Aon Reports First Quarter 2025 Results

Aon plc (NYSE: AON) has reported results for the three months ended March 31, 2025.

• Aon delivered 16% Total revenue growth and another quarter of mid-single-digit Organic revenue growth, which reached 5%. EPS was $4.43 and Adjusted EPS was $5.67
• Free Cash Flow generation enabled continued targeted tuck-in acquisitions and $397 million of capital return to shareholders through the dividend and share repurchases. On track to reach 2.8-3.0x leverage objective by Q4 2025
• Announced a 10% increase to quarterly dividend, marking the 15th consecutive year of dividend growth
• Reaffirming 2025 guidance, including mid-single-digit or greater Organic revenue growth, adjusted operating margin expansion, strong adjusted EPS growth and double-digit Free Cash Flow growth

"Aon has momentum entering year two of the 3x3 Plan and our continued execution drove another quarter of mid-single-digit Organic revenue growth and strong operating performance," said Greg Case, president and CEO of Aon. "In the first quarter, we delivered 5% Organic revenue growth, 12% Adjusted Operating Income growth and Adjusted EPS of $5.67. We are driving growth by providing actionable insights, powered by Aon Business Services, to our clients in an increasingly complex macro environment. These results reflect robust demand for our Risk Capital and Human Capital solutions. We are reaffirming our 2025 guidance, across all key metrics, reflecting the resilience and strength of our business and financial model."

Net income attributable to Aon shareholders decreased 17%, to $4.43 per share on a diluted basis, compared to $5.35 per share on a diluted basis, in the prior year period. Adjusted net income per share attributable to Aon shareholders increased to $5.67 on a diluted basis, including an unfavorable impact of $0.14 per share if prior year period results were translated at current period foreign exchange rates ("foreign currency translation"), compared to $5.66 in the prior year period. Certain items that impacted first quarter results and comparisons with the prior year period are detailed in "Reconciliation of Non-GAAP Measures - Operating Income, Operating Margin and Diluted Earnings Per Share" on page 11 of this press release.

FIRST QUARTER 2025 FINANCIAL SUMMARY

Total revenue in the first quarter increased 16% to $4.7 billion compared to the prior year period, reflecting the contribution from NFP, 5% Organic revenue growth and a 2% unfavorable impact from foreign currency translation. Risk Capital revenue increased $216 million, or 7%, to $3.2 billion and Human Capital revenue increased $442 million, or 40%, to $1.5 billion.

Total operating expenses in the first quarter increased 25% to $3.3 billion compared to the prior year period due primarily to the inclusion of NFP's ongoing operating expenses, an increase in expense associated with 5% Organic revenue growth, an increase in intangible asset amortization associated with the acquisition of NFP, and investments in long-term growth, partially offset by $40 million of net restructuring savings. Risk Capital operating expenses increased $204 million, or 11%, to $2.0 billion and Human Capital operating expenses increased $426 million, or 59%, to $1.1 billion.

Foreign currency translation in the first quarter had a $0.13 per share unfavorable impact on diluted EPS and a $0.14 per share unfavorable impact on adjusted EPS. If currency were to remain stable at today's rates, the Company would expect an unfavorable impact on adjusted EPS of approximately $0.08 per share for the full year 2025.

Effective tax rate was 21.4% in the first quarter compared to 23.2% in the prior year period. After adjusting to exclude the applicable tax impact associated with certain non-GAAP adjustments, the adjusted effective tax rate for the first quarter of 2025 was 20.9% compared to 22.6% in the prior year period. The primary drivers of the change in adjusted effective tax rate were the changes in the geographical distribution of income and a net favorable impact from discrete items.

Weighted average diluted shares outstanding increased to 217.9 million in the first quarter compared to 200.1 million in the prior year period. The Company repurchased 0.6 million class A ordinary shares for approximately $250 million in the first quarter. As of March 31, 2025, the Company had approximately $2.1 billion of remaining authorization under its share repurchase program.

YEAR TO DATE 2025 CASH FLOW SUMMARY

Cash flows provided by operations for the first three months of 2025 decreased $169 million, or 55%, to $140 million compared to the prior year period, primarily due to higher payments related to incentive compensation, interest and restructuring, partially offset by strong adjusted operating income growth and days sales outstanding improvements.

Free cash flow, defined as cash flow from operations less capital expenditures, decreased 68%, to $84 million for the first three months of 2025 compared to the prior year period, reflecting a decrease in cash flows provided by operations and an $8 million increase in capital expenditures.

FIRST QUARTER 2025 REVENUE REVIEW

The first quarter revenue reviews provided below include supplemental information related to Organic revenue growth, which is a non-GAAP measure that is described in detail in "Reconciliation of Non-GAAP Measures - Organic Revenue Growth and Free Cash Flow" on page 10 of this press release.

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