Aon (AON) Q3 2024 earnings summary

Executive summary

• Total revenue for Q3 2024 was $3.7 billion, up 26% year-over-year, driven by 7% organic growth and the NFP acquisition.

• Adjusted EPS rose 17% to $2.72, while reported EPS fell 30% to $1.57 due to higher expenses and integration costs.

• Adjusted operating margin expanded to 24.6%, while reported margin declined to 16.7% due to NFP-related amortization and restructuring.

• Net income attributable to shareholders decreased 25% to $343 million; adjusted net income increased 25% to $594 million.

• Free cash flow for the first nine months was $1.67 billion, down 15% year-over-year, reflecting higher cash taxes and integration costs.

Financial highlights

• Q3 2024 revenue: $3.7B (+26% YoY); organic revenue growth was 7% across all solution lines.

• Adjusted operating income increased 28% to $915M; adjusted operating margin was 24.6% in Q3 and 30.8% year-to-date.

• Adjusted EPS grew 17% to $2.72; free cash flow for Q3 was $951M, totaling $1.67B year-to-date.

• Operating expenses rose 37% year-over-year, mainly from NFP integration, higher amortization, and restructuring charges.

• Interest expense increased to $213M in Q3 2024, reflecting higher debt post-NFP acquisition.

Outlook and guidance

• Reaffirmed 2024 guidance: mid-single-digit or greater organic revenue growth, adjusted margin expansion above 2023 baseline, $100 million in restructuring savings, and double-digit free cash flow growth through 2026.

• Expect $350M annual run-rate savings by end of 2026 from restructuring; anticipate leverage objective of 2.8x–3.0x by end of Q4 2025.

• Management expects to deliver full-year results in line with financial guidance, supported by strong performance in the first three quarters.

• Q4 2024 interest expense expected to be ~$210M; foreign currency expected to have a minor unfavorable impact.