Stagwell Inc. (NASDAQ:STGW) Q4 2022 Earnings Conference Call March 2, 2023 8:30 AM ET

Company Participants

Jason Reid – Chief Investment Officer

Mark Penn – Chairman and Chief Executive Officer

Frank Lanuto – Chief Financial Officer

Conference Call Participants

Barton Crockett – Rosenblatt Securities

Jason Reid

Good morning from Stagwell’s headquarters at One World Trade Center in New York City, and welcome to Stagwell’s Inc.’s earnings webcast for Q4 and full year 2022. My name is Jason Reid, Chief Investment Officer at Stagwell. I’m here joined by Mark Penn, Stagwell’s Chairman and Chief Executive Officer; and Frank Lanuto, Chief Financial Officer. Mark will begin with a business update followed by a full financial review for Frank. We will then proceed to a discussion with Barton Crockett for Rosenblatt Securities and open the floor for Q&A. You are welcome to submit questions through the chat function.

As we begin, I’d like to remind you that the following remarks include forward-looking statements and non-GAAP financial data. Forward-looking statements about the company include those related to earnings guidance, are subject to uncertainties and risk factors addressed in our earnings release, slide presentation and the company’s SEC filings. Unless otherwise stated, comparisons to prior full year periods discussed on this webcast will be pro forma for the combination, giving full effect to historical results as if the combination had been completed on January 1, 2021.

Please refer to our website, stagwellglobal.com/investors for an investor presentation and additional resources. This morning’s press release and slide deck provide definitions, examples, explanations and reconciliations of non-GAAP financial data.

And with that, I’ll turn it over to our Chairman and CEO, Mark Penn.

Mark Penn

Thank you, Jason. Stagwell closed out 2022 with industry-leading double-digit growth, strong margin expansion, record free cash flow, record earnings per share and a net debt ratio significantly below our year-end target. We promised to transform marketing, building game-changing AI and AR products and services as we continue to grow and transform both our business and the industry.

In 2022, Stagwell hit a record $2.7 billion in revenue, achieving a 21% overall revenue growth and 19% organic growth. On a net revenue basis, we achieved 15% growth, 14% organically. This growth was led by our digital transformation services, performance media and research offerings. In line with our strategic focus on global expansion, Stagwell grew 26% internationally, about twice as fast as in North America. In Q4, we also grew by double digits, marking six consecutive quarters of double-digit growth. All this in the face of market headwinds and a difficult economy tempered by rising interest rates.