Stagwell Shares Dip As It Reports Organic Revenue Decline Of 3% For Q1

Stagwell reported a 1% decline in net revenue to $522 million for the first quarter, including an organic revenue decline of 3%.  

The firm said the dip was in line with company expectations given the exceptionally strong growth in the year-ago period when organic growth reached 21%. The tech slowdown also impacted growth although the company said it believes the tech sector will improve as the year progresses.  

advertisement

advertisement

On an investor call Tuesday, Stagwell executives reaffirmed earlier full-year organic net revenue guidance of 7% to 10% with double-digit growth expected in the last two quarters of 2023.  

The company is buying back significant amounts of its outstanding stock. It announced during the call that it had agreed to repurchase approximately 23.3 million shares from Carlyle’s AlpInvest Partners at a share price of $6.43, or nearly $150 million in total. CEO Mark Penn told analysts he believed that the purchase would remove an “overhang” on the value of company shares. 

Separately, Stagwell Media LP, a shareholder in Stagwell Inc., and whose investors include Penn and former Microsoft CEO Steve Ballmer and AlpInvest are engaged in advanced talks to redeem AlpInvest's remaining interests in the Stagwell Media LP entity. Upon completion of the transactions, AlpInvest Partners will no longer be an investor in Stagwell Inc. 

Separately the company also repurchased approximately 2.6 million outstanding shares for approximately $18 million during Q1.  

The firm’s stock price dipped more than 7% in early trading Tuesday after the company released its Q1 results. 

"Stagwell is stronger than ever today with the removal of an overhang on the stock and Q1 results are in line with management’s expectations, allowing us to reaffirm guidance for another year of significant growth,” said Penn. 

He said the company was investing $20 million in its Marketing Cloud offering this year including additional investments to market existing products like PRophet for the PR industry and in-stadium augmented reality platform ARound. Regarding the latter, Penn said the firm’s goal is to generate $500,000 in sponsorship revenue in each venue that ARound is placed in per season. It has deals with teams in the National Basketball Association, National Football League and Major League Baseball.  

Stagwell reported $53 million (annualized revenue) in new business wins during the first quarter and another $40 million in April. Q1 wins included T-Mobile and Brooks Running. Penn said the company’s pipeline of new business pitches is expected to expand at least 20% versus the $1 billion (billings) worth of pitches it participated in last year. 

Penn noted that the firm sees numerous opportunities to deploy generative AI tools in service to clients. He referenced an agreement announced last week between Stagwell agency Code and Theory and Oracle to work on new applications within the Oracle Cloud Infrastructure. 

Other company agencies include 72andSunny and Assembly. 

 

Next story loading loading..