Financial Outlook

2024 financial guidance is as follows:

• Organic Net Revenue growth of 5% to 7%
• Organic Net Revenue excluding Advocacy growth of 4% to 5%
• Adjusted EBITDA of $400 million to $450 million
• Free Cash Flow Conversion of approximately 50%
• Adjusted EPS of $0.75 – $0.88
• Guidance assumes no impact from foreign exchange, acquisitions or dispositions.

FOURTH QUARTER AND FULL YEAR HIGHLIGHTS:

• Completed the sale of ConcentricLife to Accenture in Q4 for gross proceeds of $245 million, resulting in a taxable gain of $175 million
• Q4 net new business of $65 million; FY23 net new business of more than $270 million
• Q4 revenue of $655 million; FY23 revenue of $2,527 million, a decrease of 6% versus the prior year period
• Q4 net revenue of $551 million; FY23 net revenue of $2,147 million, a decrease of 3% versus the prior year period
• Q4 organic net revenue declined 7% versus the prior year period and 5% ex-Advocacy; FY23 organic net revenue declined 6% versus the prior year period and 4% ex-Advocacy
• Q4 net revenue from international increased 3%, led by an increase of 19% in the United Kingdom; FY23 net revenue from international increased 13%, led by increases of 17% in EMEA, and 5% in APAC
• Q4 net income of $46 million versus net loss of $43 million in the prior year period; FY23 net income of $42 million versus net income of $50 million in the prior year period
• Q4 Adjusted EBITDA of $95 million; FY23 Adjusted EBITDA of $360 million, a decrease of 20% versus the prior year period
• Q4 Adjusted EBITDA Margin of 17% on net revenue; FY23 Adjusted EBITDA Margin of 17% on net revenue
• Q4 earnings per share attributable to Stagwell Inc. common shareholders of $0.00; FY23 earnings per share attributable to Stagwell Inc. common shareholders of $0.00
• Q4 Adjusted earnings per share attributable to Stagwell Inc. common shareholders of $0.12; FY23 Adjusted earnings per share of $0.57

2022 Revised Consolidated Financial Statements

In connection with the preparation of the consolidated financial statements during 2023, the Company identified errors in the areas of income taxes as well as accumulated other comprehensive loss in its previously filed 2022 annual consolidated financial statements. As a result, the 2022 financial statements included herein have been revised to reflect the correction of the errors. The primary change to the 2022 income statement was an increase in tax expense of approximately $18 million compared to the previously filed 2022 financial statements. The Company’s 2023 Form 10-K will include disclosure providing further details of the revision.

Video Webcast

Management will host a video webcast on Tuesday, February 27, 2024, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the year ended December 31, 2023. The video webcast will be accessible at https://stgw.io/Earnings. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the webcast.

A recording of the webcast will be accessible one hour after the webcast and available for ninety days at www.stagwellglobal.com.

Stagwell Inc.

Stagwell is the challenger network built to transform marketing. We deliver scaled creative performance for the world’s most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing. Led by entrepreneurs, our specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com.

Contacts

For Investors: 
Ben Allanson
Ir@stagwellglobal.com 

For Press:
Beth Sidhu
Pr@stagwellglobal.com 

Non-GAAP Financial Measures

In addition to its reported results, Stagwell Inc. has included in this earnings release certain financial results that the Securities and Exchange Commission (SEC) defines as “non-GAAP Financial Measures.” Management believes that such non-GAAP financial measures, when read in conjunction with the Company’s reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company’s results. Such non-GAAP financial measures include the following:

(1) Organic Revenue: “Organic revenue growth” and “Organic revenue decline” reflects the year-over-year change in the Company’s reported net revenue attributable to the Company’s management of the entities it owns. We calculate organic net revenue growth (decline) by subtracting the net impact of acquisitions (divestitures) and the impact of foreign currency exchange fluctuations from the aggregate year-over-year increase or decrease in the Company’s reported net revenue. The net impact of acquisitions (divestitures) reflects the year-over-year change in the Company’s reported net revenue attributable to the impact of all individual entities that were acquired or divested in the current and prior year. We calculate impact of an acquisition as follows: (a) for an entity acquired during the current year, we present the entity’s prior year net revenue for the same period during which we owned it in the current year as impact of the acquisition in the current year; and (b) for an entity acquired in the prior year, we present the entity’s prior year net revenue for the period during which we did not own the entity in the prior year as impact of the acquisition in the current year. We calculate impact of a divestiture as follows: (a) for a divestiture in the current year, we present the entity’s prior year net revenue for the same period during which we no longer owned it in the current year as impact of the divestiture in the current year; and (b) for a divestiture in the prior year, we present the entity’s prior year net revenue for the period during which we owned it in the prior year as impact of the divestiture in the current year. We calculate the impact of any acquisition or divestiture without adjusting for foreign currency exchange fluctuations. The impact of foreign currency exchange fluctuations reflects the year-over-year change in the Company’s reported net revenue attributable to changes in foreign currency exchange rates. We calculate the impact of foreign currency exchange fluctuations for the portion of the reporting period in which we recognized revenue from a foreign entity in both the current year and the prior year. The impact is calculated as the difference between (1) reported prior period net revenue (converted to U.S. dollars at historical foreign currency exchange rates) and (2) prior period net revenue converted to U.S. dollars at current period foreign exchange rates.

(2) Net New Business: Estimate of annualized revenue for new wins less annualized revenue for losses incurred in the period.

(3) Adjusted EBITDA: defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items.

(4) Adjusted Diluted EPS is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income attributable to Class C shareholders, excluding amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items, divided by (ii) (a) the per weighted average number of common shares outstanding plus (b) the weighted average number of Class C shares outstanding, (if dilutive). Other items includes restructuring costs, acquisition-related expenses, and non-recurring items, and subject to the anti-dilution rules.

(5) Free Cash Flow: defined as Adjusted EBITDA less capital expenditures, change in net working capital, cash taxes, interest, and distributions to minority interests, but excludes contingent M&A payments.

(6) Financial Guidance: The Company provides guidance on a non-GAAP basis as it cannot predict certain elements which are included in reported GAAP results.

Included in this earnings release are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures.

This document contains forward-looking statements. within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company’s beliefs and expectations, future financial performance and future prospects, business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “create,” “estimate,” “expect,” “focus,” “forecast,” “foresee,” “future,” “guidance,” “intend,” “look,” “may,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section.

Forward-looking statements in this document are based on certain key expectations and assumptions made by the Company. Although the management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The material assumptions upon which such forward-looking statements are based include, among others, assumptions with respect to general business, economic and market conditions, the competitive environment, anticipated and unanticipated tax consequences and anticipated and unanticipated costs. These forward-looking statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:

• risks associated with international, national and regional unfavorable economic conditions that could affect the Company or its clients;
• and demand for the Company’s services, which may precipitate or exacerbate other risks and uncertainties;
• inflation and actions taken by central banks to counter inflation;
• the Company’s ability to attract new clients and retain existing clients;
• the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
• financial failure of the Company’s clients;
• the Company’s ability to retain and attract key employees;
• the Company’s ability to compete in the markets in which it operates;
• the Company’s ability to achieve its cost saving initiatives;
• the Company’s implementation of strategic initiatives;
• the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration;
• the Company’s ability to manage its growth effectively, including the successful completion and integration of acquisitions that complement and expand the Company’s business capabilities;
• the Company’s ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products;
• adverse tax consequences for the Company, its operations and its stockholders, that may differ from the expectations of the Company, including that future changes in tax laws, potential increases to corporate tax rates in the United States and disagreements with tax authorities on the Company’s determinations may result in increased tax costs;
• adverse tax consequences in connection with the Transactions, including the incurrence of material Canadian federal income tax (including material “emigration tax”);
• the Company’s unremediated material weaknesses in internal control over financial reporting and its ability to establish and maintain an effective system of internal control over financial reporting;
• the Company’s ability to protect client data from security incidents or cyberattacks;
• economic disruptions resulting from war and other geopolitical tensions (such as the ongoing military conflicts between Russia and Ukraine and in Israel and Gaza), terrorist activities and natural disasters;
• stock price volatility; and
• foreign currency fluctuations.

Investors should carefully consider these risk factors, other risk factors described herein, and the additional risk factors outlined in more detail in our 2022 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2023, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings.

“Unlock Surveys is arguably the most significant research panel launched in nearly a decade, in an industry that has seen research means consolidated, leading to commoditization, poor data quality and high participant turnover,” said Mark Penn, chairman and CEO, Stagwell. “From brand competition for customer satisfaction and loyalty, to understanding voters in the political arena, the demand for capturing the public’s opinion online is at an all-time high. As a pioneering pollster, I’m proud to see this advanced, member-first offering come under the Stagwell umbrella, making it easier than ever for brands to unlock quality insights that inform vital business decisions.”

“Under the current model, researchers and brands can spend tens of millions of dollars per year collecting online research from an increasingly unreliable pool of external suppliers. In exchange, the quality of that deliverable has declined dramatically over the past decade as fraud rates have increased, respondent engagement has dropped, and trust has diminished,” said Adam Dietrich, managing director, Unlock Surveys. “We’re building Unlock Surveys in a way that connects with authentic people and is underpinned by proven, time-tested research principles.”

Why this matters for modern marketing
Beyond the standard single-use research panels, the Stagwell Marketing Cloud will tap into proprietary data from Unlock Surveys to drive more comprehensive, two-way consumer behavioral analytics, thereby enhancing media targeting capabilities and providing marketers with more granular insights into the demands of modern-day consumers.

Brand marketers, media buyers and planners, researchers and other professionals in need of an international, representative collection of trustworthy respondents benefit from Unlock Surveys in a myriad of ways:

• Data purity enables speed and agility: Clients of any of Stagwell’s 70+ agencies benefit from access to a centralized data house and the flexibility to pursue follow-up surveys, longitudinal studies, qualitative interviews, and other activities without the need to consult new or outside sources.
• Members are trusted, verified participants: All members are double-opted-in via email verification, and must pass a series of stringent quality measures that include cutting-edge bot deterrents and the latest in fraud prevention systems before ever being placed into a client survey. This weeds out bad actors and technology fraudsters, also ensuring the client is receiving a participant that is most likely to qualify for and complete their survey. These panels have been built to score highly in any “research on research” metric such as quality, consistency, and census representation.
• Applying science to behavior: As brands push the limits of quantitative research, it is vital to have a people engine to unlock the next phase of meaningful insights. This panel provides not only the respondents to participate in traditional research, but also the loyal, engaged group required for the ever-evolving complexities of behavioral understanding that come with ongoing engagement and analysis.

Consumers interested in becoming part of the panel can visit www.unlocksurveys.com. Organizations interested in using Unlock Surveys to conduct research can reach out to support@unlocksurveys.com.

About Stagwell Marketing Cloud
Stagwell Marketing Cloud (SMC) is a marketing-focused, AI-enablement platform built for the modern marketer. Born out of Stagwell’s (NASDAQ: STGW) network of award-winning marketing agencies, SMC’s technology empowers marketers to drive business impact by giving them intuitive tools equipped with proprietary, actionable data. SMC’s portfolio of solutions powers strategic consumer research, communications, and media activation for brands worldwide by leveraging technology such as generative and predictive artificial intelligence, shared augmented reality, and more. Get your head in the cloud at www.stagwellmarketingcloud.com.

Media Contact
Sarah Arvizo
pr@stagwellglobal.com

WNP is one of the leading digital creative firms in Europe, exemplified in its work for clients such as Cora, Danone, Ecoutier Voir, Meetic Europe, and Savencia. WNP will deepen Anomaly’s presence in Europe and add capabilities in scaled digital content and AI-enabled CRM and data, as well as the leadership in-market to compete for and service larger European accounts.

“Anomaly continues to surge around the world because clients resonate with our relentless pursuit of effectiveness, the leveraging of the widest possible meaning of ‘creativity’ across all marketing tools, and our entrepreneurial ambition. That equation is not easily replicable and, as we expand across continents, it’s essential our clients know our partners exemplify what it means to be an anomaly,” said Carl Johnson, Anomaly Founding Partner and Executive Chairman. “In What’s Next Partners, we have found kindred spirits in Europe, and I could not be more excited to welcome them to our team.”

Guy Chauvel, Founder and CEO of WNP, brings an exceptional track record of creative leadership to the partnership, with prior tenures as EVP of J. W. T., the 3^rd largest global agency, and CEO of Europe at Havas. He has directly advised on marketing and/or communication strategies for a variety of blue-chip companies including P&G, L’Oréal, Unilever, Rolex, Disney, and more.  He will drive the creation of new client solutions for WNP and the Anomaly Alliance with Carl Johnson, leveraging the breadth and depth of the Stagwell portfolio.

“Advertisers we are talking to or working with are pushing us to go international. We have always kept a close eye on Anomaly over the past 15 years as a source of inspiration and are fascinated by their model and culture,” said Guy Chauvel. “When the decision came to choose our new partner, Anomaly was the obvious choice. I am thrilled they agreed. We were also very impressed when meeting a committed, open-minded, and disruptive Stagwell executive team, and are excited to grow further as part of the network.”

“2023’s exceptional new business pipeline made it clear Stagwell’s proposition resonates with clients,” added Mark Penn, Chairman and CEO, Stagwell. “We’re all-in on expanding our unique tech-forward approach to transforming marketing in France and Europe more broadly. In 2024, we’re excited to welcome tested leaders like WNP and Guy and to build a best-in-class European team to support our clients and our talent.”

Currently, Anomaly has offices in New York, Los Angeles, Toronto, London, Berlin and Shanghai. Further acquisitions for the Anomaly Alliance will follow ranging from Latin America to Asia Pacific.

WNP will mark Stagwell’s third acquisition announced in 2024 following the purchase of Team Epiphany, a culturalist creative agency connecting brands to multicultural consumers, in January 2024; and Sidekick, a creative collective in the U.K., in February 2024.

Lazare Consulting LLC served as the exclusive strategic M&A advisor to WNP.

About Stagwell
Stagwell (NASDAQ: STGW) is the challenger network built to transform marketing. We deliver scaled creative performance for the world’s most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing. Led by entrepreneurs, our specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com

About What’s Next Partners

WNP has grown to be one of the leading independent players on the French market thanks to the successful integration of varied talents and skillsets such as consumer intelligence, strategic planning, creative advertising campaigns, digital content production, social media & influence, CRM & data analytics, and brand/product marketing innovation. Among its active client portfolio, WNP has gained the trust of large national and international advertisers such as: Danone, Meetic Europe, LVMH, Panzani, Savencia, La Poste, Ecouter Voir, Cora, La Centrale, BASF, Maaf.”

CONTACT: 
Sarah Arvizo
pr@stagwellglobal.com 

“After spending more than 20 years working in both agency and brand-side roles, I’ve come to understand the headache marketers face when brand and performance marketing operate in silos. The Brand Performance Network flips the script by treating brand and performance as a single, unified action,” said Shannon Pruitt.

After joining Stagwell in 2020, Shannon was elevated to Global Chief Content & Partnership Innovation Officer of BxP in 2021. In this role, Shannon spearheaded partnerships with emerging platforms like Roblox and Audio, while collaborating with BxP agencies and Stagwell on key business initiatives. In 2023, Shannon launched Partners for Progress, Assembly’s Global Diversity & Inclusion initiative, and consolidated Assembly Global’s ESG efforts into Assembly Impact.

Prior to joining Stagwell, Shannon was the Chief Marketing Officer of The Honest Company and the co-founder and CEO of Dentsu’s The Story Lab, amassing experience across Fortune 100 brands including GM, XBox, P&G, Fox, Microsoft, Mondelez, MasterCard and Macy’s. Shannon has also led creative, marketing and business development teams at entertainment powerhouses 19 Entertainment, Mark Burnett Productions, Warner Bros and Octagon. Throughout this time, she was responsible for the strategy and activation of MasterCard’s FIFA World Cup, Major League Baseball, and National Football League sponsorships.

“Given Shannon’s deep background in brand storytelling, partnerships, content creation, and omnichannel campaigns, she is the ideal person to drive forward the Brand Performance Network’s mission. Shannon understands the necessity for connected solutions across creative, media and commerce and can help us tell the story for brands seeking a modern alternative to the legacy players,” said James Townsend, CEO of the Brand Performance Network.

“Shannon is also deeply passionate about sustainable growth and impact for brands. We know that DEI and environmental sustainability are important not only to consumers but to clients who have also made shareholder and business commitments in these areas. Shannon will continue to serve as a trusted advisor to clients defining their path forward,” Townsend added.

To inquire about partnering with the Brand Performance Network, please contact hello@bxpnetwork.com. 

About Brand Performance Network
The Brand Performance Network (BxP) is a collection of top Stagwell agencies providing B2B and B2C marketers with connected global solutions in creative, media, commerce, data, and technology. BxP has over 5,000 experts across 60 offices in 20 countries, collectively handling over $5 billion in media.

About Stagwell
Stagwell (NASDAQ: STGW) is the challenger network built to transform marketing. We deliver scaled creative performance for the world’s most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing. Led by entrepreneurs, our 13,000+ specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com.

PR Contact:
Madeleine Maher
pr@stagwellglobal.com

“Sidekick is at the forefront of storytelling and will be an essential part of the challenger marketing network we are building in Europe,” said Mark Penn, Chairman and CEO, Stagwell. “As we embark on our next chapter in Europe, I’m excited to welcome Duncan and Ollie to our network and see Allison continue to transform its content innovation capabilities.”

The addition of Sidekick will further expand Allison’s footprint in Europe and introduce capabilities in the market that are critical for a new era of integrated brand storytelling. It adds tremendous synergies to Allison’s existing core competencies of strategic communications, influencer marketing, digital, performance marketing and data analytics. 

“After a successful period of collaboration with the Sidekick team, we are delighted to have them officially join the Allison family.  The organisation that the Sidekick founders have built together with their colleagues delivers an impressive suite of services that complements those already offered by Allison and leads with a strong and supportive culture that aligns with our own,” said Scott Allison, Global Chairman of Allison.  He added, “As we continue to expand our operations throughout Europe, Sidekick will form an integral part of this growth story.”

The Sidekick Group launched back in 2021 when experiential agency Kreate and content agency Many Makers came together to form a strategic arm of the business, capitalising its collective expertise on behalf of clients.  Kreate delivers ‘real-world’ activations for clients, specialising in brand experience and live events.  Many Makers is a video and brand content agency that uses digital storytelling including social media, video production, gamification and AR/VR content on behalf of the wider group.

Sidekick Co-founders Duncan McCaslin and Ollie Burgoyne will remain as Managing Directors of their respective teams and both will join Allison’s European management team.  Directors William Howe and Stephen Bradley will also move across in their current roles.  No other staffing changes are planned.

“The acquisition represents a significant leap forward in the growth of Sidekick and our people. Having seen our collective teams work successfully together over the last year or so, we knew that joining with Allison and Stagwell was the logical next step. We see this as the perfect time to combine forces, further enhancing our collective capabilities and ensuring that we continue to deliver outstanding results for our clients,” said Duncan McCaslin, MD of Sidekick and Kreate.

“This is an extremely exciting next step for Sidekick. Having worked alongside the team at Allison for the last two years, we quickly realised that we share the same vision and values.  I can’t wait for our teams to work as one and to be a part of the exciting growth plans that Scott and team have in place,” added Ollie Burgoyne, MD of Sidekick and Many Makers.

This acquisition comes amid a significant European acceleration at Stagwell, which has in recent months appointed James Townsend as CEO, EMEA, and launched a regional hub at the Blue Fin Building in London to connect its 15+ agencies and over 1900 employees within the region.

Sidekick is Stagwell’s second acquisition of the year, following the purchase of Team Epiphany, a culturalist creative agency connecting brands to multicultural consumers, in January 2024.

About Stagwell
Stagwell (NASDAQ: STGW) is the challenger network built to transform marketing. We deliver scaled creative performance for the world’s most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing. Led by entrepreneurs, our 13,000+ specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com

About Allison
Allison is a global integrated marketing and communications consultancy dedicated to driving growth, innovation, and positive change for clients, colleagues, and communities. With a diverse range of expertise and a forward-looking mindset, Allison delivers game-changing results that make a lasting impact. Allison is owned by Stagwell (NASDAQ: STGW), one of the fastest growing and most influential marketing and communications networks in the world. Agency partners leverage Stagwell’s technology, data analytics, insights and strategic consulting solutions to drive measurable results and optimize return on marketing investment for more than 1,700 clients worldwide. Learn more at www.allisonworldwide.com  

Stagwell PR Contact
Beth Sidhu
pr@stagwellglobal.com 

Stagwell IR Contact
Ben Allanson
ir@stagwellglobal.com 

Allison PR Contact
Kate Lynch
kate.lynch@allisonworldwide.com