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The first quarter wasn’t terribly kind to Stagwell.
On Tuesday, the agency holding company reported $622 million in Q1 revenue – a 3% decrease year over year – and $53 million in Q1 net-new business, a 1% decrease YoY, according to CFO Frank Lanuto.
The company’s stock was down nearly 10% on the news.
Tough stuff
But Stagwell has a simple plan for returning to growth: Keep moving.
“Through pandemics, new recessions, tech slowdowns, we never stand still,” Stagwell CEO and Chairman Mark Penn told investors.
Penn also trotted out a number of excuses for Stagwell’s Q1 performance, pointing to tough YoY comps, the overall slowdown of the tech sector and the fact that Q1 2023 was “at the bottom of the four-year political cycle.”
The company eliminated more than 300 roles in Q1, which will generate approximately $25 million in savings.
Two major segments of Stagwell’s business took a hit in the first quarter.
Tech, which is usually 18% of net revenue, grew by just 3% in Q1, and finance and banking, which is usually 6% of business, shrank by 3%.
But, overall, Stagwell saw limited impact from the bank crisis that roiled the economy earlier this year.
“We had no Silicon Valley Bank exposure, but we did have First Republic Bank as a digital platform client,” said Penn, noting that JPMorgan Chase, which bought First Republic Bank and subsequently saw profits leap, is a “major client.”
Looking ahead
Like its fellow agency holding companies, Stagwell is also not shying away from generative AI.
The plan is to deploy AI tools across the company, but especially in media operations, Penn said, which will “significantly enhance efficiency” over time.
Penn touted Prophet, Stagwell’s generative AI product, which recently partnered with LexisNexis to expand its database of content. He also highlighted a partnership between Code and Theory, a Stagwell network company, and Oracle to co-develop generative AI and create new consumer marketing products and services.
“We are combing through every possible application that we can, from helping creative to helping analyze research, and applying these new tools as quickly as possible across our network,” Penn said.
Stagwell also invested in its marketing cloud and made a strategic investment in Q1 with the acquisition of In the Company of Huskies, a digital creative marketing agency in Ireland. On top of that, Stagwell combined four internal digital creative and media agencies to relaunch CP+B.
“2023 is going to be a year of investment,” Penn said. “We expect significant revenue increases in 2024.”
For the remainder of 2023, Stagwell is sticking to its guidance of 7.5% to 10% organic net revenue growth.
