Stagwell Group released its first earnings since its merger with MDC was made official in July. The holding company posted 22.8% organic net revenue growth when compared to last year's third quarter and 14.4% net revenue growth compared to the third quarter of 2019.
The results were calculated on a pro forma basis, as if the company’s merger had been completed on Jan. 1, 2020. Pro forma net revenue was $498.1 million in the third quarter versus $397.8 million in the prior-year period.
The third-quarter results are proof that ”the combination is working,” Mark Penn, chairman and CEO of Stagwell said during this morning’s earnings call. As a result, Stagwell increased its revenue guidance for the year to $2.17 billion from $2.13 billion.
Moving forward, Stagwell will look to compete in larger pitches in the U.S and globally than it had been able to in the past.
“Our goal is to get into more and more of what I see is about 15 major pitches each year, that four majors [holding companies] are in, and that we individually—neither Stagwell, nor the old company—really were in," said Penn in an interview. "And I think we're going to qualify up the chain, and when people really kick the tires here, I think that's going to be a process that we go through," he said. "I can point to four $10 million assignments that we won in the last two or three months and previously I didn't see the companies [bringing in] really much [above] $5 million in assignments.”
Some examples of those wins include Code and Theory winning business with Amazon Ads; Gale picking up lead agency duties for MilkPEP and agency-of-record duties for H&R Block; as well as Doner and Code and Theory winning significant business for Johnson & Johnson.
One growth area for Stagwell was its Integrated Agencies Network, which grew by 30% compared to last year and includes the Anomaly Alliance, the Constellation Network, the Code and Theory Network, and the Doner Partners Network.