Stagwell Inc

Previous wording

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 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 GAAP measures are below.

Current wording

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, 2025 (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 GAAP measures are below.

Previous wording

Stagwell conducts its business through its networks, 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. Stagwell’s differentiation lies in its creative 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.

Current wording

Stagwell conducts its business through its networks, 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 creative 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.

Previous wording

Stagwell manages its business by monitoring several financial and non-financial performance indicators. The key indicators that we focus on are revenue, operating expenses, capital expenditures and the non-GAAP financial measures 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 principal capability, (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 networks. These indicators may include a network’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 network’s next generation team that is in place as part of a potential succession plan to succeed the current senior executive team.

Current wording

Stagwell manages its business by monitoring several financial and non-financial performance indicators. The key indicators that we focus on are revenue, operating expenses, 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 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 principal capability, (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 networks. These indicators may include a network’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 network’s next generation team that is in place as part of a potential succession plan to succeed the current senior executive team.

Previous wording

On October 1, 2024, the Company acquired Consulum (Cayman) Limited (“Consulum”), a government advisory firm in the Middle East and North Africa (“MENA”) region that provides public relations management and media and marketing services, for $71.2 million, of which $58.3 million was paid in cash and $12.9 million in 1,810,274 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 $90.0 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. Due to the timing of the closing of the acquisition and delivery of related data, there was insufficient time to incorporate additional disclosures related to the preliminary purchase price allocation and fair value of the assets acquired and liabilities assumed.

Current wording

On April 2, 2025, the Company acquired Create Group Holding Limited, a strategic digital communications group in Middle East, for $15.5 million, of which $11.5 million was paid in cash and $4.0 million was paid in 653,663 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 approximately $24.0 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. Due to the timing of the closing of the acquisition, there was insufficient time to incorporate additional disclosures related to the preliminary purchase price allocation and fair value of the assets acquired and liabilities assumed.

Previous wording

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. 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.

Current wording

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.

Previous wording

Historically, we typically generate the highest quarterly revenue during the fourth quarter in each year. In addition, within our Communications Network, client concentration increases during election years due to the cyclical nature of our advocacy Brands. The highest volumes of retail related consumer marketing increase with the back-to-school season through the end of the holiday season.

Current wording

Historically, we typically generate the highest quarterly revenue during the fourth quarter of each year. In addition, within our Communications Network, client concentration increases during election years due to the cyclical nature of our advocacy Brands. The highest volumes of retail related consumer marketing increase with the back-to-school season through the end of the holiday season.

Previous wording

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“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.”

Current wording

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“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,” “Adjusted EBITDA,” and “Adjusted Diluted EPS.”

Previous wording

“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, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items. Adjusted EBITDA for our reportable segments is reconciled to Operating Income (Loss), as Net Income (Loss) is not a relevant reportable segment financial metric.

Current wording

“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, and other items. Other items primarily includes restructuring, certain system implementation and acquisition-related expenses. Adjusted EBITDA for our reportable segments is reconciled to Operating Income (Loss), as Net Income (Loss) is not a relevant reportable segment financial metric.

Previous wording

“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, 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) (a) the weighted average number of common shares outstanding plus (b) the weighted average number of shares of Class C Common Stock outstanding. Other items include restructuring costs, acquisition-related expenses, and non-recurring items. The diluted weighted average shares outstanding include shares of Class C Common Stock as if converted to shares of Class A Common Stock to calculate Adjusted Diluted EPS.

Current wording

“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) (a) the weighted average number of common shares outstanding plus (b) the weighted average number of outstanding shares of Class C Common Stock. The diluted weighted average shares outstanding include shares of Class C Common Stock as if converted to shares of Class A Common Stock to calculate Adjusted Diluted EPS.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

The CODM uses Adjusted EBITDA (as defined above) 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.

Previous wording

The Company has three reportable segments as follows: “Integrated Agencies Network,” “Brand Performance Network” and the “Communications Network.” In addition, the Company combines and discloses operating segments that do not meet the aggregation criteria, and includes the elimination of certain intercompany services, as “All Other.” The Company also reports corporate expenses, as further detailed below, as “Corporate.” All segments follow the same basis of presentation and accounting policies as those described throughout the Notes to the Unaudited Consolidated Financial Statements included herein and in Note 2 of the Company’s Audited Consolidated Financial Statements included in the 2023 Form 10-K.

Current wording

The Company has three reportable segments as follows: “Integrated Agencies Network,” “Brand Performance Network” and the “Communications Network.” The composition of these segments are as follows:

Previous wording

In addition, Stagwell reports its corporate office expenses incurred in connection with the strategic resources provided to the networks, as well as certain other centrally managed expenses that are not fully allocated to the operating segments as Corporate. Corporate provides client and business development support to the networks as well as certain strategic resources, including accounting, administrative, financial, real estate, human resource and legal functions.

Current wording

The Company reports corporate expenses as “Corporate.” Corporate consists of 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 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.

Previous wording

The following discussion focuses on the operating performance of the Company for the three and nine months ended September 30, 2024 and 2023 and the financial condition of the Company as of September 30, 2024.

Current wording

The following discussion focuses on the operating performance of the Company for the three months ended March 31, 2025, and 2024 and the financial condition of the Company as of March 31, 2025.

Previous wording

The geographic mix in net revenues for the three months ended September 30, 2024 and 2023 is as follows:

Current wording

The geographic mix in Net revenue for the three months ended March 31, 2025 and 2024 was as follows:

Previous wording

The increase in Office and general expenses was primarily attributable to an increase in deferred acquisition consideration.

Current wording

Operating Income for the three months ended March 31, 2025, was $18.3 million, compared to $25.9 million for the three months ended March 31, 2024, representing a decrease of $7.6 million. The decrease in Operating Income was primarily attributable to the increase in Net revenue of $31.7 million, partially offset by higher expenses as detailed below.

Previous wording

Deferred acquisition consideration increased $5.7 million, primarily attributable to an increase in the fair value of certain obligations.

Current wording

Deferred acquisition consideration increased by $6.5 million, primarily attributable to an increase in the fair value of certain obligations.

Previous wording

Stock-based compensation increased $1.1 million, primarily due to an increase in the fair value of awards, partially offset by a decrease in the number of shares being expensed.

Current wording

Stock-based compensation decreased by $4.6 million, primarily due to a decrease in the fair value of awards, partially offset by an increase in the number of awards.

Previous wording

Interest expense, net, for the three months ended September 30, 2024 was $23.8 million, compared to $25.9 million for the three months ended September 30, 2023, a decrease of $2.1 million, primarily attributable to lower 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 lower interest rate on amounts outstanding under the Credit Agreement.

Current wording

Interest expense, net for the three months ended March 31, 2025 was $23.4 million, compared to $21.0 million for the three months ended March 31, 2024, an increase of $2.4 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), partially offset by a lower average interest rate.

Previous wording

The foreign exchange gain for the three months ended September 30, 2024 was $1.3 million, compared to a loss of $0.1 million for the three months ended September 30, 2023, primarily attributable to the movement in the British Pound.

Current wording

The foreign exchange gain for the three months ended March 31, 2025, was $1.2 million, compared to a loss of $2.3 million for the three months ended March 31, 2024, primarily attributable to the movement in the British Pound and Euro.

Previous wording

The effect of noncontrolling and redeemable noncontrolling interests for the three months ended September 30, 2024 was income of $10.6 million, compared to income of $2.5 million for the three months ended September 30, 2023. The amounts are driven by the mix of income and loss derived from entities not entirely owned by the Company.

Current wording

The effect of noncontrolling and redeemable noncontrolling interests for the three months ended March 31, 2025 was loss of $2.4 million, compared to an income of $0.6 million for the three months ended March 31, 2024. The amounts are driven by the mix of income and loss derived from entities not entirely owned by the Company.

Previous wording

As a result of the foregoing, net income attributable to Stagwell Inc. common shareholders for the three months ended September 30, 2024 was $3.3 million, compared to net income of $0.7 million for the three months ended September 30, 2023.

Current wording

As a result of the foregoing, net loss attributable to Stagwell Inc. common shareholders for the three months ended March 31, 2025, was $2.9 million, compared to a net loss of $1.3 million for the three months ended March 31, 2024.

Previous wording

Adjusted EBITDA for the nine months ended September 30, 2024 was $287.6 million, compared to $265.2 million for the nine months ended September 30, 2023, representing an increase of $22.4 million, primarily driven by an increase in Operating Income, as discussed above.

Current wording

Adjusted EBITDA for the three months ended March 31, 2025, was $80.6 million, compared to $90.3 million for the three months ended March 31, 2024, representing a decrease of $9.7 million, primarily driven by a decrease in Operating Income, as discussed above.

Previous wording

(1) All Other Revenue and Administrative costs include approximately $8 million and $6 million of eliminations of intercompany services for the nine months ended September 30, 2024 and 2023, respectively.

Current wording

(1) All Other Revenue and Administrative costs include approximately $5 million and $6 million of eliminations of intercompany services for the three months ended March 31, 2025, and 2024, respectively.

Previous wording

The increase in Office and general expenses was primarily attributable to an increase in deferred acquisition consideration and staff costs due to the inclusion of costs from acquired entities as well as an increase in salaries and commissions.

Current wording

The $11.5 million increase in Office and general expenses was primarily attributable to inclusion of costs from acquired entities as well as higher software license fees.

Previous wording

Operating Loss for the three months ended September 30, 2024 was $24.6 million, compared to $16.9 million for the three months ended September 30, 2023, representing an increase of $7.7 million. The increase in Operating Loss was primarily attributable to higher Staff costs and Stock-based compensation.

Current wording

Operating Loss for the three months ended March 31, 2025, was $22.4 million, compared to $19.8 million for the three months ended March 31, 2024, representing an increase of $2.6 million, primarily attributable to higher Staff costs and Stock-based compensation.

Previous wording

Stock-based compensation increased $4.9 million, primarily due to an increase in the fair value, partially offset by a decrease in the number of shares being expensed.

Current wording

Stock-based compensation expense increased by $1.5 million, primarily attributable to an increase in the number of awards partially offset by a decrease in the fair value of the awards.

Previous wording

The Company had cash and cash equivalents of $145.8 million and $119.7 million as of September 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 September 30, 2024, the Company had $375.0 million of borrowings outstanding and $15.5 million of issued and undrawn letters of credit resulting in $249.5 million unused amount under the Credit Agreement.

Current wording

The Company had cash and cash equivalents of $137.7 million and $131.3 million as of March 31, 2025, and December 31, 2024, 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, as of March 31, 2025, 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, 2025, the Company had $375.0 million of borrowings outstanding and $15.3 million of issued and undrawn letters of credit resulting in $249.7 million unused borrowing capacity under the Credit Agreement. On April 23, 2025 the Company entered into the Second Amended and Restated Credit Agreement which amended and restated the Credit Agreement to, among other things, increase the revolving commitment by $110.0 million to a total of $750.0 million. See Executive Summary to the Management’s Discussion and Analysis of Financial Condition and Results of Operations, for additional details.

Previous wording

The trade receivables transferred to the third parties were $224.8 million and $173.1 million for the nine months ended September 30, 2024 and 2023, respectively. The amount collected and due to the third parties under these arrangements was $14.5 million as of September 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 $3.0 million for the three and nine months ended September 30, 2024, respectively, and $1.0 million and $2.8 million for the three and nine months ended September 30, 2023, respectively.

Current wording

The trade receivables transferred to the third parties were $129.3 million and $69.8 million for the three months ended March 31, 2025 and 2024, respectively. The amount collected and due to the third parties under these arrangements was $10.4 million as of March 31, 2025 and $19.5 million as of December 31, 2024. Fees for these arrangements were recorded in Office and general expenses in the Unaudited Consolidated Statements of Operations and totaled $1.5 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

On November 6, 2024, the Board authorized an extension and a $125.0 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 $375.0 million of shares of our outstanding Class A common stock, par value $0.001 per share (“Class A Common Stock”), with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program will expire on November 6, 2027.

Current wording

The Company may repurchase up to an aggregate of $375.0 million of shares of our outstanding Class A Common Stock under its stock repurchase program (the “Repurchase Program”). The Repurchase Program will expire on November 6, 2027.

Previous wording

During the nine months ended September 30, 2024, 13.8 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an average price of $6.29 per share, for an aggregate value, excluding fees, of $86.7 million. The repurchased shares included 4 million shares of Class A Common Stock repurchased from certain affiliates of The Goldman Sachs Group, Inc. at a price of $6.34 per share, for an aggregate purchase price of $25.4 million.

Current wording

During the three months ended March 31, 2025, 0.9 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an average price of $6.07 per share, for an aggregate value, excluding fees, of $5.7 million.

Previous wording

The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $51.8 million as of September 30, 2024.

Current wording

The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $164.2 million as of March 31, 2025.

Previous wording

The Company’s obligations extending beyond twelve months primarily consist of deferred acquisition consideration payments, purchases of 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 8 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 with Stagwell Media LP and OpCo (“TRA”) (see Note 14 of the Notes included herein for additional details). The amount and timing of payments are contingent on the Company achieving certain 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 OpCo’s assets resulting from exchanges of Paired Units (each as defined in Note 11 of the Notes included herein) for shares of Class A Common Stock or cash, as applicable, and (ii) certain other tax benefits related to the Company making payments under the TRA. 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.

Current wording

The Company’s obligations extending beyond twelve months primarily consist of deferred acquisition consideration payments, purchases of 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 8 of the Notes included herein) and Credit Agreement. The Company expects to make estimated cash payments in the future to satisfy obligations under our TRA (see Notes 14 and 1 of the Notes included herein for additional details). The amount and timing of payments are contingent on the Company achieving certain 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 OpCo’s assets resulting from exchanges of Paired Units (each as defined in Note 11 of the Notes included herein) for shares of Class A Common Stock or cash, as applicable, and (ii) certain other tax benefits related to the Company making payments under the TRA. 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.

Previous wording

Cash flows used in investing activities were $66.5 million for the nine months ended September 30, 2024, primarily driven by $19.3 million in capitalized software spend, $16.7 million in capital expenditures, and $23.8 million for acquisitions, net of cash acquired.

Current wording

Cash flows used in investing activities were $20.4 million for the three months ended March 31, 2025, primarily driven by $12.0 million in capitalized software spend and $3.9 million in capital expenditures.

Previous wording

Cash flows used in investing activities were $44.8 million for the nine months ended September 30, 2023, primarily driven by $19.0 million in capitalized software spend, $12.2 million in capital expenditures, and $6.7 million in acquisitions, net of cash acquired.

Current 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 in acquisitions, net of cash acquired.

Previous wording

During the nine months ended September 30, 2024, cash flows provided by financing activities were $159.1 million, primarily driven by $316.0 million in net borrowings under the Credit Agreement, partially offset by shares repurchased and cancelled of $101.2 million, payments of deferred consideration of $28.7 million, and distributions to noncontrolling interests of $23.6 million.

Current wording

During the three months ended March 31, 2025, cash flows provided by financing activities were $83.2 million, primarily driven by $111.0 million in net proceeds borrowed under the Credit Agreement, partially offset by shares repurchased of $11.1 million and payments of deferred consideration of $16.1 million.

Previous wording

During the nine months ended September 30, 2023, cash flows provided by financing activities were $51.7 million, primarily driven by $312.0 million in net borrowings under the Credit Agreement, shares repurchased and cancelled of $204.0 million, payments of deferred consideration of $31.7 million, and distributions to noncontrolling interests of $24.5 million.

Current 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.

Previous wording

Debt, net of debt issuance costs, as of September 30, 2024, was $1,463.9 million, compared to $1,145.8 million outstanding as of 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

As of March 31, 2025, Debt, net of debt issuance costs, was $1,465.3 million, compared to $1,353.6 million outstanding as of December 31, 2024. See Note 8 of the Notes included herein for information regarding the Company’s 5.625% Notes, and the Credit Agreement. See Executive Summary to the Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional details.

Previous wording

The Company is currently 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.

Current wording

As of March 31, 2025, 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.

Previous wording

The Company’s Brands enter into contractual commitments with media providers and agreements with production companies on behalf of its clients at levels that exceed the revenue from services. Some of our Brands purchase media for clients and act as an agent for a disclosed principal. These commitments are included in Accounts payable and Accrued media when the media services are delivered by the media providers. Stagwell takes precautions against default on payment for these services including the procurement of credit insurance and has historically had a very low incidence of default. Stagwell is still exposed to the risk of significant uncollectible receivables from our clients. The risk of a material loss could significantly increase in periods of severe economic downturn.

Current wording

The Company’s Brands enter into contractual commitments with media providers and agreements with production companies on behalf of their clients at levels that exceed the revenue from services. Some of our Brands purchase media for clients and act as an agent for a disclosed principle. These commitments are included in Accounts payable and Accrued media when the media services are delivered by the media providers. Stagwell takes precautions against default on payment for these services, including the procurement of credit insurance, and has historically had a very low incidence of default. Stagwell is still exposed to the risk of significant uncollectible receivables from our clients. The risk of a material loss could significantly increase in periods of severe economic downturn.