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Stagwell Inc (STGW)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 net revenue rose 6% year over year to $564M while reported revenue declined 3% to $652M; adjusted EBITDA was $81M with a 14% margin and adjusted EPS of $0.12; GAAP EPS was $(0.04) .
  • Record net new business of $130M in Q1 (LTM $446M), driven by technology and retail wins; management reiterated 2025 guidance (net revenue growth ~8%, adjusted EBITDA $410–$460M, FCF conversion >45%, adjusted EPS $0.75–$0.88) .
  • Capability highlights: Digital Transformation net revenue ex-advocacy +15%, Stagwell Marketing Cloud net revenue ex-advocacy +45%, Creativity & Communications ex-advocacy +10%; Performance Media & Data down 10% YoY with sequential rebound expected starting Q2 .
  • Estimates context: S&P Global consensus for Q1 2025 EPS, revenue, and EBITDA was unavailable, so beats/misses vs Street cannot be assessed; management characterized Q1 results as “in-line with expectations” . Values queried from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Record net new business of $130M (LTM $446M) with wins at PayPal, Panera, CarMax, Celsius, and Hyatt, supporting growth in tech (+18%) and retail (+52%) client spend; “we remain optimistic about our outlook” .
  • Strong capability performance: Digital Transformation net revenue ex-advocacy +15%; Creativity ex-advocacy +10%; Stagwell Marketing Cloud ex-advocacy +45%, with QuestBrand approaching +200% growth post-BERA.ai integration .
  • Cost discipline and efficiency agenda: comp-to-net revenue ratio improved to 65.3% vs 2023 non-political year; AI-enabled “content supply chain” efficiency drive targeting $60–$70M cost savings in 2025 (total program $80–$100M) .

What Went Wrong

  • Adjusted EBITDA declined 11% YoY to $81M and adjusted EPS fell to $0.12 from $0.16; GAAP net loss attributable to common shareholders widened to $(2.9)M and GAAP EPS to $(0.04) .
  • Performance Media & Data net revenue fell 10% YoY due to reduced spend by a single customer in its seasonal peak quarter; management expects strong sequential rebound starting Q2 .
  • Operating cash flow was a use of $(60.0)M in Q1, reflecting working capital movements (AR, AP, accrued expenses) and lease payments; CapEx plus capitalized software was $15.9M .

Financial Results

Quarterly performance vs prior quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$711 $789 $652
Net Revenue ($USD Millions)$580 $630 $564
Adjusted EBITDA ($USD Millions)$111 $123 $81
Adjusted EBITDA Margin % (on net revenue)19% 20% 14%
GAAP EPS ($USD)$0.03 $0.03 $(0.04)
Adjusted EPS ($USD)$0.22 $0.24 $0.12
Net income (loss) attributable to common shareholders ($USD Millions)$3.27 $3.24 $(2.92)

Year-over-year comparison (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$670.1 $652
Net Revenue ($USD Millions)$532.5 $564
Adjusted EBITDA ($USD Millions)$90.3 $81
GAAP EPS ($USD)$(0.01) $(0.04)
Adjusted EPS ($USD)$0.16 $0.12

Segment breakdown (Networks)

SegmentNet Revenue Q1 2024 ($USD Thousands)Net Revenue Q1 2025 ($USD Thousands)Adjusted EBITDA Q1 2024 ($USD Thousands)Adjusted EBITDA Q1 2025 ($USD Thousands)
Integrated Agencies Network$292,772 $325,794 $60,108 $77,169
Brand Performance Network$162,562 $146,858 $27,494 $11,543
Communications Network$67,488 $66,998 $19,384 $11,757
All Other$9,632 $24,537 $(3,986) $(6,330)
Corporate——$(12,684) $(13,557)
Total$532,454 $564,187 $90,316 $80,582

Capability KPIs (management taxonomy)

CapabilityNet Revenue Q1 2025 ($USD Millions)Commentary
Digital Transformation$106+15% ex-advocacy; strength with tech (+16%) and industrial (+28%) clients
Stagwell Marketing Cloud$63+32% YoY (ex-advocacy +45%); Harris Quest +170% with platform enhancements
Creativity & Communications$242+7% YoY (ex-advocacy +10%); retail >2x, tech +15%
Consumer Insights & Strategy$49+8% YoY; tech +23%, financials nearly doubled (Visa, JPMorgan)
Performance Media & Data$104−10% YoY; sequential rebound expected starting Q2

Additional KPIs and liquidity

MetricQ3 2024Q4 2024Q1 2025
Net New Business ($USD Millions)$101 $102 $130
LTM Net New Business ($USD Millions)$345 $382 $446
Cash And Equivalents ($USD Millions, period-end)$145.8 $131.3 $137.7
Cash from Operations ($USD Millions)——$(60.0)
Net leverage ratio (x)——3.3x (as of Q1 end)
Revolver drawn ($USD Millions)——$375 (as of Q1); refinanced in Q2 to $750 capacity, extended to Apr 2030

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
Total Net Revenue GrowthFY 2025~8% ~8% Maintained
Adjusted EBITDAFY 2025$410M–$460M $410M–$460M Maintained
Free Cash Flow ConversionFY 2025>45% >45% Maintained
Adjusted EPSFY 2025$0.75–$0.88 $0.75–$0.88 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI / Technology InitiativesQ3: Digital Transformation returned to double-digit growth; Adobe deal highlighted . Q4: Digital Transformation +22% revenue; fastest-growing positioning .AI-first agenda: ID Graph, Palantir targeting, Adobe content OS; Chief AI Officer appointed; SMC ex-advocacy +45% .Accelerating
Net New Business MomentumQ3: $101M; LTM $345M . Q4: $102M; LTM $382M .Record $130M; LTM $446M; wins in tech and retail .Improving
Cost Savings / EfficiencyQ4: Comp-to-revenue ratio improved to 57.5% (company record) .AI-enabled “content supply chain” targeting $60–$70M 2025 savings; comp-to-net revenue ratio 65.3% vs 2023 non-political year .In execution
Tariffs / MacroGeneral risk disclosures in prior periods .Minimal direct impact observed; “tariff mania seems overblown” near term .Stable, low impact
Performance Media & DataNot singled out in prior PRs .−10% YoY on single-customer reduction in seasonal quarter; management expects strong sequential rebound starting Q2 .Near-term softness, improving expected
Regional Expansion (Middle East / Asia)Not emphasized in prior PRs .Middle East net revenue >250% YoY; Asia mandates (Diageo, Jollibee, Princess Cruises); ADK GLOBAL expected to close in coming months .Expanding

Management Commentary

  • “Despite the noise of tariffs… Q1 is a low point in the political cycle and yet we delivered solid growth… double-digit increases in our Digital Transformation, Creativity and Stagwell Marketing Cloud capabilities. We hit a record $130M of net new business” — Mark Penn, CEO .
  • “We are on track to achieve $60–$70M in cost savings this year” via AI tools underpinning the $80–$100M efficiency drive announced at Investor Day — Mark Penn .
  • “Stagwell Marketing Cloud posted $63M in net revenue… ex-advocacy +45%… Harris Quest grew more than 170% with platform enhancements” — Frank Lanuto, CFO .
  • “Minimal impact from tariffs… our business, particularly strong with tech companies, is not directly impacted… tariff mania seems overblown” — Mark Penn .
  • “We invested approximately $17M [in SMC]… investment cadence to decline through 2026 as products mature” — Mark Penn .

Q&A Highlights

  • Performance Media & Data outlook: Decline driven by single customer’s seasonal shift; management expects strong sequential rebound starting Q2 as new clients ramp and new data/media tools roll out .
  • AI productization: Near-term deployments include Palantir-enabled targeting and Adobe content OS; combined with proprietary data assets (Harris Poll, People platform, NRG) to strengthen media/data competitiveness in H2 .
  • Tariffs impact: Management reiterated minimal direct effects so far; sectoral differentials possible but current client demand steady, especially in tech and retail .
  • Margin path: Efficiency program, maturing SMC (60–80% gross margin potential), and media transaction innovations seen as multi-year drivers of margin expansion (years 3–5 of plan) .

Estimates Context

  • S&P Global consensus for Q1 2025 EPS, revenue, and EBITDA was unavailable; no values were returned, so a beat/miss assessment vs Street cannot be provided. Values retrieved from S&P Global. Management stated Q1 results were “in-line with our expectations” .

Key Takeaways for Investors

  • Capability strength and mix shift: Digital Transformation and SMC are driving multi-year growth; ex-advocacy net revenue rose 9% and SMC ex-advocacy +45%, supporting a higher-quality revenue base .
  • Near-term margin headwinds from SMC investment ($17M in Q1), but efficiency program ($60–$70M 2025 savings) and SMC maturation (2026 timeframe) support medium-term margin expansion .
  • Net new business is a clear catalyst: record $130M in Q1 with LTM $446M; tech and retail strength point to H2 revenue ramps, particularly for new logos .
  • Watch Q2 for inflection in Performance Media & Data: management expects a strong sequential rebound as customer mix normalizes and new tools go live .
  • Balance sheet flexibility improved: revolver refinanced to $750M capacity (Apr 2030 maturity) and Class C conversion simplifies capital structure; net leverage 3.3x at Q1 end .
  • Regional expansion (Middle East >250% YoY, Asia logos) and continued M&A (JetFuel, UNICEPTA, Create Group, pending ADK GLOBAL) broaden the growth footprint .
  • With Street estimates unavailable this quarter, narrative catalysts for stock reaction center on reiterated guidance, cost-savings progress updates expected on the Q2 call, and visible H2 new business ramps in tech/retail .
Note: We searched for an “8-K 2.02” filing for Q1 2025 but did not find one; the company issued a Q1 2025 earnings press release and held an earnings webcast/transcript, which were read in full for this recap **[876883_20250508NY83146:0]** **[876883_STGW_3426647_0]**.