Stagwell (NASDAQ: STGW) grows Q1 2026 revenue but widens net loss
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Stagwell Inc. reported first-quarter 2026 revenue of $704.1 million, up from $651.7 million a year earlier, driven by growth in Digital Transformation and Communications. Despite higher revenue, the company recorded a net loss of $13.9 million versus a $5.3 million loss, with diluted loss per share widening to $0.05 from $0.04.
Adjusted EBITDA increased to $89.7 million from $82.3 million as the company managed staff and administrative costs. Operating cash flow was a use of $26.5 million, an improvement from $60.0 million used in the prior-year quarter.
Stagwell ended the period with $114.9 million in cash and $1.44 billion of long-term debt, primarily its credit facility and 5.625% senior notes. The company repurchased 7.3 million Class A shares for $44.9 million and completed the $10.2 million Wavelength acquisition to expand its communications capabilities.
Positive
- None.
Negative
- None.
Key Figures
Revenue: $704.1M
Net loss: $13.9M
Diluted loss per share: $0.05
+5 more
8 metrics
Revenue
$704.1M
Three months ended March 31, 2026 vs $651.7M in 2025
Net loss
$13.9M
Three months ended March 31, 2026 vs $5.3M loss in 2025
Diluted loss per share
$0.05
Three months ended March 31, 2026; $0.04 diluted loss per share in 2025
Adjusted EBITDA
$89.7M
Three months ended March 31, 2026 vs $82.3M in 2025
Net cash from operating activities
-$26.5M
Three months ended March 31, 2026 vs -$60.0M in 2025
Long-term debt
$1.44B
As of March 31, 2026, including Credit Agreement and 5.625% Notes
Class A share repurchases
$44.9M
7.3M shares repurchased in Q1 2026 at $6.16 average price
Wavelength acquisition price
$10.2M
Net assets of Wavelength Strategy LLC acquired January 30, 2026
Key Terms
Adjusted EBITDA, Free Cash Flow, Tax Receivable Agreement, redeemable noncontrolling interests, +2 more
6 terms
Adjusted EBITDA financial
"The CODM uses Adjusted EBITDA as a key metric to evaluate the operating and financial performance of a segment"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Free Cash Flow financial
"“Free Cash Flow” is defined as consolidated net cash flow from operations less cash outflow from capital expenditures and capitalized software"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
Tax Receivable Agreement financial
"In connection with the Company’s Tax Receivable Agreement (“TRA”), the Company is required to make cash payments to Stagwell Media"
A contract in which a company agrees to pay a specified party (often former owners after a spinoff or IPO) a share of future tax savings the company realizes. Think of it like agreeing to share a future tax refund with someone who helped create the conditions for that refund. For investors it matters because those payments reduce the cash the company can use for dividends, buybacks, or reinvestment, and therefore affect valuation and returns.
redeemable noncontrolling interests financial
"Where the incremental purchase may be required of the Company, the amounts are recorded as Redeemable noncontrolling interests in mezzanine equity"
A redeemable noncontrolling interest is a minority ownership stake in a company that the holder can force the company to buy back at a set price or under certain conditions. For investors this matters because it creates a future cash obligation and can be treated more like a liability than permanent equity, affecting a company’s reported debt, net income and valuation — think of it as a part-owner who can cash out, forcing the business to pay them.
Deferred acquisition consideration financial
"Adjustments to deferred acquisition consideration contains fair value changes from the Company’s initial estimates of deferred acquisition payments"
The Marketing Cloud financial
"The Marketing Cloud segment delivers a comprehensive suite of technology solutions for in-house marketers, combining SaaS and DaaS offerings"
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended March 31, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from ______________ to ______________
Commission File Number: 001-13718
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(646 ) 429-1800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | ☒ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of common shares outstanding as of April 22, 2026, was 247,854,366 shares of Class A Common Stock.
Table of Contents
STAGWELL INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
| Page | ||||||||
| PART I. FINANCIAL INFORMATION | ||||||||
| Item 1. | Financial Statements | 3 | ||||||
Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 | 3 | |||||||
Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2026 and 2025 | 4 | |||||||
Unaudited Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 | 5 | |||||||
Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 | 6 | |||||||
Unaudited Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2026 and 2025 | 8 | |||||||
Notes to the Unaudited Consolidated Financial Statements | 10 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 45 | ||||||
| Item 4. | Controls and Procedures | 46 | ||||||
| PART II. OTHER INFORMATION | ||||||||
| Item 1. | Legal Proceedings | 46 | ||||||
| Item 1A. | Risk Factors | 46 | ||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 46 | ||||||
| Item 3. | Defaults Upon Senior Securities | 47 | ||||||
| Item 4. | Mine Safety Disclosures | 47 | ||||||
| Item 5. | Other Information | 47 | ||||||
| Item 6. | Exhibits | 47 | ||||||
Signatures | 49 | |||||||
Table of Contents
EXPLANATORY NOTE
References in this Form 10-Q to “Stagwell,” “we,” “us,” “our” and the “Company” refer to Stagwell Inc. and its direct and indirect subsidiaries, unless the context otherwise requires or otherwise is expressly stated.
All dollar amounts are stated in United States (“U.S.”) dollars unless otherwise stated.
Forward-Looking Statements
This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company’s beliefs and expectations, future financial performance, growth, and future prospects, the Company’s strategy, business and economic trends and growth, technological leadership and differentiation, potential and completed acquisitions, anticipated and actual operating efficiencies and synergies and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as “ability,” “aim,” “anticipate,” “assume,” “believe,” “better,” “build,” “consider,” “continue,” “could,” “develop,” “drive,” “enhance,” “estimate,” “expect,” “focus,” “forecast,” “future,” “grow,” “guidance,” “improve,” “intend,” “likely,” “maintain,” “may,” “ongoing,” “outlook,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “seek,” “should,” “target,” “will,” “would” or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section.
Forward-looking statements in this document are based on certain key expectations and assumptions made by the Company. Although the management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The material assumptions upon which such forward-looking statements are based include, among others, assumptions with respect to general business, economic and market conditions, the competitive environment, anticipated and unanticipated tax consequences and anticipated and unanticipated costs. These forward-looking statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:
•risks associated with international, national and regional unfavorable economic conditions, including the effect of changing tariffs and other trade policies, inflation and other macroeconomic factors that could affect the Company or its clients;
•demand for the Company’s services, which may precipitate or exacerbate other risks and uncertainties;
•inflation and actions taken by central banks to counter inflation;
•the Company’s ability to attract new clients and retain existing clients;
•the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
•financial failure of the Company’s clients;
•the Company’s ability to retain and attract key employees;
•the Company’s ability to compete in the markets in which it operates;
•the Company’s ability to achieve its cost saving initiatives;
•the Company’s implementation of strategic initiatives;
•the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests, deferred acquisition consideration and profit interests;
•the Company’s ability to manage its growth effectively;
•the Company’s ability to identify and complete acquisitions or other strategic transactions that complement and expand the Company’s business capabilities and successfully integrate newly acquired businesses into the Company’s operations, retain key employees, and realize cost savings, synergies and other related anticipated benefits within the expected time period;
•the Company’s ability to identify and complete divestitures and to achieve the anticipated benefits therefrom;
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•the Company’s ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products;
•the Company’s use of artificial intelligence, including generative artificial intelligence;
•adverse tax consequences for the Company, its operations and its stockholders, that may differ from the expectations of the Company, including that recent or future changes in tax laws, potential changes to corporate tax rates in the United States and disagreements with tax authorities on the Company’s determinations that may result in increased tax costs;
•adverse tax consequences in connection with the business combination that formed the Company in August 2021, including the incurrence of material Canadian federal income tax (including material “emigration tax”);
•the Company’s ability to maintain an effective system of internal control over financial reporting, including the risk that the Company’s internal controls will fail to detect misstatements in its financial statements;
•the Company’s ability to accurately forecast its future financial performance and provide accurate guidance;
•the Company’s ability to protect client data from security incidents or cyberattacks;
•economic disruptions resulting from war and other economic and geopolitical tensions (such as the ongoing military conflicts in Iran and the Middle East, and between Russia and Ukraine), terrorist activities, natural disasters, public health events, and tariff and trade policies;
•stock price volatility; and
•foreign currency fluctuations.
Investors should carefully consider these risks and the additional risk factors described in more detail in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2026, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share amounts)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue | $ | $ | |||||||||
| Operating expenses | |||||||||||
| Cost of services | |||||||||||
| Office and general expenses | |||||||||||
| Depreciation and amortization | |||||||||||
Operating income | |||||||||||
| Other income (expenses): | |||||||||||
| Interest expense, net | ( | ( | |||||||||
| Foreign exchange, net | ( | ||||||||||
Other, net | ( | ||||||||||
| ( | ( | ||||||||||
Loss before income taxes and equity in earnings of non-consolidated affiliates | ( | ( | |||||||||
Income tax (benefit) expense | ( | ||||||||||
| Loss before equity in earnings of non-consolidated affiliates | ( | ( | |||||||||
| Equity in loss of non-consolidated affiliates | ( | ( | |||||||||
| Net loss | ( | ( | |||||||||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | |||||||||||
| Net loss attributable to Stagwell Inc. common shareholders | $ | ( | $ | ( | |||||||
| Loss per common share: | |||||||||||
| Basic | $ | ( | $ | ( | |||||||
| Diluted | $ | ( | $ | ( | |||||||
| Weighted average number of common shares outstanding: | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
See Notes to the Unaudited Consolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands)
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| COMPREHENSIVE INCOME (LOSS) | ||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
Other comprehensive income (loss) - Foreign currency translation adjustment | ( | |||||||||||||
Comprehensive income (loss) for the period | ( | |||||||||||||
Comprehensive (income) loss attributable to the noncontrolling and redeemable noncontrolling interests | ( | |||||||||||||
Comprehensive income (loss) attributable to Stagwell Inc. common shareholders | $ | ( | $ | |||||||||||
See Notes to the Unaudited Consolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
| March 31, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Expenditures billable to clients | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Fixed assets, net | |||||||||||
| Right-of-use lease assets - operating leases | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Deferred tax assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS (“RNCI”), AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued media | |||||||||||
| Accruals and other liabilities | |||||||||||
| Advance billings | |||||||||||
| Current portion of lease liabilities - operating leases | |||||||||||
| Current portion of deferred acquisition consideration | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term portion of deferred acquisition consideration | |||||||||||
| Long-term lease liabilities - operating leases | |||||||||||
| Deferred tax liabilities | |||||||||||
| Long-term tax receivable agreement liability | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Redeemable noncontrolling interests | |||||||||||
Commitments, contingencies and guarantees (Note 9) | |||||||||||
Shareholders’ equity | |||||||||||
| Common shares - Class A | |||||||||||
| Paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
Stagwell Inc. shareholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
Total shareholders’ equity | |||||||||||
Total liabilities, RNCI, and shareholders’ equity | $ | $ | |||||||||
See Notes to the Unaudited Consolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to cash used in operating activities: | |||||||||||
| Stock-based compensation | |||||||||||
| Depreciation and amortization | |||||||||||
Amortization of right-of-use lease assets and lease liability interest | |||||||||||
| Lease termination gain | ( | ||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Adjustment to deferred acquisition consideration | |||||||||||
| Other, net | ( | ||||||||||
| Changes in working capital: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Expenditures billable to clients | ( | ||||||||||
| Other current assets | ( | ( | |||||||||
| Accounts payable | ( | ( | |||||||||
| Accrued expenses and other liabilities | ( | ( | |||||||||
| Advance billings | |||||||||||
| Current portion of lease liabilities - operating leases | ( | ( | |||||||||
Net cash used in operating activities | ( | ( | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capitalized software | ( | ( | |||||||||
| Capital expenditures | ( | ( | |||||||||
| Acquisitions, net of cash acquired | ( | ||||||||||
| Other | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repayment of borrowings under revolving credit facility | ( | ( | |||||||||
| Proceeds from borrowings under revolving credit facility | |||||||||||
| Shares repurchased and cancelled | ( | ( | |||||||||
| Distributions to noncontrolling interests | ( | ( | |||||||||
| Payment of deferred consideration | ( | ||||||||||
Tax Receivables Agreement payment | ( | ||||||||||
Net cash provided by financing activities | |||||||||||
| Effect of exchange rate changes on cash and cash equivalents | |||||||||||
| Net increase in cash and cash equivalents | |||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued)
(amounts in thousands)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Supplemental Cash Flow Information: | |||||||||||
| Cash income taxes paid | $ | $ | |||||||||
| Cash interest paid | |||||||||||
| Non-cash investing and financing activities: | |||||||||||
| Shares issued for business acquisitions | |||||||||||
| Right-of-use lease assets obtained in exchange for operating lease liabilities | |||||||||||
See Notes to the Unaudited Consolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(amounts in thousands)
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares - Class A | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Stagwell Inc. Shareholders’ Equity | Noncontrolling Interests | Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Total other comprehensive loss | — | — | — | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Changes in redemption value of RNCI, net of tax | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Restricted awards granted or vested | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased and cancelled | ( | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Restricted shares forfeited | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Shares issued, acquisitions | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
See Notes to the Unaudited Consolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - (continued)
(amounts in thousands)
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares - Class A | Common Shares - Class C | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Stagwell Inc. Shareholders’ Equity | Noncontrolling Interests | Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in redemption value of RNCI, net of tax | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted awards granted or vested | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased and cancelled | ( | ( | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted shares forfeited | ( | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in ownership held by Class C shareholders | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
See Notes to the Unaudited Consolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Business and Basis of Presentation
Stagwell Inc. (together with its consolidated subsidiaries, unless the context requires otherwise, the “Company,” “we,” or “Stagwell”), incorporated under the laws of Delaware, operates a global network of technology-enabled marketing & advertising, media, data, and technology businesses (“Brands”). We help clients grow by delivering both discrete and integrated products and services, including self-service software-as-a-service (“SaaS”) and data-as-a-service (“DaaS”). Our offerings address needs such as creative, communications strategy, digital transformation, experiences, technology solutions, and market research across our Marketing Services, Communications, Digital Transformation, Media & Commerce, and The Marketing Cloud segments that support clients in navigating change and achieving measurable results in a rapidly evolving business environment.
On September 30, 2025, the Company reorganized its organizational structure, which resulted in a realignment of its segments. Refer to Note 14 of the Notes included herein for additional information.
The accompanying Unaudited Consolidated Financial Statements include the accounts of Stagwell and its subsidiaries. Stagwell has prepared the unaudited consolidated interim financial statements included herein in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting interim financial information on Form 10-Q. The preparation of financial statements in conformity with GAAP requires us to make judgments, assumptions and estimates about current and future results of operations and cash flows that affect the amounts reported and disclosed. Actual results could differ from these estimates and assumptions. The consolidated reports for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).
The accompanying financial statements reflect all adjustments, consisting of normal recurring accruals, which in the opinion of management are necessary for a fair statement, in all material respects, of the information contained therein. Intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to the prior year financial information to conform to the current year’s presentation.
Accounting Change
In January 2026, the Company adopted Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient and clarifications related to estimating expected credit losses on current accounts receivable and current contract assets. The Company applied the amendments prospectively and elected the practical expedient. Adoption of ASU 2025-05 did not have a material impact on the Company’s consolidated financial statements.
2. New Accounting Pronouncements
In December 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-11, Interim Reporting (Topic 270): Improvements to Interim Disclosure Requirements (“ASU 2025-11”), to enhance the transparency and consistency of interim financial reporting by clarifying and expanding certain disclosure requirements in interim periods. ASU 2025-11 is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company is evaluating the impact of these new requirements on its interim financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), to clarify the scope, capitalization criteria, and disclosure requirements for software costs that are accounted for under Subtopic 350-40 (referred to as “internal-use software”). ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company is evaluating the impact of these new requirements on the accounting for its internal-use software.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses (“ASU 2024-03”), to enhance the transparency and decision usefulness of financial information presented in the income statement by requiring disaggregated information about certain income statement expense line items. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is evaluating the impact of these new requirements on its income statement presentation and disclosures.
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3. Acquisition
Acquisition of Wavelength
On January 30, 2026, the Company acquired the net assets of Wavelength Strategy LLC (“Wavelength”), a digital advocacy and communications company, for $10.2 million, consisting of $4.3 million, recorded as a short-term liability, $0.3 million paid in cash, and $5.6 million paid in 863,624 shares of the Company’s Class A Common Stock, subject to post-closing adjustments. In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of $24.8 million, subject to continued employment and meeting certain future earnings targets, of which a portion may be settled in shares of Class A Common Stock, at the Company’s discretion. The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of Wavelength and expected growth related to new customer relationships. Trade names of less than $1.0 million, Customer relationships of $3.4 million, and Goodwill of $6.3 million were assigned to the Communications reportable segment. The goodwill is fully deductible for income tax purposes. The purchase price accounting is not yet final as the Company may still make adjustments due to changes in post-closing adjustments.
The unaudited pro forma revenue and net income in 2026 was not materially different from the actual amounts of revenue and net income reported for these periods. Further, there were no material post-closing adjustments during the three months ended March 31, 2026.
4. Revenue
Disaggregated Revenue Data
The Company provides a broad range of services to a large base of clients across each of our segments globally. The primary source of revenue is from Brand arrangements in the form of fees for services performed, commissions, and performance incentives or bonuses. Certain clients may engage with the Company in various geographic locations, across multiple disciplines, and through multiple Brands. Representation of a client rarely means that Stagwell handles marketing communications for all brands or product lines of the client in every geographical location. The Company’s Brands often cooperate with one another through referrals and the sharing of economics, services and expertise, which enables Stagwell to service clients’ varied marketing needs by crafting custom integrated solutions.
As of March 31, 2026, Stagwell’s Brands were located in the United States, the United Kingdom, and at least 33 other countries around the world. The Company continues to expand its global footprint to support clients in international markets.
The following table presents revenue disaggregated by geography based on where the services are performed for the three months ended March 31:
| Geographical Location | Reportable Segment | 2026 | 2025 | ||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| United States | All | $ | $ | ||||||||||||||
| United Kingdom | All (except Digital Transformation) | ||||||||||||||||
| Other | All | ||||||||||||||||
| $ | $ | ||||||||||||||||
See Note 14 of the Notes included herein for further discussion on disaggregated revenue data.
Unbilled Receivables and Contract Liabilities
Unbilled receivables consist of fees and reimbursable outside vendor costs incurred on behalf of clients when providing advertising, marketing and corporate communications services that have not yet been invoiced to clients. Such amounts are invoiced to clients at various times over the course of providing services. In arrangements where we act as principal, unbilled receivables are included as a component of Accounts receivable on the Unaudited Consolidated Balance Sheets. These receivables totaled $222.2 million and $154.2 million as of March 31, 2026 and December 31, 2025, respectively. In arrangements where we act as agent, unbilled amounts related to fees are recorded in unbilled receivables and amounts pertaining to reimbursable vendor costs are included on the Unaudited Consolidated Balance Sheets as Expenditures billable to clients. These assets were $170.3 million and $164.7 million as of March 31, 2026 and December 31, 2025, respectively.
Contract liabilities represent advanced billings to customers for fees and reimbursements of third-party costs, whether we act as principal or agent. Such fees and reimbursements of third-party costs are classified as Advance billings on the Company’s Unaudited Consolidated Balance Sheets. Advance billings as of March 31, 2026 and December 31, 2025, were $393.0 million and $329.8 million, respectively. Substantially all of the Advance billings balance as of December 31, 2025 is expected to be recognized as revenue in 2026, which included the incurrence and reimbursement of third-party costs where the Company acts as an agent.
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Unsatisfied Performance Obligations
5. Loss Per Share
The following table presents the computations of basic and diluted loss per common share for the three months ended March 31, 2026 (amounts in thousands, except per share amounts):
| 2026 | |||||
Loss Per Share - Basic and Diluted | |||||
| Numerator: | |||||
| Net loss | $ | ( | |||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | |||||
| Net loss attributable to Stagwell Inc. common shareholders | $ | ( | |||
| Denominator: | |||||
| Weighted average number of common shares outstanding | |||||
Loss Per Share - Basic and Diluted | $ | ( | |||
| Anti-dilutive: | |||||
Restricted Awards | |||||
Class A Shares to settle deferred acquisition obligations | |||||
| Employee Stock Purchase Plan shares | |||||
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The following table presents the computations of basic and diluted loss per common share for the three months ended March 31, 2025 (amounts in thousands, except per share amounts):
| 2025 | |||||
| Loss Per Share - Basic | |||||
| Numerator: | |||||
| Net loss | $ | ( | |||
| Net loss attributable to Class C shareholders | |||||
| Net income attributable to other equity interest holders | ( | ||||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | |||||
| Net loss attributable to Stagwell Inc. common shareholders | $ | ( | |||
| Denominator: | |||||
| Weighted average number of common shares outstanding | |||||
| Loss Per Share - Basic | $ | ( | |||
| Loss Per Share - Diluted | |||||
| Numerator: | |||||
| Net loss attributable to Stagwell Inc. common shareholders | $ | ( | |||
| Net loss attributable to Class C shareholders | ( | ||||
| $ | ( | ||||
| Denominator: | |||||
| Basic - Weighted average number of common shares outstanding | |||||
| Dilutive shares: | |||||
| Class C Shares | |||||
| Diluted - Weighted average number of common shares outstanding | |||||
| Loss Per Share - Diluted | $ | ( | |||
| Anti-dilutive: | |||||
| Class A Shares to settle deferred acquisition obligations | |||||
| Stock Appreciation Rights and Restricted Awards | |||||
| Employee Stock Purchase Plan shares | |||||
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6. Deferred Acquisition Consideration
The following table presents changes in deferred acquisition consideration for the three months ended March 31, 2026 and the year ended December 31, 2025 and a reconciliation to the amounts reported on the Unaudited Consolidated Balance Sheets as of the dates indicated:
| March 31, 2026 | December 31, 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Beginning balance | $ | $ | |||||||||
Payments (1) | ( | ||||||||||
Adjustments to deferred acquisition consideration (2) | |||||||||||
| Currency translation adjustment | ( | ||||||||||
Ending balance (3) | $ | $ | |||||||||
(1) Includes deferred acquisition consideration payments settled in shares of Class A Common Stock and other forms of payment of $21.8 million for the year ended December 31, 2025.
(2) Adjustments to deferred acquisition consideration contains fair value changes from the Company’s initial estimates of deferred acquisition payments and accretion of expense as awards are earned over the vesting period.
(3) The deferred acquisition consideration as of March 31, 2026 and December 31, 2025 includes $15.2 million and $13.6 million, respectively, expected to be settled in shares of Class A Common Stock.
7. Debt
The following tables present the Company’s indebtedness as reported on the Unaudited Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
Credit Agreement | $ | $ | |||||||||
| Debt issuance costs | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
Interest expense related to long-term debt included in Interest expense, net on the Unaudited Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025 was $22.4 million, and $22.7 million, respectively.
The amortization of debt issuance costs included in Interest expense, net on the Unaudited Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025 was $0.7 million and $0.7 million, respectively.
Revolving Credit Agreement
The Company is party to a senior secured revolving credit facility with a five-year maturity with a syndicate of banks (as amended the “Credit Agreement”). On March 27, 2026, the Company entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement that modified certain provisions of the Credit Agreement to expand the Company’s ability to borrow under its revolving credit facility in non-U.S. dollar currencies. Under the prior terms, borrowings denominated in British pounds sterling and Euros were each subject to individual sub-limits of $50.0 million, with an aggregate foreign currency sub-limit of $100.0 million. The amendment eliminated those individual currency sub-limits, allowing borrowings in U.S. dollars, British pounds sterling, Euros, and Canadian dollars up to the full revolving commitment, subject to overall facility availability. The amendment also established a framework for adding other currencies by mutual agreement among the Company and the lenders, subject to a sub-limit of $100.0 million. In addition, the amendment increased the annual limit on permitted restricted payments for repurchases or redemptions of the Company’s stock to $175.0 million per fiscal year from $100.0 million, and increased the annual limit on permitted repurchases of equity interests from employees of the Company to $50.0 million per fiscal year from $15.0 million. As of March 31, 2026, the Credit Agreement provides revolving commitments of up to $750 million with a maturity date of April 23, 2030.
Borrowings pursuant to the Credit Agreement bear interest at a rate equal to, at the Company’s option, (i) the greatest of (a) the prime rate of interest in effect on such day, (b) the federal funds effective rate plus 0.50% and (c) the Secured Overnight Financing Rate (“SOFR”), plus 1% in each case, plus the applicable margin (calculated based on the Company’s Total
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Leverage Ratio, as defined in the Credit Agreement) at that time or (ii) the SOFR rate plus the applicable margin (calculated based on the borrowers’ total leverage ratio) at that time.
The Credit Agreement contains a number of financial and non-financial covenants and is guaranteed by substantially all of our present and future subsidiaries, subject to customary exceptions. The Company was in compliance with all covenants as of March 31, 2026.
A portion of the Credit Agreement in an amount not to exceed $50.0 million is available for the issuance of standby letters of credit. As of March 31, 2026 and December 31, 2025, the Company had issued undrawn outstanding letters of credit of $15.6 million and $15.1 million, respectively.
Senior Notes
The Company had $1.1 billion aggregate principal amount of 5.625 % senior notes (“5.625 % Notes”) outstanding as of March 31, 2026. The 5.625 % Notes are due August 15, 2029, and bear annual interest of 5.625 % to be paid semiannually on February 15 and August 15 of each year.
The 5.625 % Notes are also subject to certain covenants and customary events of default, including cross-payment default and cross-acceleration provisions. The Company was in compliance with all covenants as of March 31, 2026.
8. Noncontrolling and Redeemable Noncontrolling Interests
When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the option to purchase incremental ownership is within the Company’s control, the amounts are recorded as Noncontrolling interests within Shareholders’ Equity in the Unaudited Consolidated Balance Sheets. Where the incremental purchase may be required of the Company, the amounts are recorded as Redeemable noncontrolling interests in mezzanine equity in the Unaudited Consolidated Balance Sheets at their estimated acquisition date redemption value and adjusted at each reporting period for changes to their estimated redemption value through Retained earnings (but not less than their initial redemption value), except for foreign currency translation adjustments.
The following table presents Net income (loss) attributable to noncontrolling and redeemable noncontrolling interests between Class C shareholders and other equity interest holders for the three months ended March 31:
| 2026 | 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
Net loss attributable to Class C shareholders (1) | $ | $ | ( | ||||||||
Net income (loss) attributable to other equity interest holders | ( | ||||||||||
Net loss attributable to noncontrolling interests | $ | ( | $ | ( | |||||||
| Net income (loss) attributable to redeemable noncontrolling interests | ( | ||||||||||
Net loss attributable to noncontrolling and redeemable noncontrolling interests | $ | ( | $ | ( | |||||||
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The following table presents changes in redeemable noncontrolling interests for the three months ended March 31, 2026 and the year ended December 31, 2025:
| March 31, 2026 | December 31, 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Beginning balance | $ | $ | |||||||||
Additions | |||||||||||
| Distributions | ( | ( | |||||||||
Changes in redemption value (1) | ( | ||||||||||
Net income (loss) attributable to redeemable noncontrolling interests (2) | ( | ||||||||||
| Currency translation adjustment | |||||||||||
| Ending balance | $ | $ | |||||||||
(1) Changes in redemption value are the fair value changes from the acquisition date redemption value based on the options held by the minority interest holders, adjusted through Retained earnings.
The noncontrolling shareholders’ ability to exercise any such option right is subject to the satisfaction of certain conditions, including conditions requiring notice in advance of exercise and specific employment termination conditions. In addition, these rights cannot be exercised prior to specified staggered exercise dates. The exercise of these rights at their earliest contractual date would result in obligations of the Company to fund the related amounts between 2026 and 2031. It is not determinable, at this time, if or when the owners of these rights will exercise all or a portion of these rights.
These adjustments will not impact the calculation of earnings per share if the redemption values are less than the estimated fair values. As such, there is no related impact on the Company’s earnings per share calculations for the three months ended March 31, 2026 and 2025.
9. Commitments, Contingencies, and Guarantees
Legal Proceedings. The Company’s operating entities are involved in legal proceedings and regulatory inquiries of various types. While any litigation or investigation contains an element of uncertainty, the Company has no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on the financial condition and results of operations of the Company.
Guarantees. Generally, the Company has indemnified the purchasers of certain assets in the event that a third party asserts a claim against the purchaser that relates to a liability retained by the Company. These types of indemnification guarantees typically extend for a number of years. Historically, the Company has not made any significant indemnification payments under such agreements, and no amount has been accrued in the accompanying Unaudited Consolidated Financial Statements with respect to these indemnification guarantees. The Company continues to monitor the conditions that are subject to guarantees and indemnifications to identify whether it is probable that a loss has occurred and would recognize any such losses under any guarantees or indemnifications in the period when those losses are probable and estimable.
Commitments. In the ordinary course of business, the Company enters into certain commitments. The following details the significant commitments of the Company as of March 31, 2026:
The Company had $15.6 million of undrawn letters of credit outstanding. See Note 7 of the Notes included herein for additional information.
The Company enters into long-term, non-cancellable contracts with partner associations that include revenue or profit-sharing commitments related to the provision of its services. These contracts may also include provisions that require the partner associations to meet certain performance targets prior to any obligation to the Company. As of March 31, 2026, the Company estimates its future minimum commitments under these non-cancellable agreements to be $7.4 million, $7.5 million, $4.7 million, $3.3 million and $1.3 million for the remainder of 2026, 2027, 2028, 2029 and 2030, respectively.
The Company is party to a long-term, non-cancellable contract with a certain vendor for cloud services that requires the Company to commit to minimum spending over the contract term. As of March 31, 2026, the Company estimates its future minimum commitments under this agreement to be $5.4 million, $10.5 million, $12.6 million and $15.4 million for the remainder of 2026, 2027, 2028 and 2029, respectively.
The Company is party to a long-term, non-cancellable contract with a certain vendor for a software license agreement that requires the Company to commit to minimum spending over the contract term. As of March 31, 2026, the Company estimates
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10. Share Capital
The authorized and outstanding share capital of the Company is below.
Class A Common Stock
There are 1.0 billion shares of Class A Common Stock authorized, of which 246.4 million shares were issued and outstanding as of March 31, 2026. Each share of Class A Common Stock carries one vote and represents an economic interest in the Company.
Class C Common Stock
There are 250.0 million shares of Class C Common Stock authorized as of March 31, 2026. The Company has no shares of Class C Common Stock outstanding as of March 31, 2026.
Class A Common Stock Repurchases
The Company may purchase shares of outstanding Class A Common Stock under its Repurchase Program. Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices, including through trading plans that may be adopted in accordance with Rule 10b5-1 of the Exchange Act, as amended, in privately negotiated transactions, or through other means. The timing and number of shares repurchased under the Repurchase Program will depend on a variety of factors, including the performance of our stock price, general market and economic conditions, regulatory requirements, the availability of funds, and other considerations we deem relevant. The Repurchase Program may be suspended, modified, or discontinued at any time without prior notice. Our Board of Directors will review the Repurchase Program periodically and may authorize adjustments of its terms.
On March 4, 2026, the Board authorized an extension and a $350.0 million increase in the size of our previously approved stock repurchase program (the “Repurchase Program”). Under the Repurchase Program, as amended, we may repurchase up to an aggregate of $725.0 million of shares of our outstanding Class A Common Stock, with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program will expire on March 4, 2029.
During the three months ended March 31, 2026, 7.3 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an average price of $6.16 per share, for an aggregate value, excluding fees, of $44.9 million. The repurchased shares included 6.2 million shares of Class A Common Stock repurchased from executive officers and other employees, to satisfy their tax obligations resulting from the Class C Exchange (as described in Note 8 of the Notes included herein), at a price of $6.17 per share, for an aggregate purchase price of $38.2 million. Additionally, during the three months ended March 31, 2026, 1.2 million shares in the amount of $6.2 million were withheld for taxes from the Class A Common Stock vested during the period. As of March 31, 2026, $10.4 million related to share repurchases was included under Accruals and other liabilities on the Unaudited Consolidated Balance Sheets.
11. Fair Value Measurements
A fair value measurement assumes a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. The hierarchy for observable and unobservable inputs used to measure fair value into three broad levels are described below:
•Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
•Level 2 - Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
•Level 3 - Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
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Financial Instruments that are not Measured at Fair Value on a Recurring Basis
The following table presents certain information for our financial liability that is not measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| 5.625% Notes | $ | $ | $ | $ | |||||||||||||||||||
The fair value of this instrument is based on quoted market prices in markets that are not active. Therefore, this debt is classified as Level 2 within the fair value hierarchy.
Financial Instruments Measured at Fair Value on a Recurring Basis
Contingent deferred acquisition consideration, redeemable noncontrolling interests, and profits interest awards, are considered Level 3 fair value measurement and are measured and adjusted at each reporting period at fair value. The estimated liability is determined in accordance with models of each business’ future performance, including revenue growth and free cash flows. These models are dependent upon significant assumptions, such as the growth rate of the earnings of the relevant subsidiary during the contractual period and the discount rate. These growth rates are consistent with the Company’s long-term forecasts. As of March 31, 2026, the discount rate used to measure these liabilities ranged from 3.6 % to 7.9 %.
As these estimates require the use of assumptions about future performance, which are uncertain at the time of estimation, the fair value measurements presented on the Unaudited Consolidated Balance Sheets are subject to uncertainty.
See Note 6, Note 8, and Note 12 of the Notes included herein for additional information regarding contingent deferred acquisition consideration, redeemable non-controlling interests, and profits interest awards, respectively.
As of March 31, 2026, and December 31, 2025, the carrying amount of the Company’s financial instruments, including cash, cash equivalents, accounts receivable and accounts payable, approximated fair value because of their short-term maturity.
Non-financial Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
12. Supplemental Information
Stock-Based Awards
Stock-based compensation recognized for awards authorized under the Company’s employee stock incentive plans during the three months ended March 31, 2026 and 2025 was $12.5 million and $11.8 million, respectively. This was included as a component of stock-based compensation in Office and general expenses and Cost of services within the Unaudited Consolidated Statements of Operations.
Certain of the Company’s subsidiaries grant awards to their employees providing them with an equity interest in the respective subsidiary (the “profits interests awards”). The profits interests awards generally provide the employee with the right, but not the obligation, to sell their profits interest in the subsidiary to the Company based on a performance-based formula and, in certain cases, receive a profit share distribution. The profits interests awards are primarily settled in cash, with certain awards having stock-settlement provisions at the Company’s discretion. The corresponding liability associated with these profits interests awards was $14.4 million and $12.8 million as of March 31, 2026 and December 31, 2025, respectively, and was included as a component of Accruals and other liabilities and Other Liabilities on the Unaudited Consolidated Balance Sheets. For the three months ended March 31, 2026, the change in the fair value of these awards resulted in stock-based compensation expense increase of $1.8 million. For the three months ended March 31, 2025, the change in the fair value of these awards resulted in a decrease in stock-based compensation expense of $0.3 million. This was included as a component of stock-based compensation in Cost of services within the Unaudited Consolidated Statements of Operations.
Transfer of Accounts Receivable
The Company transfers certain of its trade receivable assets to third parties under certain agreements. Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer.
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Related Party Transactions
In the ordinary course of business, the Company enters into transactions with related parties, including its affiliates. The transactions may range in the nature and value of services underlying the arrangements. The Company provides marketing and advertising services to a client where the founder of the client has a significant interest in the Company and recorded $0.6 million and $0.6 million of related party revenue for the three months ended March 31, 2026 and 2025, respectively.
13. Income Taxes
Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in interim periods.
The Company had an income tax benefit for the three months ended March 31, 2026 of $2.9 million (on a pre-tax loss of $16.7 million resulting in an effective tax rate of 17.3 %) compared to income tax expense of $1.7 million (on a pre-tax loss of $3.6 million resulting in an effective tax rate of (47.8 )% for the three months ended March 31, 2025).
The effective tax rate increased by 65.1 percentage points compared to the prior‑year period, primarily due to a 49.1 percentage point increase from additional pre-tax losses, which were not subject to valuation allowances, for which we recorded a $3.9 million tax benefit, a 4.2 percentage point increase related to a corporate restructure for which we recorded $0.7 million tax benefit, and an 11.8 percentage point increase from changes to other discrete tax items totaling less than $0.1 million tax impact.
Tax Receivables Agreement
In connection with the Company’s Tax Receivable Agreement (“TRA”), the Company is required to make cash payments to Stagwell Media equal to 85% of certain U.S. federal, state and local income tax or franchise tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of the assets of Stagwell Global LLC (“OpCo”), the Company’s only operating subsidiary, resulting from exchanges of Paired Units (each share of Class C Common Stock is paired with a corresponding common unit of OpCo, a “Paired Unit”) for shares of Class A Common Stock or cash, as applicable, and (ii) certain other tax benefits related to us making payments under the TRA.
Effective April 4, 2025, all Paired Units were exchanged for Class A Shares. As a result of the Class C Exchange, the Company recorded an increase to its deferred tax asset balance by $237.9 million and an increase to its TRA liability balance by $229.7 million. The total TRA liability and the associated deferred tax balances, net of amortization, in connection with the exchange of Paired Units and the projected obligations under the TRA were as follows:
| March 31, 2026 | December 31, 2025 | ||||||||||
(dollars in thousands) | |||||||||||
Tax Receivable Agreement liability (1) | $ | $ | |||||||||
Deferred tax assets (2) | |||||||||||
(1) TRA liability as of December 31, 2025 includes $2.6 million short-term liability included under Accruals and other liabilities on the Unaudited Consolidated Balance Sheets. The Company paid $2.6 million of TRA liability during the three months ended March 31, 2026.
(2) Deferred tax asset balances, net of deferred tax liabilities, on the Unaudited Consolidated Balance Sheets were $280.1 million and $281.1 million as of March 31, 2026 and December 31, 2025, respectively, principally due to jurisdictional netting.
14. Segment Information
The Company determines an operating segment if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has discrete financial information, and is (iii) regularly reviewed by the Chief Operating Decision Maker (“CODM”), who is Mark Penn, Chief Executive Officer and Chairman, to make decisions regarding resource allocation for the segment and assess its performance. Once operating segments are identified, the Company performs an analysis to determine if aggregation of operating segments is applicable. This determination is based upon a quantitative analysis of the expected and historic average long-term profitability for each operating segment, together with a qualitative assessment to determine if operating segments have similar operating characteristics. All segments follow the same basis of presentation and accounting policies as those described throughout the Notes included herein.
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The CODM uses Adjusted EBITDA as a key metric to evaluate the operating and financial performance of a segment, identify trends affecting the segments, develop projections and make strategic business decisions. Adjusted EBITDA is defined as Net income (loss) attributable to Stagwell Inc. common shareholders excluding non-operating income or expense to achieve operating income (loss), plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, impairment and other losses, and other items. Other items primarily includes restructuring, certain system implementation costs, working capital administrative fees and acquisition-related expenses.
On September 30, 2025, the Company reorganized its organizational structure to better reflect how the Company manages its business and goes to market, to simplify reporting and to provide clearer visibility into performance trends across its service offerings. The reorganization also seeks to enhance consistency in the Company’s portfolio of services and improve the transparency and comparability of financial information provided to investors.
As a result of the reorganization, the Company now has five operating and reportable segments: “Marketing Services,” “Digital Transformation,” “Media & Commerce,” “Communications,” and “The Marketing Cloud.” Prior period presented has been recast to reflect the reclassification of Brands within the reportable segments. Based on the segment analysis, management concluded that the operating segments do not exhibit similar economic characteristics or share other aggregation criteria. As a result, none of our operating segments are aggregated for reporting purposes. Further, as a result of the reorganization, certain reporting units have been redefined, and the composition of others has changed. The new structure fairly reflects the allocation of the Company’s resources, thereby improving comparability for investors and supporting the Company’s long-term strategic objectives. The composition of these segments is as follows:
•The Marketing Services segment delivers a broad range of services across four closely related client needs: creative, research, experiential, and social media solutions designed to build and elevate brands. Capabilities include developing breakthrough brand campaigns, providing consumer insights through advanced research methodologies, creating immersive experiential marketing programs and social engagement strategies that connect brands with audiences across digital platforms. By combining creative excellence, data-driven insights, and innovative experiences, Marketing Services empowers organizations to differentiate themselves in the marketplace, drive audience engagement, and achieve measurable business results. These services employ a wide variety of artificial intelligence (“AI”)-powered services in the delivery, such as AI-powered creative production and data analysis. Brands in this segment include, but are not limited to, creative agencies 72 and Sunny and Anomaly, research agencies NRG and Harris Insights, experiential agency TEAM, and social agency Movers & Shakers.
•The Digital Transformation segment designs, implements and activates modern digital ecosystems that enable brand and customer experiences through the integration of strategy, design, and technology. This segment helps clients modernize their digital infrastructure, enhance customer engagement, and accelerate enterprise transformation. Its capabilities span the delivery of digital products and experiences that connect brand storytelling with technology, including website and content development, digital campaigns, product and platform design, AI-native strategies and integration, and implementation of marketing technology (“MarTech”) products and solutions for customers. It also provides managed services, staff augmentation, and engineering expertise across various delivery models, offering system integration, full-stack development, and ongoing platform management. Additionally, Digital Transformation connects digital ecosystems to physical experiences through innovative, technology-driven customer engagements, such as business-to-business (“B2B”) platforms and multimodal activations that blend physical and digital environments using augmented reality (“AR”), virtual reality (“VR”), and emerging technologies. Together, these capabilities empower organizations to transform their digital presence and drive sustained business growth. Brands in this segment include, but are not limited to, strategy and design agencies Code and Theory and Instrument, development and implementation agency TrueLogic, and digital activation agency Left Field Labs.
•The Media & Commerce segment delivers integrated AI-based data solutions that drive audience engagement and business growth through media buying, owned media platforms, commerce enablement, and Customer Relationship Management (“CRM”) strategies. Its capabilities include planning and executing media campaigns across global platforms, leveraging data-driven approaches to optimize reach and effectiveness across first-party data, second-party data, and third-party data, and providing commerce and CRM tools that connect brands with consumers throughout the purchase journey. The segment also offers specialized media platforms and translation services to support targeted communication and market expansion. By combining expertise in media strategy, commerce activation, and audience analytics, Media & Commerce empowers organizations to maximize their marketing investments and achieve measurably efficient commercial outcomes. Brands in this segment include, but are not limited to, media buying and strategy agency Assembly Global, owned media platforms Reach TV, and commerce and CRM agency Gale.
•The Communications segment provides a leading edge set of solutions designed to help organizations build, protect, and enhance their reputation across diverse audiences and channels. Its capabilities include strategic communications, public relations, and advocacy services that leverage AI and data-driven insights to craft compelling narratives and influence public perception. The segment also offers expertise in targeted communications, corporate public affairs consulting, crisis management, and stakeholder engagement, ensuring clients can respond effectively to emerging
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issues and opportunities. Advocacy services encompass strategic political campaign management, grassroots mobilization, and fundraising expertise that reach across the political spectrum. By combining deep industry knowledge with innovative digital approaches to media and advocacy, Communications empowers organizations to connect with key audiences, shape conversations, and achieve their strategic objectives. Brands in this segment include, but are not limited to, Allison, Consulum, SKDK and Targeted Victory.
•The Marketing Cloud segment delivers a comprehensive suite of technology solutions for in-house marketers, combining SaaS and DaaS offerings. Its key products cover a range of areas. Advanced research tools that enable real-time customer insights through syndicated and Do It Yourself (“DIY”) generative AI-drafted surveys, AI-driven text analysis, and predictive analytics. Communications technology that aggregates data from millions of sources, including news, social media, print, and TV/radio broadcasts, on a daily basis to monitor, analyze, and respond to market trends. Media studio products that leverage first-party, third-party, and proprietary data to provide actionable audience insights and attribution analytics and advanced media platforms that encompass audience engagement solutions such as AR, quick response (“QR”) codes, and loyalty programs, all designed to collect consumer data and generate actionable insights. Together, these capabilities empower marketers to understand, engage, and influence their audiences with precision and agility. Brands in this segment include, but are not limited to, QUEST, Unicepta, Holy Grail and Smart Assets.
“Corporate, eliminations and other” consists of revenue generated by the Other business components, elimination of certain intercompany revenue and expenses, and corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These corporate office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, and (iv) certain other professional fees managed by the corporate office.
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| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||||||||||||||||
| Marketing Services | Digital Transformation | Media & Commerce | Communications | The Marketing Cloud | Total | |||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Revenue (1) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Billable costs | ||||||||||||||||||||||||||||||||||||||
| Staff costs | ||||||||||||||||||||||||||||||||||||||
| Administrative costs | ||||||||||||||||||||||||||||||||||||||
| Unbillable and other costs * | ||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | ( | |||||||||||||||||||||||||||||||||||||
Corporate, eliminations and other | ( | |||||||||||||||||||||||||||||||||||||
| Total Consolidated Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
| Deferred acquisition consideration | ||||||||||||||||||||||||||||||||||||||
| Other items, net | ||||||||||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||||||||
| Other expenses: | ||||||||||||||||||||||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||||||||||||||||||||
| Foreign exchange, net | ( | |||||||||||||||||||||||||||||||||||||
| Other, net | ( | |||||||||||||||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||||||||||||||
| Loss before income taxes and equity in earnings of non-consolidated affiliates | ( | |||||||||||||||||||||||||||||||||||||
Income tax benefit | ( | |||||||||||||||||||||||||||||||||||||
| Loss before equity in earnings of non-consolidated affiliates | ( | |||||||||||||||||||||||||||||||||||||
| Equity in loss of non-consolidated affiliates | ( | |||||||||||||||||||||||||||||||||||||
| Net loss | ( | |||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | ||||||||||||||||||||||||||||||||||||||
| Net loss attributable to Stagwell Inc. common shareholders | $ | ( | ||||||||||||||||||||||||||||||||||||
(1) Total consolidated revenue of $704,143 reflects revenue generated by the Other business components and intercompany elimination of $2,229 .
*For each reportable segment, Unbillable and other costs include costs to fulfill customer contract requirements such as research and subscription related costs, audience measurement, data and analytics, panels and survey costs, and also includes travel related expenses.
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| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Marketing Services | Digital Transformation | Media & Commerce | Communications | The Marketing Cloud | Total | |||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Revenue (1) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Billable costs | ||||||||||||||||||||||||||||||||||||||
| Staff costs | ||||||||||||||||||||||||||||||||||||||
| Administrative costs | ||||||||||||||||||||||||||||||||||||||
| Unbillable and other costs * | ||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | ( | |||||||||||||||||||||||||||||||||||||
Corporate, eliminations and other | ( | |||||||||||||||||||||||||||||||||||||
| Total Consolidated Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
| Deferred acquisition consideration | ||||||||||||||||||||||||||||||||||||||
| Other items, net | ||||||||||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||||||||
| Other income (expenses): | ||||||||||||||||||||||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||||||||||||||||||||
| Foreign exchange, net | ||||||||||||||||||||||||||||||||||||||
| Other, net | ||||||||||||||||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||||||||||||||
| Loss before income taxes and equity in earnings of non-consolidated affiliates | ( | |||||||||||||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||||||||||||||
| Loss before equity in earnings of non-consolidated affiliates | ( | |||||||||||||||||||||||||||||||||||||
| Equity in loss of non-consolidated affiliates | ( | |||||||||||||||||||||||||||||||||||||
| Net loss | ( | |||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | ||||||||||||||||||||||||||||||||||||||
| Net loss attributable to Stagwell Inc. common shareholders | $ | ( | ||||||||||||||||||||||||||||||||||||
(1) Total consolidated revenue of $651,740 reflects an intercompany elimination of $1,815 .
*For each reportable segment, Unbillable and other costs include costs to fulfill customer contract requirements such as research and subscription related costs, audience measurement, data and analytics, panels and survey costs, and also includes travel related expenses.
The Company’s long-lived tangible assets (i.e., Right-of-use lease assets-operating leases and Fixed assets, net) was $273.9 million ($204.9 million in the United States and $69.0 million in all other countries) as of March 31, 2026 and $286.6 million ($211.6 million in the United States and $75.0 million in all other countries) as of December 31, 2025.
The Company’s CODM does not use segment assets to allocate resources or to assess performance of the segments and therefore, total segment assets have not been disclosed.
See Note 4 of the Notes included herein for a summary of the Company’s revenue by geographic region for the three months ended March 31, 2026 and 2025.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis are based on and should be read in conjunction with our Unaudited Consolidated Financial Statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the period ended March 31, 2026 (the “Form 10-Q”). The following discussion and analysis contain forward-looking statements and should be read in conjunction with the disclosures and information contained and referenced under the captions “Forward-Looking Statements” and “Risk Factors” in this Form 10-Q. The following discussion and analysis also include a discussion of certain non-GAAP financial measures. A description of the non-GAAP financial measures discussed in this section and reconciliations to the comparable United States (“U.S.”) generally accepted accounting principles (“GAAP”) measures are below.
In this section, the terms “Stagwell,” “we,” “us,” “our” and the “Company” refer to Stagwell Inc. and its direct and indirect subsidiaries. References to a “fiscal year” mean the Company’s year commencing on January 1 of that year and ending December 31 of that year (e.g., fiscal 2026 means the period beginning January 1, 2026, and ending December 31, 2026).
Executive Summary
Overview
Stagwell conducts its business through its segments, which provide marketing and business solutions that realize the potential of combining data and creativity. Stagwell’s strategy is to build, grow, and acquire market-leading businesses that deliver the modern suite of services that marketers need to thrive in a rapidly evolving business environment. We believe Stagwell’s differentiation lies in its digital-first and technology-based roots and proven entrepreneurial leaders, which together with innovations in technology and data, bring transformational marketing, activation, communications and strategic consulting services to clients. Stagwell leverages its range of services in an integrated manner, offering strategic, creative and innovative solutions that are technologically forward and media-agnostic. The Company’s strategy is intended to challenge the industry status quo, realize returns on investment, and drive transformative growth and business performance for its clients and stakeholders.
Stagwell manages its business by monitoring several financial and non-financial performance indicators. The key indicators that we focus on are revenue, operating expenses, staff cost ratio, capital expenditures, net income (loss), net income (loss) attributable to Stagwell Inc. common shareholders, net income (loss) per share and the non-GAAP financial measures including Adjusted EBITDA, Free cash flow at consolidated level, and Adjusted EPS, as defined and described below. Revenue growth is analyzed by reviewing a mix of measurements, including (i) growth by major geographic location, (ii) growth from existing clients and the addition of new clients, (iii) growth by service line, (iv) growth from currency changes, and (v) growth from acquisitions. In addition to monitoring the foregoing financial indicators, the Company assesses and monitors several non-financial performance indicators relating to the business performance of our segments. These indicators may include the Company’s recent new client win/loss record; the depth and scope of a pipeline of potential new client account activity; the overall quality of the services provided to clients; and the relative strength of the Company’s next generation team that is in place as part of a potential succession plan to succeed the current senior executive team.
Significant Factors Affecting our Business and Results of Operations
The most significant factors affecting our business and results of operations include national, regional, and local economic conditions, our clients’ profitability, mergers and acquisitions of our clients, changes in top management of our clients and our ability to retain and attract key employees. New business wins and client losses occur due to a variety of factors. We believe the two most significant factors are (i) our clients’ desire to change marketing communication firms, and (ii) the digital and data-driven products that our portfolio of marketing services firms, which we refer to as “Brands,” offer. A client may choose to change marketing communication firms for several reasons, such as a change in leadership where new management wants to retain a Brand that it may have previously worked with. In addition, if the client is merged or acquired by another company, the marketing communication firm is often changed. Clients also change firms as a result of the firm’s failure to meet marketing performance targets or other expectations in client service delivery.
Seasonality
Historically, we typically generate the highest quarterly revenue during the fourth quarter of each year. The highest volumes of retail related consumer marketing increase with the back-to-school season through the end of the holiday season. In addition, within our Communications segment, client concentration increases during election years due to the cyclical nature of our advocacy services.
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Non-GAAP Financial Measures
The Company reports its financial results in accordance with GAAP. In addition, the Company has included non-GAAP financial measures and ratios, which management uses to operate the business, which it believes provide useful supplemental information to both management and readers of this report in making period-to-period comparisons in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by GAAP and should not be construed as an alternative to other titled measures determined in accordance with GAAP. The non-GAAP financial measures included are “net revenue,” “organic net revenue growth (decline),” “Adjusted EBITDA,” and “Adjusted Diluted EPS.”
“Net revenue” refers to revenue excluding billable costs. The Company believes billable costs and their fluctuations are not indicative of the operating performance of its underlying business.
“Organic net revenue growth (decline)” reflects the year-over-year change in the Company’s reported net revenue attributable to the Company’s management of the entities it owns. We calculate organic net revenue growth (decline) by subtracting the net impact of acquisitions (divestitures) and the impact of foreign currency exchange fluctuations from the aggregate year-over-year increase or decrease in the Company’s reported net revenue.
The net impact of acquisitions (divestitures) reflects the year-over-year change in the Company’s reported net revenue attributable to the impact of all individual entities that were acquired or divested in the current and prior year. Beginning with the quarter ended September 30, 2025, we calculate the impact of an acquisition as follows: (a) for an entity acquired during the current year, we present the entity’s current period reported revenue as the impact of the acquisition in the current year; and (b) for an entity acquired in the prior year, we present an amount equal to the entity’s current year net revenue for the same period during which we didn’t own the entity in the prior year as the impact of the acquisition in the current year. Previously, we calculated the impact of an acquisition as follows: (a) for an entity acquired during the current year, we presented the entity’s prior year net revenue for the same period during which we owned it in the current year as impact of the acquisition in the current year; and (b) for an entity acquired in the prior year, we presented the entity’s prior year net revenue for the period during which we did not own the entity in the prior year as impact of the acquisition in the current year. We believe that this change in the method of calculating the impact of an acquisition results in a measurement of organic net revenue growth (decline) that better reflects the effect of our management of an acquired entity by including the revenue of the acquired entity in such measurement after we have owned it for 12 months. We calculate impact of a divestiture as follows: (a) for a divestiture in the current year, we present the entity’s prior year net revenue for the same period during which we no longer owned it in the current year as impact of the divestiture in the current year; and (b) for a divestiture in the prior year, we present the entity’s prior year net revenue for the period during which we owned it in the prior year as impact of the divestiture in the current year. We calculate the impact of any acquisition or divestiture without adjusting for foreign currency exchange fluctuations.
The impact of foreign currency exchange fluctuations reflects the year-over-year change in the Company’s reported net revenue attributable to changes in foreign currency exchange rates. We calculate the impact of foreign currency exchange fluctuations for the portion of the reporting period in which we recognized revenue from a foreign entity in both the current year and the prior year. The impact is calculated as the difference between (1) reported prior period net revenue (converted to U.S. dollars at historical foreign currency exchange rates) and (2) prior period net revenue converted to U.S. dollars at current period foreign exchange rates.
“Adjusted EBITDA” is defined as Net income (loss) attributable to Stagwell Inc. common shareholders excluding non-operating income or expense to achieve Operating income (loss), plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, impairment and other losses, and other items. Other items primarily includes restructuring, certain system implementation, working capital administrative fees and acquisition-related expenses. Adjusted EBITDA for our reportable segments is reconciled to Operating income (loss), as Net income (loss) is not relevant for reportable segment financial metric.
“Free Cash Flow” is defined as consolidated net cash flow from operations less cash outflow from capital expenditures and capitalized software, excluding material nonrecurring capital purchases.
“Adjusted Diluted EPS” is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income (loss) attributable to Class C shareholders, excluding the impact of amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items (as defined above), based on total consolidated amounts, then allocated to Stagwell Inc. common shareholders and Class C shareholders, based on their respective income allocation percentage using a normalized effective income tax rate divided by (ii) the diluted weighted average shares outstanding. The diluted weighted average shares outstanding is calculated as (a) the diluted weighted average number of common shares outstanding plus (b) the shares of Class C common stock, par value $0.00001 per share (the “Class C Common Stock”) as if converted to shares of Class A Common Stock if not included because they were anti-dilutive.
All amounts are in U.S. dollars unless otherwise stated. Amounts reported in millions herein are computed based on the amounts in thousands. As a result, the sum of the components, and related calculations, reported in millions may not equal the total amounts due to rounding.
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The percentage changes included in the tables in Item 2 herein that are not considered meaningful are presented as “NM.”
Segments
The Company’s Chief Operating Decision Maker uses Adjusted EBITDA as a key metric to evaluate the operating and financial performance of a segment, identify trends affecting the segments, develop projections and make strategic business decisions.
On September 30, 2025, the Company reorganized its organizational structure to better reflect how the Company manages its business and goes to market, to simplify reporting and to provide clearer visibility into performance trends across its service offerings. The reorganization also seeks to enhance consistency in the Company’s portfolio of services and improve the transparency and comparability of financial information provided to investors.
As a result of the reorganization, the Company now has five operating and reportable segments: “Marketing Services,” “Digital Transformation,” “Media & Commerce,” “Communications,” and “The Marketing Cloud.” Prior period presented has been recast to reflect the reclassification of Brands within the reportable segments. Based on the segment analysis, management concluded that the operating segments do not exhibit similar economic characteristics or share other aggregation criteria. As a result, none of our operating segments are aggregated for reporting purposes. Further, as a result of the reorganization, certain reporting units have been redefined, and the composition of others has changed. The new structure fairly reflects the allocation of the Company’s resources, thereby improving comparability for investors and supporting the Company’s long-term strategic objectives. The composition of these segments is as follows:
•The Marketing Services segment delivers a broad range of services across four closely related client needs: creative, research, experiential, and social media solutions designed to build and elevate brands. Capabilities include developing breakthrough brand campaigns, providing consumer insights through advanced research methodologies, creating immersive experiential marketing programs and social engagement strategies that connect brands with audiences across digital platforms. By combining creative excellence, data-driven insights, and innovative experiences, Marketing Services empowers organizations to differentiate themselves in the marketplace, drive audience engagement, and achieve measurable business results. These services employ a wide variety of artificial intelligence (“AI”)-powered services in the delivery, such as AI-powered creative production and data analysis. Brands in this segment include, but are not limited to, creative agencies 72 and Sunny and Anomaly, research agencies NRG and Harris Insights, experiential agency TEAM, and social agency Movers & Shakers.
•The Digital Transformation segment designs, implements and activates modern digital ecosystems that enable brand and customer experiences through the integration of strategy, design, and technology. This segment helps clients modernize their digital infrastructure, enhance customer engagement, and accelerate enterprise transformation. Its capabilities span the delivery of digital products and experiences that connect brand storytelling with technology, including website and content development, digital campaigns, product and platform design, AI-native strategies and integration, and implementation of marketing technology (“MarTech”) products and solutions for customers. It also provides managed services, staff augmentation, and engineering expertise across various delivery models, offering system integration, full-stack development, and ongoing platform management. Additionally, Digital Transformation connects digital ecosystems to physical experiences through innovative, technology-driven customer engagements, such as business-to-business (“B2B”) platforms and multimodal activations that blend physical and digital environments using augmented reality (“AR”), virtual reality (“VR”), and emerging technologies. Together, these capabilities empower organizations to transform their digital presence and drive sustained business growth. Brands in this segment include, but are not limited to, strategy and design agencies Code and Theory and Instrument, development and implementation agency TrueLogic, and digital activation agency Left Field Labs.
•The Media & Commerce segment delivers integrated AI-based data solutions that drive audience engagement and business growth through media buying, owned media platforms, commerce enablement, and Customer Relationship Management (“CRM”) strategies. Its capabilities include planning and executing media campaigns across global platforms, leveraging data-driven approaches to optimize reach and effectiveness across first-party data, second-party data, and third-party data, and providing commerce and CRM tools that connect brands with consumers throughout the purchase journey. The segment also offers specialized media platforms and translation services to support targeted communication and market expansion. By combining expertise in media strategy, commerce activation, and audience analytics, Media & Commerce empowers organizations to maximize their marketing investments and achieve measurably efficient commercial outcomes. Brands in this segment include, but are not limited to, media buying and strategy agency Assembly Global, owned media platforms Reach TV, and commerce and CRM agency Gale.
•The Communications segment provides a leading edge set of solutions designed to help organizations build, protect, and enhance their reputation across diverse audiences and channels. Its capabilities include strategic communications, public relations, and advocacy services that leverage AI and data-driven insights to craft compelling narratives and influence public perception. The segment also offers expertise in targeted communications, corporate public affairs consulting, crisis management, and stakeholder engagement, ensuring clients can respond effectively to emerging
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issues and opportunities. Advocacy services encompass strategic political campaign management, grassroots mobilization, and fundraising expertise that reach across the political spectrum. By combining deep industry knowledge with innovative digital approaches to media and advocacy, Communications empowers organizations to connect with key audiences, shape conversations, and achieve their strategic objectives. Brands in this segment include, but are not limited to, Allison, Consulum, SKDK and Targeted Victory.
•The Marketing Cloud segment delivers a comprehensive suite of technology solutions for in-house marketers, combining SaaS and DaaS offerings. Its key products cover a range of areas. Advanced research tools that enable real-time customer insights through syndicated and Do It Yourself (“DIY”) generative AI-drafted surveys, AI-driven text analysis, and predictive analytics. Communications technology that aggregates data from millions of sources, including news, social media, print, and TV/radio broadcasts, on a daily basis to monitor, analyze, and respond to market trends. Media studio products that leverage first-party, third-party, and proprietary data to provide actionable audience insights and attribution analytics and advanced media platforms that encompass audience engagement solutions such as AR, quick response (“QR”) codes, and loyalty programs, all designed to collect consumer data and generate actionable insights. Together, these capabilities empower marketers to understand, engage, and influence their audiences with precision and agility. Brands in this segment include, but are not limited to, QUEST, Unicepta, Holy Grail and Smart Assets.
“Corporate, eliminations and other” consists of revenue generated by the Other business components, elimination of certain intercompany revenue and expenses, and corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These corporate office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, and (iv) certain other professional fees managed by the corporate office.
The following discussion focuses on the operating performance of the Company for the three months ended March 31, 2026 and 2025 and the financial condition of the Company as of March 31, 2026.
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Results of Operations and Reconciliation of Net Loss to Adjusted EBITDA:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Revenue: | |||||||||||
| Marketing Services | 250,778 | $ | 247,996 | ||||||||
| Digital Transformation | 101,466 | 90,887 | |||||||||
| Media & Commerce | 174,511 | 160,422 | |||||||||
| Communications | 153,102 | 129,088 | |||||||||
| The Marketing Cloud | 26,515 | 25,162 | |||||||||
| Corporate, eliminations and other | (2,229) | (1,815) | |||||||||
| Total revenue | $ | 704,143 | $ | 651,740 | |||||||
| Operating income | $ | 9,642 | $ | 18,285 | |||||||
| Other income (expenses): | |||||||||||
| Interest expense, net | $ | (23,266) | $ | (23,356) | |||||||
| Foreign exchange, net | (3,021) | 1,220 | |||||||||
Other, net | (69) | 249 | |||||||||
Loss before income taxes and equity in earnings of non-consolidated affiliates | (16,714) | (3,602) | |||||||||
Income tax (benefit) expense | (2,888) | 1,722 | |||||||||
| Loss before equity in earnings of non-consolidated affiliates | (13,826) | (5,324) | |||||||||
Equity in loss of non-consolidated affiliates | (121) | (1) | |||||||||
| Net loss | (13,947) | (5,325) | |||||||||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | 974 | 2,408 | |||||||||
| Net loss attributable to Stagwell Inc. common shareholders | $ | (12,973) | $ | (2,917) | |||||||
| Reconciliation to Adjusted EBITDA: | |||||||||||
| Net loss attributable to Stagwell Inc. common shareholders | $ | (12,973) | $ | (2,917) | |||||||
Non-operating items (1) | 22,615 | 21,202 | |||||||||
| Operating income | 9,642 | 18,285 | |||||||||
| Depreciation and amortization | 44,331 | 42,006 | |||||||||
| Stock-based compensation | 14,248 | 11,543 | |||||||||
| Deferred acquisition consideration | 10,254 | 6,657 | |||||||||
| Other items, net | 11,210 | 3,802 | |||||||||
| Adjusted EBITDA | $ | 89,685 | $ | 82,293 | |||||||
(1) Non-operating items includes items within the Statements of Operations, below Operating income, and above Net loss attributable to Stagwell Inc. common shareholders. | |||||||||||
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THREE MONTHS ENDED MARCH 31, 2026 COMPARED TO THREE MONTHS ENDED MARCH 31, 2025
Consolidated Results of Operations
The components of operating results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 704,143 | $ | 651,740 | $ | 52,403 | 8.0 | % | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Cost of services | 459,531 | 412,087 | 47,444 | 11.5 | % | |||||||||||||||||||||
| Office and general expenses | 190,639 | 179,362 | 11,277 | 6.3 | % | |||||||||||||||||||||
| Depreciation and amortization | 44,331 | 42,006 | 2,325 | 5.5 | % | |||||||||||||||||||||
| $ | 694,501 | $ | 633,455 | $ | 61,046 | 9.6 | % | |||||||||||||||||||
| Operating income | $ | 9,642 | $ | 18,285 | $ | (8,643) | (47.3) | % | ||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
Revenue | $ | 704,143 | $ | 651,740 | $ | 52,403 | 8.0 | % | |||||||||||||||
| Billable costs | 119,519 | 87,553 | 31,966 | 36.5 | % | ||||||||||||||||||
Net revenue | 584,624 | 564,187 | 20,437 | 3.6 | % | ||||||||||||||||||
| Staff costs | 380,186 | 368,262 | 11,924 | 3.2 | % | ||||||||||||||||||
| Administrative costs | 74,362 | 73,398 | 964 | 1.3 | % | ||||||||||||||||||
| Unbillable and other costs, net | 40,391 | 40,234 | 157 | 0.4 | % | ||||||||||||||||||
| Adjusted EBITDA | 89,685 | 82,293 | 7,392 | 9.0 | % | ||||||||||||||||||
| Stock-based compensation | 14,248 | 11,543 | 2,705 | 23.4 | % | ||||||||||||||||||
| Depreciation and amortization | 44,331 | 42,006 | 2,325 | 5.5 | % | ||||||||||||||||||
| Deferred acquisition consideration | 10,254 | 6,657 | 3,597 | 54.0 | % | ||||||||||||||||||
| Other items, net | 11,210 | 3,802 | 7,408 | 194.8 | % | ||||||||||||||||||
Operating income (1) | $ | 9,642 | $ | 18,285 | $ | (8,643) | (47.3) | % | |||||||||||||||
(1) See the Results of Operations section above for a reconciliation of Operating income to Net loss attributable to Stagwell Inc. common shareholders. | |||||||||||||||||||||||
*Consolidated amounts in the table above are net of eliminations. | |||||||||||||||||||||||
Revenue
Revenue for the three months ended March 31, 2026 was $704.1 million, compared to $651.7 million for the three months ended March 31, 2025, an increase of $52.4 million.
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Net Revenue
The components of the fluctuations in Net revenue for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended March 31, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Services | $ | 215,174 | $ | 2,637 | $ | (876) | $ | 641 | $ | 2,402 | $ | 217,576 | 0.3 | % | 1.1 | % | |||||||||||||||||||||||||||||||
| Digital Transformation | 88,504 | (134) | 3,227 | 4,912 | 8,005 | 96,509 | 5.6 | % | 9.0 | % | |||||||||||||||||||||||||||||||||||||
| Media & Commerce | 146,188 | 2,358 | 1,965 | (1,016) | 3,307 | 149,495 | (0.7) | % | 2.3 | % | |||||||||||||||||||||||||||||||||||||
| Communications | 90,981 | 739 | 240 | 4,814 | 5,793 | 96,774 | 5.3 | % | 6.4 | % | |||||||||||||||||||||||||||||||||||||
| The Marketing Cloud | 25,155 | 1,468 | — | (124) | 1,344 | 26,499 | (0.5) | % | 5.3 | % | |||||||||||||||||||||||||||||||||||||
| Corporate, eliminations and other | (1,815) | — | — | (414) | (414) | (2,229) | 22.8 | % | NM | ||||||||||||||||||||||||||||||||||||||
| $ | 564,187 | $ | 7,068 | $ | 4,556 | $ | 8,813 | $ | 20,437 | $ | 584,624 | 1.6 | % | 3.6 | % | ||||||||||||||||||||||||||||||||
| Component % change | 1.3 | % | 0.8 | % | 1.6 | % | 3.6 | % | |||||||||||||||||||||||||||||||||||||||
For the three months ended March 31, 2026, organic net revenue increased by $8.8 million, or 1.6% reflecting net growth across the Digital Transformation and Communications segments, partially offset by net declines in Media & Commerce and The Marketing Cloud. Growth in Digital Transformation was driven by new client wins, expanded scope with existing clients, and increased demand for AI enabled offerings in the technology sector. Communications growth was primarily attributable to higher corporate public affairs revenue, election cycle fundraising growth, and early primary activity related to the 2026 election cycle. Within Media & Commerce and The Marketing Cloud, organic net revenue benefited from higher integrated media, technology, and data offerings as well as increased platform utilization and subscription-based services, however, these gains were more than offset by revenue declines in those segments related to the conflict in the Middle East.
The increase in net acquisitions (divestitures) was impacted by the prior year acquisitions of JetFuel Studio LLC and Powered by JetFuel LLC (collectively, “Jetfuel”), Create Group Holding Limited (“Create”), and ADK Global (“ADK”) which expanded the Company’s capabilities in experiential marketing, digital communications, and integrated marketing in Asia-Pacific (“APAC”) region, partially offset by the divestiture of a Brand in the Marketing Services segment.
The geographic mix in Net revenue for the three months ended March 31, 2026 and 2025 was as follows:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| United States | $ | 453,917 | $ | 440,159 | |||||||
| United Kingdom | 40,117 | 36,304 | |||||||||
| Other | 90,590 | 87,724 | |||||||||
| Total | $ | 584,624 | $ | 564,187 | |||||||
Expenses
Cost of services increased by $47.4 million. Excluding the increase in Billable costs of $32.0 million and the addition of expenses from acquired entities of $3.5 million, Cost of services increased $12.0 million primarily due to a $3.7 million increase in severance to reorganize the business, and higher staff costs to support the growth of the business.
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Office and general expenses increased by $11.3 million. Excluding the addition of expenses of acquired entities of $4.7 million, Office and general expenses increased $6.6 million, primarily attributable to higher software license fees due to investments in automation and AI intended to improve workflow efficiency and support future margin expansion and higher staff costs to support the growth in the business and an increase in Deferred acquisition consideration expense as explained below.
Stock-based compensation increased by $2.7 million, primarily due to an increase in the fair value of certain profit interest awards driven by strong performance in certain Brands.
Deferred acquisition consideration increased by $3.6 million, primarily attributable to strong performance in certain acquired Brands, causing an increase in the fair value of the deferred acquisition consideration liability of those Brands, partially offset by a reduction in the fair value of the deferred acquisition consideration liability associated with certain other Brands driven by performance timing.
Operating Income
Operating income decreased by $8.6 million, as declines in the Media & Commerce segment and Corporate segment totaling $13.4 million were partially offset by a $6.0 million increase in the Communications segment. The decrease in Media & Commerce of $6.1 million was driven primarily by an $8.4 million increase in deferred acquisition consideration expense. The increase in Corporate’s Operating loss was primarily attributable to higher software license fees related to investments in automation and AI as well as higher staff costs to support business growth. These declines were partially offset by higher Operating income in Communications, reflecting an $8.7 million improvement, driven by corporate public affairs consulting revenue, election-cycle fundraising growth, early primary activity, and operational savings from a prior-year leadership restructuring.
Interest Expense, Net
Interest expense, net for the three months ended March 31, 2026 was $23.3 million, compared to $23.4 million for the three months ended March 31, 2025, a decrease of $0.1 million. This decrease was primarily attributable to a lower average interest rate, partially offset by higher levels of debt outstanding under the Credit Agreement (as defined and discussed in Note 7 of the Notes to the Unaudited Consolidated Financial Statements included herein) used to support the growth in working capital attributable to the growth of Net revenue of the business.
Foreign Exchange, Net
The foreign exchange loss for the three months ended March 31, 2026, was $3.0 million, compared to a gain of $1.2 million for the three months ended March 31, 2025, primarily attributable to the movement in the British Pound, Canadian dollar and Euro.
Income Tax (Benefit) Expense
For the three months ended March 31, 2026, the Company recorded an income tax benefit of $2.9 million on a pre-tax loss of $16.7 million, resulting in an effective tax rate of 17.3%, compared to an income tax expense of $1.7 million on a smaller pre-tax loss of $3.6 million in the prior-year period, which resulted in an effective tax rate of negative 47.8%.
The effective tax rate increased by 65.1 percentage points compared to the prior‑year period, primarily due to a 49.1 percentage point increase from additional pre-tax losses, which were not subject to valuation allowances, for which we recorded a $3.9 million tax benefit, a 4.2 percentage point increase related to a corporate restructure for which the Company recorded a $0.7 million tax benefit, and an 11.8 percentage point increase from changes to other discrete tax items totaling less than $0.1 million tax impact.
Noncontrolling and Redeemable Noncontrolling Interests
The effect of Noncontrolling and redeemable noncontrolling interests for the three months ended March 31, 2026 was a loss of $1.0 million, compared to a loss of $2.4 million for the three months ended March 31, 2025. The amounts were driven by the mix of income and loss derived from entities not entirely owned by the Company. Additionally, the change was driven by the Class C Exchange during the second quarter of 2025, which increased the loss allocated to Stagwell Inc.’s common shareholders.
Net Loss Attributable to Stagwell Inc. Common Shareholders
As a result of the foregoing, Net loss attributable to Stagwell Inc. common shareholders for the three months ended March 31, 2026 was $13.0 million, compared to a net loss of $2.9 million for the three months ended March 31, 2025.
Adjusted EBITDA
Adjusted EBITDA increased by $7.4 million, or 9.0% and Adjusted EBITDA margin as a percentage of Net revenue expanded to 15.3% from 14.6%, driven primarily by improved performance in the Communications, Digital Transformation,
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and Media & Commerce segments, partially offset by higher costs in Corporate. Communications contributed $7.5 million of the increase, reflecting Net revenue growth of $5.8 million and a 5.2 percentage point improvement in the staff cost ratio as a percentage of Net Revenue, which drove margin expansion to 25.9% from 19.3%. This improvement was primarily attributable to operating leverage, where higher corporate public affairs consulting revenue, early-cycle fundraising growth, and early primary activity were delivered through a variable cost base. Digital Transformation contributed a $2.4 million increase in Adjusted EBITDA, supported by a $4.9 million increase in organic net revenue from AI-related services, and $3.2 million of incremental revenue from the acquisition of Create, partially offset by a $5.3 million increase in Staff costs. Media & Commerce contributed $2.1 million of incremental Adjusted EBITDA, with margin expanding to 10.3% from 9.1%, reflecting disciplined cost management. These increases were partially offset by a $6.7 million decline in Corporate, primarily due to higher software license fees related to investments in automation and AI and higher Staff costs to support standardized shared services platform to optimize cost structures and to support business growth.
Earnings Per Share
Diluted EPS and Adjusted Diluted EPS for the three months ended March 31, 2026 were as follows:
| GAAP | Adjustments | Non-GAAP | ||||||||||||||||||
| (amounts in thousands, except per share amounts) | ||||||||||||||||||||
Net income (loss) attributable to Stagwell Inc. common shareholders | $ | (12,973) | $ | 56,168 | $ | 43,195 | ||||||||||||||
Diluted - Weighted average number of common shares outstanding | 250,766 | — | 250,766 | |||||||||||||||||
Diluted EPS and Adjusted Diluted EPS (1) | $ | (0.05) | $ | 0.17 | ||||||||||||||||
Adjustments to Net income (loss) | ||||||||||||||||||||
| Amortization | $ | 38,918 | ||||||||||||||||||
| Stock-based compensation | 14,248 | |||||||||||||||||||
| Deferred acquisition consideration | 10,254 | |||||||||||||||||||
| Other items, net | 11,210 | |||||||||||||||||||
| 74,630 | ||||||||||||||||||||
Adjustment to GAAP income tax expense(2) | (18,462) | |||||||||||||||||||
| $ | 56,168 | |||||||||||||||||||
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
(2) Represents the difference between the income tax benefit of $2.9 million at an effective tax rate of 17.3% on a GAAP basis and the income tax expense of $15.6 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
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Diluted EPS and Adjusted Diluted EPS for the three months ended March 31, 2025 were as follows:
| GAAP | Adjustments | Non-GAAP | ||||||||||||||||||
(amounts in thousands, except per share amounts) | ||||||||||||||||||||
Net income (loss) attributable to Stagwell Inc. common shareholders | $ | (2,917) | $ | 18,988 | $ | 16,071 | ||||||||||||||
Net income (loss) attributable to Class C shareholders | (6,637) | 25,222 | 18,585 | |||||||||||||||||
Net income (loss) attributable to Stagwell Inc. and Class C shareholders and adjusted net income | $ | (9,554) | $ | 44,210 | $ | 34,656 | ||||||||||||||
Diluted - Weighted average number of common shares outstanding | 112,088 | — | 112,088 | |||||||||||||||||
| Weighted average number of shares of Class C Common Stock outstanding | 151,649 | — | 151,649 | |||||||||||||||||
Diluted - Weighted average number of shares outstanding | 263,737 | — | 263,737 | |||||||||||||||||
Diluted EPS and Adjusted Diluted EPS (1) | $ | (0.04) | $ | 0.13 | ||||||||||||||||
Adjustments to Net income (loss) | ||||||||||||||||||||
Amortization | $ | 32,981 | ||||||||||||||||||
| Stock-based compensation | 11,543 | |||||||||||||||||||
| Deferred acquisition consideration | 6,657 | |||||||||||||||||||
| Other items, net | 3,802 | |||||||||||||||||||
| 54,983 | ||||||||||||||||||||
Adjustment to GAAP income tax expense(2) | (10,773) | |||||||||||||||||||
| 44,210 | ||||||||||||||||||||
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
(2) Represents the difference between the income tax expense of $1.7 million at an effective tax rate of (47.8)% on a GAAP basis and the income tax expense of $12.5 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
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Marketing Services
The components of operating results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 250,778 | $ | 247,996 | $ | 2,782 | 1.1 | % | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Cost of services | 165,221 | 156,716 | 8,505 | 5.4 | % | |||||||||||||||||||||
| Office and general expenses | 48,408 | 49,574 | (1,166) | (2.4) | % | |||||||||||||||||||||
| Depreciation and amortization | 12,482 | 14,314 | (1,832) | (12.8) | % | |||||||||||||||||||||
| $ | 226,111 | $ | 220,604 | $ | 5,507 | 2.5 | % | |||||||||||||||||||
| Operating income | $ | 24,667 | $ | 27,392 | $ | (2,725) | (9.9) | % | ||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
Revenue | $ | 250,778 | $ | 247,996 | $ | 2,782 | 1.1 | % | |||||||||||||||
| Billable costs | 33,202 | 32,822 | 380 | 1.2 | % | ||||||||||||||||||
Net revenue | 217,576 | 215,174 | 2,402 | 1.1 | % | ||||||||||||||||||
| Staff costs | 132,189 | 127,889 | 4,300 | 3.4 | % | ||||||||||||||||||
| Administrative costs | 22,732 | 26,654 | (3,922) | (14.7) | % | ||||||||||||||||||
| Unbillable and other costs, net | 17,680 | 16,404 | 1,276 | 7.8 | % | ||||||||||||||||||
| Adjusted EBITDA | 44,975 | 44,227 | 748 | 1.7 | % | ||||||||||||||||||
| Stock-based compensation | 5,003 | 2,481 | 2,522 | 101.7 | % | ||||||||||||||||||
| Depreciation and amortization | 12,482 | 14,314 | (1,832) | (12.8) | % | ||||||||||||||||||
| Deferred acquisition consideration | — | 2,583 | (2,583) | (100.0) | % | ||||||||||||||||||
| Other items, net | 2,823 | (2,543) | 5,366 | NM | |||||||||||||||||||
| Operating income | $ | 24,667 | $ | 27,392 | $ | (2,725) | (9.9) | % | |||||||||||||||
Revenue
Revenue for the three months ended March 31, 2026 was $250.8 million, compared to $248.0 million for the three months ended March 31, 2025, an increase of $2.8 million.
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Net Revenue
The components of the fluctuations in Net revenue for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended March 31, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Services | $ | 215,174 | $ | 2,637 | $ | (876) | $ | 641 | $ | 2,402 | $ | 217,576 | 0.3 | % | 1.1 | % | |||||||||||||||||||||||||||||||
| Component % change | 1.2 | % | (0.4) | % | 0.3 | % | 1.1 | % | |||||||||||||||||||||||||||||||||||||||
The increase in organic net revenue of $0.6 million, or 0.3%, was primarily attributable to an increase in the Research service line due to new client wins and expanded client relationships in the business services and automotive sectors driven by the accelerating adoption of AI, partially offset by broader industry headwinds on pricing. The decrease in net acquisitions (divestitures) was primarily driven by the divestiture of a Brand, partially offset by the prior year acquisition of Jetfuel, an experiential marketing services agency.
Expenses
Cost of services increased $8.5 million. Excluding the increase in Billable costs of $0.4 million and the decrease of expenses from acquired/divested entities of $0.9 million, Cost of services increased $9.0 million. This increase was primarily attributable to higher staff costs to support growth of business, increase in severance to reorganize the business and increase in stock-based compensation discussed below.
Stock-based compensation expense increased $2.5 million, primarily due to an increase in the fair value of certain profit interest awards driven by strong performance in certain Brands and a greater proportion of the annual incentive compensation being allocated to stock-based awards compared to last year.
Deferred acquisition consideration decreased $2.6 million, primarily attributable to a reduction in the fair value of the deferred acquisition consideration liability associated with certain Brands driven by the performance timing of those Brands.
Other items, net increased $5.4 million, primarily attributable to a lease termination during the first quarter of 2025 as part of the real estate consolidation initiatives resulting in a gain of $3.5 million and an increase in severance of $1.3 million.
Operating Income
Operating income decreased $2.7 million, primarily due to a non-recurring gain on lease termination of $3.5 million in the three months ended March 31, 2025, an increase in Staff costs of $4.3 million to support growth of business and higher Stock-based compensation expense of $2.5 million, partially offset by an increase in Net revenue primarily due to foreign currency fluctuations of $2.6 million and non-recurrence of $2.6 million in deferred acquisition consideration expense recognized in the prior year period.
Adjusted EBITDA
Adjusted EBITDA increased by $0.7 million, or 1.7%, reflecting Net revenue growth of $2.4 million, or 1.1% partially offset only by an increase in expenses.
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Digital Transformation
The components of operating results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 101,466 | $ | 90,887 | $ | 10,579 | 11.6 | % | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Cost of services | 61,428 | 54,236 | 7,192 | 13.3 | % | |||||||||||||||||||||
| Office and general expenses | 20,140 | 18,470 | 1,670 | 9.0 | % | |||||||||||||||||||||
| Depreciation and amortization | 5,848 | 5,445 | 403 | 7.4 | % | |||||||||||||||||||||
| $ | 87,416 | $ | 78,151 | $ | 9,265 | 11.9 | % | |||||||||||||||||||
| Operating income | $ | 14,050 | $ | 12,736 | $ | 1,314 | 10.3 | % | ||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
Revenue | $ | 101,466 | $ | 90,887 | $ | 10,579 | 11.6 | % | |||||||||||||||
| Billable costs | 4,957 | 2,383 | 2,574 | 108.0 | % | ||||||||||||||||||
Net revenue | 96,509 | 88,504 | 8,005 | 9.0 | % | ||||||||||||||||||
| Staff costs | 64,567 | 59,227 | 5,340 | 9.0 | % | ||||||||||||||||||
| Administrative costs | 6,388 | 5,441 | 947 | 17.4 | % | ||||||||||||||||||
| Unbillable and other costs, net | 123 | 762 | (639) | (83.9) | % | ||||||||||||||||||
| Adjusted EBITDA | 25,431 | 23,074 | 2,357 | 10.2 | % | ||||||||||||||||||
| Stock-based compensation | 1,037 | 1,387 | (350) | (25.2) | % | ||||||||||||||||||
| Depreciation and amortization | 5,848 | 5,445 | 403 | 7.4 | % | ||||||||||||||||||
| Deferred acquisition consideration | 3,153 | 3,280 | (127) | (3.9) | % | ||||||||||||||||||
| Other items, net | 1,343 | 226 | 1,117 | 494.2 | % | ||||||||||||||||||
| Operating income | $ | 14,050 | $ | 12,736 | $ | 1,314 | 10.3 | % | |||||||||||||||
Revenue
Revenue for the three months ended March 31, 2026 was $101.5 million, compared to $90.9 million for the three months ended March 31, 2025, an increase of $10.6 million.
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Net Revenue
The components of the fluctuations in Net revenue for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended March 31, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Digital Transformation | $ | 88,504 | $ | (134) | $ | 3,227 | $ | 4,912 | $ | 8,005 | $ | 96,509 | 5.6 | % | 9.0 | % | |||||||||||||||||||||||||||||||
| Component % change | (0.2) | % | 3.6 | % | 5.6 | % | 9.0 | % | |||||||||||||||||||||||||||||||||||||||
The strong increase in organic net revenue of $4.9 million, or 5.6%, was attributable to an increase in the technology sector in the Development and Implementation and Digital Activation service lines, which grew $4.5 million driven by AI-related services. The increase in net acquisitions (divestitures) was primarily driven by the prior year acquisition of Create, a digital communications group in the Middle East.
Expenses
Cost of services increased $7.2 million. Excluding the increase in Billable costs of $2.6 million and the addition of expenses from acquired entities of $2.1 million, Cost of services increased $2.5 million, or only 4.8% compared to organic net revenue growth of 5.6%, reflecting strong operating leverage. This increase was primarily due to higher staff costs due to the growth in Net revenue, partially offset by the restructuring of agency teams to support business optimization efforts and the impact of competition in the labor market.
Operating Income
Operating income increased $1.3 million, or 10.3%, primarily attributable to organic net revenue growth of $4.9 million or 5.6% from an increase in AI-related services in the technology sector and the additional Net revenue from the Create acquisition of $3.2 million, or 3.6%. This increase was partially offset by an increase in Staff costs of $5.3 million or 9.0% to support the growth in Net revenue, and by an increase in Other items, net of $1.1 million, primarily due to restructuring costs. Operating margin increased from 14.4% to 14.6%, reflecting improved operating leverage.
Adjusted EBITDA
Adjusted EBITDA increased by $2.4 million or 10.2%. Adjusted EBITDA margin as a percentage of Net revenue expanded from 26.1% to 26.4% primarily driven by an increase in Net revenue of $8.0 million or 9.0%, partially offset by the increase in Staff costs of $5.3 million, or 9.0%.
Media & Commerce
The components of operating results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, were as follows:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 174,511 | $ | 160,422 | $ | 14,089 | 8.8 | % | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Cost of services | 111,449 | 100,269 | 11,180 | 11.2 | % | |||||||||||||||||||||
| Office and general expenses | 59,051 | 50,793 | 8,258 | 16.3 | % | |||||||||||||||||||||
| Depreciation and amortization | 7,915 | 7,148 | 767 | 10.7 | % | |||||||||||||||||||||
| $ | 178,415 | $ | 158,210 | $ | 20,205 | 12.8 | % | |||||||||||||||||||
Operating income (loss) | $ | (3,904) | $ | 2,212 | $ | (6,116) | (276.5) | % | ||||||||||||||||||
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| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
Revenue | $ | 174,511 | $ | 160,422 | $ | 14,089 | 8.8 | % | |||||||||||||||
| Billable costs | 25,016 | 14,234 | 10,782 | 75.7 | % | ||||||||||||||||||
Net revenue | 149,495 | 146,188 | 3,307 | 2.3 | % | ||||||||||||||||||
| Staff costs | 97,225 | 94,948 | 2,277 | 2.4 | % | ||||||||||||||||||
| Administrative costs | 23,173 | 22,413 | 760 | 3.4 | % | ||||||||||||||||||
| Unbillable and other costs, net | 13,682 | 15,495 | (1,813) | (11.7) | % | ||||||||||||||||||
| Adjusted EBITDA | 15,415 | 13,332 | 2,083 | 15.6 | % | ||||||||||||||||||
| Stock-based compensation | 1,144 | 1,323 | (179) | (13.5) | % | ||||||||||||||||||
| Depreciation and amortization | 7,915 | 7,148 | 767 | 10.7 | % | ||||||||||||||||||
| Deferred acquisition consideration | 7,101 | (1,282) | 8,383 | NM | |||||||||||||||||||
| Other items, net | 3,159 | 3,931 | (772) | (19.6) | % | ||||||||||||||||||
Operating income (loss) | $ | (3,904) | $ | 2,212 | $ | (6,116) | (276.5) | % | |||||||||||||||
Revenue
Revenue for the three months ended March 31, 2026 was $174.5 million, compared to $160.4 million for the three months ended March 31, 2025, an increase of $14.1 million.
Net Revenue
The components of the fluctuations in Net revenue for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended March 31, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Media & Commerce | $ | 146,188 | $ | 2,358 | $ | 1,965 | $ | (1,016) | $ | 3,307 | $ | 149,495 | (0.7) | % | 2.3 | % | |||||||||||||||||||||||||||||||
| Component % change | 1.6 | % | 1.3 | % | (0.7) | % | 2.3 | % | |||||||||||||||||||||||||||||||||||||||
Organic net revenue decreased by $1.0 million or 0.7%. Increases in the Media Buying service line were driven by integrated media, technology, and data offerings that contributed to new wins and expanded scope with existing clients and were offset by a decrease due to the conflict in the Middle East. The increase in net acquisitions (divestitures) was primarily driven by the prior year acquisition of ADK, an integrated marketing company that expands our global footprint in the APAC region.
Expenses
Cost of services increased by $11.2 million. Excluding the increase in Billable costs of $10.8 million and the addition of expenses from acquired entities of $2.0 million, Cost of services decreased $1.6 million, or 1.8%, compared to organic net revenue decrease of 0.7%.
Office and general expenses increased $8.3 million. Excluding the addition of costs from acquired entities of $2.4 million, Office and general expenses increased $5.9 million, primarily due to higher Deferred acquisition consideration as explained below.
Deferred acquisition consideration increased $8.4 million, primarily attributable to the strong performance of a certain Brand in 2026, causing an increase in the fair value of the deferred acquisition consideration liability associated with that Brand.
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Operating Income (Loss)
Operating loss for the three months ended March 31, 2026 was $3.9 million, compared to income of $2.2 million for the three months ended March 31, 2025, representing a decrease of $6.1 million. The decrease in Operating income (loss) was primarily driven by the increase in Deferred acquisition consideration expense of $8.4 million driven by the strong performance of a certain Brand. Excluding the increase in Billable costs of $10.8 million and the addition of expenses from acquired entities of $2.0 million, Cost of services decreased $1.6 million, or 1.8%, compared to organic net revenue decrease of 0.7%, reflecting disciplined cost management.
Adjusted EBITDA
Adjusted EBITDA increased by $2.1 million, or 15.6%, primarily due to an increase in Net revenue, partially offset by an increase in Staff costs, as discussed above. Adjusted EBITDA margin as a percentage of Net revenue increased from 9.1% to 10.3%, reflecting disciplined cost management.
Communications
The components of operating results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 153,102 | $ | 129,088 | $ | 24,014 | 18.6 | % | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Cost of services | 109,108 | 90,057 | 19,051 | 21.2 | % | |||||||||||||||||||||
| Office and general expenses | 22,751 | 24,094 | (1,343) | (5.6) | % | |||||||||||||||||||||
| Depreciation and amortization | 6,858 | 6,596 | 262 | 4.0 | % | |||||||||||||||||||||
| $ | 138,717 | $ | 120,747 | $ | 17,970 | 14.9 | % | |||||||||||||||||||
| Operating income | $ | 14,385 | $ | 8,341 | $ | 6,044 | 72.5 | % | ||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
Revenue | $ | 153,102 | $ | 129,088 | $ | 24,014 | 18.6 | % | |||||||||||||||
| Billable costs | 56,328 | 38,107 | 18,221 | 47.8 | % | ||||||||||||||||||
Net revenue | 96,774 | 90,981 | 5,793 | 6.4 | % | ||||||||||||||||||
| Staff costs | 56,950 | 58,312 | (1,362) | (2.3) | % | ||||||||||||||||||
| Administrative costs | 12,747 | 12,996 | (249) | (1.9) | % | ||||||||||||||||||
| Unbillable and other costs, net | 2,024 | 2,081 | (57) | (2.7) | % | ||||||||||||||||||
| Adjusted EBITDA | 25,053 | 17,592 | 7,461 | 42.4 | % | ||||||||||||||||||
| Stock-based compensation | 2,397 | 1,033 | 1,364 | 132.0 | % | ||||||||||||||||||
| Depreciation and amortization | 6,858 | 6,596 | 262 | 4.0 | % | ||||||||||||||||||
| Deferred acquisition consideration | — | 1,213 | (1,213) | (100.0) | % | ||||||||||||||||||
| Other items, net | 1,413 | 409 | 1,004 | 245.5 | % | ||||||||||||||||||
| Operating income | $ | 14,385 | $ | 8,341 | $ | 6,044 | 72.5 | % | |||||||||||||||
Revenue
Revenue for the three months ended March 31, 2026 was $153.1 million compared to $129.1 million for the three months ended March 31, 2025, an increase of $24.0 million.
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Net Revenue
The components of the fluctuations in Net revenue for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended March 31, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Communications | $ | 90,981 | $ | 739 | $ | 240 | $ | 4,814 | $ | 5,793 | $ | 96,774 | 5.3 | % | 6.4 | % | |||||||||||||||||||||||||||||||
| Component % change | 0.8 | % | 0.3 | % | 5.3 | % | 6.4 | % | |||||||||||||||||||||||||||||||||||||||
The increase in organic net revenue of $4.8 million, or 5.3%, was primarily attributable to growth in corporate public affairs consulting and the commencement of primary campaigns ahead of the 2026 U.S. election cycle, new client wins and expanded scope with existing clients. This was partially offset by reduced client spending and competitive account losses in the consumer products vertical, delayed new engagement activity driven by geopolitical uncertainty in the Middle East and the non-recurrence of a prior year project timing benefits.
Expenses
Cost of services increased $19.1 million, primarily driven by $18.2 million increase in Billable costs reflecting higher pass-through activity. Excluding Billable costs, Cost of services increased only $0.8 million, or 1.6% compared to organic net revenue growth of 5.3%, reflecting deliberate headcount optimization and operational restructuring across the segment’s Brands, including the transition of certain functions to shared services and AI-driven workflow efficiencies.
Operating Income
Operating income increased $6.0 million, or 72.5%. The increase was primarily attributable to $8.7 million of improvement due to corporate public affairs consulting, election-cycle fundraising growth and early primary activity, as well as operational savings from a prior-year leadership restructuring, and the non-recurrence of $1.2 million in deferred acquisition consideration expense recognized in the prior year period. These increases were partially offset by $2.6 million in combined Operating income declines at our consumer-focused integrated communications and international strategic advisory services, reflecting the revenue headwinds discussed above.
Adjusted EBITDA
Adjusted EBITDA increased by $7.5 million, or 42.4%, reflecting Net revenue growth of $5.8 million, or 6.4%, combined with a 5.2 percentage point improvement in the staff cost ratio as a percentage of Net revenue, consistent with the expense efficiencies described above. Adjusted EBITDA margin as a percentage of Net revenue expanded to 25.9% from 19.3%, driven primarily by the operating leverage, where higher revenue from corporate public affairs consulting, election-cycle fundraising growth and early primary activity was delivered against a variable cost base.
The Marketing Cloud
The components of operating results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 26,515 | $ | 25,162 | $ | 1,353 | 5.4 | % | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Cost of services | 15,012 | 11,868 | 3,144 | 26.5 | % | |||||||||||||||||||||
| Office and general expenses | 14,650 | 17,813 | (3,163) | (17.8) | % | |||||||||||||||||||||
| Depreciation and amortization | 6,728 | 5,058 | 1,670 | 33.0 | % | |||||||||||||||||||||
| $ | 36,390 | $ | 34,739 | $ | 1,651 | 4.8 | % | |||||||||||||||||||
| Operating loss | $ | (9,875) | $ | (9,577) | $ | (298) | 3.1 | % | ||||||||||||||||||
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| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
Revenue | $ | 26,515 | $ | 25,162 | $ | 1,353 | 5.4 | % | |||||||||||||||
| Billable costs | 16 | 7 | 9 | 128.6 | % | ||||||||||||||||||
Net revenue | 26,499 | 25,155 | 1,344 | 5.3 | % | ||||||||||||||||||
| Staff costs | 16,803 | 17,337 | (534) | (3.1) | % | ||||||||||||||||||
| Administrative costs | 5,190 | 5,657 | (467) | (8.3) | % | ||||||||||||||||||
| Unbillable and other costs, net | 6,882 | 5,492 | 1,390 | 25.3 | % | ||||||||||||||||||
| Adjusted EBITDA | (2,376) | (3,331) | 955 | (28.7) | % | ||||||||||||||||||
| Stock-based compensation | 115 | 211 | (96) | (45.5) | % | ||||||||||||||||||
| Depreciation and amortization | 6,728 | 5,058 | 1,670 | 33.0 | % | ||||||||||||||||||
| Deferred acquisition consideration | — | 863 | (863) | (100.0) | % | ||||||||||||||||||
| Other items, net | 656 | 114 | 542 | 475.4 | % | ||||||||||||||||||
| Operating loss | $ | (9,875) | $ | (9,577) | $ | (298) | 3.1 | % | |||||||||||||||
Revenue
Revenue for the three months ended March 31, 2026 was $26.5 million compared to $25.2 million for the three months ended March 31, 2025, an increase of $1.4 million.
Net Revenue
The components of the fluctuations in Net revenue for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended March 31, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| The Marketing Cloud | $ | 25,155 | $ | 1,468 | $ | — | $ | (124) | $ | 1,344 | $ | 26,499 | (0.5) | % | 5.3 | % | |||||||||||||||||||||||||||||||
| Component % change | 5.8 | % | — | % | (0.5) | % | 5.3 | % | |||||||||||||||||||||||||||||||||||||||
Organic net revenue remained relatively flat year over year due to growth in the Research service line due to increased demand from new and existing clients in the financial and business services sectors and higher platform utilization including the successful introduction of additional service offerings within a subscription model, offset by a decrease in the Communications Technology service line due to the conflict in the Middle East.
Expenses
Cost of services increased $3.1 million due to higher staff costs to support the expansion in the business.
Office and general expenses decreased $3.2 million, primarily due to lower staff costs and a decrease in Deferred acquisition consideration expense as explained below.
Deferred acquisition consideration decreased by $0.9 million, primarily due to an increase in the fair value of a certain Brand due to performance timing in 2025.
Operating Loss
Operating loss increased $0.3 million or 3.1%. The increase in Operating loss was primarily attributable to an increase in Depreciation and amortization of $1.7 million related to increased investments in AI and automation to expand our offerings and services and improve workflow efficiency, partially offset by an increase in Net revenue of $1.5 million due to foreign currency fluctuations and the non-recurrence of $0.9 million of Deferred acquisition expense recognized in the prior year. Operating margin improved 0.8 percentage points, reflecting improved operating leverage.
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Adjusted EBITDA
Adjusted EBITDA increased by $1.0 million and Adjusted EBITDA margin as a percentage of Net revenue improved 4.3 percentage points, primarily due to an increase in Net revenue, as discussed above, combined with a 5.5 percentage point improvement in the staff cost ratio as the benefit of lower underlying staff costs partially offset the increase in cost of services to support business expansion.
Corporate
The components of operating results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Staff costs | $ | 15,183 | $ | 11,898 | $ | 3,285 | 27.6 | % | |||||||||||||||
| Administrative costs | 3,630 | 237 | 3,393 | NM | |||||||||||||||||||
| Adjusted EBITDA | (18,813) | (12,135) | (6,678) | 55.0 | % | ||||||||||||||||||
| Stock-based compensation | 4,552 | 5,108 | (556) | (10.9) | % | ||||||||||||||||||
| Depreciation and amortization | 4,453 | 3,445 | 1,008 | 29.3 | % | ||||||||||||||||||
| Other items, net | 1,816 | 1,665 | 151 | 9.1 | % | ||||||||||||||||||
| Operating loss | $ | (29,634) | $ | (22,353) | $ | (7,281) | 32.6 | % | |||||||||||||||
Expenses
Staff costs increased by $3.3 million, primarily attributable to an increase in headcount to support the implementation of a standardized shared services platform to optimize cost structures and support future growth and higher healthcare-related insurance claims.
Administrative costs increased $3.4 million, primarily due to a $6.3 million increase in computer software and licensing fees reflecting investments in automation and AI intended to improve workflow efficiency and support future margin expansion, partially offset by a $2.9 million decrease resulting from a higher allocation of Corporate’s administrative costs to the Brands through the implementation of the shared services platform, which leverages Stagwell's scale and buying power to reduce overall costs and drive centralized service efficiencies reflected in the Brands’ income statements. These costs include rent, IT services, accounting services, financial operations services, and business applications.
Operating Loss
Operating loss for the three months ended March 31, 2026 was $29.6 million compared to $22.4 million for the three months ended March 31, 2025, representing an increase of $7.3 million, primarily attributable to higher expenses, as discussed above.
Liquidity and Capital Resources:
The following table provides summary information about the Company’s liquidity position and capital resources:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net cash used in operating activities | $ | (26,486) | $ | (60,013) | $ | 33,527 | (55.9) | % | |||||||||||||||
| Net cash used in investing activities | (33,037) | (20,359) | (12,678) | 62.3 | % | ||||||||||||||||||
| Net cash provided by financing activities | 69,352 | 83,248 | (13,896) | (16.7) | % | ||||||||||||||||||
The Company had cash and cash equivalents of $114.9 million and $104.5 million as of March 31, 2026, and December 31, 2025, respectively.
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Operating Activities
Net cash used in operating activities for the three months ended March 31, 2026 was $26.5 million, a decrease of $33.5 million, or 55.9%, compared to the prior year. This was driven by a $27.5 million improvement in working capital primarily attributable to stronger working capital management driven by technology automation and improved billing and collection process, which resulted in favorable changes in advance billings of $47.4 million. Additionally, there were favorable changes in accounts payable of $17.3 million as a result of improved payment terms with significant service providers. This was partially offset by an unfavorable change in other current assets of $30.1 million due to an increase in certain prepaid media assets and unfavorable changes in expenditures billable to clients of $17.0 million and accruals of $36.5 million.
Changes in non-cash items consisted primarily of an increase in stock-based compensation of $2.7 million due to an increase in the fair value of certain profit interest awards driven by strong performance in certain Brands, a $3.6 million increase in the fair value of deferred acquisition liabilities driven by the performance timing of certain acquisitions, and an increase of $2.3 million in depreciation and amortization resulting from higher capital investment in AI and automation related technologies.
Investing Activities
Net cash used in investing activities for the three months ended March 31, 2026 was $33.0 million, an increase of $12.7 million, or 62.3%, compared to the prior year. This increase was primarily driven by an increase in capital expenditures and capitalized software for investments in AI and process automation technologies of $4.9 million and $10.4 million, respectively.
Financing Activities
Net cash provided by financing activities for the three months ended March 31, 2026 was $69.4 million, a decrease of $13.9 million compared to the prior year. This decrease was primarily driven by an increase in share repurchases of $29.7 million, partially offset by a decrease in payment of deferred consideration of $16.1 million.
Liquidity
The Company expects to maintain sufficient cash and/or available borrowings to fund operations for the next twelve months and subsequent periods. The Company has historically maintained and expanded its business using cash generated from operating activities, funds available under the Credit Agreement, and other initiatives, such as obtaining additional debt, equity and receivable financing. The Credit Agreement provides revolving commitments of up to $750 million and permits restricted payments for share repurchases or redemptions from certain of its stockholders. On March 27, 2026, the Company entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement that modified certain provisions of the Credit Agreement to expand the Company’s ability to borrow under its revolving credit facility in non-U.S. dollar currencies. Under the prior terms, borrowings denominated in British pounds sterling and Euros were each subject to individual sub-limits of $50.0 million, with an aggregate foreign currency sub-limit of $100.0 million. The amendment eliminated those individual currency sub-limits, allowing borrowings in U.S. dollars, British pounds sterling, Euros, and Canadian dollars up to the full revolving commitment, subject to overall facility availability. The amendment also established a framework for adding other currencies by mutual agreement among the Company and the lenders, subject to a sub-limit of $100.0 million. In addition, the amendment increased the annual limit on permitted restricted payments for repurchases or redemptions of the Company’s stock to $175.0 million per fiscal year from $100.0 million and increased the annual limit on permitted repurchases of equity interests from employees of the Company to $50.0 million per fiscal year from $15.0 million. As of March 31, 2026, the Company had $350.3 million of borrowings outstanding and $15.6 million of issued and undrawn letters of credit, resulting in $384.1 million unused borrowing capacity under the Credit Agreement.
The Company transfers certain of its trade receivable assets to third parties under certain agreements. Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer.
The trade receivables transferred to the third parties were $169.1 million and $129.3 million for the three months ended March 31, 2026 and 2025, respectively. The amount collected and due to the third parties under these arrangements was $16.7 million and $21.2 million as of March 31, 2026 and December 31, 2025, respectively. Fees for these arrangements were recorded in Office and general expenses in the Unaudited Consolidated Statements of Operations and totaled $1.8 million and $1.5 million for the three months ended March 31, 2026 and 2025, respectively.
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The Company may purchase shares of outstanding Class A Common Stock under its Repurchase Program. Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices, including through trading plans that may be adopted in accordance with Rule 10b5-1 of the Exchange Act, as amended, in privately negotiated transactions, or through other means. The timing and number of shares repurchased under the Repurchase Program will depend on a variety of factors, including the performance of our stock price, general market and economic conditions, regulatory requirements, the availability of funds, and other considerations we deem relevant. The Repurchase Program may be suspended, modified, or discontinued at any time without prior notice. Our Board of Directors will review the Repurchase Program periodically and may authorize adjustments of its terms.
During the three months ended March 31, 2026, 7.3 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an average price of $6.16 per share, for an aggregate value, excluding fees, of $44.9 million. The repurchased shares included 6.2 million shares of Class A Common Stock repurchased from executive officers and other employees at a price of $6.17 per share, for an aggregate purchase price of $38.2 million. Additionally, during the three months ended March 31, 2026, 1.2 million shares in the amount of $6.2 million were withheld for taxes from the Class A Common Stock vested during the period.
The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $356.2 million as of March 31, 2026.
The Company’s obligations extending beyond twelve months primarily consist of deferred acquisition consideration payments, purchases of redeemable noncontrolling interests, subsidiary awards, capital expenditures, scheduled lease obligation payments, and interest payments on borrowings under the Company’s 5.625% Notes (as defined in Note 7 of the Notes included herein) and Credit Agreement. The Company expects to make estimated cash payments in the future to satisfy obligations under our Tax Receivables Agreement (“TRA”), which remains in effect after the final exchange of Class C Common Stock (see Note 13 of the Notes included herein for additional details). The amount and timing of any payments under the TRA are contingent on the Company achieving certain tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize. Based on the current outlook, the Company believes future cash flows from operations, together with the Company’s existing cash balance and availability of funds under the Credit Agreement, will be sufficient to meet the Company’s anticipated cash needs for the next twelve months and subsequent periods. The Company’s ability to make payments will depend on future performance, which is subject to general economic conditions, the competitive environment and other factors, including those described in this Form 10-Q and in the Company’s other SEC filings.
Total Debt
As of March 31, 2026, Debt, net of debt issuance costs, was $1,439.7 million, compared to $1,326.0 million outstanding as of December 31, 2025. See Note 7 of the Notes included herein for information regarding the Company’s 5.625% Notes and the Credit Agreement.
As of March 31, 2026, the Company was in compliance with all of the terms and conditions of the Credit Agreement, and management believes, based on its current financial projections, that the Company will be in compliance with its covenants over the next twelve months.
If the Company loses all or a substantial portion of its lines of credit under the Credit Agreement, or if the Company uses the maximum available amount under the agreement, it will be required to seek other sources of liquidity. If the Company were unable to find these sources of liquidity, for example, through an equity offering or access to the capital markets, the Company’s ability to fund its working capital needs and any contingent obligations with respect to acquisitions and redeemable noncontrolling interests would be adversely affected.
Pursuant to the Credit Agreement, the Company must maintain a Total Leverage Ratio (as defined in the Credit Agreement) below an established threshold. For the period ended March 31, 2026, the Company’s calculation of this ratio, and the maximum permitted under the Credit Agreement, respectively, were calculated based on the trailing twelve months as follows:
| March 31, 2026 | |||||
| Total Leverage Ratio | 3.16 | ||||
| Maximum per covenant | 4.25 | ||||
These ratios and measures are not based on GAAP and are not presented as alternative measures of operating performance or liquidity. Some of these ratios and measures include, among other things, pro forma adjustments for acquisitions, one-time charges, and other items, as defined in the Credit Agreement. They are presented here to demonstrate compliance with the covenants in the Credit Agreement, as non-compliance with such covenants could have a material adverse effect on the Company.
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Material Cash Requirements
To the extent required under a particular client engagement, Stagwell’s Brands enter into contractual commitments with media providers, production companies and other third parties on behalf of their clients at levels that exceed the revenue from the services. In most of these transactions, the Brands act as the clients’ “Agent for a Disclosed Principal” where the Brands’ risk is mitigated by sequential payment liability, i.e., the brands’ obligation to pay a third party is tolled until it receives the underlying payment from the client thereby safeguarding the Brand in the event of a client default. To further protect against client default, Stagwell takes additional precautions, including the procurement of credit insurance. While Stagwell has historically had a very low incidence of default, Stagwell is still exposed to the risk of significant uncollectible receivables from its clients, and the risk of a material loss could significantly increase in periods of severe economic downturn.
Deferred acquisition consideration on the balance sheet consists of deferred obligations related to contingent purchase price payments and retention payments tied to continued employment of specific personnel. See Note 6 of the Notes included herein for additional information regarding contingent deferred acquisition consideration.
When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the incremental purchase may be required of the Company, the amounts are recorded as redeemable noncontrolling interests in mezzanine equity. See Note 8 of the Notes included herein for additional information regarding noncontrolling interests and redeemable noncontrolling interests.
Certain of the Company’s subsidiaries grant awards to their employees providing them with an equity interest in the respective subsidiary (the “profits interests awards”). The awards generally provide the employee with the right, but not the obligation, to sell their profits interest in the subsidiary to the Company based on a performance-based formula and, in certain cases, receive a profit share distribution. The profits interests awards are primarily settled in cash, with certain awards having stock-settlement provisions at the Company’s discretion. The corresponding liability associated with these profits interests awards is included as a component of Accruals and other liabilities and Other liabilities on the Consolidated Balance Sheets. See Note 12 of the Notes included herein for additional information regarding these material commitments.
The Company enters into certain long-term non-cancellable contracts for services such as revenue or profit share arrangements, cloud-based services, or software licensing. See Note 9 of the Notes included herein for additional information regarding these material commitments.
Critical Accounting Estimates
See Note 2 of the Company’s 2025 Form 10-K for information regarding the Company’s critical accounting estimates.
Website Access to Company Reports and Information
Stagwell Inc.’s Internet website address is www.stagwellglobal.com. The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to the Exchange Act, will be made available free of charge through the Company’s website as soon as reasonably practical after those reports are electronically filed with, or furnished to, the SEC. The Company announces material information to the public through a variety of means, including filings with the SEC, press releases, public conference calls, and its website. The Company uses these channels, as well as social media, including X (formerly Twitter) (@stagwell) and (@Mark_Penn), Instagram (@stagwellglobal) and its LinkedIn page (https://www.linkedin.com/company/stagwell/), to communicate with investors and the public about the Company, its products and services, and other matters. Therefore, investors, the media, and others interested in the Company are encouraged to review the information the Company makes public in these locations, as such information could be deemed to be material information. Information on or that can be accessed through the Company’s websites or these social media channels is not part of this Form 10-Q, and the Company’s website addresses and social media channels are included herein as inactive textual references only.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, the Company is exposed to market risk related to interest rates, foreign currencies and impairment risk.
Debt Instruments: As of March 31, 2026, the Company’s debt obligations consisted of amounts outstanding under its Credit Agreement and the 5.625% Notes. The Credit Agreement bears interest at variable rates based upon SOFR, EURIBOR, and SONIA depending on the duration of the borrowing product. The Company’s ability to obtain the required bank syndication commitments depends in part on conditions in the bank market at the time of syndication.
With regard to our variable rate debt, a 10% increase or decrease in interest rates would change our annual interest expense by $2.7 million.
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Foreign Exchange: While the Company primarily conducts business in markets that use the U.S. dollar, the Canadian dollar, the Euro and the British Pound, its non-U.S. operations transact business in numerous different currencies. The Company’s results of operations are subject to risk from the translation to the U.S. dollar of the revenue and expenses of its non-U.S. operations. The effects of currency exchange rate fluctuations on the translation of the Company’s results of operations are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 2 of the Company’s Audited Consolidated Financial Statements included in the 2025 Form 10-K. For the most part, revenues and expenses incurred related to the non-U.S. operations are denominated in their functional currency. This reduces the impact that fluctuations in exchange rates will have on profit margins. Translation of intercompany debt, which is not intended to be repaid, is included in cumulative translation adjustments. Translation of current intercompany balances are included in net income (loss). From time to time, the Company may enter into foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.
See the Significant Accounting Policies section in the “Notes to Audited Consolidated Financial Statements” of the 2025 Form 10-K for information related to impairment testing for Goodwill, Right-of-use lease assets and long-lived assets and the risk of potential impairment charges in future periods. See the Critical Accounting Estimates section in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2025 Form 10-K for information related to the risk of potential impairment charges in future periods.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”), who is our principal executive officer, and Chief Financial Officer (“CFO”), who is our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
We conducted an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rules 13a-15(b) and 15d-15(b) of the Exchange Act. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2026.
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of business, we are involved in various legal proceedings. We do not currently expect that these proceedings will have a material adverse effect on our results of operations, cash flows or financial position.
Item 1A. Risk Factors
There have been no material changes to the risk factors in Part I, Item 1A “Risk Factors” of our 2025 Form 10-K. These risks could materially and adversely affect our business, results of operations, financial condition, cash flows, projected results and future prospects. These risks are not exclusive and additional risks which we are subject to include the factors listed under note about “Forward-Looking Statements” and the risks described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
In the three months ended March 31, 2026, the Company issued 122,484 restricted stock units underlying shares of Class A Common Stock as inducement for employment and issued 863,624 shares of Class A Common Stock as purchase consideration valued at $5.6 million, in connection with an acquisition exempt from registration under Section 4(a)(2) of the Securities Act. The Company received no cash proceeds and no commissions were paid to any person in connection with the issuance of these shares.
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Purchase of Equity Securities by the Issuer and Affiliated Purchasers
On March 4, 2026, the Board authorized an extension and a $350.0 million increase in the size of our previously approved stock repurchase program (the “Repurchase Program”). Under the Repurchase Program, as amended, we may repurchase up to an aggregate of $725.0 million of shares of our outstanding Class A Common Stock, with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program will expire on March 4, 2029.
Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices (including through trading plans that may be adopted in accordance with Rule 10b5-1 of the Exchange Act), in privately negotiated transactions, or through other means. The timing and number of shares repurchased under the Repurchase Program will depend on a variety of factors, including the performance of our stock price, general market and economic conditions, regulatory requirements, the availability of funds, and other considerations we deem relevant. The Repurchase Program may be suspended, modified or discontinued at any time without prior notice. The Board will review the Repurchase Program periodically and may authorize adjustments of its terms. Pursuant to its Credit Agreement (as defined and discussed in Note 7 of the Notes included herein) and the indenture governing the 5.625% Notes, the Company is currently limited as to the dollar value of shares it may repurchase in the open market.
The following table details our monthly shares repurchased during the first quarter of 2026 and the approximate dollar value of shares that may yet be purchased pursuant to the Repurchase Program:
| Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Program (2) | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (2) | ||||||||||||||||||||||
1/1/2026 - 1/31/2026 | 149,703 | $ | 5.24 | — | $ | 51,089,668 | ||||||||||||||||||||
2/1/2026 - 2/28/2026 | 26,303 | $ | 4.64 | — | $ | 51,089,668 | ||||||||||||||||||||
3/1/2026 - 3/31/2026 | 8,322,949 | $ | 6.02 | 7,281,910 | $ | 356,188,747 | ||||||||||||||||||||
| Total | 8,498,955 | $ | 6.01 | 7,281,910 | $ | 356,188,747 | ||||||||||||||||||||
(1) Includes information for all shares repurchased by the Company, including shares repurchased as part of the Company’s publicly announced Repurchase Program, and 1,217,045 shares to settle employee tax withholding obligations related to the vesting of restricted stock awards, restricted stock units, performance stock awards and stock settled stock appreciation rights. Under the Repurchase Program, which was announced in March 2022, was extended and increased in March 2026 and will expire on March 4, 2029, the Company may repurchase up to an aggregate of $725.0 million of shares of the Company’s Class A Common Stock.
(2) Only includes information for shares repurchased as part of the Company’s publicly announced Repurchase Program.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the quarterly period covered by this Form 10-Q, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K).
Item 6. Exhibits
The exhibits required by this item are listed on the Exhibit Index.
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EXHIBIT INDEX
| Exhibit No. | Description | |||||||
3.1 | Second Amended and Restated Certificate of Incorporation of Stagwell Inc., as amended (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on May 9, 2023). | |||||||
3.2 | Amended and Restated Bylaws of Stagwell Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed on August 2, 2021). | |||||||
10.1 | Amendment No. 2, dated as of March 27, 2026, to Second Amended and Restated Credit Agreement by and among Stagwell Marketing Group LLC, Stagwell Global LLC, Maxxcom LLC, as the Borrowers, the other Loan Parties party thereto, the Lenders party thereto, the Issuing Banks party thereto and JP Morgan Chase Bank, N.A., as Administrative Agent.* | |||||||
31.1 | Certification by Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.* | |||||||
31.2 | Certification by Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.* | |||||||
32.1 | Certification by Chief Executive Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | |||||||
32.2 | Certification by Chief Financial Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | |||||||
| 101 | Interactive Data File, for the period ended March 31, 2026. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.* | |||||||
| 104 | Cover Page Interactive Data File. The cover page XBRL tags are embedded within the inline XBRL document and are included in Exhibit 101.* | |||||||
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| STAGWELL INC. | |||||
| /s/ Mark Penn | |||||
| Mark Penn | |||||
| Chairman of the Board and Chief Executive Officer (Principal Executive Officer) | |||||
| May 1, 2026 | |||||
/s/ Ryan J. Greene | |||||
Ryan J. Greene | |||||
| Chief Financial Officer (Principal Financial Officer) | |||||
| May 1, 2026 | |||||
49
FAQ
How did Stagwell (STGW) perform financially in Q1 2026?
Stagwell generated Q1 2026 revenue of $704.1 million, up from $651.7 million in 2025. The company reported a net loss of $13.9 million and Adjusted EBITDA of $89.7 million, reflecting higher operating scale but continued investment and financing costs.
How did Stagwell’s segments contribute to revenue in Q1 2026?
In Q1 2026, Marketing Services generated $250.8 million of revenue, Digital Transformation $101.5 million, Media & Commerce $174.5 million, Communications $153.1 million, and The Marketing Cloud $26.5 million. Corporate and eliminations reduced the consolidated total by $2.2 million.
What were Stagwell’s cash flow trends in Q1 2026?
Stagwell used $26.5 million in net cash from operating activities in Q1 2026, compared with $60.0 million used in Q1 2025. Investing activities used $33.0 million, while financing activities provided $69.4 million, largely from revolving credit facility activity and share repurchases.
How much debt does Stagwell (STGW) have outstanding?
As of March 31, 2026, Stagwell reported $1.44 billion of long-term debt. This includes $350.3 million under its senior secured revolving Credit Agreement and $1.1 billion of 5.625% senior notes due August 15, 2029, net of debt issuance costs.
What acquisition did Stagwell complete in early 2026?
On January 30, 2026, Stagwell acquired the net assets of Wavelength Strategy LLC for $10.2 million. Consideration included $0.3 million in cash, $4.3 million as a short-term liability, and $5.6 million in Class A shares, plus potential contingent consideration up to $24.8 million.