Stagwell Inc. · NASDAQ:STGW
Stagwell — Q3 2022 Earnings Presentation
30 slides from Stagwell's earnings presentation, Nov 3, 2022
Slide 1: Third Quarter 2022 Earnings Presentation
Third Quarter 2022 EARNINGS PRESENTATION NOVEMBER 3 | 2022
Slide 2: Forward Looking Statements & Other Information
FORWARD LOOKING STATEMENTS & OTHER INFORMATION 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 exp
Slide 3: Definitions of Non-GAAP Financial Measures
DEFINITIONS OF NON-GAAP FINANCIAL MEASURES In addition to its reported results, Stagwell Inc. has included in this presentation certain financial results that the Securities and Exchange Commission (SEC) defines as "non-GAAP Financial Measures." Management believes that such non-GAAP financial measu
Slide 4: Financial Outlook Full-Year 2022
FINANCIAL Full-Year 2022 OUTLOOK 16% - 20% Organic Net Revenue Growth 13% - 17% Organic Net Revenue Growth, Ex-Advocacy $450M - $480M In Adjusted EBITDA $0.86 - $0.94 In Adjusted Earnings Per Share ~30% Free Cash Flow Growth Note: Guidance as of 11/03/2022. All figures presented on a Pro Forma basis
Slide 5: Third Quarter Highlights
THIRD QUARTER HIGHLIGHTS NET DEBT: $1,180M | NET LEVERAGE RATIO: 2.7x | STOCK BUY BACKS: $14M Leading GROWTH Record NEW BUSINESS 11.6% Net Revenue Growth, 11.3% Organic $86M In Net New Business On top of 30% organic growth in 3Q21; 34% two-year stack Driven by larger wins and client diversification
Slide 6: Summary Pro Forma Combined Financials
SUMMARY PRO FORMA COMBINED FINANCIALS Three Months Ended Nine Months Ended September 30, September 30, $ in Thousands 2022 2021 2022 2021 Net Revenue $ 555,754 $ 498,130 $ 1,638,707 $ 1,407,122 Billable Costs 108,037 70,294 340,900 205,294 Revenue $ 663,791 $ 568,424 $ 1,979,607 $ 1,612,416 Billable
Slide 7: Pro Forma Net Revenue
PRO FORMA NET REVENUE Three Months Ended, September 30, 2022 Nine Months Ended, September 30, 2022 $ in Thousands Net Revenue Change Net Revenue Change 2021 Net Revenue $ 498,130 $ 1,407,122 Organic revenue 56,177 11.3% 234,495 16.7% Acquisitions (divestitures), net 7,641 1.5% 12,370 0.9% Foreign cu
Slide 8: 3Q Net Revenue by Geography
3Q NET REVENUE BY GEOGRAPHY % OF NET REVENUE Organic Growth Y/Y 10.8% 7.6% 3Q Geography 3Q22 YTD United States 9.7% 15.4% 81.5% United Kingdom 25.5% 33.9% Other 14.1% 16.5% 11.1% 7.5% TOTAL 11.3% 16.7% YTD 81.4% Note: Figures presented on a Pro Forma basis giving effect to the combination as if comp
Slide 9: 3Q Net Revenue Mix by Principal Capability
3Q NET REVENUE MIX BY PRINCIPAL CAPABILITY 1 Digital Transformation 29% 57% Building & Designing Digital Platforms & Technology 2 Performance Media & Data Addressable on a Global Scale 18% 3 Consumer Insights & Strategy Tracking Across the Entire Consumer Journey 9% 4 Creativity & Communications Blu
Slide 10: 3Q Year-over-Year Growth by Capability
3Q YEAR-OVER-YEAR GROWTH BY CAPABILITY % OF NET REVENUE 29% Organic Net Net Revenue Adjusted EBITDA* 18% Principal Capability Revenue Growth Growth Growth 9% 43% Digital Transformation 28.4% 30.5% 48.7% Performance Media & Data 4.8% 13.1% 4.1% Consumer Insights & Strategy 11.3% 12.7% (0.8%) % Creati
Slide 11: 3Q Ex-Advocacy Net Revenue & Adjusted EBITDA
3Q EX-ADVOCACY NET REVENUE & ADJUSTED EBITDA $ in Millions Three Months Ended, SEPT 30, SEPT 30, % Change 2022 2021 NET Total Net Revenue $556 $498 11.6% REVENUE Advocacy Net Revenue 52 29 79.9% Ex Advocacy Net Revenue $504 $469 7.3% Three Months Ended, SEPT 30, SEPT 30, % Change 2022 2021 ADJ. Tota
Slide 12: Strong New Business in Q3 2022
STRONG NEW BUSINESS in Q3 2022 LTM NET NEW BUSINESS OF $247M $86M $75M $54M $31M 4Q21 1Q22 2Q22 3Q22 12
Slide 13: New Business Update
NEW BUSINESS UPDATE Notable Business WINS & EXPANSIONS Net New Business 3Q $86M LTM $247M Avg. Net Revenue 3Q $6.1M PER CLIENT AT TOP 25 13
Slide 14: Brand Performance Network
BRAND PERFORMANCE NETWORK is working YEAR FOUNDED LOCATIONS / COUNTRIES 2021 60/20 GLOBAL HQ PEOPLE NYC 6K+ MEDIA MANAGED YOY NET REVENUE "Creative + Media + Commerce'—the new $ 5B+ + 26% equation for modern marketing—is simple, but executing against it is complex," YTD NET REVENUE PARTNERSHIPS 500M
Slide 15: Strategic M&A in Q3
STRATEGIC M&A IN Q3 Transaction 80% ACQUISITION (remaining stake) Headquartered in Los Angeles, Wolfgang is a consultancy and creative agency, purposely built for the modern age. Wolfgang’s mission is to bridge the gap between management Business consulting and advertising by focusing on solving cli
Slide 16: Development of the Stagwell Marketing Cloud
DEVELOPMENT OF THE STAGWELL MARKETING CLOUD is a critical way to enhance the value of our company. Technology is not something that others do - it’s something we all need to participate in & get across the finish line. WE ARE MAKING INVESTMENTS & getting ready to market products that we believe can
Slide 17: SMC is a proprietary suite of SaaS & DaaS tools
SMC IS A Our Four Divisions PROPRIETARY SUITE HARRIS DATA COMMS TECH of SaaS & DaaS tools built for the One-Stop Suite SaaS Platform For in-house marketer Of DaaS Tools For Modern Communication Market Researchers Professionals TARGETING MEDIA SPECIALTY STUDIO MEDIA ~$140M OF REVENUE IN 2023 & A DIY
Slide 18: SMC Key Updates
SMC Key Updates ADDED SMC CHIEF ADDED & INTEGRATED ORGANIZING SMC AROUND TECHNOLOGY OFFICER NEW PRODUCTS INTO SUITE FOUR BUSINESS UNITS HARRIS COMMS DATA TECH MEDIA SPECIALTY STUDIO MEDIA Previously with Accenture’s Applied Intelligence Practice, working on strategy & consulting, data led transforma
Slide 19: SMC Leadership Team and Board
SMC CORPORATE LEADERSHIP TEAM SMC BOARD LEADERSHIP team Dan Mansoor Abe Gardner Basha Geiger BOARD CTO CPO MEMBER Previously with Accenture’s Applied Former CPO of Hudson MX, Co-Founder of Code and Theory Intelligence Practice, working on media buying & accounting and business leader of Stagwell’s s
Slide 20: Press coverage of acquisitions and rebranding
Stagwell Acquires Creative Agency | ADWEEK a=» ST A G W E L L Wolfgang to Expand the Doner wh . y Stagwell Is Rebranding Its | TRANSFORMING MARKETING Partners Network Media Network as a Brand Performance Network campaig n cert BRAND xX io PERFORMANCE consumer behavior platform, for its third acquisi
Slide 21: Press coverage: Minnesota Twins AR app and marketing
Minnesota Twins Launch First Shared AR For Live Sports App That Opens Door To Sponsorship Land Grab Minnesota Twins launch augmented reality app for fans AdAge MARKETING IN THE METAVERSE— WHAT SCIENCE FICTION CAN TEACH BRANDS ABOUT WEB3 With marketing ploys that are just transaction schemes extended
Slide 22: We Have Our Financial House in Order
Refinanced Bonds, Securing $1.1BN in financing › Fixed interest rate of 5.625% WE HAVE OUR in rising interest rate environment FINANCIAL › 8 years to maturity in 2029, HOUSE providing financial flexibility in order Secured $500M Revolving Credit Facility with flexible terms, 5-year maturity Moody’s
Slide 23: Maintaining Discipline Around Deferred Acquisition Costs
MAINTAINING DISCIPLINE AROUND Deferred Acquisition Costs REDUCED DAC BY $63M FROM 2021 YEAR-END BALANCE $222M $224M $197M $160M 4Q21 1Q22 2Q22 3Q22 Note: Numbers may not foot due to rounding. 23
Slide 24: GAAP Consolidated Operating Performance
GAAP CONSOLIDATED OPERATING PERFORMANCE Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 $ and Shares in Thousands Revenue $ 663,791 $ 466,634 $ 1,979,607 $ 857,436 Cost of services 417,134 324,782 1,253,765 558,856 Office & general expenses 119,186 121,770 429,12
Slide 25: Adjusted Earnings Per Share
ADJUSTED EARNINGS PER SHARE Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Reported Reported $ and Shares in Thousands Adjustments Non-GAAP Adjustments Non-GAAP (GAAP) (GAAP) Net income attributable to Stagwell Inc. common shareholders $ 10,609 $ 16,159 $ 26,768 $ 33,747
Slide 26: Pro Forma Capital Structure
PRO FORMA CAPITAL STRUCTURE Pro Forma Share Count Net Debt & Debt-Like ($M, as of 9/30/22) (Thousands, as of 10/28/22) Revolving Credit Facility $ 245 Class A3 130,790 Bonds 1,100 NCI1 32 Class C4 164,376 (equal voting & economic rights to Class A) DAC 160 RNCI2 98 Share-based awards5 3,712 Less: Ca
Slide 27: Appendix
| me SL ASWELL Appendix
Slide 28: Liquidity
LIQUIDITY $ in Millions Available Liquidity (as of 9/30/22) Commitment Under Credit Facility $ 500 Drawn 245 Undrawn Letters of Credit 25 Undrawn Commitments Under Facility $ 230 Total Cash & Cash Equivalents 165 Total Available Liquidity $ 395 28
Slide 29: Global Network
GLOBAL NETWORK Stagwell’s Affiliate Network Significantly Expands Our Global Footprint Europe North America • Austria • Ukraine • Belgium • France • Bulgaria • Germany • Italy • Netherlands • Canada • Latvia • Poland • USA • Romania • Spain • Mexico • Slovak Republic • Sweden Asia Pacific • Slovenia
Slide 30: Thank You
Thank You Contact Us: IR@StagwellGlobal.com