to noncontrolling interests | (82.9) | (85.4) | (70.9) | ||||||||||||||
| Net change in noncontrolling interests | (139.4) | (51.3) | 72.4 | ||||||||||||||
| Ending balance | 647.2 | 552.4 | 608.8 | ||||||||||||||
| Total Equity | $ | 12,693.0 | $ | 4,745.9 | $ | 4,225.1 | |||||||||||
| Dividends Declared Per Common Share | $2.90 | $2.80 | $2.80 |
The accompanying notes to the consolidated financial statements are an integral part of these statements.
F-8
OMNICOM GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash Flows from Operating Activities: | |||||||||||||||||
| Net income | $ | 43.7 | $ | 1,574.0 | $ | 1,473.2 | |||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization of right-of-use assets | 145.1 | 136.1 | 130.8 | ||||||||||||||
| Amortization of intangible assets | 131.6 | 105.6 | 80.3 | ||||||||||||||
| Share-based compensation | 100.8 | 91.4 | 84.8 | ||||||||||||||
| Severance and repositioning costs | 1,247.0 | 57.8 | 191.5 | ||||||||||||||
| Loss (gain) on assets held for sale and dispositions | 547.1 | — | (78.8) | ||||||||||||||
| Other, net | 10.8 | (0.2) | 3.0 | ||||||||||||||
| Increase (decrease) in operating capital | 712.1 | (231.2) | (462.9) | ||||||||||||||
| Net Cash Provided By Operating Activities | 2,938.2 | 1,733.5 | 1,421.9 | ||||||||||||||
| Cash Flows from Investing Activities: | |||||||||||||||||
| Capital expenditures | (149.8) | (140.6) | (78.4) | ||||||||||||||
| Net cash received (paid) for acquisition of businesses and interests in affiliates | 1,079.5 | (902.1) | (93.3) | ||||||||||||||
| Maturity of short-term investments | — | — | 60.8 | ||||||||||||||
| Proceeds from disposition of subsidiaries and other | 50.5 | (16.0) | 190.0 | ||||||||||||||
| Net Cash Provided By (Used In) Investing Activities | 980.2 | (1,058.7) | 79.1 | ||||||||||||||
| Cash Flows from Financing Activities: | |||||||||||||||||
| Proceeds from borrowings | — | 1,235.5 | — | ||||||||||||||
| Repayment of debt | — | (750.0) | — | ||||||||||||||
| Change in short-term debt | (42.0) | 12.6 | (8.7) | ||||||||||||||
| Dividends paid to common shareholders | (549.6) | (552.7) | (562.7) | ||||||||||||||
| Repurchases of common stock | (707.9) | (370.7) | (570.8) | ||||||||||||||
| Proceeds from stock plans | 27.2 | 102.1 | 35.6 | ||||||||||||||
| Acquisition of additional noncontrolling interests | (116.7) | (53.6) | (87.6) | ||||||||||||||
| Dividends paid to noncontrolling interest shareholders | (82.9) | (85.4) | (70.9) | ||||||||||||||
| Payment of contingent purchase price obligations | (48.4) | (42.4) | (67.7) | ||||||||||||||
| Other, net | (70.3) | (77.4) | (55.0) | ||||||||||||||
| Net Cash Used In Financing Activities | (1,590.6) | (582.0) | (1,387.8) | ||||||||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | 213.9 | (185.4) | 37.0 | ||||||||||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | 2,541.7 | (92.6) | 150.2 | ||||||||||||||
| Cash and Cash Equivalents at the Beginning of Year | 4,339.4 | 4,432.0 | 4,281.8 | ||||||||||||||
| Cash and Cash Equivalents at the End of Year | $ | 6,881.1 | $ | 4,339.4 | $ | 4,432.0 |
The accompanying notes to the consolidated financial statements are an integral part of these statements.
F-9
1. Presentation of Financial Statements
Omnicom is a strategic holding company that operates through global networks, connected capabilities and specialized agencies, which connect its comprehensive portfolio of companies to deliver marketing, sales, communications, and commerce services to many of the largest global companies. Our products and service offerings support client objectives across our primary focus areas: media, content, commerce, generative AI, and branding communications.
The terms “Omnicom,” “the Company”, “we”, “our” and “us” each refer to Omnicom Group Inc. and its subsidiaries, unless the context indicates otherwise. The accompanying consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP or GAAP. All intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates and assumptions. Unless otherwise noted, dollars in tables are in millions, except per share amounts.
Merger with IPG
On November 26, 2025 (the “Closing Date”), Omnicom completed its Merger with IPG (the “Merger”). As previously reported, on December 8, 2024, Omnicom entered into an Agreement and Plan of Merger (the “Merger Agreement”) with IPG and EXT Subsidiary Inc., a Delaware corporation and a direct wholly owned subsidiary of Omnicom (“Merger Sub”). On the Closing Date, pursuant to the terms and conditions of the Merger Agreement, Merger Sub merged with and into IPG (the “Merger”), with IPG continuing as the surviving corporation and a direct wholly owned subsidiary of Omnicom.
Upon completion of the Merger, the 361,498,876 shares of IPG common stock (the “IPG common stock”) (par value $0.10 per share) that were issued and outstanding immediately prior to the Merger were converted into 124,352,188 shares of Omnicom common stock (par value $0.15 per share) based on an exchange ratio (the “Exchange Ratio”) of 0.344 shares of Omnicom common stock for each share of IPG common stock. The shares issued represented total equity consideration of $8,891.2 million at closing and total consideration of $8,893.5 million, excluding debt assumed in connection with the IPG Exchange Offers (as defined below). For the full year 2025, we recorded $347.3 million of acquisition-related costs related to the Merger in selling, general and administrative expenses, compared to $14.6 million in the prior year. Following the close of the Merger, Omnicom shareholders owned approximately 60.6% of the combined company and IPG shareholders owned approximately 39.4%, on a fully diluted basis.
Omnicom common stock continues to trade on the New York Stock Exchange, or NYSE, under the symbol “OMC,” and IPG’s common stock ceased trading. The Merger qualified as a tax-free reorganization for U.S. federal income tax purposes, and the combined company operates under the Omnicom name with headquarters in New York, New York.
Omnicom is the acquirer of IPG under U.S. GAAP and as a result, the consolidated financial statements of Omnicom for periods prior to the Closing Date do not include the results of operations, financial position, or cash flows of IPG. The results of operations of IPG are included in Omnicom’s consolidated financial statements only from the Closing Date forward. Accordingly, Omnicom’s financial results, the effects on financial condition and cash flow are not comparable to historical periods due to the inclusion of IPG’s results from the Closing Date, see Note 5 to the consolidated financial statements.
IPG Senior Notes Exchange Offers
In connection with the Merger, Omnicom commenced offers to exchange all outstanding notes of certain series issued by IPG for up to $2.95 billion in aggregate principal amount of new notes issued by Omnicom (the “IPG Exchange Offers”). As a result of the IPG Exchange Offers, which were completed on December 2, 2025, approximately 94% of IPG's outstanding senior notes were exchanged for $2.76 billion in aggregate principal amount of new notes issued by Omnicom. The remaining approximately 6% of IPG's senior notes that were not tendered for exchange by holders remain outstanding obligations of IPG, a wholly owned subsidiary of Omnicom (see Note 7 to the consolidated financial statements).
Risks and Uncertainties
Global economic disruptions, including geopolitical events, international hostilities, acts of terrorism, public health crises, inflation or stagflation, tariffs and other trade barriers, central bank interest rate policies in our major markets, and labor or supply chain challenges, could contribute to economic uncertainty and volatility. The impact of these conditions on our business may vary by geographic market and service discipline. We monitor macroeconomic conditions, client revenue levels, and other relevant factors and may take actions to align our cost structure with changes in client demand and to manage working capital. However, there can be no assurance that such actions will be sufficient to mitigate the effects of adverse economic conditions, reductions in client spending, changes in client creditworthiness, or other developments.
Accounting Changes
On January 1, 2025, we adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), that requires, among other things, greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. ASU 2023-09 affects financial statement disclosure only in 2025, and its adoption did not affect our results of operations or financial condition.
F-10
On January 1, 2024, we adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), that requires retrospective disclosure of significant expenses that are regularly provided to the chief operating decision maker (see Note 8 to the consolidated financial statements). ASU 2023-07 was effective for annual periods beginning January 1, 2024 and for interim periods beginning January 1, 2025. ASU 2023-07 affects financial statement disclosure only, and its adoption did not affect our results of operations or financial condition.
2. Significant Accounting Policies
Revenue Recognition**.** Revenue is recognized when a customer obtains control and receives the benefit of the promised goods or services (the performance obligation) in an amount that reflects the consideration we expect to receive in exchange for those goods or services (the transaction price). We measure revenue by estimating the transaction price based on the consideration specified in the client arrangement. Revenue is recognized as the performance obligations are satisfied. Our revenue is primarily derived from the planning and execution of advertising, marketing, and communications services in the following fundamental disciplines: Media & Advertising, Precision Marketing, Public Relations, Healthcare, Branding & Retail Commerce, Experiential, and Execution & Support. Our client contracts are primarily fees for service on a rate per hour or per project basis. Revenue is recorded net of sales, use and value added taxes.
Performance Obligations. In substantially all our disciplines, the performance obligation is to provide advisory and consulting services at an agreed-upon level of effort to accomplish the specified engagement. Our client contracts are comprised of diverse arrangements involving fees based on any one or a combination of the following: an agreed fee or rate per hour for the level of effort expended by our employees; commissions based on the client’s spending for media purchased from third parties; qualitative or quantitative incentive provisions specified in the contract; and reimbursement for third-party costs that we are required to include in revenue when we control the vendor services related to these costs and we act as principal. The transaction price of a contract is allocated to each distinct performance obligation based on its relative stand-alone selling price and is recognized as revenue when, or as, the customer receives the benefit of the performance obligation. Clients typically receive and consume the benefit of our services as they are performed. Substantially all our client contracts provide that we are compensated for services performed to date and allow for cancellation by either party on short notice, typically 90 days, without penalty.
Generally, our short-term contracts, which normally take 30 to 90 days to complete, are performed by a single agency and consist of a single performance obligation. As a result, we do not consider the underlying services as separate or distinct performance obligations because our services are highly interrelated, occur in close proximity, and the integration of the various components of a marketing message is essential to overall service. In certain of our long-term client contracts, which have a term of up to one year, the performance obligation is a stand-ready obligation, because we provide a constant level of similar services over the term of the contract. In other long-term contracts, when our services are not a stand-ready obligation, we consider our services distinct performance obligations and allocate the transaction price to each separate performance obligation based on its stand-alone selling price, including contracts for strategic media planning and buying services, which are considered to be multiple
performance obligations, and we allocate the transaction price to each distinct service based on the staffing plan and the stand-alone selling price. In substantially all of our creative services contracts, we have distinct performance obligations for our services, including certain creative services contracts where we act as an agent and arrange, at the client’s direction, for third parties to perform studio production efforts. Our payment terms vary by client, and the time between invoicing date and due date is typically not significant.
Revenue Recognition Methods. A substantial portion of our revenue is recognized over time, as the services are performed, because the client receives and consumes the benefit of our performance throughout the contract period, or we create an asset with no alternative use and are contractually entitled to payment for our performance to date in the event the client terminates the contract for convenience. For these client contracts, other than when we have a stand-ready obligation to perform services, revenue is recognized over time using input measures that correspond to the level of staff effort expended to satisfy the performance obligation on a rate per hour or equivalent basis. For client contracts when we have a stand-ready obligation to perform services on an ongoing basis over the life of the contract, typically for periods up to one year, where the scope of these arrangements is broad and there are no significant gaps in performing the services, we recognize revenue using a time-based measure resulting in a straight-line revenue recognition. From time to time, there may be changes in the client service requirements during the term of a contract and the changes could be significant. These changes are typically negotiated as new contracts covering the additional requirements and the associated costs, as well as additional fees for the incremental work to be performed. For contracts greater than 1 year, primarily within our data management contracts, revenue is generally recognized over time as services are delivered.
To a lesser extent, for certain other contracts where our performance obligations are satisfied in phases, we recognize revenue over time using certain output measures based on the measurement of the value transferred to the customer, including milestones achieved. Where the transaction price or a portion of the transaction price is derived from commissions based on a percentage of purchased media from third parties, the performance obligation is not satisfied until the media is run and we have an enforceable contract providing a right to payment. Accordingly, revenue for commissions is recognized at a point in time, typically when the media is run, including when it is not subject to cancellation by the client or media vendor.
Principal vs. Agent. In substantially all our businesses, we incur third-party costs on behalf of clients, including direct costs and incidental, or out-of-pocket costs. Third-party direct costs incurred in connection with the creation and delivery of advertising,
F-11
marketing, and communications services include, among others: purchased media, studio production services, specialized talent, including artists and other freelance labor, event marketing supplies, materials and services, promotional items, market research and third-party data and other related expenditures. Out-of-pocket costs include, among others: transportation, hotel, meals, shipping and telecommunication charges incurred by us in the course of providing our services. Billings related to out-of-pocket costs are included in revenue since we control the goods or services prior to delivery to the client.
However, the inclusion of billings related to third-party direct costs in revenue depends on whether we act as a principal or as an agent in the client arrangement. In most of our businesses, including advertising, which also includes studio production efforts and media planning and buying services, precision marketing, public relations, healthcare, and branding and retail commerce, we act as an agent and arrange, at the client’s direction, for third parties to perform certain services. In these cases, we do not control the goods or services prior to the transfer to the client. As a result, revenue is recorded net of these costs, equal to the amount retained for our fee or commission.
In certain businesses we may act as principal when contracting for third-party services on behalf of our clients. In our experiential business and most of our execution and support businesses, including field marketing and certain specialty marketing businesses, we act as principal because we control the specified goods or services before they are transferred to the client and we are responsible for providing the specified goods or services, or we are responsible for directing and integrating third-party vendors to fulfill our performance obligation at the agreed upon contractual price. In such arrangements, we also take pricing risk under the terms of the client contract. In certain media buying businesses, we act as principal when we control the buying process for the purchase of the media and contract directly with the media vendor. In these arrangements, we assume the pricing risk under the terms of the client contract. When we act as principal, we include billable amounts related to third-party costs in the transaction price and record revenue over time at the gross amount billed, including out-of-pocket costs, consistent with the manner that we recognize revenue for the underlying services contract. However, in media buying contracts where we act as principal, we recognize revenue at a point in time, typically when the media is run, including when it is not subject to cancellation by the client or media vendor.
Variable Consideration. Some of our client arrangements include variable consideration provisions, which include performance incentives, tiered commission structures and vendor rebates in certain markets outside of the United States. Variable consideration is estimated and included in total consideration at contract inception based on either the expected value method or the most likely outcome method. These estimates are based on historical award experience, anticipated performance and other factors known at the time. Performance incentives are typically recognized in revenue over time. Variable consideration for our media businesses in certain international markets includes rebate revenue and is recognized when it is probable that the media will be run, including when it is not subject to cancellation by the client. In addition, when we receive rebates or credits from vendors for transactions entered into on behalf of clients, they are remitted to the clients in accordance with contractual requirements or retained by us based on the terms of the client contract or local law. Amounts passed on to clients are recorded as a liability and amounts retained by us are recorded as revenue when earned, typically when the media is run.
Operating Expenses. Operating expenses include cost of services, selling, general and administrative expenses, or SG&A, and depreciation and amortization. We measure cost of services in two distinct categories: salary and service costs and occupancy and other costs. As a service business, salary and service costs make up a significant portion of our operating expenses, and substantially all these costs comprise the essential components directly linked to the delivery of our services. Salary and service costs include employee compensation and benefits, freelance labor, third-party service costs, and third-party incidental costs. Third-party service costs include vendor costs when we act as principal in providing services to our clients. Third-party incidental costs that are required to be included in revenue primarily consist of client-related travel and incidental out-of-pocket costs that we bill back to the client directly at our cost. Occupancy and other costs consist of the indirect costs related to the delivery of our services, including office rent and other occupancy costs, equipment rent, technology costs, general office expenses and other expenses. SG&A expenses primarily consist of third-party marketing costs, professional fees and compensation and benefits and occupancy and other costs of our corporate and executive offices, which includes group-wide finance and accounting, treasury, legal and governance, human resource oversight and similar costs.
Cash and Cash Equivalents. Cash and cash equivalents include cash in banks and highly liquid interest-bearing time deposits with original maturities of three months or less. Due to the short-term nature of these investments, carrying value approximates fair value. We have a policy governing counterparty credit risk for financial institutions that hold our cash and cash equivalents and we have deposit limits for each institution.
Work in Process. Work in process represents accrued costs incurred on behalf of customers, including media and production costs and fees, other third-party costs and contract assets that have not yet been billed. Media and production costs are billed during the production process in accordance with the terms of the client contract. Substantially all unbilled fees and costs will be billed within the next 30 days. Contract assets primarily include incentive fees, which are not material, and will be billed to clients in accordance with the terms of the client contract.
Property and Equipment. Property and equipment are carried at cost and are depreciated over the estimated useful lives of the assets using the straight-line method ranging from: three to five years for technology and related equipment, seven to ten years for
F-12
furniture, and up to 40 years for office buildings. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful life of the asset. Assets under finance leases are amortized on a straight-line basis over the lease term.
Equity Method Investments. Investments in companies where we exercise significant influence over the operating and financial policies of the investee and own less than 50% of the equity are accounted for using the equity method. Our proportionate share of the net income or loss of equity method investments is included in results of operations and any dividends received reduce the carrying value of the investment. The excess of the cost of our investment over our proportionate share of the fair value of the net assets of the investee at the acquisition date is recognized as goodwill and included in the carrying amount of the investment. Goodwill in the equity method investments is not amortized. Gains and losses from changes in our ownership interests are recorded in results of operations until control is achieved. In circumstances where a change in our ownership interest results in obtaining control, the existing carrying value of the investment is remeasured to the acquisition date fair value and any gain or loss is recognized in results of operations. We periodically review the carrying value of the equity method investments to determine if there has been an other-than-temporary decline in carrying value. A variety of factors are considered when determining if a decline in carrying value is other-than-temporary, including the financial condition and business prospects of the investee, as well as our investment intent.
Marketable Equity Securities. Marketable equity securities are measured at fair value and changes in fair value are recognized in results of operations.
Non-Marketable Equity Securities**.** Non-marketable equity securities do not have a readily determinable fair value and are measured at cost, less any impairment, and are adjusted for observable changes in fair value from transactions for identical or similar securities of the same issuer.
Business Combinations. In a business combination, the assets acquired, including identified intangible assets, liabilities assumed and any noncontrolling interest in the acquired business are recorded at acquisition date fair value. Intangible assets generally comprise customer relationships, including the related customer contracts, trade names and purchased or internally developed technology or software. The fair value measurements of the customer relationships and trade names intangible assets are primarily determined using the multi-period excess earnings method and the relief-from-royalty method under the income approach, respectively. In circumstances where control is obtained and less than 100% of a business is acquired, goodwill related to the noncontrolling shareholders is recorded as if 100% were acquired. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs are expensed as incurred. Certain acquisitions include an initial payment at closing and provide for future additional contingent purchase price payments (earn-outs), which are recorded as a liability at the acquisition date fair value using the discount rate in effect on the acquisition date. Subsequent changes in the fair value of the liability are recorded in results of operations. Amounts earned under the contingent purchase price arrangements may be subject to a maximum and payment is not contingent upon future employment. The results of operations of acquired businesses are included in results of operations from the acquisition date (see Notes 1 and 5 to the consolidated financial statements).
Goodwill and Intangible Assets. Goodwill represents the excess of the acquisition cost over the fair value of the net assets acquired. Goodwill is not amortized but is reviewed for impairment. Intangible assets are amortized over their estimated useful lives ranging from five to twenty years. We consider a number of factors in determining the useful lives and amortization method, including the pattern in which the economic benefits are consumed, as well as trade name recognition and customer attrition. There is no estimated residual value for the intangible assets.
We evaluate goodwill for impairment at least annually on May 1 and whenever events or circumstances indicate the carrying value may not be recoverable. The impairment evaluation compares the fair value of each reporting unit, which we identified as our four agency networks, to its carrying value, including goodwill. If the fair value of the reporting unit is equal to or greater than its carrying value, goodwill is not impaired. Goodwill is impaired when the carrying value of the reporting unit exceeds its fair value. Goodwill is written down to its fair value through a non-cash expense recorded in results of operations in the period the impairment is identified.
We identified our regional reporting units as components of our operating segments, which are our four global agency networks. The regional reporting units and connected capabilities monitor the performance and are responsible for the agencies in their region. The regional reporting units report to the segment managers and facilitate the administrative and logistical requirements of our key client matrix organization structure for delivering services to clients in their regions. We have concluded that, for each of our operating segments, their regional reporting units have similar economic characteristics and should be aggregated for purposes of testing goodwill for impairment at the operating segment level. Our conclusion was based on a detailed analysis of the aggregation criteria set forth in FASB ASC Topic 280, Segment Reporting, and in FASB ASC Topic 350. Consistent with our fundamental business strategy, the agencies within our regional reporting units serve similar clients in similar industries, and in many cases the same clients. In addition, the agencies within our regional reporting units have similar economic characteristics, and the employees share similar skill sets. The main economic components of each agency are employee compensation and related costs, and direct service costs and occupancy and other costs, which include rent and occupancy costs, technology costs that are generally limited to personal computers, servers and off-the-shelf software and other overhead expenses.
F-13
Finally, the expected benefits of our acquisitions are typically shared by multiple agencies in various regions as they work together to integrate the acquired agency into our virtual client network strategy. We use the following valuation methodologies to determine the fair value of our reporting units: (1) the income approach, which utilizes discounted expected future cash flows, (2) comparative market participant multiples of EBITDA (earnings before interest, taxes, depreciation and amortization) and (3) when available, consideration of recent and similar acquisition transactions. The market assumptions used in our assessment reflected the current economic environment (see Note 1 to the consolidated financial statements).
Based on the results of the annual impairment test, we concluded that, at May 1, 2025 and 2024, goodwill was not impaired because either the fair value of each reporting unit was substantially in excess of its respective net book value, or for reporting units with a negative book value, fair value of assets exceeds total assets. Subsequent to the annual goodwill impairment test, there have been no events or circumstances that triggered the need for an interim impairment test.
Debt Issuance Costs. Debt issuance costs are capitalized and amortized in interest expense over the term of the related debt and are presented as a reduction to the carrying amount of debt.
Temporary Equity - Redeemable Noncontrolling Interests. Owners of noncontrolling equity interests in some of our subsidiaries have the right in certain circumstances to require us to purchase all or a portion of their equity interests at fair value as defined in the applicable agreements. The intent of the parties is to approximate fair value at the time of redemption by using a multiple of earnings that is consistent with generally accepted valuation practices used by market participants in our industry. These contingent redemption rights are embedded in the equity security at issuance, are not free-standing instruments, do not represent a de facto financing and are not under our control, however, in almost all cases we have a similar protective call right to buy the security at fair value.
Treasury Stock. Repurchases of our common stock are accounted for at cost and are recorded as treasury stock. The excise tax on net stock repurchases is recorded as a cost of acquiring treasury stock. Reissued treasury stock, primarily in connection with share-based compensation plans, is accounted for at average cost. Gains or losses on reissued treasury stock arising from the difference between the average cost and the fair value of the award are recorded in additional paid-in capital and do not affect results of operations.
Noncontrolling Interests. Noncontrolling interests represent equity interests in certain subsidiaries held by third parties. Noncontrolling interests are presented as a component of equity and the proportionate share of net income attributed to the noncontrolling interests is recorded in results of operations. Changes in noncontrolling interests that do not result in a loss of control are accounted for in equity. Gains and losses resulting from a loss of control are recorded in results of operations.
Foreign Currency Translation and Transactions. Substantially all of our foreign subsidiaries use their local currency as their functional currency. Assets and liabilities are translated from the local functional currency into U.S. Dollars at the exchange rate on the balance sheet date and revenue and expenses are translated at the average exchange rate for the period. Translation adjustments are recorded in accumulated other comprehensive income. Foreign currency gains and losses arising from transactions not in the subsidiaries’ local currency are recorded in results of operations. We recorded foreign currency transaction losses of $19.3 million, $5.4 million and $14.0 million in 2025, 2024 and 2023, respectively. Foreign currency gains and losses for hyper-inflationary economies are recorded in results of operations.
Share-Based Compensation. Share-based compensation for restricted stock and stock option awards is measured at the grant date fair value. The fair value of restricted stock awards is determined and fixed using the closing price of our common stock on the grant date and is recorded in additional paid-in capital. The fair value of stock option awards is determined using the Black-Scholes option valuation model. For awards with a service only vesting condition, compensation expense is recognized on a straight-line basis over the requisite service period. For awards with a performance vesting condition, compensation expense is recognized on a graded-vesting basis. Typically, all share-based awards are settled with treasury stock. See Note 10 to the consolidated financial statements for additional information regarding our specific award plans.
Severance. The liability for one-time termination benefits, such as severance pay or benefit payouts, is measured and recognized at fair value in the period the liability is incurred. Subsequent changes to the liability are recognized in results of operations in the period of change.
Pension and Other Postemployment Benefits**.** We have various defined benefit and defined contribution plans and post employment benefits plans throughout the world, including statutory plans in certain countries. Our significant plans include a Senior Executive Retention Plan and Key Executive Retention Plan that cover certain executives. In addition, we have postemployment benefit plans for various key employees that primarily cover a period of 10 years after cessation of full-time employment. For all of our pension and postemployment benefit plans, we use actuarial methods and assumptions in determining our annual net pension and postemployment benefit costs and obligations, including the discount rate used to determine the present value of future benefits, expected long-term rate of return on plan assets and compensation cost trends. The overfunded or underfunded status of our pension and other postemployment benefit plans is recorded on the balance sheet (see Note 12 to the consolidated financial statements).
F-14
Deferred Compensation**.** Some of our subsidiaries have deferred compensation arrangements with certain executives that provide for payments over varying terms upon retirement, cessation of employment or death. The cost of these arrangements is accrued during the employee’s service period, and included in other long-term liabilities except for the current portion.
Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable for the current period and the deferred taxes recognized during the period. Deferred income taxes reflect the temporary difference between assets and liabilities that are recognized for financial reporting purposes and income tax purposes and are recorded as noncurrent. Deferred income taxes are measured using the enacted tax rates that are assumed to be in effect when the differences reverse. Valuation allowances are recorded where it is more likely than not that all or a portion of a deferred tax asset will not be realized. In assessing the need for a valuation allowance, we evaluate factors such as prior earnings history, expected future earnings, carry-back and carry-forward periods and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset.
Interest and penalties related to tax positions taken in our tax returns are recorded in income tax expense. We record a liability for uncertain tax positions that reflects the treatment of certain tax positions taken in our tax returns that do not meet the more-likely-than not threshold, or that meet the more-likely-than-not threshold but have measurement related unrecognized tax benefits. Until these positions are sustained by the taxing authorities or the statute of limitations concerning such issues lapses, we do not generally recognize the tax benefits resulting from such positions.
Net Income Per Share. Basic net income per share is based on the weighted average number of common shares outstanding during the period. Diluted net income per share is based on the weighted average number of common shares outstanding, plus the dilutive effect of common share equivalents, which include outstanding stock options and restricted stock awards.
Leases. At the inception of a contract, we assess whether the contract is, or contains, a lease. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of the criteria. Substantially all our operating leases are office space leases, and substantially all our finance leases are office furniture and technology equipment leases.
For all leases a right-of-use, or ROU, asset and lease liability are recognized at the lease commencement date. The lease liability represents the present value of the lease payments under the lease. The ROU asset is initially measured at cost, which includes the initial lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All ROU assets are reviewed for impairment. The lease liability is initially measured as the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, our secured incremental borrowing rate for the same term as the underlying lease. For real estate and certain equipment operating leases, we use our secured incremental borrowing rate. For finance leases, we use the rate implicit in the lease or our secured incremental borrowing rate if the implicit lease rate cannot be determined.
Lease payments included in the measurement of the lease liability comprise: the fixed noncancelable lease payments, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early. Lease components, including fixed payments for real estate taxes and insurance for office space leases, are included in the measurement of the initial lease liability.
Office space leases may contain variable lease payments, which include payments based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement. Additional payments based on the change in an index or rate, or payments based on a change in our portion of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability.
Operating lease expense is recognized on a straight-line basis over the lease term. Lease expense may include variable lease payments incurred in the period that were not included in the initial lease liability. Finance lease expense consists of the amortization of the ROU asset on a straight-line basis over the lease term and interest expense determined on an amortized cost basis. Finance lease payments are allocated between a reduction of the lease liability and interest expense.
Concentration of Credit Risk. We provide data-inspired, creative marketing and sales solutions to several thousand clients that operate in nearly every industry sector of the global economy, and we grant credit to qualified clients in the normal course of business. Due to the diversified nature of our client base, we do not believe that we are exposed to a concentration of credit risk as our largest client accounted for 2.4% of revenue in 2025.
Derivative Financial Instruments. All derivative instruments, including certain derivative instruments embedded in other contracts, are recorded at fair value. Derivatives qualify for hedge accounting if: the hedging instrument is designated as a hedge, the hedged exposure is specifically identifiable and exposes us to risk, and a change in fair value of the derivative financial instrument and an opposite change in the fair value of the hedged exposure have a high degree of correlation. The method of assessing hedge effectiveness and measuring hedge ineffectiveness is formally documented. Hedge effectiveness is assessed, and
F-15
hedge ineffectiveness is measured at least quarterly throughout the designated hedge period. Changes in the fair value of a fair value hedge are offset against the change in fair value of the hedged asset, liability or firm commitment through results of operations. Gains and losses on a terminated fair value hedge of our long-term debt are included in long-term debt and are amortized over the remaining term of the respective debt that was hedged. Changes in the fair value of a cash flow hedge are recognized in other comprehensive income until the hedged item is recognized in results of operations. Foreign currency hedges of the net investment in our foreign operations are recorded in accumulated other comprehensive income (loss), or AOCI. Any gain or loss will remain in AOCI until the complete or substantially complete liquidation of our investment in the underlying operation. We do not use derivatives for trading or speculative purposes. Using derivatives exposes us to the risk that counterparties to the derivative contracts will fail to meet their contractual obligations. We manage that risk through careful selection and ongoing evaluation of the counterparty financial institutions based on specific minimum credit standards and other factors.
Fair Value. We apply the fair value measurement guidance in FASB ASC Topic 820, Fair Value Measurements and Disclosures, for our financial assets and liabilities that are required to be measured at fair value and for our nonfinancial assets and liabilities that are not required to be measured at fair value on a recurring basis, which includes goodwill and other identifiable intangible assets. The measurement of fair value requires the use of techniques based on observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions.
The inputs create the following fair value hierarchy:
-
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities.
-
Level 2 - Unadjusted quoted prices in active markets for similar assets or liabilities; unadjusted quoted prices for identical assets or liabilities in markets that are not active; and model-derived valuations with observable inputs.
-
Level 3 - Unobservable inputs for the asset or liability.
We use unadjusted quoted market prices to determine the fair value of our financial assets and liabilities and classify such items in Level 1. We use unadjusted quoted market prices for similar assets and liabilities in active markets and model-derived valuations and classify such items in Level 2.
In determining the fair value of financial assets and liabilities, we consider certain market valuation adjustments that market participants would consider in determining fair value, including, counterparty credit risk adjustments applied to financial assets and liabilities, taking into account the actual credit risk of the counterparty when valuing assets measured at fair value and credit risk adjustments applied to reflect our credit risk when valuing liabilities measured at fair value.
3. Revenue
Nature of our services
We provide data-inspired, creative marketing and sales solutions through various client-centric networks that are organized to meet specific client objectives. Our networks, connected capabilities and agencies provide a comprehensive range of services in the following fundamental disciplines: Media & Advertising, Precision Marketing, Public Relations, Healthcare, Branding & Retail Commerce, Experiential, and Execution & Support. Media & Advertising includes creative services across digital and traditional media, strategic media planning and buying, performance media, data analytics services, and Omnicom Production. Precision Marketing includes digital and direct marketing, digital transformation consulting, e-commerce operations, media execution, market intelligence and data and analytics. Public Relations services include corporate communications, crisis management, public affairs and media and media relations services. Healthcare includes corporate communications and advertising and media services to global healthcare and pharmaceutical companies. Branding & Retail Commerce services include brand and product consulting, strategy and research and retail marketing. Experiential marketing services include live and digital events and experience design and execution. Execution & Support includes field marketing, sales support, digital and physical merchandising, point-of-sale and product placement, as well as other specialized marketing and custom communications services. At the core of all our services is the ability to create or develop a client’s marketing or corporate communications message into content that can be delivered to a target audience across different communications mediums.
Economic factors affecting our revenue
Global economic conditions have a direct impact on our revenue. Adverse economic conditions pose a risk that our clients may reduce, postpone or cancel spending for our services, which would impact our revenue.
F-16
Revenue by discipline:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Media & Advertising | $ | 10,015.9 | $ | 8,656.1 | $ | 8,101.8 | |||||||||||
| Precision Marketing | 1,938.5 | 1,776.3 | 1,414.7 | ||||||||||||||
| Public Relations | 1,613.6 | 1,640.8 | 1,540.3 | ||||||||||||||
| Healthcare | 1,379.9 | 1,337.1 | 1,342.4 | ||||||||||||||
| Branding & Retail Commerce | 617.6 | 726.4 | 788.0 | ||||||||||||||
| Experiential | 862.7 | 719.5 | 635.3 | ||||||||||||||
| Execution & Support | 843.7 | 832.9 | 869.7 | ||||||||||||||
| Revenue | $ | 17,271.9 | $ | 15,689.1 | $ | 14,692.2 |
Revenue by geographic market:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Americas: | |||||||||||||||||
| North America | $ | 9,592.2 | $ | 8,650.2 | $ | 7,951.0 | |||||||||||
| Latin America | 540.2 | 433.7 | 386.8 | ||||||||||||||
| EMEA: | |||||||||||||||||
| Europe | 4,804.9 | 4,439.0 | 4,266.9 | ||||||||||||||
| Middle East and Africa | 409.2 | 319.2 | 309.6 | ||||||||||||||
| Asia-Pacific | 1,925.4 | 1,847.0 | 1,777.9 | ||||||||||||||
| Revenue | $ | 17,271.9 | $ | 15,689.1 | $ | 14,692.2 |
The Americas is comprised of North America, which includes the United States, Canada and Puerto Rico, and Latin America, which includes South America and Mexico. EMEA is comprised of Europe, the Middle East and Africa. Asia-Pacific includes Australia, Greater China, India, Japan, Korea, New Zealand, Singapore and other Asian countries. Revenue in the United States for 2025, 2024 and 2023 was $9,102.5 million, $8,186.5 million and $7,471.6 million, respectively.
Contract balances
Contract balances include work in process and customer advances that primarily consist of advance billings to customers in accordance with the terms of the client contracts, primarily for the reimbursement of third-party costs.
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Work in process: | |||||||||||
| Media and production costs | $ | 2,200.1 | $ | 864.0 | |||||||
| Unbilled fees and costs and contract assets | 1,208.8 | 758.2 | |||||||||
| Work in process | $ | 3,408.9 | $ | 1,622.2 | |||||||
| Customer advances | $ | 1,727.6 | $ | 1,336.1 |
There were no impairment charges to work in process recorded in 2025 or 2024.
The majority of our contracts are for periods of one year or less, with the exception of our data management contracts. For those contracts with a term of more than one year, we had approximately $497.9 million of unsatisfied performance obligations as of December 31, 2025, which will be recognized as services are performed over the remaining contractual terms through 2030.
F-17
4. Net Income per Share
Basic and diluted net income per share:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net income (loss) - Omnicom Group Inc. | $ | (54.5) | $ | 1,480.6 | $ | 1,391.4 | |||||||||||
| Weighted average shares (millions): | |||||||||||||||||
| Basic | 204.9 | 196.4 | 199.4 | ||||||||||||||
| Dilutive stock options and restricted shares | — | 2.2 | 2.0 | ||||||||||||||
| Diluted* | 204.9 | 198.6 | 201.4 | ||||||||||||||
| Anti-dilutive stock options and restricted shares (millions): | 6.0 | — | — | ||||||||||||||
| Net income (loss) per share - Omnicom Group Inc.: | |||||||||||||||||
| Basic | $(0.27) | $7.54 | $6.98 | ||||||||||||||
| Diluted | $(0.27) | $7.46 | $6.91 |
*The number of shares excluded from diluted shares outstanding were 1.2 million for the year ended December 31, 2025, because the effect would have been anti-dilutive. There were no shares excluded from diluted shares outstanding for the years ended December 31, 2024 or December 31, 2023.
The increase in our weighted average shares in 2025 is a result of the inclusion of one month of outstanding shares issued in connection with the acquisition of IPG, see Notes 1 and 5 to the consolidated financial statements.
5. Business Combinations
Overview of Acquisition Strategy
Our acquisition strategy focuses on building expertise within an assembled workforce to enhance our strategic business platforms and agency brands, including expanding geographic reach and service offerings. In evaluating acquisitions, we consider factors such as specialized know-how, competitive position, client relationships, and geographic coverage, with expected benefits typically shared across multiple agencies and regions. One of the primary drivers of executing our acquisition strategy is the existence of, or the ability to expand, our existing client relationships. The expected benefits of our acquisitions are typically shared across multiple agencies and regions.
For each acquisition, we identify and separately value identifiable intangible assets using market participant assumptions to determine fair value. This approach includes consideration of similar and recent transactions, the use of discounted expected cash flow methodologies, and, when available and as appropriate, the use of comparative market multiples to supplement our analysis. Identifiable intangible assets primarily consist of customer relationships, trade names, and core technology, software tools and platforms for internal use.
General Acquisition Activity
In 2025, we completed two acquisitions that increased goodwill by $7,698.6 million, the most significant of which was the Merger with IPG, discussed below. During 2025 and 2024, we also acquired additional equity interests in certain majority-owned subsidiaries, which were accounted for as equity transactions and did not result in additional goodwill.
Certain acquisitions include contingent consideration arrangements (earn-outs) based on the future performance of the acquired businesses. Contingent consideration liabilities are measured at fair value on the acquisition date and remeasured at fair value at each reporting period until settled. As of December 31, 2025 and 2024, contingent purchase price liabilities were $214.9 million and $220.1 million, respectively, of which $95.8 million and $56.0 million, respectively, were classified as current liabilities.
Merger with IPG
Transaction Overview
On November 26, 2025, we completed the Merger with IPG (see Note 1 to the consolidated financial statements). The Merger combines complementary capabilities and service offerings and is expected to expand client opportunities and support long-term growth.
Purchase Consideration
Pursuant to the Merger Agreement, each outstanding share of IPG common stock (other than certain excluded shares) was converted into the right to receive 0.344 shares of Omnicom’s common stock and cash in lieu of fractional shares, resulting in the issuance of 124,352,188 shares of Omnicom’s common stock upon closing. Following the close of the Merger, legacy Omnicom shareholders owned approximately 60.6% of the combined company, and legacy IPG shareholders owned approximately 39.4%, on a fully diluted basis.
F-18
The total consideration paid was $8,893.5 million, consisting of primarily equity consideration of $8,891.2 million. The following table summarizes the purchase consideration:
| Fair value of shares issued to IPG shareholders1 | $ | 8,891.2 | |||
| Cash paid for fractional shares | 0.3 | ||||
| Fair value of equity awards2 | 2.0 | ||||
| Total Consideration | $ | 8,893.5 |
-
The fair value of shares issued reflects the number of IPG shares outstanding at the Closing Date multiplied by the Exchange Ratio and Omnicom’s closing share price on the Closing Date.
-
Represents the fair value of director awards that were settled as part of the closing consideration through the issuance of shares and assumed stock option awards.
Preliminary Purchase Price Allocation
The following table summarizes the preliminary fair values of the tangible and identifiable assets acquired and liabilities assumed as of the Closing Date:
| Cash and Cash equivalents | $ | 1,080.6 | Accounts payable | $ | 7,065.9 | |||||||||
| Accounts receivable | 5,753.5 | Customer advances | 715.8 | |||||||||||
| Work in process | 2,227.6 | Short-term debt | 42.4 | |||||||||||
| Assets held for sale | 267.5 | Liabilities held for sale | 106.5 | |||||||||||
| Other current Assets | 579.6 | Other current liabilities | 1,673.0 | |||||||||||
| Property and equipment | 251.6 | Long-term liabilities | 220.2 | |||||||||||
| Operating lease right-of-use assets | 597.9 | Long-term liability - operating leases | 876.4 | |||||||||||
| Equity Method Investments | 41.8 | Long-term debt | 2,764.9 | |||||||||||
| Intangible assets | 4,640.3 | Deferred tax liabilities, net | 948.7 | |||||||||||
| Other Assets | 395.0 | Non-controlling interests | 211.7 | |||||||||||
| Total Assets | $ | 15,835.4 | Redeemable non-controlling interest | 11.2 | ||||||||||
| Total Liabilities and Non-controlling interest | $ | 14,636.7 | ||||||||||||
| Fair value of net assets acquired | $ | 1,198.7 | ||||||||||||
| Goodwill | 7,694.8 | |||||||||||||
| Total Consideration | $ | 8,893.5 |
The purchase price allocation is preliminary as of December 31, 2025. The Company has not yet finalized the valuation of certain assets acquired and liabilities assumed, including identifiable intangible assets due to the period of time from the close of the acquisition to the reporting date. The purchase price allocation may be adjusted during the measurement period, which will not exceed one year from the acquisition date. Non-controlling interests represent equity interests in certain acquired subsidiaries not attributable to the Company and were measured at fair value on the acquisition date. Assets and liabilities classified as held for sale were valued at fair market value, which approximated net realizable value and are discussed further in Note 14 to the consolidated financial statements.
Goodwill primarily represents the expertise and value of the assembled workforce and other intangible benefits that do not qualify for separate recognition. Goodwill is not expected to be deductible for income tax purposes.
Identifiable Intangible Assets
The following table summarizes the preliminary allocation of purchase consideration to identifiable intangible assets acquired:
| Fair Value | Weighted-average estimated useful life | |||||||
| Trade names | $ | 792.0 | 11 years | |||||
| Customer relationships | 3,616.0 | 15 years | ||||||
| Technology and other | 232.3 | 5 years | ||||||
| Total identified intangible assets acquired | $ | 4,640.3 |
F-19
-
Trade names:** the fair value of various IPG trade names were determined by applying the relief from royalty method under the income approach. The estimated useful life was determined based on the expected life of the trade names and the cash flows anticipated over the forecast period, which ranged up to 20 years.
-
Customer relationships:** representing the fair value of future projected revenue that will be derived from services provided to existing customers of IPG and were valued using the profit contribution method under the income approach. The estimated useful life was determined by evaluating many factors, including the useful life of other similar intangible assets and historical customer turnover rates and ranged up to fifteen years.
-
Technology and other:** primarily relates to core technology and software tools and platforms for internal use and which supports, underpins and is integrated with our services offered to clients. It is not available to clients in separate fee for service arrangements. Accordingly, the Company valued the acquired technology based on the replacement cost of similar assets. The economic useful life was determined based on the technology cycle for the acquired technology, not exceeding five years.
Identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives to cost of sales and operating expenses.
Results of Operations
The following table presents the results of operations of IPG for the period from the Closing Date through December 31, 2025:
| Year Ended December 31, | |||||
| 2025 | |||||
| Revenue | $ | 1,078.7 | |||
| Operating Loss | (172.2) | ||||
| Net Loss | $ | (153.1) |
Acquisition-Related Costs
During the years ended December 31, 2025 and 2024, the Company incurred approximately $347.3 million and $14.6 million, respectively, of acquisition-related costs associated primarily with the Merger. These costs consist mainly of third-party professional fees and certain compensation-related charges and were recorded within selling, general and administrative expenses in the consolidated statements of income. The Company may incur additional acquisition-related costs in the future related to the Merger.
Supplemental Unaudited Pro Forma Information
The following unaudited pro forma combined financial information presents the consolidated results of operations as if the acquisition of IPG had occurred on January 1, 2024. The unaudited pro forma information was prepared in accordance with ASC 805. It includes adjustments for amortization of acquired intangible assets, transaction-related costs, expense adjustments related to the effects of recording assets and liabilities at fair value, and the related income tax effects. The unaudited pro forma information does not include anticipated synergies, future integration costs, or other expected benefits of the Merger.
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenue | $ | 26,480.7 | $ | 26,380.8 | |||||||
| Operating Income | 1,212.2 | 2,849.8 | |||||||||
| Net Income | $ | 425.7 | $ | 1,675.5 |
In 2025, the Company incurred approximately $347.3 million of transaction-related costs. The costs are included in selling, general and administrative costs in the consolidated income statement for the year ended December 31, 2025 and are reflected in the pro forma earnings for the year ended December 31, 2024.
Pro Forma Operating Income and Net Income for each of the years ended December 31, 2025 and 2024 reflect amortization expense of approximately $240.0 million, and amortization expense net of tax of approximately $180.2 million, primarily related to newly acquired intangible assets in connection with the Merger.
Other Acquisitions
Flywheel Acquisition
On January 2, 2024, we acquired Flywheel Digital, the digital commerce business of Ascential plc, for a net cash purchase price of approximately $845 million. The principal tangible assets and liabilities acquired were net working capital, and the intangible assets acquired totaled $182.6 million, primarily consisting of customer relationships, intellectual property, and trade names. Goodwill of $672.5 million was recorded, of which the amount attributable to the U.S. operations of Flywheel Digital will be deductible for U.S. income tax purposes. The effect of the acquisition on our financial statements was not material to our financial condition or results of operations.
F-20
6. Goodwill and Intangible Assets
Change in goodwill:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| January 1 | $ | 10,677.4 | $ | 10,082.3 | |||||||
| Acquisitions | 7,698.6 | 761.2 | |||||||||
| Noncontrolling interests in acquired businesses | 2.7 | 22.8 | |||||||||
| Contingent purchase price obligations of acquired businesses | 2.6 | — | |||||||||
| Planned dispositions (see Note 14) | (66.2) | (6.0) | |||||||||
| Foreign currency translation | 326.3 | (182.9) | |||||||||
| December 31 | $ | 18,641.4 | $ | 10,677.4 |
The increase in goodwill in 2025 and 2024 is primarily attributable to the acquisitions of IPG and Flywheel Digital, respectively. There were no goodwill impairment losses recorded in 2025 or 2024, and there are no accumulated goodwill impairment losses.
Intangible assets:
| December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||||||||||||
| Trade Names | 929.9 | (76.5) | 853.4 | 153.7 | (73.1) | 80.6 | |||||||||||||||||||||||||||||
| Customer Relationships | 4,389.5 | (504.1) | 3,885.4 | 813.7 | (484.0) | 329.7 | |||||||||||||||||||||||||||||
| Technology and other | 409.2 | (79.6) | 329.6 | 128.7 | (48.9) | 79.8 | |||||||||||||||||||||||||||||
| Acquired intangible assets and internally developed strategic platform assets | $ | 5,728.6 | $ | (660.2) | $ | 5,068.4 | $ | 1,096.1 | $ | (606.0) | $ | 490.1 | |||||||||||||||||||||||
| Other purchased and internally developed software | 275.6 | (243.0) | 32.6 | 258.3 | (226.3) | 32.0 | |||||||||||||||||||||||||||||
| Intangible Assets | $ | 6,004.2 | $ | (903.2) | $ | 5,101.0 | $ | 1,354.4 | $ | (832.3) | $ | 522.1 |
The increase in the gross carrying value of acquired intangible assets for 2025 and 2024 was primarily related to the $4,640.3 million and $182.6 million of combined customer relationships, intellectual property and trade names for IPG and Flywheel Digital, respectively.
Amortization of intangible assets:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Acquired intangible assets and internally developed strategic platform assets | $ | 115.8 | $ | 87.5 | $ | 61.8 | |||||||||||
| Other purchased and internally developed software | 15.8 | 18.1 | 18.5 | ||||||||||||||
| Amortization Expense | $ | 131.6 | $ | 105.6 | $ | 80.3 |
Estimated amortization expense at December 31, 2025:
| 2026 | $ | 383.1 | ||||||
| 2027 | 382.6 | |||||||
| 2028 | 378.6 | |||||||
| 2029 | 371.6 | |||||||
| 2030 | 358.8 |
F-21
7. Debt
IPG Senior Note****s Exchange Offers
In connection with the Merger, Omnicom commenced offers to exchange all outstanding notes of certain series issued by IPG for up to $2.95 billion in aggregate principal amount of new notes issued by Omnicom. As a result of these exchange offers, which were completed on December 2, 2025, approximately 94% of IPG's outstanding senior notes were exchanged for $2.76 billion in aggregate principal amount of new notes issued by Omnicom (the “Exchange Senior Notes”). The only cash exchanged was related to the consent payment of $2.7 million and the remaining debt exchange is presented as a non-cash financing activity. The remainder of the acquired IPG senior notes, representing approximately $185.0 million in aggregate principal amount (the “IPG Senior Notes”), that were not exchanged pursuant to the exchange offers remain obligations of IPG and will continue to be subject to their existing terms, as modified by the amendments made in the exchange offers and consent solicitations. Collectively, the aggregate principal amount of the Exchange Senior Notes and IPG Senior Notes is $2.95 billion. As of December 31, 2025, the unamortized discount related to the fair value adjustment of the Exchange Senior Notes and IPG Senior Notes was $183.9 million. Consent payments in connection with the exchange offers included $2.7 million capitalized as debt issuance costs and $13.2 million recorded as interest expense. Interest on the Exchange Senior Notes and IPG Senior Notes will be payable semi-annually in arrears.
Credit Facility
On November 26, 2025, the Company entered into a Fourth Amended and Restated Five Year Credit Agreement (the “Credit Agreement Amendment”), which amended and restated the Company’s Third Amended and Restated Five Year Credit Agreement, dated as of June 2, 2023. The Credit Agreement Amendment, among other things, (i) increased the unsecured multi-currency revolving credit facility (the “Credit Facility”) amount from $2.5 billion to $3.5 billion, (ii) reduced the facility fee and applicable margin, (iii) extended the termination date (with respect to the available commitments of the extending lenders) from June 2, 2028 to November 26, 2030 and (iv) designated Omnicom as sole borrower under the Credit Facility.
Our $3.5 billion Credit Facility terminates on November 26, 2030. We can issue up to $3 billion of U.S. Dollar denominated commercial paper under a U.S. commercial paper program, and issue up to the equivalent of $500 million in British Pounds, Euro or U.S. Dollars under a Euro commercial paper program. In addition, certain of our international subsidiaries have uncommitted credit lines that are guaranteed by Omnicom aggregating $1,131.1 million. All of these facilities provide additional liquidity sources for operating capital and general corporate purposes. We did not issue commercial paper in 2025 or 2024. At both December 31, 2025 and 2024, there were no outstanding borrowings under the Credit Facility and no outstanding commercial paper issuances.
The Credit Facility has a financial covenant that requires us to maintain a Leverage Ratio (as defined in the Credit Facility) of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than 3.5 times for the most recently ended 12-month period. At December 31, 2025, we were in compliance with this covenant as our Leverage Ratio was 2.5 times. The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.
Short-Term Debt
Short-term debt of $62.0 million and $21.3 million at December 31, 2025 and 2024, respectively, represented bank overdrafts and short-term borrowings primarily of our international subsidiaries. The weighted average interest rate was 11.5% and 11.4%, respectively. Due to the short-term nature of this debt, carrying value approximates fair value.
F-22
Long-Term Debt
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| 3.600% Senior Notes due 2026 | 1,400.0 | 1,400.0 | |||||||||
| €500 Million 0.80% Senior Notes due 2027 | 588.7 | 520.3 | |||||||||
| 4.650% Senior Notes (Exchange/IPG) due 2028 | 500.0 | — | |||||||||
| 2.450% Senior Notes due 2030 | 600.0 | 600.0 | |||||||||
| 4.200% Senior Notes due 2030 | 600.0 | 600.0 | |||||||||
| 4.750% Senior Notes (Exchange/IPG) due 2030 | 650.0 | — | |||||||||
| €500 Million 1.40% Senior Notes due 2031 | 588.7 | 520.3 | |||||||||
| 2.400% Senior Notes (Exchange/IPG) due 2031 | 500.0 | — | |||||||||
| 2.600% Senior Notes due 2031 | 800.0 | 800.0 | |||||||||
| €600 Million 3.70% Senior Notes due 2032 | 706.4 | 624.5 | |||||||||
| £325 Million 2.25% Senior Notes due 2033 | 439.1 | 407.9 | |||||||||
| 5.375% Senior Notes (Exchange/IPG) due 2033 | 300.0 | — | |||||||||
| 5.300% Senior Notes due 2034 | 600.0 | 600.0 | |||||||||
| 3.375% Senior Notes (Exchange/IPG) 2041 | 500.0 | — | |||||||||
| 5.400% Senior Notes (Exchange/IPG) 2048 | 500.0 | — | |||||||||
| Long-Term Debt, Gross | 9,272.9 | 6,073.0 | |||||||||
| Unamortized discount1 | (192.3) | (9.5) | |||||||||
| Unamortized debt issuance costs | (25.9) | (27.4) | |||||||||
| Unamortized deferred gain (loss) from settlement of interest rate swaps | (0.2) | (0.8) | |||||||||
| Long-Term Debt, including current portion | 9,054.5 | 6,035.3 | |||||||||
| Current portion | (1,399.5) | — | |||||||||
| Long-Term Debt | $ | 7,655.0 | $ | 6,035.3 |
- The unamortized discount includes the fair value adjustment to principal for debt acquired in the Merger and those exchanged. The total fair value adjustment recorded as discount to debt acquired was $185.1 million and will be amortized over the remaining term of the respective debt.
Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc. (OCI), are co-obligors under the 3.60% Senior Notes due 2026. These notes are a joint and several liability of Omnicom and OCI, and Omnicom unconditionally guarantees OCI’s obligations with respect to the notes. OCI provides funding for our operations by incurring debt and lending the proceeds to our operating subsidiaries. OCI’s assets primarily consist of cash and cash equivalents and intercompany loans made to our operating subsidiaries, and the related interest receivable. There are no restrictions on the ability of OCI or Omnicom to obtain funds from our subsidiaries through dividends, loans or advances. Such notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.
Omnicom and OCI have, jointly and severally, fully and unconditionally guaranteed the obligations of OFH with respect to the €500 million 0.80% Senior Notes due 2027 and the €500 million 1.40% Senior Notes due 2031, and Omnicom has fully and unconditionally guaranteed the obligations of OFH with respect the €600 million 3.70% Senior Notes due 2032, collectively the Euro Notes. OFH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, providing funding for various operating companies in Europe, Australia and other countries in the Asia-Pacific region. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom, OCI or OFH to obtain funds from their subsidiaries through dividends, loans or advances. The Euro Notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OFH and each of Omnicom and OCI, as applicable.
Omnicom has fully and unconditionally guaranteed the obligations of Omnicom Capital Holdings plc, a U.K.-based wholly owned subsidiary of Omnicom (OCH), with respect to the £325 million 2.25% Senior Notes due 2033 (“Sterling Notes”). OCH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, providing funding for various operating companies in EMEA, Australia and other countries in the Asia-Pacific region. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom or OCH to obtain funds from their subsidiaries through dividends, loans or advances. The Sterling Notes and the related guarantee are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OCH and Omnicom, respectively.
F-23
On August 2, 2024, Omnicom issued $600 million 5.30% Senior Notes due 2034. The net proceeds from the issuance after deducting the underwriting discount and offering expenses, were $592.4 million. The net proceeds from the issuance, along with available cash, were used to fund the repayment of our $750 million 3.65% Senior Notes on November 1, 2024.
On March 6, 2024, Omnicom Finance Holdings plc, or OFH, a U.K.-based wholly owned subsidiary of Omnicom, issued €600 million 3.70% Senior Notes due 2032. The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $643.1 million and were used for general corporate purposes, including working capital expenditures, acquisitions and repurchases of our common stock.
Our 2.45% Senior Notes due 2030, 4.20% Senior Notes due 2030, 2.60% Senior Notes due 2031 and 5.30% Senior Notes due 2034 are senior unsecured obligations of Omnicom that rank equal in right of payment with all existing and future unsecured senior indebtedness.
Long-term debt maturities at December 31, 2025:
| 2026 | $ | 1,400.0 | ||||||
| 2027 | 588.7 | |||||||
| 2028 | 500.0 | |||||||
| 2029 | — | |||||||
| 2030 | 1,850.0 | |||||||
| Thereafter | 4,934.2 | |||||||
| Long-Term Debt, Gross | $ | 9,272.9 |
Interest Expense
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Long-term debt | $ | 209.6 | $ | 194.9 | $ | 165.1 | ||||||||||||||
| Fees | 4.3 | 4.4 | 4.8 | |||||||||||||||||
| Pension and other interest | 53.7 | 50.3 | 50.5 | |||||||||||||||||
| Interest rate and cross currency swaps | (4.2) | (1.7) | (1.9) | |||||||||||||||||
| Interest Expense | $ | 263.4 | $ | 247.9 | $ | 218.5 |
8. Segment Reporting
Our branded agency networks operate in the advertising, marketing and corporate communications services industry, and are organized into agency networks, virtual client networks, regional reporting units and operating groups or connected capabilities. Our networks, virtual client networks and agencies increasingly share clients and provide clients with integrated services. The main economic components of each agency are employee compensation and related costs, direct service costs and occupancy and other costs which include rent and occupancy costs, technology costs and overhead expenses. Therefore, given these similarities, we aggregate our four operating segments, which are our agency networks, into one reporting segment. The chief operating decision maker, or CODM, reviews segment operating income for each network and allocates resources accordingly. Beginning in December of 2025, we integrated the newly acquired IPG businesses into our existing four networks and the effect of one month of IPG’s operations were not significant to the networks operations. The CODM includes Omnicom’s chief executive officer, chief financial officer and chief operating officer.
Segment operating results include allocations of costs, including information technology, and other shared services costs, that are allocated using metrics designed to correlate the allocation with consumption.
F-24
Segment revenue, segment operating expenses and segment operating income of our operating segments:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Revenue | $ | 17,271.9 | $ | 15,689.1 | $ | 14,692.2 | |||||||||||
| Segment Operating Expenses: | |||||||||||||||||
| Salary and service costs: | |||||||||||||||||
| Salary and related costs | $ | 7,777.9 | $ | 7,441.4 | $ | 7,212.8 | |||||||||||
| Third-party service costs | 4,113.7 | 3,348.6 | 2,917.9 | ||||||||||||||
| Third-party incidental costs | 752.4 | 642.5 | 570.5 | ||||||||||||||
| Total salary and service costs | 12,644.0 | 11,432.5 | 10,701.2 | ||||||||||||||
| Occupancy and other costs | 1,366.7 | 1,274.4 | 1,168.8 | ||||||||||||||
| Segment cost of services | 14,010.7 | 12,706.9 | 11,870.0 | ||||||||||||||
| Selling, general and administrative expenses | 398.4 | 393.5 | 393.7 | ||||||||||||||
| Depreciation and amortization | 276.7 | 241.7 | 211.1 | ||||||||||||||
| Total segment operating expenses | 14,685.8 | 13,342.1 | 12,474.8 | ||||||||||||||
| Segment Operating Income | $ | 2,586.1 | $ | 2,347.0 | $ | 2,217.4 | |||||||||||
Reconciliation of segment operating income to operating income and income before income taxes and income from equity method investments:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Segment Operating Income | $ | 2,586.1 | $ | 2,347.0 | $ | 2,217.4 | |||||||||||
| Severance and repositioning costs | 1,247.0 | 57.8 | 191.5 | ||||||||||||||
| Acquisition-related costs | 347.3 | 14.6 | — | ||||||||||||||
| Loss (gain) on assets held for sale and on disposition of subsidiary | 547.1 | — | (78.8) | ||||||||||||||
| Operating Income | $ | 444.7 | $ | 2,274.6 | $ | 2,104.7 | |||||||||||
| Interest Expense | 263.4 | 247.9 | 218.5 | ||||||||||||||
| Interest Income | 96.9 | 100.9 | 106.7 | ||||||||||||||
| Income Before Income Taxes and Income From Equity Method Investments | $ | 278.2 | $ | 2,127.6 | $ | 1,992.9 |
We reconcile segment operating income to income before income taxes and income from equity method investments as income tax expense is reviewed at the consolidated level and the segment managers are not held accountable for performance of net income.
The agency networks' regional reporting units comprise three principal regions: the Americas, EMEA and Asia-Pacific. The regional reporting units monitor the performance and are responsible for the agencies in their region. Agencies within the regional reporting units serve similar clients in similar industries and in many cases the same clients and have similar economic characteristics.
Revenue and long-lived assets and goodwill by geographic region:
| Americas | EMEA | Asia-Pacific | |||||||||||||||
| December 31, 2025 | |||||||||||||||||
| Revenue | $ | 10,132.4 | $ | 5,214.1 | $ | 1,925.4 | |||||||||||
| Long-lived assets and goodwill | 15,935.8 | 4,297.0 | 798.7 | ||||||||||||||
| December 31, 2024 | |||||||||||||||||
| Revenue | $ | 9,083.9 | $ | 4,758.2 | $ | 1,847.0 | |||||||||||
| Long-lived assets and goodwill | 8,166.6 | 3,693.9 | 685.2 | ||||||||||||||
| December 31, 2023 | |||||||||||||||||
| Revenue | $ | 8,337.8 | $ | 4,576.5 | $ | 1,777.9 | |||||||||||
| Long-lived assets and goodwill | 7,749.5 | 3,523.3 | 730.8 |
9. Equity Method Investments
Income from our equity method investments was $7.7 million, $6.9 million, and $5.2 million in 2025 2024, and 2023, respectively. At December 31, 2025 and 2024, our proportionate share in the net assets of the equity method investments was $53.3 million and $12.7 million, respectively. Equity method investments are not material to our results of operations or financial condition; therefore, summarized financial information is not required to be presented.
F-25
10. Share-Based Compensation Plans
Share-based incentive awards are granted to employees under the 2021 Incentive Award Plan, or the 2021 Plan, that was approved by the shareholders. The 2021 Plan is administered by the Compensation Committee of the Board of Directors, or the Compensation Committee. Awards include stock options, restricted stock and other performance-based stock awards. The maximum number of shares of common stock that can be granted under the 2021 Plan is 14.7 million shares plus any shares awarded under the 2021 Plan and any prior plan that have been forfeited or have expired. All awards reduce the number of shares available for grant on a one-for-one basis. The terms of each award and the exercise date are determined by the Compensation Committee. The 2021 Plan does not permit the holder of an award to elect cash settlement under any circumstances. At December 31, 2025, there were 1,086,325 shares available for grant under the 2021 Plan and the plan was effectively frozen for new grants upon approval of the 2026 Incentive Award Plan.
On January 28, 2026, our shareholders approved the 2026 Incentive Award Plan (the “Plan”). The Plan is administered by a committee, which may be the Board of Directors (the “Board”) or a committee appointed by the Board such as our Compensation Committee (collectively, the “Committee”). Until otherwise determined by the Board, the Committee consists solely of two or more Board members who are Non-Employee Directors (as defined in Rule 16b-3(b)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and “independent directors” under the rules of the New York Stock Exchange. The Board or the Committee may delegate to a committee of one or more Board members or one or more Omnicom officers the authority to grant or amend awards under the Plan to participants other than (i) senior Omnicom executives who are subject to Section 16 of the Exchange Act, and (ii) Omnicom officers or directors to whom the authority to grant or amend awards under the Plan has been delegated. Awards include stock options, restricted stock and other performance-based stock awards. The maximum number of shares of common stock that may be subject to awards granted under the Plan is 27.4 million, less one share for each share subject to an award granted under a prior plan after November 26, 2025.
Share-based compensation expense in 2025, 2024 and 2023 was $100.8 million, $91.4 million and $84.8 million, respectively. At December 31, 2025, unamortized share-based compensation that will be expensed over the next five years is $304.3 million.
We recognize a tax benefit in income tax expense and record a deferred tax asset for the share-based compensation expense recognized for financial reporting purposes that has not been deducted on our income tax return. Excess tax benefits and deficiencies represent the difference between the actual compensation deduction for tax purposes, which is calculated as the difference between the grant date price of the award, and the price of our common stock on the vesting or exercise date. Upon vesting of restricted stock awards or exercise of stock options, any excess tax benefit or deficiency related to share-based compensation is recorded in results of operations, as a component of income tax expense. In 2025 and 2024, we recognized a tax benefit of $0.5 million and $12.3 million, respectively.
Stock Options
The exercise price of stock option awards cannot be less than 100% of the market price of our common stock on the grant date and have a maximum contractual life of 10 years.
Stock option activity:
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | |||||||||||||||||||||||||||||||||
| January 1 | 3,085,287 | $71.65 | 4,564,575 | $71.81 | 5,127,625 | $72.90 | ||||||||||||||||||||||||||||||||
| Granted | 6,001,906 | 77.89 | — | — | ||||||||||||||||||||||||||||||||||
| Exercised | (275,900) | 72.47 | (1,297,238) | 72.47 | (413,750) | 84.94 | ||||||||||||||||||||||||||||||||
| Forfeited | (69,085) | 72.18 | (182,050) | 69.80 | (149,300) | 72.99 | ||||||||||||||||||||||||||||||||
| IPG options converted | 86,000 | 67.82 | — | — | ||||||||||||||||||||||||||||||||||
| December 31 | 8,828,208 | $75.82 | 3,085,287 | $71.65 | 4,564,575 | $71.81 | ||||||||||||||||||||||||||||||||
| Exercisable December 31 | 2,742,290 | $73.30 | 2,302,762 | $72.47 | — |
F-26
Options outstanding and exercisable:
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||||||||||||||||||
| Exercise Price Range | Shares | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | |||||||||||||||||||||||||||||||||||||||
| $60.00 | to | $70.00 | 843,750 | 6.4 years | $69.09 | 169,000 | $68.51 | |||||||||||||||||||||||||||||||||||||
| $71.00 | to | $79.00 | 6,932,292 | 6.2 years | 75.95 | 2,573,290 | 73.61 | |||||||||||||||||||||||||||||||||||||
| $80.00 | to | $89.00 | 1,052,166 | 6.2 years | 80.39 | — | 0.00 | |||||||||||||||||||||||||||||||||||||
| 8,828,208 | $75.82 | 2,742,290 | $73.30 |
The grant date fair value of $16.48 for the 2025 option awards was determined using the Black-Scholes option valuation model. The assumptions, without adjusting for forfeitures and lack of liquidity, were: an expected life ranging from 5.0 years to 5.3 years, risk free interest rate ranging from 3.6% to 4.1%, expected volatility ranging from 24.8% to 28.9%, and dividend yield ranging from 3.5% to 4.2%.
Restricted Stock
Restricted stock activity:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| January 1 | 3,151,514 | 2,802,297 | 3,010,343 | ||||||||||||||
| Granted | 1,503,181 | 1,459,525 | 1,010,575 | ||||||||||||||
| Vested | (954,745) | (878,247) | (915,245) | ||||||||||||||
| Forfeited | (311,239) | (232,061) | (303,376) | ||||||||||||||
| December 31 | 3,388,711 | 3,151,514 | 2,802,297 | ||||||||||||||
| Weighted average grant date fair value of shares granted in the period | $66.38 | $81.39 | $84.33 | ||||||||||||||
| Weighted average grant date fair value at December 31 | $69.50 | $71.59 | $64.84 |
Generally, restricted shares vest ratably over five years from the grant date provided the employee remains employed by us. Restricted shares do not pay a dividend, and may not be sold, transferred, pledged or otherwise encumbered until the forfeiture restrictions lapse. Under most circumstances, the employee forfeits the shares if employment ceases prior to the end of the restriction period.
Performance Restricted Stock Units
The Compensation Committee grants certain employees performance restricted stock units, or PRSU. Each PRSU represents the right to receive one share of common stock on vesting. The ultimate number of PRSUs received by the employee depends on the Company's average return on equity over a three-year period compared to the average return on equity of a peer group of principal competitors over the same period. The PRSUs vest three years from the grant date. The PRSUs have a service and performance vesting condition and compensation expense is recognized on a graded-vesting basis. Over the performance period, compensation expense is adjusted upward or downward based on our estimate of the probability of achieving the performance target for the portion of the awards subject to the performance vesting condition. We have assumed that all PRSUs will vest.
PRSU activity:
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||||||||||||
| January 1 | 574,184 | $86.63 | 563,036 | $81.11 | 570,235 | $71.19 | ||||||||||||||||||||||||||||||||
| Granted | — | 177,059 | 93.19 | 178,998 | 92.18 | |||||||||||||||||||||||||||||||||
| Distributed | (218,127) | 76.79 | (165,911) | 74.89 | (186,197) | 61.36 | ||||||||||||||||||||||||||||||||
| December 31 | 356,057 | $92.67 | 574,184 | $86.63 | 563,036 | $81.11 |
Employee Stock Purchase Plan
The employee stock purchase plan, or ESPP, enables employees to purchase our common stock through payroll deductions over each plan quarter at 95% of the market price on the last trading day of the plan quarter. Purchases are limited to 10% of eligible compensation as defined by the Employee Retirement Income Security Act of 1974, or ERISA. In 2025, 2024 and 2023,
F-27
employees purchased 68,541 shares, 56,473 shares and 65,644 shares, respectively. All shares purchased were issued from treasury stock, for which we received $5.0 million, $5.1 million and $5.3 million, respectively. At December 31, 2025, there were 8,171,126 shares available under the ESPP.
11. Income Taxes
Income before income taxes:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic | $ | 319.0 | $ | 940.0 | $ | 696.0 | |||||||||||
| International | (40.8) | 1,187.6 | 1,296.9 | ||||||||||||||
| Income Before Income Taxes | $ | 278.2 | $ | 2,127.6 | $ | 1,992.9 |
Income tax expense (benefit):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| U.S. federal | $ | 103.0 | $ | 183.8 | $ | 154.2 | |||||||||||
| U.S. state and local | 26.9 | 46.6 | 34.8 | ||||||||||||||
| International | 171.5 | 309.9 | 330.8 | ||||||||||||||
| Total Current Income Tax Expense | 301.4 | 540.3 | 519.8 | ||||||||||||||
| Deferred: | |||||||||||||||||
| U.S. federal | (19.0) | 17.5 | 10.9 | ||||||||||||||
| U.S. state and local | (10.9) | 1.3 | 1.3 | ||||||||||||||
| International | (29.3) | 1.4 | (7.1) | ||||||||||||||
| Total Deferred Tax Expense (Benefit) | (59.2) | 20.2 | 5.1 | ||||||||||||||
| Total Income Tax Expense | $ | 242.2 | $ | 560.5 | $ | 524.9 | |||||||||||
| Total Income Tax Expense: | |||||||||||||||||
| U.S. federal | 84.0 | 201.3 | 165.1 | ||||||||||||||
| U.S. state and local | 16.0 | 47.9 | 36.1 | ||||||||||||||
| International | 142.2 | 311.3 | 323.7 | ||||||||||||||
| Total Income Tax Expense | $ | 242.2 | $ | 560.5 | $ | 524.9 |
F-28
On January 1, 2025, we prospectively adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), that requires, greater disaggregation of information in the rate reconciliation.
Reconciliation from the statutory U.S. federal income tax rate to effective tax rate for 2025:
| Year Ended December 31, | ||||||||||||||
| 2025 | ||||||||||||||
| Statutory U.S. federal income tax rate | $ | 58.4 | 21.0 | % | ||||||||||
| Domestic - Federal | ||||||||||||||
| Tax credits | (6.5) | (2.3) | % | |||||||||||
| Nontaxable and nondeductible items | ||||||||||||||
| Nondeductible transaction costs | 49.0 | 17.6 | % | |||||||||||
| Nontaxable investment income | (42.1) | (15.1) | % | |||||||||||
| Other | 23.8 | 8.6 | % | |||||||||||
| Cross-border taxes, net of foreign tax credit | (0.2) | (0.1) | % | |||||||||||
| U.S. state and local income taxes, net of U.S. federal income tax benefit | 7.0 | 2.5 | % | |||||||||||
| Impact of foreign operations: | ||||||||||||||
| Australia - Statutory rate differential | 5.1 | 1.8 | % | |||||||||||
| Australia - Nondeductible expenses | 1.4 | 0.5 | % | |||||||||||
| Germany - Statutory rate differential | (2.9) | (1.0) | % | |||||||||||
| Germany - Nondeductible expenses | 12.4 | 4.5 | % | |||||||||||
| Germany - Other | 6.5 | 2.3 | % | |||||||||||
| Malta - Investment income | 63.5 | 22.8 | % | |||||||||||
| Malta - Reduced rate due to imputation system | (63.4) | (22.8) | % | |||||||||||
| United Kingdom - Statutory rate differential | 7.6 | 2.7 | % | |||||||||||
| United Kingdom - Nondeductible expenses | 25.8 | 9.3 | % | |||||||||||
| Other | 94.5 | 34.0 | % | |||||||||||
| Changes in unrecognized tax benefits, net | 2.3 | 0.8 | % | |||||||||||
| Change in valuation allowance | — | — | % | |||||||||||
| Effective tax rate | $ | 242.2 | 87.1 | % |
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Statutory U.S. federal income tax rate | 21.0 | % | 21.0 | % | |||||||
| U.S. state and local income taxes, net of U.S. federal income tax benefit | 1.7 | % | 1.4 | % | |||||||
| Total impact of foreign operations | 3.8 | % | 3.9 | % | |||||||
| Other | (0.2) | % | — | % | |||||||
| Effective tax rate | 26.3 | % | 26.3 | % |
Our effective tax rate for 2025 increased year-over-year to 87.1%. The effective tax rate for 2025 was unfavorably impacted by the lower tax benefit associated with the non-deductibility in certain jurisdictions of severance and repositioning charges, loss on disposition of subsidiaries and acquisition-related costs of the Merger.
Numerous foreign jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion, or Pillar Two, model rules issued by the Organization for Economic Co-operation and Development. A minimum effective tax rate of 15% would apply to multinational companies with consolidated revenue above €750 million.
Under the Pillar Two rules, a company is required to determine a combined effective tax rate for all entities located in a jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. We are continuing to monitor Pillar Two legislative developments and the effects of Pillar Two on our business, such as the recent statement of understanding released by the Group of Seven (G7) of a potential “side-by-side system” approach to the Pillar Two framework, which would exclude U.S. parented groups from certain
F-29
Pillar Two provisions in recognition of existing U.S. minimum tax rules. The provisions effective in 2025 do not have a materially adverse impact on our results of operations, financial position, or cash flows.
On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. The legislation does not have a material impact on our financial statements.
The Tax Cuts and Jobs Act of 2017, or the Tax Act, imposed a one-time tax, the transition tax, on the accumulated earnings of foreign subsidiaries. At December 31, 2025 and 2024, the remaining transition tax liability was $6.4 million and $41.2 million, respectively. The transition tax is expected to be fully paid in 2026. The Tax Act also implemented a territorial tax system that allows us to repatriate earnings of our foreign subsidiaries without incurring additional U.S. tax by providing a 100% dividend exemption. While a territorial tax system limits U.S. federal income tax to domestic source income, foreign source income is subject to tax in the appropriate foreign jurisdiction at the local rate, which in certain jurisdictions may be higher than the U.S. federal statutory income tax rate of 21%. Therefore, the foreign tax rate differential will cause our effective tax rate to be higher than the U.S. federal statutory income tax rate.
We have elected to account for any tax on the global intangible low-taxed income, or GILTI, in the period in which it is incurred. We provided $2.8 million and $5.5 million in 2025 and 2024, respectively, for tax impact of GILTI.
Deferred tax assets and liabilities and balance sheet classification:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Compensation | $ | 237.6 | $ | 136.1 | |||||||
| Tax loss and credit carryforwards | 292.5 | 78.2 | |||||||||
| Basis differences from acquisitions | 164.2 | 53.2 | |||||||||
| Operating lease liability | 276.9 | 160.8 | |||||||||
| Capitalized research and development expenditures | 181.2 | 106.8 | |||||||||
| Other | 35.9 | (44.4) | |||||||||
| Deferred tax assets | 1,188.3 | 490.7 | |||||||||
| Valuation allowance | (281.9) | (17.0) | |||||||||
| Deferred tax assets, net | $ | 906.4 | $ | 473.7 | |||||||
| Deferred tax liabilities: | |||||||||||
| Goodwill and intangible assets | $ | 1,866.1 | $ | 707.5 | |||||||
| Basis difference from short-term assets and liabilities | 0.9 | 8.7 | |||||||||
| ROU assets - Operating lease | 2.0 | 124.5 | |||||||||
| Unremitted foreign earnings | 148.6 | 44.1 | |||||||||
| Basis differences from investments | 37.7 | 5.2 | |||||||||
| Deferred tax liabilities | $ | 2,055.3 | $ | 890.0 | |||||||
| Long-term deferred tax assets | $ | 300.5 | $ | 75.5 | |||||||
| Long-term deferred tax liabilities | $ | 1,449.4 | $ | 491.8 |
The increase in our deferred tax assets and liabilities in 2025 relates primarily to the Merger. We have concluded that it is more likely than not that we will be able to realize our net deferred tax assets in future periods because results of future operations are expected to generate sufficient taxable income. At December 31, 2025 and 2024, the valuation allowance of $281.9 million and $17.0 million, respectively, relates to tax losses and tax credit carryforwards in the U.S. and in international jurisdictions. The change in valuation allowance between 2024 an 2025 is primarily related to deferred tax assets acquired as part of the IPG Merger. Tax loss and credit carryforwards for which there is no valuation allowance are available for periods ranging from 2026 to 2045, which is longer than the forecasted utilization of such carryforwards.
F-30
Reconciliation of unrecognized tax benefits:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| January 1 | $ | 181.5 | $ | 167.8 | |||||||
| Additions: | |||||||||||
| Current year tax positions | 4.4 | 15.7 | |||||||||
| Prior year tax positions | 11.1 | 4.4 | |||||||||
| Positions acquired as part of IPG Merger | 294.6 | — | |||||||||
| Reduction of prior year tax positions | (47.4) | (2.5) | |||||||||
| Settlements | (0.8) | (2.6) | |||||||||
| Foreign currency translation | 0.7 | (1.3) | |||||||||
| December 31 | $ | 444.1 | $ | 181.5 |
Substantially all the liability for uncertain tax positions is recorded in long-term liabilities. At December 31, 2025 and 2024, approximately $426.9 million and $175.1 million, respectively, of the liability for uncertain tax positions would affect our effective tax rate upon resolution of the uncertain tax positions.
Income tax expense in 2025, 2024 and 2023 includes $5.2 million, $4.4 million and $3.2 million, respectively, of interest, net of tax benefit, and penalties related to tax positions taken on our tax returns. At December 31, 2025 and 2024, accrued interest and penalties were $70.0 million and $23.5 million, respectively.
We file a consolidated U.S. federal income tax return and income tax returns in various state and local jurisdictions. Our subsidiaries file tax returns in various foreign jurisdictions. Our principal foreign jurisdictions include the U.K., France and Germany. The Internal Revenue Service has completed its examination of our U.S. federal tax returns through 2016. Tax returns in the U.K., France and Germany have been examined through 2023, 2019 and 2013, respectively.
12. Pension and Other Postemployment Benefits
Defined Contribution Plans
Our domestic and international subsidiaries provide retirement benefits for their employees primarily through defined contribution profit sharing and savings plans. Contributions to the plans vary by subsidiary and have generally been in amounts up to the maximum percentage of total eligible compensation of participating employees that is deductible for income tax purposes. Contribution expense was $110.4 million, $87.9 million and $127.9 million in 2025, 2024 and 2023, respectively.
Defined Benefit Pension Plans
Two of our U.S. businesses and several of our non-U.S. businesses sponsor noncontributory defined benefit pension plans. These plans provide benefits to employees based on formulas recognizing length of service and earnings. The U.S. plans are subject to ERISA and cover approximately 750 participants. These plans are closed to new participants and do not accrue future benefit credits. The non-U.S. plans, which include statutory plans, are not subject to ERISA and cover approximately 17,000 participants. In addition, we acquired US and international plans from IPG, the largest international plan being in the U.K. In 2023, the IPG U.K. pension plan entered into an annuity purchase contract that matches the plans future projected benefit obligations to covered participants. The annuity contract has the option to complete a “buy-out”, which would transfer all liabilities of the plan to the insurer. There was no compensation expense recorded in 2025 related to this plan. The benefit obligation at December 31, 2025 is included on our consolidated balance sheet.
We have a Senior Executive Restrictive Covenant and Retention Plan, or Senior Executive Retention Plan, for certain executive officers and senior executives selected by the Compensation Committee. In 2024, we adopted a Key Executive Restrictive Covenant and Retention Plan, or Key Executive Retention Plan, for certain key employees who are not executive officers selected by the Compensation Committee. These plans are non-qualified deferred compensation severance plans that are not subject to ERISA. These plans were adopted to secure non-competition, non-solicitation, non-disparagement and ongoing consulting services from such individuals and to strengthen the retention aspect of executive officer, senior executive or key executive compensation.
The Senior Executive Retention Plan provides annual payments to the participants or to their beneficiaries upon termination following at least seven years of service with Omnicom or its subsidiaries. A participant’s annual benefit is payable for 15 consecutive calendar years following termination, but in no event prior to age 55. The annual benefit is generally equal to the lesser of (i) the participant’s final average pay times an applicable percentage, which is based upon the executive’s years of service as an executive officer, not to exceed 35% or (ii) $1.5 million adjusted for cost-of-living, not to exceed 2.5% per year. The Senior Executive Retention Plan is not funded, and benefits are paid when due.
The Key Executive Retention Plan provides annual payments to the participants or to their beneficiaries upon termination following at least six years of service from the date of the participant’s award agreement with Omnicom or its subsidiaries. A
F-31
participant’s annual benefit is payable for 12 consecutive calendar years following termination, but in no event prior to age 55. The annual benefit is equal to the lesser of (i) the participant’s final average pay times an applicable percentage, which is based upon the employee’s years of service, not to exceed 65% or (ii) $1.0 million. The annual benefit vests 100% after six years of service from the date of the award agreement. The Key Executive Retention Plan is not funded, and benefits are paid when due.
Postemployment Arrangements
We have post employment benefits, including statutory plans in certain markets. Our significant plans primarily related to executive retirement agreements under which benefits will be paid to participants or to their beneficiaries over periods up to ten years beginning after cessation of full-time employment. Our postemployment arrangements are unfunded and benefits are paid when due.
Pension and other postemployment benefits net periodic benefit expense:
| Defined Benefit Pension Plans | Postemployment Arrangements | ||||||||||||||||||||||||||||||||||
| Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| Service cost | $ | 7.6 | $ | 1.6 | $ | 2.4 | $ | 2.2 | $ | 2.9 | $ | 3.4 | |||||||||||||||||||||||
| Interest cost | 12.2 | 8.5 | 11.1 | 5.7 | 5.9 | 5.7 | |||||||||||||||||||||||||||||
| Expected return on plan assets | (4.4) | (2.2) | (0.3) | — | — | — | |||||||||||||||||||||||||||||
| Amortization of prior service cost | 3.4 | 0.4 | 0.3 | 3.7 | 4.4 | 3.8 | |||||||||||||||||||||||||||||
| Amortization of actuarial loss | (3.8) | 0.8 | 0.7 | — | 0.2 | — | |||||||||||||||||||||||||||||
| Net Periodic Benefit Expense | $ | 15.0 | $ | 9.1 | $ | 14.2 | $ | 11.6 | $ | 13.4 | $ | 12.9 |
Included in AOCI for Defined Benefit Pension Plans at December 31, 2025 and 2024 were unrecognized costs for actuarial gains and losses and prior service cost of $37.6 million ($26.7 million net of income taxes) and $6.5 million ($4.5 million net of income taxes), respectively, that have not yet been recognized in net periodic benefit cost. The unrecognized costs for actuarial gains and losses and prior service cost included in AOCI and expected to be recognized in net periodic benefit cost in 2026 is a benefit of $3.6 million.
Included in AOCI for Postemployment Arrangements at December 31, 2025 and 2024 were unrecognized costs for actuarial gains and losses and prior service cost of $28.5 million ($20.2 million net of income taxes) and $25.3 million ($17.6 million net of income taxes), respectively, that have not yet been recognized in the net periodic benefit cost. The unrecognized costs for actuarial gains and losses and prior service cost included in AOCI and expected to be recognized in net periodic benefit cost in 2026 is $2.9 million.
Weighted average assumptions:
| Defined Benefit Pension Plans | Postemployment Arrangements | ||||||||||||||||||||||||||||||||||
| Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| Discount rate | 5.0 | % | 4.5 | % | 4.7 | % | 4.9 | % | 4.5 | % | 4.7 | % | |||||||||||||||||||||||
| Compensation increases | 3.8 | % | 3.4 | % | 2.6 | % | 3.5 | % | 3.5 | % | 3.5 | % | |||||||||||||||||||||||
| Expected return on plan assets | 5.5 | % | 2.2 | % | 1.5 | % |
The expected long-term rate of return for plan assets for the U.S. plans is based on several factors, including current and expected asset allocations, historical and expected returns on various asset classes and current and future market conditions. A total return investment approach using a mix of equities and fixed income investments maximizes the long-term return. This strategy is intended to minimize plan expense by achieving long-term returns in excess of the growth in plan liabilities over time. The discount rate used to compute net periodic benefit cost is based on yields of available high-quality bonds and reflects the expected cash flow as of the measurement date. The expected returns on plan assets and discount rates for the non-U.S. plans are based on local factors, including each plan’s investment approach, local interest rates and plan participant profiles.
Experience gains and losses and the effects of changes in actuarial assumptions are generally amortized over a period no longer than the expected average future service of active employees.
Our funding policy is to contribute amounts sufficient to meet minimum funding requirements in accordance with the applicable employee benefit and tax laws that the plans are subject to, plus such additional amounts as we may determine to be appropriate. In 2025 and 2024, we contributed $11.6 million and $10.6 million, respectively, to the defined benefit pension plans. We do not expect the contributions for 2026 to differ materially from the 2025 contributions.
F-32
Change in benefit obligation and fair value of plan assets:
| Defined Benefit Pension Plans | Postemployment Arrangements | ||||||||||||||||||||||
| Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Benefit obligation: | |||||||||||||||||||||||
| Projected Benefit Obligation, January 1 | $ | 216.0 | $ | 224.3 | $ | 126.6 | $ | 142.2 | |||||||||||||||
| Service cost | 7.6 | 1.6 | 2.2 | 2.9 | |||||||||||||||||||
| Interest cost | 12.2 | 8.5 | 5.7 | 5.9 | |||||||||||||||||||
| Amendments, curtailments and settlements | 14.9 | 16.1 | 1.4 | (0.6) | |||||||||||||||||||
| Actuarial (gain) loss | 7.3 | (23.1) | 6.5 | (12.4) | |||||||||||||||||||
| Benefits paid | (14.7) | (11.7) | (14.0) | (11.4) | |||||||||||||||||||
| Acquisition | 398.2 | — | 15.1 | — | |||||||||||||||||||
| Foreign currency translation | 13.9 | 0.3 | — | — | |||||||||||||||||||
| Projected Benefit Obligation, December 31 | $ | 655.4 | $ | 216.0 | $ | 143.5 | $ | 126.6 | |||||||||||||||
| Fair value of plan assets: | |||||||||||||||||||||||
| Fair value of plan assets, January 1 | $ | 45.9 | $ | 45.5 | $ | — | $ | — | |||||||||||||||
| Actual return on plan assets | 5.3 | 2.0 | — | — | |||||||||||||||||||
| Employer contributions | 11.6 | 10.6 | — | — | |||||||||||||||||||
| Benefits paid | (14.7) | (11.7) | — | — | |||||||||||||||||||
| Acquisition | 332.9 | — | — | — | |||||||||||||||||||
| Foreign currency translation and other | 11.2 | (0.5) | — | — | |||||||||||||||||||
| Fair value of plan assets, December 31 | $ | 392.2 | $ | 45.9 | $ | — | $ | — | |||||||||||||||
| Funded status, December 31 | $ | (263.2) | $ | (170.1) | $ | (143.5) | $ | (126.6) | |||||||||||||||
| Funded status recognized in the balance sheet: | |||||||||||||||||||||||
| Other assets | $ | 15.7 | $ | 1.5 | $ | — | $ | — | |||||||||||||||
| Other current liabilities | (23.1) | (10.7) | (13.5) | (13.5) | |||||||||||||||||||
| Long-term liabilities | (255.8) | (160.9) | (130.0) | (113.1) | |||||||||||||||||||
| Total amount recognized | $ | (263.2) | $ | (170.1) | $ | (143.5) | $ | (126.6) |
Included in the plan assets above are $312.3 million of insurance contacts that are level 3 in the fair value hierarchy that are included within the pension assets acquired as part of the IPG acquisition. The remaining assets are primarily fixed income securities or equities and are classified as level 1.
Weighted average assumptions:
| Discount rate | 5.0 | % | 5.2 | % | 4.9 | % | 5.3 | % | |||||||||||||||
| Compensation increases | 3.8 | % | 2.5 | % | 3.5 | % | 3.5 | % |
At December 31, 2025 and 2024, the accumulated benefit obligation for our defined benefit pension plans was $645.0 million and $169.1 million, respectively.
Defined benefit pension plans with benefit obligations in excess of plan assets:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Benefit obligation | $ | (622.8) | $ | (208.3) | |||||||
| Plan assets | 343.9 | 36.7 | |||||||||
| $ | (278.9) | $ | (171.6) |
F-33
At December 31, 2025, the estimated pension and other postemployment benefits expected to be paid over the next 10 years:
| Defined Benefit Pension Plans | Postemployment Arrangements | ||||||||||
| 2026 | $ | 47.8 | $ | 15.1 | |||||||
| 2027 | 40.4 | 15.5 | |||||||||
| 2028 | 45.1 | 16.0 | |||||||||
| 2029 | 46.6 | 14.9 | |||||||||
| 2030 | 48.1 | 13.1 | |||||||||
| 2031 - 2035 | 241.6 | 52.6 |
13. Severance and Repositioning Costs
Severance and repositioning costs, incurred primarily in the fourth quarter of 2025, related to actions we took following the Merger with IPG and in the first half of 2025 related to efficiency actions in our advertising and production businesses are presented as a single line item within operating expenses in the consolidated statements of income. The costs consist of severance and employee-related termination benefits, real estate repositioning costs, and other costs, including ROU assets (as defined below) and leasehold improvement impairments, contract cancellations and other costs associated with exit activities.
The following table summarizes our severance and repositioning costs for the year ended December 31, 2025. Cash items represent severance and real estate repositioning costs expected to be settled in cash, while non-cash items primarily reflect impairments and other non-cash charges recognized during the period.
| Year Ended December 31, | |||||||||||||||||
| 2025 | |||||||||||||||||
| Cash Items | Non-Cash Items | Total | |||||||||||||||
| Severance and repositioning costs: | |||||||||||||||||
| Severance | $ | 786.0 | $ | — | $ | 786.0 | |||||||||||
| Real estate repositioning | — | 380.6 | 380.6 | ||||||||||||||
| Contract terminations and other | 80.4 | — | 80.4 | ||||||||||||||
| Total severance and repositioning costs | $ | 866.4 | $ | 380.6 | $ | 1,247.0 | |||||||||||
Severance
Severance costs primarily consist of employee termination benefits, including severance payments and related payroll costs, recognized when management committed to a plan of termination and the affected employees were notified or related to a contractual or constructive obligation to employees. Accrued severance is included in Other current liabilities in the consolidated balance. The $127.4 million of severance recorded as of the third quarter of 2025, was substantially paid as of December 31, 2025. Substantially all of the severance incurred in the fourth quarter of 2025 was in other current liabilities at December 31, 2025 and is expected to be paid in the next 12 months.
Real estate repositioning
Real estate repositioning costs primarily relate to office space consolidations undertaken in connection with the integration of IPG. These costs include impairments of operating lease right-of-use assets (ROU assets), as well as write-downs of leasehold improvements and furniture, and the recognition of asset retirement obligations associated with vacated office space, along with certain other related items. Impairments and asset retirement obligations were measured based on estimated fair values using market participant assumptions, including forecasted discounted cash flows, where applicable. The operating lease payments related to the ROU asset write-downs will be paid over the remaining lease term, unless terminated earlier. Notwithstanding the early lease terminations that we may pursue, we expect the lease obligations related to the impaired ROU assets to be substantially paid in the next 3 years.
Contract cancellations and other costs
Other costs primarily include costs associated with contract exit costs, and other charges directly related to our repositioning activities and are expected to be substantially paid in the next twelve months.
Severance and repositioning costs in prior periods
In connection with our strategic initiatives, for the year ended December 31, 2024, operating expenses included $57.8 million ($42.9 million after-tax), primarily reflecting severance actions related to ongoing efficiency initiatives, including strategic agency consolidation in our smaller international markets and the launch of our centralized production strategy and which have been substantially paid as of December 31, 2025.
In connection with the transition to a flexible working environment, a hybrid model which allows for partial remote work, we took certain actions in the first quarter of 2023 to reduce and reposition our office lease portfolio. In the second quarter of 2023, as a result of our continuing efforts to increase efficiencies and relevant skill sets to meet client demands, we incurred severance charges and other exit costs associated with rebalancing our workforce and consolidating operations in certain markets. As a result,
F-34
for the year ended December 31, 2023, operating expenses included $191.5 million ($145.5 million after-tax), related to non-cash impairment charges for the ROU, assets, severance charges, and other exit costs. All severance and other costs were paid during the year ended December 31, 2023. Substantially all of the operating lease payments related to the ROU assets will be paid out through December 31, 2026.
14. Loss on Assets Held for Sale or Dispositions of Subsidiaries
During the fourth quarter of 2025, management determined that the assets and liabilities of certain businesses planned for disposition in the next twelve months, primarily within the Advertising and Execution & Support disciplines, met the criteria to be classified as held for sale. Accordingly, these businesses were recorded at net realizable value - fair value less cost to sell. The disposals do not represent a strategic shift that has or will have a major effect on our operations or financial results and therefore do not qualify for discontinued operations presentation.
We recorded impairment charges of $367.1 million to write down the disposed businesses to net realizable value and severance charges, primarily related to contractual or constructive obligations, of employees of $180.0 million during the fourth quarter of 2025. Fair value was determined using discounted cash flow analyses, supplemented by observable market inputs where available. These charges were recorded in loss on assets held for sale and disposition of subsidiaries in the consolidated statements of income.
The following table presents the major classes of assets and liabilities classified as held for sale and included in the consolidated balance sheet as of December 31, 2025. Assets and liabilities classified as held for sale are presented separately within current assets and current liabilities, respectively, in the consolidated balance sheet as of December 31, 2025. There were no assets or liabilities classified as held for sale as of December 31, 2024.
| December 31, | |||||||||||
| 2025 | |||||||||||
| Assets Held for Sale or Disposition | |||||||||||
| Accounts receivable | $ | 623.4 | |||||||||
| Work in process | 240.7 | ||||||||||
| Other current assets | 116.8 | ||||||||||
| Property and Equipment, net | 13.1 | ||||||||||
| Other assets | 18.2 | ||||||||||
| Total Assets Held for Sale or Disposition | $ | 1,012.2 | |||||||||
| Liabilities Held for Sale or Disposition | |||||||||||
| Accounts payable | $ | 669.7 | |||||||||
| Customer advances | 377.5 | ||||||||||
| Other current liabilities | 213.8 | ||||||||||
| Total Liabilities Held for Sale or Disposition | $ | 1,261.0 |
Dispositions in prior years
In April 2023, we completed the disposition of certain research businesses within our Execution & Support discipline for net cash proceeds of $180.5 million, subject to customary closing adjustments. As a result, we recorded a pretax gain of $78.8 million in connection with the transaction, which is included in gain on disposition of subsidiary in the consolidated statements of income.
The disposition did not have a material impact on our consolidated results of operations, financial position, or cash flows. Cash proceeds were classified as investing activities within the disposition of subsidiaries and other line in the consolidated statements of cash flows.
15. Supplemental Cash Flow Data
Change in operating capital:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Increase) decrease in accounts receivable | $ | 557.0 | $ | (597.1) | $ | (513.9) | |||||||||||
| (Increase) decrease in work in process and other current assets | 165.1 | (316.9) | (121.8) | ||||||||||||||
| Increase in accounts payable | 2,145.1 | 997.5 | 602.3 | ||||||||||||||
| (Decrease) in customer advances, taxes payable and other current liabilities | (2,318.9) | (229.1) | (399.6) | ||||||||||||||
| Change in other assets and liabilities, net | 163.8 | (85.6) | (29.9) | ||||||||||||||
| Increase (decrease) in operating capital | $ | 712.1 | $ | (231.2) | $ | (462.9) |
F-35
On January 1, 2025, we prospectively adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), that requires, among other things, greater disaggregation of income taxes paid disaggregated by jurisdiction.
Supplemental financial information:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Interest paid | $ | 175.7 | $ | 156.4 | $ | 162.8 | |||||||||||
| Income taxes paid: | |||||||||||||||||
| US - Federal | $ | 201.0 | |||||||||||||||
| US - State & Local | 36.6 | ||||||||||||||||
| United Kingdom | 42.2 | ||||||||||||||||
| Germany | 56.1 | ||||||||||||||||
| Other | 195.4 | ||||||||||||||||
| Total income taxes paid | $ | 531.3 | $ | 544.1 | $ | 474.3 |
Non-cash increase in lease liabilities:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating leases | $ | 1,276.2 | $ | 231.1 | |||||||
| Finance leases | $ | 35.2 | $ | 47.1 |
Non-cash increases to Shareholder’s equity related to the IPG Merger:
| Year Ended December 31, | |||||
| 2025 | |||||
| Common Stock at par value | $ | 18.6 | |||
| Additional Paid-in Capital | $ | 8,872.9 |
16. Noncontrolling Interests
Changes in the ownership interests in our less than 100% owned subsidiaries:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net income attributed to Omnicom Group Inc. | $ | (54.5) | $ | 1,480.6 | $ | 1,391.4 | |||||||||||
| Net transfers (to) from noncontrolling interests | (38.6) | (10.0) | (88.1) | ||||||||||||||
| Change from net income attributed to Omnicom Group Inc. and transfers (to) from noncontrolling interests | $ | (93.1) | $ | 1,470.6 | $ | 1,303.3 |
17. Leases and Property and Equipment
Leases
| Year Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Operating lease cost: | ||||||||||||||
| Operating lease cost | $ | 239.3 | $ | 209.6 | ||||||||||
| Variable lease cost | 23.0 | 16.5 | ||||||||||||
| Short-term lease cost | 3.9 | 3.9 | ||||||||||||
| Sublease income | (6.0) | (0.9) | ||||||||||||
| Total Operating Lease Cost | $ | 260.2 | $ | 229.1 | ||||||||||
| Finance lease cost: | ||||||||||||||
| Depreciation of ROU assets | $ | 57.3 | $ | 58.9 | ||||||||||
| Interest | 8.1 | 8.3 | ||||||||||||
| Total Finance Lease Cost | $ | 65.4 | $ | 67.2 | ||||||||||
| Total Lease Cost | $ | 325.6 | $ | 296.3 |
F-36
Future lease payments:
| December 31 | |||||||||||||||||
| Operating Leases | Finance Leases | ||||||||||||||||
| 2026 | $ | 528.6 | $ | 46.2 | |||||||||||||
| 2027 | 446.2 | 31.5 | |||||||||||||||
| 2028 | 354.9 | 18.6 | |||||||||||||||
| 2029 | 277.5 | 8.1 | |||||||||||||||
| 2030 | 193.5 | 1.7 | |||||||||||||||
| Thereafter | 659.0 | 0.7 | |||||||||||||||
| Total lease payments | 2,459.7 | 106.8 | |||||||||||||||
| Less: Interest | 412.3 | 2.3 | |||||||||||||||
| Present Value of Lease Liabilities | $ | 2,047.4 | $ | 104.5 |
Balance sheet classification of operating leases:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating Lease ROU Assets | $ | 1,379.8 | $ | 1,043.6 | |||||||
| Operating lease liability: | |||||||||||
| Other current liabilities | $ | 430.4 | $ | 204.5 | |||||||
| Long-term liability - operating leases | 1,617.0 | 814.2 | |||||||||
| Total Operating Lease Liability | $ | 2,047.4 | $ | 1,018.7 |
At December 31, 2025 and 2024, office space and equipment operating leases had a weighted average remaining lease term of 4.8 and 6.2 years, respectively, and a weighted average discount rate of 3.8% and 3.9%, respectively.
Property and Equipment
Property and equipment:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Property and equipment - owned | $ | 1,999.3 | $ | 1,520.3 | |||||||
| Equipment under finance leases | 397.8 | 401.3 | |||||||||
| Property and Equipment, Gross | 2,397.1 | 1,921.6 | |||||||||
| Accumulated depreciation | (1,386.8) | (1,096.9) | |||||||||
| Property and Equipment, Net | $ | 1,010.3 | $ | 824.7 |
At December 31, 2025 and 2024, finance leases had a weighted average remaining lease term of 2.8 years and 2.6 years, respectively, and a weighted average discount rate of 8.7% and 7.3%, respectively.
18. Temporary Equity - Redeemable Noncontrolling Interests
Owners of noncontrolling equity interests in certain of our subsidiaries have the right in certain circumstances to require us to purchase all or a portion of their equity interest at fair value as defined in the applicable agreements. In most cases we have a protective call right under similar terms. Assuming that the subsidiaries perform at their current and projected profit levels, at December 31, 2025, the aggregate estimated amount we could be required to pay in future periods is $363.2 million, of which $164.5 million is currently exercisable by the holders. If these rights are exercised, there would be an increase in net income attributable to Omnicom as a result of our increased ownership interest and the reduction of net income attributable to noncontrolling interests. The ultimate amount paid could be significantly different because the redemption amount depends on the future results of operations of the subject businesses, the timing of the exercise of these rights and changes in foreign currency exchange rates. Upon redemption, the difference between the estimated redemption value and the actual amount paid is recorded in additional paid-in capital.
19. Commitments and Contingent Liabilities
In the ordinary course of business, we are involved in various legal proceedings. We do not expect that such proceedings will have a material adverse effect on our business, results of operations or financial condition.
F-37
20. Accumulated Other Comprehensive Income (Loss)
Changes in AOCI, net of income taxes:
| Cash Flow Hedge | Pension and Other Postemployment Benefits | Foreign Currency Translation | Total | ||||||||||||||||||||
| January 1, 2024 | $ | (8.1) | $ | (42.7) | $ | (1,286.8) | $ | (1,337.6) | |||||||||||||||
| Other comprehensive income (loss) before reclassifications | — | 13.1 | (158.6) | (145.5) | |||||||||||||||||||
| Reclassification from accumulated other comprehensive income (loss) | 3.1 | 4.1 | — | 7.2 | |||||||||||||||||||
| December 31, 2024 | (5.0) | (25.5) | (1,445.4) | (1,475.9) | |||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | — | (18.2) | 220.7 | 202.5 | |||||||||||||||||||
| Reclassification from accumulated other comprehensive income (loss) | 3.7 | 3.5 | 0.4 | 7.6 | |||||||||||||||||||
| December 31, 2025 | $ | (1.3) | $ | (40.2) | $ | (1,224.3) | $ | (1,265.8) |
,
21. Fair Value
Financial assets and liabilities measured at fair value on a recurring basis:
| December 31, 2025 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 6,881.1 | $ | 6,881.1 | |||||||||||||||||||
| Marketable equity securities | 0.9 | 0.9 | |||||||||||||||||||||
| Cross currency swaps - net investment hedge | $ | 7.1 | 7.1 | ||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Contingent purchase price obligations | $ | 214.9 | 214.9 | ||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 4,339.4 | $ | 4,339.4 | |||||||||||||||||||
| Marketable equity securities | 0.9 | 0.9 | |||||||||||||||||||||
| Cross currency swaps - net investment hedge | 9.3 | $ | 9.3 | ||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign currency derivatives | $ | 0.1 | $ | 0.1 | |||||||||||||||||||
| Contingent purchase price obligations | $ | 220.1 | 220.1 |
F-38
Changes in contingent purchase price obligations:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| January 1 | $ | 220.1 | $ | 229.5 | |||||||
| Acquisitions | 37.7 | 39.2 | |||||||||
| Revaluation and interest | 5.2 | (5.1) | |||||||||
| Payments | (48.4) | (42.4) | |||||||||
| Foreign currency translation | 0.3 | (1.1) | |||||||||
| December 31 | $ | 214.9 | $ | 220.1 |
Carrying amount and fair value of our financial assets and liabilities:
| December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 6,881.1 | $ | 6,881.1 | $ | 4,339.4 | $ | 4,339.4 | |||||||||||||||
| Marketable equity securities | 0.9 | 0.9 | 0.9 | 0.9 | |||||||||||||||||||
| Non-marketable equity securities | 62.1 | 62.1 | 36.8 | 36.8 | |||||||||||||||||||
| Cross currency swaps - net investment hedge | 7.1 | 7.1 | 9.3 | 9.3 | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Short-term debt | $ | 62.0 | $ | 62.0 | $ | 21.3 | $ | 21.3 | |||||||||||||||
| Foreign currency derivatives | — | — | 0.1 | 0.1 | |||||||||||||||||||
| Contingent purchase price obligations | 214.9 | 214.9 | 220.1 | 220.1 | |||||||||||||||||||
| Long-Term Debt, including current portion | 9,054.5 | 8,818.9 | 6,035.3 | 5,664.9 |
The estimated fair values of the cross-currency swaps and foreign currency derivative instruments are determined using model-derived valuations, taking into consideration foreign currency rates, interest rates, and counterparty credit risk. The estimated fair value of the contingent purchase price obligations is calculated in accordance with the terms of each acquisition agreement and is discounted. The fair value of long-term debt is based on quoted market prices.
22. Derivative Instruments and Hedging Activities
We manage our exposure to foreign exchange rate risk and interest rate risk through various strategies, including the use of derivative financial instruments. We use net investment hedges to manage the volatility of foreign exchange rates on the investment in our foreign subsidiaries. We may use forward foreign exchange contracts as economic hedges to manage the cash flow volatility arising from foreign exchange rate fluctuations related to foreign currency transactions. We do not use derivatives for trading or speculative purposes. Using derivatives exposes us to the risk that counterparties to the derivative contracts will fail to meet their contractual obligations. We manage that risk through careful selection and ongoing evaluation of the counterparty financial institutions based on specific minimum credit standards and other factors.
We evaluate the effects of changes in foreign currency exchange rates, interest rates and other relevant market risks on our derivatives. We periodically determine the potential loss from market risk on our derivatives by performing a value-at-risk, or VaR, analysis. VaR is a statistical model th\at uses historical currency exchange rate data to measure the potential impact on future earnings of our derivative financial instruments assuming normal market conditions. The VaR model is not intended to represent actual losses but is used as a risk estimation and management tool. Based on the results of the model, we estimate with 95% confidence a maximum one-day change in the net fair value of our derivative financial instruments at December 31, 2025 was not significant.
Foreign Currency Exchange Risk
As an integral part of our global treasury operations, we centralize our cash and use notional multicurrency pools to manage the foreign currency exchange risk that arises from imbalances between subsidiaries and their respective treasury centers. In addition, there are circumstances where revenue and expense transactions are not denominated in the same currency. In these instances, amounts are either promptly settled or hedged with forward foreign exchange contracts. To manage this risk, at December 31, 2025 and December 31, 2024, we had outstanding forward foreign exchange contracts with an aggregate notional amount of $27.4 million and $4.7 million, respectively.
Foreign currency derivatives are designated as fair value hedges; therefore, any gain or loss in fair value incurred on those instruments is recorded in results of operations and is generally offset by decreases or increases in the fair value of the underlying exposure. By using these financial instruments, we reduce financial risk of adverse foreign exchange changes by foregoing any
F-39
gain which might occur if the markets move favorably. The terms of our forward foreign exchange contracts are generally less than 90 days.
We have fixed-to-fixed Yen/U.S. Dollar exchange rate and Sterling/Euro exchange rate cross currency swaps with a notional value of $181 million and £325.0 million, respectively. The Yen/U.S. Dollar swaps hedge a portion of the net investment in our Japanese subsidiaries against volatility in the Yen/U.S. Dollar exchange rate. The Sterling/Euro swaps hedge the exchange rate volatility on a portion of the Sterling Entity's net investment in Euro Functional currency subsidiaries. The swaps are designated and qualify as a hedge of a net investment in a foreign subsidiary and are scheduled to mature in 2028, 2029, 2032 and 2033. Changes in the fair value of the swaps are recognized in foreign currency translation and are reported in AOCI. Any gain or loss will remain in AOCI until the complete or substantially complete liquidation of our investment in the underlying operations. We have elected to assess the effectiveness of our net investment hedges based on changes in spot exchange rates. We recorded a reduction of interest expense of $10.3 million in 2025 and $6.6 million in 2024. At December 31, 2025, an asset of $7.1 million is recorded in other assets, and at December 31, 2024, an asset of $9.3 million is recorded in other assets, for the swap fair value.
Interest Rate Risk
We may use interest rate swaps to manage our interest cost and structure our long-term debt portfolio to achieve a mix of fixed rate and floating rate debt. In 2025 and 2024, we did not have any interest rate swaps. At December 31, 2025 and 2024, long-term debt consisted entirely of fixed-rate debt.
23. New Accounting Standards
In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements (“ASU 2025-09”), which provides targeted improvements intended to better reflect an entity’s risk management strategies in its application of hedge accounting. ASU 2025-09 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted on any date on or after issuance. We are currently evaluating the impact of adopting ASU 2025-09 on our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which modernizes and clarifies the accounting for certain internal-use software costs. ASU 2025-06 is effective for annual and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2025-06 on our consolidated financial statements.
On November 4, 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”), that requires, additional information about specific expense
categories in the notes to financial statements at interim and annual reporting periods. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. ASU 2024-03 affects financial statement disclosure only, and its adoption will not affect our results of operations or financial condition.
24. Subsequent Events
In February 2026, the Board authorized the repurchase of up to $5.0 billion of our common stock. Pursuant to this authorization, we also entered into an accelerated share repurchase program to repurchase approximately $2.5 billion of our common stock.
F-40
OMNICOM GROUP INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Three Years Ended December 31, 2025
(In millions)
| Description | Balance Beginning of Period | Charged to Costs and Expenses | Removal of Uncollectible Receivables | Translation Adjustment Increase (Decrease) | Balance End of Period | ||||||||||||||||||||||||
| Valuation accounts deducted from assets: | |||||||||||||||||||||||||||||
| Allowance for Doubtful Accounts: | |||||||||||||||||||||||||||||
| December 31, 2025 | $ | 15.0 | $ | 3.0 | $ | (7.0) | $ | 0.9 | $ | 11.9 | |||||||||||||||||||
| December 31, 2024 | $ | 17.2 | $ | (2.7) | $ | 0.9 | $ | (0.4) | $ | 15.0 | |||||||||||||||||||
| December 31, 2023 | $ | 24.7 | $ | (2.8) | $ | (5.1) | $ | 0.4 | $ | 17.2 |
S-1
Previous: Item 15. Exhibits and Financial Statement Schedules