Good morning from Stagwell’s global headquarters in One World Trade Center, New York, and welcome to Stagwell Inc.’s earnings webcast for the Second Quarter of 2024. My name is Ben Allanson, and I lead the Investor Relations function here at Stagwell. With me today are Mark Penn, Stagwell’s Chairman and Chief Executive Officer; and Frank Lanuto, the Chief Financial Officer. Mark will provide a business update, and Frank will share a financial review. After the prepared remarks, we will open the floor for Q&A. You are welcome to submit questions through the chat function. Before we begin, I’d like to remind you that the following remarks include forward-looking statements and non-GAAP financial data. Forward-looking statements about the company, including those related to earnings guidance are subject to uncertainties and risk factors addressed in our earnings release, slide presentation and the company’s SEC filings. Please refer to our website, stagwellglobal.com/investors for an investor presentation and additional resources. This morning’s press release and slide deck provide definitions, explanations and reconciliations of non-GAAP financial data. And with that, I’d like to turn the call over to our Chairman and CEO, Mark Penn.

Thank you, Ben. Thank you to everyone joining us for our earnings call. The state of the Stagwell business is strong and getting stronger. We’re on the verge of renewed growth spurt as new business is climbing, client pullbacks seem over and the political season is heating up. The results for first half of this year puts us in solid shape to make or exceed guidance for the year as multiple sizable wins occurred late in the second quarter and in the first month of the third quarter that significantly strengthened our position for H2. Importantly, the industry and its consultants and gatekeepers are now beginning to view Stagwell differently. They see us increasingly as a full on competitor to the majors, and we are receiving far more opportunities that are in the $10 million-plus range. Last year, by this time, we had one. This year, we’ve had 11 of them. We are also very much a tech company’s tech company, and our client roster includes the biggest names and technology collaborating with us on how they can integrate AI into their consumer experiences. The result is a record smashing $113 million of net new business this quarter and LTM net new business of $324 million, significantly ahead of expectations. The win of both Chevy and Cadillac from General Motors for Creative was the largest single win in the company’s history. But the major wins have continued into Q3 with about another $50 million of wins, including Ferrero and Anomaly as well as with a significant global provider, hopefully, to be announced soon. These wins will come essentially at the midyear and will start to be reflected in the third quarter coming on top of what we have seen in Q2. In addition to GM, we’ve had major wins in…

Thank you, Mark. Good morning, everyone, and thank you for joining us to discuss our second quarter results. As a reminder, if you would like to ask a question after prepared remarks conclude, please feel free to submit them through the chat function. Led by record-breaking net new business and robust growth in our creativity and communications, Advocacy and Performance Media & Data capabilities, Stagwell delivered solid second quarter financial results. For the quarter, we reported revenue of $671 million, an increase of 6% as compared to the same period in the prior year. Net revenue, excluding pass-through costs, increased 2% for the same period to $554 million. We generated record net new business of $113 million in the quarter, approximately 31% higher than the previous high for the prior 11 quarters since our merger. This brings our trailing 12-month net new business total to $324 million, another record and the sixth consecutive such quarterly increase. This was driven by a strong new business pipeline of increasingly larger global pitches. The average size of our wins increased 65% year-over-year, driven by a 57% increase in business deals above $1 million, a positive indicator that our offering is resonating strongly in the marketplace. Turning to revenue by capability. For the second consecutive quarter, revenue grew in four of our five principal capabilities. Performance Media & Data delivered $78 million in revenue, an increase of 5% over the prior year period. The growth was driven by continued strength in the consumer products and financial sectors and was further supported by a recent return to growth in technology over the past couple of quarters. Creativity and Communications delivered $317 million of revenue, an increase of 9% over the prior year period, driven by our Advocacy business, which grew 42% year-over-year to $72 million.…

Thank you, Frank. Just a reminder, if you have any questions, please do submit them via the chat button at the top of the screen. We’re going to start with a question here from Jason Kreyer at Craig-Hallum. Can you talk a little bit about the changes in trends for new business wins? You’ve landed a record deal with 72 and Anomaly, saw a big uptick in larger wins this quarter. What do you think is driving Stagwell success in some of these larger engagements?

I think overall, Stagwell is really being recognized now as the challenger holding company. I think we have established our image and brand. We held a recent meeting with search consultants, and they gave us the feedback that we’re -- we’ve put together just this incredible combination of talent and technology that really has a growing place in the marketplace. And I think that as we kind of roll out here over time, the word is spreading and what we’re really finding is more and more consultants and brands are coming to us and giving us larger and larger opportunities. That is the whole strategy of Stagwell as the challenger holding company, and as we scale up into more countries and more capabilities.

Right. I think just following on from the question about new business wins, Barton Crockett at Rosenblatt, just asks, when do you see some of these big wins positively impacting the revenue trajectory? And how do you feel about some of the pipeline to more into potentially in the second half of the year?

Sure. Many of these wins came just at the end of the quarter. In fact, the GM one, I think, was like June 26th or so. And so these will come into play in Q3. We expect that these wins are really all online in Q3. And as I said, we had another significant raft of wins that probably won’t come online this month but will really start to come online next -- by next month. But we’re seeing now that the clients took a long time to make decisions. But once they make the decision, they want to get going.

Turning to Advocacy, and the question from Mike Ng at Goldman. With regards to political ad spending and targeted victory fundraising, could you maybe talk a little bit about whether we’ve seen some increased activity in the last month or so, given obviously some changes in the dynamic in the race?

Yes. So we’ve seen 20% to 30% increases in the last month or so. Voters really thought the presidential race was over. They were pulling back. And now with the changes that happened on the Democratic side, voters have reengaged. As you can see in the polling, it’s a competitive race. And of course, when it’s a highly competitive race, it could go either way, spending, spending as I always say, go somewhat to Infinity. And so I think you’re seeing increasing engagement and expenditures on all sides.

Perfect. Digital transformation, can we talk a little bit about some of the trends we’re seeing in DT, maybe project spend? Obviously, been a little bit of a challenge at some points here today. But what’s kind of giving us confidence maybe in the back part of the year seeing the acceleration there?

I think that we’re seeing some of our kind of most advanced properties and designers already helping tech companies figure out how consumers should interact with AI. Look, the big expenditures in technology is obviously AI. And I think all of the tech companies and the brands are experimenting with what the best way for that technology to be deployed. So we feel that, that’s going to really kick off years and years of enhanced digital transformation work. It’s not here yet. It’s beginning to trickle in, beginning to get some significant assignments. We’ve got a $7.5 million assignment just in the last month about how best to have AI interactive with consumers from big tech companies. And we -- I think that a certain point here, I don’t know whether it’d be Q3 or by Q1 of next year, I expect the floodgates to open on digital transformation capacity.

Great. Maybe just playing with that a little bit. Cameron McVeigh, Morgan Stanley, just a quick question here on tech clients. What are kind of maybe some of the things we’re hearing from them about spending tensions in the second half of the year?

I think the competition for AI is on. I think that unlike one company that has social and another company that has work productivity software and another company another – you are seeing real all-on competition here for both cloud services and AI services. And that means tech companies are going to be spending really significantly to try to get competitive advantage here to really stake out their place in the marketplace.

Just flipping a little bit to the Stagwell Marketing Cloud. A question from Mark Zgutowicz of Benchmark. He asks, what’s your most promising SaaS or DaaS revenue opportunity you think over the next 12 months? And can we quantify this?

Well, look, I think immediately you’re seeing our text messaging platform being used both by Advocacy and brands, right, as taking off. And I think that, again, oftentimes, there are little things that people don’t see that as you’ve seen in some of the sales and others that really have significant hidden value. I think we are spending a lot of immediate time on the research components. We just bought, actually, at an auction great technology that comes with about $9 million of revenue that we picked up for less than $1 million. But we believe that the most promising area here right now is the rollout of the research products. We’ve got about 130 large corporate clients, the Harris brand terminal. We’re adding do-it-yourself research. We’re adding AI-based analysis to it, and we’re rolling out those products. But again, we’ve also just bought leaders, which comes with, again, another significant raft of new business and another influencer platform. And I think we’re really beginning then secondarily to get all of our communications products together. But I think the emphasis right now that I have for the next few months is getting the research products fully out the door, I think that has the most immediate promise.

Another question, this time from an investor. And this is just talking about the second half of the year and the implied inflection in the business of the acceleration in organic growth in the second half of the year. The question really is what gives us that confidence in that inflection in organic revenue growth and that acceleration in the second half? What are some of those key drivers?

Well, look, I think there are three key drivers. Number one, as I think I’ve emphasized in the call, we have had a flood of business wins at the end of the second quarter, highlighted by the first time by wins that include tens of millions of dollars at the same time on a multiple basis. Second, a lot of media and media margin is loaded in the back end. And third, a lot of the political season is loaded in the back end. So I think those three developments, I think give us confidence to reaffirm our guidance and kind of move forward with what I think are going to be a really good next two quarters based on those three fundamental factors.

I think the last question here and just a quick one on SPORT BEACH and the successes of the event. The question is from Jeff Van Sinderen at B. Riley. ‘What are you likely to emphasize at SPORT BEACH if you are going to do it in 2025? And, effectively, what are some of the inputs into potentially increasing investment, changing investment in that event [Indiscernible]?

We are going to do a full review of how to move forward with what has been created in SPORT BEACH. It lives almost as a unique brand within our brand now, that brings together sports and brands and technology and creativity. And I think it may live beyond just Cannes in a way and take on a life of its own. So stay tuned as we carefully look at how we develop it. Again, as I always say, the old joke about a shoemaker has no shoes, but instead we are a shoemaker with shoes. I think that SPORT BEACH has been proof that when our companies work together, they can produce some amazing marketing. And I think that it was not just an experience for clients, it was an experience that clients could take away and say, Wow, this is the kind of company I want working for our brands.

Awesome. Well, that brings us to the end of our second quarter earnings call 2024. Thank you very much for joining us. We will look forward to talking with you again later on in the year. Have a good one.

Thank you.