Stagwell posts 23.6% first-quarter organic net revenue growth
The holding company stood by its double-digit organic revenue growth forecast for 2022.
Troov
Stagwell reported organic net revenue growth of 23.6% for the first quarter and stood by an earlier forecast calling for double-digit growth for the year.
“While many legacy holding companies are guiding to 5 or 6% growth we are reaffirming our strong double-digit growth projections for the year and expanding our long-term targets,” Mark Penn, Stagwell's CEO, said on a conference call.
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Penn reaffirmed Stagwell’s 2022 forecast calling for net revenue growth of 18% to 22%.
The results were calculated on a pro forma basis, as if the company’s July 2021 merger with MDC Partners had been completed on Jan. 1, 2020. Pro forma net revenue for the quarter was $526.6 million, with 56% coming from digital services.
Growth by segment
When asked about Stagwell’s numbers compared to big tech companies, Penn explained that Stagwell’s growth is in part due to the company being “the new kid on the block.”
“I think that’s explained by the fact that we are able to grow share in this marketplace,” Penn said. “When you look at us we are the new kid on the block with digital capabilities in line with what people are looking for. So many of the contracts we've won were from legacy companies and were different in character than the old contracts used to be. The old contracts used to have primarily legacy services, the new contracts that people want [is they] want to have the right ad for the right person at the right time. They want to combine digital targeting along with the kind of creativity that we can offer. That's, what's enabling us to grow this quickly.”
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The holding company saw strong growth on the media side. First-quarter revenue for its media network, which includes Gale and Assembly, grew by 44%. Stagwell’s communication segment, which includes firms such as Targeted Victory and Allison+Partners, grew by 31%. Its integrated agency segment, which includes Anomaly, Code and Theory, and Instrument, grew by 16%.
Net new business wins totaled $54 million in the quarter, including a Lenovo agency of record win.
Subleasing real estate
One way that Stagwell is keeping its costs down is by managing its physical locations, including consolidating real estate in New York and Los Angeles.
“We are continuing to shrink our real estate footprint," Penn said, citing collaborative work as well as the trend of more people working outside of the office.
Rivals' results
Earlier today, S4 Capital finally announced its 2021 results, after two postponements, a delay that Executive Chairman Martin Sorrell said was “unacceptable” and “embarrassing to all of us.”
S4's delayed results were in line with analyst expectations. The company doubled its revenue to £687 million ($847 million), which S4 Chief Financial Officer Mary Basterfield said was within the range of market estimates. Gross profit was £560.3 million, up 44% on a like-for-like basis. However, S4 recorded a pre-tax loss of £55.7 million ($68.7 million) after adjustments.
