Stagwell Inc. · NASDAQ:STGW
Stagwell — Investor Presentation (February 2023)
40 slides from Stagwell's investor presentation, February 2023
Slide 1: Investor Presentation February 2023
Investor Presentation FEBRUARY | 2023
Slide 2: Forward Looking Statements & Other Information
FORWARD LOOKING STATEMENTS & OTHER INFORMATION This presentation contains forward-looking statements. Statements in this presentation that are not historical facts, including without limitation the information under the heading "Financial Outlook" and statements about the Company’s beliefs and expec
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: What We Are Building
= mw SASWELL WHAT WE ARE Building
Slide 5: The Stagwell Story
WHAT WE ARE BUILDING FROM ZERO to MARKET HERO THE STAGWELL Story Stagwell started in late 2015 with a vision for a new digital-first marketing company powered by an experienced leader and an investment from Steve Ballmer 2019 2021 KEY DIGITAL INVESTED IN COMPLETED 5 QUARTERS OF ACQUISITIONS MDC PART
Slide 6: Stagwell Has Achieved
WHAT WE ARE BUILDING Growing scale with Quarter after Revenue over $2B to quarter of challenge the majors double-digit & transform marketing revenue growth STAGWELL Has Achieved Growing Achieving its vision global presence of offering everything from in 34 countries global tech driven services to se
Slide 7: The Future Is Promising
WHAT WE ARE BUILDING LARGE With less than 2% market share1, 1 MARKET we have built a track record of competing & OPPORTUNITY winning against market leaders to gain share THE FUTURE TIED TO Our mix of services is overwhelmingly digital, 2 HIGH GROWTH overweighted in the high-growth areas with Is Prom
Slide 8: Market Opportunity
Market Opportunity STRICTLY CONFIDENTIAL 8
Slide 9: The Advertising Market Is Ripe for Disruption
THE ADVERTISING MARKET IS RIPE FOR DISRUPTION MARKET BACKDROP $2B+ OTHERS $32B $18B ~ $60B spent with the top 4 STAGWELL $14B legacy holding companies1 Consulting companies have ~$130B $9B Deloitte Digital $14B begun to take share, but we $9B believe they lack essential PwC Digital spent on advertis
Slide 10: Digital Media Is Disrupting Marketing
DIGITAL MEDIA IS DISRUPTING MARKETING MARKET BACKDROP The new marketplace creates new opportunities 2% 7% 6% GLOBAL AD 5% GLOBAL AD SPENDING 2000 9% SPENDING 2021 33% 51% 27% 35% 15% 3% 6% Newspapers Magazines Television Radio Cinema Outdoor Internet Source: Zenith research 1010
Slide 11: Digital Marketing Continues to Grow Rapidly
DIGITAL MARKETING CONTINUES TO GROW RAPIDLY MARKET OPPORTUNITY Double digit growth in e-commerce, digital marketing services, & CTV E-Commerce Digital Marketing Connected TV Designing, creating, implementing & Services enabling influencers & New ways of reaching consumers through managing consumer e
Slide 12: Political & Advocacy Growing Rapidly
POLITICAL & ADVOCACY GROWING RAPIDLY MARKET OPPORTUNITY Strong secular growth in spend & fundraising facilitated by technology and driven by increased engagement Political Political Paid Media Spend Funds Raised Online ($ in billions) ($ in billions) $14 $7 $9 $6 $4 $2 $0 $1 2014 2016 2018 2020 2014
Slide 13: Stagwell Today
Stagwell Today 13
Slide 14: Key Stats
Key Stats STAGWELL TODAY ~13,700 1,300+ $130B+ Employees Software Engineers Addressable Market 34+ 50+ ~4,000 Countries Affiliates Blue-Chip Customers $2.5B+ $431M ~$200M LTM GAAP Revenue LTM Adj. EBITDA 2021 Free Cash Flow Note: Financials are Pro Forma as if the combination was completed January 1
Slide 15: Integrated Platform for the Modern Marketer
Integrated Platform FOR THE MODERN MARKETER STAGWELL TODAY 1 Digital Transformation Building Digital Platforms & Consumer Experiences Performance Media & Data 2 Integrated Omnichannel Media, Data & E-Commerce 3 Consumer Insights & Strategy Tracking Across the Consumer Journey 4 Creativity & Communic
Slide 16: Stagwell Today: Client Case Studies
Cutting Edge Powerful Collaboration Between Data & Insights Shaping Digital Transformation Technology & Creativity The Digital Future STAGWELL TODAY THE MAGIC WALL DISPLACE ‘S OTT CONTENT STRATEGY Design an experience that brings election results to life. AGENCY OF 65 YEARS A client for 40+ years, N
Slide 17: Mark Penn: Founder and CEO Background
FOUNDER & POLLSTER Founded Penn and Schoen in 1975 with his Harvard roommate Doug Schoen GROWER Under Penn’s leadership, firm expanded to 200+ people with offices around the world. ADVISOR Served key corporate (Texaco, AT&T, Microsoft, Ford, Merck, etc.) & political (President Clinton’s pollster for
Slide 18: The Stagwell Nasdaq Listed
Nasdaq STGW NasdaqListed
Slide 19: Unique Digital Mix
Digital Mix We have the mix of high growth digital today that TODAY legacy peers are slowly working towards UNIQUE DIGITAL MIX 1 Digital Transformation Building Digital Platforms & Consumer Experiences ~57% OF 3Q 2022 NET REVENUE 29% 2 Performance Media & Data Capabilities Integrated Omnichannel Med
Slide 20: Investing Behind Digital
TARGET INVESTING BEHIND DIGITAL But we are not stopping there, adding a Martech Layer of new Revenue Mix SaaS & DaaS products & investing in our core digital platforms Proprietary SaaS & DaaS Products Developed by Stagwell’s Innovation Group 29% 65%+ DIGITAL REVENUE 18% 9% 43% <35% Today’s Mix Targe
Slide 21: Winning Bigger: Blue-Chip Client Base
Blue-Chip Growing average client size through larger, CLIENT BASE integrated wins and expansion across new services WINNING BIGGER Communications Food & Consumer Financial Media & Entertainment Retail Beverage Products Technology Automotive Services Healthcare 21
Slide 22: Integrated Approach Is Working
BRAND CREATIVE CONSULTING PERFORMANCE INTEGRATED APPROACH NETWORK is working OMNICHANNEL MEDIA ~$500M YTD NET REVENUE +26% CONNECTED COMMERCE YTD ORGANIC NET REVENUE GROWTH Note: Financials are combined as if the Transactions were completed January 1, 2021. Media managed and partnerships as of Septe
Slide 23: Expanding Stagwell's Global Affiliate Network
Expanding Stagwell’s Global Affiliate Network SCALING THE NETWORK significantly expands our global footprint OUR GLOBAL NETWORK Europe • Austria • Turkey • Belgium • Ukraine • Bulgaria • France North America • • Italy Latvia • • Germany Netherlands • Romania • Poland • Canada • Slovak Republic • Spa
Slide 24: Scaling Development
SCALING Building a global development practice Global Engineering SCALING DEVELOPMENT effectively leveraging lower-cost markets US & Canada 250+ EMEA 100+ India Southeast Asia EXPANDING ~400 LATAM ~100 upon North American base with lower-cost ~450 global engineering hubs Figures indicate number of s
Slide 25: Platform Creation: Global Digital Transformation
SCALING VALUE Global Digital Transformation CREATION Added LATAM digital transformation +64% 450+ 2022 YTD ENGINEERS capabilities & clients NET REVENUE ACROSS to Code & Theory GROWTH LATAM PLATFORM Added content & design practices +17% 50+ 2022 YTD UX AND & blue chip west coast NET REVENUE CONTENT c
Slide 26: The Value-Added Platform
STRATEGIC THE VALUE VALUE-ADDED PLATFORM Investment CREATION Platform Global Media Affiliate Client Marketing Network Reach Services Unified & engaged corporate team delivering value-added shared services driving both $ Growth PLATFORM revenue & cost synergies Central M&A Innovation Group Investment
Slide 27: 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 28: SMC Is a Proprietary Suite of SaaS & DaaS Tools
Our Four Divisions HARRIS COMMS DATA TECH SMC IS A PROPRIETARY One-Stop Suite Of DaaS Tools For SaaS Platform For Modern Communication SUITE Market Researchers Professionals of SaaS & DaaS tools built for the MEDIA SPECIALTY STUDIO MEDIA in-house marketer DIY Platform For Proprietary & In-House Medi
Slide 29: 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 30: Stadium-size AR games could transform live sports
“Stadium-size AR games could transform live sports” VRScout First-of-its-kind Content Platform Shared AR for stadiums launched with Minnesota Twins in August Mass Community Engagement Highly immersive and interactive shareable experiences Live & Remote Experiences Multiple AR activation opportunitie
Slide 31: The Stagwell Plan: Adding It All Up
ADDING Potential Equation for Success* ($M) it all up THE STAGWELL PLAN 10-12% long-term organic growth target driven by: 10-20% Digital 5-7% Public Relations ~$3,500 OPPORTUNITY 3-5% Creative & Media TO GROW TO + Stagwell Marketing Cloud ~$75 $4 BILLION+ + M&A Growth $450 AND BEYOND OF GAAP REVENUE
Slide 32: Financial Highlights
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Slide 33: We Have Our Financial House in Order
Refinanced Bonds in 2021 with $1.1BN in financing › Fixed interest rate of 5.625% in rising interest rate environment WE HAVE OUR › 7 years to maturity in 2029, providing financial flexibility FINANCIAL HOUSE Secured $500M Revolving Credit Facility in order with flexible terms, 5-year maturity Stron
Slide 34: Maintaining Discipline Around Deferred Acquisition Consideration
MAINTAINING DISCIPLINE AROUND Deferred Acquisition Consideration REDUCED DAC BY $63M FROM 2021 YEAR-END BALANCE $222M $224M $197M $160M 4Q21 1Q22 2Q22 3Q22 Note: Numbers may not foot due to rounding. 34
Slide 35: Pro Forma Capital Structure
PRO FORMA CAPITAL STRUCTURE Pro Forma Share Count Net Debt & Debt-Like ($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 (equal voting & economic rights to Class A) 164,376 DAC 160 RNCI2 98 Share-based awards5 3,712 Less: Ca
Slide 36: Appendix
| me SL ASWELL Appendix
Slide 37: YTD GAAP Consolidated Operating Performance
YTD GAAP CONSOLIDATED OPERATING PERFORMANCE $ and Shares in Thousands Nine Months Ended September 30, 2022 2021 Revenue $ 1,979,607 $ 857,436 Cost of services 1,253,765 558,856 Office & general expenses 429,121 226,720 Depreciation & amortization 95,642 46,122 Impairment & other losses 28,034 14,926
Slide 38: Reconciliation of GAAP Net Income to Adj. EBITDA
RECONCILIATION OF GAAP NET INCOME TO ADJ. EBITDA Full Year Ended Nine Months Ended December 31, September 30, $ in Thousands 2021 2020 2022 2021 Net Income $ 35,920 $ 71,461 $ 93,415 $ 31,186 Net income attributable to noncontrolling & (14,884) (15,105) (59,668) (10,987) redeemable noncontrolling in
Slide 39: Reconciliation of Combined Net Revenue Growth to Organic Net Revenue Growth
RECONCILIATION OF COMBINED NET REVENUE GROWTH TO COMBINED ORGANIC NET REVENUE GROWTH COMPONENTS OF CHANGE CHANGE $ In thousands, Combined Net Revenue - Net Revenue – except Nine Months Ended Foreign Net Acquisitions Total Nine Months Ended percentages September 30, 2021 Currency (Divestitures) Organ
Slide 40: Thank You
Thank You Contact Us: IR@StagwellGlobal.com