Aon (AON) Q2 2024 earnings summary

Executive summary

• Total revenue rose 18% year-over-year to $3.8 billion in Q2 2024, driven by 6% organic growth and the NFP acquisition, with all solution lines contributing and strong global performance, especially in EMEA and LATAM.

• Adjusted operating income increased 19% to $1,029 million, and adjusted EPS rose 6% to $2.93, reflecting NFP integration, restructuring savings, and share buybacks.

• Operating expenses increased 33% to $3.1 billion, mainly due to NFP integration, restructuring charges, and growth investments, resulting in a decline in operating margin to 17.4%, while adjusted margin improved to 27.4%.

• Net income attributable to shareholders fell 6% to $524 million, while adjusted net income rose 9% to $624 million.

• Leadership transition underway, with Edmund Reese succeeding Christa Davies as CFO.

Financial highlights

• Q2 2024 revenue: $3.8 billion (+18% YoY); organic revenue growth: 6%; H1 2024 revenue: $7.8 billion (+11% YoY).

• Adjusted operating income up 19% year-over-year; adjusted EPS was $2.93 in Q2 2024 (+6% YoY); YTD adjusted EPS reached $8.50 (+7% YoY).

• Adjusted operating margin reached 27.4% in Q2; year-to-date margin at 33.8%, up 20 basis points.

• Free cash flow for H1 2024 was $721 million, down 27% year-over-year due to higher receivables, integration costs, and cash taxes.

• Interest expense rose to $225 million in Q2 2024, reflecting increased debt from the NFP acquisition.

Outlook and guidance

• Expect mid-single-digit or greater organic revenue growth for full year 2024 and long term, including NFP.

• NFP expected to contribute $175 million in net revenue synergies by 2026 and $300 million/$600 million in incremental free cash flow in 2025/2026.

• Committed to adjusted operating margin expansion over the full year and long term, with a 2025 baseline margin of 30.6%.

• Annual run-rate savings of $350 million from the Accelerating Aon United Restructuring Program targeted by end of 2026.

• Management expects a $0.07 per share unfavorable FX impact for full year 2024 if current rates persist.