IPG Q4 2024 net revenue sees 5.9% decline to $2.43 billion

IPG has reported total revenue, which includes billable expenses, of $2.86 billion for the fourth quarter ended December 31, 2024, compared $3.02 billion in the fourth quarter of 2023. Revenue before billable expenses (net revenue) was $2.43 billion, a reported decrease of 5.9% compared to the fourth quarter of 2023. The organic decrease of net revenue was 1.8% from the fourth quarter of 2023.

In the fourth quarter of 2024, operating income was $567.9 million, including a reversal of restructuring charges of $(6.4) million and deals costs of $9.3 million, compared to $606.8 million, including restructuring charges of $0.8 million, for the same period in 2023.

Adjusted EBITA before the reversal of restructuring charges and deal costs was $591.2 million in the fourth quarter of 2024, compared to $628.5 million for the same period in 2023. Fourth quarter 2024 margin of adjusted EBITA before restructuring charges and deal costs was 24.3% on revenue before billable expenses.

For the full year 2024, total revenue, which includes billable expenses, was $10.69 billion compared to $10.89 billion for the full year 2023. Revenue before billable expenses was $9.19 billion, a reported decrease of 2.3% compared to the full year 2023. The organic increase of net revenue was 0.2% from the full year 2023.

Operating income for the full year 2024 was $1.20 billion, including a reversal of restructuring charges of $(5.0) million and deal costs of $9.3 million, compared to $1.48 billion, including restructuring charges of $0.1 million, for the same period in 2023. Operating results for the full year 2024 include non-cash goodwill impairment of $232.1 million in the third quarter related to the write down of the carrying value of digital specialist agencies to fair value.

Adjusted EBITA before restructuring charges and deals costs was $1.52 billion for the full year 2024, compared to $1.57 billion for the same period in 2023. Full year 2024 margin of adjusted EBITA before restructuring charges and deal costs was 16.6% on revenue before billable expenses.

Commenting on the performance, Philippe Krakowsky, CEO, IPG, said, “Today we are reporting an organic revenue increase of 20 basis points for the full year 2024, along with adjusted EBITA margin in-line with our forecast of 16.6%. Our strong margin result reflects continued effective operating discipline by our teams, notwithstanding the challenges of the past year.”

He further said, “Solid new business momentum in the fourth quarter and early 2025 will begin to come online later this year, though it will not offset sizable client losses incurred last year due largely to changes in the media trading environment. Factoring in those headwinds, and with the benefit of otherwise sound underlying performance, we are forecasting an organic decrease in revenue for the full year of 1% to 2%.”

“Given the rapid and ongoing evolution of our industry, we will be undertaking a program of accelerated business transformation this year, designed to enhance our offerings and drive significant structural expense savings. This blueprint includes improving operating efficiencies at a number of our agencies, strategic centralization of many corporate functions, speeding our progress on simplification and platforming in both corporate services and certain areas of client delivery, greater offshoring and nearshoring, as well as further improving real estate efficiency,” Krakowsky added.

“We estimate that this program will lead to savings of approximately $250 million in calendar 2025 – net of reinvestment in our most advanced capabilities – at an equivalent cost, a significant portion of which will be non-cash. These actions allow us to target an adjusted EBITA margin for 2025 of 16.6%, despite the revenue challenges we are facing,” he said.

IPG expects the significant return on these efforts will advance Interpublic’s go-forward standalone capabilities, and, further, allow the group to become a part of the new Omnicom as the strongest possible company. It also bears mention that the benefits of this restructuring have limited overlap with the cost synergies identified as part of the Omnicom acquisition.

“We believe the proposed acquisition will result in the industry’s most dynamic and well-resourced company. Our understanding of consumer behavior at every step of the marketing lifecycle will be deeper than any other provider, as will our capacity to invest in emerging technologies. Together, we will bring to market an unparalleled range of talented practitioners in every marketing and sales discipline, supported by exceptional technology, data, production, and commerce platforms, to unlock growth opportunities and measurable results for our clients and for the combined company,” Krakowsky added.

Also Read: IPG Q4 2021 revenue up 11.6% to $2.55 bn; APAC delivers growth of 9.7%