STGW - Earnings call transcript Q2 2024

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Ben Allanson

Good morning from Stagwell's global headquarters in One World Trade Center, New York, and welcome to Stagwell Inc.'s earnings webcast for the Second Quarter of 2024. My name is Ben Allanson, and I lead the Investor Relations function here at Stagwell. With me today are Mark Penn, Stagwell's Chairman and Chief Executive Officer; and Frank Lanuto, the Chief Financial Officer. Mark will provide a business update, and Frank will share a financial review. After the prepared remarks, we will open the floor for Q&A.

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you like following non-GAAP Before I'd remind financial that and we begin, statements to the forward-looking remarks data. include

are those statements data. And an additional and in reconciliations addressed stagwellglobal.com/investors Please release, to the to Forward-looking slide refer company, and and earnings presentation uncertainties financial including that, deck of presentation resources. and SEC the earnings definitions, risk about explanations our guidance for our company's subject Penn. slide press to and factors to investor like This to release and provide over non-GAAP website, related turn CEO, filings. with I'd call morning's the our Mark Chairman

Mark Penn

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bigger transformation Labs week, AI agencies, Instrument X% continuing the over as year-over-year & $XXX Marketing growth network. and led across our begin Left expect We or and over Media to it theory of will we is Performance Communications, growth into of process time get revenue in Stagwell the X% a Creativity Stagwell company on This XX% the up by posted X% million achieved remain in growth quarter. Digital these as X code Demand up X% growth, in we in digits This resources was integrate digital Advocacy. We XX% growth take AI Data. ramp. Earlier pick from completes the projects. in to come. to in to scaling transformation to projects double projects step Advocacy, of back this and growth Cloud, XX% engineering technology Field second took confident

in experience acquiring companies, entertainment, pitches, million other internal for on recognize development arcades we that significant EBITDA growth. On investments onetime these business the apples-to-apples $XX overall Cloud $XX in and million important It's larger the compensation spending initiatives, are quarter. travel, Our $XX to the expenses. On paying On now an on new and us. growth XX an with spends growth. additional came at a addition spent basis, to with making with basis, in new an a off they're wins and and million we annually Stagwell client top about are we $XX Marketing million average, about quarter

and initiative, size we our Jason sports, this in experience. Code Musk was private a and Theory, marketers share sports that recognition and point were as the chat want which as industry her a even Sidhu, who This can Brand success. creativity. I as call our continues knows and marketer Beth market say collaboration in a to Xx like athletes we voice, now complete how technology XXandSunny, through bring me force, to to show hosted boost of out Officer industry leading be for our task together a and market inflection Chief over sponsors, a that moment and including our effective company. XX-minute Cannes critical with Kelce, Let multi-agency X,XXX Elon participants, and Travis team how team It is to worked others the

client our assignments are key the long-term strategy growth. achieve we First, success of seeing scaling as up in core to to larger

expansion unique a media plans SSP third, global first that with offering Further deal the And capabilities Tel in full our media a the leaders build Marketing acquire can East Aviv, campaigns. flexibility larger as known in which expands advisor to we and are our are announced in advancing technology, Cloud Stagwell joins acquisitions to placements Second, Live global commitment influencer social we platform management to We've underway. appointment a bring a it East region. based and and of unlock and in our on the the announcements give in the marketing ]. and Middle the senior clients Middle self-service X to and footprint DSP region deepening a content [ to process as assignments. We're maximum into be larger Stagwell significant we of are the

are third AI-powered up surveys, portfolio scale. In Cloud our survey and Our well. leverage Assets, Without messaging variety which and built undertake reached and the technology one-on-one of Google Infrastructure line. based quarter, text PayPal. Cloud models. remarkable in technology surveys Stagwell milestone We Marketing our were panel of as customers across a with with show of clean our critical partnership at is brands Marketing into do-it-yourself Stagwell features Doctors this our we using organizations quarter, wide growth quarter, consumers conversations Harris Wondercave, picked Borders, progressing launching gaining products, work its which team CarMax Cloud product Advocacy to financial Quest our unlock this initiatives Gemini launching marketing In platform its including our to ] Smart AI, with year-over-year new Google XXX% a are of Harris innovative new and products, the start-up [ first newest notable allows steam. series engage the

around a will and the we will is category. assessment established AI completed the companies our immersive We've heavily solution. We're gaming soccer to Our expanding capabilities for of AI We've now being marketers who corporate, and whose on baseball, we Anzu by central partnering opportunity other and and firms collaboration initial each needs Code be to in as also established stadiums we our bringing Internally, opportunities help are afforded Theory with advertising. sponsors, enable a is thousands space, our focused reality led transformation. We're and tech products augmented integrated ID suite that at investing finance data The and improving Target stay capture of. tech products unique AI experience including Disney. ahead internal are our into in overall sharpening map multiyear including already partnerships in tools football in its an other initially processing expand major players in to and the capture presence of and function. solutions Nexon, efficiency tasks of innovation ability on their network by performance-driven Graph AI hundreds immersive media of central across year, in-game unit, applying to Stagwell to bills our to receive like with applications road

We continue efficiency our measures. implement to cost

We this generate off leases will will finance next the have are year. rightsizing across HR, -- have about that about savings $XX of million rolls we departments approximately will fall $XX company to million and of technology we $XX year, by our and million of additional

comp our in kept keeping our and productivity from it line We revenue long-term costs ratio We're to we and while reduced have line invest even growth. year significantly. in improving in last

X into And continue the us on disposition net on going number are only just these new planned to and to months ago, X will years and again yet conformation, on we that was years, creativity. Today's marketing our for have goals portfolio. our XX bidders, started so of the and well solid the mentioned had XXXX. Stagwell transforming track with with progressing efforts and As our track vision public next business it's the few strategic a against in we to transaction in first point multiyear mature of blend come. consummated, right of best technology growth year XXXX. will and is We're we the and and grow been position calls, is a for prior wins, nature is along undervalued to round

more some to Officer, Lanuto, Now through I'll you things our results financial Chief detail. over in Financial Frank walk hand to our of

Frank Lanuto

us joining discuss Good Thank second everyone, to quarter thank for our you you, morning, results. Mark. and

if communications, a financial to solid As Data growth quarter remarks after net please and through to ask and question and by feel second Advocacy new chat conclude, Performance like record-breaking business submit free would our Stagwell Media creativity robust them & you reminder, results. in capabilities, function. Led a delivered prepared the

period average prior reported year. to deals in million, strongly the that a XX% our excluding positive in in pass-through was prior quarters of $XXX the increased X% strong $XXX larger new pipeline generated of for high increase. business we revenue increased previous new $XXX than the same XX-month another driven million, increase XX% X% costs, the resonating increasingly total approximately consecutive to business as our quarter, the business the by by new is record period net marketplace. and the an compared XX% increase our same revenue, size merger. pitches. million a trailing sixth quarterly brings of our for The a the global offering the indicator business This of Net quarter, such $XXX million. We year-over-year, $X since above XX of net wins in higher to million, record For This driven

capability. by revenue to Turning

$XX and the was quarters. Creativity million. the of in driven and consumer was For The a revenue, consecutive by X% delivered to growth increase products prior by return the $XXX delivered second Performance prior capabilities. period. of growth Advocacy to an year over business, X revenue & in an and recent driven Data in technology X% million of financial increase strength million over principal supported the XX% of of Media quarter, grew continued year-over-year our X which our the over year couple Communications in $XX period, further by past grew revenue, sectors

ramp Advocacy we half move season We November. expect of the election the up in the as accelerating the year general in convention performance second in towards and

continued existing Excluding the wins return a in begin Advocacy, by Media by to strong Hollywood year, which the sequential the verticals, $XXX prior Marketing Advocacy business, last revenue posted in Travel combination to X% reflecting been noteworthy growth recent with Fogo X% retail seen the performance in driven sectors. Digital This the products, Communications U.S. from of in ramps the and consumer well in in as $XX our recent by consumer Latin by includes quarter growth QX the increasing XX% the and year-over-year year-over-year, Performance revenue, driven revenue behind and a as revenue capabilities. period second markets. a revenue, win geographical driven Communications million its as up. new driven transformation in has of the at quarter. X% improvement new by increase XX% the our driven This grew to by this. Quickly breakdown, Data and customers in driven year a over with Creativity million wins consumer been million, within the grew Cloud $XX communication by in and a lastly, communications and Across X%, political Advocacy put sectors. stronger comparable to International driven compared in space, growth and strategy East second period. and growth & American which improving improvement continued we've we has And robust saw of Creativity strikes as AOR an Chao. Stagwell reported the insights Middle growth trends Media and in looking as de but our expansion technology, of improved X% retail decline Advocacy,

second invest revenue new conscious in We at in Turning aimed several quarter the a made initiatives pipeline our and decision to into costs. converting building to business.

event Our new Cannes success, last the months. XX was business a at reported we've Sport contributing wins XXXX big to record-breaking Beach the in over net

Given Sport year. the the trend, Beach in positive we franchise our increased investment this

While year's the of early the business is quantify our still select festival increased of success new unprecedented. too this to out event, coming level the We've new business opportunities. of opportunities investment in also

We are be billion $X.X now more invited XXXX. tracking to pitches to than in of

costs G&A net expenses. our revenues. line with customer tend These unbillable inclusive certain to other grow are of Our costs in

investment to our a in client percentage in net with pushed an revenue incremental the by and approximately expense. results $X versus second to $X historical of revenue approximately ratio. the XX.X%, stable points largely our included net This G&A in higher costs million approximately basis increased million XX quarters although This and expenses second G&A the ratio increase growth of quarter X%. at of $XXX both in For of prior XXXX line T&E period, in The million. our remained costs modestly service unbillable XXXX, as

quarter, by we which bonuses limited talent, awarded $X EBITDA the million. adjusted to key During reduced approximately

staffing Our sequentially XX.X% year as prior revenue improved excluding XX the basis ratio improving points net as to by well points. bonuses, basis XXX over to

controlling to meeting costs of continue while revenue. growing the closely our requirements We focus labor on

during throughout quarter, revenue staffing maintained we $XX the year. And approximately XX% the Marketing ratio goal investment our to Our a in second is million. net XX% lastly, the of Cloud maintain to to of

to Continued investment for tech suite integral to an priority digital strategy build our the of in is our remains marketer. work industry-leading major for products as a capabilities investment and we us modern

This million margin EBITDA quarter. delivered a As represents second on in adjusted a net Stagwell XX.X% in the result, $XX revenue.

been adjusted second would our EBITDA Excluding investment, our margin XX.X%. cloud quarter have approximately

Moving to sheet. the balance

end by a second approximately of DAC the acquisition year. to We Starting obligations position. at from remain financial continue last by strong of to our deferred million $XX track quarter on obligations second allocate capital the million $XX $XX efficiently of the to 'XX. approximately reduced to We end to with end maintain the year quarter the the We in reduce million consideration.

for We X.X acquired per quarter average $XX million. million at during also shares $X.XX approximately the share an price of

quarter relative of in as software with capitalized has first $XX line Our and of targets. million in improved remaining was broadly capital in by the year by and ago, million from same $XX our existing cash working improvements management. buyback We the our in authorization end quarter period XXXX availability. CapEx operations for a to the driven flows million $XX half

ended $XXX revolver As with our cash with leverage $XXX a a result, in of we and under outstanding quarter million X.Xx. the ratio million

excluding growth XXXX X%. is $XXX be Advocacy X% be to X%. a year-end reaffirming expected We ratio net X.Xx. And to revenue, Organic continue to of target follows: are is EBITDA finally, to net million Xx X% $XXX to to revenue full to our million. year leverage we between to between Adjusted Organic is as guidance be expected expected

We share of XX% our Allanson be approximately over the expected flow open conversion prepared portion expect deliver and the remarks and the adjusted is $X.XX. That for per this I free call. concludes to Ben back cash Q&A to morning. between to will $X.XX now call turn to earnings

Ben Allanson

you, Thank Frank.

big have about the via submit from questions, with little going top any a think with driving business Kreyer, you is the them deal if What reminder, start engagements? here and wins? a uptick screen. We're chat talk some a Craig-Hallum. landed Stagwell in new this larger a to button saw larger these of you quarter. the question you at trends in changes You've Just do wins Can please success in the bit a for XX Jason do of Anomaly, record

Mark Penn

being I think holding recognized overall, company. really is challenger as now the Stagwell

we're together I of of image feedback the has We the that put that kind as gave really a And think brand. marketplace. we is our I here the and and more time, just search and think we've really That is whole to up this holding is the combination have us and talent countries with us out brands we larger capabilities. finding and they what that and more of place growing spreading opportunities. and more and consultants coming consultants, roll in incredible technology established challenger giving meeting larger strategy a held us recent company, -- Stagwell the over word are and we're as scale we more as and into

Ben Allanson

Right.

at when see impacting trajectory? you asks, potentially I the big And half following positively about of to some these year? do the from of wins, second think pipeline the into Crockett just you feel question about the business of on how wins in do the new just some Rosenblatt, revenue Barton more

Mark Penn

wins at quarter. Many these end of came just Sure. the the of

XXth think, In fact, I one, the GM or June was like so.

in And play so into QX. these will come

come to clients expect in get want online they probably We to raft really but all we're But But these had that online that next wins make -- QX. month a And the month. long wins seeing of going. time as we next decision, come start I this significant really now took make another to will once won't by the they online that said, are decisions.

Ben Allanson

and dynamic Advocacy, regards targeted question at or activity Mike increased the some race? seen and we've changes to the in so, political from about in Ng Goldman. some whether fundraising, little bit the in talk obviously victory you given maybe month to ad Turning With last the could spending a

Mark Penn

Yes.

the changes reengaged. or increases Democratic to back. have in voters over. were that last side, month so. the They the happened Voters And on with the thought So was presidential race really we've seen XX% pulling now XX%

highly of it polling, could race. as to a spending, way, competitive it's And spending I competitive always a go when somewhat it's can race, you either go say, in course, As Infinity. the see

expenditures And I increasing seeing engagement sides. so think all you're on and

Ben Allanson

little of we're at what's us trends Perfect. today. But points back here Digital talk confidence transformation, a seeing the about a some bit there? of giving little year of in the the Obviously, can of in acceleration been DT, challenge we a seeing some kind bit project spend? the part maybe maybe

Mark Penn

we're I And and most obviously interact our deployed. the technology Look, the AI. be designers out what seeing way in think tech figure experimenting some and how should that to the all consumers expenditures companies of already with companies AI. technology are big tech of brands with properties kind think best the I helping that is for advanced of

So whether we in how feel on tech it'd the that, expect It's I that's companies. be digital point in, or enhanced think the don't I with years AI best a transformation beginning from not consumers about to month beginning to big million And -- to here assignment going have year, QX a floodgates to significant and digital assignments. just QX years next capacity. kick of know trickle transformation by we off interactive certain I to that get here, some really got $X.X yet. We've last work. of It's open

Ben Allanson

with a little Great. Cameron Maybe that bit. just playing Stanley. McVeigh, Morgan

Just spending maybe in from What second the a hearing of of quick year? them clients. half tensions about of the kind things question some on tech here the are we're

Mark Penn

is AI for competition the think on. I

significantly that try services. to out get to companies here place both And to that and [ spending be another real for competition I has here in to think are tech another and you're ], marketplace. one competitive means all-on that really services and cloud seeing company has company stake advantage that unlike really productivity work software their social AI another the company going

Ben Allanson

DaaS question Cloud. what's Just flipping Mark And quantify asks, months? think SaaS revenue XX He Stagwell over promising to next Zgutowicz, bit your the the most opportunity can you Marketing Benchmark. a little we A or this? from

Mark Penn

really immediately right, as used that think the see our look, being there don't you've of Well, seen value. some I off. seeing as text I others have oftentimes, brands, things taking little by Advocacy that And that, and sales both in that messaging significant again, you're platform people hidden are and think

We to that the comes business million brand it, million. rollout with, I research. and up of But $X we right we're a beginning all we're promise. our immediate we new But here bought, few we've communications adding have raft comes We're the then on actually, believe research is with the the terminal. got think the at again, together. just really the $X corporate of platform. the We've auction the area of research secondarily fully are think that the products. out an months think again, components. And Harris get to spending for clients, also great that products. about revenue I getting emphasis just think large for has about picked promising AI-based XXX rolling next do-it-yourself technology We're we right significant than now another another adding those of that time less most lot products research products analysis But which most the now out is influencer and I I immediate bought of I leaders, door, that

Ben Allanson

question And this time some second second organic of the half? those inflection that that the of half acceleration and half really about business in the the in and What question, investor. in the implied that of the in an in of growth inflection The year. in Another organic are key acceleration revenue the second from is is just what year this talking growth confidence gives the drivers? us

Mark Penn

a look, think quarter, business the flood I Number Well, drivers. end by tens of that as first are key the there of emphasized dollars of of the highlighted one, had multiple we I millions X basis. same second wins the wins on call, time time at think the have in include a at I've by

in is end. margin the of is in loaded media the And the end. of third, loaded Second, lot a season lot political a back media and back

really think good X X I our those on forward X and what give with based reaffirm fundamental be think a of us kind I move quarters I next confidence factors. those guidance So are to to think developments, going

Ben Allanson

on the here question a the Sinderen, the emphasize from Beach question Beach Sport going Jeff you're some investment changing The XXXX? if a what that to successful What maybe in is are and Van today? to inputs, B. the think of of potentially I to and sort event. investment, just successes in one do your what you last obviously is Riley. Effectively, are event Sport likely quick intentions? suppose, of And increasing are it I

Mark Penn

brings We're going brand lives do kind has to move unique review as it a full ] to its our what and of created way that and a been brands Sport with live sports It and just on can life forward brand may together technology and of in in take Beach. think a beyond own. creativity. And now within almost I [ how a of

we as So how kind shoes. joke we a as about are develop instead, Again, at carefully we I shoes. no always the with But stay old of shoemaker has it. say, shoemaker tuned look

wasn't that I think an was that -- an been away think -- when I And a that, our say, Sport amazing company experience is was we it I for the it experience some work has for that proof "Wow, brands. and could this can that marketing. produce of take Beach together, our kind working clients, just companies they want clients

Ben Allanson

year. on us you Thank very our earnings one. quarter second joining Well, us. call to a look We'll again forward the of end for later with good in the talking that you XXXX. brings Have much to

Mark Penn

you. Thank

Stagwell (STGW) 1 Aug 242024 Q2 Earnings call transcript