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NEW YORK - Stagwell (NASDAQ: STGW), a marketing services company currently valued at approximately $689 million, announced during its 2025 Investor Day held virtually today that it aims to reach $5 billion in annual revenue by the end of 2029. This target is part of its "5 x 5" initiative, which also projects $1 billion in adjusted EBITDA within the next five years, an ambitious goal considering its current EBITDA of $310 million. The company intends to achieve these objectives without increasing debt ratios. According to InvestingPro analysis, Stagwell appears undervalued at current levels, with analysts maintaining positive earnings expectations for the year ahead.
The firm also disclosed plans for substantial cost savings, estimating $80 to $100 million through the adoption of AI-driven technologies expected to enhance employee efficiency. These measures are projected to be fully implemented over the next 18 to 24 months, with the majority of savings realized by the end of 2025. The company’s focus on efficiency comes as it maintains a solid revenue growth rate of 12.4% over the last twelve months. InvestingPro data reveals several additional insights about Stagwell’s financial health and growth potential, with 8+ exclusive ProTips available to subscribers.
In efforts to streamline its operations, Stagwell is restructuring its business units to align with current client purchasing patterns. The new financial reporting structure, to be introduced later this year, will include Marketing Services; Media and Commerce; Advocacy; Digital Transformation; and the Stagwell Marketing Cloud.
Additionally, Stagwell is simplifying its capital structure by eliminating its two-class share structure, converting all Class C shares to Class A publicly traded common stock. This move is expected to make the stock more appealing to additional indexes and funds.
The company is enhancing its data capabilities through a partnership with Palantir, integrating the Stagwell ID Graph with Palantir’s advanced data analysis and AI tools. This development follows a collaboration with Adobe for advanced content management services.
John Kahan, with nearly four decades of experience at Microsoft and IBM, will be joining Stagwell as the network’s first Chief AI Officer, reporting directly to Chairman and CEO Mark Penn.
Stagwell reaffirmed its full-year 2025 guidance, which includes an 8% growth in net revenue, adjusted EBITDA of $410 million to $460 million, a free cash flow conversion exceeding 45%, and adjusted earnings per share ranging from $0.75 to $0.88.
The company’s virtual Investor Day, which included presentations from key executives and Q&A sessions, was broadcast live and a recording will be available on their website.
This announcement is based on a press release statement from Stagwell.
In other recent news, Stagwell Inc. reported its fourth-quarter earnings for 2024, meeting analysts’ expectations with an earnings per share (EPS) of $0.24 and revenue of $789 million. This revenue figure exceeded forecasts by approximately 5%, marking a 20% increase from the previous year. The company invested $23 million in AI and cloud solutions during the quarter, contributing to its robust performance. Stagwell also repurchased 14.8 million shares in 2024, enhancing shareholder value. For the full year, Stagwell posted a revenue of $2.84 billion, reflecting a 12% year-over-year growth. The company projects an 8% growth in total net revenue for 2025, with adjusted EBITDA expected to range between $410 million and $460 million. Furthermore, Stagwell plans to launch "The Machine," an AI-based content development platform, in the summer. Analysts from firms like Craig Hallum and Morgan Stanley have shown interest in Stagwell’s digital transformation capabilities, noting strong growth in this area.
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