• by Steve McClellan  @mp_mcclellan, November 3, 2021

Stagwell Inc. shares were up more than 8% in morning trading Wednesday after the company issued strong Q3 earnings results. 

Pro forma organic net revenue growth for the period was nearly 23% and 15.6% for the first nine months of the year. The pro forma numbers calculate results as if the Stagwell-MDC merger had closed at the beginning of 2021. It actually closed in August.

On a morning call with financial analysts company executives said the operation as a whole had surged well ahead of Q3 2019, shortly before the pandemic hit.

Pro forma net revenue in Q3 was up 25% to $498 million and up nearly 19% to $1.4 billion for the first nine months of the year.

Stagwell Chairman and CEO Mark Penn said on the call that the strong results “reinforces our conviction” that merging Stagwell and MDC was the right path to take. “The combination is working,” he added.

Penn said he is confident that the momentum will accelerate further next year when the midterm elections will help boost some of the firm’s advocacy operations which so far this year have lagged compared to other parts of the firm. The anticipated resurgence in the travel economy will also add to the firm’s momentum, he said.

The company’s integrated agencies division (72andSunny, Anomaly and others) posted a 30% net revenue gain in Q3 while the company’s media arm (led by Assembly) was up 31%. The media operation now manages $5.5 billion in billings. 

Those results were offset slightly by a 6% decline in the advocacy and communications group, although non-political PR operations were up 33%. 

Net new business wins in Q3 totaled $63 million in revenue on an annualized basis. The company has added business from Athleta, Nike, Aetna, Forever 21, TikTok, Johnson & Johnson and others. 

Penn said a top M&A priority is expanding the company’s global footprint in a bid to collect a greater share of global contracts from clients. Bolstering existing and new digital capabilities are also priorities. 

The company revised its full-year growth outlook with pro-forma revenues now expected to reach between $2.15 billion and $2.18 billion. Full-year pro forma pre-tax earnings are estimated at between $370 million and $380 million.  

Outside of the automotive sector, where chips are in short supply, Penn said the firm has not seen pullbacks from clients due to supply chain issues which he suggested bodes well for holiday season spending by marketers.