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Stagwell's revenue surge in Q2 is accompanied by a spike in costs

Quarterly revenue surge at Stagwell due to AI investment increases, digital growth, and fresh business acquisitions, maintaining optimism for the full-year projections, yet incurring a net loss.

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Quarter two of Stagwell experiences a return to revenue expansion, concurrently witnessing a surge...
Quarter two of Stagwell experiences a return to revenue expansion, concurrently witnessing a surge in costs.

Stagwell's revenue surge in Q2 is accompanied by a spike in costs

In the dynamic world of marketing and technology, Stagwell is making waves with its impressive growth and new business wins. The company, known for its strategic focus on AI and marketing technology, has reiterated its 2025 guidance, citing significant growth across various sectors.

Stagwell reported a 38% year-over-year growth on its Marketing Cloud, and a 26% growth across its top 25 clients. These figures are a testament to the company's successful strategy, as it continues to save costs and invest in innovation.

The savings were driven by back-office consolidation, real estate reductions, technology efficiencies, and a decline in personnel costs. These measures have enabled Stagwell to achieve a $122 million year-over-year cash flow improvement, supporting sustained investment in new business and innovation.

Stagwell's CEO, Mark Penn, expressed optimism about the company's future, stating that while other companies are grappling with digital transformation, new business, and workforce reductions, Stagwell's pipeline is robust and growing. He also highlighted the company's ability to attract key talent from holding companies.

One such addition to the Stagwell team is Slavi Samardzija, the global CEO of Annalect, who will lead Stagwell's data strategy starting this fall. This strategic move is expected to further strengthen Stagwell's position in the AI and marketing tech space.

The second half of the year looks even more promising for Stagwell, with the CEO expecting growth to accelerate due to a positive economic outlook, new large clients coming online, and a decrease in client churn after the first half of the year.

Stagwell's Q2 2025 report also highlighted strong performance in digital and tech-driven segments. The company reported a 5% year-over-year total revenue growth and 8% year-over-year net revenue growth, excluding its advocacy segment. Notably, its Digital Transformation net revenue excluding advocacy grew 12%, and the Stagwell Marketing Cloud segment grew around 45% year-over-year, excluding advocacy.

These investments in AI and marketing tech have driven significant organic growth and enhanced profitability metrics, such as a 23% adjusted EBITDA growth ex-advocacy in Q2 2025.

Stagwell also secured substantial new business during this period, with net new business revenue estimated at $117 million in Q2 2025 and $451 million over the last twelve months, setting company records. Among the significant new client wins spotlighted are brands like New Balance and Samsung, as well as others including Starbucks, Visa, PayPal, Panera, CarMax, Celsius, and Hyatt.

These new assignments reflect Stagwell’s growing influence in tech-centric and retail sectors, contributing to an 18% increase in marketing spend from tech customers and a 52% increase from retail customers.

Stagwell's investments in technology innovation include the rapid growth of its Quest Brand solution and deepening relationships with technology platforms such as Adobe, further underpinning its AI and marketing tech strategy.

In conclusion, Stagwell's emphasis on AI and marketing technology has driven double-digit growth in key digital segments, drawn high-profile clients like New Balance and Samsung, and enabled record new business wins. With approximately 8% total net revenue growth anticipated for 2025, Stagwell is well-positioned for continued success in the future.

[1] Stagwell's Q2 2025 Earnings Release [2] Stagwell's Q2 2025 Investor Presentation [3] Stagwell's Q2 2025 Cash Flow Statement [4] Stagwell's 2025 Guidance Update

  1. The growth in Stagwell's business, particularly in digital and tech-driven segments, has been fueled by strategic investments in AI and marketing technology, leading to a 23% adjusted EBITDA growth excluding advocacy in Q2 2025.
  2. The company's focus on technology innovation, evident in its rapid growth of Quest Brand solution and deepening relationships with technology platforms like Adobe, has further strengthened Stagwell's position in the AI and marketing tech space, contributing to its robust pipeline of new business.

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