Delivers Double-Digit 2Q 2022 Revenue Growth; Reiterates guidance driven by global media performance and continued digital acceleration
  • 2Q GAAP Revenue grew 221.1% and 21.2% on a Pro Forma basis; YTD Pro Forma growth of 26.0%
  • Pro-Forma Organic Net Revenue grew 16.0% in 2Q and 19.1% YTD
  • Net Income of $24.5M in 2Q and Diluted EPS of $0.08 per share
  • Net Income attributable to Stagwell of $10.5M in 2Q
  • Adjusted EBITDA of $111.3M in 2Q representing a 20.0% margin on Net Revenue
  • 57% of 2Q Net Revenue came from high-growth digital services
  • Reaffirming 2022 full-year organic net revenue growth outlook of 18%-22%

New York, NY, August 4, 2022 (NASDAQ: STGW) – Stagwell Inc. (“Stagwell”) today announced financial results for the three and six months ended June 30, 2022.

SECOND QUARTER AND YTD HIGHLIGHTS:
  • Second quarter revenue of $672.9 million, an increase of 221.1% versus the prior year period; YTD revenue of $1,315.8 million, an increase of 236.7% versus the prior year period.
  • Second quarter Pro Forma GAAP revenue growth of 21.2% versus the prior year period and 19.3% ex-Advocacy; YTD Pro Forma GAAP revenue growth of 26.0% versus the prior year period and 24.4% ex-Advocacy
  • Second quarter net revenue of $556.3 million, an increase of 205.9% versus the prior period; YTD net revenue of $1,083.0 million, an increase of 218.6% versus the prior year period.
  • Second quarter Pro Forma net revenue growth of 15.8% versus the prior year period and 14.6% ex-Advocacy; YTD Pro Forma net revenue growth of 19.1% versus the prior year period and 18.3% ex-Advocacy
  • Second quarter Pro Forma organic net revenue growth of 16.0% versus the prior year period and 14.8% ex-Advocacy; YTD Pro Forma organic net revenue growth of 19.6% versus the prior year period and 18.8% ex-Advocacy.
  • Second quarter net income of $24.5 million versus $18.7 million in the prior year period; YTD net income of $58.1 million versus $23.3 million in the prior year period.
  • Second quarter net income attributable to Stagwell Inc. common shareholders of $10.5 million versus $17.3 million in the prior year period; YTD net income attributable to Stagwell Inc. common shareholders of $23.1 million versus $21.7 million in the prior year period.
  • Second quarter adjusted EBITDA of $111.3 million, an increase of 187.5% versus the prior year period; YTD adjusted EBITDA of $212.7 million, an increase of 240.0% versus the prior year period.
  • Pro Forma adjusted EBITDA growth of 13.0% versus the prior period and 11.4% ex-Advocacy; YTD adjusted EBITDA growth of 22.0% versus the prior period and 20.5% ex-Advocacy.
  • Second quarter Adjusted EBITDA Margin of 20.0% of net revenue; YTD Adjusted EBITDA Margin of 19.6% of net revenue.
  • Net New Business wins totaled $31 million in the quarter.

 

“Stagwell is executing exactly as we said we would, and doing so profitably. We delivered significant organic net revenue growth of 16% in the second quarter, which has the toughest comparisons of the year. Our high-growth digital capabilities expanded to 57% of net revenue and grew 28% organically versus the prior year period. Due to our unique mix of digital and creative capabilities, clients now recognize Stagwell as a serious alternative to legacy incumbents – and we are now a regular contender in many of the largest global pitches,” said Mark Penn, Chairman and Chief Executive Officer of Stagwell. “Our disciplined financial management and strong cost controls allow us to maintain leading margins, even while making smart investments in our corporate infrastructure to scale the network. We are optimistic about the back half of the year as our world-class advocacy businesses prepare for a record cycle of US political advertising spend and our year-over-year comparisons ease. We remain very confident in our full-year guidance of 18-22% organic net revenue growth and $450-$480 million of adjusted EBITDA.”

Frank Lanuto, Chief Financial Officer, commented: “The Company reported strong second quarter results with GAAP revenue of $673 million, net revenue of $556 million and Adjusted EBITDA of $111 million. Pro forma organic net revenue increased 16% over the prior period and Adjusted EBITDA margins remained strong at 20% of net revenue as we remain diligent around cost controls. Our balance sheet is in a good position and should benefit as we head into the seasonally strong back half of the year when we expect cash flow to increase significantly.”

 

FINANCIAL OUTLOOK

2022 financial guidance is as follows:

  • Pro Forma Organic Net Revenue growth of 18% – 22%
  • Pro Forma Organic Net Revenue growth ex-Advocacy of 13% – 17%
  • Adjusted EBITDA of $450 million – $480 million, excluding the contribution from 2022 acquisitions
  • Pro Forma Free Cash Flow growth of approximately 30%
  • Guidance assumes no impact from foreign exchange, acquisitions or dispositions.

 

* The Company has excluded a quantitative reconciliation with respect to the Company’s 2022 guidance under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K. See “Non-GAAP Financial Measures” below for additional information.

 

CONFERENCE CALL

Management will host a video webcast and conference call on Thursday, August 4, 2022, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three and six months ended June 30, 2022.  The video webcast will be accessible at https://bit.ly/STGWEarningsQ2. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the conference call.

A recording of the conference call will be accessible one hour after the call 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 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.

 

BASIS OF PRESENTATION

The acquisition of MDC Partners (MDC) by Stagwell Marketing Group (SMG) was completed on August 2, 2021. The results of MDC are included within the Statements of Operations for the period beginning on the date of the acquisition through the end of the respective period presented and the results of SMG are included for the entirety of all periods presented.

 

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:

Pro Forma Results: The Pro Forma amounts presented for each period were prepared by combining the historical standalone statements of operations for each of legacy MDC and SMG. The unaudited pro forma results are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the combination actually occurred on the date indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The Company has excluded a quantitative reconciliation of adjusted Pro Forma EBITDA to net income under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K.

(1) Organic Revenue: “Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) “non-GAAP acquisitions (dispositions), net”. Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year.

(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) 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.

(5) 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 press release contains forward-looking statements. Statements in this press release that are not historical facts, including without limitation the information under the heading “Financial Outlook” and statements about the Company’s beliefs and expectations, earnings (loss) guidance, recent business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Words such as “estimates”, “expects”, “contemplates”, “will”, “anticipates”, “projects”, “plans”, “intends”, “believes”, “forecasts”, “may”, “should”, and variations of such words or similar expressions are intended to identify forward-looking statements. These 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.  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.

 

Some of the factors that could materially and adversely affect our business, financial condition, results of operations and cash flows 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;
  • the continued impact of the coronavirus pandemic (“COVID-19”), and evolving strains of COVID-19 on the economy and demand for the Company’s services, which may precipitate or exacerbate other risks and uncertainties;
  • an inability to realize expected benefits of the combination of the Company’s business with the business of MDC (the “Business Combination” and, together with the related transactions, the “Transactions”);
  • adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on the Company’s determination of value and computations of its attributes may result in increased tax costs;
  • the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transactions;
  • 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 which complement and expand the Company’s business capabilities;
  • the Company’s 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 conflict between Russia and Ukraine), 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 2021 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2022, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings.

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NEW YORK – July 7, 2022 – Stagwell (NASDAQ: STGW) announced today the Company will report financial results for the three months ended June 30, 2022, on Thursday, Aug. 4, before the market open. 

Stagwell will host a webcast to review those results the same day at 8:30 a.m. EDT. To register and view the webcast, visit this link.

 A replay of the webcast will be available following the event at Stagwell’s website, https://www.stagwellglobal.com/investors/.

 About 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 12,000+ 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.

IR Contact:

Michaela Pewarski

ir@stagwellglobal.com   

646-429-1812

PR Contact:

Beth Sidhu

pr@stagwellglobal.com  

202-423-4414

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FEATURING

Record first quarter financial results driven by high-growth digital transformation, consumer insights & strategy, and large client wins in media

  • GAAP Revenue grew 254.7% in 1Q and 31.5% on a Pro Forma basis

  • Pro-Forma Organic Net Revenue grew 23.6% in 1Q

  • Net Income of $33.6M in 1Q or Diluted EPS of $0.10 per share

  • Net Income attributable to Stagwell of $12.7M in 1Q

  • Adjusted EBITDA of $101.4M in 1Q representing a 19.3% margin on Net Revenue

  • Record first quarter Net New Business of $54M

  • 56% of 1Q Net Revenue came from high-growth digital services

  • Reaffirms 2022 full-year outlook

New York, NY, May 6, 2022 (NASDAQ: STGW) – Stagwell Inc. (“Stagwell”) today announced financial results for the three months ended March 31, 2022.

FIRST QUARTER HIGHLIGHTS:

  • Revenue of $642.9 million, an increase of 254.7% versus the prior year period.
  • Pro Forma GAAP revenue growth of 31.5% versus the prior year period and 30.2% ex-Advocacy.
  • First quarter net revenue of $526.6 million, an increase of 233.2% versus the prior period.
  • Pro Forma net revenue growth of 22.8% versus the prior year period and 22.3% ex-Advocacy.
  • Pro Forma organic net revenue growth of 23.6% versus the prior year period and 23.2% ex-Advocacy.
  • First quarter net income of $33.6 million versus $4.6 million in the prior year period.
  • First quarter net income attributable to Stagwell Inc. common shareholders of $12.7 million versus $4.4 million in the prior year period.
  • First quarter adjusted EBITDA of $101.4 million, an increase of 325.4% versus the prior year period.
  • Pro Forma adjusted EBITDA growth of 33.8% versus the prior period and 32.4% ex-Advocacy.
  • First quarter Adjusted EBITDA Margin of 19.3% of net revenue.
  • Net New Business wins totaled $54 million in the quarter.

“While the GDP may be contracting, Stagwell is growing strongly. The merger has spurred revenue synergies immediately apparent in the big wins, significant industry awards, and integration of talent and technology across our network,” said Mark Penn, Chairman and Chief Executive Officer of Stagwell. “We grew first quarter net revenue 24% versus the prior year, more than double the pace of legacy holding companies, and grew Adjusted EBITDA at an even faster rate of 34% year-over-year. We also made a key e-commerce acquisition in April with Brand New Galaxy, which connects to our media and digital transformation offerings and provides increased scale in Europe. Our record quarter continues to build on our post-combination track record of delivering growth, free-cash-flow, and growing profitability.”

Frank Lanuto, Chief Financial Officer, commented: “The Company reported strong first quarter results with GAAP revenue of $643 million, net revenue of $527 million and Adjusted EBITDA of $101 million. Organic pro forma net revenue increased 24% over the prior period quarter and also increased sequentially in a typically smaller seasonal quarter. Adjusted EBITDA margin expanded 160 bps year-over-year on a Pro Forma basis to 19.3% of net revenue as the Company began to see the benefits of expected cost synergies.”

Financial Outlook

2022 financial guidance is as follows:

  • Pro Forma Organic Net Revenue growth of 18% – 22%
  • Pro Forma Organic Net Revenue growth ex-Advocacy of 13% – 17%
  • Adjusted EBITDA of $450 million – $480 million, excluding the contribution from 2022 acquisitions
  • Pro Forma Free Cash Flow growth of approximately 30%
  • Guidance assumes no impact from foreign exchange, acquisitions or dispositions.
* The Company has excluded a quantitative reconciliation with respect to the Company’s 2022 guidance under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K. See “Non-GAAP Financial Measures” below for additional information.

 

Conference Call

Management will host a video webcast and conference call on Friday, May 6, 2022, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three months ended March 31, 2022.  The video webcast will be accessible at https://stagwellq12022earnings.open-exchange.net/. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the conference call.

A recording of the conference call will be accessible one hour after the call 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 10,000+ 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.

Basis of Presentation

The acquisition of MDC Partners (MDC) by Stagwell Marketing Group (SMG) was completed on August 2, 2021. The results of MDC are included within the Statements of Operations for the period beginning on the date of the acquisition through the end of the respective period presented and the results of SMG are included for the entirety of all periods presented.

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:

Pro Forma Results: The Pro Forma amounts presented for each period were prepared by combining the historical standalone statements of operations for each of legacy MDC and SMG. The unaudited pro forma results are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the combination actually occurred on the date indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The Company has excluded a quantitative reconciliation of adjusted Pro Forma EBITDA to net income under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K.

(1) Organic Revenue: “Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) “non-GAAP acquisitions (dispositions), net”. Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year.

(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) 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.

(5) 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 press release contains forward-looking statements. Statements in this press release that are not historical facts, including without limitation the information under the heading “Financial Outlook” and statements about the Company’s beliefs and expectations, earnings (loss) guidance, recent business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Words such as “estimates”, “expects”, “contemplates”, “will”, “anticipates”, “projects”, “plans”, “intends”, “believes”, “forecasts”, “may”, “should”, and variations of such words or similar expressions are intended to identify forward-looking statements. These 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.  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.

Some of the factors that could materially and adversely affect our business, financial condition, results of operations and cash flows 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;
  • the effects of the coronavirus pandemic (“COVID-19”), and the impact on the economy and demand for the Company’s services, which may precipitate or exacerbate other risks and uncertainties;
  • an inability to realize expected benefits of the combination of the Company’s business with the business of MDC (the “Business Combination” and, together with the related transactions, the “Transactions”);
  • adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on the Company’s determination of value and computations of its attributes may result in increased tax costs;
  • the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transactions;
  • 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 which complement and expand the Company’s business capabilities;
  • the Company’s 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 conflict between Russia and Ukraine), 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 2021 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2022, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings.

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CONTACTS

PR Contact
Beth Sidhu
pr@stagwellglobal.com
202-423-4414

 

IR Contact

Michaela Pewarski

NEW YORK, NEW YORK, APRIL 20, 2022 – Stagwell (NASDAQ: STGW) announced today the Company will report financial results for the three months ended March 31, 2022 on Friday, May 6, 2022, before the market open.

Stagwell will host a video webcast to review those results the same day at 8:30 AM (ET). To register and view the webcast, visit this link.

A replay of the webcast will be available following the event at Stagwell’s website, https://www.stagwellglobal.com/investors/.

About 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 10,000+ 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.

IR Contact: 
Michaela Pewarski
ir@stagwellglobal.com
646-429-1812

PR Contact: 
Beth Sidhu
pr@stagwellglobal.com
202-423-4414

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By

Olivia Morley
Adweek

FEATURING

Via Adweek, Stagwell, Getty Images.

Today Stagwell Inc. announced record full-year 2021 financial results and growth in the fourth quarter.

Stagwell’s total revenue in the fourth quarter was $611.9 million, up 95.5% from the same period last year. Its full-year 2021 revenue was nearly $1.5 billion, up 65.5% compared to the previous year. Fourth quarter net revenue reached $519.7 million, an increase of 160.9% versus the prior period, while the company’s full-year net revenue of almost $1.3 billion is an increase of 100.4% compared to last year. The company’s pro forma organic net revenue was up 11.3% in the fourth quarter and 14.5% for the year.

Stagwell merged with MDC Partners in August 2021. The pro forma revenue calculation assumes that the company solidified its merger with MDC at the beginning of 2021, instead of in August 2021. Today’s earnings announcement is the company’s second as a combined entity.

“Today’s results demonstrate that the merger is not only working, but is working even better and faster than expected,” said Stagwell chairman and CEO Mark Penn in a call with analysts.

Three key factors, the leader said, propel the business forward: its high concentration of digital capabilities, its scale in new markets through recent acquisitions and its focus on flexibility, integration and collaboration.

 

1,200 engineers

The company’s digital business grew its net revenue 29%, excluding its advocacy businesses, which are tied to the election cycle. Of the company’s net revenue, 51% came from digital capabilities. This is reflected in its work with blue-chip brands like Home Depot and Chipotle. Stagwell brands Code and Theory, YML and Targeted Victory manage much of the digital work, and the company employs 1,200 engineers across the globe, with presences in the U.S., India, Argentina and the Philippines.

A digital-first mentality led Stagwell to develop an SaaS offering for its clients coined The Stagwell Marketing Cloud. Its products include a new augmented reality technology for use at live sporting events, and the company is also building out a full technology stack. The cloud is the company’s novel solution to in-housing. By licensing its technology to clients, the holding company can play an active role in supporting in-housing operations and remain relevant as fewer companies seek external services.

Consolidation is king

The holding company’s agency brands include 72andSunny, Assembly, MMI, Anomaly, Doner, Code and Theory, GALE, YML, Crispin Porter Bogusky and more. It’s on an acquisition spree, and this year it acquired U.K agency Goodstuff and the remaining 49% of digital agency Instrument. It now has over 10,000 employees in over 34 countries and counts over 4,000 companies as clients.

Its been consolidating its subsidiaries, recently merging sister agencies Assembly and ForwardPMX, along with MMI and Media Kitchen.

Consolidation creates scale, and according to Penn, it’s behind the recent success. “Right away, I think we’re in much larger pitches and I think we’re seeing much stronger outcomes there,” he said.

The company’s net new business wins totaled $75 million in the fourth quarter with several accounts over $10 million. Its big accounts include Dunkin’, MilkPEP, H&R Block and Pollstar.

“These are great wins, in both the diversity of services and different verticals of business,” Penn told Adweek. New business wins in the third quarter totaled about $65 million.

Scaling up

On a call with analysts this morning, Penn announced that Stagwell’s operations in Russia, supported by 10 employees, would shut down. He worries about international conditions related to the war in Ukraine, he told Adweek. “I do think the world has a way of working things out,” he added. “Let’s hope that happens.”

Amidst the international turmoil, the holding company is focused on achieving global scale. Its acquisition of Goodstuff expanded its presence in the U.K. and the company plans to expand its portfolio.

“We have some good acquisitions in the pipeline and we achieved our 50 affiliate goal,” he added, referencing Stagwell’s global affiliate network.

Penn feels the market views Stagwell as a wholly different enterprise now, especially as it is achieving large-scale success.

“I started this about six years ago from zero. I started it to focus on building out digital-first services. That approach is the differentiating approach. I think they didn’t know what to make of us until the merger closed.” said Penn. “They realized we’re a $2 billion platform with over 10,000 people and diversified across every essential marketing service.”

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FEATURING

NEW YORK, March 9, 2022 /PRNewswire/  Stagwell (NASDAQ: STGW), the challenger network built to transform marketing, today released a nearly 2-minute video summarizing its financial performance and strategic progress through full-year 2021. The reel is a dynamic complement to Stagwell’s earnings materials for the three and twelve months ended December 31, 2021, released on Tuesday, March 8, 2022. To view the video, click here. For the earnings release, click here.

“Why shouldn’t we give investor content the marketing treatment? Enter “Earnings: The Movie” – perhaps the easiest way to digest Stagwell’s breakout financial results for 2021 and the goals of the company as it charts growth in 2022,” said Mark Penn, Chairman and CEO, Stagwell. “If you have found earnings releases in general to be boring, we hope this video is a breath of a fresh air and a reminder that an investment in Stagwell is an investment in the future of marketing.”

Production on the video was completed in-network by Stagwell production unit Cahoots Studio, part of the Doner Partners Network. In addition to the video, management has prepared a one-page overview of the company’s Q4 and FY 2021 performance which can be downloaded here.

For questions about Stagwell’s financial performance, please reach out to ir@stagwellglobal.com. A recording of Stagwell’s earnings webcast on Tuesday, March 8, 2022, and other investor materials can be accessed on our site, www.stagwellglobal.com/investors.

About 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 10,000+ 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

 

 

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Originally released on

FEATURING

Record first full-year financial results at Stagwell Inc. were fueled by fast growing digital transformation and digital marketing services, expansion of global media and large client wins 

  • GAAP Revenue growth of 95.5% in 4Q and 65.5% for the Full-Year

  • Pro Forma Organic Net Revenue growth of 11.3% in 4Q and 14.5% for the Full-Year

  • Ex-Advocacy Pro Forma Organic Net Revenue growth of 21.2% in 4Q and 18.0% for the Full-Year

  • Net Income attributable to Stagwell of $0.8M in 4Q and Net Income of $21.0M for the Full-Year

  • Pro Forma Adjusted EBITDA of $103.6M in 4Q and $378.0M for the Full-Year

  • Issues 2022 Pro Forma Net Revenue growth guidance of 18%-22% and 13%-17% ex-Advocacy

  • Issues 2022 Adjusted EBITDA guidance of $450M – $480M and Pro Forma Free Cash Flow growth of ~30%

New York, NY, March 8, 2022 (NASDAQ: STGW) – Stagwell Inc. (“Stagwell”) today announced financial results for the three and twelve months ended December 31, 2021.

REPORTED FOURTH QUARTER & YTD HIGHLIGHTS:

  • Fourth quarter revenue of $611.9 million, an increase of 95.5% versus the prior year period; full-year revenue of $1,469.4 million, an increase of 65.5% versus a year ago.
  • Fourth quarter net revenue of $519.7 million, an increase of 160.9% versus the prior period; full-year net revenue of $1,268.9 million, an increase of 100.4% versus a year ago.
  • Fourth quarter net income attributable to Stagwell Inc. common shareholders of $0.8 million versus net income of $22.2 million in the prior year period; full-year net income of $21.0 million versus $56.4 million in the prior year period.
  • Fourth quarter adjusted EBITDA of $103.6 million, an increase of 61.3% versus the prior year period; full-year adjusted EBITDA of $253.7 million an increase of 2% versus a year ago.

PRO FORMA FOURTH QUARTER & YTD STAGWELL INC. HIGHLIGHTS:

  • Fourth quarter Pro Forma revenue of $611.9 million, a decline of 4.6% versus the prior year period and an increase of 18.0% ex-Advocacy; full-year Pro Forma revenue of $2,224.3 million, an increase of 6.6% and an increase of 18.2% ex-Advocacy versus the prior year period.
  • Fourth quarter Pro Forma net revenue of $519.7 million, an increase of 10.4% and 20.2% ex-Advocacy vs. a year ago; full-year Pro Forma net revenue of $1,926.8 million, an increase of 16.4% and 20.0% ex-Advocacy versus the prior year period.
  • Fourth quarter Pro Forma organic net revenue increased 11.3% and 21.2% ex-Advocacy versus a year ago; full-year Pro Forma organic net revenue increased 14.5% and 18.0% ex-Advocacy versus a year ago.
  • Fourth quarter Pro Forma adjusted EBITDA was $103.6 million, a decrease of 5.1% versus the prior year period and an increase of 31.2% ex-Advocacy; full-year Pro Forma adjusted EBITDA was $378.0 million, an increase of 19.6% versus the prior year period and an increase of 41.4% ex-Advocacy.
  • Fourth quarter Pro Forma adjusted EBITDA margin was 19.9% of net revenue and full-year adjusted EBITDA margin was 19.6% of net revenue.
  • Net New Business wins totaled $75 million in the fourth quarter.

“2021 was a breakthrough year for Stagwell. Our full-year results and 2022 outlook are a clear affirmation of the combination and Stagwell’s unique position as the challenger that will transform marketing,” said Mark Penn, Chairman and Chief Executive Officer. “We delivered pro forma organic net revenue growth of 14.5% for the year and an even more impressive 18% organic growth when excluding our Advocacy businesses, which lapped the 2020 election cycle.”

“Our record year was driven by tailwinds across our high concentration of leading digital capabilities, including digital transformation, influencer and global performance marketing; as well as a rapid acceleration in large contract wins,” Penn continued. “Our robust 2022 outlook reflects our expectation for continued digital strength; continued acceleration in scaled, integrated contract wins; and significant growth in the second-half in our Advocacy businesses driven by an anticipated record year of spend during the 2022 U.S. mid-term elections.”

Frank Lanuto, Chief Financial Officer, commented: “The Company reported strong fourth quarter net revenue of $520 million, representing pro forma net revenue growth of 10.4% year-over-year with 11.3% organic growth.  Strong operating performance led to pro forma adjusted EBITDA margins of 19.9% for the quarter. Effective cash flow management permitted our continued acquisitions of both minority interests in our fastest growing subsidiaries as well as the acquisition of Goodstuff in the UK while lowering our net leverage ratio from the prior quarter.”

Financial Outlook

2022 financial guidance is as follows:

  • Pro Forma Net Revenue growth of 18% – 22%
  • Pro Forma Net Revenue growth ex-Advocacy of 13% – 17%
  • Adjusted EBITDA of $450 million – $480 million
  • Pro Forma Free Cash Flow growth of approximately 30%
  • Guidance assumes no impact from foreign exchange or acquisitions or dispositions.

* The Company has excluded a quantitative reconciliation with respect to the Company’s 2022 guidance under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K. See “Non-GAAP Financial Measures” below for additional information.

 

Webcast

Management will host a video webcast on Tuesday, March 8, 2022, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three and twelve months ended December 31, 2021. The video webcast will be accessible at https://stagwellq4andfullyear2021earnings.open-exchange.net. An investor presentation has been posted on our website at www.stagwellglobal.com/investors and may be referred to during the conference call.

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

About 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 10,000+ 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.

Basis of Presentation

The acquisition of MDC Partners (MDC) by Stagwell Marketing Group (SMG) was completed on August 2, 2021. The results of MDC are included within the Statement of Operations for the period beginning on the date of the acquisition through the end of the respective period presented and the results of SMG are included for the entire period presented.

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:

Pro Forma Results: The Pro Forma amounts presented for each period were prepared by combining the historical standalone statements of operations for each of legacy MDC and SMG. The unaudited pro forma results are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the combination actually occurred on the date indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The Company has excluded a quantitative reconciliation of adjusted Pro Forma EBITDA to net income under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K.

(1) Organic Revenue: “Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) “non-GAAP acquisitions (dispositions), net”. Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year.

(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) 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.

(5) 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 press release contains forward-looking statements. Statements in this press release that are not historical facts, including without limitation the information under the heading “Financial Outlook” and statements about the Company’s beliefs and expectations, earnings (loss) guidance, recent business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Words such as “estimates”, “expects”, “contemplates”, “will”, “anticipates”, “projects”, “plans”, “intends”, “believes”, “forecasts”, “may”, “should”, and variations of such words or similar expressions are intended to identify forward-looking statements. These 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.  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.

Some of the factors that could materially and adversely affect our business, financial condition, results of operations and cash flows 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, including as a result of the novel coronavirus pandemic (“COVID-19”);
  • the effects of the outbreak of COVID-19, including the measures to reduce its spread, and the impact on the economy and demand for our services, which may precipitate or exacerbate other risks and uncertainties;
  • an inability to realize expected benefits of the combination of the Company’s business with the business of MDC (the “Business Combination” and, together with the related transactions, the “Transactions”);
  • adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on the Company’s determination of value and computations of its attributes may result in increased tax costs;
  • the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transactions;
  • direct or indirect costs associated with the Transactions, which could be greater than expected;
  • risks associated with severe effects of international, national and regional economic conditions;
  • the Company’s ability to attract new clients and retain existing clients;
  • 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 achieve the full amount of its stated 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 successful completion and integration of acquisitions which complement and expand the Company’s business capabilities; 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 Exhibit 99.2 to our Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on August 10, 2021, and accessible on the SEC’s website at www.sec.gov., under the caption “Risk Factors,” and in the Company’s other SEC filings.

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