Q3 2023 Stagwell Inc Earnings Call

Speaker 1: in Miami, Florida. And welcome to StagWell Inc's earnings webcast for Q3 2023.

Welcome to stag well Inc's earnings webcast, the Q3 2023.

Speaker 1: My name is Ben Allison and I lead the investor relations function here at StagWell.

My name is Ben Alison and I lead the Investor relations function here at stag well.

Speaker 1: With me today are Mark Penn, Stagwell's Chairman and Chief Executive Officer, and Frank Lenuto, the Chief Financial Officer.

With me today are Mark Penn Steigerwalt, Chairman, and Chief Executive Officer, and Franklin Neuter, the Chief Financial Officer.

Speaker 1: Mark will provide a business update and Frank will share a financial review.

Mark will provide a business update and Frank will share our financial review.

Speaker 1: After the prepared remarks, we will open the floor for Q&A. You are welcome to submit questions.

After the prepared remarks, we will open the floor for Q&A.

You are welcome to submit questions through the chat function.

Speaker 1: Before we begin, I'd like to remind you that the following remarks include forward looking statements and non-GAAP financial data.

Before we begin I'd like to remind you that the following remarks include forward looking statements and non-GAAP financial data.

Speaker 1: forward-looking statements about the company, including those related to earnings guidance.

Forward looking statements about the company, including those related to earnings guidance.

Speaker 1: are subject to uncertainties and risk factors addressed in our earnings release, slide presentation and the company's SEC filing.

Subject to uncertainties and risk factors addressed in our earnings release slide presentation, and the Companys SEC filings.

Speaker 1: Please refer to our website, stagwellglobal.com forward slash investor for an investor presentation and additional resources.

Please refer to our website stag world Global Dot Com forward slash investor for an investor presentation and additional resources.

Speaker 1: This morning's press release and slide deck provide definitions, explanations and recommendations of non- GAAP financial dates.

This morning's press release and slide deck provide definitions explanations and reconciliations of non-GAAP financial data.

Speaker 1: And with that, I'd like to turn the call over to our chairman and CEO , Mark.

And with that I'd like to turn the call over to our chairman and CEO Mark <unk>.

Yeah.

Speaker 2: Thank you, man, and thank you to everyone joining us for our earnings call.

Thank you ma'am and thank to thank you everyone joining us for our earnings call.

Speaker 2: Our company is emerging from a more challenging economic environment this year, stronger and more nimble than ever.

Our company is emerging from a more challenging economic environment, this year stronger and more nimble than ever.

Speaker 2: and poised to return to growth. This quarter demonstrates that we have our costs under control as we invest in expanding our digital and global footprint.

And poised to return to growth.

This quarter demonstrates that we have our costs under control as we invest in expanding our digital and global footprint.

Speaker 2: 2023, through a number of curve balls at us. Tech companies that engaged in mass-firing and cutbacks, which adversely affected our digital transformation business.

2023 through a number of curve balls of US tech companies that are engaged in a mass borrowings and cutbacks, which adversely affected our digital transformation business a banking crisis that knocked out the first Republic bank of significant clients, a b to be recession as client held back marketing and digital projects, fearing a recession.

Speaker 2: a banking crisis that knocked out the first Republic Bank of significant clients. A B2B recession, as clients held back marketing and digital projects, fearing a recession that was always around the corner.

That was always around the corner.

Speaker 2: Rising interest rates, an auto strike that froze auto marketing, and a writer's strike in Hollywood that downed our entertainment research.

Rising interest rates and auto strike that froze auto marketing and a writer's strike in Hollywood that down to our entertainment research business.

Speaker 2: Throughout this, we stayed on our mission, bringing costs in line, installing central data and information systems, expanding our presence and footprint in the industry, winning new business, and now just about all of those negative factors are in retreat. We've returned to earning over $100 million of either a quarter, even in a low point of the political cycle.

Throughout this we stayed on our mission, bringing cost in line installing central data and information systems.

Spanning our presence and footprint in the industry.

Winning new business and now just about all of those negative factors are in retreat.

Returned to earning over $100 million of EBITDA a quarter, even in a low point of the political cycle.

Speaker 2: As we head into the end of the year, we believe we've reached a key inflection point for our business and we expect to return to modest net growth, excluding advocacy in the fourth quarter and stronger growth in Q1 2024. We've already returned to growth in most areas of the business.

As we head into the end of the year. We believe we've reached a key inflection point for our business and we expect to return to modest net growth excluding advocacy in the fourth quarter and stronger growth in Q1, 'twenty 'twenty four we've already returned to growth in most areas of the business.

Speaker 2: 2024 offers a significant number of tailwinds that allow me to call the bottom.

2024 offers a significant number of tailwind that allow me to call a bottom here first and foremost we will have trimmed our cost to be well positioned to hold and expand our target, 20% plus margin next year.

Speaker 2: First and foremost, we will have trimmed our costs to be well positioned to hold and expand our target 20% plus margin next.

Speaker 2: Tech companies are coming back and starting to spend again. AI offers a whole new class of digital transformation work. We have the engineers to implement.

Tech companies are coming back and starting to spend again.

AI offers a whole class of digital transformation work, we have the engineers to implement <unk>.

Speaker 2: Fear of recession seems to be easy and favor of a soft landing. The political season will be a record one. The strikes are all ending, and digital spending and spending is expected to grow.

Fear of recession seems to be easing in favor of a soft landing the political season will be a record one the strikes or all lending and digital spending AD spending is expected to grow.

Speaker 2: Since our last earnings call, we've made significant progress to manage our costs and to advance our long-term strategy.

Since our last earnings call, we've made significant progress to manage our costs and to advance our long term strategy.

Speaker 2: Cut a further $34 million of annualized costs from the business as we right size our staffing cost structure as we look ahead to 2024. $34 million of annualized costs from the business as we look ahead to 2022.

[noise] cut a further $34 million of annualized cost from our business as we rightsize our staffing cost structure as we look ahead to 2024.

Speaker 2: and announced the Investiture of Concentric Life to Accenture for $245 million in cash.

And announced the divestiture.

Of concentric life to Accenture for $245 million in cash.

Speaker 2: We also accelerated digital services through acquisitions, including left field labs, a cutting edge digital transformation company, leveraging AI and AR.

We also accelerated digital services through acquisitions, including Westfield labs, a cutting edge digital transformation company, leveraging AI and a R.

Speaker 2: create truly innovative digital customer experiences and movers and shakers. A disruptive creative agency were now in for its social and emerging platform capability.

To create truly innovative digital customer experiences and movers and shakers disruptive Creative agency, we're now for social and emerging platform capabilities.

Speaker 2: Turning to our results, Stagwell posted third quarter net revenue of $535 million down 3.8% from the prior year.

Turning to our resolve stag ROE posted third quarter net revenue of $535 million down 3.8% from the prior year.

Speaker 2: We saw continued momentum in performance media and the Stagwell Marketing Cloud with both posting double digit net revenue growth year over year. And we returned to positive net revenue growth in our creativity and communications capability of the score. Strong performance in these businesses was offset by challenges in digital transformation and consumer insights, particularly our entertainment research firm.

We saw continued momentum in performance media and the stag well marketing cloud with both posting double digit net revenue growth year over year.

And we returned to positive net revenue growth and our creativity and communications capability. This quarter strong performance in these businesses was offset by challenges in digital transformation and consumer insights, particularly our entertainment research firm.

Speaker 2: Perhaps most importantly, we continue to deliver strong net new business, capturing more than 81 million dollars in the third quarter, maintaining our strong momentum from the second, our net new business figure of 155 million is a record company company record for back to back quarter.

Perhaps most importantly, we continued to deliver strong net new business, capturing more than $81 million in the third quarter, maintaining our strong momentum from the second our net new business figure of $155 million is a record company company record for back to back quarters.

Speaker 2: Clients leaving us is down to a record low of $7 million. So our client base is expanding, setting us up well for an economic recovery.

Clients, leaving us is down to a record low of $7 million. So our client base is expanding setting us up well for an economic recovery.

Speaker 2: The orientation of our business towards our largest, most impactful relationships continued in the third quarter. Our top 100 customers grew 18% year over year with three customers exceeding $50 million of annual spend in the last 12 months.

The orientation of our business towards our largest most impactful relationships continued in the third quarter. Our top 100 customers grew 18% year over year with three customers exceeding $50 million of annual spend in the last 12 months.

Speaker 2: International also continues to be a real bright spot for our business as net revenue grew overall 25% in the third quarter Organic net revenue from our international business was 15% Led by outside gross of 14% in Asia and 16% in Amia This performance speaks to the benefit of continuing to diversify our business internationally a core tenant of our overall growth strategy

International also continues to be a real bright spot for our business as net revenue grew overall, 25% in the third quarter organic net revenue from our international business was 15% led by outsized growth of 14% in Asia and 16% in EMEA. This performance speaks to.

The benefit of continuing to diversify our business internationally, a core tenant of our overall growth strategy.

Speaker 2: In the last few weeks, we've added to our affiliate network, partnering with Marcus Agency in Vietnam and Colorivia in Brazil, allowing us to expand our reach in these regions. We also, earlier this year, acquired Huskies, an Irish digital agency, and are exploring further acquisitions that will expand our reach in Latin America, Europe , and the Mid-East.

In the last few weeks, we've added to our affiliate network partnering with Marcus Agency in Vietnam, and Korea, and Brazil, allowing us to expand our reach in these regions. We also earlier this year acquired Husky's, an Irish digital agency and are exploring further acquisitions that will expand our reach in Latin America Europe.

And the mid east.

Speaker 2: Our adjusted EBITDA came in at $102 million, a more than $10 million sequential improvement over the second quarter, and representing a margin of 19%.

Our adjusted EBITDA came in at $102 million or more than $10 million sequential improvement over the second quarter and representing a margin of 19% 210 basis point improvement over the second quarter and a 520 basis point improvement. Since Q1. This is a direct result of the actions we've taken to <unk>.

Speaker 2: 210 basis point improvement over the second quarter, and a 520 basis point improvement since Q1. This is a direct result of the actions we have taken to right-size our staffing levels.

Our staffing levels steps that have led to an $82 million annualized reduction in staffing costs, our staff costs as a percentage of net revenue currently stand at 63, 4% a 360.

Speaker 2: steps that have led to an $82 million annualized reduction in staffing costs.

Speaker 2: Our staff costs as a percentage of net revenue currently stand at 63.4% of 360 basis point improvement since the end of the first.

360 basis point improvement since the end of the first quarter.

Speaker 2: As we've trimmed our costs, we have continued to invest in key growth areas.

As we've trimmed our costs, we have continued to invest in key growth areas.

Speaker 2: The Stagwell Marketing Cloud is one such area. And our EBITDA would be higher if not for the $8 million OPEX investment we made in the area during the quarter. We posted $0.18 of adjusted earnings per share during the quarter, a 13% improvement sequence.

The skywalk marketing cloud is one such area and our EBITDA would be higher if not for the $8 million Opex investments, we made in the area during the quarter, we posted 18 cents of adjusted.

Earnings per share during the quarter of 13 improved percent improvement sequentially.

Speaker 2: Stadwell now expects to generate $390 million to $410 million of adjusted EBITDA in 2026.

Stag well now expects to generate 390 million to $410 million of adjusted EBITDA. In 2023. This should translate into about 73 to 78 of adjusted EPS. We expect overall organic net revenue growth to be about negative 4%.

Speaker 2: This should translate into about 73 to 78 cents of adjusted ETF.

Speaker 2: We expect overall organic net revenue growth to be about negative 4% excluding advocacy. Organic net revenue growth is expected to be about negative two and a half.

Excluding advocacy organic net revenue growth is expected to be about negative 2.5%.

Speaker 2: Given the litany of events occurring this year this temporary retrenchment is a testament to the resilience of the business and its ability to meet its long term growth target.

Given the litany of events occurring this year. This temporary retrenchment is a testament to the resilience of the business and its ability to meet its long term growth targets.

Speaker 2: Our agencies continue to be recognized for their market transforming work.

Our agencies continue to be recognized for their market transforming work.

Speaker 2: Just last month, Cole McVoy was recognized as the mid-sized agency of the year, and Gale, our business consultancy, crowned the number one fastest-growing large agency boast by AdWords.

Just last month cum before it was recognized as the midsized agency of the year and Gail our business consultancy Crown the number one fastest growing large agency both by Adweek.

Speaker 2: Additionally, Code & Theory, our leading digital transformation agency, won a highly coveted Fast Company Innovation by Design Award for its brand and technical work for Yeti.

Additionally code in theory, our leading digital transformation agency won a highly coveted fast company innovation by design award for its brand and technical work for Yeti.

Speaker 2: If 2023 has been a year of efficiency for the tech companies, we believe that 2024 will be a year of competition for them. The last few years have seen the biggest tech companies move from their previously defined areas of strength to compete directly against each other in areas like the cloud enterprise, productivity products, hardware, and AI, which has brought another area of competition, which these companies will have to address.

If 2023 has been a year of efficiency for the tech companies. We believe the 'twenty 'twenty four will be here a competition for them. The last few years have seen the biggest tech companies move from their previously defined areas of strength to compete directly against each other in areas like the like the cloud enterprise productivity products.

Hardware and AI, which has brought another area of competition, which these companies will have to address.

Speaker 2: We believe this will lead to a significant increase in digital transformation spending.

We believe this will lead to a significant increase in digital transformation spending.

Speaker 2: Our expertise in delivering AI-enabled marketing and enterprise transformation positions us extremely well to capitalize on this long-term tailwind.

Our expertise in delivering an AI enabled marketing and enterprise transformation positions us extremely well to capitalize on this long term tailwind we've already done award winning work with generative AI and audience development at Cogent theory for <unk> a European.

Speaker 2: We've already done award-winning work with generative AI and audience development at Code & Theory for Tipico, a European sports betting giant, and are also helping the publisher Ringier build the newsroom of the future with AI. Additionally, we've recently signed a large office retailer into our enterprise AI solution in the Stagwell Marketing Cloud called the private.

Sports betting giant and are also helping the publisher ring a bell.

Will the newsroom of the future with AI. Additionally, we've recently signed a large office retailer into our enterprise AI solution and the stag oil marketing cloud called the private GPT.

Speaker 2: The strikes in Hollywood which affected our consumer insights and strategy capability dragging it down 9 percent in the third quarter are almost over and we expect this business to return to normal levels by Q4 and next.

The strikes in Hollywood, which affected our consumer insights and strategy capability.

Taking it down 9% in the third quarter are almost over and we expect this business to return to normal levels by Q4 and next year.

Speaker 2: Digital transformation, excluding advocacy, was down 17% in the third quarter, but all signs point to a return to both sequential and year-over-year net revenue growth in the fourth quarter.

Digital transformation, excluding advocacy was down seven 7% in the third quarter, but all signs point to a return to both sequential and year over year net revenue growth in the fourth quarter.

Speaker 2: We continue to examine our portfolio and the best ways to deploy capital.

We continue to examine our portfolio in the best ways to deploy capital.

Speaker 2: Yesterday, we announced the closing of a transaction to sell Concentric Life, a prescription drug marketing agency, to Accenture.

Yesterday, we announced the closing of a transaction to sell concentric life prescription drug marketing agency to Accenture <unk> has an amazing track record of acquiring businesses and driving meaningful improvement in revenue and profitability.

Speaker 2: Stagwell has an amazing track record of acquiring businesses and driving meaningful improvement in revenue and profitability.

Speaker 2: This fact was reflected in the $245 million selling price, which represented a 4 to 5x return on our initial investment in the business.

This fact was reflected in the $245 million selling price, which represented a four to five X return on our initial investment in the business.

Speaker 2: In the transactions we've completed or expect to complete this year

And the transactions, we've completed or expect to complete this year.

Speaker 2: We were replaced by years and all of the divested revenue and EBITDA for a cash outlay of less than a fifth of that sales price, giving us the ability to use the additional capital to accelerate growth over the next few years while prudently managing our balance sheet and deploying targeted share repurchases against the $155 million remaining in our authorized buyback.

We were replaced by year's end all of the divested revenue in EBITDA for a cash outlay of less than a fifth of that sales price, giving us the ability to use the additional capital to accelerate growth over the next few years, while prudently managing our balance sheet and deploying targeted share repurchase.

<unk> against the $155 million remaining in our authorized buyback.

Speaker 2: We've developed not only one of the world's top tech-infused marketing service companies,

We have developed not only one of the world's top tech infused marketing service companies.

Speaker 2: But we have also created a great platform for acquisition and growth of such firms. The double-digit EBITDA ratio of this asset, which no analyst, in my recollection, in over 50 such meetings even asked about, is representative of the value of many of our portfolio companies.

But we have also created a great platform for acquisition and growth of such firms the double digit EBITDA ratio of this asset, which no analysts and by recollection and over 50, such meetings. Even asked about is representative of the value of many of our portfolio companies totaling billions of dollars.

Speaker 2: totaling billions of dollars, which should command an even higher value when brought together at scale, as we do at Staggered.

Which should command, an even higher value when brought together at scale as we do at stack well.

Speaker 2: Our goal is to fine-tune our portfolio by pairing back on non-core assets and investing in AI and global expansion to get to scale in all of our services.

Our goal is to fine tune our portfolio by paring back on non core assets and investing in AI and global expansion to get to scale in all of our services.

Speaker 2: There's one other non-core asset which we're actively exploring divesting at this time which we expect will yield the transaction about half the size of concentric life by the end of the year.

One other noncore asset, which we're actively exploring divesting at this time.

Which we expect will yield the transaction about half the size of concentric life by the end of the year.

Speaker 2: Additionally, on the M&A front, we recently announced the acquisition of left field labs.

Additionally, on the M&A front, we recently announced the acquisition of Westfield Labs, which will form a critical part of our strategy to lead the AI transformation of marketing left field has built a track record of designing experiences and products never imagined before and edge end to end services encompassing strategic.

Speaker 2: which will form a critical part of our strategy to lead the AI transformation of marketing. Leftfield has built a track record of designing experiences and products never imagined before and adds end-to-end services encompassing strategic innovation, user experience design, adept prototyping, and cutting edge technological engineering.

User experience design adept prototyping and cutting edge technological engineering.

Speaker 2: We have also acquired Movers and Shakers, crowned by Adweek, as the world's best agency on TikTok. Movers joins to supercharge our ability to connect brands to culture and resonate with Gen Z and millennial consumers. They boast particular strength in mainstream social and emerging digital platforms, which will be complementary to the Constellation Network.

We have also acquired movers and Shakers crown by Adweek as the worlds Best agency on tick Tock.

Movers joins to supercharge, our ability to connect brands to culture, and resonate with Gen Z and millennial consumers. They both particular strength in mainstream social and emerging digital platforms, which will be complementary to the constellation now.

Speaker 2: Stagwell marketing cloud remains a major investment focus for us. This is the second quarter we've broken out financials for the business.

The stag oil marketing cloud remains a major investment focus for US. This is the second quarter, we've broken out financials for the business.

Speaker 2: unit and the first time that we've reported it as a standalone capability.

And the first time that we've reported it as a standalone capability.

Speaker 2: For the third quarter, the reported SMC revenue growth of 20% year over year with an annualized run rate of just under $200 million.

For the third quarter the reported S. M C revenue growth of 20% year over year with an annualized run rate of just under $200 million. We're staying ahead of the AI transformation of marketing with product innovation and partnerships senior leaders from across our digital shops and creative firms are collaborating.

Speaker 2: We're staying ahead of the AI transformation of marketing with product innovation and partnerships. Senior leaders from across our digital shops and creative firms are collaborating to devise a stag-wheel-level service offering on AI. We'll begin to pitch to clients next year. In the meantime, SMC is forging ahead with AI advance.

To devise a stag ROE level service offering on AI will begin to pitch to clients next year in the meantime, SMC is forging ahead with AI advancements we've added AI powered influencer marketing and media monitoring to profit and launched Harriss Quest and integrated suite.

Speaker 2: We've added AI-powered influencer marketing and media monitoring to profit and launched Harris Quest, an integrated suite of self-service AI enabled research tools for modern markets.

<unk> a self service AI enabled research tools for modern marketers. We also expect to announce shortly a partnership with a major cloud provider.

Speaker 2: We also expect to announce currently a partnership with a major cloud provider.

Speaker 2: that will offer marketing and developing a marketing development boost to our cloud product.

That will offer a marketing and developing a marketing development boost to our cloud products.

Speaker 2: Finally, we continue to explore options to augment our media studio within SMC, including working with or acquiring a DSP as we identify ways to compete for a wide range of large and small clients for programmatic media.

Finally, we continue to explore options to augment our media studio within S. M C, including working with or acquiring a DSP as we identify ways to compete for a wide range of large and small clients for programmatic media.

Speaker 2: As 2023 draws to a close, I wanted to reiterate our confidence that the top line challenges that have pressured our business this year are beginning to abate.

As 2023 draws to a close I wanted to do.

We reiterate our confidence.

But the topline challenges that have pressured our business. This year are beginning to abate.

Speaker 2: We expect to see a return to net revenue growth, excluding advocacy in the fourth quarter, as customers and the technology and media structures begin to resume their activities. And as customers start to refocus on digital transformation.

We expect to see a return to net revenue growth excluding advocacy in the fourth quarter.

As customers in the technology and media sectors begin to resume their activities and as customers start to refocus on digital transformation.

Speaker 2: 2024 promises to be a big year for Spagwell, driven by this spending turnaround among tech customers and on digital transformation, as well as tailwinds from what we expect to be a record-breaking political cycle and continued growth in our marketing cloud product.

24 promises to be a big year for stag world driven by this spending turnaround among tech customers and on digital transformation as well as tailwind from what we expect to be a record breaking political cycle and continued growth in our marketing cloud products.

Speaker 2: As I said last quarter, with growing large company relationships, strong new business momentum, a commitment to managing costs, and investment in leading tech products, Stagwell remains strongly positioned to benefit from the long-term growth in digital marketing and in particular, the next revolution of AI-based digital transformation in the space.

As I said last quarter with growing large company relationships strong new business momentum our commitment to managing costs and investment in leading tech products Stag will remains strongly positioned to benefit from the long term growth and digital marketing and in particular, the next revolution of AI based digital transformation.

<unk> in the space.

Speaker 2: Now I'd like to hand it over to Frank Lannuto, our chief financial officer, to walk you through some of our financial results in more detail.

Now I'd like to hand, it over to Frank Menudo, Our Chief Financial Officer to walk you through some of our financial results in more detail.

Speaker 3: Thank you, Mark. Good morning, everyone. And thank you for joining us to discuss our third quarter results. As a reminder, if you would like to ask a question after the prepared remarks conclude, please feel free to submit them through the chat.

Thank you Mark good morning, everyone and thank you for joining us to discuss our third quarter results. As a reminder, if you would like to ask a question. After our prepared remarks conclude please feel free to submit them through the chat function.

Speaker 3: In Q3, we continue to make progress improving our operating performance across the disk.

In Q3, we continued to make progress improving our operating performance across the business.

Speaker 3: Revenues was stronger in international markets as well as our media and data and creative and communications capabilities, which returned to growth despite the ongoing headwinds in the US, our largest market.

Revenues were stronger in international markets, as well as our media and data and creative and communications capabilities, which returned to growth. Despite the ongoing headwinds in the U S. Our largest market.

Speaker 3: We also continue to improve operating efficiency and margins with further cost savings and compensation, real estate and the consolidation of back office operations.

We also continued to improve operating efficiency and margins with further cost savings and compensation real estate and a consolidation of back office operations. As a result reported revenue for Q3 was $618 million decline of 7% as compared to the same period.

Speaker 3: As a result, reported revenue for Q3 was $680 million, the client of 7% as compared to the same period in the prior year.

<unk> in the prior year.

Speaker 3: Net revenue, excluding pass-through costs, declined 3.8% the year over the year to 535.

Net revenue excluding pass through costs declined 3.8% year over year to 535 million.

Speaker 3: Organic net revenue declined 6.8%. Excluding advocacy, organic net revenue declined 4.6% for the peer.

Organic net revenue declined six 8%.

Excluding advocacy organic net revenue declined four 6% for the period.

Speaker 3: Breaking down that revenue by geography, we continue to see strong performance in our international markets.

Breaking down net revenue by geography, we continued to see strong performance in our international markets overall organic net revenue increased 15% internationally led.

Speaker 3: Overall, organic net revenue increased 15% internationally, led by Amir, which increased 16% and followed closely by APAC, which proved 14%.

Led by EMEA, which increased 16% and followed closely by APAC, which grew 14%.

Speaker 3: In the US, where macroeconomic headwinds, tech company restructurings, and labor strikes, in the entertainment and auto industries persisted, organic net revenue declined 9.9%.

In the U S, where macroeconomic headwinds Tech company restructurings and labor strikes and the entertainment and auto industries persisted.

<unk> net revenue declined nine 9%.

Speaker 3: Despite macro conditions, many of our largest customers continue to demonstrate resilience.

Despite macro conditions many of our largest customers continue to demonstrate resilience.

Speaker 3: In the third quarter, our top 100 customers representing approximately 48% of net revenue grew 18% year over year.

In the third quarter, our top 100 customers, representing approximately 48% of net revenue grew 18% year over year.

Speaker 3: Although budgets have been compressed to a greater extent by smaller clients.

Although budgets had been compressed to a greater extent by smaller clients. Many of our larger clients have continued to invest in marketing spend supported by the strength of the U S consumer.

Speaker 3: Many of our large clients have continued to invest in marketing spend supported by the strength of the U.S. consumer.

Speaker 3: Now turning to revenue by capability, we have now expanded our reporting to include the Stagwell Marketing Cloud Group as a new separate capability.

Now turning to revenue by capability, we have now expanded our reporting to include the stag well marketing cloud group as a new separate capability.

Speaker 3: For historical, light-for-light comparability, please reference the historical core metric document on the Stagwell Investor website.

For historical like for like comparability. Please reference the historical core metrics document on the stag well investor website.

Speaker 3: Digital transformation delivered $126 million of net revenue in Q3, a decline of 20% compared to last year.

Digital transformation delivered $126 million of net revenue in Q3, a decline of 20% compared to last year.

Speaker 3: excluding advocacy, which is in an off-election cycle year, the decline was 17%.

Excluding advocacy, which is in an off election cycle here the decline was 17%.

Speaker 3: As I mentioned previously, challenging mech or economic conditions continue to weigh on the capability as customers chose to delay the start of business transformation project.

As I mentioned previously challenging macroeconomic conditions continue to weigh on the capability as customers chose to delay the start of business transformation projects.

Speaker 3: From an industry perspective, financials, healthcare, and technology experience the principle reductions in budget.

From an industry perspective financials health care and technology experienced the principal reductions in budgets.

Speaker 3: Financials were impacted by the banking turmoil earlier in the year. Well, the healthcare decline was largely driven by the laughing of the end of the pandemic, which saw some customers in the medical testing and diagnostic space pull back.

Financials were impacted by the banking turmoil earlier in the year, while the health care decline was largely driven by the lapping of the end of the pandemic, which saw some customers in the medical testing and diagnostics space pullback.

Speaker 3: Consumer insights and strategy reported $46 million in that revenue, a decline of 9% year-over-year.

Consumer insights and strategy reported $46 million in net revenue a decline of 9% year over year.

Speaker 3: Much of the weakness was attributable to the lingering effects of the writer and actor strikes in the second and third quarter.

Each of the weakness was attributable to the lingering effects of the writer and active strikes in the second and third quarters.

Speaker 3: excluding the temporary impact on our entertainment research business, our consumer insights business grew 4%.

Excluding the temporary impact on our entertainment research business, our consumer insights business grew 4%.

Speaker 3: Performance media and data reported $72 million in that revenue an increase of 11% year over year. The strong growth was driven by increased spend in the transportation and travel vertical, which continues to recover from the pandemic.

Performance media and data reported $72 million of net revenue an increase of 11% year over year. The strong growth was driven by increased spend in the transportation and travel vertical which continues to recover from the pandemic.

Speaker 3: Performance media has been a standout performer in 2023, despite a challenging macro environment. Posting positive the year over year growth.

Performance media has been a standout performer in 2023, despite a challenging macro environment.

Posting positive year over year growth each quarter.

Speaker 3: Creativity and communications delivered $244 million in that revenue in the third quarter, a year-over-year increase of 1 million.

Creativity and communications delivered $244 million in net revenue in the third quarter.

Our year over year increase of $1 million.

Speaker 3: excluding advocacy, net revenue increased $6 million or 3%.

Excluding advocacy net revenue increased $6 million or 3%.

Speaker 3: This marks a return to positive growth for the capability and continues a trend of sequential improvement throughout 2023.

This marks a return to positive growth for the capability and continues the trend of sequential improvement throughout 2023.

Speaker 3: Stagraw Marketing Club, who delivered more than $47 million in net revenue in the third quarter, representing a 20% increase over the prior comparable period.

Stag oil marketing cloud.

Delivered more than $47 billion in net revenue in the third quarter, representing a 20% increase over the prior comparable period.

Speaker 3: 36 million of this net revenue came from our advanced media platforms group and approximately 11 million was derived from our software platform product.

36 million of this net revenue came from our advanced media platforms group and.

And approximately 11 million was derived from our software platform products.

Speaker 3: In the third quarter, we ramped up our investment spending in the Stagwell Marketing Cloud by $6.4 million over the prior period.

In the third quarter, we ramped up our investment spending in the stag ROE marketing cloud by $6 $4 million over the prior year period.

Speaker 3: as we drive to deliver the suite of self-service products to our clients, enabling them to perform a host of marketing communication activities in-house. Now moving to it.

As we drive to deliver a suite of self service products to our clients, enabling them to perform a host of marketing communication activities in house.

Now moving to its operating expenses and profitability.

Speaker 3: We have continued to take decisive action to manage costs. As the pressures we have previously discussed persist.

We have continued to take decisive action to manage costs as the pressures we have previously discussed persistent.

Speaker 3: Our actions have enabled us to drive our Q3 adjusted EBITDA margins to approximately 19%. Back in line with our targeted range of 19-20.

Our actions have enabled us to drive our Q3, adjusted EBITDA margins to approximately 19%.

In line with our targeted range of 19% to 20%.

Speaker 3: I wanted to take a moment to discuss the more impactful items.

I wanted to take a moment to discuss the more impactful items here.

Speaker 3: Staffing, our greatest single cost was the primary focus of RF.

Staffing our greatest single cost was the primary focus of our effort.

Speaker 3: Beginning in Q1, we took steps to reduce our staffing cost as a percentage of net revenue.

Beginning in Q1, we took steps to reduce our staffing costs as a percentage of net revenue.

Speaker 3: We have now successfully reduced the staff cross ratio to 63.4% from 67% at the end of the first quarter and improvement of 360 days.

We have now successfully reduced the staff cost ratio to 63, 4% from 67% at the end of the first quarter, an improvement of 360 basis points.

Speaker 3: As previously announced, we took action to eliminate $48 million of annualized staffing costs in the first half of the year.

As previously announced we took action to eliminate $48 million of annualized staffing costs in the first half of the year.

Speaker 3: Since July , we have taken further actions, amounting to an additional 34 million of annualized savings.

Since July we have taken further actions amounting to an additional $34 million of annualized savings.

Speaker 3: Bringing our total annualized cost savings to $82 million.

Bringing our total annualized cost savings to $82 million.

Speaker 3: Our head count is now about 7% lower than at the beginning of the year.

Our head count is now about 7% lower than at the beginning of the year.

Speaker 3: We will continue to monitor our staffing levels to ensure a strong finish to 23.

We will continue to monitor our staffing levels to ensure a strong finish to 'twenty three.

Speaker 3: We continue to make good progress towards realizing the $30 million of annualized cost savings from synergies announced at the time of the merger.

We continue to make good progress towards realizing the $30 million of annualized cost savings from synergies announced at the time of the merger.

Speaker 3: With the implementation of our global ERP and HR systems nearly complete, in Q3 we began to consolidate our agency's finance organizations to our shared services platform.

With the implementation of our global ERP and HR systems nearly complete in Q3, we began to consolidate our agencies finance organizations to our shared services platform.

Speaker 3: Based on actions taken thus far, more than $1 million of annualized savings is anticipated.

Based on actions taken thus far more than $1 million of annualized savings as anticipated.

Speaker 3: We expect to continue implementing this consolidation across our remaining brands leading to further cross-safe.

We expect to continue implementing this consolidation across our remaining brands leading to further cost savings.

Speaker 3: As part of our plans consolidate our real estate footprint to reduce costs and increase collaboration, we have realized more than $2.5 million of annualized savings this year to date, led by consolidation efforts in both London and New York.

As part of our plan to consolidate our real estate footprint to reduce cost and increase collaboration we have realized more than $2 $5 million of annualized savings this year to date <unk>.

Led by consolidation efforts in both London, and New York.

Speaker 3: As a result, we delivered $102 million of adjusted EBITDA in the quarter, representing a 19th percent adjusted EBITDA to net revenue margin, and paving the way to restoring our adjusted EBITDA margin, 19 to 20 percent in line with our previous comment.

As a result, we delivered a $102 million of adjusted EBITDA in the quarter, representing a 19% adjusted EBITDA to net revenue margin.

The way to restoring our adjusted EBITDA margin.

19, 2% in line with our previous comments.

Speaker 3: Has I previously noted, despite the tough macro environment, we have increased spending in the cloud by $6.4 million a year over year.

As I previously noted despite the tough macro environment, we have increased spending in the cloud by $6 $4 million year over year.

Speaker 3: Adjusting for the strategic investment our adjusted even a margin would have increased by an additional hundred forty basis points to 20 point four percent

Adjusting for this strategic investment our adjusted EBITDA margin would have increased by an additional 140 basis points to 24%.

Speaker 3: Now moving to the balance sheet, we continue to take actions to improve the strength of the long-term financial position.

Now moving to the balance sheet, we continue to take actions to improve the strength of the long term financial position.

Speaker 3: Starting with the third acquisition consideration, we reduced obligations by approximately $28 million from the R&D to $134 million at the end of Q3.

Starting with deferred acquisition consideration, we reduced obligations by approximately $28 million from year end to $134 million at the end of Q3.

Speaker 3: We expect to further reduce back by $32 million in Q4.

We expect to further reduce that by $32 million in Q4.

Speaker 3: Excluding the impact of our recently announced left-field labs acquisition, the year end DAC balance would be below $100 million as we previously communicate.

Excluding the impact of our recently announced Leftfield labs acquisition, the year end debt balance would be below $100 million as we previously communicated.

Speaker 3: We also acquired 586,000 shares during the quarter at an average price of $4.72 per share for approximately $2.8 million.

We also acquired 586000 shares during the quarter at an average price of $4 72 per share for approximately $2 $8 million.

Speaker 3: This brings our total buyback activity to date, inclusive of the Out-Invest Transaction, announced on our first quarter call to approximately $193 million, representing 30 million shares at an average price of $6.42.

This brings our total buyback activity to date inclusive of the <unk> transaction announced on our first quarter call to approximately $193 million, representing 30 million shares at an average price of $6 42 sets.

Speaker 3: Our existing buyback authorization still has approximately $155 million in the remaining availability.

Our existing buyback authorization still has approximately $155 million and the remaining availability.

Speaker 3: Catex for a quarter was $8 million in line with our state of target of 1 to 1.5% of net.

Capex for the quarter was $8 million in line with our stated target of one to one 5% of net revenue.

Speaker 3: As a result, we ended the quarter with cash of $99 million and drawings under our revolver of 412 million. Our leverage was 3.64 times as of the quarter end, largely driven by the increase in the revolver balance used to finance our share repurchase from Alpinvest earlier this year.

As a result, we ended the quarter with cash of $99 million and drawings under our revolver of $412 million.

Our leverage was 3.64 times as of quarter end.

Largely driven by the increase in the revolver balanced used to finance our share repurchase from ALP invest earlier this year.

Speaker 3: The concentric life disposition discussed by Mark earlier will have an immediate, favorable impact on leverage and will bolster the seasonal fourth quarter positive cash trends of our business.

The concentric life disposition discussed by Mark earlier will have an immediate favorable impact on leverage and will bolster the seasonal fourth quarter positive cash trends of our business.

Speaker 3: Importantly, it will help us to significantly reduce our year-end net debt position to help us achieve our stated goal of reducing net leverage down to two times over the medium term.

Importantly, it will help us to significantly reduce our yearend net debt position to help us achieve our stated goal of reducing net leverage down to two times over the medium term.

Speaker 3: It will also support our ability to pursue strategic acquisitions and investments in line with our growth strategy.

It will also support our ability to pursue strategic acquisitions and investments in line with our growth strategy.

Speaker 3: Finally, moving to guidance and light of prevailing conditions, we are revising our full-year guidance.

And finally moving to guidance in light of prevailing conditions, we are revising our full year guidance as follows.

Speaker 3: Organic net revenue is now expected to decline about 4% for the full year.

Organic net revenue is now expected to decline about 4% for the full year.

Speaker 3: Organic net revenue excluding advocacy is now expected to decline about 2.5% for the full year.

Organic net revenue excluding advocacy is now expected to decline about 2.5% for the full year.

Speaker 3: Adjusted EBITDA is expected to be between $390, $410 million.

Adjusted EBITDA is expected to be between 390 and $410 million.

Speaker 3: And we expect to deliver 40% to 50% free cash flow conversion.

And we expect to deliver 40% to 50% free cash flow conversion.

Speaker 3: And finally, adjusted earnings for share is expected to be between 73 cents and 78.

And finally adjusted earnings per share is expected to be between 73 cents.

78.

Speaker 3: That concludes our prepared remarks for this morning. I will now turn to call back over to Ben Allenson to open the Q&A portion of the call.

That concludes our prepared remarks for this morning.

I will now turn the call back over to Ben Atkinson to open the Q&A portion of the call.

Thank you.

Speaker 1: Thank you, Frank. 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 couple of questions looking ahead. We're going to start off with a question from Jason Cryer at Craig Hallam. What gives you confidence that digital transformation will be bound in the four quarters?

Thank you Frank if you have any questions. Please submit them via the chat button at the top of the screen, we're going to start with a couple of questions. Looking looking ahead, we're going to start off with a question from Jason Cry at Craig Hallum.

What gives you confidence that digital transformation will rebound in the fourth quarter and into 2020.

Speaker 2: We've been looking very carefully at those couple of big companies that declared a year of efficiency. What we're seeing now is that they're re-issuing for the first time pitches, contracts. And so we're seeing those come in now and landing on the desk of our digital transformation agent.

We've been looking very carefully at those couple of big companies that that.

Declared a year of efficiency and what we're seeing now is that they're reissuing for the first time pitches contracts.

And so we're seeing those come in now and landing on the desk of our trim digital transformation agencies, plus a lot of them have been holding back while they plan for what kind of AI products that theyre going to produce for consumers and we see that as kind of a next wave coming in next year, but our confidence is primarily based.

Speaker 2: Plus, a lot of them have been holding back while they plan for what kind of AI products that they're gonna produce for consumers. And we see that as kind of a next wave coming in next year. But our confidence is primarily based on the checks of what are the RFPs that are coming in and where they're from.

On the on the checks of what are the Rfps that are coming in and where they are from.

Speaker 1: Perhaps just following up on that and a question from Mark's got to it's bench Mark about tech investments and rebounds from tech customers. What are some of those finds that we're seeing it gives us confidence?

Perhaps just following up on a question from Mark should go to what chip benchmark.

Our tech investments rebounds from tech customers what are some of those signs that we're seeing that gives us confidence in that again I think you saw the tech companies, having gone through the year of efficiency produce pretty strong earnings you'll see as I said before I think they're going to have to compete now much more in the cloud and in AI.

Speaker 2: Again, I think you saw the tech companies having gone through the year of efficiency produce pretty strong earnings. You see, as I said before, I think they're gonna have to compete now, much more in the cloud and in AI products because no one owns those.

Products because no one owns those lanes.

Speaker 2: And again, I think thirdly, some of the companies that adopted as a strategy of pullback and cuts now has the new employees back in place, now have reoriented their mission. And now, you know, we saw one company that cut back from 24, 25 million to almost zero, and we see the RFP's flowing again, you know, really as of this month.

And again I think thirdly, some of the companies that adopted as a strategy a pullback in cuts now has the new employees back in place now have reoriented their mission and now you know we saw one company that cut back from $24 $25 million to almost zero and we see the rfp's flowing again.

You know really as of this month.

Speaker 1: Sort of just continuing on kind of the look forward a little bit. Steve K. Hill from Wells Fargo. Can you talk about the trends in creative and how you're managing through?

Okay.

It sort of just continuing on kind of the look forward a little bit Steve Cahall from Wells Fargo can you talk about the trends and created and how youre managing through some of that.

Speaker 2: Sure. Look, I think, you know, interestingly creative in some senses coming back, people are more interested than ever in the Super Bowl, and in great creative expression.

Sure.

Look I I, I think interestingly creative and some census coming back people.

Or are more interested than ever in the Super Bowl and in great creative expression.

Speaker 2: I think what you saw with our, with our purchase of movers and shakers is that we're also cognizant that people want more and more online creativity across social media and that a lot of cost effective marketing is there and that's where we're really bolstering. You know, particularly TikTok would be the fastest growing advertising medium around.

What you saw with our with our purchase of movers and Shakers is that were also cognizant that people want more and more online creativity across social media and that a lot of cost effective marketing is there and that's where we're really bolstering, particularly tictoc would be the fastest growing advertising medium.

Okay.

Speaker 1: Obviously some strong net new business trends in the quarter and actually over the course of the last 12 months. Ben Swimburn over at Morgan Stanley 's Disask. Can you talk about the pace at which you expect some of that net new business to translate?

Obviously, some strong net new business trends in the quarter and actually over the course of the last 12 months.

Ben Swinburne.

Morgan Stanley's just ask can you talk about the pace at which you expect some of that net new business to translate into revenues sure I think that people now are getting online with it I certainly see these these contracts that we're winning coming online by the beginning of the year for sure. Some of them will start in this quarter, which gives us some.

Speaker 2: Sure. I think that the people now are getting online with it. I certainly see

Speaker 2: these contracts that were winning coming online by the beginning of the year for sure. Some of them will start in this quarter, which gives us some enhanced confidence about the quarter of the child. But we do see the last three, four,

Some enhanced confidence about the quarter itself, but we do see the the last three or four months of new business piling up into a strong.

Speaker 2: of new business piling up into a strong next year, which is why I feel as strongly as I do about Q1 2024. Look, these are, when you look at these new business numbers.

Next year, which is why I feel as strongly as I do about Q1 2024 look these are.

When you look at these new business numbers. These are impressed unprecedented scopes of wins on a consistent back to back basis. When you look at some of the areas here that we've returned to growth you look at research minus Entertainment you look at performance media. If you look at creative creativity and communications and <unk>.

Speaker 2: These are unprecedented scopes of winds on a consistent back-to-back base.

Speaker 2: When you look at some of the areas here that we've returned to growth, you look at research from minus entertainment, you look at performance media, you look at creative creativity and communications, and you look on top of that, this kind of new business showing our position on the business.

Look on top of that this kind of new business showing our position on the business add to that digital and add to add to that sorry.

Speaker 2: Add to that digital and add to that, sorry, rather political, and add to that return to really the single area that has been a big drag this year, digital transformation. That's how these things come together.

Sorry, rather political and answer that returned to really the single area. You know there has been that has been a big drag this year digital transformation. That's how these things come together.

Speaker 1: Shifting a little bit to M&A and particularly some questions around the concentric life deal that we announced last week and closed yesterday It was healthily. This is a question from Barton Crockett at Rosenblatt It was healthily accretive and the timing is good given current pressures across your company You say you're looking at other potential divestments can you provide some more color on that?

Shifting a little bit to M&A, and particularly some questions around the concentric life deal that we announced last week and closed yesterday. It was hopefully this is a question from Barton Crockett at Rosenblatt.

It was helpfully accretive and the timing is good given current precious across your company.

You say, you're looking at other potential divestments can you provide some more color on that potential I think there were looking at probably one more assay at about half the size. It will equally be something that nobody ever asked me about many of the calls so I think that there'll be generally surprised that the again the value under our hood.

Speaker 2: I think that we're looking at probably one more asset, about half the size. It will equally be something that nobody ever asked me about in any of the calls, so I think that they'll be generally...

Speaker 2: that the at the end the value under our hood is really is really quite tremendous.

<unk> is really is really quite tremendous and our ability then to restore and even take a sale in.

Speaker 2: and our abilities in to restore and even take a sale in these double digit multiples, you'll see take a look at the concentric of 18 multiples. Our abilities in to buy stuff at five, six, seven multiples and then grow them is really how tremendous value is built in our asset.

These double digit multiples here if you take a look at the concentric of 18 multiple our ability then to buy stuff that 567 multiples and then grow them is really how tremendous value was built in our assets.

Speaker 2: and should be built in our stock and outside value appreciation.

And should be built in our in our stock and outside value appreciation.

Speaker 1: Geographical expansion has obviously been a key tenant of the M&A approach. Brett Feldman here asks, and Goldman asks, getting scale in international markets seems like a key way you can position Stagwell to win larger contracts with your largest customers. What do you see is the most effective path to expending your presence outside the U.S., both organically and internationally?

At geographical expansion has obviously been a key tenant of the M&A approach Brett Feldman here as a Goldman ash.

Jenny Scanlon niches in international markets. It seems like a key way he can be positioned stag will to win larger contracts with your largest customers. What do you see as the most effective path to expanding your presence outside the U S. Both organically and Inorganically well. The first thing that we did was really to bring together the existing assets that we have in these re.

Speaker 2: Well, the first thing that we did was really to bring together the existing assets that we had in these weeks.

Speaker 2: They had been really quite scattered. So you really kind of see the double digit growth in Asia after we brought all of our agencies together in Singapore headquarters and put in infrastructure.

They had been really quite scattered so you really kind of see the double digit growth in Asia. After we brought all of our agencies together.

In Singapore headquarters and put an infrastructure in Europe in January almost all our European agencies in London will all come together into a physical facility work together and then you'll see the same kind of EMEA growth, where they're able to kind of show the true scale of operations. There. We found that's the first path to double.

Speaker 2: In Europe , in January , almost all our European agencies in London will all come together into a physical facility, work together, and then you see the same kind of amea growth where they're able to kind of show the true scale of operations there. We found that's the first path to double digit growth and really to take existing assets that we're not seeing growth and really turn them into double digit growth.

Digit growth and really to take existing assets that were not seen growth really turn them into double digit growers I think in terms of investment we're still looking at Latin America. The Mideast is in a bit more turmoil at the moment, but we'd like to to beef up in those two regions.

Speaker 2: I think in terms of investment, we're still looking at Latin America. The Middle East is in a bit more turmoil at the moment, but we'd like to beef up in those two regions to have a better positioning for a large global contract. By the way, just to go back to an earlier question, we are seeing a very strong pitch season here in the fourth quarter.

To be to have a better positioning for large global contracts by the way just to go back to an earlier question. We are seeing a very strong.

[noise] pitch season here in the fourth quarter.

Speaker 1: Maybe just one final question on political before we hand over the Frank for a couple of questions on the on the financials, but Question from Jeff Ansendron over at B Riley. What are the early reads on the magnitude and possible timing of advocacy revenue contribution as we enter the year leading

Maybe just one final question on political before we hand over to Frank for a couple of questions on the on the financials, but question from Japan Center on a B Riley what are the early reads on the magnitude and possible timing of advocacy revenue contribution as we enter the year, leading up to the presidential election, well I think all reads.

Speaker 2: Well, I think all reads are that this is the, the, the, it'll kind of be the biggest spending election in history exceeding $12 billion, you know, of expenses.

Or that this is the.

Kind of be the biggest spending election in history exceeding $12 billion of expenditures I think the timing is a little less clear because we don't know what's going to happen in terms of how much activity there'll be in primary fights it looks like there isn't really a democratic primary.

Speaker 2: I think the timing is a little less clear because we don't know what's gonna happen in terms of how much activity there'll be in primary fights. Looks like there isn't really a democratic primary fight so that'll push some of their spending later. Looks like there may or may not be a Republican fight. We'll really find that out, you know, as these contests start to happen in Iowa and New Hampshire.

So that will push some of their spending later it looks like there may or may not be a Republican I will really find that out you know as as these contracts start to happen in Iowa, and New Hampshire. So I think that we know that the crescendo is gonna be hit you know the closer you get to the election, we don't know how much of it will come in.

Speaker 2: So I think that we know that the crescendo is going to be hit you know the closer you get to the election, we don't know how much of it will come in in first versus second quarter depending on how the primary season works it works its way out.

First versus second quarter, depending upon how the primary season works it works its way out.

Speaker 1: Maybe just a quick question for Frank here, and this is looking at a free cash flow conversion, a question from an investor, just saying, you know, what was the driver of the change in conversion from the 55% at the midpoint previously done?

Maybe just a quick question for Frank here and this is looking at our free cash flow conversion a question from an investor just saying you know what was the driver of the change in conversion from 55% at the midpoint previously down to 40.

Speaker 3: Yeah, certainly. I think it's two things. One, it's interest, both the function of higher rates throughout and on raising rates throughout 2023. And also the higher average outstanding balance, we finance the acquisition of a larger share per-tune.

Certainly I think it's two things one it's interest both a function of higher rates throughout and not raising rates throughout 2023 and also the higher average outstanding balance you know we financed the acquisition of a larger share purchase but this was more of a one time event. So it is a temporary condition.

Speaker 2: But this was more of a one-time event, so it's a temporary condition than that should bring interest down in 2024 as our expectation.

That should bring interest down in 2024 is our expectation and then second you know we see potentially just some lighter prepayments, perhaps in Q4 and I think that's all it is.

Speaker 3: And then second, we see potentially just some lighter prepayments perhaps in Q4. And I think that's all it is.

Speaker 4: I think we're coming to a close here, but we're going to want one question on a slightly lighter note. Are the blue shirts the new Stangwell uniform? They were my uniform at Microsoft and they're the uniform at the

Great I think we're coming to a close date, but when she won one question on a slightly lighter lighter note all the blue shirts, Denise Tango uniform.

They were my uniform at Microsoft and there was a uniform at.

Here at Stag well.

Speaker 1: Good stuff. Well, that brings our third quarter earnings call to a close. If you have any questions, please do feel free to reach out to the IR team over here at Stagwell. And we look forward to chatting to you early next year, Rob.

Good stuff well that brings our third quarter earnings call to a close if you have any questions. Please do feel free to reach out to the IR team over here at stag well and we look forward to chatting to you early next year fourth quarter.