Q2 2025 Stagwell Inc Earnings Call
Ben Allanson: Washington, D.C. Welcome to Stagwell Inc.'s second quarter 2025 earnings webcast. 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; Ryan Green, the Chief Financial Officer; and Frank Lanuto, EVP of Finance. Mark will provide a business update before Ryan and Frank 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 would 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 FGC filings. Please refer to our website, StagwellGlobal.com/Investors, for an investor presentation and additional resources.
Washington, DC. Welcome to Stagwell. This is the link to the second quarter 2025 earnings webcast. My name is Ben Allanson, and I lead the investor relations function here at Stagwell.
With me today, I'm Mark, Penn stagl, chairman and chief executive officer, Ryan green, the Chief Financial Officer and Franklin new EVP of Finance.
Mark will provide a business update before Ryan and Frank share a financial review.
After the prepared remarks, we will open the floor for Q&A. You're welcome to submit questions through the chat function.
Forward-looking statements about the company, including those related to earnings guidance, are subject to uncertainties and risk factors addressing our earnings, release, slide presentation and the company's efficacy filings.
Ben Allanson: This morning's press release and slide deck provide definitions, explanations, and reconciliations of non-GAAP financial data. With that, I would like to turn the call over to our Chairman and CEO, Mark Penn.
Please refer to our website stagwell global.com, stagwell global.com slash investors for an investor presentation and additional resources.
Mark Penn: Thank you, Ben Allanson. Thank you for everyone joining us for our earnings call this morning. I am pleased to report another set of strong results for the quarter, fully in line with our expectations. As we look forward, we expect to achieve our full-year guidance on all metrics as growth accelerates, margins expand, leverage declines, and cash flows continue to strengthen. Our net revenue grew at industry-leading 8% and ex-advocacy by 10%. On top of this growth, we achieved a swing of $122 million of operating cash flow improvement, continued to expand our top client relationships, and scooped up significant new business. We expect growth to accelerate in the second half of the year as the economic outlook is positive, large new clients are coming online, and client turn typically drops off after the first half of the year.
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 penny.
Thank you, ma'am. And thank you for everyone joining us for our earnings call this morning.
Mark Penn: While digital transformation of other companies is lagging, ours is booming. While most of the others are struggling with new business, our pipeline is robust and growing. While others are cutting thousands of workers, we are picking up key talent from old coasts, including 10 major new executives for our media businesses with vast decline experience. Today, I am pleased to announce the hiring of Frank Lanuto, who is joining us this fall from Omnicom to work on our forward-looking data strategy. He joins a team of executives hired from companies including IBM, Accenture, and Microsoft. We will have more news on this soon. This is an incredible time of opportunity for Stagwell.
I'm pleased to report another set of strong results for the quarter, fully in line with our expectations. As we look forward, we expect to achieve our full year guidance on all metrics, as growth accelerates margins, expand, leverage, declines, and cash, flows continue to strengthen our net revenue, grew and industry-leading 8% and next advocacy Group by 10% on top of the growth. We achieved a swing of 122 million dollars of operating cash flow Improvement continued to expand our top client relationships and scooped up significant new business. We expect growth to accelerate in the second half of the year, as the economic Outlook is positive. Large new clients are coming online and client turned typically drops off after the first half of the year,
while digital transformation of other companies is lagging. Ours is booming, While most of the others are struggling with new business, our pipeline is robust and growing.
While others are cutting thousands of workers. We are picking up key Talent from Whole Coast including 10. Major new Executives for our media businesses with vast, big client experience. Today, I'm pleased to announce the hiring of Google slavi samardza, who is joining us this fall from omnicon to work on our forward-looking data strategy, he joins a team of Executives hired from companies including IBM Accenture and Microsoft. We'll have more news on this soon.
Mark Penn: In an industry of behemoths having trouble with their scale, we are just the right size to adapt to the coming revolution of AI. We are investing about $20 million a quarter of OpEx in adapting to new technologies and building state-of-the-art offerings. Discipline by discipline, we are adopting AI, applying it to tasks that can be streamlined or reimagined. In media, we are developing agents that deploy targeted media and will streamline our operation and costs. In communications, we have bots that assemble influencer campaigns, write press releases, and pitch stories. In research, we are already deploying dashboards that read and analyze survey data for our clients on the basis of simple prompts and questions. In our creative companies, we are using AI to dream up and produce unique standout ads with incredible new special effects.
This is an incredible time of opportunity for stagwell in an industry of behemoths having trouble with their scale. We are just the right size to adopt to the coming revolution of AI.
We're investing about 20 million a quarter of Opex and adopting to new technologies and building. State-of-the-art offerings discipline by discipline. We're adopting AI. Applying it to tasks that can be streamlined or reimagined.
In media, we're developing agents that deploy targeted media and will streamline our operations and costs. In Communications. We have thoughts that assemble influencer campaigns. Write press releases and Pitch stories in research. We're already deploying dashboards that read and analyze survey data for our clients from the basis of simple, prompts and questions.
Mark Penn: We are building and deploying in partnership with Adobe, the Stagwell content supply chain management system, and wrapping up all our tools and software into The Machine, a central nervous system designed to connect data, people, teams, and software tools across the Stagwell network. The Machine addresses a clear client need: a single unified platform for accessing all our services. We are all ready to begin to roll out these systems and expect them to have fully deployed by early 2026. It will dramatically increase efficiency, adopt new ways of working, and likely reduce costs by about 15%. Nothing shows that our tech-first approach is resonating more than growth among our top 25 customers. Our top 25 in the second quarter generated over $175 million in net revenue. That same cohort a year ago generated $140 million, an increase of 26% year on year.
In our creative companies, we're using AI to dream up and produce unique standout ads with Incredible, new special effects.
We are building and deploying in partnership with Adobe the stagwell content Supply Chain management system and wrapping up all our tools and software into the machine. A central nervous system designed to connect data, people teams and software tools, the Stag World Network, the machine addresses, a clear client need of single unified platform for accessing all our services, we're all ready to begin. Beginning to roll out these systems, and expect them to have fully deployed by early 2026. They will dramatically increase efficiency, adopt new ways of working and likely reduce costs by about 15%.
Nothing shows that our Tech first approach is resonating more than growth among our top 25 customers our top 25. In the second quarter generated over 175 million in net revenue.
Mark Penn: Our top 25 customers now average approximately $28 million in annual net revenue. Our top 100 clients grew similarly in size. Historically, from 1980 to 2005, a company like ours would be judged solely by its total growth, with organic growth relevant only in the later stages of scale and maturity, and such scale accelerates organic opportunities. Because of high quarterly variations, I suggested an analyst should look at our mix of organic growth annually, and we adopted total growth as our primary guidance metric. I still believe that, but in the interest of transparency, we will continue to report all metrics each quarter. While we achieved overall 10% ex-advocacy growth this quarter, 20% of it or 2% was from purely organic growth.
That same cohort a year ago generated 140 million and increase of 26% year on year. Our top 25 customers now average approximately 28 million dollars in annual net revenue, our top, 100 clients grew, similarly in size
Mark Penn: As we saw last year, we have a cycle of lower organic growth in H1 as that is when clients turn, and higher organic growth in H2 when media and other clients tend to increase their spend. With new assignments from GM, Visa, Adobe, and Target, we expect a similar pattern this year in which organic growth will again grow to high single and near double digits in H2. We are about three points ahead of last year in organic growth. Given that trend, we expect to hit the overall growth numbers and for most of it to be organic when the year is over and the dust has settled. Importantly, our digital transformation capability grew 12% ex-advocacy, with organic growth ex-advocacy of 7% in the quarter. This is a sharp contrast to the lagging performance seen in the larger digital transformation industry.
Because of high quarterly via variations. I suggested an analyst should look at our mix of organic growth annually. When we adopted total growth as our primary guidance metric, I still believe that, but in the interest of transparency, we will continue to report. All metrics each quarter, while we achieve the overall, 10% X accuracy growth, this quarter 20% of it, or 2% was from purely organic growth. But as we saw last year, we have a cycle of lower organic growth in H1. As that's when clients turn and higher organic growth in H2 when media and other clients tend to increase their spend with new assignments from GM Visa, Adobe and Target. We expect a similar pattern this year, from which organic growth will again grow to high single and near double digits in H2. We're about 3 points ahead of last year, in organic growth and given that Trend. We expect to hit the overall growth numbers. And for most of it to be organic when the year is over, and the dust has settled importantly.
Mark Penn: Clients are beginning to incorporate AI in their consumer experiences, and the Code and Theory network is becoming a supplier of choice, having been named Digital Innovation Agency of the Year by Campaign. Our major tech clients grew 11% this quarter, and five of our top six clients are mega tech companies. People seem to tie our fortunes to tariffs and other old economy measures. We are a tech company's tech company, and most affected by the ups and downs of that industry. Further evidence of AI being good for our business is reflected in the marketing cloud grew 38% ex-advocacy. In Q2 in particular, the Harris Quest suite of research projects grew organically 100%. As we look across our agencies, many are performing strongly. The second quarter saw leading creative agencies 72andSunny grow net revenues 19% year over year. Research firms NRG grew 13%.
Our digital transformation capability grew 12% x acree with Organic growth X, accuracy of 7% in the quarter. This is our sharp contrast to the legging performance scene in the larger digital transformation industry. Clients are beginning to cooperate incorporate Ai and their consumer experiences and the code. And Theory network is becoming a supplier of choice. Having the name digital Innovation agency of the Year by campaign, our major Tech clients grew 11%, this quarter and 5 of our top 6.
Mark Penn: Media buying business Assembly grew 7%, and digital transformation agency Kettle grew at 41%. Net new business was a standout once again, and we delivered $117 million in the quarter of the fifth consecutive period, eclipsing the $100 million mark and bringing our trailing 12-month figure to $451 million. Wins with Samsung, New Balance, ServiceNow, and Volkswagen highlight the momentum as we continue to take share from legacy players. This quarter also saw our first wins in the newly formed government contracts division, which is beginning to come online with multiple pitches in the final stages. Allison Partners signed a three-year agreement with Covered California to help state health insurance marketplace maximize the number of Californians enrolled in health insurance. We also delivered $93 million in adjusted EBITDA in the quarter, representing a 16% margin, flat versus prior year.
Clients are Mega tech companies. People seem to tie our fortunes to Tunes to tariffs and other old economy measures. We are a tech companies tech company and most affected by the ups and downs of that industry. Further evidence of AI being good for our business is reflected in the that the marketing Cloud group, 38% X advocacy and 2q in particular, the Harris Quest, Suite of research projects, grew organically, 100%. As we look at our agency's, many are performing strongly. The second quarter saw a leading creative agency, 72 and sunny grow, net revenues 19% year-over-year research for our energy growth 13% media. Buying business assembly growth 7% and digital transformation agency cattle, grow 41%,
Net new business was a standout. Once again, we delivered 117 million dollars in a quarter of the fifth consecutive period eclipsing the hundred million dollar Mark and bringing our trailing 12-month figure to 451 million Windsor Samsung, New Balance service now and Volkswagen highlights. The momentum as we continue to take share from Legacy players.
Mark Penn: Excluding advocacy, our adjusted EBITDA increased more than 23% year over year to $80 million. Adjusting for our cloud investment of $18 million this quarter, our second quarter margin would have been about 18.5%, representing a 300 basis point improvement from a year ago. Our adjusted EPS also increased by more than 20% year over year to $0.17. The quarter also included the marketing effort, all the travel expenses of Sport Beach, our annual Cannes Lion Festival experience that brings together brands and world-class athletes. This continues to be so successful that it is becoming a business of its own as we create these experiences at different venues. Athletes like Serena Williams, Billie Jean King, Mo Farah, Jordan Chiles, and Alex Rodriguez participated. Our focus on cash management is paying off.
This quarter also saw our first wins in the newly formed government contracts division which is beginning to come online with multiple pitches in the final stages. Allison Partners signed a 3-year agreement with Covered California to help State Health Insurance Marketplace, maximize, the number of Californians enrolled in health insurance. We also delivered 93 million in adjusted ebag on the quarter representing a 16% margin flat versus prior year. But excluding advocacy are adjusted ibida. Increase more than 23% year-over-year to 800 million dollars.
Mark Penn: Through a combination of implementation of technology for greater cash visibility, greater oversight of our brands, and successful renegotiation of payment terms with vendors, we have seen our cash flow from operations improve by $122 million year to date, setting us to achieve fully our goal of 45% free cash flow conversion at end of year. We are able to achieve a net leverage of 3.18 times, a significant improvement over the same point last year when leverage stood at 3.48, and putting us on course to finish the year with net leverage in the twos. This quarter, we invested in our stock, repurchasing almost 10 million shares at very attractive multiples. We also completed the acquisition of previously announced ADK Global in the second quarter, giving us offices in 10 new Asia-Pacific markets, aligning with our strategy of increasing global scale.
Adjusting our, for our Cloud investment that are 18 million this quarter. Our second quarter Market would have been about 18.5% representing a 300 basis, point improvement from a year ago, and our adjusted EPS, also increased by more than 20% year-over-year to 17 cents the quarter, also included the marketing effort while the travel expenses of sport Beach, our annual, Cannes lion Festival experience. It brings together brands at World Class athletes, this continues to be so successful that it's becoming a business of its own. As we create these experiences at different venues athletes. Like, Serena Williams Billie Jean, King serro farra, Jordan, Charles, and Alex Rodriguez. Our focus on cash management is paying off through a combination of implementation of technology for greater cash. Visibility greater oversight of Our Brands and successful renegotiation of payment, terms with vendors. We've seen our cash flow from operations,
Approved by 122 million dollars year to date. Sending us to achieve fully our goal of 45% free cash flow conversion at end of year.
We're able to achieve a net leverage of 3.18 times a significant improvement over the same point last year. When leveraged at a 3.48 and putting us on course, to finish the year with net leverage in the tubes this quarter, we invested in our stock repurchasing, almost 10 million shares at very attractive multiples.
Mark Penn: We took steps to strengthen our shopper and retail marketing by acquiring Jetfuel. M&A remains a key growth driver for Stagwell moving forward, but we do expect to slow down our outside acquisitions through the rest of the year. Our focus is on integrating the raft of companies acquired over the last 18 months and scaling important technology initiatives to drive growth and efficiency. AI will most likely have the most direct impact on the production of mass content, which is a relatively small part of our business, as we tend to design premium content and develop the overall creative strategies. However, to reduce outside expenditures and stay current in production, we formally launched Unreasonable Studios, our award-winning in-house production and content creative company. It unites capabilities from multiple agencies into a centralized content production service.
All right, jet fuel. M&a remains a key growth driver for stag role, moving forward. But we do expect to slow down our outside. Acquisitions through the rest of the year. Our focus is on integrating the raft of companies acquired over the last 18 months on scaling important, technology initiatives to drive growth and efficiency.
Mark Penn: The team is already partnering with brands like Google, Starbucks, Coca-Cola, Louis Vuitton, and Marriott to deliver everything from generative tech-driven content at scale to Netflix quality original documentaries. We are continuing to work in partnership with Palantir to develop state-of-the-art data targeting as we develop a Stagwell ID graph, and we are testing with clients now. All of these new tools and systems will significantly upgrade our media offerings to be fully competitive against the majors when it comes to digital marketing, which in the world of AI is driven not by scale but by effective technology. That is exactly what we are developing. This quarter, we also announced the rebranding of the Stagwell Marketing Cloud to simply The Marketing Cloud. This new branding encourages use by other agencies and facilitates potential spin-off at the right time.
AI will most likely have the most direct impact on the production of mass content which is a relatively small part of our business. As we tend to design premium content and develop the overall creative strategies, however, to reduce outside expenditures and stay current in production. We formally launched unreasonable Studios, our award-winning in-house production and content creative company. It unites capabilities for multiple agencies into a centralized content Production Service. The team is already partnering with Brands like Google Starbucks, Hoka Lewis weapon and Marriott to deliver everything from generative tech-driven content, at scale to Netflix. Quality original documentaries, we're continuing to work in partnership with palantir to develop state-of-the-art data targeting. As we develop the stagwell ID graph and we are testing with clients now,
All of these new tools and systems with significantly. Upgrade our media offerings to be fully competitive against the majors.
Majors. When it comes to digital marketing which in the world of AI is driven not by scale.
but by a
technology.
Mark Penn: You can check out the breadth of the new products, all available on a single platform, by logging on to www.themarketingcloud.com. In sum, we are well positioned for a successful second half, building on a strong half as new business continues to build, client size keeps increasing, digital transformation continues to grow, AI is being deployed, and the company improves in terms of cash, leverage, margin, and cost. As a result, we are reaffirming our guidance plan. With that, I would like to hand it over to Frank Lanuto, EVP of Finance, and Ryan Green, our new CFO, to walk through some of our financial results in more detail.
This quarter, we also announced the rebranding of the stackable Marketing Cloud to Simply the Marketing Cloud. This new branding encourages use by other agencies and facilitates potential spin-off. At the right time, you can check out the breadth of the new products, all available in a single platform, by logging on to www.themarketingcloud.com. In summary, we are well positioned for a successful second half, building on a strong first half.
First as new business continues to build.
Client size keeps increasing digital transformation continues to grow AI is being deployed and the company improves in terms of cash, leverage margin and costs. As a result, we are reaffirming our guidance today with that. I would like to hand it over to Franklin, Nudo EVP of finance and Ryan green. Our new CFO to walk through some of our financial results in more detail.
Ben Allanson: Thank you, Mark. It has been a privilege to serve as CFO for Stagwell Inc. and its predecessor for the last six years. I look forward to supporting Ryan moving forward as he takes over the reins. I have full confidence that he will build on our achievements and take Stagwell's finance function to new levels. Headlined by a significant improvement in cash flow from operations, Stagwell Inc. delivered solid Q2 financial results, which has positioned us well to achieve our full-year guidance. For the quarter, we reported net revenue of $598 million, an increase of 8% over the prior year. Excluding advocacy, total net revenue grew 10%. In the quarter, digital transformation net revenue grew 6% to $109 million. Excluding advocacy, net revenue grew 12%.
Thank you, Mark. It has been a privilege to serve as CFO for stagwell and its predecessor for the last 6 years.
I look forward to supporting Ryan moving forward as he takes over the Reigns, I have full confidence that he will build on our achievements and take stag Well's Finance function to new levels.
Headline by significant Improvement in cash flow from operations, stagwell delivered, solid second quarter Financial results which has positioned us well to achieve our full year guidance.
For the quarter, we reported net revenue of $598 million.
Increase of 8% over the prior year.
Excluding advocacy total, net revenue, grew 10%.
In the quarter, digital transformation, net revenue, grew 6% to 109 million.
Ben Allanson: The continued resurgence in digital transformation was fueled by a 20% increase in revenue from technology clients, led by expansions at major tech companies, and a 36% increase in revenue from healthcare clients. The Stagwell Marketing Cloud posted $66 million in net revenue in the quarter, an increase of 28% year over year. Excluding advocacy, net revenue grew 38%. We saw continued strong performance from our Harris Quest brand, which grew more than 180% in the second quarter, including 100% organic growth after recent product enhancements. Creativity and communications delivered $264 million in net revenue in the quarter, an increase of 8% over the prior period. Excluding advocacy, net revenue also grew 8%. The results were driven by strong performance with auto clients, which almost doubled year over year, and by a 67% increase with retail clients, as recent wins with Starbucks and Stellantis begin to drive growth.
Including advocacy, net revenue group, 12%.
The continued resurgence in digital transformation was fueled by a 20% increase in revenue from technology clients.
Led by expansions at Major tech companies and a 36% increase in revenue from Healthcare clients.
The marketing Cloud posted 66 million dollars in net revenue in the quarter.
And increase of 28% year-over-year.
Excluding advocacy, net revenue group 38%.
We saw continued strong performance from our Harris Quest Brad, which grew more than 180% in the second quarter. Including 100% organic growth at the recent product enhancements.
Creativity and Communications delivered 264 million in net revenue in a quarter and increase of 8% over the prior period.
excluding advocacy, net revenue, also, grew 8%
The results were driven by strong performance with auto clients, which almost doubled year-over-year.
And buy a 67.
Ben Allanson: Consumer insights and strategy continued its resurgence, posting $51 million in net revenue, an increase of 6% as compared to last year. The growth was led by a 12% year-over-year increase in revenue from technology clients and by a strong growth in the financial sector, which more than doubled year over year. Finally, performance media and data returned to growth during the quarter, reporting $108 million in net revenue, an increase of 1% over the prior period. Moving to operating expenses, we continue to make progress against our goal of margin improvement through effective cost management. Personnel costs, excluding incentives, our largest expense came in at 62.6% in the second quarter. Excluding advocacy, the ratio was 63.2%, 110 basis points lower than last year. Both metrics represent the lowest Q2 ratios since 2023.
Increase with retail clients as recent wins with Starbucks and General Motors. Begin to drive growth.
Consumer insights and strategy. Continued, its Resurgence, posting 51 million in net revenue and increase of 6% as compared to last year.
The growth was led by a 12% year-over-year. Increase in revenue from technology clients and by a strong growth, in the financial sector, which more than doubled year-over-year.
During the quarter, we reported net revenue of $108 million, an increase of 1% over the prior period.
Moving to operating expenses, we continue to make progress against our goal of margin Improvement through effective cost management.
Personnel costs excluding incentives.
Our largest expense came in at 62.6% in the second quarter.
excluding Avoca, the ratio was 63.2%
110 basis points lower than last year.
Ben Allanson: Ryan will speak to our progress on the $80 million to $100 million in tech-driven cost savings we announced at the investor day. We are ahead of schedule and confident that a portion of these savings will flow through to adjusted EBITDA in the second half. Summarizing our operating results, we delivered $93 million in adjusted EBITDA in the second quarter with a margin of 15.5% on net revenue, flat year over year. Excluding advocacy, our margin improved by approximately 160 basis points over the prior year to 14.3%. Excluding our cloud investment of $18 million this quarter, our second quarter adjusted EBITDA margin would have been approximately 18.5%, representing a 300 basis point improvement. Moving to the balance sheet, we continue to focus on capital allocation to maintain a strong financial position.
Both metrics represent the lowest Q2 ratios since 2023.
Ryan will speak to our progress on the 80 to 100 million dollars in Tech driven cost savings. We announced that the investor day
but we are ahead of schedule and confident that a portion of these savings will flow through to adjusted Ava and
summarizing our operating results. We delivered 93 million in the just
Second quarter with a margin of 15.5% on that revenue plus year-over-year.
And improved by approximately 160 basis points over the prior year to 14.3%.
Excluding our Cloud investment of 18 million this quarter, our second quarter adjusted. Even the margin would have been approximately 18.5% representing a 300 basis, point Improvement.
Ben Allanson: Our deferred acquisition consideration balance stands at $92 million as of the end of the second quarter, $10 million lower than at the end of 2024. By the end of the year, DAC balances will reduce by nearly half, with the remaining balance spread over the next four to five years. During the quarter, we acquired approximately 9.6 million of our shares at an average price of $4.95 per share for approximately $48 million. Our buyback authorization as of the end of the second quarter has $160 million in remaining availability. For the six months ended June 30, cash flows from operations improved by $122 million year over year, driven by a number of improvements in working capital management, which Ryan will discuss in greater detail.
Now moving to the balance sheet, we continue to focus on Capital allocation to maintain a strong financial position.
Our deferred acquisition consideration balance spans at 92 million. As of the end of the second quarter, 10 million lower than, at the end of 2024.
By the end of the year Dak balances will reduce by nearly half what the remaining balance, spread over the next 4 to 5 years.
During the quarter, we acquired approximately 9.6 million of our shares at an average price of $4.95 per share for approximately 40 million dollars.
Our buyback authorization, as of the end of the second quarter has 160 million dollars in remaining availability.
For the 6 months end of June 30th, cash flows from operations improved by 122 million year-over-year.
Ben Allanson: As a result, we ended the quarter with $181 million in cash, drawings under our revolver of $377 million, resulting in a net leverage ratio of 3.18 times, significantly better than the same point last year. We expect leverage at year-end will be in the twos. Finally, we are reiterating full-year 2025 guidance today as follows. Total net revenue growth is expected to be approximately 8%. Adjusted EBITDA is expected to be between $410 million to $460 million. We expect to deliver in excess of 45% free cash flow conversion, and adjusted earnings per share is expected to be between $0.75 per share and $0.88 per share. I will now turn the call over to Ryan to discuss our progress on both cost savings and cash flow.
By a number of improvements in working capital management, which Ryan will discuss in greater detail.
As a result, we ended the quarter with 181 million in cash.
Drawings under our revolver.
Of 377 million resulting in a net, leverage ratio of 3.18 times significantly better than the same point last year, we expect leverage at year. End will be in the twos.
And finally, we are reiterating full year 2025 guidance. Today as follows
Total net revenue growth is expected to be approximately 8%.
Adjusted Eva is expected to be between 410 million to 460 million.
We expect to deliver in excess of 45%, free cash flow conversion.
And adjusted earnings per share is expected to be between 75 cents per share and 888 cents per share.
Ryan Green: Thank you, Mark and Frank. I'm excited to take on the role of Chief Financial Officer, and I look forward to working with both of you. Today, I'll update you on two key initiatives: our strong improvement in cash flows and our progress towards our $80 to $100 million cost savings target by the end of 2026. Since the merger, Frank and I have focused on creating an integrated finance and operations function, resulting in $65 million in cost synergy to date. Turning to cash flow, the Treasury team has delivered strong results. We achieved our first-ever second quarter positive cash flow from operations, contributing to a $122 million year-over-year improvement in the first half. This is a new normal for Stagwell Inc. and supports our full-year guidance of 45% free cash flow conversion from adjusted EBITDA.
I will now turn the call over to Ryan to discuss our progress on both the color savings and cash flow.
Thank you, Mark and Frank. I'm excited to take on the role of Chief Financial Officer and I look forward to working with both of you.
Today, I'll update you on 2 key initiatives.
Are strong Improvement in cash flows and our progress, towards our 80 to 100 million dollar cost savings Target by the end of 2026.
Since the merger Frank and I are focused on creating an integrated finance and operations function, resulting in 65 million in cost synergies today.
Turning to cash flow. The treasury team has delivered strong results. We achieved our first ever second quarter positive cash flow from operations contributing to 122 million year-over-year Improvement in the first half.
Ryan Green: On cost savings, we're off to a fast start towards the $80 to $100 million target. Our 2025 goal is to take $60 to $70 million of actions, driven by real estate, back-office consolidation, and tech efficiencies to the Stagwell content supply chain. Year to date, we have already executed $20 million in annualized savings, with $7 million flowing through to adjusted EBITDA. These are just a few of the bold, proactive steps we have taken to drive operational improvement in the business, and we're just getting started. That concludes our prepared remarks. I'll now turn the call over to Ben to open the Q&A.
This is a new Norm rule for stagwell and supports our full year guidance of 45% free cash flow conversion from adjusted evidence.
On cost savings. We're off to a fast start towards the $80 to $100 million target.
Our 2025 goal is to take 60 to 70 million of actions. Driven by real estate back office, consolidation and Tech efficiencies to the Stag World content supply chain.
Year to date. We have already executed 20 million dollars in annualized savings with 7 million dollars flowing through to adjust the debt.
We're just getting started.
Ben Allanson: Thank you, Ryan. Just a reminder, if you have any questions, please do submit them via the chat button at the top of the screen. Mark, let's start with a question that's come from a number of different people, just talking about the acceleration in the back half of the year. First half of the year is some nice growth, but the second half implies a little bit of acceleration. Can you talk a little bit about what gives us confidence in that acceleration in the back half?
That concludes our prepared remarks. I'll now turn the call over to Ben to open the Q&A.
Please do submit them via.
Screen. Um,
Mark, let's start with a question and sort of come from a number of different people. Just talking about the acceleration in the back half
first half of the Year, some nice growth, but the second half,
Mark Penn: I think you look at the strong growth in the first half. You look at the fact that organic growth is running three points ahead of last year when you look at H1. When you look kind of at the pattern, I think that everybody gets confused too. Client churn is in the first half. Client advancement really happens in the second half because so much of the business revolves around the holiday seasons and the fall. I think that's been the clear pattern. You look at last year, very precisely the same kind of pattern. We're off to a much stronger first half here. As you can see, we're beating all metrics, and that's what's given us very good confidence that we're going to meet all our metrics.
Is a little bit of acceleration. Can you talk a little bit about what gives us confidence in that acceleration in backass? Well, I I think you look at the strong, uh, growth in the first half. You look at the fact that uh, the organic growth is running. 3 points ahead of last year. When you look at, when you look at H1, uh, and when you, when you look kind of at the pattern, I think in rig has gets used to client churn is in the first half.
Ben Allanson: Great. I think the other area where we've got a lot of questions this quarter is around improving cash flows. So maybe this one is for you, Ryan. Could you maybe go into some further detail just on what has driven this improvement and maybe talk a little bit about the sustainability of that improvement moving forward?
You know, client advancement really happens in the second half because so much of the business revolves around, uh, the holiday seasons and, uh, and the fall. And I think that's been the clear pattern. You look at last year, very really precisely the same kind of pattern. We're we're off to a much stronger first half year. As you can see, we're beating all metrics and that's what's giving us very good confidence that we're going to meet all our metrics.
Great. Um, all the other way we've got a lot of questions. This quarter is around improving cash flow. So maybe this 1 fits for you Ryan. Um could you maybe go into some further detail just on what has
Mark Penn: Yeah, sure. Thanks for the question. I am happy to go into some of the detail. Cash has been a primary focus for us, and we have really dug into all areas of working capital. Last year, we principally finished the deployment of our back-office tech stack, and that provided real-time visibility into cash flows across all of our businesses. But more importantly, it allowed our team to take action when we noticed certain exceptions and allowed us to identify key terms in terms of days that bill past Q1 and other areas within working capital management. We have also built out our back-office center, which has allowed us to proactively chase processing invoices, tracking collections to getting cash in the door, and even renegotiating some key vendor terms. This really is not a one-quarter phenomenon. This is really the result of a holistic approach to improve cash.
Driven this Improvement and maybe talk a little bit about the sustainability of that Improvement. Moving forward. Yeah sure thanks for the question and and I'm happy to go for the detail cash has been a primary focus for us and we really don't get into all areas of working capital.
Last year, we principally finished the deployment of our back office. Tech stack.
And that's provided real-time visibility into a cash flows across all of our businesses. But more importantly allowed, our team to take action actually, where we noticed certain exceptions, and allowed us to identify, uh, key terms in terms of days that bill, uh, passed through our and other areas within working Capital Management.
We've also built out our back office center, which has allowed us to proactively chase processing invoices, track collections, and get cash in the door, and even renegotiate some key vendor terms.
Mark Penn: So we are confident that this is going to be sustainable going forward. We are going to bring the same rigor to other areas of our business, with an immediate focus being on our cost structures and really improving our margin going forward.
This really isn't a 1 quarter phenomenon. Um, this is really the result of a holistic approach to improved cash and so we're confident that this is going to be sustainable going forward.
Ben Allanson: Great. AI. Lots of questions about AI this quarter, so I am going to sort of break them up a little bit. First one from Cameron McVey over at Morgan Stanley. He goes, curious how you would frame the opportunity around marketing for AI-native companies. What is the value add of Stagwell within that particular process?
We're going to bring the same rigor, the other areas of our business and within a media focused thing on our cost structures and really improving our margin going forward.
All right. Good stuff. Um, AI
Mark Penn: I think first, you look at the Code and Theory network, and I think we're really well positioned. I'll go back to, look, I can't disclose the exact level of our tech assignments, but behind the scenes, five of our six clients are tech companies, and a lot of that is helping to design and engineer AI experiences. What's really happening with AI is the whole front end of how companies will interact with people and how consumers use AI is going to generate a tremendous amount of work, and we believe that the Code and Theory network is incredibly well positioned to pick up on that work. Then I look internally to how AI will change what we do. I think people always look at just efficiencies, not fully realizing that technology takes the best work to even higher standards.
Lots of questions about AI this quarter and so I'm going to sort of break them up a little bit. First 1 from Cameron McVey over at Morgan Stanley, he goes curious how you would frame the opportunity around marketing for AI native companies and what's the value add of stag? Well, within that particular process? Well, I think first you look at the code and Theory Network and I think we're really well positioned. I'll go back to look, I can't disclose our the exact level of our Tech assignments, but behind the scenes 5 of our 6 clients are tech companies and a lot of that is helping to design and engineer AI experiences. What's really happening with AI is the whole front end of how companies will interact with people and how consumers use AI is going to generate a tremendous amount of work. And we believe that the code and Theory network is incredibly well positioned to pick up
Mark Penn: That means that the ads of tomorrow are going to be incredibly more sophisticated, personalized, and provide graphic images that would have been completely unattainable without AI. So I think it up-levels our business, and at the same time, as I noted in the script, creates a number of both internal efficiencies and new features and services that we can offer to clients that didn't exist before.
on that on that work and then I look internally to how AI will change what we do. And I think people always look at just efficiencies not fully realizing the technology takes the best work to even higher standards. And so that means that the ads of tomorrow are going to be incredibly more sophisticated personalized uh and provide graphic images that would have been completely uh, unattainable without AI. So I think it up levels our business and at the same time as I noted in the script creates a number of both internal efficiencies.
Ben Allanson: I think coming off of that, questions about The Machine, obviously, launching pretty soon. We have already seen testing with at least one customer, and it is launching in the near future. Question from Laura Martin, first of all. You mentioned that The Machine and tools like that could reduce costs by about 15%. Could you maybe give a little bit more detail about where you envision some of those cost savings coming from?
Agencies and new features and services that we can offer to clients that didn't exist before.
I think coming off of that question.
Launching pretty soon. We've already been testing with a with at least 1 customer in the near future. Um question from Laura Martin. First of all, you mentioned that uh the machine and tools like that could reduce cost by about 15%.
Mark Penn: Sure. Look, when you look at the marketing stack, there's entry, there's mid-level, and then there's kind of higher-level performance. I think The Machine does simplify a lot of tasks that are done by a lot of mid-level people. I think you're going to see some condensation of the labor stack and marketing efficiency. I've been through this before, particularly in research where things went from interviewers and coders to then analysts and people who can run computer systems. I think we're seeing how it changes production. We're seeing how it simplifies media. We're seeing how it's additive to the kind of research that can be done. So I'm expecting that The Machine rolls in. Now, we'll have a central platform for the processes that involve technology and clients, the same way that, as you saw, we rolled in the systems for cash.
If you give a little bit more detail about where you envision, some of those cost savings coming from sure. Look, when you, when you look at the marketing stack, there's entry, there's mid-level and then there's kind of higher level of performance. I I think the machine does simplify a lot of tasks that are done by a lot of mid-level people.
Mark Penn: We roll in the systems for cash, and wow, cash becomes incredibly more efficient. I think you're going to see the same thing. As we roll in The Machine, as we connect it to our other technologies here, as we integrate it with Adobe as well, you're going to see the same kind of improved efficiency in what can be delivered.
Before, you know, particularly in research, where things went from, you know, interviewers and coders to, to then analysts and people who can run computer systems. And, and I think we're seeing how it changes, uh, production we're seeing how it it simplifies media. We're seeing how it's additive to the kind of research that can be done. So, I'm expecting that the machine rolls in now will have a central platform for, for the processes that involve technology and clients the same way that as you saw, we rolled in the systems for cash. We roll in the systems for cash and wow cash becomes incredibly more efficient. I think you're going to see the same thing as we roll in the machine as we connect it to our other Technologies here as we integrate it with Adobe as well. You're going to see the same kind of improved efficiency in in what can be delivered.
Ben Allanson: Before we get into talking about some of the capabilities, a question about net new business from Barton Crockett over at Rosenblatt. He noted that net new win volume doubled in Q1. It was a little bit slower in terms of growth in Q2, but there was a little bit of volatility in the trend. How do you feel about the trajectory of net new business heading into the second half of the year?
um, before we get into talking about some of the capabilities, a question about net new
Frozen. But he he he noted that net new net, new wind volume doubled in 1. Q is a little bit slower in terms of growth in 2q, um, but there is a little bit of volatility in the trend. How do you feel about the trajectory of net new business?
Mark Penn: I think, as I mentioned, we look at kind of our net available pipeline, and our net available pipeline keeps growing rather than shrinking. We don't even put the new government stream into that pipeline. We feel good about it. We think the 130 in Q1 was really exceptional. We think kind of the ones hitting over 100 here is a very solid benchmark for where new business really, really is landing. Remember, the pitch season itself is really heaviest in the fall. It kind of begins to slow down a little bit here, then heavies up in the fall as people hire their vendors and put out their contracts to kick off the beginning of next year.
Heading into the second half of the year.
Ben Allanson: Maybe playing off of that government point, obviously a nice first win within government space. From Jason Cryer over at Craig Hallam, could you maybe frame the opportunity in government and what that can mean for Stagwell Inc. in the coming years?
Well, I I think, as I mentioned, we look at kind of our our net available Pipeline and our net available pipeline keeps growing rather than shrinking. And we don't even put the new government stream in into that into that pipeline. So, we feel good about it. We think the 1, you know, the 130 in q1 was really uh was really exceptional. We think kind of the once we're hitting over 100. Here is a very solid uh Benchmark for where new business really really is landing. You remember, the pitch season itself is really heaviest in the fall. It kind of begins to slow down a little bit here, then then Heavies up uh in the in the fall as people hire their, their vendors and put out their contracts uh to kick off the beginning of next year.
Mark Penn: I think if you went back three years, Stagwell was not at the scale and organizational strength that it could qualify for major government contracts. I think if you look at today, I think we're in the U.S. alone, we're the number two listed U.S. marketing company. As you know, there's a little bit of a tendency now in the government to hire U.S.-based firms, and our scale now has qualified us for opportunities. My experience when I was at WPP was about 10% or 15% of our business should be really government contracts, and many of them are quite large in the hundreds of millions of dollars of media and services. I think it is a very considerable opportunity. We started on this really last year, beginning to see the first benefits trickle in. We're in the finals in three or four others.
Um, maybe playing a that government Point, obviously a nice first win within the government space, um, from Jason Cryer over at Craig Hallam. Could you maybe frame the opportunity in government and what that can mean for stagwell in the coming years. Sure. I I think if he went back, 3 years, stagwell was not at the scale and organizational strength that it could qualify for major government contracts. I I, I think if you look at today, I think we're in the us alone. We're the number 2 listed us marketing company. So as, you know, there's a little bit of a tendency now, in the government to hire us, space farms, uh, and our scale now has qualified US for opportunities. My experience when I was
Mark Penn: Definitely, several years from now, I think you should see that this is a major component of our business from growing from zero because we have scaled up and can handle the complex accounting and other systems necessary to execute successful government contracts.
At wpp was about 10 or 15% of our business, should be really government contracts. And many of them are quite large in the hundreds of millions of dollars of of media and services. So I think it it is a it is a very considerable opportunity. We started on this really last year, we're beginning to see the first benefits trickle in we're in the finals. In 3 or 4, others.
Definitely several years from now. I think you should should see that. That this is a major component of our business from growing from zero because we have scaled up and can handle the complex accounting and other systems necessary to to execute successful government contracts.
Ben Allanson: Just a reminder, if you would like to submit any questions, please do feel free to do so through the chat function. Pivoting to media, you talked a little bit about it in your script, and a question from Steve Cahill and team over at Wells Fargo. A little bit of lagging maybe in our media business in the first half of the year. Can you maybe go into a little bit more detail about some of the steps that have been taken to kind of strengthen that? The second part of the question was, it is currently a little bit subscale relative to some of the other players. Do you consider it a core part of the offering? Does it make sense to continue operating at its current scale, or is there a need to ramp? How would you think about that?
Um,
Just a reminder, if you would like to submit any questions, please do feel free to do so through the chat function, um, listening to Media. Uh, you talked a little bit about it, in your script and question from uh, Steve Cahill and team over at Wells Fargo. Little bit of lagging maybe in our media business in the first half of the year, can you maybe go into a little bit more detail about some of the stuff?
That have been.
Mark Penn: I think we're putting a lot of emphasis on addressing those key points. I think right now we're buying $5 or $6 billion of media, and about 75% or 80% of that is online media. We are performance-oriented in nature. I think the strength of our operation is that if you're a performance-oriented marketer, we probably have the most expensive and best built-out performance marketing advertising system, and it works globally. We're addressing the technology spine of that even further, not just with The Machine, but with the content management system and with the Stagwell ID graph. You put this kind of push towards technology. Our position is that it's not scale, but technological efficiency that really is going to make the best in class when it comes to media. So our plan here is to kind of step up to the next level.
Strengthened that. And then the second part of the question was, um, it's currently a little bit subscale relative to some of the some of the other players. Um, do you consider it a core part of the offering? It doesn't make sense to continue operating at its current scale or, or is there any to ramp how would you think about that? Uh, I know we're putting a lot of emphasis on addressing those those key points. Uh, I I think, I think, right now we're buying 5 or 6 billion dollars of media,
Mark Penn: We already have some global clients spending $300 or $400 million. There's a big market opportunity for us. We are not shying away from it. We expect these technology tools to be completed by the end of the year and to be able to announce a major upgrade of what we can deliver to the marketplace in this area.
Really is going to make the best in class when it comes to Media. So our plan here is to kind of step up to the to the next level. We have already some Global clients spending 3 or 400 million. There's a big Market opportunity for us. We are not shying away from it. We expect these technology tools to be completed by the end of the year, and to be able to announce a major upgrade, what we can deliver to the marketplace in this area.
Ben Allanson: are going to wrap it up with just a couple of questions on M&A and our M&A approach, if that is OK. The first one is just talking about our global expansion, if that makes sense, and a question from an investor going, how do you think about realigning some of the cost synergies as part of that global expansion and as part of the overall M&A strategy? Is it back-office consolidation? How do you think about that?
Mark Penn: I do not know. If Ryan or Frank you want to, I think that the global expansion is less about cost efficiency, and it is more about revenue synergies. We need to really drive bigger contracts, regional and global assignments. That is why last year, my primary focus was on completing our Asia network, which now immediately has drawn bids for Pan-Asia work and also qualified us for other global assignments. In the Mideast, where I saw tremendous growth, we now have 500 or 600 people, and we did not really have an operation there before. Those two functions expand the streams by which new business can come in. So we are getting bids now on contracts that simply we would never have been considered for, both in Asia and in the Mideast. In terms of cost efficiencies, it may tear your hair out with a lot of new jurisdictions.
Um, we're going to wrap it up with just a couple of questions on m&a and our m&a approach, that's okay. Um, first 1 is just talking about our Global, uh, our Global expansion if that makes sense. And the question from an investor going, how do you think about realizing some of the cost synergies as part of that Global expansion? And as part of the overall m&a strategy, you know, is it, um, is it back up as consolidation? How do you think? We think about that?
Uh well I don't I don't know if we're in our Frank, you want to. I I think that the the global expansion is less about cost efficiency and it's more about Revenue synergies. Uh we need to really Drive bigger contracts Regional and Global assignments. That's why last year my primary focus was on.
Ryan Green: Yeah, that is very accurate. I would say there is benefit that comes with our scaled cost that we have put in place and when we negotiate it. One of the biggest benefits really is we've established hubs, and when they join our hubs, it provides an opportunity for them to work together with us so they are not going it alone and bringing not only our offering more complete, but bringing more opportunities to them so that we can better service employees.
Completing our Asia Network, which now immediately has drawn, you know, Biz or panasia work and also qualified US for other Global assignments. And in the Middle East where I saw tremendous growth, and we now have 5 or 6, hundred people, uh, and we didn't really have an operation there before and those 2 functions, expand the streams by which new business can come in. So, we're getting bids now and contracts that simply we would never have been considered for both in Asia. Uh, and in the Middle East. In terms of cost efficiencies, uh, it may tear your hair out with a lot of new jurisdictions. Yeah, that that is very accurate, I would say there. There is benefits that comes with our skilled costs that we have put in place. So what we negotiated but I think 1 of the biggest benefits really is we've established hubs and when they join our hubs and up for providing an opportunity for to work together with us, so they're not going it alone. They're bringing in not only our offering more complete but bringing more opportunities to them so that we can better service.
Ben Allanson: A couple more questions here. I think two related ones. Just one asking about potential dispositions in the back half of the year. We have talked about them in the past, but are there sort of any opportunities for that? A couple of questions related, one from Barton and one from Laura, talking about the possible spin-off of the Stagwell Marketing Cloud, something you mentioned in the past. How would you think about the time being right for that if that was going to happen? What might be some of the barriers that would need to be met or whatever it might be before that happens?
Um, couple more questions here. Uh,
2 related ones, just 1 asking about the potential potential disposition.
In the back half of the year, we
Mark Penn: Sure. Look, I think in terms of the marketing cloud, we are a ways off from that. I think you are beginning to see clearly the Harris Quest brand is a hit, and the first thing I think prerequisite in technology is to have some hits, and I think that is beginning to develop. I think that you have got to get really pretty much double, somewhere at least double or more of the revenue before you consider alternatives. We want to make sure that the marketing cloud gets its full value. If that full value is part of being incorporated in Stagwell, great. If it is a tracking stock or if it is a spin-off, we will consider those options when we get there.
In the past. Uh, but I I is there sort of any opportunity for that and then a couple of questions, um, related 1 from Barton and 1 from Laura talking about that the possible spin-off of the marketing class. Something you mentioned in the past. How would you think about the time being right for that if that was going to happen? What might be some of the barriers that would need to be met or whatever it might be before that happened. Um, uh sure, uh, look, I, I think, in terms of the terms of the marketing Cloud, uh, we're a ways off from that. I think you're beginning to see what clearly, uh, Harris Quest. Brand is a hit and the first thing I think prerequisite in technology is to have some hits and I think that's beginning to, uh, to to develop, you know, in in that I I think that you got to get really pretty much double, you know, somewhere, at least double or or more the revenue before you consider alternatives, we want to make sure that the marketing Cloud gets its full value. If that full value is part of being incorporated into stag world,
Mark Penn: Right now, as I said before, we are finishing development on a lot of the products, bringing it together, beginning to get it to a market, trying to identify if we are hitting a consumer need. In terms of what was the first one on?
Great. If it's a tracking stock, or if it's a spin-off, we will consider those options when we get there. Right now, as I said before, we are finishing development on a lot of the products, bringing them together, beginning to get them to market, and trying to identify where we're addressing consumer needs.
Ben Allanson: It was just about potential dispositions.
Mark Penn: I don't see anything slated for the rest of this year. There are one or two that we're looking at for next year.
Ben Allanson: One final question from Laura Martin. This is just turning back to the government work side of things. She goes, how much does government work add to your backlog? Then she goes, aren't government margins a little bit lower? Could you maybe discuss some of the pros and cons of government work versus commercial new business at a time when Gen AI is demanding resources across nearly all incumbent companies in the U.S. economy?
And uh, in terms of what was the first 1 on? I was just about potential disposition. Uh I don't see anything slated for the rest of this year. Uh there there are 1 or 2 that we're looking at for for for next year.
Mark Penn: First of all, I think in government, they are looking for a few new vendors. I think they are a little tired of some of the old vendors, and we provide kind of a great new opportunity. Look, I think those contracts often are multi-year in nature, and they provide actually an element of stability. Some of these contracts are three and five-year contracts. Even the one that we have won outside in California is a three-year contract, and that actually provides more stability and definiteness. I think the margins, I think at the end of the day, come out about the same because there is a lot more paperwork to comply with, but at the same time, you know, they typically are of a larger size than typical corporate assignments.
Um 1 final question from Laura Martin, this is just turning back to the government work side of things she goes how much does government work? Add to your backlog backlog and she thinks aren't government margins. A little bit lower. Could you maybe discuss some of the pros and cons of government work versus commercial new business at a time when Gen AI is demanding resources across, nearly all incumbent companies in the US economy. Well, first of all, I think the government they're they're looking for a few new vendors.
Uh, I think there are a little tired of some of the, some of the old vendors and we provide kind of a, a, a great new opportunity. Uh look. I think those contracts often are multi-year in nature and they provide actually an element of stability. Some of these contracts are 3 and 5 year contracts. Even the 1 that we uh that we run outside of California, is a 3 year contract and that actually provides more stability and definiteness
There's a lot more paperwork, uh, and to comply with. But at the same time, you know, they typically are of a larger size
Mark Penn: I think it will fit in nicely. We are at the right scale now to be really tough competitors, and when appropriate, we will bring in or work with partners in order to win the business. I think we are not going to be shy or shy away from doing that.
Ben Allanson: Thank you, Mark. Thank you, Ryan. Thank you, Frank. That brings an end to the Q&A section of the call. Thank you, as always, for joining us today, and we look forward to welcoming you later this year for our third quarter call.
Than typical corporate assignments. And so I think it will fit in nicely. We're at the right scale. Now, to be to be really tough competitors and win appropriate. We'll we'll uh, we'll bring in or work with Partners uh, in order to to win the business. And I think we're not going to be, you know shy or shy away from doing that.
Mark Penn: Thank you.
Thank you, Mark. Thank you Ron. Thank you, Frank. Uh, that brings an end to the Q&A section of the of the call. Thank you as always for joining us today and we look forward to welcoming you later this year for
thank you.