Stagwell Inc. trimmed its annual organic revenue growth forecast despite a record new business run in the third quarter.

Stagwell said it is now expecting 16% to 20% organic revenue growth for the year, a decrease from its previous guidance of 18% to 22%. 

“This reflects a more modest contribution from advocacy fundraising relative to the 2020 presidential cycle due to a decline in closely contested races, persistent inflation, and hurricane impact in large markets,” Frank Lanuto, chief financial officer at Stagwell said during an earnings call this morning.

Stagwell raked in $86 million in net new business for the quarter, the company's highest on record for any quarter in its history, Stagwell CEO Mark Penn said in an interview. Its political advocacy agencies include Targeted Victory and SKDK, which the company said grew, but not as robustly as in the previous political cycle.

Excluding results from its advocacy business, the holding company’s revenue guidance for the year remains unchanged at 13% to 17%.

Penn said in the interview he saw a “pause in the marketplace” when it came to new business opportunities coming into Cannes this year, but has seen a significant increase since then. “We've seen some clients push off projects, but nothing at a level that would've given us extraordinary concern compared to say the pandemic or when I managed other properties in 2009. I don't see anything like that right now. I see new business being quite strong,” Penn said.

The holding company reported 11.3% organic revenue growth for the third quarter of 2022. The results were calculated on a pro forma basis, as if the August 2021 acquisition of MDC Partners by Stagwell Marketing Group had been completed on Jan. 1, 2020. 

Shares of Stagwell fell 5% to $7.02 in trading Thursday.

Digital transformation

Third-quarter revenue growth was boosted by the company's digital transformation business, where revenue is up 30% year-to-date, led by triple-digit growth at Gale and double-digit growth at Code and Theory.

Stagwell’s creativity and communications business, which includes Anomaly and 72andSunny, grew by 5% in the quarter and saw overall growth across the portfolio, according to Lanuto, which he said was “​​offset by some reductions at agencies repositioning their brands.” Penn later clarified that included “clients moving from one [agency] brand to the other.”

Holding companies' tally

Stagwell is the latest holding company to release its earnings. While it lowered its 2022 revenue growth forecast, its growth projection still outpaces those of key competitors.

Last week, WPP reported 3.8% organic revenue growth for its third quarter this year, reaching 2.99 billion pounds or $3.46 billion in revenue. WPP also adjusted annual revenue growth guidance to between 6.5% and 7%, a slight change from August, when it targeted growth of 6% to 7%.

IPG raised its guidance slightly in October, and now expects organic revenue will rise 7% this year. In July, it anticipated exceeding 6.5% organic growth this year.

Publicis raised its guidance, expecting organic revenue to rise 8.5% this year, higher than the already increased 6% to 7% revenue growth forecast t issued in July.

Omnicom raised its full-year organic revenue forecast, calling for growth of 8% to 8.5%, and posted third-quarter organic revenue growth of 7.5%. 

Dentsu Group is set to announce third-quarter earnings on Nov. 14. 

For the first time Stagwell’s earnings webcast included a live Q&A session. Laura Martin, a managing director and senior internet analyst at Needham and Company sat down with Penn on the call, and then other analysts asked their questions. “We really had a record number of people on the call, so I think part of the Stagwell story is an emerging story,” Penn said. “[We are] known first in the marketing world, and I think [we are] increasingly getting known in the investor world. And so it's the first time an analyst wanted to come.”

This is the second significant change to Stagwell’s earnings presentation, which recently started featuring an earnings “movie” with each webcast.