Stagwell posts 16% organic growth, cites digital transformation

By Abimbola Mohammed

Stagwell Inc., a global marketing solution network, has announced net organic revenue growth in the second quarter of 16% versus the prior year period on net revenue of $556 million. The growth, according to the company, is attributed to digital capabilities, research and investment in content and people.

According to a statement on Stagwell website, for the first six months of the year, organic revenue growth was 19.6% on net revenue of $1.082 billion. The company reaffirmed its full-year organic growth outlook of 18% to 22%. While the Q2 growth came on top of 29% organic growth in the second quarter of 2021 for two-year aggregated growth of 45%.

In an exclusive interview with MARKETING EDGE, Rotimi Bankole, Group CEO, SBI Media, noted that the Network growth is as a result of innovation, digital transformation, research and content investment growth is certain.

His words: “Stagwell Global’s latest stellar result accentuates its rapid growth driven by digital transformation, research and investment in content and people. In the African region, we believe the group will accelerate its efforts through the kinds of partnerships we are part of and other initiatives that such a collective alliance can bring to bear.”

Mark J. Penn, Chairman/ CEO, Stagwell, said: “Stagwell is executing exactly as we said we would, and doing so profitably. We delivered significant organic net revenue growth of 16% in the second quarter, which has the toughest comparisons of the year. Our high-growth digital capabilities expanded to 57% of net revenue and grew 28% organically versus the prior year period. Due to our unique mix of digital and creative capabilities, clients now recognize Stagwell as a serious alternative to legacy incumbents and we are now a regular contender in many of the largest global pitches.”

He continued: “Our disciplined financial management and strong cost controls allow us to maintain leading margins, even while making smart investments in our corporate infrastructure to scale the network. We are optimistic about the back half of the year as our world-class advocacy businesses prepare for a record cycle of US political advertising spend and our year-over-year comparisons ease. We remain very confident in our full-year guidance of 18-22% organic net revenue growth and $450-$480 million of adjusted EBITDA.”

A big part of the growth story is getting top clients to spend more, said Penn, noting that the average revenue spent for the firm’s top 25 clients is now $6 million versus $4.5 million a year ago. The firm’s digital capabilities now account for 57% of its net revenue.

For the second quarter, organic growth at the company’s integrated agencies network was 9.3%. Growth for the media network, including Assembly, was 33%, while the communications division (PR) was 27.9%.

In the same vein, Frank Lanuto, Chief Financial Officer, said: “The Company reported strong second quarter results with GAAP revenue of $673 million, net revenue of $556 million and Adjusted EBITDA of $111 million. Pro forma organic net revenue increased 16% over the prior period and Adjusted EBITDA margins remained strong at 20% of net revenue as we remain diligent around cost controls. Our balance sheet is in a good position and should benefit as we head into the seasonally strong back half of the year when we expect cash flow to increase significantly.”


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