Stagwell Inc. · NASDAQ:STGW
Stagwell — Investor Presentation (March 2023)
41 slides from Stagwell's investor presentation, March 2023
Slide 1: Investor Presentation March 2023
Investor Presentation MARCH | 2023
Slide 2: Disclaimer: Forward-Looking Statements
DISCLAIMER Forward-Looking Statements This presentation 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 repre
Slide 3: Disclaimer: Risk Factors
DISCLAIMER Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following: • risks associated w
Slide 4: Disclaimer: Combined Financial Information and Non-GAAP Measures
DISCLAIMER Combined Financial Information and Non-GAAP Financial Measures This presentation includes certain unaudited combined financial information for Stagwell and MDC that gives effect to the Transactions as if they had been consummated on January 1, 2021. These unaudited combined results were p
Slide 5: Building Stagwell: What We Are
= STAGWELL WHAT WE ARE Building
Slide 6: Stagwell is a holistic, technology-first enterprise services company
“Stagwell is a holistic, technology-first, enterprise services company owing to its combination of ad agency creative skills and information technology skills. STGW differentiates itself in the marketplace through its integration of technology and data with creative ad solutions to drive market shar
Slide 7: From Zero to Market Hero: The Stagwell Story
FROM ZERO to MARKET HERO THE STAGWELL $2.7B Story FY 2022 REVENUE 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 TODAY KEY DIGITAL INVESTED IN COMPLETED 6 QUARTERS OF Acquisitions
Slide 8: Achieved Robust Growth: FY 2022 Highlights
Robust 15% FY 2022 NET REVENUE GROWTH, 14% ORGANIC Growth Digital capabilities, accounting for 57% of FY 2022 net revenue, grew 28% EXPANDING WE HAVE GROWING TWICE AS FAST INTERNATIONALLY VS. DOMESTIC Internationally 26% FY 2022 net revenue growth internationally, 14% in North America Achieved Launc
Slide 9: The Future Is Promising
LARGE With approximately 2% market share1, 1 MARKET we have built a track record of competing & Opportunity winning against market leaders to gain share THE FUTURE Is Promising 2 TIED TO HIGH GROWTH Our mix of services is overwhelmingly digital, overweight in the high-growth areas of digital Digital
Slide 10: On the Frontier of Marketing: AI & AR
ON THE FRONTIER OF MARKETING Bringing Together AI & AR Across Marketing Services with Global Network of 1,500+ Engineers AUGMENTED REALITY GENERATIVE AI Shared AR product ARound is bringing Comms Tech AI product PRophet is launching premium and interactive brand-sponsored AR experiences generative A
Slide 11: Market Opportunity
Market Opportunity 11
Slide 12: The Advertising Market Is Ripe for Disruption
THE ADVERTISING MARKET IS RIPE FOR DISRUPTION MARKET BACKDROP ~ $60B $2B+ OTHERS $32B $18B spent with the top 4 legacy holding STAGWELL $14B companies1 Consulting companies ~$130B Deloitte $9B have begun to take share, Digital $14B $9B but we believe they lack PwC Digital essential creative talent t
Slide 13: Digital Media Is Disrupting Marketing
DIGITAL MEDIA IS DISRUPTING MARKETING MARKET BACKDROP The new marketplace creates new opportunities 2% 5% 6% 4% GLOBAL AD GLOBAL AD 9% SPENDING 2000 SPENDING 20211 33% 25% 59% 35% 15% 3% 4% Newspapers Magazines Television Radio Cinema Outdoor Internet (1) Figures are advertising expenditure estimate
Slide 14: Digital Marketing Continues to Grow Rapidly
DIGITAL MARKETING CONTINUES TO GROW RAPIDLY MARKET OPPORTUNITY Double digit growth in e-commerce, digital marketing services, & CTV E-Commerce Digital Marketing Connected TV Designing, creating, implementing & Services enabling influencers & New ways of reaching consumers through managing consumer e
Slide 15: Political & Advocacy Growing Rapidly
POLITICAL & ADVOCACY GROWING RAPIDLY MARKET OPPORTUNITY Strong secular growth in spend & fundraising facilitated by technology and driven by increased engagement Political Paid Media Spend ($ in billions) $14 $9 $6 $4 2014 2016 2018 2020 Source: GroupM 1515
Slide 16: Stagwell Today
Stagwell Today 16
Slide 17: Key Stats
Key Stats STAGWELL TODAY 12,000+ 1,500+ $130B+ Employees Engineers Addressable Market 34 75 4,000+ Countries Affiliates Blue-Chip Customers ~$2.7B $451M ~$270M 2022 GAAP Revenue 2022 Adj. EBITDA 2022 Free Cash Flow Note:Employees includes full-time employees and full-time contractors. Figures as of
Slide 18: 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 19: Cutting-Edge Digital Transformation, Technology & Creativity, Data & Insights
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 20: Mark Penn 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 21: The Stagwell Plan
The Stagwell Plan 21
Slide 22: Unique Digital Mix
DIGITAL MIX We have the mix of high-growth digital today Today that we believe legacy peers are slowly working towards UNIQUE DIGITAL MIX 57% OF FY 2022 1 Digital Transformation NET REVENUE Building Digital Platforms & Consumer Experiences 28% 2 Performance Media & Data Capabilities 28% Integrated O
Slide 23: Investing Behind Digital
TARGET INVESTING BEHIND DIGITAL But we are not stopping there, adding a Martech Layer of new Net Revenue Mix SaaS & DaaS products & investing in our core digital platforms Proprietary SaaS & DaaS Products Developed by Stagwell Marketing Cloud 28% 65%+ DIGITAL REVENUE 19% 10% 43% <35% TODAY’S MIX TAR
Slide 24: 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 24
Slide 25: Integrated Approach Is Working
BRAND CREATIVE CONSULTING PERFORMANCE INTEGRATED APPROACH NETWORK is working OMNICHANNEL MEDIA ~$670M FY 2022 NET REVENUE +18% CONNECTED COMMERCE FY 2022 ORGANIC NET REVENUE GROWTH Note: Financials are combined as if the Transactions were completed January 1, 2021. Media managed and partnerships as
Slide 26: Scaling the Network
EXPANDING Stagwell’s Global Affiliate Network significantly Our Global Network expands our global footprint SCALING THE NETWORK Europe • Austria • Turkey • Belgium • Ukraine • Bulgaria • France North America • • Italy Latvia • • Germany Netherlands • Romania • Poland • Slovak Republic • Spain • Slov
Slide 27: Scaling Development
SCALING Building a global development practice Global Engineering effectively leveraging lower-cost markets SCALING DEVELOPMENT US & Canada 600+ EMEA 100+ India Southeast Asia EXPANDING ~400 LATAM ~100 upon North American base with lower-cost ~450 global engineering hubs Figures indicate number of e
Slide 28: Strategic 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 $ Growth PLATFORM shared services driving both Central M&A Innovation Group Investment revenue & cost synergies
Slide 29: Stagwell Marketing Cloud
STAGWELL MARKETING CLOUD SaaS & DaaS tools for the in-house marketer SMC SMC Comms Tech Media Studio SMC SMC Real-Time Research New Media Platforms SMC Data & AI Marketplace QR Code 29
Slide 30: Product Spotlight: Augmented Reality
AUGMENTED REALITY “Stadium-size AR games could transform live sports” Product Spotlight - VRScout THE NEXT GENERATION OF STADIUM ENTERTAINMENT AND FAN ENGAGEMENT ARound is bringing a whole new level of fan engagement to the sports and entertainment world with shared augmented reality. By 3D mapping
Slide 31: Product Spotlight: Generative AI
GENERATIVE AI Product Spotlight PROPHET IS A PIONEERING GENERATIVE AND PREDICTIVE AI SAAS PLATFORM DESIGNED BY AND FOR THE PR COMMUNITY. The platform uses AI to help modern PR professionals predict, produce, and perform by generating, analyzing and testing content that predicts earned media interest
Slide 32: 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 5-15% Performance Media & Data ~$3,500 OPPORTUNITY 3-7% Creativity & Communications TO GROW TO + Stagwell Marketing Cloud ~$75 $4 BILLION+ + M&A Growth $450 AND BE
Slide 33: Financial Highlights
Financial Highlights 33
Slide 34: We Have Our Financial House in Order
WE HAVE OUR FINANCIAL HOUSE In Order Refinanced Bonds in 2021 Secured $500M Strong track record Returning capital with $1.1B in financing Revolving Credit of controlling costs to shareholders › Fixed interest rate Facility with with a highly with $52M in of 5.625% in rising flexible terms, variable
Slide 35: Maintaining Discipline Around Deferred Acquisition Costs
MAINTAINING DISCIPLINE AROUND Deferred Acquisition Costs REDUCED DAC BY $61M FROM 2021 YEAR-END BALANCE $222M $161M Q421 Q422 35
Slide 36: Pro Forma Capital Structure
PRO FORMA Capital Structure Net Debt & Debt-Like ($M, as of 12/31/22) Pro Forma Share Count (Thousands, as of 2/28/23) Revolving Credit Facility $ 100 Class A4 131,614 Bonds 1,100 NCI1 34 DAC 161 Class C5 160,909 (equal voting & economic rights to Class A) RNCI2 60 Less: Investments3 18 Share-based
Slide 37: Appendix
Appendix
Slide 38: GAAP Consolidated Operating Performance
GAAP CONSOLIDATED OPERATING PERFORMANCE Three Months Ended December 31, Twelve Months Ended December 31, $ and Shares in Thousands 2022 2021 2022 2021 Revenue $ 708,185 $ 611,927 $ 2,687,792 $ 1,469,363 Cost of services 419,811 348,000 1,673,576 906,856 Office & general expenses 172,415 197,318 601,
Slide 39: Reconciliation of GAAP Net Income to Adj. EBITDA & FCF
RECONCILIATION OF GAAP NET INCOME TO ADJ. EBITDA & FCF Full Year Ended December 31, $ in Thousands 2022 2021 Net Income $ 65,842 35,920 Net income attributable to noncontrolling & redeemable noncontrolling interests (38,573) (14,884) Net income attributable to Stagwell Inc. common shareholders 27,26
Slide 40: Reconciliation of Combined Net Revenue Growth to Organic Growth
RECONCILIATION OF COMBINED NET REVENUE GROWTH TO COMBINED ORGANIC NET REVENUE GROWTH COMPONENTS OF CHANGE CHANGE $ In thousands, Net Revenue - Year Net Revenue – except Ended December 31, Foreign Net Acquisitions Total Year Ended December percentages 2021 Currency (Divestitures) Organic Change 31, 2
Slide 41: Thank You
= STAGWELL Thank You