Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Dollars in tables in millions, except per share amounts.)
EXECUTIVE SUMMARY
Merger with IPG
On the Closing Date, Omnicom completed its Merger with IPG. As previously reported, on December 8, 2024, Omnicom entered into the Merger Agreement with IPG and EXT Subsidiary Inc., a Delaware corporation and a direct wholly owned subsidiary of Omnicom (the “Merger Sub”). On the Closing Date, pursuant to the terms and conditions of the Merger Agreement, Merger Sub merged with and into IPG, with IPG continuing as the surviving corporation and a direct wholly owned subsidiary of Omnicom. Upon the Merger, each outstanding share of IPG common stock (other than certain excluded shares) converted into the right to receive 0.344 shares of Omnicom common stock and cash in lieu of fractional shares. Following the closing 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 (see Note 5 to the consolidated financial statements).
Omnicom’s common stock continues to trade on the New York Stock Exchange , or NYSE, under the symbol “OMC,” and IPG’s common stock has 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 results of operations, financial condition and cash flows after the Closing Date are not comparable to prior 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. 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 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.
Our Business
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.
Omnicom’s agencies integrate data, creativity, and technology to deliver coordinated marketing, communications, and commerce solutions. All of our agencies are supported by our integrated technology platform: Omni- including Acxiom and Interact, which were acquired from IPG and Flywheel Commerce Cloud, as well as privacy-focused identity and data management capabilities. These capabilities include the integration of emerging AI-based tools, such as generative AI, into planning, creative advertising, media, and analytics workflows.
Omnicom client teams collaborate and accelerate client-service innovation through two integral enterprise-wide solutions: the Global Growth Team (GGT) and our Client Success Leaders (CSLs). GGT ensures an integrated, enterprise-level view of client needs and innovative solutions across new business development. CSLs manage our agency’s capabilities, providing holistic, tailored solutions across our service lines for individual client strategies and key performance indicators (KPIs) to enable client success.
Our global networks include: Omnicom Advertising (OA), Omnicom Media (OM), the DAS Group of Companies (DAS), and the Communications Consultancy Network (CCN). OA includes our creative brands, BBDO, TBWA, and McCann, which we acquired from IPG, and the brands included within the Advertising Collective. OM includes OMD, PHD, Hearts & Sciences, as well as UM, Acxiom, Initiative and Mediahub, which we acquired from IPG. DAS includes Omnicom Precision Marketing and MRM, which we acquired from IPG and Omnicom Health, which includes IPG Health. CCN includes FleishmanHillard and Ketchum, as well as Golin and Weber Shandwick, which we acquired from IPG.
On a global, pan-regional, and local basis, our 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 strategic media planning, buying and optimization, data and analytics, creative services, and content production. Precision Marketing includes technology and digital transformation consulting, decision sciences, digital experience design, customer relationship management, and e-commerce and enterprise platforms. 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 includes 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. Our Omni platform integrates data and technology in support of the services provided by all of our disciplines . Our geographic markets include the Americas, which includes North America and Latin America, Europe, the Middle East and Africa (EMEA), and Asia-Pacific.
Our business model was built and continues to evolve around our clients. While our networks, connected capabilities and agencies operate under different names and frame their ideas in different disciplines, we organize our services around our clients. Our fundamental business principle is that our clients’ specific requirements are the central focus of how we structure our service offerings and allocate our resources. This client-centric business model requires that multiple agencies and disciplines within Omnicom collaborate in formal client networks, such as our CSLs and GGT, as well as informal virtual client networks, resulting in a client matrix organization structure. This collaboration allows us execute our clients’ marketing requirements in a consistent and comprehensive manner. We use our client-centric approach to grow our business by expanding our service offerings to existing clients, moving into new markets and obtaining new clients. In addition, we pursue selective acquisitions of complementary companies with strong entrepreneurial management teams that could fill gaps in our service delivery to our existing clients.
We believe generative AI and agentic AI have, and will continue to have, a significant impact on how we provide services to our clients and how we enhance the productivity of our people. As the marketing industry adjusts to the evolving AI landscape, we seek to leverage these technologies to better serve our clients and maintain our competitive advantage. In January 2026, we unveiled our next generation of Omni, our proprietary marketing intelligence platform. Omni integrates our connected capabilities, high-quality and comprehensive identity and data infrastructure, and cutting-edge AI into a single operating system that we believe will give clients a unified foundation to connect strategy, execution, and performance across their entire marketing ecosystem.
As we continue to make investments in new technologies, we remain committed to responsible AI practices and collaboration to harness AI's potential, while evaluating related risks, such as ethical considerations, public perception and reputational concerns, intellectual property protection, regulatory compliance, privacy and data security concerns and our ability to effectively adopt this new emerging technology.
Our clients operate in virtually every sector of the global economy, with no one industry representing more than 15% of our revenue in 2025. In many cases, multiple agencies within our networks serve different brands, product groups or both within the same client. For example, in 2025, our largest client represented 2.4% of revenue and was served by approximately 144 of our agencies. Our 100 largest clients, which represent many of the major marketers, represented approximately 54% of revenue and were each served, on average, by approximately 55 of our agencies. Although our revenue is generally balanced between the United States and international markets and we have a large and diverse client base, we are not immune to general economic downturns.
Global economic conditions and disruptions have a direct impact on our business and financial performance. Adverse global economic conditions and disruptions pose a risk that our clients may reduce, postpone or cancel spending on marketing and communications services, which would reduce the demand for our services. Revenue is typically lower in the first and third quarters and higher in the second and fourth quarters, reflecting client spending patterns during the year, as well as additional project work that usually occurs in the fourth quarter. Certain global events targeted by major marketers for advertising expenditures, such as the FIFA World Cup and the Olympics, and certain national events, such as the U.S. election process, may affect our revenue year-over-year in certain businesses. Typically, these events do not have a significant impact on our revenue in any period.
Given our size and breadth, we monitor several financial indicators. The KPIs that we focus on are revenue growth and variability of operating expenses.
We analyze revenue growth by reviewing the components and mix of the growth, including growth by principal regional market, connected capabilities and marketing disciplines, the impact from foreign currency exchange rate changes, and growth from our largest clients. Operating expenses primarily consist of cost of services, selling, general and administrative expenses, or SG&A, and depreciation and amortization, and are analyzed for each network by the Chief Operating Decision Maker, who allocates resources accordingly.
Financial Performance
Worldwide revenue in 2025 increased by $1.6 billion, or 10.1%, to $17.3 billion compared to $15.7 billion in 2024. Our performance benefited from one month of IPG operations recorded in the fourth quarter of 2025. The year-over-year increase in worldwide revenue reflected worldwide constant currency growth (defined below) of $1,458.2 million, or 9.3%, which was driven primarily by increased client spending in our Media & Advertising, Precision Marketing, Experiential and Healthcare disciplines and in substantially all of our major geographic markets, and a favorable impact from foreign exchange rates of $124.6 million, or 0.8%.
In North America, constant currency growth of $951.2 million, or 11.0%, in 2025 compared to the prior year was driven by strong performance in the United States, particularly within the Media & Advertising discipline, led by our media business, as well as our Precision Marketing, Experiential, Healthcare and Execution & Support disciplines. Our performance in the region also benefited from one month of IPG operations recorded in the fourth quarter of 2025. This growth was partially offset by underperformance in our Branding & Retail Commerce discipline. The impact of foreign currency exchange rates on revenue was nominal.
In Latin America, constant currency growth in 2025 of $127.2 million, or 29.3%, compared to the prior year, was driven by a strong performance within the Media & Advertising discipline, led by our media business, and across all countries in the region. Our performance in the region also benefited from one month of IPG operations recorded in the fourth quarter of 2025. However, the weakening of most local currencies against the U.S. Dollar negatively impacted revenue in 2025, compared to 2024 by $20.6 million, or 4.8%.
In Europe, constant currency growth in 2025 of $196.2 million, or 4.4%, compared to the prior year was driven by strong performance in our Media & Advertising discipline, led by our media business. Our performance in the region also benefited from one month of IPG operations recorded in the fourth quarter of 2025. Foreign currency exchange rate changes increased revenue year-over-year by $169.7 million, or 3.8%, primarily as a result of the strengthening of the Euro and British Pound.
In Asia-Pacific, constant currency growth in 2025 of $94.8 million, or 5.1%, compared to 2024 was led by our Media & Advertising discipline, partially offset by underperformance in our Experiential and Precision Marketing disciplines. Our performance in the region also benefited from one month of IPG operations recorded in the fourth quarter of 2025. Several markets in the region, especially India, Japan, New Zealand, Philippines and Malaysia, had positive constant currency growth as compared to the prior year. Foreign currency changes decreased revenue for the year by $16.3 million, or 0.9%, primarily as a result of the weakening of the Australian Dollar and New Zealand Dollar against the U.S. Dollar.
The year-over-year changes in worldwide revenue in 2025, compared to 2024, in our fundamental disciplines were: Media & Advertising increased $1,359.8 million, Precision Marketing increased $162.2 million, Public Relations decreased $27.2 million, Healthcare increased $42.8 million, Branding & Retail Commerce decreased $108.8 million, Experiential increased $143.2 million and Execution & Support increased $10.8 million.
The increases in worldwide revenue across our principal regional markets were: North America $942.0 million, Europe $365.9 million, Asia-Pacific $78.4 million and Latin America $106.5 million.
A summary of our consolidated results of operations year-over-year:
$ Change
% Change
Revenue
Operating Income 2,3
Operating Margin 2,3
Net Income (Loss) - Omnicom Group Inc. 2,3
Net Income (Loss) per Share - Omnicom Group Inc.: Diluted 2,3
EBITA 1,2,3
EBITA Margin 1,2,3
1) Reconciliation of Non-GAAP Financial Measures on page 30 .
2) In 2025, operating expenses included $1,247.0 million ( $984.5 million after-tax) related to severance, real estate repositioning, contract cancellations and other costs, as well as efficiency initiatives taken in the second quarter of 2025, primarily within Omnicom Advertising and Omnicom Production, and $547.1 million ($447.5 million after-tax) of losses on dispositions of certain businesses in connection with the Merger (see Notes 13 and 14 to the consolidated financial statements). Included in selling, general and administrative expenses are acquisition related costs of $347.3 million ($318.5 million after-tax), related to the Merger (see Note 1 to the consolidated financial statements). The net
impact of these items reduced operating income for 2025 by $2,141.4 million ($1,750.5 million after-tax) and reduced diluted net income per share - Omnicom Group Inc. by $8.50.
In 2024, operating expenses included $57.8 million ($42.9 million after-tax) of repositioning costs, primarily related to severance, recorded in the second quarter of 2024 (see Note 13 to the consolidated financial statements). Included in selling, general and administrative expenses in the fourth quarter of 2024 are acquisition-related costs of $14.6 million ($13.1 million after-tax), related to the Merger (see Note 1 to the consolidated financial statements). The net impact of these items reduced operating income for 2024 by $72.4 million ($56.0 million after-tax) and reduced diluted net income per share - Omnicom Group Inc. by $0.28.
3) Beginning in 2024, EBITA is defined as earnings before interest, income taxes and amortization of acquired intangible assets and internally developed strategic platform assets. As a result, we reclassified the prior year to be consistent with the revised definition, which reduced EBITA from previously reported amounts. We believe EBITA is useful in evaluating the impact of amortization of acquired intangible assets and internally developed strategic platform assets on operating performance and allows for comparability between reporting periods. The after-tax impact on diluted net income per share- Omnicom Group Inc. for 2025 and 2024 was $0.42 and $0.32, respectively.
CRITICAL ACCOUNTING ESTIMATES
The following summary of our critical accounting policies provides a better understanding of our financial statements and the related discussion in this MD&A. We believe that the following policies may involve a higher degree of judgment and complexity in their application than most of our accounting policies and represent the critical accounting policies used in the preparation of our financial statements. Readers are encouraged to consider this summary together with our consolidated financial statements and the related notes, including Note 2, for a more complete understanding of the critical accounting policies discussed below.
Estimates
We prepare our financial statements in conformity with U.S. GAAP and are required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We use a fair value approach in testing our intangible assets, which primarily consist of goodwill, for impairment. Actual results could differ from those estimates and assumptions.
Acquisitions and Goodwill
We have made and expect to continue to make selective acquisitions. The evaluation of potential acquisitions is based on various factors, including specialized know-how, reputation, geographic coverage, competitive position and service offerings of the target businesses, as well as our experience and judgment.
Our acquisition strategy is focused on acquiring the expertise of an assembled workforce in order to continue to build upon the core capabilities of our various strategic business platforms and agency brands through the expansion of their geographic reach or their service capabilities to better serve our clients. Additional key factors we consider include the competitive position and specialized know-how of the acquisition targets. Accordingly, as is typical in most service businesses, a substantial portion of the assets we acquire are intangible assets, primarily consisting of the know-how of the personnel, which is treated as part of goodwill and is not required to be valued separately under U.S. GAAP. For each acquisition, we undertake a detailed review to identify other intangible assets that are required to be valued separately. A significant portion of the identifiable intangible assets acquired is derived from customer relationships, including the related customer contracts, as well as trade names. 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 connection with the IPG acquisition, we reviewed the assumptions related to royalty rates, customer attrition rates, and discount rates applied in valuing the intangible assets.
We evaluate goodwill for impairment annually at May 1 each year and whenever events or circumstances indicate the carrying value may not be recoverable. Under FASB ASC Topic 350, Intangibles - Goodwill and Other , we have the option of either assessing qualitative factors to determine whether it is more-likely-than-not that the carrying value of our reporting units exceeds their respective fair value (Step 0) or proceeding directly to the quantitative goodwill impairment test. While there were no trigger events that required us to perform a quantitative test, we performed the annual quantitative impairment test and compared the fair value of each of our reporting units to its respective carrying value, including goodwill. Effective January 1, 2025, we formed Omnicom Advertising Group (OA), which aligned all of our creative advertising networks under one segment manager. 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 performance and are responsible for the agencies in their region. They 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 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. 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.
Goodwill Impairment Review - Estimates and Assumptions
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 for EBITDA (earnings before interest, taxes, depreciation and amortization) and (3) when available, consideration of recent and similar acquisition transactions.
In applying the income approach, we use estimates to derive the discounted expected cash flows, or DCF, for each reporting unit that serves as the basis of our valuation. These estimates and assumptions include revenue growth and operating margin, EBITDA, tax rates, capital expenditures, weighted average cost of capital and related discount rates and expected long-term cash flow growth rates. All of these estimates and assumptions are affected by conditions specific to our businesses, economic conditions related to the industry we operate in, as well as conditions in the global economy. The assumptions that have the most significant effect on our valuations derived using a DCF methodology are: (1) the expected long-term growth rate of our reporting units' cash flows and (2) the weighted average cost of capital, or WACC, for each reporting unit.
The long-term growth rate and WACC assumptions used in our evaluations:
May 1, 2025
May 1, 2024
Long-Term Growth Rate
WACC
Long -term growth rate represents our estimate of the long-term growth rate for our industry and the geographic markets we operate in. For the past ten years, the average historical revenue growth rate of our reporting units and the Average Nominal GDP, or NGDP, growth of the countries comprising the major markets that account for substantially all of our revenue, was approximately 3.5% and 5.0% , respectively. We considered this history when determining the long-term growth rates used in our annual impairment test at May 1, 2025. Included in the 10-year history is the full year 2020, which included the negative impact of the COVID-19 pandemic on the global economy and our revenue. We believe marketing expenditures over the long term have a high correlation to NGDP, notwithstanding the volatility of inflationary environments. Based on our past performance, we also believe that our growth rate can exceed NGDP growth in the short-term in the markets we operate in, which are similar across our reporting units. Accordingly, for our annual test as of May 1, 2025, we used an estimated long-term growth rate of 3.5%.
When performing the annual impairment test as of May 1, 2025 and estimating the future cash flows of our reporting units, we considered the current macroeconomic environment, as well as industry and market specific conditions in 2025. In the first half of 2025, our constant currency growth was 3.2%, which excluded the impact from changes in foreign exchange rates.
The WACC is comprised of: (1) a risk-free rate of return, (2) a business risk index ascribed to us and to companies in our industry comparable to our reporting units based on a market derived variable that measures the volatility of the share price of equity securities relative to the volatility of the overall equity market, (3) an equity risk premium that is based on the rate of return on equity of publicly traded companies with business characteristics comparable to our reporting units, and (4) a current after-tax market rate of return on debt of companies with business characteristics similar to our reporting units, each weighted by the relative market value percentages of our equity and debt.
Our four reporting units vary in size with respect to revenue and the amount of debt allocated to them. These differences drive variations in fair value among our reporting units. In addition, these differences as well as differences in book value, including goodwill, cause variations in the amount by which fair value exceeds book value among the reporting units. The goodwill balances and debt vary by reporting unit primarily because our three legacy agency networks were acquired at the formation of Omnicom and were accounted for as a pooling of interests that did not result in any additional debt or goodwill being recorded. The remaining three agency networks were built through a combination of internal growth and acquisitions that were accounted for using the acquisition method and as a result, they have a relatively higher amount of goodwill and debt. Finally, the allocation of goodwill when components are transferred between reporting units is based on relative fair value at the time of transfer.
Goodwill Impairment Review - Conclusion
Based on the results of our impairment test, we concluded that our goodwill as of May 1, 2025 was not impaired, because the fair value of each of our reporting units was in excess of its respective net book value. For our reporting units with negative book value, we concluded that the fair value of their total assets was in excess of book value of total assets. The minimum decline in fair value that one of our reporting units would need to experience in order to fail the goodwill impairment test was approximately 46%. Notwithstanding our belief that the assumptions we used for WACC and long-term growth rate in our impairment testing were reasonable, we performed a sensitivity analysis for each reporting unit. The results of this sensitivity analysis on our impairment test as of May 1, 2025 revealed that if the WACC increased by 1% and/or the long-term growth rate decreased by 1%, the fair value of each of our reporting units would continue to be in excess of its respective net book value and would pass the impairment test.
We will continue to perform our impairment test each year at May 1, unless events or circumstances trigger the need for an interim impairment test. There were no events through December 31, 2025 that would change our impairment assessment. The estimates used in our goodwill impairment test do not constitute forecasts or projections of future results of operations, but rather are estimates and assumptions based on historical results and assessments of macroeconomic factors affecting our reporting units as of the valuation date. We believe that our estimates and assumptions are reasonable, but they are subject to change from period to period. Actual results of operations and other factors will likely differ from the estimates used in our discounted cash flow valuation, and it is possible that differences could be significant. A change in the estimates we use could result in a decline in the estimated fair value of one or more of our reporting units from the amounts derived as of our latest valuation and could cause us to fail our goodwill impairment test if the estimated fair value for the reporting unit is less than the carrying value of the net assets of the reporting unit, including its goodwill. A large in estimated fair value of a reporting unit could result in a non-cash charge and may have an effect on our results of operations and financial condition. Additional information about acquisitions and goodwill appears in Notes 2, 5 and 6 to the consolidated financial statements.
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 such 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.
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, 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.
NEW ACCOUNTING STANDARDS
See Notes 1 and 23 to the consolidated financial statements for information on the adoption of new accounting standards and accounting standards not yet adopted.
CONSOLIDATED RESULTS OF OPERATIONS
The year-over-year change in results of operations:
Year Ended December 31,
$ Change
$ Change
Revenue
Operating Expenses:
Salary and service costs
Occupancy and other costs
Severance and repositioning costs 2
Loss (gain) on assets held for sale and dispositions 2
Cost of services
Selling, general and administrative expenses 2
Depreciation and amortization
Total operating expenses
Operating Income
Interest Expense
Interest Income
Income Before Income Taxes and Income From Equity
Method Investments
Income Tax Expense
Income From Equity Method Investments
Net Income
Net Income Attributed To Noncontrolling Interests
Net Income (Loss) - Omnicom Group Inc. 2
Net Income (Loss) Per Share - Omnicom Group Inc.:
Basic
Diluted 2
Revenue
Operating Margin %
EBITA 1,3
EBITA Margin %
1) Reconciliation of Non-GAAP Financial Measures on page 30 .
2) In 2025, operating expenses included $1,247.0 million ( $984.5 million after-tax) related to severance, real estate repositioning, contract cancellations and other costs, as well as efficiency initiatives taken in the second quarter of 2025, primarily within Omnicom Advertising and Omnicom Production, and $547.1 million ($447.5 million after-tax) of losses on dispositions of certain businesses in connection with the Merger, (see Notes 13 and 14 to the consolidated financial statements). Included in selling, general and administrative expenses are acquisition related costs of $347.3 million ($318.5 million after-tax), related to the Merger with IPG (see Note 1 to the consolidated financial statements). The net impact of these items reduced operating income for 2025 by $2,141.4 million ($1,750.5 million after-tax) and reduced diluted net income per share - Omnicom Group Inc. by $8.50.
In 2024, operating expenses included $57.8 million ($42.9 million after-tax) of repositioning costs, primarily related to severance, recorded in the second quarter of 2024 (see Note 13 to the consolidated financial statements). Included in selling, general and administrative expenses in the fourth quarter of 2024 are acquisition related costs of $14.6 million ($13.1 million after-tax), related to the Merger (see Note 1 to the consolidated financial statements). The net impact of these items reduced operating income for 2024 by $72.4 million ($56.0 million after-tax) and reduced diluted net income per share - Omnicom Group Inc. by $0.28.
In 2023, operating expenses included real estate operating lease impairment charges, severance and other exit costs of $191.5 million ($145.5 million after-tax) related to repositioning actions we took in the first and second quarters of 2023 to reduce our real estate requirements, rebalance our workforce, and consolidate operations in certain markets. In addition, in the second quarter of 2023, we recorded a gain of $78.8 million ($55.9 million after-tax) on the disposition of certain of our research businesses in the Execution & Support discipline. Included in the fourth quarter of 2023 within selling, general and administrative expenses are acquisition related costs of $14.5 million ($13.0 million after-tax), primarily related to the purchase of Flywheel Digital in January 2024 (see Note 5 to the consolidated financial statements). The net impact of these items reduced operating income for 2023 by $127.2 million ($102.6 million after-tax) and reduced diluted net income per share - Omnicom Group Inc. by $0.50 (see Notes 13 and 14 to the consolidated financial statements).
3) Beginning in 2024, EBITA is defined as earnings before interest, income taxes and amortization of acquired intangible assets and internally developed strategic platform assets. As a result, we reclassified the prior year to be consistent with the revised definition, which reduced EBITA from previously reported amounts. We believe EBITA is useful in evaluating the impact of amortization of acquired intangible assets and internally developed strategic platform assets on operating performance and allows for comparability between reporting periods. The after-tax impact on diluted net income per share- Omnicom Group Inc. for 2025, 2024 and 2023 was $0.42, $0.32 and $0.23, respectively.
Revenue
The components of year-over-year revenue change in the United States (“Domestic”) and the remainder of the world (“International”):
Total
Domestic
International
Year Ended December 31, 2024
Components of revenue change:
Foreign exchange rate impact
Constant currency growth
Year Ended December 31, 2025
Total
Domestic
International
Year Ended December 31, 2023
Components of revenue change:
Foreign exchange rate impact
Constant currency growth
Year Ended December 31, 2024
The components and percentages are calculated as follows:
• Foreign exchange rate impact is calculated by translating the current period’s local currency revenue using the prior period average exchange rates to derive current period constant currency revenue (in this case $17,147.3 million and $15,754.6 million for the Total column for December 31, 2025 and December 31, 2024, respectively). The foreign exchange impact is the difference between the current period revenue in U.S. Dollars and the current period constant currency revenue ($17,271.9 million less $17,147.3 million and $15,689.1 million less $15,754.6 million for the Total column for December 31, 2025 and December 31, 2024, respectively).
• Constant currency growth represents the change in revenue from the prior year, excluding the effects of foreign currency exchange rate fluctuations. This measure is calculated by adjusting current-period revenue to eliminate the impact of changes in foreign exchange rates and comparing the resulting amount to prior-year revenue.
• The percentage change is calculated by dividing the individual component amount by the prior period revenue base of that component ($15,689.1 million and $14,692.2 million for the Total column for December 31, 2025 and December 31, 2024, respectively).
Changes in the value of foreign currencies against the U.S. Dollar affect our results of operations and financial condition. For the most part, because the revenue and expense of our foreign operations are both denominated in the same local currency, the economic impact on operating margin is minimized. Assuming exchange rates at January 30, 2026, remain unchanged, we expect the impact of changes in foreign exchange rates will be over a positive 2% for the full year of 2026. In addition, in connection with the Merger we identified planned dispositions of certain businesses in 2026 that we expect will occur within the next twelve months (see Note 14 to the consolidated financial statements). These businesses had revenue in the prior year of approximately $3.2 billion.
In the normal course of business, our agencies both gain and lose business from clients each year due to a variety of factors. Under our client-centric approach, we seek to broaden our relationships with all of our clients. Our largest client represented approximately 2.4% and 2.7% of revenue for 2025 and 2024, respectively. Our ten largest and 100 largest clients represented approximately 18.0% and 54.2% of revenue for 2025, respectively, and 19.1% and 54.4% of revenue for 2024, respectively.
Revenue by Discipline
To monitor the changing needs of our clients and to further expand the scope of our services to key clients, we monitor revenue across a broad range of disciplines and group them into the following categories: Media & Advertising, Precision Marketing, Public Relations, Healthcare, Branding & Retail Commerce, Experiential and Execution & Support,
The year-over-year change in revenue and constant currency growth by discipline:
Year Ended December 31,
Revenue
Revenue
$ Change
Constant Currency Growth
Media & Advertising
Precision Marketing
Public Relations
Healthcare
Branding & Retail Commerce
Experiential
Execution & Support
Revenue
Year Ended December 31,
Revenue
Revenue
$ Change
Constant Currency Growth
Media & Advertising
Precision Marketing
Public Relations
Healthcare
Branding & Retail Commerce
Experiential
Execution & Support
Revenue
The year-over-year changes in worldwide revenue in 2025, compared to 2024, in our fundamental disciplines were: Media & Advertising increased $1,359.8 million, Precision Marketing increased $162.2 million, Public Relations decreased $27.2 million, Healthcare increased $42.8 million, Branding & Retail Commerce decreased $108.8 million, Experiential increased $143.2 million, and Execution & Support increased $10.8 million. Constant currency growth of $1,458.2, or 9.3%, primarily reflected increased client spending in Media & Advertising, led by our media business, as well as our Precision Marketing, Experiential and Healthcare disciplines compared to the prior year. Our performance also benefited from one month of IPG operations recorded in the fourth quarter of 2025. Constant currency growth was partially offset by underperformance in our Branding & Retail Commerce, Public Relations and Execution & Support disciplines. Changes in foreign exchange rates increased revenue by $124.6 million, or 0.8%. The increase in revenue from foreign exchange translation was primarily related to the strengthening of the Euro and British Pound currencies, partially offset by the weakening of the Australian and New Zealand Dollar, Brazilian Real and Canadian Dollar against the U.S. Dollar.
The year-over-year changes in worldwide revenue in 2024, compared to 2023, in our fundamental disciplines were: Media & Advertising increased $554.3 million, Precision Marketing increased $361.6 million, Public Relations increased $100.5 million, Healthcare decreased $5.3 million, Branding & Retail Commerce decreased $61.6 million, Experiential increased $84.2 million, and Execution & Support decreased $36.8 million. Constant currency growth of $1,062.4 million, or 7.2%, primarily reflected increased client spending in Media & Advertising, led by our media business, as well as Precision Marketing, Public Relations and Experiential disciplines compared to the prior year. Our Public Relations discipline was helped by spending on the U.S. elections, and the Experiential discipline benefited from spending on the Summer Olympics. Constant currency growth was partially offset by underperformance in our Branding & Retail Commerce discipline. Changes in foreign exchange rates reduced revenue slightly. The decrease in revenue from foreign exchange translation was primarily related to the weakening of the Japanese Yen and
Brazilian Real against the U.S. Dollar, partially offset by the strengthening of the British Pound, Colombian Peso and Euro against the U.S. Dollar.
Revenue by Geography
The year-over-year change in revenue and constant currency growth in our geographic markets:
Year Ended December 31,
Revenue
Revenue
$ Change
Constant Currency Growth
Americas:
North America
Latin America
EMEA:
Europe
Middle East and Africa
Asia-Pacific
Revenue
Year Ended December 31,
Revenue
Revenue
$ Change
Constant Currency Growth
Americas:
North America
Latin America
EMEA:
Europe
Middle East and Africa
Asia-Pacific
Revenue
In 2025, worldwide revenue increased by $1,582.8 million, or 10.1%, to $17,271.9 million, compared to $15,689.1 million in 2024. Total revenue growth by geographic region was led by North America, which increased $942.0 million, or 10.9%, followed by Europe with an increase of $365.9 million, or 8.2%. Latin America increased $106.5 million, or 24.6%, the Middle East and Africa increased $90.0 million, or 28.2%, and Asia-Pacific increased $78.4 million, or 4.2%. The year-over-year increase in worldwide revenue reflected worldwide constant currency growth of $1,458.2 million, or 9.3%, along with a favorable impact from foreign exchange rates of $124.6 million, or 0.8%. Our performance also benefited from one month of IPG operations recorded in the fourth quarter of 2025.
In 2024, worldwide revenue increased by $996.9 million, or 6.8%, to $15,689.1 million, compared to $14,692.2 million in 2023. Total revenue growth by geographic region was led by North America, which increased $699.2 million, or 8.8%, followed by Europe with an increase of $172.1 million, or 4.0%, Latin America increased $46.9 million, or 12.1%, the Middle East and Africa increased $9.6 million, or 3.1%, and Asia-Pacific increased $69.1 million, or 3.9%. The year-over-year increase in worldwide revenue reflected worldwide constant currency growth of $1,062.4 million, or 7.2%, along with an unfavorable impact from foreign exchange of $65.5 million, or 0.4%.
North America
In North America, constant currency growth of $951.2 million, or 11.0%, in 2025 compared to the prior year was driven by strong performance in the United States, particularly within the Media & Advertising discipline, led by our media business, as well as our Precision Marketing, Experiential, Healthcare and Execution & Support disciplines. Our performance in the region also benefited from one month of IPG operations recorded in the fourth quarter of 2025. This growth was partially offset by underperformance in our Branding & Retail Commerce discipline. The impact of foreign currency exchange rates on revenue was nominal.
In North America, constant currency growth in 2024 compared to the prior year was primarily driven by strong performance in the United States, especially in the Media & Advertising discipline, led by our media business, and our Precision Marketing, Experiential, and Public Relations disciplines. Our Public Relations discipline was helped by spending on the U.S. elections, and the Experiential discipline benefited from spending on the Summer Olympics. Constant currency growth was partially offset by underperformance in our Branding & Retail Commerce, Execution & Support, and Healthcare disciplines. Our U.S. revenue in our Precision Marketing discipline benefited from the acquisition of Flywheel Digital in January 2024 and acquisitions completed in the second half of 2023 within our Public Relations discipline, partially offset by dispositions in the Execution & Support discipline during the first half of 2023.
Latin America
In Latin America, constant currency growth in 2025 of $127.2 million, or 29.3%, compared to the prior year, was driven by a strong performance within the Media & Advertising discipline, led by our media business, and across all countries in the region. Our performance in the region also benefited from one month of IPG operations recorded in the fourth quarter of 2025. However, the weakening of most local currencies against the U.S. Dollar negatively impacted revenue in 2025, compared to 2024 by $20.6 million, or 4.8%.
In Latin America, constant currency growth in 2024 compared to the prior year increased in substantially all disciplines, led by Media & Advertising, and in all countries in the region. The weakening of most currencies against the U.S. Dollar decreased revenue in 2024 by $39.0 million, or 10.1%, compared to 2023. Constant currency growth in the region was impacted positively by acquisitions in our Media & Advertising discipline in the prior year and the purchase of Flywheel Digital in January 2024.
EMEA
Europe
In Europe, constant currency growth in 2025 of $196.2 million, or 4.4%, compared to the prior year was driven by strong performance in our Media & Advertising discipline, led by our media business. Our performance in the region also benefited from one month of IPG operations recorded in the fourth quarter of 2025. Foreign currency exchange rate changes increased revenue year-over-year by $169.7 million, or 3.8%, primarily as a result of the strengthening of the Euro and British Pound. In the U.K., constant currency growth of 3.6% year-over-year was led by our media business, in our Media & Advertising discipline, and in our Experiential discipline, partially offset by underperformance in other disciplines. In Continental Europe, which includes the Euro Zone and the other European countries, constant currency growth year-over-year of 4.9% was led by our Media & Advertising and Public Relations disciplines. Constant currency growth by country was led by Turkey, Poland, Germany and Italy, partially offset by underperformance in the Netherlands and France.
In Europe, constant currency growth in 2024 compared to the prior year was driven by strong performance in our Media & Advertising discipline, led by our media business, and in our Experiential and Execution & Support disciplines, partially offset by underperformance in our Precision Marketing, Branding & Retail Commerce and Public Relations disciplines. Foreign currency exchange rate changes increased revenue year-over-year by $20.8 million, or 0.5%, primarily as a result of the strengthening of the British Pound, partially offset by the weakening of several currencies against the U.S. Dollar. Acquisitions, net of dispositions, for 2024 positively impacted revenue and were primarily related to the purchase of Flywheel Digital in January 2024 and acquisition activity in our Media & Advertising discipline in the second half of 2023, partially offset by dispositions in the Execution & Support discipline in the first half of 2023. In 2024, constant currency growth year-over-year in the U.K. of 4.3% was led by our media business, in our Media & Advertising discipline, and our Experiential and Execution & Support disciples, partially offset by negative performance in our Precision Marketing, Branding & Retail Commerce, and Public Relations disciplines. In Continental Europe, which includes the Euro Zone and the other European countries, constant currency growth year-over-year of 3.1% was across substantially all disciplines. Constant currency growth by country was led by Turkey, Spain, Germany and Netherlands, partially offset by in France and Italy.
Middle East and Africa 2025 vs. 2024 vs. 2023
In the Middle East and Africa, constant currency growth in 2025 of $88.8 million, or 27.8%, compared to 2024 was primarily a result of a strong performance in our Media & Advertising and Experiential disciplines, including the benefit from one month of IPG operations recorded in the fourth quarter of 2025. For 2025, the strengthening of certain currencies in the region against the U.S. Dollar increased revenue year-over-year.
In the Middle East and Africa for 2024, constant currency growth compared to 2023, was primarily a result of a strong performance in our Media & Advertising and Experiential disciplines. For 2024, the weakening of certain currencies in the region against the U.S. Dollar decreased revenue year-over-year.
Asia-Pacific
In Asia-Pacific, constant currency growth in 2025 of $94.8 million, or 5.1%, compared to 2024 was led by our Media & Advertising discipline, partially offset by underperformance in our Experiential and Precision Marketing disciplines. Our performance in the region also benefited from one month of IPG operations recorded in the fourth quarter of 2025. Several markets in the region, especially India, Japan, New Zealand, Philippines and Malaysia, had positive constant currency growth as compared to the prior year. Foreign currency changes decreased revenue for the year by $16.3 million, or 0.9%, primarily as a result of the weakening of the Australian Dollar and New Zealand Dollar against the U.S. Dollar.
In Asia-Pacific, constant currency growth in 2024 of $104.2 million, or 5.9%, compared to 2023 was driven by our Media & Advertising discipline, partially offset by underperformance in our Precision Marketing and Public Relations disciplines. Substantially all markets in the region, especially China, India, Australia, the Philippines and Thailand, had positive constant currency growth as compared to the prior year. Foreign currency changes decreased revenue for the year by $35.1 million, or 2.0%, primarily as a result of the weakening of the Japanese Yen and Chinese Reminbi against the U.S. Dollar. Acquisition activity, including the purchase of Flywheel Digital in January 2024, increased revenue compared to the prior year.
Revenue by Industry
Revenue by industry sector:
Year Ended December 31,
Pharmaceuticals and Healthcare
Food and Beverage
Auto
Consumer Products
Financial Services
Retail
Technology
Travel and Entertainment
Government
Telecommunications
Services
Oil, Gas and Utilities
Not-for-Profit
Education
Other
Total
Operating Expenses
The year-over-year change in operating expenses:
Year Ended December 31,
Revenue
Revenue
Change
Change
Revenue
Operating Expenses:
Salary and service costs:
Salary and related costs
Third-party service costs
Third-party incidental costs
Total salary and service costs
Occupancy and other costs
Severance and repositioning costs
Loss on assets held for sale and dispositions
Cost of services
Selling, general and administrative expenses
Depreciation and amortization
Total operating expenses
Operating Income
Year Ended December 31,
Revenue
Revenue
Change
Change
Revenue
Operating Expenses:
Salary and service costs:
Salary and related costs
Third-party service costs
Third-party incidental costs
Total salary and service costs
Occupancy and other costs
Severance and repositioning costs
Gain on assets held for sale and dispositions
Cost of services
Selling, general and administrative expenses
Depreciation and amortization
Total operating expenses
Operating Income
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 the 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 are billed 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. Adverse and beneficial fluctuations in foreign currencies from year-over-year impact our results of operations and financial condition when we translate our financial statements from local foreign currencies to the U.S. Dollar. However, substantially all of our foreign operations transact business in their local currency, mitigating the impact of changes in foreign currency exchange rates on our
operating margin percentage. As a result, the changes in our operating expenses year-over-year from foreign currency translation were in line with the percentage impact from changes in foreign currencies on revenue for the year ended December 31, 2025.
Merger with IPG
In connection with the Merger, we took certain repositioning actions, in the fourth quarter 2025, intended to realize cost synergies within our newly combined operations. In addition, we identified certain businesses for disposition within the year. As a result, included in operating expenses in 2025 are $1,247.0 million, primarily for severance, real estate and other asset impairment charges, and contract cancellation and other costs, and $547.1 million of charges to reflect the businesses to be disposed at their net realizable value. In addition, we incurred transaction and other administrative costs related to the Merger of $347.3 million, which are included in Selling, general and administrative expenses (see Notes 13 and 14 to the consolidated financial statements).
Operating expenses in 2025 increased $3,412.7 million, or 25.4%, to $16,827.2 million, compared to the prior year, primarily as a result of the repositioning charges related to the Merger, as discussed above. In addition, there were repositioning costs related to efficiency initiatives taken in the second quarter of 2025, primarily within Omnicom Advertising and Omnicom Production (see Notes 13 and 14 to the consolidated financial statements). Operating expenses also increased year-over-year as a result of our revenue growth and the inclusion of one month of IPG operating expenses in the fourth quarter 2025.
Operating expenses in 2024 increased $827.0 million, or 6.6%, to $13,414.5 million, compared to the prior year, primarily as a result of constant currency growth and the acquisition of Flywheel in the first quarter of 2024 (see Note 5 to the consolidated financial statements). Operating expenses for 2024 include the impact of repositioning costs, primarily related to severance, recorded in the second quarter of 2024 for $57.8 million in connection with our strategic initiatives to increase efficiencies in our international operations and the start of the consolidation of our production services (see Note 13 to the consolidated financial statements). Included in selling, general and administrative expenses in the fourth quarter of 2024 are acquisition related costs of $14.6 million ($13.1 million after-tax) related to the Merger (see Note 1 to the consolidated financial statements). In 2023, the gain on disposition of subsidiaries decreased operating expenses by $78.8 million.
Operating Expenses - Salary and Service Costs
Salary and service costs, which tend to fluctuate with changes in revenue, are comprised of salary and related costs, third-party service costs, and third-party incidental costs.
Salary and service costs for 2025 increased $1,211.5 million, or 10.6%, to $12,644.0 million, compared to the prior year, primarily as a result of our constant currency growth and the inclusion of one month of IPG operations. Salary and related costs for 2025 increased $336.5 million, or 4.5%, to $7,777.9 million. These costs decreased as a percentage of revenue, primarily as a result of the efficiencies realized from the severance actions and other costs reductions undertaken in 2024 and the first half of 2025. Third-party service costs for 2025 increased $765.1 million, or 22.8%, to $4,113.7 million, primarily as a result of revenue growth in our Media & Advertising and Experiential disciplines and the effects of including one month of IPG operations. Third-party incidental costs for 2025 increased $109.9 million, or 17.1%, to $752.4 million as result of our revenue growth and the effects of including one month of IPG operations.
Salary and service costs in 2024 increased $731.3 million, or 6.8% to $11,432.5 million, compared to the prior year. Salary and related costs for 2024 increased $228.6 million, or 3.2%, to $7,441.4 million, primarily as a result of our acquisition of Flywheel Digital. These costs decreased as a percentage of revenue, primarily due to the reduction in headcount arising from our ongoing repositioning actions and changes in our global employee mix. Third-party service costs for 2024 increased $430.7 million, or 14.8%, to $3,348.6 million, primarily as a result of revenue growth in our Media & Advertising and Experiential disciplines. Third-party incidental costs for 2024 increased $72.0 million, or 12.6%, to $642.5 million.
Operating Expenses - Occupancy and Other Costs
Occupancy and other costs are less directly linked to changes in revenue than salary and service costs.
Occupancy and other costs for 2025, increased by $92.3 million, or 7.2%, year-over-year to $1,366.7 million, primarily driven by the effects of including one month of IPG occupancy costs. As a percentage of revenue, occupancy and other costs increased year-over-year as higher office costs were only partially offset by rent expense.
Occupancy and other costs for 2024, increased by $105.6 million, or 9.0%, year-over-year to $1,274.4 million, primarily resulting from acquisition activity. Increased office and other related costs were partially offset by lower rent expense in the year.
Operating Expenses - Selling, General & Administrative 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, including group-wide finance and accounting, treasury, legal and governance, human resource oversight and similar costs.
SG&A expenses increased $337.6 million in 2025 compared to 2024, primarily due to acquisition-related costs for the IPG acquisition of, $347.3 million ($318.5 million after-tax) (see Note 1 to the consolidated financial statements).
SG&A expenses for 2024 increased $14.4 million compared to 2023, primarily due to professional fees related to our strategic initiatives. Included in selling, general and administrative expenses in the fourth quarter of 2024 are acquisition-related costs of $14.6 million ($13.1 million after-tax) related to the Merger with IPG (see Note 1 to the consolidated financial statements).
Operating Income
Operating income for 2025 decreased $1,829.9 million, to $444.7 million, compared to 2024, and operating margin decreased to 2.6% from 14.5%. EBITA decreased $1,801.6 million to $560.5 million, and EBITA margin decreased to 3.2% from 15.1%. The net effect of primarily severance, real estate repositioning, contract cancellations and other costs, and loss on planned dispositions of certain businesses in connection with the Merger, as well as costs incurred in connection with efficiency initiatives taken in the second quarter of 2025, primarily within Omnicom Advertising and Omnicom Production (see Notes 13 and 14 to the consolidated financial statements) reduced both operating income and EBITA by $2,141.4 million, and reduced both operating margin by 12.4% and EBITA margin by 12.4%. In 2024, the net effect of repositioning actions, primarily related to severance, recorded in the second quarter of 2024 and acquisition-related costs recorded in the fourth quarter of 2024 (see Note 13 to the consolidated financial statements) reduced both operating income and EBITA by $72.4 million, and reduced both operating margin and EBITA margin by 0.4%.
Operating income for 2024 increased $169.9 million, or 8.1%, to $2,274.6 million, compared to 2023, and operating margin increased to 14.5% from 14.3%. EBITA increased $195.6 million to $2,362.1 million, and EBITA margin increased to 15.1% from 14.7%. The net effect of repositioning actions, primarily related to severance, recorded in the second quarter of 2024 and acquisition related costs recorded in the fourth quarter of 2024 (see Note 13 to the consolidated financial statements) reduced both operating income and EBITA by $72.4 million, and reduced both operating margin by 0.5% and EBITA margin by 0.4%. In 2023, the net effect of the real estate and other repositioning costs, the gain on disposition of subsidiaries (see Notes 13 and 14 to the consolidated financial statements) and acquisition costs, reduced both operating income and EBITA by $127.2 million, and reduced both operating margin and EBITA margin by 0.9% in 2023.
Net Interest Expense
Net interest expense in 2025 increased $19.5 million year-over-year to $166.5 million. Interest expense increased by $15.5 million year-over-year to $263.4 million, due primarily to higher weighted average cost of debt in 2025 (see Note 7 to the consolidated financial statements). In addition, 2025 includes one month of interest expense related to the IPG debt exchange (see Note 7 to the consolidated financial statements). Interest income in 2025 decreased $4.0 million to $96.9 million, principally due to lower interest rates. Going forward we expect net interest expense to increase by $210 million, primarily from assumed IPG debt and refinancing activities during the year.
Net interest expense in 2024 increased $35.2 million year-over-year to $147.0 million. Interest expense on debt increased by $31.2 million year-over-year, primarily related to the issuance in the first quarter of 2024 of €600.0 million 3.70% Senior Notes due 2032, or 2032 Notes, and the issuance in the third quarter of 2024 of $600.0 million 5.30% Senior Notes due 2034, or 2034 Notes. The net proceeds from the issuance of the 2032 Notes were used for general corporate purposes, including working capital expenditures, acquisitions and repurchases of our common stock. The net proceeds from the issuance of the 2034 Notes, along with available cash, were used to fund the repayment of our $750 million 3.65% Senior Notes on November 1, 2024 (see Note 7 to the consolidated financial statements). Interest income in 2024 decreased $5.8 million year-over-year to $100.9 million, primarily as a result of lower cash balances in the first half of the year due to the timing of our financing and acquisition activity, including the purchase of Flywheel in the first quarter of 2024.
Income Taxes
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 related to the Merger. The effective tax rate for 2024 includes an increase of approximately $7.5 million of favorable impacts from the resolution of certain non-U.S. tax positions.
Our effective tax rate for 2024 remained flat year-over-year at 26.3%. The effective tax rate for 2024 was favorably impacted by the windfall tax benefit on share-based compensation. The effective tax rate for 2023 includes an increase of approximately $10.7 million in income tax expense related to a lower tax benefit in certain jurisdictions for the real estate and other repositioning costs in the period and an increase in the U.K. statutory tax rate, partially offset by approximately $10.0 million of favorable impacts from the resolution of certain non-U.S. tax positions.
Net Income (Loss) and Net Income Per Share - Omnicom Group, Inc.
Net income (loss) - Omnicom Group Inc. in 2025 decreased $1,535.1 million to a $54.5 million net loss from $1,480.6 million of net income. The year-over-year decrease is due to the factors described above. Diluted net income (loss) per share - Omnicom Group Inc. decreased to a $0.27 net loss per share in 2025, from net income of $7.46 in 2024, due to the factors described above and the impact of the increase in our weighted average common shares outstanding resulting from the equity consideration in connection with the Merger, partially offset by repurchases of our common stock, net of shares issued for restricted stock awards, stock option exercises and the employee stock purchase plan during the year. For 2025, the effects of severance, real estate repositioning costs, contract cancellations and other costs, and loss on dispositions of certain businesses in connection with the Merger, as well as costs related to efficiency initiatives taken in the second quarter of 2025, primarily within Omnicom Advertising and Omnicom Production (see Notes 13 and 14 to the consolidated financial statements) reduced net income - Omnicom Group Inc. by $1,750.5 million and diluted net income per share - Omnicom Group Inc. by $8.50. In 2024, the net effect of repositioning actions, primarily related to severance, recorded in the second quarter of 2024 and acquisition-related costs recorded in the fourth quarter of 2024 (see Note 13 to the consolidated financial statements) reduced net income - Omnicom Group Inc. by $56.0 million and diluted net income per share - Omnicom Group Inc. by $0.28.
Net income - Omnicom Group Inc. in 2024 increased $89.2 million to $1,480.6 million from $1,391.4 million. The year-over-year increase is due to the factors described above. Diluted net income per share - Omnicom Group Inc. increased to $7.46 in 2024, from $6.91 in 2023, due to the factors described above and the impact of the reduction in our weighted average common shares outstanding resulting from the repurchases of our common stock, net of shares issued for restricted stock awards, stock option exercises and the employee stock purchase plan during the year. For 2024, the net impact of the real estate and other repositioning costs, primarily related to severance, recorded in the second quarter of 2024 (see Note 13 to the consolidated financial statements) and acquisition-related costs, recorded in the fourth quarter of 2024 reduced net income - Omnicom Group Inc. by $56.0 million and diluted net income per share - Omnicom Group Inc. by $0.28. In 2023, the net effect of the gain on disposition of subsidiary increased net income - Omnicom Group Inc. by $102.6 million and diluted income per share - Omnicom Group Inc. by $0.50.
NON-GAAP FINANCIAL MEASURES
We use certain non-GAAP financial measures in describing our performance. We use EBITA and EBITA Margin as additional operating performance measures, which exclude from operating income the non-cash amortization expense of acquired intangible assets and internally developed strategic platform assets. We believe EBITA and EBITA Margin are useful measures for investors to evaluate the performance of our business and allow for comparability between the periods presented. We also use constant currency growth as an additional operating performance measure. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP. Non-GAAP financial measures reported by us may not be comparable to similarly titled amounts reported by other companies.
Reconciliation of Non-GAAP Financial Measures
The following table reconciles the U.S. GAAP financial measure of Net Income - Omnicom Group Inc. to EBITA and EBITA Margin:
Year Ended December 31,
Net Income (Loss) - Omnicom Group Inc.
Net Income Attributed To Noncontrolling Interests
Net Income
Income From Equity Method Investments
Income Tax Expense
Income Before Income Taxes and Income From Equity Method Investments
Interest Expense
Interest Income
Operating Income
Add back: Amortization of acquired intangible assets and
internally developed strategic platform assets
Earnings before interest, taxes, and amortization of intangible assets (EBITA)
Revenue
EBITA
EBITA Margin %
LIQUIDITY AND CAPITAL RESOURCES
Cash Sources and Requirements
The primary sources of our short-term liquidity are net cash provided by operating activities and cash and cash equivalents. Additional liquidity sources include our $3.5 billion unsecured multi-currency revolving credit facility, or Credit Facility, terminating on November 26, 2030, the ability to issue up to $3 billion of U.S. Dollar denominated commercial paper and issue up to the equivalent of $500 million in British Pounds or Euro under a Euro commercial paper program, and access to the capital markets. In addition, certain of our international subsidiaries have uncommitted credit lines that are guaranteed by Omnicom aggregating $1.1 billion. Our liquidity sources fund our non-discretionary cash requirements and our discretionary spending. Our $600 million Delayed Draw Term Loan Agreement automatically terminated on July 15, 2024.
Working capital, which we define as current assets minus current liabilities, is our principal non-discretionary funding requirement. Our working capital cycle typically peaks during the second quarter of the year due to the timing of payments for incentive compensation, income taxes and contingent purchase price obligations. In addition, we have contractual obligations related to our long-term debt (principal and interest payments), recurring business operations, primarily related to lease obligations, and acquisition-related obligations. Our principal discretionary cash spending includes dividend payments to common shareholders, capital expenditures, strategic acquisitions and repurchases of our common stock.
Cash and cash equivalents increased $2,541.7 million from December 31, 2024. The increase was composed of:
Sources
Net cash provided by operating activities - as reported
Less: Increase in operating capital
Principal cash sources
Uses
Capital expenditures
Dividends paid to common shareholders
Dividends paid to noncontrolling interest shareholders
Cash acquired from merger with IPG, net of acquisition payments, including payment of contingent purchase price obligations and acquisition of additional noncontrolling interests
Repurchases of common stock, net of proceeds from stock plans
Principal cash uses
Principal cash sources in excess of principal cash uses
Effect of foreign exchange rate changes on cash and cash equivalents
Other net financing and investing activities
Increase in operating capital
Increase in cash and cash equivalents - as reported
Principal cash sources and principal cash uses are Non-GAAP liquidity measures. These amounts exclude changes in operating capital and other investing and financing activities. This presentation reflects the metrics used by us to assess our sources and uses of cash and was derived from our consolidated statement of cash flows. We believe that this presentation is meaningful to understand the primary sources and uses of our cash flow and the effect on our cash and cash equivalents. Non-GAAP liquidity measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP. Non-GAAP liquidity measures as reported by us may not be comparable to similarly titled amounts reported by other companies. Additional information regarding our cash flows can be found in our consolidated statement of cash flows and Note 15 to the consolidated financial statements.
At December 31, 2025, we have the following contractual obligations:
• The aggregate principal amount of long-term debt is $9.3 billion and matures at various dates from 2026 through 2048. Future interest payments on the debt total $2.1 billion, of which $282.3 million is payable in 2026.
• The liability for operating and finance lease payments is $2,566.5 million, of which $574.8 million is due in 2026.
• The obligation for the defined benefit pension plans is $655.4 million, and the liability for the postemployment arrangements is $143.5 million. In 2025, we contributed $11.6 million to the defined benefit plans and paid $14.0 million for the postemployment arrangements. We do not expect these payments to increase significantly in 2026.
• The liability for contingent purchase price payments (earn-outs) is $214.9 million, of which $95.8 million is payable in 2026.
• The remaining balance for the transition tax on accumulated foreign earnings imposed by the Tax Cuts and Jobs Act of 2017 is $6.4 million, which is payable in 2026.
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.
Based on past performance and current expectations, we believe that net cash provided by operating activities and cash and cash equivalents will be sufficient to meet our non-discretionary cash requirements for the next twelve months. In addition, and over the longer term, our Credit Facility and access to capital markets are available to fund our working capital, contractual obligations and discretionary spending.
Cash Management
Our regional treasury centers in North America, Europe and Asia manage our cash and liquidity. Each day, operations with excess funds invest those funds with their regional treasury center. Likewise, operations that require funds borrow from their regional treasury center. Treasury centers with excess cash invest on a short-term basis with third parties, with maturities generally ranging from overnight to 90 days. Certain treasury centers have notional pooling arrangements that are used to manage their cash and set-off foreign exchange imbalances. These arrangements require each treasury center to have its own notional pool account and to maintain a positive notional balance. Additionally, under the terms of the arrangement, set-off of foreign exchange positions are limited to the long and short positions within their own account. We may also use multi entity notional cash pooling arrangements with banks instead of treasury centers to manage our liquidity requirements. In these pooling arrangements, certain legal entities agree with a single bank that the cash balances of any of the entities with the bank will be subject to a full right of set-off against amounts other entities owe the bank, and the bank provides for overdrafts as long as the net balance for all entities does not exceed an agreed-upon level. To the extent that our treasury centers require liquidity, they can issue up to a total of $3.0 billion
of U.S. Dollar-denominated commercial paper, issue up to the equivalent of $500 million in British Pounds or Euro under a Euro commercial paper program, or borrow under the Credit Facility or the uncommitted credit lines. This process enables us to manage our debt more efficiently and utilize our cash more effectively, as well as manage our risk to foreign exchange rate imbalances. In countries where we either do not conduct treasury operations or it is not feasible for one of our treasury centers to fund net borrowing requirements on an intercompany basis, we arrange for local currency uncommitted credit lines. We have a policy governing counterparty credit risk with financial institutions that hold our cash and cash equivalents, and we have deposit limits for each institution. In countries where we conduct treasury operations, generally the counterparties are either branches or subsidiaries of institutions that are party to the Credit Facility. These institutions generally have credit ratings better than or equal to our credit ratings.
At December 31, 2025, our foreign subsidiaries held approximately $3.2 billion of our total cash and cash equivalents of $6.9 billion. Substantially all of the cash is available to us, net of any foreign withholding taxes payable upon repatriation to the United States.
As of December 31, 2025, our net debt position, which we define as total debt, including short-term debt, less cash and cash equivalents increased $518.2 million to $2.2 billion from December 31, 2024. The increase in net debt primarily resulted from our net discretionary spending of $0.5 billion, primarily related to our financing activities, including the increase of our outstanding debt arising from the IPG debt exchange (see Note 7 to the consolidated financial statements). This increase was partially offset by the increase in cash from the net cash provided by operating activities of $2.9 billion. In addition, the net effect of foreign exchange rate changes on cash and cash equivalents and on our foreign currency denominated debt decreased net debt by $36.0 million.
Net debt:
December 31,
Short-term debt
Long-term debt, including current portion
Total debt
Less: Cash and cash equivalents
Net debt
Net debt is a Non-GAAP liquidity measure. This presentation, together with the comparable U.S. GAAP liquidity measures, reflects one of the key metrics used by us to assess our cash management. Non-GAAP liquidity measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP. Non-GAAP liquidity measures as reported by us may not be comparable to similarly titled amounts reported by other companies.
Debt Instruments and Related Covenants
In connection with the Merger, Omnicom commenced offers to exchange all outstanding IPG notes 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 the IPG notes were exchanged for $2.76 billion in aggregate principal amount of new notes issued by Omnicom. The only cash exchanged related to a consent payment of $2.7 million and the debt exchange is presented net, or as a non-cash financing activity. The remainder of the IPG notes, representing approximately $185.0 million in aggregate principal amount, 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. As of December 31, 2025, the unamortized discount related to the required fair value adjustment (see Note 5 to the consolidated financial statements) of the former IPG notes was $183.9 million. Interest on the former IPG notes will be payable semi-annually in arrears (see Note 7 to the consolidated financial statements).
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.
Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc., or 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 to 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, or OCH, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the £325 million 2.25% Senior Notes due 2033, or 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.
The Credit Facility has a financial covenant that requires us to maintain a Leverage Ratio 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, computed in accordance with the terms of the facility, was 2.5 times. The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.
At December 31, 2025, our long-term and short-term debt was rated BBB+ and A2 by S&P and Baa1 and P2 by Moody's. Our access to the commercial paper market and the cost of any issuances is affected by market conditions and our credit ratings. The long-term debt indentures and the Credit Facility do not contain provisions that require acceleration of cash payments in the event of a downgrade in our credit ratings.
Credit Markets and Availability of Credit
In light of the uncertainty of future economic conditions, we will continue to take actions available to us to respond to changing economic conditions, and we will manage our discretionary expenditures. We will also continue to monitor and manage the level of credit made available to our clients. We believe that these actions, in addition to the availability of our Credit Facility, are sufficient to fund our near-term working capital needs and our discretionary spending. Information regarding our Credit Facility is provided in Note 7 to the consolidated financial statements.
We have the ability to fund our day-to-day liquidity, including working capital, by issuing commercial paper or borrowing under the Credit Facility. During both 2025 and 2024, we did not issue commercial paper. At both December 31, 2025 and 2024, there were no outstanding borrowings under the Credit Facility and no outstanding commercial paper issuances.
We may issue commercial paper to fund our day-to-day liquidity when needed. However, disruptions in the credit markets may lead to periods of illiquidity in the commercial paper market and higher credit spreads. To mitigate any disruption in the credit markets and to fund our liquidity, we may borrow under the Credit Facility or the uncommitted credit lines or access the capital markets if favorable conditions exist. We will continue to monitor closely our liquidity and conditions in the credit markets. We cannot predict with any certainty the impact on us of any disruptions in the credit markets. In such circumstances, we may need to obtain additional financing to fund our day-to-day working capital requirements. Such additional financing may not be available on favorable terms, or at all.
