Stagwell Inc
For the period ended Jun 30, 2026. Filed Jul 31, 2026.
View on SEC.govAbout this filing
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, 2026 · Filed Jul 31, 2026
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 2026-03-31; filed 2026-05-01.
0000876883-26-000017
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-31.
0000876883-26-000026
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.
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Tables are not compared: 25 previous and 47 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 (101)
Current report
Recent Developments
Current report
On July 17, 2026, the Company entered into an agreement to acquire the net assets of QStrauss Consulting, a Colombian technology consulting firm, for an estimated purchase price of $4.0 million, up to $2.0 million of which may be paid in shares of the Company’s Class A Common Stock, at the Company’s discretion. The acquisition is expected to close in August 2026, subject to the satisfaction of customary closing conditions. In connection with the acquisition, the sellers are eligible to earn contingent consideration of up to $8.0 million, a portion of which may be settled in shares of the Company’s Class A Common Stock, at the Company’s discretion.
Current report
Revenue for the three months ended June 30, 2026 was $786.3 million, compared to $706.8 million for the three months ended June 30, 2025, an increase of $79.5 million.
Current report
For the three months ended June 30, 2026, organic net revenue increased $30.1 million, or 5.0%. Digital Transformation grew $16.6 million, reflecting higher demand for AI‑related services and marketing‑technology transformation among technology‑sector clients. Communications grew $11.9 million as it entered an on‑cycle U.S. election year, which increased public affairs activity across digital, advertising, direct‑mail, and political fundraising work. Marketing Services, Media & Commerce, and The Marketing Cloud each contributed additional growth from new client wins, higher platform utilization, and subscription‑based offerings. These increases were partially offset by reduced client spending in the Middle East related to the ongoing conflict.
Current report
Cost of services increased by $57.8 million, or 12.6%. Excluding the increase in Billable costs of $46.0 million, and the addition of $1.8 million of expenses from acquired entities, Cost of services increased $10.0 million, or only 2.9%, compared to Organic net revenue of 5.0%. The increase was driven by increases in Unbillable and other costs, net and staff costs to support the growth of Net revenue.
Current report
Office and general expenses increased $30.7 million, primarily attributable to non-cash Deferred acquisition consideration, as discussed below, and due to higher software licensing fees from investments in automation and AI intended to improve workflow efficiency and support future margin expansion.
Current report
Operating income decreased by $11.6 million, or 50.2%, and operating margin decreased to 1.8% from 3.9%. The decrease was driven by a $13.3 million increase in non-cash expenses of Stock-based compensation, Depreciation and amortization, and Deferred Acquisition consideration expenses and a 12.8 million increase in Other items, net, related to non‑recurring tax and insurance adjustments. These increases were partially offset by Net revenue growth of $33.5 million, or 5.6%, while Staff, Administrative, and Unbillable and other costs, net increased only $19.1 million, or 3.8%, resulting in a 1.4 percentage point improvement in those costs as a percentage of Net revenue.
Current report
The foreign exchange gain for the three months ended June 30, 2026 was $0.6 million, compared to a loss of $1.3 million for the three months ended June 30, 2025. The $1.9 million improvement was primarily driven by foreign exchange gains realized by our Brands operating in Canada, partially offset by foreign exchange losses incurred by our Brands operating in Europe during the same period.
Current report
The effect of noncontrolling and redeemable noncontrolling interests for the three months ended June 30, 2026 was a loss of $0.6 million, compared to income of $0.6 million for the three months ended June 30, 2025. The change reflects the mix of income and loss generated by entities that are not wholly owned by the Company.
Current report
Adjusted EBITDA increased by $14.4 million or 15.3% and Adjusted EBITDA margin as a percentage of Net revenue increased to 17.2% from 15.8%. The increase was driven by Net revenue growth of $33.5 million, or 5.6%, while Staff costs increased only $3.1 million, resulting in a 2.9 percentage point improvement in Staff costs as a percentage of Net revenue. These benefits were partially offset by an increase of $7.9 million in Administrative costs and $8.0 million in Unbillable and other costs, net, as explained above.
Current report
(3)Represents the difference between the income tax benefit of $0.3 million at an effective tax rate of 3.8% on a GAAP basis and the income tax expense of $21.8 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
Current report
(3)Represents the difference between the income tax expense of $2.7 million at an effective tax rate of (134.9)% on a GAAP basis and the income tax expense of $16.6 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
Current report
Organic net revenue increased by $1.2 million or 0.5% as growth in Research, Experiential, and Social was largely offset by the decline in Creative. Research benefited by new client wins and expanded relationships with communications, technology, and transportation and lodging clients including increased demand related to AI adoption. Creative declined as Billable costs increased while Revenue remained relatively the same, although several significant new client engagements began ramping up during the quarter. The impact of acquisitions and divestitures primarily reflected the divestiture of an Experiential brand, partially offset by the prior year acquisition of Jetfuel.
Current report
Cost of services increased by $4.3 million or 2.3%. Excluding a $2.4 million increase in Billable costs and a $1.2 million decrease related to acquired and divested entities, Cost of services increased $3.0 million, or 2.1%. The increase was driven by $4.9 million of higher Unbillable and other costs, net. Unbillable and other costs, net in Research increased $2.3 million, or 15.7%, compared to Organic net revenue growth of 14.1%. Additionally, Unbillable and other costs, net increased due to outsourced Creative costs and the expansion of Sport Beach within Experiential. This was reduced by a $1.5 million decrease in stock-based compensation expense.
Current report
Office and general expenses increased $1.0 million, primarily due to a non-cash $4.9 million increase in deferred acquisition consideration reflecting a decrease in the fair value of contingent consideration associated with a certain brand in the prior-year period. This increase was partially offset by lower staff costs from AI-enabled business optimization and cost reduction initiatives, as well as savings from the consolidation of the Company’s real estate footprint.
Current report
Operating income decreased $3.9 million, or 14.1%, and operating margin decreased to 10.1% from 11.7%. The decrease was driven by a $4.7 million increase in non-cash expenses for Stock-based compensation and Deferred acquisition consideration, and Net revenue decline of 1.1 million, or 0.5%. These were partially offset by the Staff, Administrative, and Unbillable and other costs, net decrease of $1.5 million, or 0.8%, resulting in a 0.3 percentage point improvement in those costs as a percentage of Net revenue.
Current report
Adjusted EBITDA increased by $0.4 million or 1.0%, and Adjusted EBITDA margin as a percentage of Net revenue increased to 19.3% from 19.0%. The increase was driven by a $6.4 million, or 3.9%, decrease in Staff costs and Administrative costs, resulting in a 2.4 percentage point improvement in Staff costs and Administrative costs as a percentage of Net revenue. These benefits were partially offset by a decrease in Net revenue of $1.1 million, or 0.5%, and an increase of $4.9 million in Unbillable and other costs, net.
Current report
Revenue for the three months ended June 30, 2026 was $117.7 million, compared to $97.6 million for the three months ended June 30, 2025, an increase of $20.1 million.
Current report
The components of the fluctuations in net revenue for the three months ended June 30, 2026, compared to the three months ended June 30, 2025 were as follows:
Current report
Organic net revenue increased by $16.6 million, or 18.2%. The increase was led by a $13.8 million increase in Strategy and Design driven by increased demand for AI-related services, expanded marketing‑technology transformation work with technology‑sector clients, additional scope on existing engagements, and new client wins, including several large enterprise engagements. Development and Implementation increased by $2.2 million, reflecting revenue synergies from the integration of recently combined agencies, growth in recurring retainers, higher renewal rates, and continued demand for staff-augmentation services. Digital Activation increased by $2.3 million, driven by expanded enterprise software activation engagements, additional work with existing enterprise clients, and new program activity, partially offset by the completion of certain prior‑year engagements.
Current report
Cost of services increased $8.3 million or 13.7%. Excluding a $3.8 million increase in Billable costs, Cost of services increased $4.6 million, or 8.5%, approximately half the 18.2% increase in Organic net revenue. The Organic net revenue growth outpacing higher staff costs reflects improvement in the operating leverage due to cost reduction initiatives and labor market conditions.
Current report
Office and general expenses increased by $6.6 million, including non-cash adjustments of $4.4 million from higher Deferred acquisition consideration and $2.9 million from higher Stock-based compensation. Deferred acquisition consideration increased due to the 2026 performance of a certain acquired brand, which raised the fair value of the related liability. Stock-based compensation increased because a greater proportion of annual incentive compensation was allocated to stock-based awards than in the prior year.
Current report
Operating income increased $5.1 million, or 49.2%, and operating margin increased to 14.4% from 11.4%. The increase was driven by Net revenue growth of $16.3 million, or 17.9%. This increase was partially offset by a $7.3 million increase in non-cash expenses explained above and a $4.5 million increase in Staff, Administrative, and Unbillable and other costs, net. These cumulative expenses only increased 14.8%, resulting in a 2.3 percentage point improvement in those costs as a percentage of Net revenue.
Current report
Adjusted EBITDA increased by $11.8 million or 58.1% and Adjusted EBITDA margin as a percentage of Net revenue increased to 30.0% from 22.4%. The increase was driven by Net revenue growth of $16.3 million, or 17.9%, while Staff, Administrative, and Unbillable and other costs, net only increased $4.5 million, or 6.4%, improving these costs as a percentage of Net revenue by 7.6 percentage points.
Current report
Revenue for the three months ended June 30, 2026 was $179.9 million, compared to $164.0 million for the three months ended June 30, 2025, an increase of $15.9 million.
Current report
Organic net revenue increased by $1.6 million or 1.0%, primarily due to a $3.8 million, or 11.4% increase in Media Platforms. The increase reflected higher connected television advertising for the World Cup, expansion of in-flight connectivity products across additional airline partners and growth in travel media publications. These increases were partially offset by reduced marketing spend in the Middle East due to ongoing conflict. The impact of acquisitions and divestitures reflected the prior year acquisition of ADK.
Current report
Cost of services increased by $17.0 million or 17.4%. Excluding the $12.2 million increase in Billable costs and a $1.9 million of expenses from acquired entities, Cost of services increased $2.9 million, or 3.4%, primarily attributable to the $1.7 million, or 13.0%, increase in Unbillable and other costs, net. The increase in Unbillable and other costs, net was primarily due to a 11.4% increase in Organic net revenue in Media Platforms.
Current report
Office and general expenses decreased $1.9 million, primarily due to lower Deferred acquisition consideration and cost discipline across the services lines. Deferred acquisition consideration decreased $1.3 million, primarily due to a lower year-over-year fair-value non-cash adjustment from a certain acquired brand. The prior-year period reflected a larger increase in the fair value of the liability driven by that brand's 2025 performance. Ongoing cost reduction initiatives across the segment also contributed to the decrease.
Current report
Operating income increased $0.4 million, or 44.4%, and operating margin improved to 0.8% from 0.6%. The increase was driven by Net revenue growth of $3.7 million, or 2.5%, and a net decrease of $1.2 million primarily due to a non-cash adjustment explained above. These were partially offset by the increase of Staff, Administrative, and Unbillable and other costs, net of $2.8 million, or 2.1%, resulting in a 0.3 percentage point improvement in those costs as a percentage of Net revenue.
Current report
Adjusted EBITDA increased $0.9 million, or 5.8%, and Adjusted EBITDA margin as a percentage of Net revenue increased to 10.4% from 10.1%. The increase was driven by Net revenue growth of $3.7 million, or 2.5%, while Staff, Administrative, and Unbillable and other costs, net increased only $2.8 million, improving these costs as a percentage of Net revenue by 0.3 percentage points.
Current report
Revenue for the three months ended June 30, 2026 was $188.4 million, compared to $146.2 million for the three months ended June 30, 2025, an increase of $42.2 million.
Current report
The components of the fluctuations in net revenue for the three months ended June 30, 2026, compared to the three months ended June 30, 2025 were as follows:
Current report
Organic net revenue increased by $11.9 million, or 12.1%, primarily due to growth in corporate public affairs consulting and the transition into an on-cycle U.S. election year. Compared with the prior year off-cycle period, increased demand for corporate public affairs consulting, political fundraising, and early primary‑campaign activity generated higher volumes of digital, texting, advertising, and direct‑mail production work. New client wins and expanded engagements with existing clients also contributed to the increase. These benefits were partially offset by lower activity in the international strategic advisory practice due to geopolitical uncertainty in the Middle East, and lower demand for certain integrated communications and research offerings, partially mitigated by growth in influencer and event‑based work. The impact of acquisitions and divestitures reflected Wavelength.
Current report
Office and general expenses increased $8.5 million, due to costs to support Net revenue growth and a $4.1 million increase in deferred acquisition consideration. The increase reflected a prior year decrease in the fair value of the related liability for a certain Brand due to timing of its 2025 performance.
Current report
Operating income increased $5.9 million, or 36.2%, and operating margin increased to 19.9% from 16.8%. The increase was driven by Net revenue growth of $14.5 million, or 14.8%. This increase was partially offset by a $2.3 million increase in the non-cash adjustment to Stock-based compensation, Deferred acquisition consideration, and Depreciation and amortization, and a $5.8 million increase in Staff, Administrative, and Unbillable and other costs, net. These cumulative expenses only increased 10.2%, resulting in a 3.3 percentage point improvement in those costs as a percentage of Net revenue.
Current report
Adjusted EBITDA increased by $8.7 million, or 33.1% and Adjusted EBITDA margin as a percentage of Net revenue increased to 31.1% from 26.8%. The increase was driven by Net revenue growth of $14.5 million, or 14.8%, This increase was partially offset by a $5.8 million, or 8.1%, increase in Staff, Administrative, and Unbillable and other costs, net, resulting in a 4.3 percentage point improvement in Staff, Administrative, and Unbillable and other costs, net as a percentage of Net revenue.
Current report
Revenue for the three months ended June 30, 2026 was $27.4 million, compared to $25.3 million for the three months ended June 30, 2025, an increase of $2.1 million.
Current report
Organic net revenue increased by $1.0 million or 4.1%, driven by growth in Research. The increases reflected higher demand from new and existing consumer products and financial services clients, increased platform utilization and the introduction of additional subscription-based service offerings.
Current report
Office and general expenses increased $4.4 million, primarily due to higher costs to support product development, customer adoption and the continued growth of the business.
Current report
Operating loss increased $4.0 million or 47.3%, and operating margin decreased to (45.6)% from (33.6)%. The decrease was driven by an increase of $6.8 million, or 26.3%, in Staff, Administrative, and Unbillable and other costs, net. This increase was partially offset by an increase in Net Revenue of $2.1 million, or 8.3%, resulting in a 17.0 percentage point deterioration in those costs as a percentage of Net revenue.
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Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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, 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.
Previous report
(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.
Previous report
(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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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%.
Previous report
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.
Previous report
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.
Previous report
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%.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Operating Loss
Previous report
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.
Previous report
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.
Previous report
Operating Loss
Previous report
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.
Previous report
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.
Reworded paragraphs (37)
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 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.
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 June 30, 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 the 2025 Form 10-K, our Quarterly Reports on Form 10-Q, and in other documents we file with the SEC from time to time. 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.
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, 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.
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, 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, Organic net revenue growth (decline), Free cash flow at consolidated level, and Adjusted Diluted 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.
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. 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.
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 merges with or is 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
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.”
Current wording
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,” “Free Cash Flow,” 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, 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.
Current wording
“Adjusted EBITDA” is defined as Net income (loss) attributable to Stagwell Inc. common shareholders excluding non-operating income or expense, income tax expense or benefit, equity in income or loss of non-consolidated entities and net income or loss attributable to noncontrolling and redeemable noncontrolling interest holders 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. Adjusted EBITDA for our reportable segments is reconciled to Operating income (loss), as Net income (loss) is not relevant for 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 (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.
Current wording
“Adjusted Diluted EPS” is defined as Adjusted Net Income (loss) attributable to Stagwell Inc. common and Class C shareholders, divided by the diluted weighted average shares outstanding. Adjusted Net Income represents net income (loss) attributable to Stagwell Inc. common and Class C shareholders, excluding amortization, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items (as defined above), allocated between the two share classes based on their respective income allocation percentages using a normalized effective tax rate. The diluted weighted average shares outstanding includes the diluted weighted average common shares outstanding plus 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.
Previous wording
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.
Current wording
The following discussion focuses on the operating performance of the Company for the three and six months ended June 30, 2026 and 2025 and the financial condition of the Company as of June 30, 2026.
Previous wording
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.
Current wording
The increase in net acquisitions (divestitures) was impacted by the prior year acquisitions of JetFuel Studio LLC and Powered by JetFuel LLC (collectively, “Jetfuel”), ADK Global (“ADK”), and current year acquisition of Wavelength Strategy LLC (“Wavelength”), which expanded the Company’s capabilities in experiential marketing and integrated marketing in the Asia-Pacific (“APAC”) region, and digital advocacy and communications, respectively, partially offset by the divestiture of a Brand in the Marketing Services segment.
Previous wording
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.
Current wording
Deferred acquisition consideration increased $12.1 million, primarily attributable to strong performance at certain acquired Brands, which increased the fair value of the related deferred acquisition consideration liabilities, partially offset by a reduction in the fair value of the liabilities associated with certain other Brands driven by performance timing.
Previous wording
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.
Current wording
Interest expense, net for the three months ended June 30, 2026 was $22.3 million, compared to $23.5 million for the three months ended June 30, 2025, a decrease of $1.1 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.
Previous wording
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%.
Current wording
For the three months ended June 30, 2026, the Company had an income tax benefit of $0.3 million (on a pre-tax loss of $9.2 million resulting in an effective tax rate of 3.8%) compared to income tax expense for the three months ended June 30, 2025 of $2.7 million (on a pre-tax loss of $2.0 million resulting in an effective tax rate of (134.9)%).
Previous wording
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.
Current wording
The effective tax rate increased by 138.7 percentage points compared to the prior year period, primarily due to (i) a 73.3 percentage point increase from additional pre-tax losses, which were not subject to valuation allowances, for which we recorded an additional $1.4 million tax benefit; (ii) a 31.9 percentage point increase related to a reduction in shortfall of deductions for stock-based compensation expense vested during the year for which we recorded $0.9 million less tax expense and (iii) a 33.5 percentage point increase related to a decrease in interest and penalties for which we recorded $0.7 million less tax expense.
Previous wording
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.
Current wording
As a result of the foregoing, net loss attributable to Stagwell Inc. common shareholders for the three months ended June 30, 2026 was $8.1 million, compared to a net loss of $5.3 million for the three months ended June 30, 2025.
Previous wording
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.
Current wording
Revenue for the three months ended June 30, 2026 was $277.3 million, compared to $275.9 million for the three months ended June 30, 2025, an increase of $1.4 million.
Previous wording
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.
Current wording
Cost of services increased $28.0 million or 27.2%, primarily due to a $27.8 million increase in Billable costs associated with higher activity. Excluding Billable costs and $1.1 million of expenses from acquired entities, Cost of services decreased $0.9 million or 1.6% compared to Organic net revenue growth of 12.1%, reflecting ongoing cost reduction initiatives, including the transition of certain functions to shared services and AI-enabled workflow efficiencies.
Previous wording
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.
Current wording
Staff costs increased by $3.8 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.
Previous wording
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.
Current wording
Administrative costs increased $5.8 million, primarily due to a $11.1 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 $4.4 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.
Previous wording
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.
Current wording
Operating loss for the three months ended June 30, 2026 was $38.2 million compared to $23.6 million for the three months ended June 30, 2025, representing an increase of $14.6 million, primarily attributable to higher expenses, as discussed above.
Previous wording
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.
Current wording
Office and general expenses increased by $42.0 million. Excluding the addition of expenses of acquired entities of $4.7 million, Office and general expenses increased $37.2 million, primarily attributable to a non-cash adjustment to Deferred acquisition consideration, as discussed below, and due to higher software licensing fees from investments in automation and AI intended to improve workflow efficiency and support future margin expansion.
Previous wording
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.
Current wording
Deferred acquisition consideration increased by $15.7 million, primarily attributable to strong performance at certain acquired Brands, which increased the fair value of the related deferred acquisition consideration liabilities, partially offset by a reduction in the fair value of the liabilities associated with certain other Brands driven by performance timing.
Previous wording
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.
Current wording
The effect of Noncontrolling and redeemable noncontrolling interests for the six months ended June 30, 2026 was a loss of $1.6 million, compared to a loss of $1.8 million for the six months ended June 30, 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.
Previous wording
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.
Current wording
Other items, net increased $5.0 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 $0.8 million.
Previous wording
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.
Current wording
Office and general expenses increased by $8.3 million primarily due to non-cash expenses resulting from an increase in Deferred acquisition consideration expense and an increase in Stock-based compensation. Deferred acquisition consideration increased by $4.2 million, primarily attributable to strong performance in a certain acquired Brand in 2026, causing an increase in the fair value of the deferred acquisition consideration liability of that Brand. Stock-based compensation increased by $2.5 million, primarily due to a greater proportion of the annual incentive compensation being allocated to stock-based awards compared to last year.
Previous wording
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:
Current wording
The components of operating results for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, were as follows:
Previous wording
Cost of services increased $3.1 million due to higher staff costs to support the expansion in the business.
Current wording
Cost of services increased $5.0 million due to higher Unbillable and other costs, net of $3.8 million due to higher Net revenue and higher staff costs to support the expansion in the business.
Previous wording
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.
Current wording
The Company had cash and cash equivalents of $109.5 million and $104.5 million as of June 30, 2026, and December 31, 2025, respectively.
Previous wording
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.
Current wording
Changes in non-cash items consisted primarily of a $15.7 million increase in the adjustment to deferred acquisition liabilities, driven by the performance timing of certain acquisitions, a $4.9 million increase in depreciation and amortization, from investments in AI and automation technologies, including increased capital investment during the latter half of 2025, and a $1.3 million increase in stock-based compensation.
Previous wording
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.
Current wording
Net cash used in investing activities for the six months ended June 30, 2026 was $89.7 million, an increase of $54.7 million, or 156.7%, compared to the prior-year period. The increase was driven primarily by higher capital expenditures and capitalized software spending of $3.5 million and $33.2 million, respectively, reflecting continued investment in AI and process automation technologies. In addition, there was an $18.6 million unfavorable change in acquisitions, net of cash acquired, primarily attributable to net cash proceeds received from the acquisition of ADK in the prior-year period.
Previous wording
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.
Current wording
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 June 30, 2026, the Company had $360.0 million of borrowings outstanding and$15.8 million of issued and undrawn letters of credit, resulting in$374.2 million of unused borrowing capacity under the Credit Agreement.
Previous wording
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.
Current wording
The trade receivables transferred to the third parties were $165.9 million, and $335.0 million for the three and six months ended June 30, 2026, respectively, and were $114.3 million and $243.5 million for the three and six months ended June 30, 2025, respectively. The amount collected and due to the third parties under these arrangements was $28.9 million, and $21.2 million as of June 30, 2026 and December 31, 2025, respectively, and was included as a component of Accruals and other liabilities on the Unaudited Consolidated Balance Sheets. Fees for these arrangements were recorded in Office and general expenses in the Unaudited Consolidated Statements of Operations and totaled $1.8 million, and $3.6 million for the three and six months ended June 30, 2026, respectively, and totaled $1.3 million, and $2.8 million for the three and six months ended June 30, 2025, respectively.
Previous wording
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.
Current wording
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, provided they are determined to be in the best interests of our Company and our stockholders and subject to compliance with the provisions of applicable law, including the Delaware General Corporate Law and securities laws. 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, dilution, including from our equity incentive plans and employee stock purchase plan, and other considerations we deem relevant, such as any disproportionate impact such repurchases may have on our shareholders. 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.
Previous wording
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.
Current wording
During the six months ended June 30, 2026, 11.8 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an average price of $6.18 per share, for an aggregate value, excluding fees, of $73.0 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 six months ended June 30, 2026, 2.6 million shares in the amount of $14.9 million were withheld for taxes from the Class A Common Stock vested during the period.
Previous wording
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.
Current wording
The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $328.0 million as of June 30, 2026.
Previous wording
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.
Current wording
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 to the Unaudited Consolidated Financial Statements 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.
Previous wording
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.
Current wording
As of June 30, 2026, Debt, net of debt issuance costs, was $1,450.1 million, compared to $1,326.0 million outstanding as of December 31, 2025. See Note 7 of the Notes to the Unaudited Consolidated Financial Statements included herein for information regarding the Company’s 5.625% Notes and the Credit Agreement.
Previous wording
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.
Current wording
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 the Brand 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.
Previous wording
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.
Current wording
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 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.
Rearranged current paragraphs (10)
Current report — wording carried from elsewhere
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
Current report — wording carried from elsewhere
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
Current report — wording carried from elsewhere
The increase in net acquisitions (divestitures) was impacted by the prior year acquisitions of Jetfuel, Create Group Holding Limited (“Create”), and ADK, and current year acquisition of Wavelength, which expanded the Company’s capabilities in experiential marketing, digital communications, and integrated marketing in APAC region, and digital advocacy and communications, respectively, partially offset by the divestiture of a Brand in the Marketing Services segment.
Current report — wording carried from elsewhere
The geographic mix in Net revenue for the six months ended June 30, 2026 and 2025 was as follows:
Current report — wording carried from elsewhere
Interest expense, net for the six months ended June 30, 2026 was $45.6 million, compared to $46.8 million for the six months ended June 30, 2025, a decrease of $1.2 million. This decrease was primarily attributable to a lower average interest rate, partially offset by higher levels of debt outstanding under the Credit Agreement used to support the growth in working capital attributable to the growth of Net revenue of the business.
Current report — wording carried from elsewhere
The effective tax rate increased by 91.2 percentage points compared to the prior-year period, primarily due to (i) a 57.7 percentage point increase from additional pre-tax losses, which were not subject to valuation allowances, for which we recorded a $5.3 million additional tax benefit; (ii) a 19.2 percentage point increase related to a reduction in interest and penalties for which we recorded $1.1 million less tax expense; (iii) an 11.6 percentage point increase related to a reduction in shortfall of deductions for stock-based compensation expense vested during the year for which we recorded $0.5 million less tax expense and (iv) a 2.7 percentage point increase related to a corporate restructure for which we recorded a $0.7 million tax benefit in 2026.
Current report — wording carried from elsewhere
Net Loss Attributable to Stagwell Inc. Common Shareholders
Current report — wording carried from elsewhere
As a result of the foregoing, Net loss attributable to Stagwell Inc. common shareholders for the six months ended June 30, 2026 was $21.1 million, compared to a net loss of $8.2 million for the six months ended June 30, 2025.
Current report — wording carried from elsewhere
Staff costs increased by $7.1 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.
Current report — wording carried from elsewhere
Administrative costs increased $9.2 million, primarily due to a $17.3 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 $7.3 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.