Interpublic Group Reports Q2 Results: AI Integration Boosts Margins Amid Revenue Decline

Interpublic Group Delivers Record Margins in Q2 | The Motley Fool

Interpublic Group (IPG 6.95%) reported second-quarter results on July 22, highlighted by a 3.5% organic revenue decrease and a record 18.1% adjusted EBITDA margin. The company confirmed progress on its merger with Omnicom and projected a 1%-2% decline in full-year organic net revenue for 2025. However, it forecast full-year adjusted EBITDA margin for 2025 well above the prior 16.6% guidance. Key insights below detail execution of strategic transformation, AI-driven operational scale, and merger-related milestones that shape the long-term investment thesis. Adjusted EBITDA reached $393.7 million in Q2, and the company delivered a 350 basis-point year-over-year improvement in adjusted EBITDA margin, driven by deeper structural cost reductions and operational consolidation. Headcount declined approximately 6% compared to Q2 2024, reaching 51,300, and restructuring charges totaled $118 million, with a projected annualized structural savings run rate above $300 million. "Our fully adjusted EBITDA margin in the quarter was 18.1%, which is an increase of 350 basis points from a year ago. That strong result is ahead of plan and is consistent with our conviction that there's continued opportunity for margin and cash flow growth in our business. I want to acknowledge and thank our teams around the world for their focus, professionalism, and high level of execution on our strategic transformation program, which continues." -- Ellen Johnson, CFO Evidence of margin expansion in the second quarter, despite a year-over-year revenue decline, demonstrates management's effective execution and suggests continued long-term leverage as cost discipline and centralization initiatives become permanent features of the operating model. Management cited rapid adoption of the proprietary Interact AI platform, with more than half of employees using it and 40% of employees engaging with it daily, supporting automation of marketing workflows and data-driven client solutions. ASC (Agentic Systems for Commerce), the latest AI-powered commerce tool, was piloted by nearly two dozen clients and delivered double-digit percentage lifts in impressions and sales during pilots; Interact processed over 1 million prompts, creating over 10,000 purpose-built AI agents year to date. "Interact delivers significant value by democratizing data and making AI accessible and scalable across our agencies, operational teams, brands, and partners. ... All of this is in support of areas of the business that were not as far along on their data and AI journeys 12 months ago as early adopters, such as our media business. ... ASC is already being piloted by almost two dozen of our global clients, with results to date that have shown double-digit improvements in impressions and sales. We believe products like ASC can become a new revenue stream for us." -- Philippe Krakowsky, CEO Accelerating AI integration is creating operational leverage and opening new SaaS-like, outcome-based, and performance-driven compensation opportunities that can diversify revenues and strengthen long-term competitive positioning. The company's merger with Omnicom advanced toward a second-half 2025 close, having secured FTC clearance in the U.S.; client support and business performance remained stable despite competitive speculation. Share buybacks totaled $98 million ($188 million year to date), constrained only by the $325 million annual cap imposed by the merger agreement on share repurchases. "We've now secured antitrust clearance in all but four of the jurisdictions required, having been cleared in Australia last week. Importantly, this includes FTC clearance in the U.S., which took place in late June. We therefore remain solidly on track to see the transaction completed in the second half of the year. Notwithstanding noise from certain competitors about distractions or inward focus, since the acquisition was announced, we've never lost sight of the needs of our clients and the teams that deliver value to marketers around the world." -- Philippe Krakowsky, CEO Management confirmed guidance for a 1%-2% decrease in organic net revenue for 2025, anticipating flat sequential results in the third and fourth quarters. The Omnicom transaction remains on track to close in the second half. No quantitative 2026 targets or structural merger synergies were specifically disclosed in this call.

IPG sees Q2 decline; APAC revenue contracts 13.6% | Advertising | Campaign India

Interpublic Group cited three large account losses from 2024 that impacted the business, especially in media and healthcare. Unlike its future acquirer, Omnicom, Interpublic Group reported a 3.5% decline in organic growth in Q2 2025, with Asia Pacific turning in its weakest performance globally -- a steep 13.6% year-on-year decline in net revenue Its revenue in the period, including billable expenses, was $2.5 billion. The decline is in line with IPG forecasts, as first mentioned in its Q1 earnings call. Profits dropped, as the reported net income was $162.5 million. IPG CEO Philippe Krakowsky confirmed on today's earnings call that IPG remains "on track with the full-year target for organic net revenue that we shared earlier this year, which is an organic decrease of 1 to 2%." "Organic growth this year is being pressured by the impact of account activity that concluded in 2024," shared Krakowsky. "As expected, those headwinds intensified sequentially from our first quarter. "Our three largest losses in 2024 weighed on growth by approximately 5.5% in Q2, which is reflected in our results across a number of geographic regions and disciplines, with the greatest impact on media and healthcare." Last year, the network lost the lion's share of Amazon's global media account, Lego and global creative duties for Pfizer. Krakowsky confirmed that, despite the "changing business and geopolitical landscape," clients are not reacting reflexively, but are instead working closely with IPG to deliver on business outcomes. IPG agencies across media, data and engagement solutions saw a YoY decrease of 3.1%. Integrated advertising and creativity-led solutions agencies saw a drop of 6.3%. Specialised communications and experiential solutions, such as Weber Shandwick, Golin, and experiential agencies, saw a 2.3% uptick. IPG Mediabrands also won significant new accounts in Q2: It was named media AOR for the U.S. by Paramount/CBS (along with Publicis), AI leader Anthropic and 7-Eleven. The network also confirmed a three-year renewal with its client, Merck. CFO Ellen Johnson provided an in-depth look at the results, stating international markets accounted for 34% of IPG's net revenue in the quarter and decreased 5.4% organically. Regions that saw a decrease in net revenue include the U.S., the U.K., Continental Europe, and the Asia Pacific. The U.S., which contributed 66% of net revenue in Q2, decreased 2.6% organically. The U.K. reported a 9.7% decrease, while Continental Europe saw a 1.6% decrease. The Asia Pacific region experienced the largest decrease, at 13.6%. Only Latin America and other markets, such as Canada, the Middle East, and Africa, saw an increase in net revenue. IPG reported strong performance across the food and beverage, financial services and tech sectors. Prior-period losses weighed on the retail, healthcare, and CPG client sectors. There is a continued focus on integrating AI into IPG's workflow, as seen in IPG's Interact, an Acxiom-powered platform that unites data, media, creative, and production across all the holding company's agencies and clients. IPG stated 40% of IPG employees are utilising the platform. Additionally, the holding company flagged an announcement coming later today that it is launching Agentic Systems for Commerce. "This is a net new offering that helps CPG brands manage the vast and complex commerce ecosystem in ways that are not possible without automation and artificial intelligence," stated Krakowsky. In line with Omnicom CEO John Wren's comments during his holdco's Q2 earnings report last week, Krakowsky confirmed the acquisition is on schedule to be completed in the second half of 2025. Antitrust clearance was secured in Australia last week and now four jurisdictions remain.