Good day, everyone, and welcome to today's MDC Partners Stagwell Global Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note, today's call may be recorded. [Operator Instructions] It is now my pleasure to turn the call over to Michaela Pewarski, Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to the Stagwell conference call for the second quarter of 2021 to discuss standalone financial results of MDC Partners and Stagwell Marketing Group. On today's call Mark Penn, Chairman and Chief Executive Officer, will first provide an overview of Stagwell's network-wide second quarter results, followed by comments from Stagwell President, Jay Leveton, and a review of financial results from our Chief Financial Officer, Frank Lanuto. You will then be joined by Stagwell Chief Operating Officer, Ryan Greene, for a Q&A session. Before we begin our prepared remarks, I'd like to remind you that the following discussion contains forward-looking statements and non-GAAP financial data. Forward-looking statements about the company, including those relating to earnings guidance, are subject to certain uncertainties referenced in the cautionary statements included in our earnings release and slide presentations, and are further detailed in the company's Form 10-K and subsequent SEC filings. For your reference, we've posted two investor presentations to our Web site, at stagwellglobal.com. We also refer you to this morning's press releases and slide presentations for definitions, explanations, and reconciliations of non-GAAP financial data. And now to start the call, I'd like to turn it over to our Chairman and Chief Executive Officer, Mark Penn.

Thank you, Michaela. Good morning and thank you for joining us. It's a momentous week for Stagwell with the closing of the combination, and our first day of trading on NASDAQ under the new ticker, STGW, that's STGW. Thank you to all our employees and shareholders who have supported our vision and made it happen. I'll be outlining the results of both Legacy MDC and Legacy Stagwell. This is the last time results will be reported separately, and two separate releases were issued as well. Overall, this was an excellent quarter for both companies in the combination. Legacy MDC continue to come back from the depths of the pandemic faster than expected, and Legacy Stagwell accelerated it's off-election cycle growth across the board. Legacy MDC reported GAAP revenue of $346 million, up 33% year-over-year, and net revenue of $298 million, up 29%, reporting organic revenue growth of 31%. Legacy Stagwell reported impressive growth numbers as well. GAAP revenue for Legacy Stagwell was $210 million, up 29% year-over-year, net revenue, up $182 million, was up 40%, and organic growth was 24% on a GAAP basis, and 33% on a net revenue basis. Stagwell was a rare business and marketing that showed growth even during the pandemic last year and this growth comes on top of last year's expansion, even though its travel and tourism business remain subdued. Legacy MDC adjusted EBITDA climbed to $60 million, the highest second quarter in the company's history, growing 67%. Legacy Stagwell increased its adjusted EBITDA to $39 million, up 92% over last year. These are excellent numbers turned in of both legacy companies as we come out of the gate ready for the combination, and beyond. Adding in the solid results from the first quarter, both legacy MDC and Stagwell delivered strong results for the…

Thank you, Mark, and good morning, everyone. I'm Jay Leveton, President of Stagwell Inc. it's a pleasure to be with you this morning and to serve in this role in the combined company. With the combination closing in the last 48 hours and the strong Q2 financial results from both companies, it is certainly an exciting time to be at Stagwell. I've spent more than 20 years working in marketing services, specifically in the market research and public relations vertical managing agencies at scale globally. I'm not a lawyer or accountant, but someone who has done client work and pitch for new business in the same way, 10,000 people here at Stagwell do every day. I understand these businesses firsthand and to truly lead them you have to have walked in these professional shoes. Specifically for the last six year as at the legacy Stagwell Group I helped lead the team with Mark that started from nothing in 2015 to what became an $880 million in revenue and $145 million EBITDA company in 2020. We accomplished a significant amount of time, a significant amount in a short period of time. I'm very pleased those corporate executives that Mark mentioned earlier and every single one of our legacy Stagwell agency business leaders are continuing on in this new journey, and what is now Stagwell Inc. a $2 billion company. It is a watershed moment for all of us. Now, we are excited to partner with the many iconic MDC marketing companies in this new chapter. In my role as President at Stagwell Inc. my north star is growth. Growth creates shareholder value. It creates opportunity for our 10,000 professionals to progress in their careers, whether they are running some of our largest businesses, or just starting out as an assistant Account…

Thanks, Jay. Good morning everyone. As previously disclosed, Stagwell Marketing Group LLC and MDC completed its business combination earlier this week, and changed the combined company's name to Stagwell Inc. My discussion of the financial results this morning will cover the quarter ended June 30th, and will address the pre-combination results of each company. All future disclosure will address the consolidated results for Stagwell Inc. Let me begin with MDC's results. The company delivered record Q2 revenue growth and its highest adjusted EBITDA in the company's history. As the recovery from the pandemic accelerated during the quarter, for the quarter, revenue grew 33% to $346 million were 31% on an organic basis. Net revenue excluding past requests increased 28% to $298 million, or 27% on an organic basis. Looking at our revenue from a client sector standpoint, we saw growth across for all sectors, healthcare, technology, consumer products, and food and beverage show the biggest year-over-year improvements primarily driven by strong organic growth with existing clients. Lodging, transportation, and travel clients also saw an uptick, but it's rebounding more slowly as clients remain cautious around the global travel outlook. We expect the travel sector as well as our experiential businesses to see gradual sequential improvement throughout the second-half of the year. Turning to our segments, revenue growth for the quarter was broad-based, as each of our reportable segments posted double-digit percentage revenue increases as compared to Q1 2020. In integrated network A, revenue increased 43% in Q2 versus the prior year, driven by growth in digital PR and our healthcare business. In integrated network B, revenue increased 32% in Q2 versus prior year, driven by strong momentum in our created digital and PR businesses. In media and data, revenue was up 31% in Q2 versus the prior year, driven by…

[Operator Instructions] We'll take our first question from Tom White with D.A. Davidson. Your line is open.

Hi, this is [Tevez] [Ph] on for Tom. Thanks for taking our question. I was wondering if I could hear your view about the evolution of the competitive landscape for Stagwell Inc. and Legacy MDC over the course of the pandemic. What does it look like? Is it significantly different now, during the past few months, where we've seen an emergence from the pandemic? And are you guys [indiscernible] everything, including the potential ramifications of further volatility via the Delta variant? And one more, if I may, you mentioned in your prepared remarks your desire to further M&A down the line following the combination. Could you elaborate on that? Thank you.

Sure. First, I don't think you've seen any real change in the competitive set. But what we're really seeing, however, is a shift as a result of the pandemic, what I would say is, look, it's a three to five-year shift in digital habits. And so the trend towards people shifting away from fully conventional marketing in, or traditional marketing into online marketing, I think, was accelerated. As I was saying, we had Instacart, but nobody used it, we had Zoom but nobody used it. We have all these things that people use now that they didn't use, and that -- and online and ecommerce is up, I believe, 30% or 35%. So, the competitive landscape shifts only in the sense that business now shifts, I think, more favorably in our direction favoring our ability to gain market share because of our much higher percentage of such services and of -- and the collection that we have created here that we've put together of high-growth digital services. I think in terms of the Delta, as I said, we're not seeing any direct effect to date. Obviously, you have to put out a cautionary. It doesn't look like businesses are going to want to shut down. Looks like there'd be, obviously, office, commercial, school; lots of impact in those areas; the question is whether or not it's going to impact commerce in the same way that it did last March, April, and May. I think that's unlikely. I think there could be some effects. The government, again, has consistently stepped in, if there's anything serious, to put money in peoples' pockets. But I don't see that we're headed for that kind of that economic slowdown. And as I said, I think that may not be as true in some of the other countries, but our revenue is really 80% to 85% in the U.S. at this point. And that also goes to the third question is, when it comes to M&A, obviously, we're planning to get our leverage down to about three times, that's where we want to operate, as we have additional cash flow, we will look at appropriate M&A. And there are two areas broadening out the global marketplace, which we need to get larger contracts. Right now, we've started the affiliate program of step one to do that. There'll be certain limited acquisitions in that area. And of course, you have to stay current on new and emerging digital marketplaces and services. And it's quite important for a marketing service company to continue to invest. And we're going to continue to invest in our own technology, SaaS products. We continue to invest in companies as a vital part of the growth in the industry. I think it's a vital part of being such a company and being successful.

Thank you.

If there's no more questions from the phone lines, we have a question through the chat. This is for Mark. You've mentioned how important SaaS products are for Stagwell. Can you give us an update on your overall plan for product development?

Well, I think we've been closed for about a day. So, a little early for an update, but above what I've been saying, which is, we've developed about nine products. We're out in the marketplace with profit, which is a comm tool that enables you to predict how news releases will be covered. We're very strongly in the market with the Harris brand platform, which is really showing very, very fast pick up and adoption, where we're about finishing [queue] [Ph], which is the consumer understanding and engagement platform, which will be used by our agencies to construct target audiences without reliance on cookies. And second, and we're out, we're now getting into the market and qualified, and in qualified, which is an influencer brand platform. So, my plan is to put more structure around this, put additional leadership, have a single sales team, have a group of entrepreneurs here who are pushing and selling the products. So, one of the first things we're going to do now that we're a single company, is go to the next step in terms of organizing that process. We're in market with three or four of the products. We're expecting to put more in markets. We're expecting to put more emphasis on systematizing the development and sales process, so that we realize our plan.

Great. There is one more question from the chat, understanding that the deal just closed, please, can you talk about your plan for integrating the network and incentivizing collaboration?

Yes, I think that we've been working very hard really for the last two and a half years, both within MDC and Stagwell for making collaboration, an important part of the culture. A lot of what we did in creating the networks was by creating the networks and creating cross incentives across groups of companies, a groups of companies that that created an incentive for people to get an incentive for themselves for their company, for their network. And of course, greater emphasis on stock-based compensation to some extent will also create a greater emphasis on looking at the organization as a whole. We have some plans that will be coming out in the coming days, about how we will strengthen the network, what legacy Stagwell into the networks, and how we will be organizing this media team, which will now have about 5 billion of media that it manages under still have some go-to-market brands, but also been under coherent leadership that I think can really take that forward. So, we'll be announcing those plans I think. You can expect announcements shortly.

Great. I think that's all the questions that we have from the chat. Operator, you can conclude the call.

We're going to finish. So, is that going to wrap up?

We'll turn it back to Mark for some closing comments.

I just want to thank you for coming to the call. I'm sorry that this is the last time that we'll give you a jigsaw puzzle of all the different areas will have now that we've closed. We'll be one company with one mission transformed marketing. We're going to do that with market leading growth for a full service, creative and technology-based company. At the same time, we expect to provide strong margins. We hope that will provide for investor's strong returns, increased liquidity, and that we will get on the marketplace full value for these incredible assets and this incredible company going forward. We look forward to keep you updated as we follow our progress. Starting with an investor introduction event slated for September 20th, at our One World Trade Center Campus followed by hosting one-on-one meetings at Goldman Sachs Communacopia Conference during the week. For more information or to receive our weekly investor newsletter, please reach out to IR at stagwellglobal.com. Thank you, and have a great day.