Stagwell Inc. · NASDAQ:STGW
Stagwell — Q3 2023 Earnings Presentation
28 slides from Stagwell's earnings presentation, Nov 2, 2023
Slide 1: Third Quarter 2023 Earnings Presentation
Third Quarter 2023 EARNINGS PRESENTATION NOVEMBER 2 | 2023
Slide 2: Forward Looking Statements & Other Information
FORWARD LOOKING STATEMENTS & OTHER INFORMATION This document contains forward-looking statements. within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s
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 earnings presentation certain financial results that the Securities and Exchange Commission (SEC) defines as "non-GAAP Financial Measures." Management believes that such non-GAAP financ
Slide 4: Adjusting Full-Year 2023 Outlook
Adjusting Full-Year 2023 Outlook ~(4%) Organic Net Revenue Growth FINANCIAL Outlook ~(2.5%) Organic Net Revenue Growth ex. Advocacy $390M - $410M In Adjusted EBITDA 40% - 50% EBITDA Conversion on Free Cash Flow $0.73 - $0.78 In Adjusted Earnings Per Share Note: Guidance as of 11/02/2023. The Company
Slide 5: Third Quarter Highlights
THIRD QUARTER HIGHLIGHTS NET REVENUE: $535M | NET LEVERAGE RATIO: 3.64x | ADJ. EBITDA: $102M Winning RECORD NEW BUSINESS Managing COSTS $81 million in net new business secured in Q3 Proactive management of staffing levels & costs Outstanding LTM net new business of $251 million $82M of annualized st
Slide 6: Summary Combined Financials
SUMMARY COMBINED FINANCIALS Three Months Ended Sept 30, Nine Months Ended Sept 30, $ in Thousands 2023 2022 2023 2022 Net Revenue $ 534,864 $ 555,754 $ 1,595,586 $ 1,638,707 Billable Costs 82,709 108,037 276,696 340,900 Revenue $ 617,573 $ 663,791 $ 1,872,282 $ 1,979,607 Billable Costs 82,709 108,03
Slide 7: 3Q23 Net Revenue
3Q23 NET REVENUE Three Months Ended Sept 30, 2023 Nine Months Ended Sept 30, 2023 $ in Thousands Net Revenue Change Net Revenue Change Sept 30, 2022 $ 555,754 $ 1,638,707 Organic revenue (37,686) (6.8%) (91,650) (5.6%) Acquisitions 13,429 2.4% 54,619 3.3% (divestitures), net Foreign currency 3,367 0
Slide 8: 3Q Net Revenue by Geography
3Q NET REVENUE BY GEOGRAPHY % OF NET REVENUE Organic Growth Y/Y Geography 3Q23 YTD 3Q 12.8% United States (9.9)% (8.0)% 7.9% United Kingdom 12.2% 10.9% Other 6.6% 3.0% 79.3% TOTAL (6.8)% (5.6)% TOTAL EX-ADVOCACY (4.6)% (4.0)% Note: Figures may not foot due to rounding. 8
Slide 9: 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 10: Our Principal Capabilities
OUR PRINCIPAL CAPABILITIES 1 Stagwell Marketing Cloud Group SaaS and DaaS Tools for the In-House Marketer 54% 3Q23 2 Digital Transformation Building & Designing Digital Platforms & Technology 3 Performance Media & Data Addressable on a Global Scale 4 Consumer Insights & Strategy Tracking Across the
Slide 11: Adj EBITDA Growth by Capability
ADJ EBITDA GROWTH BY CAPABILITY Adj. EBITDA* Growth Y/Y % OF ADJ. EBITDA* Principal Capability 3Q23 YTD 4% Stagwell Marketing Cloud Group (52.7%) (44.5%) 30% 3Q 10% Digital Transformation (30.0%) (40.2%) 10% Performance Media & Data 65.4% 5.7% 46% Consumer Insights & Strategy 23.5% (9.3%) Creativity
Slide 12: Net Revenue Growth by Capability
NET REVENUE GROWTH BY CAPABILITY % OF NET REVENUE 3Q23 YTD Principal Organic Net Net Organic Net Net Revenue Revenue Revenue Revenue Capability Growth Growth Growth Growth 9% Stagwell Marketing (7.1%) 20.4% (1.5%) 31.0% 24% Cloud Group 3Q Digital Transformation 14% (20.2%) (20.5%) (13.9%) (14.0%) 9%
Slide 13: 3Q Ex-Advocacy Net Revenue & Adjusted EBITDA
3Q EX-ADVOCACY NET REVENUE & ADJUSTED EBITDA $ in Millions Three Months Ended, Nine Months Ended, Sept 30, Sept 30, Sept 30, Sept 30, % Change % Change 2023 2022 2023 2022 Total Net Revenue $535 $556 (3.8%) $1,596 $1,639 (2.6%) NET REVENUE Advocacy Net Revenue 38 52 (27.4%) 97 129 (24.5%) Total Ex A
Slide 14: New Business Update
NEW BUSINESS UPDATE Notable Business WINS & EXPANSIONS Net New Business 3Q23 $81M LTM $251M Avg. Net Revenue 3Q23 $5.9M PER CLIENT AT TOP 25 14
Slide 15: Stagwell Marketing Cloud Group
STAGWELL MARKETING CLOUD GROUP Net Revenue1 Adj. Net EBITDA Revenue Margin $47M Advanced $36.3 22.4% $39M Media Platforms Stagwell $11.0 (41.1)% Marketing Cloud TOTAL $47.3 7.6% 3Q22 3Q23 GROWTH (y/y) 20.4% 1. Defined as GAAP Revenue minus Billable Costs – Includes both the Advanced Media Platform a
Slide 16: Liquidity
LIQUIDITY $ in Millions Available Liquidity (as of 9/30/2023) Commitment Under Credit Facility $ 640 Drawn 412 Letters of Credit 25 Undrawn Commitments Under Facility $ 203 Total Cash & Cash Equivalents 99 Total Available Liquidity $ 302 16
Slide 17: Maintaining Discipline Around Deferred Acquisition Costs
MAINTAINING DISCIPLINE AROUND Deferred Acquisition Costs REDUCED DAC BY $26M FROM 3Q22 QUARTER-END BALANCE $160M $134M 3Q22 3Q23 17
Slide 18: Adjusted Earnings Per Share
ADJUSTED EARNINGS PER SHARE Three Months Ended Sept 30, 2023 Nine Months Ended Sept 30, 2023 Reported Reported $ and Shares in Thousands (GAAP) Adjustments Non-GAAP (GAAP) Adjustments Non-GAAP Net income attributable to Stagwell Inc. common shareholders 653 $ 20,844 $ 21,497 (3,597) $ 61,195 $ 57,59
Slide 19: GAAP Consolidated Operating Performance
GAAP CONSOLIDATED OPERATING PERFORMANCE Three Months Ended Sept 30, Nine Months Ended Sept 30, $ and Shares in Thousands 2023 2022 2023 2022 Revenue $ 617,573 $ 663,791 $ 1,872,282 $ 1,979,607 Cost of services 384,980 417,134 1,201,309 1,253,765 Office & general expenses 160,021 119,186 481,379 429,
Slide 20: Capital Structure
CAPITAL STRUCTURE Net Debt & Debt-Like ($M, as of 9/30/2023) Share Count5 (Thousands, as of 11/1/2023) Revolving Credit Facility $ 412 Class A 120,634 Bonds 1,100 NCI1 30 DAC2 134 Class C 151,649 (equal voting & economic rights to Class A) RNCI3 27 Less: Investments4 19 Share-based awards6 449 Less:
Slide 21: Stagwell Marketing Cloud Group: SaaS & DaaS tools for the in-house marketer
STAGWELL MARKETING CLOUD GROUP SaaS & DaaS tools for the in-house marketer SMC SMC Comms Tech Media Studio SMC SMC Real-Time Research Advanced Media Platforms SMC Data & AI Marketplace QR Code 21
Slide 22: Applying a Proven Playbook to Scale Stagwell Marketing Cloud Group
APPLYING A PROVEN PLAYBOOK to scale Stagwell Marketing Cloud Group Building complementary software solutions leveraging the domain expertise and distribution channels already in place at Stagwell Digital Services Technology Digital Transformation SMC Advanced Media Platforms 1 Building Digital Platf
Slide 23: Product Incubation Playbook
STAGWELL MARKETING CLOUD GROUP Product Incubation Playbook We've developed a proven strategy to develop and incubate new technologies, making informed product roadmap decisions based off agency clients while leveraging our world-class tech team Faster WE BUILD Shared infrastructure + tech expertise
Slide 24: Real-Time Insights Product Spotlight
REAL-TIME INSIGHTS Product Spotlight Customer Benefit Unlocking continuous brand tracking on an affordable, global, modern basis for research professionals 24
Slide 25: Artificial Intelligence Product Spotlight
ARTIFICAL INTELLIGENCE Product Spotlight Customer Benefit Revolutionizing the PR process through AI, saving PR professionals from millions of tedious working hours 25
Slide 26: Augmented Reality Product Spotlight
AUGMENTED REALITY Product Spotlight Customer Benefit Bringing a whole new level of stadium entertainment and fan engagement to sports and entertainment through shared AR 26
Slide 27: Pricing Model
STAGWELL MARKETING CLOUD GROUP Pricing Model Modern, flexible pricing models that fit the needs and budgets for the modern, in-house marketer Subscription Pricing Consumption Fee Advertising-Based Annual SaaS contract Data and media spend Sponsorship fees 27
Slide 28: Thank You
Thank You Contact Us: IR@StagwellGlobal.com