Results show significant growth including a 29.1% increase in GAAP revenue to $209.6m and a 39.5% increase in net revenue to $181.8m for Q2 2021 vs Q2 2020.
After adjusting for acquisitions, foreign exchange effects, and the election cycle, GAAP revenue for the quarter grew 43.9% with net revenue growth of 42.0%.
Second quarter net income increased to $18.7 million, representing 285.1% growth over Q2 2020.
Adjusted EBITDA increased 91.5% in Q2 2021 vs Q2 2020.
STAGWELL MARKETING GROUP HIGHLIGHTS: 2nd QUARTER AND YTD JUNE 30, 2021
2nd Quarter 2021:
- GAAP revenue was $209.6 million, representing growth of $47.2 million, or 29.1%, compared to Q2 2020 of $162.3 million.
- GAAP revenue organic growth was $38.7 million, or 23.8%.
- Adjusting for acquisitions, foreign exchange effects, and the election cycle, GAAP revenue organic growth for the quarter is 43.9%.
- Net revenue was $181.8 million, representing growth of $51.5 million, or 39.5%, compared to Q2 2020 of $130.4 million.
- Net revenue organic growth was $43.0 million, or 33.0%.
- Adjusting for acquisitions, foreign exchange effects, and the election cycle, net revenue organic growth for the quarter is 42.0%.
- Net income was $18.7 million, representing growth of $13.8 million, or 285.1%, compared to the prior year period.
- Adjusted EBITDA was $38.7 million, representing growth of $18.5 million, or 91.5%, compared to the prior year period.
Year to Date June 30, 2021:
- GAAP revenue was $390.8 million, representing growth of $43.9 million, or 12.7%, compared to YTD 2020 of $346.9 million.
- GAAP revenue organic growth was $25.9 million, or 7.5%.
- Adjusting for acquisitions, foreign exchange effects, and the election cycle, GAAP revenue organic growth for the quarter is 24.0%.
- Net revenue was $339.9 million, representing growth of $58.7 million, or 20.9%, compared to YTD 2020 of $281.2 million.
- Net revenue organic growth was $40.8 million, or 14.5%.
- Adjusting for acquisitions, foreign exchange effects, and the election cycle, net revenue organic growth for the quarter is 26.1%.
- Net income was $23.3 million, representing growth of $5.9 million, or 34.2%, compared to the prior year period.
- Adjusted EBITDA was $62.6 million, representing growth of $20.7 million, or 49.5%, compared to the prior year period.
- Cash provided by operating activities of $39.2 million, a decrease of $7.6 million, or 16.2%, principally due to increased working capital requirement resulting from revenue growth.
Stagwell Marketing Group, which formally merged with MDC Partners to form Stagwell Inc. (Nasdaq: STGW) on August 2, announced standalone financial results for Stagwell Marketing Group LLC (“Stagwell” or the “Company”) for the three and six months ended June 30, 2021.
Current Stagwell Inc. President and former Stagwell Group Partner Jay Leveton stated, “The standalone Stagwell Marketing Group quarterly results show industry-leading, double digit net revenue growth across every one of our business segments. As the impact of the pandemic recedes, marketers are investing in research and data analytics to better understand changes among their stakeholders and improve how they connect with them through digital channels — areas where Stagwell companies excel. We have excellent momentum as we launch Stagwell Inc.”
Current Stagwell Inc. COO and former Stagwell Group CFO Ryan Greene commented, “In the second quarter of 2021, due to its digital first nature, Stagwell’s net revenue grew robustly at 39.5% and EBITDA increased 91.5% as did net income, by 285.1% year over year. At a time when legacy holding companies are working to recover to 2019 pre-pandemic revenue levels, Stagwell’s GAAP revenue this past quarter is more than 20% higher and EBITDA is over 40% higher versus Q2 2019.”
Second Quarter and Year-to-Date 2021 Stagwell Marketing Group Standalone Financial Results
GAAP revenue for the second quarter of 2021 increased $47.2 million, or 29.1%, to $209.6 million. This included organic revenue growth of $38.7 million, or 23.8%. Inorganic revenue was $7.5 million and we reported a foreign exchange impact on GAAP revenue of approximately $1.0 million. Our GAAP revenue includes third-party direct costs, which are expenses incurred with third-party vendors when Stagwell acts as the principal when performing services for its clients. Third-party direct costs were $27.7 million as compared to $32.0 million for the second quarter of 2020, which represents a decrease of 13.3%.
Net revenue for the second quarter of 2021, after deducting third-party direct costs, was $181.8 million compared to $130.4 million for the same period in 2020. This represents an increase of $51.5 million or 39.5%. This included organic revenue growth of $43.0 million, or 33.0%. The organic revenue increase was primarily attributable to double-digit organic growth across nearly all non-political segments. Inorganic revenue of $7.5 million included acquisitions that expanded our digital transformation and digital platform management offerings. We also recorded a foreign exchange impact on net revenue of $1.0 million.
Net income for the second quarter of 2021 was $18.7 million as compared to net income of $4.8 million in the second quarter of 2020, an increase of $13.8 million, or 285.1%. Our operating expenses increased $30.5 million, which related to additional people and client delivery expenses incurred in support of the revenue growth noted above plus additional costs connected to acquired brands. Additionally, general expenses increased $11.4 million across a number of brands and our non-operating expenses increased by $2.9 million, which primarily related to increased provision for income taxes.
Adjusted EBITDA for the second quarter of 2021 was $38.7 million compared to $20.2 million in the second quarter of 2020, an increase of $18.5 million, or 91.5%. The increase was driven by the strong revenue performance that was partially offset by the increase in operating expenses noted above. Our Adjusted EBITDA margin was 18.5% on GAAP revenue and 21.3% on net revenue, up from 12.5% and 15.5% respectively in the second quarter of 2020.
GAAP revenue for the first six months of 2021 increased $43.9 million, or 12.7%, to $390.8 million. This included organic revenue growth of $25.9 million, or 7.5%. Inorganic revenue was $17.1 million, and we recorded a foreign exchange impact on GAAP revenue of $0.9 million. The organic revenue growth was primarily attributable to a $26.2 million increase in organic revenues from our Digital – Marketing segment that were partially offset by an organic revenue decline of $18.6 million from our Communications, Public Affairs and Advocacy and Digital – Content segments. All remaining segments reported organic revenue growth of $18.4 million. Inorganic revenue totaled $17.1 million and included $15.0 million from investments that expanded our digital transformation offerings and $2.2 million from investments that expanded our strategic corporate communications offering. Third-party direct costs were $50.9 million as compared to $65.7 million for the first six months of 2020, which represents a decrease of 22.5%.
Net revenue for the first six months of 2021, after deducting third-party direct costs, was $339.9 million as compared to $281.2 million for the first six months of 2020, which represents an increase of $58.7 million or 20.9%. This included organic revenue growth of $40.8 million, or 14.5%. All segments except for Digital – Content, which remained impacted by travel restrictions put in place in response to COVID, reported double digit organic growth. Inorganic revenue was $17.1 million and included $15.0 million from investments that expanded our digital transformation offerings and $2.1 million from investments that expanded our strategic corporate communications offering. We also recorded a foreign exchange impact on net revenue of $0.9 million.
Net income for the first six months of 2021 was $23.3 million as compared to net income of $17.3 million in the first six months of 2020, an increase of $5.9 million, or 34.2%. Our operating expenses increased $31.9 million, which related to additional operating expenses incurred by our existing brands in support of the revenue growth noted above plus additional costs connected to acquired brands. General expenses increased $20.4 million across several brands and our non-operating expenses (net of other income) increased by $6.1 million, which primarily related to increased provision for income taxes of 3.4 million and a decrease in other income reported in prior period not repeated in the current period of $2.2 million.
Adjusted EBITDA for the first six months of 2021 was $62.6 million as compared to $41.8 million in the first six months of 2020, an increase of $20.7 million, or 49.5%. Again, the increase was driven by the strong revenue performance that was partially offset by the increase in operating expenses noted above. In addition, the adjusted EBITDA margin was 16.0% on GAAP revenue and 18.4% on net revenue, up from 12.1% and 14.9% respectively in the first six months of 2020.
Stagwell Inc. Conference Call
Management will host a video webcast and conference call on Wednesday, August 4, 2021, at 8:30 a.m. (ET) to discuss standalone results for Stagwell Marketing Group LLC and MDC Partners Inc. for the three and six months ended June 30, 2021.The video webcast will be accessible at https://kvgo.com/openexchange-inc/mdca-stagwell-earnings-call. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the conference call.
A recording of the conference call will be accessible one hour after the call and available for ninety days at www.stagwellglobal.com.
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