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0000876883false00008768832023-05-092023-05-09

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported) — May 9, 2023
 
Stagwell Inc.  
(Exact Name of Registrant as Specified in its Charter)
 
Delaware 001-13718 86-1390679
(Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.)
 
One World Trade Center, Floor 65, New York, NY 10007
(Address of principal executive offices and zip code)
 
(646) 429-1800
(Registrant’s Telephone Number)
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Class A Common Stock, $0.001 par value
STGW NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company     ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                              ☐

 
 



   
Item 2.02 Results of Operations and Financial Condition

On May 9, 2023, Stagwell Inc. (the “Company”) issued an earnings release reporting its financial results for the three months ended March 31, 2023. A copy of this earnings release is attached as Exhibit 99.1 hereto. Following the issuance of this earnings release, the Company will host an earnings call in which its financial results for the three months ended March 31, 2023 will be discussed. The investor presentation to be used for the call is attached as Exhibit 99.2 hereto.

The Company has posted the materials attached as Exhibit 99.1, and 99.2 on its website (www.stagwellglobal.com). The information found on, or otherwise accessible through, the Company’s website is not incorporated into, and does not form a part of, this Current Report on Form 8-K.
         
The foregoing information (including the exhibits hereto) is being furnished under “Item 2.02 - Results of Operations and Financial Condition”. Such information (including the exhibits hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
    
The foregoing information and the exhibits hereto contain forward-looking statements within the meaning of the federal securities laws. These statements are based on present expectations, and are subject to the limitations listed therein and in the Company’s other SEC reports, including that actual events or results may differ materially from those in the forward-looking statements.










































Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.
99.1 Press release dated May 9, 2023, relating to the Company’s results for the three months ended March 31, 2023.

99.2 Investor presentation dated May 9, 2023.

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)





Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed by the undersigned hereunto duly authorized.
 
Date: May 9, 2023
Stagwell Inc.
By: /s/ Frank Lanuto
Frank Lanuto
Chief Financial Officer
 


        
EX-99.1 2 stgw2023331pr.htm EX-99.1 Document
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FOR IMMEDIATE ISSUE


STAGWELL INC. (NASDAQ: STGW) REPORTS RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2023

Revenue of $622 Million
Adjusted EBITDA of $72 million
First Quarter Results in line with Management Expectations
Reaffirms 2023 Full Year Guidance
Announces Share Repurchase Agreement for over 23.3 million Class A Shares in Stagwell Inc.
Aggregate Class A and Class C Shares reduced 8% to 267 million

New York, NY, May 9, 2023 (NASDAQ: STGW) – Stagwell Inc. (“Stagwell”) today announced financial results in line with internal expectations for the three months ended March 31, 2023.

FIRST QUARTER RESULTS:

•Revenue and EBITDA in line with management expectations
•Revenue of $622 million, a decrease of 3% versus the prior year period.
•First quarter net revenue of $522 million, a decrease of 1% versus the prior period.
•Organic net revenue decline of 3%, and excluding advocacy of 1%, versus the prior year period.
•On a two-year growth stack basis, organic net revenue growth of 21%
•First quarter net income attributable to Stagwell Inc. Common Shareholders of $0.4 million versus $13 million in the prior year period.
•First quarter Adjusted EBITDA of $72 million, a decrease of 29% versus the prior year period.
•First quarter Adjusted Earnings Per Share for Stagwell Inc. Common Shareholders of $0.13 versus $0.22 in the prior year period.
•Net new business wins of $53 million in the quarter and $212 million for the trailing twelve months.

"Stagwell is stronger than ever today with the removal of an overhang on the stock and Q1 results in line with management’s expectations, allowing us to reaffirm guidance for another year of significant growth,” said Mark Penn, Chairman and CEO of Stagwell Inc. “This quarter is compared to Q1 2022 which had 24% of organic growth compared to 14% for the year. We expect to return to double-digit growth in the later quarters, especially given strong new business wins within the quarter and after the close. We are moving forward with the Stagwell Marketing Cloud and all investors are invited to try our generative A.I. product at www.PRProphet.ai.”

“We have additionally announced entry into a definitive agreement, approved unanimously by Stagwell’s independent and disinterested directors who were advised by outside counsel and advisers, to repurchase approximately 23.3 million shares of Stagwell Inc. Class A Stock from AlpInvest,” Penn added. “I believe this purchase will help create value for shareholders in the marketplace given our undervalued stock.”

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Frank Lanuto, Chief Financial Officer, commented: “Coming off a record Q1 performance in 2022, the Company posted first quarter results in a challenging environment that were in line with management expectations. We are beginning to see positive signs, including strong new business wins, and improving client conditions, which give us confidence about the outlook for the remainder of the year.”

Financial Outlook
2023 financial guidance is as follows:
•Organic Net Revenue growth of 7.5% – 10%
•Organic Net Revenue growth ex-Advocacy of 10% – 14%
•Adjusted EBITDA of $450 million – $490 million
•Free Cash Flow Conversion of 50% – 60%
•Adjusted EPS of $0.90 – $1.05
•Guidance assumes no impact from foreign exchange, acquisitions or dispositions.
* The Company has excluded a quantitative reconciliation with respect to the Company’s 2023 guidance under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K. See "Non-GAAP Financial Measures" below for additional information.

Stock Repurchase Program
In the first quarter, the Company repurchased approximately 2.6 million shares of Class A Common Stock at an average price of $6.91 per share for an aggregate value of approximately $18 million. The remaining value of shares permitted to be repurchased was approximately $180 million as of March 31, 2023.

Stock Repurchase Transaction
On May 9, 2023, Stagwell Inc. agreed to repurchase approximately 23.3 million shares from AlpInvest Partners at a share price of $6.43 which is a total value of approximately $150 million. As announced separately, Stagwell Media LP, a shareholder in Stagwell Inc., and AlpInvest are engaged in advanced negotiations to redeem AlpInvest's remaining interests in Stagwell Media LP., subject to final documentation. Upon completion of these transactions, AlpInvest Partners will no longer be an investor in Stagwell Inc.


Conference Call
Management will host a video webcast and conference call on Tuesday, May 9, 2023, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three months ended March 31, 2023. The video webcast will be accessible at https://stgw.io/Q12023Earnings. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the conference call.

A recording of the conference call will be accessible one hour after the call and available for ninety days at www.stagwellglobal.com.

Stagwell Inc.
Stagwell is the challenger network built to transform marketing. We deliver scaled creative performance for the world's most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing. Led by entrepreneurs, our 13,000+ specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients.
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Join us at www.stagwellglobal.com.

Contacts
For Investors:
Ben Allanson
Ir@stagwellglobal.com

For Press:
Beth Sidhu
Pr@stagwellglobal.com


Non-GAAP Financial Measures
In addition to its reported results, Stagwell Inc. has included in this earnings release certain financial results that the Securities and Exchange Commission (SEC) defines as "non-GAAP Financial Measures." Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results. Such non-GAAP financial measures include the following:
(1) Organic Revenue: “Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) “non-GAAP acquisitions (dispositions), net”. Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year.
(2) Net New Business: Estimate of annualized revenue for new wins less annualized revenue for losses incurred in the period.
(3) Adjusted EBITDA: defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items.
(4) Adjusted Diluted EPS is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income attributable to Class C shareholders, excluding amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items, divided by (ii) (a) the per weighted average number of common shares outstanding plus (b) the weighted average number of Class C shares outstanding, (if dilutive). Other items includes restructuring costs, acquisition-related expenses, and non-recurring items, and subject to the anti-dilution rules.
(5) Free Cash Flow: defined as Adjusted EBITDA less capital expenditures, change in net working capital, cash taxes, interest, and distributions to minority interests, but excludes contingent M&A payments.
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(6) Financial Guidance: The Company provides guidance on a non-GAAP basis as it cannot predict certain elements which are included in reported GAAP results.
Included in this earnings release are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures.
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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 representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company’s beliefs and expectations, future financial performance and future prospects, business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “create,” “estimate,” “expect,” “focus,” “forecast,” “foresee,” “future,” “guidance,” “intend,” “look,” “may,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section.

Forward-looking statements in this document are based on certain key expectations and assumptions made by the Company. Although the management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The material assumptions upon which such forward-looking statements are based include, among others, assumptions with respect to general business, economic and market conditions, the competitive environment, anticipated and unanticipated tax consequences and anticipated and unanticipated costs. These forward-looking statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.

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 with international, national and regional unfavorable economic conditions that could affect the Company or its clients;
•the continued impact of the coronavirus pandemic (“COVID-19”), and evolving strains of COVID-19 on the economy and demand for the Company’s services, which may precipitate or exacerbate other risks and uncertainties;
•inflation and actions taken by central banks to counter inflation;
•the Company’s ability to attract new clients and retain existing clients;
•the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
•financial failure of the Company’s clients;
•the Company’s ability to retain and attract key employees;
•the Company’s ability to compete in the markets in which it operates;
•the Company’s ability to achieve its cost saving initiatives;
•the Company’s implementation of strategic initiatives;
•the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration;
•the Company’s ability to manage its growth effectively, including the successful completion and integration of acquisitions that complement and expand the Company’s business capabilities;
•the Company’s ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products;
•an inability to realize expected benefits of the combination of the Company’s business with the business of MDC;
•adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on the Company’s determination of value and computations of its attributes may result in increased tax costs;
•the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transactions;
•the Company’s unremediated material weaknesses in internal control over financial reporting and its ability to establish and maintain an effective system of internal control over financial reporting;
•the Company’s ability to protect client data from security incidents or cyberattacks;
•economic disruptions resulting from war and other geopolitical tensions (such as the ongoing military conflict between Russia and Ukraine), terrorist activities and natural disasters;
•stock price volatility; and
•foreign currency fluctuations.

Investors should carefully consider these risk factors, other risk factors described herein, and the additional risk factors outlined in more detail in our 2022 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2023, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings.
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SCHEDULE 1
STAGWELL INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share amounts)
Three Months Ended March 31,
2023 2022
Revenue $ 622,444  $ 642,903 
Operating Expenses
Cost of services 413,898  411,970 
Office and general expenses 158,836  144,512 
Depreciation and amortization 33,477  31,204 
Impairment and other losses —  557 
606,211  588,243 
Operating Income 16,233  54,660 
Other income (expenses):
Interest expense, net (18,189) (18,729)
Foreign exchange, net (670) (306)
Other, net 220  156 
(18,639) (18,879)
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates (2,406) 35,781 
Income tax expense 2,384  3,189 
Income (loss) before equity in earnings of non-consolidated affiliates (4,790) 32,592 
Equity in income (loss) of non-consolidated affiliates (227) 1,030 
Net income (loss) (5,017) 33,622 
Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests 5,460  (20,947)
 Net income attributable to Stagwell Inc. common shareholders $ 443  $ 12,675 
Income (loss) Per Common Share:
   Basic $ 0.00  $ 0.10 
   Diluted $ (0.01) $ 0.10 
Weighted Average Number of Common Shares Outstanding:
   Basic 125,199  122,285 
   Diluted 289,806  297,484 
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SCHEDULE 2
STAGWELL INC.
UNAUDITED COMPONENTS OF NET REVENUE CHANGE
(amounts in thousands)

Net Revenue - Components of Change Change
Three Months Ended March 31, 2022 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Three Months Ended March 31, 2023 Organic Total
Integrated Agencies Network $ 303,666  $ (2,793) $ 2,465  $ (10,434) $ (10,762) $ 292,904  (3.4) % (3.5) %
Brand Performance Network 155,482 (4,118) 5,911  5,659 7,452  162,934  3.6  % 4.8  %
Communications Network 64,379 (281) 1,069  $ (12,195) (11,407) 52,972  (18.9) % (17.7) %
All Other 3,110  (157) 9,038  861  9,742  12,852  27.7  % 313.2  %
$ 526,637  $ (7,349) $ 18,483  $ (16,109) $ (4,975) $ 521,662  (3.1) % (0.9) %

Note: The Company made changes to its internal management and reporting structure in the first quarter of 2023, resulting in an update to our reportable segments (Networks). The change in reportable segments was that Mono, previously in the Integrated Agencies Network, is now within Allison & Partners in the Communications Network, and Storyline (a Brand specializing in research and survey generation), previously in the Communications Network, is now within Constellation in the Integrated Agencies Network. Periods presented prior to the first quarter of 2023 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.




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SCHEDULE 3
STAGWELL INC.
UNAUDITED SEGMENT OPERATING RESULTS
(amounts in thousands)

For the Three Months Ended March 31, 2023
Integrated Agencies Network Brand Performance Network Communications Network All Other Corporate Total
Net Revenue $ 292,904  $ 162,934  $ 52,972  $ 12,852  $ —  $ 521,662 
Billable costs 36,888  50,406  13,488  —  —  100,782 
Revenue 329,792  213,340  66,460  12,852  —  622,444 
Billable costs 36,888  50,406  13,488  —  —  100,782 
Staff costs 187,693  104,596  40,077  10,487  6,824  349,677 
Administrative costs 29,166  23,082  8,756  3,195  3,977  68,176 
Unbillable and other costs, net 16,660  11,835  126  2,975  (9) 31,587 
Adjusted EBITDA (1)
59,385  23,421  4,013  (3,805) (10,792) 72,222 
Stock-based compensation 8,198  657  507  32  2,610  12,004 
Depreciation and amortization 18,643  8,244  2,713  1,948  1,929  33,477 
Deferred acquisition consideration 5,991  (1,179) 539  (1,263) —  4,088 
Other items, net (1)
3,025  1,992  605  —  798  6,420 
Operating income (loss) $ 23,528  $ 13,707  $ (351) $ (4,522) $ (16,129) $ 16,233 

(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.

Note: The Company made changes to its internal management and reporting structure in the first quarter of 2023, resulting in an update to our reportable segments (Networks). The change in reportable segments was that Mono, previously in the Integrated Agencies Network, is now within Allison & Partners in the Communications Network, and Storyline (a Brand specializing in research and survey generation), previously in the Communications Network, is now within Constellation in the Integrated Agencies Network. Periods presented prior to the first quarter of 2023 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.




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SCHEDULE 4
STAGWELL INC.
UNAUDITED SEGMENT OPERATING RESULTS
(amounts in thousands)

For the Three Months Ended March 31, 2022
Integrated Agencies Network Brand Performance Network Communications Network All Other Corporate Total
Net Revenue $ 303,666  $ 155,482  $ 64,379  $ 3,110  $ —  $ 526,637 
Billable costs 45,085  42,305  28,876  —  —  116,266 
Revenue 348,751  197,787  93,255  3,110  —  642,903 
Billable costs 45,085  42,305  28,876  —  —  116,266 
Staff costs 192,096  96,024  40,826  2,536  9,156  340,638 
Administrative costs 25,609  17,040  7,068  695  5,882  56,294 
Unbillable and other costs, net 17,073  11,170  47  —  28,293 
Adjusted EBITDA (1)
68,888  31,248  16,438  (124) (15,038) 101,412 
Stock-based compensation 5,073  1,260  (243) 1,923  8,021 
Depreciation and amortization 18,860  8,196  2,560  501  1,087  31,204 
Deferred acquisition consideration (1,325) 2,132  1,090  —  —  1,897 
Impairment and other losses —  557  —  —  —  557 
Other items, net (1)
764  1,061  72  —  3,176  5,073 
Operating income (loss) $ 45,516  $ 18,042  $ 12,959  $ (633) $ (21,224) $ 54,660 

(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.

Note: The Company made changes to its internal management and reporting structure in the first quarter of 2023, resulting in an update to our reportable segments (Networks). The change in reportable segments was that Mono, previously in the Integrated Agencies Network, is now within Allison & Partners in the Communications Network, and Storyline (a Brand specializing in research and survey generation), previously in the Communications Network, is now within Constellation in the Integrated Agencies Network. Periods presented prior to the first quarter of 2023 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.




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SCHEDULE 5
STAGWELL INC.
UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)
(amounts in thousands, except per share amounts)

For the Three Months Ended March 31, 2023
GAAP Adjustments Non-GAAP
Net income attributable to Stagwell Inc. common shareholders $ 443  $ 18,623  $ 19,066 
Net income (loss) attributable to Class C shareholders (3,165) 23,104  19,939 
Net income (loss) - Diluted EPS (2,722) 41,727  39,005 
Weighted average number of common shares outstanding 128,897  128,897 
Weighted average number of common Class C shares outstanding 160,909  160,909 
Weighted average number of shares outstanding 289,806  289,806 
Diluted EPS and Adjusted Diluted EPS $ (0.01) $ 0.13 
Adjustments to Net Income(1)
Pre-Tax Tax Net
Amortization $ 26,732  $ (5,346) $ 21,386 
Stock-based compensation 12,004  (2,401) 9,603 
Deferred acquisition consideration 4,088  (818) 3,270 
Other items, net 6,420  (1,283) 5,137 
Tax adjustments —  2,331  2,331 
Total add-backs $ 49,244  $ (7,517) $ 41,727 

(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.



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SCHEDULE 5
STAGWELL INC.
UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)
(amounts in thousands, except per share amounts)


For the Three Months Ended, March 31, 2022

GAAP Adjustments Non-GAAP
Net income attributable to Stagwell Inc. common shareholders $ 12,675  $ 15,865  $ 28,540 
Net income attributable to Class C shareholders 17,721  20,100  37,821 
Net income - Diluted EPS 30,396  35,965  66,361 
Weighted average number of common shares outstanding 297,484  297,484 
Diluted EPS and Adjusted Diluted EPS $ 0.10  $ 0.22 
Adjustments to Net Income(1)
Pre-Tax Tax Net
Amortization $ 24,904  $ (4,981) $ 19,923 
Stock-based compensation 8,021  (1,604) 6,417 
Deferred acquisition consideration 1,897  (379) 1,518 
Other items, net (1)
5,073  (985) 4,088 
Tax adjustments —  3,573  3,573 
Total add-backs $ 39,895  $ (4,376) $ 35,519 

(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
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SCHEDULE 6
STAGWELL INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
  March 31, 2023 December 31, 2022
 
ASSETS    
Current Assets    
Cash and cash equivalents $ 138,529  $ 220,589 
Accounts receivable, net 659,068  645,846 
Expenditures billable to clients 97,590  93,077 
Other current assets 77,930  71,443 
Total Current Assets 973,117  1,030,955 
Fixed assets, net 94,839  98,878 
Right-of-use assets - operating leases 260,763  273,567 
Goodwill 1,569,532  1,566,956 
Other intangible assets, net 888,455  907,529 
Other assets 114,227  115,447 
Total Assets $ 3,900,933  $ 3,993,332 
LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable $ 308,759  $ 357,253 
Accrued media 283,578  240,506 
Accruals and other liabilities 152,937  248,477 
Advance billings 334,933  337,034 
Current portion of lease liabilities - operating leases 75,939  76,349 
Current portion of deferred acquisition consideration 94,039  90,183 
Total Current Liabilities 1,250,185  1,349,802 
Long-term debt 1,235,281  1,184,707 
Long-term portion of deferred acquisition consideration 71,645  71,140 
Long-term lease liabilities - operating leases 278,978  294,049 
Deferred tax liabilities, net 43,023  40,109 
Other liabilities 70,371  69,780 
Total Liabilities 2,949,483  3,009,587 
Redeemable Noncontrolling Interests 32,517  39,111 
Commitments, Contingencies and Guarantees
Shareholders' Equity
Common shares - Class A & B 130  132 
Common shares - Class C
Paid-in capital 469,891  491,899 
Retained earnings 30,324  29,445 
Accumulated other comprehensive loss (13,253) (38,941)
Stagwell Inc. Shareholders' Equity 487,094  482,537 
Noncontrolling interests 431,839  462,097 
Total Shareholders' Equity 918,933  944,634 
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity $ 3,900,933  $ 3,993,332 
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SCHEDULE 7
STAGWELL INC.
UNAUDITED SUMMARY CASH FLOW DATA
(amounts in thousands)
  Three Months Ended March 31,
2023 2022
Cash flows from operating activities:
Net income $ (5,017) $ 33,622 
Adjustments to reconcile net income to cash used in operating activities:
Stock-based compensation 12,004  8,021 
Depreciation and amortization 33,477  31,204 
Impairment and other losses —  557 
Deferred income taxes 3,809  (1,350)
Adjustment to deferred acquisition consideration 4,088  1,897 
Other, net (1,550) (2,647)
Changes in working capital:
Accounts receivable (12,425) (70,039)
Expenditures billable to clients (4,173) 11,996 
Other assets (5,986) (6,100)
Accounts payable (51,670) (32,386)
Accrued expenses and other liabilities (54,684) (5,592)
Advance billings (2,986) (17,760)
Net cash used in operating activities
(85,113) (48,577)
Cash flows from investing activities:
Capital expenditures (3,435) (4,760)
Acquisitions, net of cash acquired (220) (935)
Capitalized software (6,735) (1,778)
Other (425) (816)
Net cash used in investing activities
(10,815) (8,289)
Cash flows from financing activities:
Repayment of borrowings under revolving credit facility (426,500) (209,500)
Proceeds from borrowings under revolving credit facility 476,500  239,000 
Shares acquired and cancelled (8,263) (14,926)
Distributions to noncontrolling interests (10,948) (6,464)
Payment of deferred consideration —  (1,581)
Repurchase of Common Stock (17,866) — 
Net cash provided by financing activities
12,923  6,529 
Effect of exchange rate changes on cash and cash equivalents 945  1,481 
Net decrease in cash and cash equivalents (82,060) (48,856)
Cash and cash equivalents at beginning of period 220,589  184,009 
Cash and cash equivalents at end of period $ 138,529  $ 135,153 

Page 13

EX-99.2 3 stagwell1q23earningspres.htm EX-99.2 stagwell1q23earningspres
First Quarter 2023 EARNINGS PRESENTATION MAY 9 | 2023


 
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 representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company’s beliefs and expectations, future financial performance and future prospects, business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “create,” “estimate,” “expect,” “focus,” “forecast,” “foresee,” “future,” “guidance,” “intend,” “look,” “may,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section. Forward-looking statements in this document are based on certain key expectations and assumptions made by the Company. Although the management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The material assumptions upon which such forward-looking statements are based include, among others, assumptions with respect to general business, economic and market conditions, the competitive environment, anticipated and unanticipated tax consequences and anticipated and unanticipated costs. These forward-looking statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. These forward- looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any. 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 with international, national and regional unfavorable economic conditions that could affect the Company or its clients; • inflation and actions taken by central banks to counter inflation; • the Company’s ability to attract new clients and retain existing clients; • the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements; • financial failure of the Company’s clients; • the Company’s ability to retain and attract key employees; • the Company’s ability to compete in the markets in which it operates; • the Company’s ability to achieve its cost saving initiatives; • the Company’s implementation of strategic initiatives; • the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration; • the Company’s ability to manage its growth effectively, including the successful completion and integration of acquisitions that complement and expand the Company’s business capabilities; • the Company’s ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products; • an inability to realize expected benefits of the combination of the Company’s business with the business of MDC; (the “Business Combination” and, together with the related transactions, the “Transactions”); • adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on the Company’s determination of value and computations of its attributes may result in increased tax costs; • the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transactions; • the Company’s unremediated material weaknesses in internal control over financial reporting and its ability to establish and maintain an effective system of internal control over financial reporting; • the Company’s ability to protect client data from security incidents or cyberattacks; • economic disruptions resulting from war and other geopolitical tensions, terrorist activities and natural disasters; • stock price volatility; and • foreign currency fluctuations. Investors should carefully consider these risk factors, other risk factors described herein, and the additional risk factors outlined in more detail in our 2022 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2023, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings. FORWARD LOOKING STATEMENTS & OTHER INFORMATION 2


 
DEFINITIONS OF NON-GAAP FINANCIAL MEASURES 3 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 financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results. Such non-GAAP financial measures include the following: Pro Forma Results: The Pro Forma amounts presented for each period were prepared by combining the historical standalone state ments of operations for each of legacy MDC and SMG. The unaudited pro forma results are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the combination actually occurred on the date indicated, nor do they purport to proje ct the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The Company has excluded a quantitative reco nciliation of Adjusted Pro Forma EBITDA to net income under the “unreasonable efforts” exception in Item 10(e)(1)( i)(B) of Regulation S-K. (1) Organic Revenue: “Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respective ly, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic reve nue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) “non- GAAP acquisitions (dispositions), net”. Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year. (2) Net New Business: Estimate of annualized revenue for new wins less annualized revenue for losses incurred in the period. (3) Adjusted EBITDA: defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and nonrecurring items. (4) Adjusted Diluted EPS is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income attributable to Class C shareholders, excluding amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items, divided by (ii) (a) the per weighted average number of common shares outstanding plus (b) the weighted average number of Class C shares outstanding (if dilutive). Other items includes restructuring costs, acquisition-related expenses, and non-recurring items, and subject to the anti-dilution rules. (5) Free Cash Flow: defined as Adjusted EBITDA less capital expenditures, change in net working capital, cash taxes, interest, and distributions to minority interests, but excludes contingent M&A payments. (6) Financial Guidance: The Company provides guidance on a non-GAAP basis as it cannot predict certain elements which are included in reported GAAP results. Included in this earnings presentation are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures.


 
4 FINANCIAL Outlook Reiterating Full-Year 2023 Outlook 7.5 - 10% Organic Net Revenue Growth 10 - 14% Organic Net Revenue Growth Ex-Advocacy $450M - $490M In Adjusted EBITDA 50 - 60% EBITDA Conversion on Free Cash Flow $0.90 - $1.05 In Adjusted Earnings Per Share Note: Guidance as of 5/09/2023. The Company has excluded a quantitative reconciliation with respect to the Company’s 2023 guidance under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K. See "Non-GAAP Financial Measures" below for additional information on definitions for Organic Net Revenue, Organic Net Revenue Ex-Advocacy, Adjusted EBITDA, Adjusted Earnings Per Share, and Free Cash Flow. Please refer to our investor website at stagwellglobal.com/investo rs for information on Forward Lo oking Statements and risk factors outlined in our 2022 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2023, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings.


 
5 BUY-BACK Transaction 23.3 million Shares Agreed to be Repurchased from AlpInvest by Stagwell Inc. $6.43 Purchase Price of Shares ~$150 million Dollar Size of Transaction ~267 million Shares Outstanding Post Transactions › On May 9, 2023, Stagwell Inc. agreed to repurchase approximately 23.3 million shares from AlpInvest Partners. › As announced separately, Stagwell Media LP, a shareholder in Stagwell Inc., and AlpInvest are engaged in advanced negotiations to redeem AlpInvest’s remaining interests in Stagwell Media LP, subject to final documentation. › Upon completion of these transactions, AlpInvest will no longer be an investor in Stagwell Inc. Announced agreement to buy-back 23.3M Shares from AlpInvest Partners


 
F I R S T Q U A R T E R H I G H L I G H T S Winning INDUSTRY RECOGNITION Compelling TWO-YEAR GROWTH Investing IN TECHNOLOGY Improving EFFICIENCY Received 70+ awards from industry publications GALE recognized as Breakthrough Media Agency of Year by Adweek Observatory won 3 SABRE Gold Awards for Doritos/Netflix Collaboration Doner Network named 2023 Standout Agency on Ad Age’s A List Proactive management of staffing levels & costs Made $25M+ of annualized staff cost savings, $20M to come in 2Q Prudently managed headcount ahead of expected rebound in 2H 21% organic net revenue growth on 2-year stack Net revenue ex. advocacy of $494 million in 1Q, growing 1% year on year $53 million of net new business in 1Q, $212 million over last 12 months Accelerating investment in Stagwell Marketing Cloud Group Launched “Taylor”, a generative AI product for PR professionals ARound now in 4 professional sports stadiums across 3 major leagues PRophet honored with Innovation SABRE award for PR Software and Services category Harris Brand Terminal has 120+ customers and grew 100% in FY22 NET REVENUE: $522M | NET LEVERAGE RATIO: 2.63x | ADJ. EBITDA: $72M Note: Net Leverage Ratio defined as Net Debt divided by LTM Adjusted EBITDA. 6


 
S U M M A R Y C O M B I N E D F I N A N C I A L S Note: Figures may not foot due to rounding. Three Months Ended March 31, 2023 2022 Net Revenue $ 521,662 $ 526,637 Billable Costs 100,782 116,266 Revenue $ 622,444 $ 642,903 Billable Costs 100,782 116,266 Staff costs 349,677 340,638 Administrative costs 68,176 56,294 Unbillable and other costs, net 31,587 28,293 Adjusted EBITDA $ 72,222 $ 101,412 Stock-based compensation 12,004 8,021 Depreciation and amortization 33,477 31,204 Deferred acquisition consideration 4,088 1,897 Impairment and other losses - 557 Other items, net 6,420 5,073 Operating income (loss) $ 16,233 $ 54,660 Adjusted EBITDA margin (on net revenue) 13.8% 19.3% 7 $ in Thousands


 
1 Q 2 3 N E T R E V E N U E Note: Figures may not foot due to rounding. Three Months Ended March 31, 2023 Net Revenue Change March 31, 2022 $ 526,637 Organic revenue (16,109) (3.1%) Acquisitions (divestitures), net 18,483 3.5% Foreign currency (7,349) (1.4%) Total Change $ (4,975) (0.9%) March 31, 2023 $ 521,662 8 $ in Thousands


 
79.9% 7.8% 12.4% 1 Q N E T R E V E N U E B Y G E O G R A P H Y Note: Figures may not foot due to rounding. 1Q Organic Growth Y/Y Geography 1Q23 United States (4.6)% United Kingdom 10.6% Other (0.5)% TOTAL (3.1)% TOTAL EX-ADVOCACY (1.1)% 9 % OF NET REVENUE


 
G L O B A L N E T W O R K 10 North America Latin America Europe Asia Pacific • Australia • China • Hong Kong • India • Indonesia • Japan • Malaysia • Philippines • Taiwan • Thailand • Singapore • South Korea Middle East & Africa • Austria • Belgium • Bulgaria • Italy • Latvia • Romania • Slovak Republic • Slovenia • Switzerland • Turkey • Ukraine • France • Germany • Netherlands • Poland • Spain • Sweden • United Kingdom • Argentina • Aruba • Bolivia • Brazil • Curacao • Colombia • Costa Rica • Dominican • Ecuador • El Salvador • Guatemala • Honduras • Jamaica • Nicaragua • Panama • Peru • Republic • Uruguay • Venezuela • Algeria • Bahrain • Egypt • Jordan • Kuwait • Lebanon • Libya • Morocco • Nigeria • Oman • Saudi Arabia • South Africa • Tunisia • United Arab Emirates Stagwell +Affiliates COUNTRIES 34 65+ EMPLOYEES 13K+ 21K+ Stagwell’s Affiliate Network Significantly Expands Our Global Footprint • Canada • USA • Mexico Note: As of March 31, 2023.


 
O U R P R I N C I P A L C A P A B I L I T I E S Creativity & Communications Blue-Chip Customer Base Performance Media & Data Addressable on a Global Scale Consumer Insights & Strategy Tracking Across the Entire Consumer Journey Digital Transformation Building & Designing Digital Platforms & Technology 1 2 3 4 11 58% 1Q23


 
N E T R E V E N U E G R O W T H B Y C A P A B I L I T Y Notes: Advocacy includes Targeted Victory, SKDK, and TMA Direct. Figures may not foot due to rounding. EBITDA includes corporate expenses, notionally allocated ratably across each capability. 1Q23 Principal Capability Organic Net Revenue Growth Net Revenue Growth Digital Transformation (9.0%) (8.9%) Performance Media & Data 5.4% 8.9% Consumer Insights & Strategy 1.4% 18.7% Creativity & Communications (3.5%) (4.0%) TOTAL (3.1%) (0.9%) TOTAL EX-ADVOCACY (1.1)% 1.0% % OF NET REVENUE 12 1Q 27% 19% 12% 42%


 
A D J E B I T D A G R O W T H B Y C A P A B I L I T Y Note: Advocacy includes Targeted Victory, SKDK, and TMA Direct. Figures may not foot due to rounding. *EBITDA includes corporate expenses, notionally allocated ratably across each capability. Principal Capability 1Q23 Digital Transformation (23%) Performance Media & Data (50%) Consumer Insights & Strategy (8%) Creativity & Communications (35%) TOTAL (29%) TOTAL EX-ADVOCACY (21%) % OF ADJ. EBITDA* 13 1Q Adj. EBITDA* Growth Y/Y 48% 8% 12% 31%


 
Three Months Ended, March 31, 2023 March 31, 2022 % Change Total Net Revenue $522 $527 (0.9%) Advocacy Net Revenue 27 37 (26.3%) Total Ex Advocacy 494 489 1.0% Three Months Ended, March 31, 2023 March 31, 2022 % Change Total Adj. EBITDA $72 $101 (28.8%) Advocacy Adj. EBITDA 1 12 (90.9%) Total Ex Advocacy 71 90 (20.7%) 1 Q E X - A D V O C A C Y N E T R E V E N U E & A D J U S T E D E B I T D A Note: Advocacy includes Targeted Victory, SKDK, & TMA Direct. Actuals may not foot due to rounding $ in Millions NET REVENUE ADJ. EBITDA 14


 
N E W B U S I N E S S U P D A T E 15 PER CLIENT AT TOP 25 Notable Business WINS & EXPANSIONSNet New Business 1Q23 $53M LTM $212M Avg. Net Revenue 1Q23 $6.2M


 
16 WE HAVE OUR FINANCIAL HOUSE in order Refinanced Bonds, Securing $1.1B in financing › Fixed interest rate of 5.625% in rising interest rate environment › ~6 years to maturity in 2029, providing financial flexibility Increased Revolving Credit Facility to $640M with flexible terms, 5-year maturity Moody’s upgraded Stagwell’s corporate family rating (CFR) to B1 from B2 in July 2022


 
17 LIQUIDITY Available Liquidity (as of 3/31/2023) Commitment Under Credit Facility $ 500 Drawn 150 Undrawn Letters of Credit 25 Undrawn Commitments Under Facility $ 325 Total Cash & Cash Equivalents 139 Total Available Liquidity $ 464 $ in Millions


 
18 MAINTAINING DISCIPLINE AROUND Deferred Acquisition Costs REDUCED DAC BY $59M FROM 1Q22 QUARTER-END BALANCE $224M $166M 1Q22 1Q23


 
A D J U S T E D E A R N I N G S P E R S H A R E Three Months Ended March 31, 2023 Reported (GAAP) Adjustments Non-GAAP Net income attributable to Stagwell Inc. common shareholders $ 443 $ 18,623 $ 19,066 Net income attributable to Class C Shareholders (3,165) 23,104 19,939 Net income – diluted EPS $ (2,722) $ 41,727 $ 39,005 Weighted average number of common shares outstanding (diluted) 128,897 128,897 Weighted average number of common class C shares outstanding (diluted) 160,909 160,909 Weighted average number of shares outstanding 289,806 289,806 Adjusted earnings per share (diluted) $ (0.01) $ 0.13 Adjustments to net income (loss) Pre-Tax Tax Net Amortization $ 26,732 $ (5,346) $ 21,386 Stock-based compensation 12,004 (2,401) 9,603 Deferred acquisition consideration 4,088 (818) 3,270 Other items, net 6,420 (1,283) 5,137 Tax adjustments 0 2,331 2,331 Total add-backs $ 49,244 $ (7,517) $ 41,727 19 $ and Shares in Thousands Note: Numbers may not foot due to rounding.


 
G A A P C O N S O L I D A T E D O P E R A T I N G P E R F O R M A N C E Three Months Ended March 31, 2023 2022 Revenue $ 622,444 $ 642,903 Cost of services 413,898 411,970 Office & general expenses 158,836 144,512 Depreciation & amortization 33,477 31,204 Impairment & other losses - 557 Total operating expenses $ 606,211 $ 588,243 Operating income (Loss) $16,233 $ 54,660 Interest expense, net (18,189) (18,729) Foreign exchange, net (670) (306) Other, net 220 156 Other income (expenses) $ (18,639) $ (18,879) Income tax expense (benefit) 2,384 3,189 Income (loss) before equity in earnings of non-consolidated affiliates $ (4,790) $ 32,592 Equity in income (loss) of non-consolidated affiliates (227) 1,030 Net income (loss) $ (5,017) $ 33,622 Net income (loss) attributable to non-controlling & redeemable non-controlling interests 5,460 (20,947) Net income (loss) attributable to Stagwell Inc. common shareholders $ 443 $ 12,675 Earnings Per Share Basic $ 0.00 $ 0.10 Diluted $ (0.01) $ 0.10 Weighted Average Number of Shares Outstanding Basic 125,199 122,285 Diluted 289,806 297,484 Note: Numbers may not foot due to rounding. 20 $ and Shares in Thousands


 
P R O F O R M A C A P I T A L S T R U C T U R E Note: Pro Forma share count assumes full conversion of Class C shares to Class A on a one-to-one basis. Numbers may not foot due to rounding 1. Excludes non-controlling interest of Stagwell Class C shareholders to reflect NCI balance pro forma for full conversion of Class C shares to Class A. 2. Includes redeemable non-controlling interest and obligations in connection with profit interests held by employees. 3. Non-consolidated investments 4. Pro Forma Share Count is as of May 3, 2023. Does not reflect change in share count as a result of agreement to buy-back ~23.3 million shares from an investor as announced on May 9, 2023. Net Debt & Debt-Like ($M, as of 3/31/2023) Revolving Credit Facility $ 150 Bonds 1,100 NCI1 31 DAC 166 RNCI2 33 Less: Investments3 18 Less: Cash 139 TOTAL NET DEBT & DEBT-LIKE $ 1,323 Pro Forma Share Count4 (Thousands, as of 5/3/2023) Class A 129,690 Class C (equal voting & economic rights to Class A) 160,909 Share-based awards 4,296 PRO FORMA DILUTED 294,895 21


 
22 STAGWELL MARKETING CLOUD GROUP SaaS & DaaS tools for the in-house marketer SMC Real-Time Research SMC Comms Tech SMC Advanced Media Platforms SMC Media Studio SMC Data & AI Marketplace QR Code


 
23 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 SMC Advanced Media Platforms Proprietary & Premium Owned Media Channels SMC Media Studio Platform for In-House Media Planners and Buyers SMC Real-Time Research Suite of Solutions for Market Researchers SMC Comms Tech AI-Driven Platform for Modern Communicators Digital Services Technology Digital Transformation Building Digital Platforms & Consumer Experiences Performance Media & Data Integrated Omnichannel Media, Data & E-Commerce Consumer Insights & Strategy Tracking Across the Consumer Journey Creativity & Communications Blue-Chip Customer Base 1 2 3 4


 
24 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 STAGWELL MARKETING CLOUD GROUP Product Incubation Playbook WE BUILD ADVANCED PRODUCTS MORE EFFICIENTLY than the rest Faster Shared infrastructure + tech expertise DEVELOP & ITERATE FAST Cheaper World's most ambitious clients + upselling opportunities LOWER GO-TO-MARKET COSTS Better Proprietary data + the best marketers in the world INTERNAL TESTING & INSIGHTS THAT DELIVER BETTER PRODUCTS


 
25 REAL-TIME INSIGHTS Product Spotlight Customer Benefit Unlocking continuous brand tracking on an affordable, global, modern basis for research professionals


 
26 ARTIFICAL INTELLIGENCE Product Spotlight Customer Benefit Revolutionizing the PR process through AI, saving PR professionals from millions of tedious working hours


 
27 AUGMENTED REALITY Product Spotlight Customer Benefit Bringing a whole new level of stadium entertainment and fan engagement to sports and entertainment through shared AR


 
28 STAGWELL MARKETING CLOUD GROUP Pricing Model Modern, flexible pricing models that fit the needs and budgets for the modern, in-house marketer Subscription Pricing Annual SaaS contract Consumption Fee Data and media spend Advertising-Based Sponsorship fees


 
Thank You Contact Us: IR@StagwellGlobal.com