Ad giant Omnicom posts upbeat quarterly revenue on boost from IPG acquisition, new clients

By Jaspreet Singh

Feb 18 (Reuters) - Omnicom OMC.N beat analysts' estimates for fourth-quarter revenue on Wednesday thanks to strong performance in its media and advertising unit, as the ad giant attracted new clients.

The results are the first after Omnicom closed its $13.25 billion acquisition of rival Interpublic Group, which boosted the combined company's quarterly revenue to 27.9%.

Shares of the company rose around 4% in extended trading after Omnicom also announced a $5 billion share buyback.

"We've secured new business and extended contracts with leading brands such as American Express, Bayer, BBVA, BNY, Clarins, Mercedes, and NatWest," Omnicom CEO John Wren said on a conference call with analysts.

Companies like UK's WPP WPP.L, French ad giant Publicis PUBP.PA and Omnicom have long been the creative voices behind brands, but the rise of advanced ad creation tools from companies including Meta META.O, TikTok and Google is intensifying competition.

The company's revenue of $5.53 billion for the quarter exceeded analysts' average estimate of $5.04 billion, according to data compiled by LSEG.

"Revenue growth was meaningful, but much of it was acquisition-driven, which shifts the conversation from 'breakout growth' to can they 'harmonize capabilities and deliver integrated value at scale'," said Jeremy Goldman, senior director at Emarketer.

Omnicom CFO Philip Angelastro said the company recorded $1.12 billion in severance and repositioning costs, which included expenses for severance, real estate, and contract exits.

Last year, the company announced job cuts of more than 4,000 employees and folded several well-known agency brands.

Omnicom's results come as the ad industry has been consolidating in recent years to reduce costs and embrace AI in a crowded market. Omnicom is merging its public relations firms Golin and Ketchum, and folding Novelli into FleishmanHillard.

The media and advertising segment, Omnicom's largest by revenue, posted an organic growth of 31.9% to $3.32 billion in the quarter ended December 31.

Omnicom said it earned $2.59 per share on an adjusted basis, falling short of expectations of $2.68 apiece.