How did STGW's Q4 earnings surprise investors?

Stagwell's Q4 2024 earnings report met analysts' expectations with an earnings per share (EPS) of $0.24 and revenue of $789 million, which included an approximately 5% surplus over forecasts. Despite the lack of positive surprises, the company's strong performance was evident through significant revenue growth driven by strategic initiatives.

1. **Revenue Growth**: Stagwell reported a 20% increase in revenue compared to the previous year, reaching $789 million. The net revenue for the quarter was $630 million, marking a 14% year-over-year growth.
2. **Digital Transformation**: The Digital Transformation segment experienced a 22% year-over-year growth in revenue during Q4, contributing significantly to the overall performance. This success was attributed to significant AI project wins, indicating a promising new wave of AI-driven work that could further enhance Stagwell’s market position.
3. **New Business**: Stagwell posted $102 million in net new business for Q4, marking the third consecutive quarter where net new business figures exceeded $100 million. This momentum reflects the company’s strong market presence and ability to attract new clients.
4. **Strategic Investments**: In 2024, Stagwell made strategic investments to expand its capabilities and geographical reach, including significant growth in the Middle East, Europe, Latin America, and Asia. These moves have enhanced the company’s geographical reach and capabilities, positioning it for further growth.

Investors reacted positively to the earnings report, with Stagwell's stock rising by 2.09% in premarket trading following the earnings release, indicating positive investor sentiment. The company's strong revenue growth, driven by strategic initiatives and market positioning, suggests a promising outlook for the future.