{"id":614313,"date":"2023-03-04T08:49:28","date_gmt":"2023-03-04T14:49:28","guid":{"rendered":"https:\/\/news.sellorbuyhomefast.com\/index.php\/2023\/03\/04\/stagwell-outpaces-the-other-holding-companies-in-growth-thanks-to-digital-wheaties\/"},"modified":"2023-03-04T08:49:28","modified_gmt":"2023-03-04T14:49:28","slug":"stagwell-outpaces-the-other-holding-companies-in-growth-thanks-to-digital-wheaties","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2023\/03\/04\/stagwell-outpaces-the-other-holding-companies-in-growth-thanks-to-digital-wheaties\/","title":{"rendered":"Stagwell outpaces the other holding companies in growth, thanks to \u2018digital Wheaties\u2019"},"content":{"rendered":"
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March 3, 2023\u00a0\u00a0\u2022\u00a0\u00a03 min read<\/span> \u00a0\u2022\u00a0 By Michael B\u00fcrgi<\/a><\/p>\n<\/div>\n

\"revenue<\/p>\n

\n\t\t\t\t\tIvy Liu\t\t\t\t<\/p>\n<\/p><\/div>\n

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Overall it wasn\u2019t a bad 2022 for the major agency holding companies \u2014 but for Stagwell, which eschews the designation of holding company (even though that\u2019s exactly what it is, it was a pretty great year. And its forecast for 2023 growth is more bullish than its competitors have predicted.<\/p>\n

The company\u2019s full year 2022 earnings, announced Thursday morning, showed 21% net revenue growth to $2.68 billion, while organic revenue grew by 14%. Meantime, net income nearly doubled to just under $66 million (up from $36 million in 2021), while the company was able to keep margins at 20%. New business generated in 2022 totaled $213 million.<\/p>\n

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\u201cWe\u2019re eating digital Wheaties,\u201d joked Mark Penn, Stagwell\u2019s chairman and CEO. \u201cTake a look at the top three layers of our four layer pyramid, and those have been growing 28%. Because we\u2019re overweighted in higher-growth areas, we continue to put up numbers that look substantially better than the bigger holding companies.\u201d<\/p>\n

For the more traditional holding companies<\/a>, 2022 revenue flat at Omnicom, up 7% at WPP while Publicis saw revenue rise 20% \u2014 meanwhile, organic growth ranged between 4-10% among them.\u00a0<\/p>\n

Stagwell forecasting for 2023 was similarly more bullish than the other holding companies, calling for 7-10% organic revenue growth (and between 10-14% when excluding Stagwell\u2019s political businesses). \u201cIn 2023, we have to work against the lack of a political cycle, but we still see research continues to be strong [as well as], digital transformation. And our brand experience group is getting a lot of pitches \u2014 that area is continuing to come to the fore when we put together the creative and the media.\u201d<\/p>\n

Independent analyst Brian Wieser noted that Stagwell has a bit of an advantage by virtue of its size (it\u2019s not quite as large as the other holding companies \u2014 yet), and can therefore afford to be more bullish in predicting 2023 growth.<\/p>\n

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The underlying economy in the U.S. and most major markets should still be positive in 2023.<\/p>\n

Independent analyst Brian Wieser<\/p>\n<\/p><\/div>\n

\u201cMany smaller agency groups out there\u2026 appear to be well positioned for faster growth than traditional agency holding companies because of where their businesses have focused,\u201d said Wieser, who noted he doesn\u2019t track Stagwell as closely as the established holding companies.<\/p>\n

\u201cThe underlying economy in the U.S. and most major markets should still be positive in 2023, with inflation providing a tailwind to growth in marketers\u2019 budgets,\u201d added Wieser.\u00a0\u201cAt the same time, most public companies are reluctant to provide numbers they don\u2019t think they can beat as guidance, so to the extent that the larger holding companies\u2019 guidance is essentially for a 3-4% organic growth rate in 2023, one should interpret that as the number they collectively expect to beat.\u201d<\/p>\n

Stagwell\u2019s results for 2022 also showed a surge in growth Internationally \u2014 while North American revenue growth hit 14%, international hit 26%. \u201cWe grew twice as fast outside the U.S. as we grew [domestically],\u201d said Penn. \u201cAnd we\u2019re continuing to focus on getting our European business in shape \u2014 bringing together our companies there so they can pitch at scale. We\u2019re doing the same thing in Asia, and we\u2019re looking on an M&A basis to fill out Latin America \u2014 we have a strong [base] in Brazil, but I want to be strong throughout the region.\u201d<\/p>\n

Debt targets for Stagwell are reduced to $2 billion from $2.5 billion, said Penn, who added that devoting cash to reduce the firm\u2019s debt load doesn\u2019t take away from acquisitive growth targets. \u201cWe\u2019re using a third for new growth, a third to pay for old stuff, and a third to pay for shareholder stock buybacks,\u201d he said.<\/p>\n<\/div>\n

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