Stagwell (STGW) Details Key Strategic Growth Targets at Investor Event, Increases Targeted Combined GAAP Revenue Goals for 2025
Management announced increased annual organic revenue targets, expanded M&A commitments, and plans to bolster its capabilities across high-growth digital marketing services including cloud suite of digital SaaS and DaaS products
Stagwell announced several strategic growth targets at the company’s first in-person and virtual presentation for investors and analysts.
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- Increased targeted combined GAAP revenue for 2025 to $3.4B versus $3B previously, based on:
- Increased target of 7-9% annual organic revenue growth compared to 5% previously, leading to double digit overall annual revenue growth. The increase is driven by 1) an increased mix of digital revenue targeted to grow at a blended 10-15% per year, 2) increased confidence in higher growth of conventional marketing driven by success in winning larger pitches, and 3) increased confidence in secular growth in advocacy.
- Increased incremental revenue target from M&A and associated organic growth of acquisitions to $450M by 2025 versus prior target of $325M. (Increased levels of cash flow due to business outperformance are expected to be dedicated to acquisitions in synergistic geographies and capabilities, in addition to faster growing digital areas.)
- Stagwell Marketing Cloud announced to service in-house marketers with suite of digital SaaS and DaaS products is targeted to generate ~$75M in revenue by 2025.
- Proportion of New Revenue derived from digital services — including digital transformation, performance marketing & data, and online research — targeted to grow to 65% by 2025, up from 48% of pro forma revenue in Q3 2021.
- Adjusted EBITDA margin expansion of 25 to 50 basis points per year, driven by a combination of synergies and increased mix of higher margin digital services, partially offset by normalization of travel & entertainment.
“Stagwell is demonstrating new levels of growth and profitability that go beyond simple pandemic recovery, bolstered by our best-in-class digital services,” said Mark Penn. “The combination has set us up to deliver record year-end growth and we are confident that doubling down on our aggressive investment in connected, integrated marketing solutions is the key to further sustained growth.”
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These targets follow strong Q3 2021 performance from the world’s newest marketing services network, including 22.8% pro forma net organic revenue and 25.2% year over year pro forma net organic revenue. GAAP Revenue for the quarter was $466.6 million.
Stagwell last week revised its full year-end guidance, which had previously been revised higher in Q2. The company now expects to end the year with pro forma revenue of $2.15B–$2.18B and is raising its Adjusted EBITDA expectations for a second time to $370M–$380M from $325–$340 at the beginning of the year.*