Stagwell reported its Q1 2025 earnings on Thursday (May 8), revealing a 6% increase in net revenue to $564 million, driven by investments in digital transformation and proprietary tools.
Despite a slight 3% year-over-year decline in total revenue to $652 million, chief executive (CEO) Mark Penn said the agency views net revenue as its key performance indicator (KPI).
Amid challenges presented by tariffs, declining consumer spend, and industry-wide consolidation, Penn was optimistic about Stagwell’s trajectory. “This is a good moment for Stagwell,” he told ADWEEK. “We’ve come a long way and are now at a well-scaled point, where we’re clearly winning bigger assignments from larger companies.”
Recent creative and media wins include Starbucks (Anomaly), Visa (Anomaly), Panera (72andSunny), and Hyatt (Assembly).
“The thing that excites me is our strategy of growth, scale, and innovation,” Penn said. “I’m really seeing that vision come into sight now as we take on bigger assignments and do fascinating things, like reintroducing Starbucks as a brand.”
Addressing the revenue decline, Penn attributed it to a drop in pass-through expenses during the political cycle rather than a downturn in business. “Net revenue, which reflects our fees, grew significantly, driven primarily by digital transformation, research, and creativity,” he explained.
Stagwell reported a net loss of $3 million for the quarter, translating to an EPS of $(0.04), missing the analyst consensus estimate of $0.03 per share. However, adjusted EPS was $0.12, surpassing expectations, with adjusted EBITDA of $81 million and a 14% EBITDA margin.
The company reaffirmed its full-year 2025 guidance, projecting total net revenue growth of approximately 8% and adjusted EBITDA between $410 million and $460 million.
Following the earnings release, Stagwell’s stock price rose over 6%.
Penn said AI and digital transformation would play a pivotal role in Stagwell’s future. In April, the company appointed John Kahan, a veteran of Microsoft and IBM, as its inaugural chief AI officer.
Stagwell has been integrating AI more deeply into its offerings over the past year. This includes building out its PRophet Comms Tech Suite, which uses AI to help predict media interest and craft more effective pitches. Its machine learning suite also features tools that track earned media coverage for clients and an influencer matchmaking tool.
Stagwell’s Q1 performance contrasts with some competitors. Omnicom reported 1.6% year-over-year revenue growth in Q1 2025, while Interpublic Group (IPG) saw a 5.9% decline.
