Stagwell Inc
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
STGW$11.64+7.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0000876883-24-000014
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0000876883-24-000022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 142 previous paragraphs and 223 current paragraphs.
76 unchanged; 40 reworded; 99 added; 24 removed; 2 previous and 8 current paragraphs rearranged.
Tables are not compared: 22 previous and 41 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (99)
Current report
The components of operating results for the three months ended June 30, 2024, compared to the three months ended June 30, 2023 were as follows:
Current report
Revenue for the three months ended June 30, 2024 was $671.2 million, compared to $632.3 million for the three months ended June 30, 2023, an increase of $38.9 million.
Current report
Operating Income for the three months ended June 30, 2024 was $21.9 million, compared to Operating Income of $21.3 million for the three months ended June 30, 2023, representing an increase of $0.6 million. The change in Operating Income was primarily attributable to an increase in Revenue and a decrease in Impairment and other losses, partially offset by an increase in Cost of services, Office and general expenses and Depreciation and amortization.
Current report
The increase in Office and general expenses was primarily attributable to higher deferred acquisition consideration expense, partially offset by a decrease in stock-based compensation.
Current report
Stock-based compensation decreased $4.7 million primarily due to the reversal of expense in the second quarter of 2024 associated with stock-based performance awards for which the performance targets were not probable of being met.
Current report
Deferred acquisition consideration increased $6.8 million primarily attributable to acquisitions occurring in the third and fourth quarter of 2023 and first quarter of 2024 and the increase in the fair value of certain obligations.
Current report
Depreciation and amortization increased $6.5 million, primarily attributable to the acceleration of amortization of certain tradenames within the Brand Performance and All Other reportable segments. As a result, amortization expense of $7.1 million was recorded in the three and six months ended June 30, 2024, representing the remaining amortization expense associated with these tradenames.
Current report
Impairment and other losses for the three months ended June 30, 2023 was $10.6 million, primarily related to the impairment of right-of-use lease assets totaling $6.1 million and the associated leasehold improvements totaling $3.1 million.
Current report
Interest expense, net, for the three months ended June 30, 2024 was $23.5 million, compared to $23.7 million for the three months ended June 30, 2023.
Current report
Other, net, for the three months ended June 30, 2024 was income of $0.2 million, compared to an expense of $0.4 million for the three months ended June 30, 2023, a change of $0.6 million.
Current report
(1) Adjusted Diluted EPS is defined and discussed within the Non-GAAP Financial Measures section of the Executive Summary.
Current report
(1) Adjusted Diluted EPS is defined and discussed within the Non-GAAP Financial Measures section of the Executive Summary.
Current report
Adjusted EBITDA for the three months ended June 30, 2024 was $86.1 million, compared to $91.2 million for the three months ended June 30, 2023, representing a decrease of $5.1 million, primarily driven by an increase in Revenue, more than offset by an increase in expenses, as discussed above.
Current report
Revenue for the three months ended June 30, 2024 was $385.1 million, compared to $365.6 million for the three months ended June 30, 2023, an increase of $19.5 million.
Current report
The increase in organic net revenue was primarily attributable to new client wins and increased spending in the consumer products, retail, technology and communications sectors, partially offset by lower spending due to budget cuts by large clients in the healthcare and financial service sectors. The increase in net acquisitions (divestitures) was primarily driven by acquisitions and dispositions, including the acquisitions of Epiphany, Movers and Shakers and Left Field Labs, partially offset by the sale of Concentric in the fourth quarter of 2023.
Current report
The increase in Cost of services was primarily attributable to higher billable costs, commensurate with higher revenue, and the inclusion of costs from acquired entities.
Current report
The increase in Office and general expenses was primarily attributable to an increase in deferred acquisition consideration and stock-based compensation.
Current report
Stock-based compensation increased $3.7 million primarily attributable to an increase in the fair value of deferred acquisition consideration arrangements settled in shares of Class A Common Stock.
Current report
Deferred acquisition consideration increased $1.4 million, primarily attributable to acquisitions occurring in the third and fourth quarter of 2023 and first quarter of 2024.
Current report
Impairment and other losses for the three months ended June 30, 2023 was $10.6 million. The 2023 impairment was primarily related to right-of-use lease assets totaling $6.1 million and the associated leasehold improvements totaling $3.1 million.
Current report
Adjusted EBITDA decreased $7.1 million, primarily driven by an increase in Revenue, offset by an increase in expenses, as discussed above.
Current report
Revenue for the three months ended June 30, 2024 was $177.2 million, compared to $176.7 million for the three months ended June 30, 2023, an increase of $0.5 million.
Current report
Operating Income for the three months ended June 30, 2024 was $0.0 million compared to $8.0 million for the three months ended June 30, 2023, representing a decrease of $8.0 million. The decrease in Operating Income was primarily attributable to an increase in Office and general expenses and Depreciation and amortization.
Current report
The increase in Office and general expenses was primarily attributable to an increase in staff costs and deferred acquisition consideration, partially offset by a decrease in occupancy related expenses.
Current report
Staff costs increased $1.8 million, primarily attributable to the reduction in bonus expense in 2023 related to cost savings initiatives.
Current report
Deferred acquisition consideration increased $1.1 million, primarily attributable to the increase in the fair value of certain obligations.
Current report
Depreciation and amortization increased $3.5 million, primarily attributable to the acceleration of amortization of certain tradenames. As a result, amortization expense of $4.3 million was recorded in the three and six months ended June 30, 2024, representing the remaining amortization expense associated with these tradenames.
Current report
Adjusted EBITDA decreased $2.8 million, primarily driven by an increase in expenses, as discussed above.
Current report
Revenue for the three months ended June 30, 2024 was $105.6 million, compared to $81.3 million for the three months ended June 30, 2023, an increase of $24.3 million.
Current report
The increase in organic net revenue was primarily attributable to new clients in the healthcare and consumer products sectors and increased revenue in the communications and public affairs sectors as a result of the current political campaign year. The increase in net acquisitions (divestitures) was primarily driven by the acquisition of PROS.
Current report
Operating Income for the three months ended June 30, 2024 was $14.4 million, compared to $11.7 million for the three months ended June 30, 2023, representing an increase of $2.7 million. The change in Operating Income was primarily attributable to an increase in Revenue, partially offset by an increase in Costs of services and Office and general expenses.
Current report
The increase in Office and general expenses was primarily attributable to an increase in deferred acquisition consideration.
Current report
Deferred acquisition consideration increased $4.3 million, primarily as a result of an increase in the fair value of a certain obligation during 2024.
Current report
Adjusted EBITDA increased $7.7 million, primarily driven by an increase in Revenue, partially offset by an increase in billable costs, as discussed above.
Current report
Revenue for the three months ended June 30, 2024 was $3.2 million, compared to $8.6 million for the three months ended June 30, 2023, a decrease of $5.4 million.
Current report
Operating Loss for the three months ended June 30, 2024 was $8.8 million compared to $5.4 million for the three months ended June 30, 2023, representing an increase of $3.4 million. The increase in Operating Loss was primarily attributable to a decrease in Revenue and increase in Depreciation and amortization, partially offset by a decrease in Cost of services and Office and general expenses.
Current report
The decrease in Cost of services was primarily attributable to lower unbillable costs and staff costs, commensurate with lower revenue and the derecognition of certain noncontrolling interest in the first quarter of 2024.
Current report
The decrease in Office and general expenses was primarily attributable to a decrease in staff costs as a result of the derecognition of certain noncontrolling interest in the first quarter of 2024.
Current report
Depreciation and amortization increased $2.9 million, primarily attributable to the acceleration of amortization of certain tradenames. As a result, amortization expense of $2.8 million was recorded in the three and six months ended June 30, 2024, representing the remaining amortization expense associated with these tradenames.
Current report
Adjusted EBITDA decreased $0.8 million, primarily driven by a decrease in Revenue, Staff costs and Unbillable costs, as discussed above.
Showing the first 40 of 99 passages. Open the source sections for the rest.
Removed paragraphs (24)
Previous report
Revenue for the three months ended March 31, 2024 was $670.1 million, compared to $622.4 million for the three months ended March 31, 2023, an increase of $47.6 million.
Previous report
The increase in Cost of services was primarily attributable to higher billable costs, commensurate with the increase in revenues, the inclusion of costs from acquired entities, partially offset by the elimination of costs of Concentric which was sold in the fourth quarter of 2023.
Previous report
Stock-based compensation increased $4.1 million primarily attributable to an increase in the number of shares being expensed and a higher weighted average grant date fair value in the first quarter of 2024 as compared to the first quarter of 2023.
Previous report
Revenue for the three months ended March 31, 2024 was $352.7 million compared to $341.2 million for the three months ended March 31, 2023, an increase of $11.5 million.
Previous report
Deferred acquisition consideration decreased $3.9 million, primarily as a result of a reduction in the fair value of certain obligations in the first quarter of 2024 versus the same period last year.
Previous report
Stock-based compensation increased $1.0 million primarily attributable to an increase in the number of shares being expensed and weighted average grant date fair value in the first quarter of 2024 as compared to the first quarter of 2023.
Previous report
Adjusted EBITDA increased $0.2 million, primarily driven by a decrease in Operating Income, partially offset by an increase in Other items, net, due to an increase in severance-related expenses.
Previous report
Revenue for the three months ended March 31, 2024 was $214.0 million, compared to $201.9 million for the three months ended March 31, 2023, an increase of $12.0 million.
Previous report
The increase in Office and general expenses was primarily attributable to an increase in occupancy-related expenses related to the acceleration of lease expense due to the cease-use of property associated with the Company’s real estate consolidation initiative.
Previous report
Adjusted EBITDA increased $4.5 million, primarily driven by an increase in Other Items, net due to the increase in occupancy-related expenses discussed above, and an increase in stock-based compensation. Stock-based compensation increased primarily due to an increase in the number of shares being expensed and weighted average grant date fair value in the first quarter of 2024 as compared to the first quarter of 2023.
Previous report
Revenue for the three months ended March 31, 2024 was $93.7 million, compared to $66.5 million for the three months ended March 31, 2023, an increase of $27.3 million.
Previous report
Operating Income (Loss)
Previous report
Operating income (loss) for the three months ended March 31, 2024 was $16.3 million compared to $0.4 million for the three months ended March 31, 2023, representing an increase of $16.6 million. The change in Operating income (loss) was primarily attributable to an increase in Revenue and Cost of services, and a decrease in Office and general expenses.
Previous report
The increase in Cost of services was primarily attributable to an increase in billable costs, commensurate with higher revenue, partially offset by a decrease in staff costs primarily attributable to restructuring costs.
Previous report
The decrease in Office and general expenses was primarily attributable to deferred acquisition consideration.
Previous report
Deferred acquisition consideration decreased $1.7 million, primarily attributable to a reduction in the fair value of the deferred acquisition consideration liability associated with a certain Brand.
Previous report
Adjusted EBITDA increased $15.4 million, primarily driven by an increase in Operating Income.
Previous report
Revenue for the three months ended March 31, 2024 was $9.6 million, compared to $12.9 million for the three months ended March 31, 2023, a decrease of $3.2 million.
Previous report
Operating Loss for the three months ended March 31, 2024 was $6.7 million compared to $4.5 million for the three months ended March 31, 2023, representing an increase of $2.2 million. The change in Operating Loss was primarily attributable to a decrease in Revenue, partially offset by a decrease in Cost of services.
Previous report
The decrease in Cost of Services was primarily attributable to the derecognition of certain noncontrolling interest in the first quarter of 2024.
Previous report
Adjusted EBITDA decreased $0.2 million, primarily driven by an increase in Operating Loss, as discussed above.
Previous report
Operating Loss for the three months ended March 31, 2024 was $19.8 million compared to $16.1 million for the three months ended March 31, 2023, representing an increase of $3.7 million. The increase in Operating Loss was primarily attributable to an increase in staff costs, partially offset by a decrease in administrative costs.
Previous report
Administrative costs decreased by $1.4 million primarily attributable to a reduction in professional, consulting and legal fees partially offset by an increase in occupancy related expenses.
Previous report
Occupancy-related expenses increased primarily due to the commencement of two new offices in the first quarter of 2024 and the assumption of an office, as part of the sale of Concentric, that was previously included under Integrated Agencies Network.
Reworded paragraphs (40)
Previous wording
In connection with the preparation of the consolidated financial statements during 2023, the Company identified errors in the areas of income taxes, noncontrolling interests, and accumulated other comprehensive loss related to its previously filed 2022 financial statements. The Company revised the 2022 annual financial statements in its 2023 Form 10-K. See Notes 1, 21 and 22 of the Notes in the Company’s 2023 Form 10-K for additional information regarding the correction of the errors. See Notes 1 and 17 of the Notes included herein for information regarding the revisions made to the previously issued unaudited financial statements for the first quarter of 2023.
Current wording
In connection with the preparation of the consolidated financial statements during 2023, the Company identified errors in the areas of income taxes, noncontrolling interests, and accumulated other comprehensive loss related to its previously filed 2022 financial statements. The Company revised the 2022 annual financial statements in its 2023 Form 10-K. See Notes 1, 21 and 22 of the Notes in the Company’s 2023 Form 10-K for additional information regarding the correction of the errors. See Notes 1 and 17 of the Notes included herein for information regarding the revisions made to the previously issued unaudited financial statements for the second quarter of 2023.
Previous wording
On April 3, 2024, the Company acquired What’s Next Partners (“WNP”), for 4.3 million Euros (“€”) (approximately $5 million) in cash. In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of €8.5 million (approximately $9 million), partially subject to continued employment and meeting certain future earnings targets, of which a portion may be settled in shares of the Company's Class A common stock, par value $0.001 per share (the “Class A Common Stock”), at the Company’s discretion.
Current wording
On July 19, 2024, the Company acquired L.D.R.S. Group Ltd. (“Leaders”), for $3.8 million, of which $2.9 million was paid in cash and $0.9 million in 135,010 shares of the Company’s Class A Common stock, par value $0.001 per share (“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 $6.6 million, partially 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.
Previous wording
The following discussion focuses on the operating performance of the Company for the three months ended March 31, 2024 and 2023 and the financial condition of the Company as of March 31, 2024.
Current wording
The following discussion focuses on the operating performance of the Company for the three and six months ended June 30, 2024 and 2023 and the financial condition of the Company as of June 30, 2024.
Previous wording
For the three months ended March 31, 2024, organic net revenue increased $9.0 million, or 1.7%. The increase was primarily attributable to an increase in public affairs spend with 2024 being a political campaign year and new wins in 2024, partially offset by a decrease in client spending due to budget cuts in the technology, retail, and financial sectors. The decrease in net acquisitions (divestitures) was primarily driven by the acquisitions of Team Epiphany, LLC (“Epiphany”), Movers and Shakers LLC (“Movers and Shakers”), Huskies, Ltd. (“Huskies”) and Left Field Labs LLC (“Left Field Labs”), offset by the sale of ConcentricLife (“Concentric”) in the fourth quarter of 2023.
Current wording
For the three months ended June 30, 2024, organic net revenue increased $6.6 million, or 1.2%. The increase was primarily attributable to new wins in the consumer products sector and increased revenue in the communications and public affairs sectors as a result of the current political campaign year. This increase was partially offset by a decrease in client spending due to budget cuts in healthcare and financial sectors. The increase in net acquisitions (divestitures) was impacted by acquisitions and dispositions, including the acquisitions of Team Epiphany, LLC (“Epiphany”), Movers and Shakers LLC (“Movers and Shakers”) and Left Field Labs LLC (“Left Field Labs”), partially offset by the sale of ConcentricLife (“Concentric”) in the fourth quarter of 2023.
Previous wording
The geographic mix in net revenues for the three months ended March 31, 2024 and 2023 was as follows:
Current wording
The geographic mix in net revenues for the three months ended June 30, 2024 and 2023 is as follows:
Previous wording
The increase in Cost of services was primarily attributable to higher billable and unbillable costs, commensurate with the increase in revenues and an increase in staff costs due to cost saving initiatives in 2023.
Current wording
The increase in Cost of services was primarily attributable to higher billable and staff costs, commensurate with the increase in revenues as well as the inclusion of costs from acquired entities.
Previous wording
The foreign exchange loss for the three months ended March 31, 2024 was $2.3 million, compared to a loss of $0.7 million for the three months ended March 31, 2023, primarily attributable to a loan funding originating in British Pounds and payable in United States Dollars.
Current wording
The foreign exchange loss for the three months ended June 30, 2024 was $1.4 million compared to a loss of $1.5 million for the three months ended June 30, 2023, primarily attributable to a loan funding originating in British Pounds and payable in United States Dollars.
Previous wording
The Company had an income tax expense for the three months ended March 31, 2024 of $2.6 million (on a pre-tax income of $1.4 million resulting in an effective tax rate of 189.5%) compared to income tax expense of $0.2 million (on pre-tax loss of $2.4 million resulting in an effective tax rate of (9.8)%) for the three months ended March 31, 2023.
Current wording
The Company had an income tax expense for the three months ended June 30, 2024 of $1.2 million (on a pre-tax loss of $2.8 million resulting in an effective tax rate of(41.8)%), compared to income tax expense of $0.4 million (on pre-tax loss of $4.3 million resulting in an effective tax rate of(10.1)%) for the three months ended June 30, 2023.
Previous wording
The difference in the effective tax rate of 189.5% in the three months ended March 31, 2024 as compared to (9.8)% in the three months ended March 31, 2023 is due to the change in pre-tax income, a reduction in benefit from the disregarded entity structure, and an increase in non-deductible share-based compensation, offset by a reduction in uncertain tax positions.
Current wording
The difference in the effective tax rate of (41.8)% in the three months ended June 30, 2024 as compared to (10.1)% in the three months ended June 30, 2023, is due to an increase in current losses subject to valuation allowance, a reduction in tax benefit from the disregarded entity structure and tax benefits recognized in 2023 with respect to lease impairments.
Previous wording
The effect of noncontrolling and redeemable noncontrolling interests for the three months ended March 31, 2024 was income of $0.6 million compared to a loss of $4.3 million for the three months ended March 31, 2023. The amounts are driven by the mix of income and losses derived from entities not entirely owned by the Company.
Current wording
The effect of noncontrolling and redeemable noncontrolling interests for the three months ended June 30, 2024 was loss of $1.0 million compared to loss of $1.8 million for the three months ended June 30, 2023. The amounts are driven by the mix of income and losses derived from entities not entirely owned by the Company.
Previous wording
As a result of the foregoing, net loss attributable to Stagwell Inc. common shareholders for the three months ended March 31, 2024 was $1.3 million compared to net income of $1.4 million for the three months ended March 31, 2023.
Current wording
As a result of the foregoing, net loss attributable to Stagwell Inc. common shareholders for the three months ended June 30, 2024 was $3.0 million, compared to net loss of $3.2 million for the three months ended June 30, 2023.
Previous wording
Operating Income for the three months ended March 31, 2024 was $13.7 million, compared to $13.7 million for the three months ended March 31, 2023 representing no change, primarily attributable to an increase in Revenue, offset by an increase in Cost of services and Office and general expenses.
Current wording
Operating Income for the three months ended June 30, 2024 was $37.1 million, compared to $37.1 million for the three months ended June 30, 2023, representing no change, primarily attributable to an increase in Revenue and a decrease in Impairment and other losses, offset by an increase in Cost of services and Office and general expenses.
Previous wording
The increase in organic net revenue was primarily attributable to new clients in the healthcare and consumer products sectors, and increased spending by existing clients in the public affairs sector as 2024 is a political campaign year.
Current wording
The increase in organic net revenue was primarily attributable to new clients and increased spending by existing clients in the consumer products and communications sectors.
Previous wording
The increase in Office and general expenses was primarily attributable to increases in stock-based compensation and occupancy-related expenses, partially offset by a decrease in deferred acquisition consideration. Occupancy-related expenses increased primarily due to the acceleration of lease expense due to the cease-use of property associated with the Company’s real estate consolidation initiative.
Current wording
Occupancy-related expenses decreased, primarily attributable to the Company’s real estate consolidation initiative.
Previous wording
Operating income for the three months ended March 31, 2024 was $25.9 million, compared to $16.2 million for the three months ended March 31, 2023, representing an increase of $9.6 million. The change in Operating Income was primarily attributable to the increase in Revenue partially offset by an increase in Cost of services, Impairment and other losses and Office and general expenses.
Current wording
The increase in Cost of services was primarily attributable to higher billable costs, commensurate with higher revenue.
Previous wording
(1) All Other Revenue and Administrative costs include approximately $6.0 million of eliminations of intercompany services.
Current wording
(1) All Other Revenue and Administrative costs include approximately $8 million and $6 million of eliminations of intercompany services in the three months ended June 30, 2024 and 2023, respectively.
Previous wording
The decrease in organic net revenue was primarily attributable to budget cuts and client losses from clients in the food and beverage, travel and transportation, and technology sectors.
Current wording
The decrease in organic net revenue was primarily attributable to budget cuts and client losses from clients in the food and beverage, travel and transportation, financial services, and consumer products sectors. The decrease in net acquisitions (divestitures) was driven by the derecognition of certain noncontrolling interest in the first quarter of 2024.
Previous wording
Interest expense, net for the three months ended March 31, 2024 was $21.0 million compared to $18.2 million for the three months ended March 31, 2023, an increase of $2.8 million, primarily attributable to higher levels of debt outstanding under the Credit Agreement (as defined and discussed in Note 8 of the Notes to the Unaudited Consolidated Financial Statements included herein), and a higher interest rate on amounts outstanding under the Credit Agreement.
Current wording
Interest expense, net for the six months ended June 30, 2024 was $44.5 million compared to $41.9 million for the six months ended June 30, 2023, an increase of $2.6 million, primarily attributable to higher levels of debt outstanding under the Credit Agreement (as discussed in Note 8 of the Notes to the Unaudited Consolidated Financial Statements included herein), and a higher interest rate on amounts outstanding under the Credit Agreement.
Previous wording
Other, net for the three months ended March 31, 2024 was $1.3 million of a loss, compared to income of $0.2 million for the three months ended March 31, 2023. The increase in expense was primarily driven by a loss on investments.
Current wording
Other, net for the six months ended June 30, 2024 was an expense of $1.1 million, compared to an expense of $0.2 million for the six months ended June 30, 2023. The increase in expense was primarily driven by a loss on investments.
Previous wording
Adjusted EBITDA for the three months ended March 31, 2024 was $90.3 million, compared to $72.2 million for the three months ended March 31, 2023, representing an increase of $18.1 million, primarily driven by an increase in Operating Income, as discussed above.
Current wording
Adjusted EBITDA for the six months ended June 30, 2024 was $176.4 million, compared to $163.4 million for the six months ended June 30, 2023, representing an increase of $13.0 million, primarily driven by an increase in Operating Income, as discussed above.
Previous wording
The decrease in organic net revenue was primarily attributable to lower spending due to budget cuts by large clients in the technology and financial services sectors, and client losses during the later part of 2023 in the retail and healthcare sectors. The decrease in net acquisitions (divestitures) was primarily driven by the sale of Concentric in the fourth quarter of 2023, partially offset by the acquisitions of Epiphany, Movers and Shakers and Left Field Labs.
Current wording
The decrease in organic net revenue was primarily attributable to lower spending due to budget cuts by large clients in the healthcare and financial services sectors, partially offset by the new client wins and higher spend in the consumer products, technology and communications sectors. The increase in net acquisitions (divestitures) was primarily driven by the acquisitions of Epiphany, Movers and Shakers and Left Field Labs, partially offset by the sale of Concentric in the fourth quarter of 2023.
Previous wording
Operating income for the three months ended March 31, 2024 was $22.4 million, compared to $23.5 million for the three months ended March 31, 2023, representing a decrease of $1.2 million. The change in Operating income was primarily attributable to an increase in Revenue, Cost of services, and Impairment and other losses, partially offset by a decrease in Office and general expenses.
Current wording
Operating Income for the six months ended June 30, 2024 was $59.5 million, compared to $60.6 million for the six months ended June 30, 2023, representing a decrease of $1.2 million. The decrease in Operating Income was primarily attributable to an increase in Cost of services and Office and general expenses, partially offset by an increase in Revenue and a decrease in Impairment and other losses.
Previous wording
The decrease in Office and general expenses was primarily attributable to a decrease in deferred acquisition consideration, and staff costs (as discussed above), partially offset by an increase in stock-based compensation.
Current wording
The increase in Office and general expenses was primarily attributable to an increase in stock-based compensation, partially offset by a decrease in deferred acquisition consideration.
Previous wording
Deferred acquisition consideration decreased $3.9 million, primarily as a result of a reduction in the fair value of certain obligations in the first quarter of 2024 versus the same period last year.
Current wording
Deferred acquisition consideration decreased $2.5 million, primarily attributable to acquisitions occurring in the third and fourth quarter of 2023 and first quarter of 2024, partially offset by a reduction in the fair value of certain obligations in the second quarter of 2024.
Previous wording
Impairment and other losses for the three months ended March 31, 2024 was $1.5 million. This was attributable to a charge to reduce the carrying value of a right-of-use lease asset and related leasehold improvements. The right-of-use lease asset and related leasehold improvements were related to an agency within the Integrated Agencies Network.
Current wording
Impairment and other losses for the six months ended June 30, 2024 was $1.5 million. This was attributable to a charge to reduce the carrying value of a right-of-use lease asset and related leasehold improvements. Impairment and other losses for the six months ended June 30, 2023 was $10.6 million, primarily related to right-of-use lease assets totaling $6.1 million and the associated leasehold improvements totaling $3.1 million.
Previous wording
The increase in organic net revenue was primarily attributable to new clients and increased spending by existing clients specifically in communications, consumer products, food and beverage, and transportation sectors. The increase in net acquisitions was primarily driven by the acquisition of Huskies.
Current wording
The increase in organic net revenue was primarily attributable to new clients and increased spending by existing clients in the communications, consumer products and food and beverage sectors. The increase in net acquisitions (divestitures) was driven by the acquisition of Huskies.
Previous wording
The increase in Cost of services was primarily attributable to higher billable costs, commensurate with higher revenue, partially offset by a decrease in staff costs primarily due to the sale of Concentric in the fourth quarter of 2023 and a decrease in stock-based compensation.
Current wording
The increase in Cost of services was primarily attributable to higher unbillable costs, commensurate with the increase in revenue and an increase in staff costs, primarily due to a reduction in bonus expense in 2023 related to cost savings initiatives.
Previous wording
Staff costs increased by $3.3 million primarily as a result of a health insurance benefit recognized in the first quarter of 2023.
Current wording
Staff costs increased by $7.0 million primarily as a result of a health insurance benefit recognized in 2023 and a reduction in bonus expense in 2023 related to cost savings initiatives.
Previous wording
The Company had cash and cash equivalents of $129.8 million and $119.7 million as of March 31, 2024 and December 31, 2023, respectively. 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 and equity financing. The Credit Agreement provides revolving commitments of up to $640.0 million and permits restricted payments for share repurchases or redemptions from certain of its stockholders in an aggregate principal amount of up to $150.0 million. As of March 31, 2024, the Company had $182.0 million of borrowings outstanding and $15.8 million of issued and undrawn letters of credit resulting in $442.2 million unused amount under the Credit Agreement.
Current wording
The Company had cash and cash equivalents of $136.1 million and $119.7 million as of June 30, 2024 and December 31, 2023, respectively. 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 and equity financing. The Credit Agreement provides revolving commitments of up to $640.0 million and permits restricted payments for share repurchases or redemptions from certain of its stockholders in an aggregate principal amount of up to $150.0 million. As of June 30, 2024, the Company had $334.0 million of borrowings outstanding and $15.5 million of issued and undrawn letters of credit resulting in $290.5 million unused amount under the Credit Agreement.
Previous wording
The trade receivables transferred to the third parties were $69.8 million and $56.2 million for the three months ended March 31, 2024 and 2023, respectively. The amount collected and due to the third parties under these arrangements was $3.7 million as of March 31, 2024 and $1.8 million as of December 31, 2023. Fees for these arrangements were recorded in Office and general expenses in the Unaudited Consolidated Statements of Operations and totaled $0.9 million and $1.0 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
The trade receivables transferred to the third parties were $141.7 million and $101.6 million for the six months ended June 30, 2024 and 2023, respectively. The amount collected and due to the third parties under these arrangements was $2.1 million as of June 30, 2024 and $1.8 million as of December 31, 2023. Fees for these arrangements were recorded in Office and general expenses in the Unaudited Consolidated Statements of Operations and totaled $1.0 million and $1.9 million for the three and six months ended June 30, 2024, respectively, and $0.8 million and $1.8 million for the three and six months ended June 30, 2023, respectively.
Previous wording
The Company may purchase up to an aggregate of$250.0 million of shares of outstanding Class A Common Stock under itsstock repurchase program (the “Repurchase Program”). The Repurchase Program expires on March 1, 2026.
Current wording
The Company may purchase up to an aggregate of$250.0 million of shares of outstanding Class A Common Stock under itsstock repurchase program (the “Repurchase Program”). The Repurchase Program, which was last authorized on March 1, 2023, expires on March 1, 2026.
Previous wording
During the three months ended March 31, 2024, 4.0 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an aggregate value, excluding fees, of $24.6 million. These shares were repurchased at an average price of $6.11 per share. The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $114.0 million as of March 31, 2024. The Company's Board of Directors (the “Board”) will review the Repurchase Program periodically and may authorize adjustments of its terms. The Repurchase Program may be suspended, modified or discontinued at any time without prior notice.
Current wording
The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $64.8 million as of June 30, 2024. The Company’s Board of Directors (the “Board”) will review the Repurchase Program periodically and may authorize adjustments of its terms. The Repurchase Program may be suspended, modified or discontinued at any time without prior notice.
Previous wording
Cash flows used in operating activities for the three months ended March 31, 2024, were $53.1 million, primarily driven by earnings, partially offset by unfavorable working capital requirements, including the timing of media supplier payments.
Current wording
Cash flows used in operating activities for the six months ended June 30, 2024, were $67.6 million, primarily driven by unfavorable working capital requirements, including the timing of media supplier payments, partially offset by earnings.
Previous wording
Cash flows used in operating activities for the three months ended March 31, 2023, were $85.1 million, primarily driven by earnings and unfavorable working capital requirements timing of media supplier payments.
Current wording
Cash flows used in operating activities for the six months ended June 30, 2023, were $144.1 million, primarily driven by unfavorable working capital requirements, including the timing of media supplier payments, partially offset by earnings.
Previous wording
Cash flows used in investing activities were $26.1 million for the three months ended March 31, 2024, primarily driven by $8.8 million in capitalized software spend, $5.4 million in capital expenditures, and $11.7 million for acquisitions, net of cash acquired.
Current wording
Cash flows used in investing activities were $52.2 million for the six months ended June 30, 2024, primarily driven by $17.1 million in capitalized software spend, $14.0 million in capital expenditures, and $20.4 million for acquisitions, net of cash acquired.
Previous wording
Cash flows used in investing activities were $10.8 million for the three months ended March 31, 2023, primarily driven by $6.7 million in capitalized software spend, $3.4 million in capital expenditures, and $0.2 million in acquisitions, net of cash acquired.
Current wording
Cash flows used in investing activities were $30.1 million for the six months ended June 30, 2023, primarily driven by $10.4 million in capitalized software spend, $8.0 million in capital expenditures, and $5.0 million in acquisitions, net of cash acquired.
Previous wording
During the three months ended March 31, 2023, cash flows provided by financing activities were $12.9 million, primarily driven by $50.0 million in net borrowings under the Credit Agreement, $10.9 million of distributions to noncontrolling interests and $26.1 million in shares repurchased and cancelled.
Current wording
During the six months ended June 30, 2024, cash flows provided by financing activities were $138.3 million, primarily driven by $275.0 million in net borrowings under the Credit Agreement, partially offset by shares repurchased and cancelled of $86.9 million, payments of deferred consideration of $24.0 million, and distributions to noncontrolling interests of $22.5 million.
Previous wording
During the three months ended March 31, 2024, cash flows provided by financing activities were $91.1 million, primarily driven by $123.0 million in net borrowings under the Credit Agreement, shares repurchased and cancelled of $29.7 million, payments of deferred consideration of $1.7 million, and distributions to noncontrolling interests of $0.6 million.
Current wording
During the six months ended June 30, 2023, cash flows provided by financing activities were $58.5 million, primarily driven by $302.0 million in net borrowings under the Credit Agreement, shares repurchased and cancelled of $199.4 million, payments of deferred consideration of $28.6 million, and distributions to noncontrolling interests of $15.4 million.
Previous wording
Debt, net of debt issuance costs, as of March 31, 2024, was $1,269.5 million as compared to $1,145.8 million outstanding at December 31, 2023. See Note 8 to the Unaudited Consolidated Financial Statements included herein for information regarding the Company’s 5.625% Notes, and the Credit Agreement, which provides for a $640.0 million senior secured revolving credit facility maturing on August 3, 2026.
Current wording
Debt, net of debt issuance costs, as of June 30, 2024, was $1,422.2 million as compared to $1,145.8 million outstanding at December 31, 2023. See Note 8 to the Unaudited Consolidated Financial Statements included herein for information regarding the Company’s 5.625% Notes, and the Credit Agreement, which provides for a $640.0 million senior secured revolving credit facility maturing on August 3, 2026.
Previous wording
Stagwell Inc. is the successor SEC registrant to MDC Partners Inc. 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 its Twitter account (@stagwell) 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 inclusion of the Company’s website addresses and social media channels are inactive textual references only.
Current wording
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), 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 inclusion of the Company’s website addresses and social media channels are inactive textual references only.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
The geographic mix in net revenues for the six months ended June 30, 2024 and 2023 was as follows:
Current report — wording carried from elsewhere
The foreign exchange loss for the six months ended June 30, 2024 was $3.6 million, compared to a loss of $2.1 million for the six months ended June 30, 2023, primarily attributable to a loan funding originating in British Pounds and payable in United States Dollars.
Current report — wording carried from elsewhere
The Company had an income tax expense for the six months ended June 30, 2024 of $3.8 million (on a pre-tax loss of $1.4 million resulting in an effective tax rate of(263.3)%) compared to income tax expense of $0.7 million (on pre-tax loss of $6.7 million resulting in an effective tax rate of(10.0)%) for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
The effect of noncontrolling and redeemable noncontrolling interests for the six months ended June 30, 2024 was loss of $0.4 million compared to a loss of $6.0 million for the six months ended June 30, 2023. The amounts are driven by the mix of income and losses derived from entities not entirely owned by the Company.
Current report — wording carried from elsewhere
Net Income (Loss) Attributable to Stagwell Inc. Common Shareholders
Current report — wording carried from elsewhere
The increase in Cost of services was primarily attributable to an increase in billable costs, commensurate with higher revenue.
Current report — wording carried from elsewhere
(1) All Other Revenue and Administrative costs include approximately $8 million and $6 million of eliminations of intercompany services in the three months ended June 30, 2024 and 2023, respectively.
Current report — wording carried from elsewhere
The decrease in organic net revenue was primarily attributable to budget cuts and client losses from clients in the food and beverage, travel and transportation, financial services, and consumer products sectors. The decrease in net acquisitions (divestitures) was driven by the derecognition of certain noncontrolling interest in the first quarter of 2024.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
On April 5, 2024, the Company acquired PROS Agency (“PROS”), for 26.5 million Brazilian reals (“R$”) (approximately $5 million) of which R$21.2 million (approximately $4 million) was paid in cash and R$5.3 million (approximately $1 million) in 182,256 shares of 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 R$72.5 million (approximately $14 million), partially 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.
Previous report — wording carried elsewhere
Impairment and other losses for the three months ended March 31, 2024 was $1.5 million. This was attributable to a charge to reduce the carrying value of a right-of-use lease asset and related leasehold improvements.