Stagwell (US:STGW)2025-05-08 15:55Acquisitions - The Company acquired JetFuel Studio LLC and Powered by JetFuel LLC for $21.6 million, with $10.3 million paid in cash and $11.3 million in shares, plus contingent consideration up to $59.5 million based on future earnings targets[152]. - The Company also acquired Create Group Holding Limited for $15.5 million, with $11.5 million paid in cash and $4.0 million in shares, and contingent consideration up to approximately $24.0 million based on future earnings targets[154]. - The Company is in the process of acquiring ADK Group for an estimated purchase price of approximately $24 million, expected to close in Q2 2025[158]. Financial Performance - Total revenue for the three months ended March 31, 2025, was $651.7 million, a decrease of $18.3 million or 2.7% compared to $670.1 million in the same period of 2024[172][171]. - Net revenue increased to $564.2 million for the three months ended March 31, 2025, up $31.7 million or 6.0% from $532.5 million in 2024, driven by acquisitions[173]. - Operating income decreased to $18.3 million, down $7.6 million or 29.3% from $25.9 million in the prior year[174]. - Adjusted EBITDA for the three months ended March 31, 2025, was $80.6 million, a decrease of $9.7 million or 10.8% from $90.3 million in 2024[171]. - Net loss attributable to Stagwell Inc. common shareholders was $2.9 million, compared to a net loss of $1.3 million in 2024[182]. Revenue Breakdown - Revenue for the three months ended March 31, 2025, was $377.4 million, an increase of $24.6 million or 7.0% compared to the same period in 2024[187]. - Net revenue for the three months ended March 31, 2025, was $325.8 million, representing an increase of $33.0 million or 11.3% driven by new client wins and higher spending in technology and retail sectors[188]. - Revenue for the Brand Performance Network for the three months ended March 31, 2025, was $162.2 million, a decrease of $51.7 million or 24.2% compared to 2024[192]. - Net revenue for the Brand Performance Network for the three months ended March 31, 2025, was $146.9 million, a decrease of $15.7 million or 9.7% attributed to lower spending by existing clients[193]. - Revenue for the Communications Network for the three months ended March 31, 2025, was $87.6 million, a decrease of $6.1 million or 6.5% compared to 2024[196]. Expenses and Costs - Cost of services decreased by $32.4 million, while office and general expenses increased by $16.0 million due to acquired entities[175]. - Interest expense, net rose to $23.4 million, an increase of $2.4 million from $21.0 million in 2024, primarily due to higher debt levels[177]. - Staff costs increased by $1.8 million or 17.7% to $11.9 million, primarily due to an increase in headcount[210]. Cash Flow and Debt - The company had cash and cash equivalents of $137.7 million as of March 31, 2025, compared to $131.3 million as of December 31, 2024[213]. - Cash flows used in operating activities for Q1 2025 were $60.0 million, compared to $53.1 million in Q1 2024, indicating a 13% increase[220]. - Total debt as of March 31, 2025, was $1,465.3 million, an increase from $1,353.6 million as of December 31, 2024, representing an 8.3% rise[224]. Risk and Compliance - The Company has contractual commitments with media providers that exceed service revenue, posing a risk of significant uncollectible receivables during economic downturns[229]. - The Company believes it will remain compliant with its Credit Agreement covenants over the next twelve months based on current financial projections[225]. - A 10% change in interest rates would affect annual interest expense by $2.5 million, highlighting sensitivity to interest rate fluctuations[238]. - The Company is exposed to foreign exchange risks due to operations in multiple currencies, but most revenues and expenses are denominated in their functional currency, mitigating some impact[239].