Stagwell Inc 10-Q for FY2026 Q3
Stagwell Inc (STGW)
10-Q
2026-10-29
For: 2026-09-30
View Original
Added on
October 29, 2026
About this 10-Q
Stagwell Inc filed this 10-Q on October 29, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Stagwell Inc. reported revenue of $816.0 million for the three months ended September 30, 2026, up $73.0 million. Operating income fell $12.9 million, or 21.1%, while Adjusted EBITDA rose $28.8 million, or 24.9%. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $816.03M
- up 9.8% from $743M a year earlier
- Net income
- $18.12M
- down 26.4% from net income of $24.62M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended September 30, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from ______________ to ______________
Commission File Number: 001-13718
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(646 ) 429-1800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | ☒ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of common shares outstanding as of October 23, 2026, was 247,973,313 shares of Class A Common Stock.
STAGWELL INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
| Page | ||||||||
| PART I. FINANCIAL INFORMATION | ||||||||
| Item 1. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| PART II. OTHER INFORMATION | ||||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
EXPLANATORY NOTE
References in this Form 10-Q to “Stagwell,” “we,” “us,” “our” and the “Company” refer to Stagwell Inc. and its direct and indirect subsidiaries, unless the context requires or is expressly stated otherwise.
All dollar amounts are stated in United States (“U.S.”) dollars unless otherwise stated.
Forward-Looking Statements
This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company’s beliefs and expectations, future financial performance, growth, and future prospects, the Company’s strategy, business and economic trends and growth, technological leadership and differentiation, potential and completed acquisitions, anticipated and actual operating efficiencies and synergies and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as “ability,” “aim,” “anticipate,” “assume,” “believe,” “better,” “build,” “consider,” “continue,” “could,” “depend,” “develop, “drive,” “enhance,” “estimate,” “evaluate,” “expand,” “expect,” “focus,” “forecast,” “future,” “grow,” “guidance,” “illustrative,” “improve,” “intend,” “likely,” “maintain,” “may,” “objective,” “ongoing,” “opportunity,” “optimize,” “outlook,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “realize,” “remain,” “scenario,” “seek,” “should,” “strategy,” “sufficient,” “support,” “target,” “will,” “would” or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section.
Forward-looking statements in this document are based on certain key expectations and assumptions made by the Company. Although the management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The material assumptions upon which such forward-looking statements are based include, among others, assumptions with respect to general business, economic and market conditions, the competitive environment, anticipated and unanticipated tax consequences and anticipated and unanticipated costs. These forward-looking statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:
•risks associated with international, national and regional unfavorable economic conditions, including the effect of changing tariffs and other trade policies, inflation and other macroeconomic factors that could affect the Company or its clients;
•demand for the Company’s services, which may precipitate or exacerbate other risks and uncertainties;
•inflation and actions taken by central banks to address inflation, including changes in interest rates;
•the Company’s ability to attract new clients and retain existing clients;
•the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
•financial failure of the Company’s clients;
•the Company’s ability to retain and attract key employees;
•the Company’s ability to compete in the markets in which it operates;
•the Company’s ability to achieve its cost saving initiatives;
•the Company’s implementation of strategic initiatives;
•the Company’s ability to remain in compliance with its debt agreements, and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests, deferred acquisition consideration and profit interests;
•the Company’s ability to manage its growth effectively;
•the Company’s ability to identify and complete acquisitions or other strategic transactions that complement and expand the Company’s business capabilities and successfully integrate newly acquired businesses into the Company’s operations, retain key employees, and realize cost savings, synergies and other related anticipated benefits within the expected time period;
1
•the Company’s ability to identify and complete divestitures and to achieve the anticipated benefits therefrom;
•the Company’s ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products;
•the Company’s use of artificial intelligence, including generative artificial intelligence, and its ability to realize anticipated efficiencies and other benefits from its investments in artificial intelligence and automation technologies, and changes in client demand for artificial intelligence-related services;
•adverse tax consequences for the Company, its operations and its stockholders, that may differ from the expectations of the Company, including that recent or future changes in tax laws, potential changes to corporate tax rates in the United States and disagreements with tax authorities on the Company’s determinations that may result in increased tax costs;
•adverse tax consequences in connection with the business combination that formed the Company in August 2021, including the incurrence of material Canadian federal income tax (including material “emigration tax”);
•the Company’s ability to maintain an effective system of internal control over financial reporting, including the risk that the Company’s internal controls will fail to detect misstatements in its financial statements, such as errors requiring out-of-period adjustments;
•the Company’s ability to accurately forecast its future financial performance and provide accurate guidance;
•the Company’s ability to protect client data from security incidents or cyberattacks;
•economic disruptions resulting from war and other economic and geopolitical tensions (such as the ongoing military conflicts in Iran and the Middle East, and between Russia and Ukraine), terrorist activities, natural disasters, public health events, and tariff and trade policies, including the resulting effects on client marketing spend in affected regions;
•stock price volatility; and
•foreign currency fluctuations.
Investors should carefully consider these risks and the additional risk factors described in more detail in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2026, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” in our subsequent Quarterly Reports on Form 10-Q and in the Company’s other SEC filings.
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of services | |||||||||||||||||||||||||||||
| Office and general expenses | |||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||
| Impairment and other losses | |||||||||||||||||||||||||||||
Operating income | |||||||||||||||||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||||||||
| Foreign exchange, net | ( | ( | ( | ||||||||||||||||||||||||||
Other, net | ( | ( | |||||||||||||||||||||||||||
| ( | ( | ( | ( | ||||||||||||||||||||||||||
Income before income taxes and equity in earnings of non-consolidated affiliates | |||||||||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||||||||
| Income (loss) before equity in earnings of non-consolidated affiliates | ( | ||||||||||||||||||||||||||||
| Equity in income (loss) of non-consolidated affiliates | ( | ||||||||||||||||||||||||||||
| Net income (loss) | ( | ||||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests | ( | ||||||||||||||||||||||||||||
| Net income (loss) attributable to Stagwell Inc. common shareholders | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||||||||||
| Basic | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Diluted | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Weighted average number of common shares outstanding: | |||||||||||||||||||||||||||||
| Basic | |||||||||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||||||||
See Notes to the Unaudited Consolidated Financial Statements.
3
STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| COMPREHENSIVE (LOSS) INCOME | ||||||||||||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Other comprehensive (loss) income - Foreign currency translation adjustment | ( | ( | ( | |||||||||||||||||||||||
| Other comprehensive loss - Benefit plan settlement reclassification adjustment, net of tax | ( | ( | ||||||||||||||||||||||||
| Other comprehensive (loss) income | ( | ( | ( | |||||||||||||||||||||||
| Comprehensive (loss) income for the period | ( | |||||||||||||||||||||||||
| Comprehensive loss (income) attributable to the noncontrolling and redeemable noncontrolling interests | ( | ( | ||||||||||||||||||||||||
| Comprehensive (loss) income attributable to Stagwell Inc. common shareholders | $ | $ | $ | ( | $ | |||||||||||||||||||||
See Notes to the Unaudited Consolidated Financial Statements.
4
STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
| September 30, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Expenditures billable to clients | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Fixed assets, net | |||||||||||
| Right-of-use lease assets - operating leases | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Deferred tax assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS (“RNCI”), AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued media | |||||||||||
| Accruals and other liabilities | |||||||||||
| Advance billings | |||||||||||
| Current portion of lease liabilities - operating leases | |||||||||||
| Current portion of deferred acquisition consideration | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term portion of deferred acquisition consideration | |||||||||||
| Long-term lease liabilities - operating leases | |||||||||||
| Deferred tax liabilities | |||||||||||
| Long-term tax receivable agreement liability | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Redeemable noncontrolling interests | |||||||||||
Commitments, contingencies and guarantees (Note 9) | |||||||||||
Shareholders’ equity | |||||||||||
| Common shares - Class A | |||||||||||
| Paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
Stagwell Inc. shareholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
Total shareholders’ equity | |||||||||||
Total liabilities, RNCI, and shareholders’ equity | $ | $ | |||||||||
See Notes to the Unaudited Consolidated Financial Statements.
5
STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||
| Net (loss) income | $ | ( | $ | ||||||||||||||
Adjustments to reconcile net (loss) income to cash provided by operating activities: | |||||||||||||||||
| Stock-based compensation | |||||||||||||||||
| Depreciation and amortization | |||||||||||||||||
Amortization of right-of-use lease assets and lease liability interest | |||||||||||||||||
| Impairment and other (gains) losses | ( | ( | |||||||||||||||
| Deferred income taxes | |||||||||||||||||
| Adjustment to deferred acquisition consideration | ( | ||||||||||||||||
| Other, net | |||||||||||||||||
| Changes in working capital: | |||||||||||||||||
| Accounts receivable | ( | ( | |||||||||||||||
| Expenditures billable to clients | |||||||||||||||||
| Other current assets | ( | ( | |||||||||||||||
| Accounts payable | ( | ( | |||||||||||||||
| Accrued expenses and other liabilities | ( | ||||||||||||||||
| Advance billings | |||||||||||||||||
| Current portion of lease liabilities - operating leases | ( | ( | |||||||||||||||
| Deferred acquisition related payments | ( | ( | |||||||||||||||
Net cash provided by operating activities | |||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||
| Capitalized software | ( | ( | |||||||||||||||
| Capital expenditures | ( | ( | |||||||||||||||
| Acquisitions, net of cash acquired | ( | ( | |||||||||||||||
| Other | ( | ( | |||||||||||||||
Net cash used in investing activities | ( | ( | |||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
| Repayment of borrowings under revolving credit facility | ( | ( | |||||||||||||||
| Proceeds from borrowings under revolving credit facility | |||||||||||||||||
| Shares repurchased and cancelled | ( | ( | |||||||||||||||
| Distributions to noncontrolling interests and RNCI | ( | ( | |||||||||||||||
| Payment of deferred consideration | ( | ( | |||||||||||||||
| Purchase of noncontrolling interest | ( | ||||||||||||||||
Tax Receivables Agreement payment | ( | ||||||||||||||||
| Debt financing and other costs | ( | ||||||||||||||||
| Net cash (used in) provided by financing activities | ( | ||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | |||||||||||||||||
| Net increase in cash and cash equivalents | |||||||||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||||||||
6
STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued)
(amounts in thousands)
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| Supplemental Cash Flow Information: | |||||||||||||||||
| Cash income taxes paid | $ | $ | |||||||||||||||
| Cash interest paid | |||||||||||||||||
| Non-cash investing and financing activities: | |||||||||||||||||
| Shares and other non-cash payment for deferred acquisition consideration | $ | ||||||||||||||||
| Shares issued for business acquisitions | |||||||||||||||||
| Right-of-use lease assets obtained in exchange for operating lease liabilities | |||||||||||||||||
| Addition to deferred tax asset related to exchange of Paired Units | |||||||||||||||||
| Addition to Tax Receivables Agreement liability related to exchange of Paired Units | |||||||||||||||||
| Conversion of Class C to Class A shares | |||||||||||||||||
See Notes to the Unaudited Consolidated Financial Statements.
7
STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(amounts in thousands)
| Three Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares - Class A | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Stagwell Inc. Shareholders’ Equity | Noncontrolling Interests | Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Changes in redemption value of RNCI, net of tax | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Restricted awards granted or vested | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased and cancelled | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Restricted shares forfeited | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Shares issued, acquisitions | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other | ( | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
See Notes to the Unaudited Consolidated Financial Statements.
8
STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - (continued)
(amounts in thousands)
| Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares - Class A | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Stagwell Inc. Shareholders’ Equity | Noncontrolling Interests | Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive loss | — | — | — | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Changes in redemption value of RNCI, net of tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Restricted awards granted or vested | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased and cancelled | ( | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Restricted shares forfeited | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Shares issued, acquisitions | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Other | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
See Notes to the Unaudited Consolidated Financial Statements.
9
STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - (continued)
(amounts in thousands)
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares - Class A | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Stagwell Inc. Shareholders’ Equity | Noncontrolling Interests | Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted awards granted or vested | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased and cancelled | ( | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted shares forfeited | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
See Notes to the Unaudited Consolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - (continued)
(amounts in thousands)
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares - Class A | Common Shares - Class C | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Stagwell Inc. Shareholders’ Equity | Noncontrolling Interests | Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Changes in redemption value of RNCI, net of tax | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted awards granted or vested | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased and cancelled | ( | ( | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted shares forfeited | ( | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued, acquisitions | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in ownership held by Class C shareholders | — | — | — | — | ( | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Class C to Class A shares | ( | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (1) | ( | ( | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1) The Other line within Paid-in Capital includes $3.1 million in connection with the conversion of Class C to Class A shares as this resulted in an adjustment between the deferred tax asset and the accrued TRA liability.
See Notes to the Unaudited Consolidated Financial Statements.
11
STAGWELL INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Business and Basis of Presentation
Stagwell Inc. (together with its consolidated subsidiaries, unless the context requires otherwise, the “Company,” “we,” or “Stagwell”), incorporated under the laws of Delaware, operates a global network of technology-enabled marketing & advertising, media, data, and technology businesses (“Brands”). We help clients grow by delivering both discrete and integrated products and services, including self-service software-as-a-service (“SaaS”), data-as-a-service (“DaaS”), and licenses of our proprietary software. Our offerings address needs such as creative, communications strategy, digital transformation, experiences, technology solutions, and market research across our Marketing Services, Communications, Digital Transformation, Media & Commerce, and The Marketing Cloud segments that support clients in navigating change and achieving measurable results in a rapidly evolving business environment.
On September 30, 2025, the Company reorganized its organizational structure, which resulted in a realignment of its segments. Refer to Note 14 of the Notes included herein for additional information.
The accompanying Unaudited Consolidated Financial Statements include the accounts of Stagwell and its subsidiaries. Stagwell has prepared the unaudited consolidated interim financial statements included herein in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting interim financial information on Form 10-Q. The preparation of financial statements in conformity with GAAP requires us to make judgments, assumptions and estimates about current and future results of operations and cash flows that affect the amounts reported and disclosed. Actual results could differ from these estimates and assumptions. The consolidated reports for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).
The accompanying financial statements reflect all adjustments, consisting of normal recurring accruals, which in the opinion of management are necessary for a fair statement, in all material respects, of the information contained therein. Intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to the prior year financial information to conform to the current year’s presentation.
During the nine months ended September 30, 2026, we recorded $8.2 million in out-of-period adjustments to correct for errors related to prior periods. The adjustments, which were identified during the second quarter of 2026, primarily related to an understatement of employer payroll tax that impacted our Cost of services and Office and general expenses financial statement line items in the Unaudited Consolidated Statements of Operations. The total impact of the adjustments to net loss in the nine months ended September 30, 2026, was $6.0 million. The Company evaluated the impact of the out-of-period adjustments and concluded that the errors were not material to the Company’s previously issued financial statements and are not expected to be material to the year ending December 31, 2026.
Accounting Change
In January 2026, the Company adopted Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient and clarifications related to estimating expected credit losses on current accounts receivable and current contract assets. The Company applied the amendments prospectively and elected the practical expedient. Adoption of ASU 2025-05 did not have a material impact on the Company’s consolidated financial statements.
Recent Development
On October 23, 2026, the Company acquired all of the outstanding stock of Publisher First, Inc., doing business as Freestar, which assists online publishers in monetizing the media on their sites, for $50.0 million: $30.0 million in 3,442,043 shares of Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”) and $20.0 million in cash, subject to post-closing adjustments. The sellers can also earn up to $60.0 million in contingent consideration if future earnings targets are met, plus a share of earnings above those targets. The Company may settle part of the contingent consideration in stock, and payments to certain holders are subject to their continued employment. Due to the timing of the acquisition, the Company is currently evaluating the purchase price allocation, including the fair value of the consideration transferred and the assets acquired and liabilities assumed.
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2. New Accounting Pronouncements
In December 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-11, Interim Reporting (Topic 270): Improvements to Interim Disclosure Requirements (“ASU 2025-11”), to enhance the transparency and consistency of interim financial reporting by clarifying and expanding certain disclosure requirements in interim periods. ASU 2025-11 is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company does not expect the adoption of ASU 2025-11 to have a material impact on its consolidated financial statements or related disclosures, as the Company already complies with the applicable interim disclosure requirements of Regulation S-X.
In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), to clarify the scope, capitalization criteria, and disclosure requirements for software costs that are accounted for under Subtopic 350-40 (referred to as “internal-use software”). ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company is evaluating the impact of these new requirements on its accounting for internal-use software.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), to enhance the transparency and decision usefulness of financial information presented in the income statement by requiring disaggregated information about certain income statement expense line items. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company expects adoption to result in additional disclosures regarding the composition of certain income statement expense captions. The adoption is not expected to have a material impact on the Company’s consolidated financial statements.
3. Acquisition
Acquisition of QStrauss
On August 3, 2026, the Company acquired the net assets of QStrauss Consulting S.A.S., QStrauss Consulting LLC, and certain related intellectual property (collectively, “QStrauss”), a Colombian technology consulting company specializing in marketing technology and digital experience services, for $3.9 million, consisting of $1.9 million paid in cash and $2.0 million paid in 254,727 shares of the Company’s Class A Common Stock, subject to post-closing adjustments. In connection with the acquisition, the sellers are eligible to receive a deferred payment of $3.0 million, subject to continued employment, and contingent consideration up to a maximum value of $5.0 million, subject to continued employment and based on future net revenue targets. A portion of the deferred payment and contingent consideration may be settled in shares of Class A Common Stock. The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of QStrauss and expected growth related to new customer relationships. Customer relationships of $1.3 million and goodwill of $3.1 million were assigned to the Digital Transformation reportable segment. The Company expects that the goodwill will not be deductible for income tax purposes. The purchase price accounting is not yet final as the Company may still make adjustments due to changes in post-closing adjustments.
Acquisition of Wavelength
On January 30, 2026, the Company acquired the net assets of Wavelength Strategy LLC (“Wavelength”), a digital advocacy and communications company, for $10.2 million, consisting of $4.6 million paid in cash, and $5.6 million paid in 863,624 shares of the Company’s Class A Common Stock, subject to post-closing adjustments. In connection with the acquisition, the sellers are eligible to receive contingent consideration up to a maximum value of $24.8 million, subject to continued employment and meeting certain future earnings targets, of which a portion may be settled in shares of Class A Common Stock, at the Company’s discretion. The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of Wavelength and expected growth related to new customer relationships. Trade names of less than $1.0 million, customer relationships of $3.4 million, and goodwill of $6.3 million were assigned to the Communications reportable segment. The goodwill is fully deductible for income tax purposes. The purchase price accounting is not yet final as the Company may still make adjustments due to changes in post-closing adjustments.
The unaudited pro forma revenue and net income in 2026 were not materially different from the actual amounts of revenue and net income reported for the three and nine months ended September 30, 2026. Further, there were no material post-closing adjustments during the nine months ended September 30, 2026.
4. Revenue
Disaggregated Revenue Data
The Company provides a broad range of services to a large base of clients across each of its segments globally. The primary source of revenue is from Brand arrangements in the form of fees for services performed, commissions, and performance incentives or bonuses. Certain clients may engage with the Company in various geographic locations, across multiple disciplines, and through multiple Brands. Representation of a client rarely means that Stagwell handles marketing
13
communications for all brands or product lines of the client in every geographical location. The Company’s Brands often cooperate with one another through referrals and the sharing of economics, services and expertise, which enables Stagwell to service clients’ varied marketing needs by crafting custom integrated solutions.
As of September 30, 2026, Stagwell’s Brands were located in the United States, the United Kingdom, and at least 33 other countries around the world. The Company continues to expand its global footprint to support clients in international markets.
The following table presents revenue disaggregated by geography based on where the services are performed for the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| Geographical Location | Reportable Segment | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||
| United States | All | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| United Kingdom | All (except Digital Transformation) | ||||||||||||||||||||||||||||||||||
| Other | All | ||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
See Note 14 of the Notes included herein for further discussion on disaggregated revenue data.
Unbilled Receivables and Contract Liabilities
Unbilled receivables consist of fees and reimbursable outside vendor costs incurred on behalf of clients when providing advertising, marketing and corporate communications services that have not yet been invoiced to clients. Such amounts are invoiced to clients at various times over the course of providing services. In arrangements where we act as principal, unbilled receivables are included as a component of Accounts receivable on the Unaudited Consolidated Balance Sheets. These receivables totaled $250.0 million and $154.2 million as of September 30, 2026 and December 31, 2025, respectively. In arrangements where we act as agent, unbilled amounts related to fees are recorded in unbilled receivables and amounts pertaining to reimbursable vendor costs are included as Expenditures billable to clients on the Unaudited Consolidated Balance Sheets. Expenditures billable to clients was $144.0 million and $164.7 million as of September 30, 2026 and December 31, 2025, respectively.
Contract liabilities represent advanced billings to customers for fees and reimbursements of third-party costs, whether we act as principal or agent. Such fees and reimbursements of third-party costs are classified as Advance billings on the Company’s Unaudited Consolidated Balance Sheets. Advance billings as of September 30, 2026 and December 31, 2025, were $365.5 million and $329.8 million, respectively. Substantially all of the Advance billings balance as of December 31, 2025 is expected to be recognized as revenue in 2026, which included the incurrence and reimbursement of third-party costs where the Company acts as an agent.
Unsatisfied Performance Obligations
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5. Earnings (Loss) Per Share
The following table presents the computations of basic and diluted earnings per share for the three months ended September 30, 2026 (amounts in thousands, except per share amounts):
| Three Months Ended September 30, | |||||
| 2026 | |||||
| Earnings Per Share - Basic | |||||
| Numerator: | |||||
| Net income | $ | ||||
| Net income attributable to noncontrolling and redeemable noncontrolling interests | ( | ||||
| Net income attributable to Stagwell Inc. common shareholders | $ | ||||
| Denominator: | |||||
| Weighted average number of common shares outstanding | |||||
| Earnings Per Share - Basic | $ | ||||
| Earnings Per Share - Diluted | |||||
| Numerator: | |||||
| Net income attributable to Stagwell Inc. common shareholders | $ | ||||
| Denominator: | |||||
| Basic - Weighted average number of common shares outstanding | |||||
| Dilutive shares: | |||||
| Restricted awards and stock options | |||||
| Diluted - Weighted average number of common shares outstanding | |||||
| Earnings Per Share - Diluted | $ | ||||
| Anti-dilutive: | |||||
| Class A Shares to settle deferred acquisition obligations | |||||
15
The following table presents the computations of basic and diluted loss per share for the nine months ended September 30, 2026 (amounts in thousands, except per share amounts):
| Nine Months Ended September 30, | |||||
| 2026 | |||||
| Loss Per Share - Basic and Diluted | |||||
| Numerator: | |||||
| Net loss | $ | ( | |||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | |||||
| Net loss attributable to Stagwell Inc. common shareholders | $ | ( | |||
| Denominator: | |||||
| Weighted average number of common shares outstanding | |||||
Loss Per Share - Basic and Diluted | $ | ( | |||
| Anti-dilutive: | |||||
| Restricted awards and stock options | |||||
Class A Shares to settle deferred acquisition obligations | |||||
| Employee Stock Purchase Plan shares | |||||
16
The following table presents the computations of basic and diluted earnings per share for the three months ended September 30, 2025 (amounts in thousands, except per share amounts):
| Three Months Ended September 30, | |||||
| 2025 | |||||
| Earnings Per Share - Basic | |||||
| Numerator: | |||||
| Net income | $ | ||||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | |||||
| Net income attributable to Stagwell Inc. common shareholders | $ | ||||
| Denominator: | |||||
| Weighted average number of common shares outstanding | |||||
| Earnings Per Share - Basic | $ | ||||
| Earnings Per Share - Diluted | |||||
| Numerator: | |||||
| Net income attributable to Stagwell Inc. common shareholders | $ | ||||
| Denominator: | |||||
| Basic - Weighted average number of common shares outstanding | |||||
| Dilutive shares: | |||||
| Stock appreciation rights and restricted awards | |||||
| Diluted - Weighted average number of common shares outstanding | |||||
| Earnings Per Share - Diluted | $ | ||||
| Anti-dilutive: | |||||
| Class A Shares to settle deferred acquisition obligations | |||||
17
The following table presents the computations of basic and diluted earnings per share for the nine months ended September 30, 2025 (amounts in thousands, except per share amounts):
| Nine Months Ended September 30, | |||||
| 2025 | |||||
| Earnings Per Share - Basic | |||||
| Numerator: | |||||
| Net income | $ | ||||
| Net loss attributable to Class C shareholders | |||||
| Net income attributable to other equity interest holders | ( | ||||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | $ | ||||
| Net income attributable to Stagwell Inc. common shareholders | $ | ||||
| Denominator: | |||||
| Weighted average number of common shares outstanding | |||||
| Earnings Per Share - Basic | $ | ||||
| Earnings Per Share - Diluted | |||||
| Numerator: | |||||
| Net income attributable to Stagwell Inc. common shareholders | $ | ||||
| Net loss attributable to Class C shareholders | ( | ||||
| $ | |||||
| Denominator: | |||||
| Basic - Weighted average number of common shares outstanding | |||||
| Dilutive shares: | |||||
| Class C Shares | |||||
| Stock appreciation rights and restricted awards | |||||
| Diluted - Weighted average number of common shares outstanding | |||||
| Earnings Per Share - Diluted | $ | ||||
| Anti-dilutive: | |||||
| Class A Shares to settle deferred acquisition obligations | |||||
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6. Deferred Acquisition Consideration
The following table presents changes in deferred acquisition consideration for the nine months ended September 30, 2026 and the year ended December 31, 2025 and a reconciliation to the amounts reported on the Unaudited Consolidated Balance Sheets as of the dates indicated:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Beginning balance | $ | $ | |||||||||
Payments (1) | ( | ( | |||||||||
Adjustments to deferred acquisition consideration (2) | |||||||||||
| Currency translation adjustment | ( | ||||||||||
Ending balance (3) | $ | $ | |||||||||
(1) Includes deferred acquisition consideration payments settled in shares of Class A Common Stock and other forms of payment of $0.5 million and $21.8 million for the nine months ended September 30, 2026 and the year ended December 31, 2025, respectively.
(2) Adjustments to deferred acquisition consideration contain fair value changes from the Company’s initial estimates of deferred acquisition payments and accretion of expense as awards are earned over the vesting period.
(3) The deferred acquisition consideration as of September 30, 2026 and December 31, 2025 includes $21.5 million and $13.6 million, respectively, expected to be settled in shares of Class A Common Stock.
7. Debt
The following tables present the Company’s indebtedness as reported on the Unaudited Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
Credit Agreement | $ | $ | |||||||||
| Debt issuance costs | ( | ( | |||||||||
| Total long-term debt | $ | $ | |||||||||
Interest expense related to long-term debt included in Interest expense, net on the Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2026 was $23.3 million, and $68.3 million, respectively, and for the three and nine months ended September 30, 2025 was $24.8 million, and $71.2 million, respectively.
The amortization of debt issuance costs included in Interest expense, net on the Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2026 was $0.7 million, and $2.2 million, respectively, and for the three and nine months ended September 30, 2025 was $0.7 million, and $2.1 million, respectively.
Revolving Credit Agreement
The Company is party to a senior secured revolving credit facility with a five-year maturity with a syndicate of banks (as amended the “Credit Agreement”). The Credit Agreement provides for revolving commitments of up to $750 million and matures on April 23, 2030. On March 27, 2026, the Company entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement, which expanded its ability to borrow in non-U.S. dollar currencies and increased the annual limits on certain permitted restricted payments, including stock repurchases or redemptions and repurchases of equity interests from Company employees.
A portion of the Credit Agreement in an amount not to exceed $50.0 million is available for the issuance of standby letters of credit. As of September 30, 2026 and December 31, 2025, the Company had issued undrawn outstanding letters of credit of $16.0 million and $15.1 million, respectively.
As of September 30, 2026, the Company had $323.7 million of borrowings outstanding and $16.0 million of issued and undrawn letters of credit, resulting in $410.3 million of unused borrowing capacity under the Credit Agreement.
Borrowings under the Credit Agreement bear interest at variable rates determined based on the currency of the borrowing and the interest rate option selected by the Company. U.S. dollar borrowings bear interest at either the Adjusted Term Secured
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Overnight Financing Rate (“SOFR”) or an Alternate Base Rate plus an applicable margin. The Alternate Base Rate is based on the highest of the prime rate, the federal funds effective rate plus 0.50%, or Adjusted Term SOFR plus 1.00%. Euro denominated borrowings bear interest at the Adjusted Euro Interbank Offered Rate (“EURIBOR”), Sterling denominated borrowings bear interest at the Adjusted daily Sterling Overnight Index Average (“SONIA”) based risk free rate, and Canadian dollar borrowings bear interest at the Adjusted Term Canadian Overnight Repo Rate Average (“CORRA”), in each case plus an applicable margin. The applicable margin is determined based on the Company’s Total Leverage Ratio, as defined in the Credit Agreement.
The Credit Agreement contains a number of financial and non-financial covenants and is guaranteed by substantially all of our present and future subsidiaries, subject to customary exceptions. The Company was in compliance with all covenants as of September 30, 2026.
Senior Notes
The Company had $1.1 billion aggregate principal amount of 5.625 % senior notes (“5.625 % Notes”) outstanding as of September 30, 2026. The 5.625 % Notes are due on August 15, 2029, and bear annual interest of 5.625 % to be paid semiannually on February 15 and August 15 of each year.
The 5.625 % Notes are also subject to certain covenants and customary events of default, including cross-payment default and cross-acceleration provisions. The Company was in compliance with all covenants as of September 30, 2026.
8. Noncontrolling and Redeemable Noncontrolling Interests
When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the option to purchase incremental ownership is within the Company’s control, the amounts are recorded as Noncontrolling interests within Shareholders’ Equity in the Unaudited Consolidated Balance Sheets. Where the incremental purchase may be required of the Company, the amounts are recorded as Redeemable noncontrolling interests in mezzanine equity in the Unaudited Consolidated Balance Sheets at their estimated acquisition date redemption value and adjusted at each reporting period for changes to their estimated redemption value through Retained earnings (but not less than their initial redemption value), except for foreign currency translation adjustments.
The following table presents Net income (loss) attributable to noncontrolling and redeemable noncontrolling interests between Class C shareholders and other equity interest holders for the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
Net loss attributable to Class C shareholders (1) | $ | $ | $ | $ | ( | |||||||||||||||||||||
| Net (loss) income attributable to other equity interest holders | ( | ( | ( | |||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Net income (loss) attributable to redeemable noncontrolling interests | ( | ( | ||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling and redeemable noncontrolling interests | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
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The following table presents changes in redeemable noncontrolling interests for the nine months ended September 30, 2026 and the year ended December 31, 2025:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (dollars in thousands) | |||||||||||
| Beginning balance | $ | $ | |||||||||
Additions | |||||||||||
| Distributions | ( | ( | |||||||||
Changes in redemption value (1) | ( | ||||||||||
Net (loss) income attributable to redeemable noncontrolling interests (2) | ( | ||||||||||
| Currency translation adjustment | |||||||||||
| Ending balance | $ | $ | |||||||||
(1) Changes in redemption value are the fair value changes from the acquisition date redemption value based on the options held by the minority interest holders, adjusted through Retained earnings.
The noncontrolling shareholders’ ability to exercise any such option right is subject to the satisfaction of certain conditions, including conditions requiring notice in advance of exercise and specific employment termination conditions. In addition, these rights cannot be exercised prior to specified staggered exercise dates. The exercise of these rights at their earliest contractual date would result in obligations of the Company to fund the related amounts between 2026 and 2031. It is not determinable, at this time, if or when the owners of these rights will exercise all or a portion of these rights.
These adjustments will not impact the calculation of earnings per share if the redemption values are less than the estimated fair values. As such, there is no related impact on the Company’s earnings per share calculations for the three and nine months ended September 30, 2026 and 2025.
9. Commitments, Contingencies, and Guarantees
Legal Proceedings. The Company’s operating entities are involved in legal proceedings and regulatory inquiries of various types. While any litigation or investigation contains an element of uncertainty, the Company has no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on the financial condition and results of operations of the Company.
Guarantees. Generally, the Company has indemnified the purchasers of certain assets in the event that a third party asserts a claim against the purchaser that relates to a liability retained by the Company. These types of indemnification guarantees typically extend for a number of years. Historically, the Company has not made any significant indemnification payments under such agreements, and no amount has been accrued in the accompanying Unaudited Consolidated Financial Statements with respect to these indemnification guarantees. The Company continues to monitor the conditions that are subject to guarantees and indemnifications to identify whether it is probable that a loss has occurred and would recognize any such losses under any guarantees or indemnifications in the period when those losses are probable and estimable.
Commitments. In the ordinary course of business, the Company enters into certain commitments. The following details the significant commitments of the Company as of September 30, 2026:
The Company had $16.0 million of undrawn letters of credit outstanding. See Note 7 of the Notes included herein for additional information.
The Company is party to a long-term, non-cancellable contract with certain vendors for cloud services and software license agreements that require the Company to commit to minimum spending over the contract term. As of September 30, 2026, the Company estimates its future minimum commitments under this agreement to be $51.6 million, $57.8 million, $32.6 million and $15.4 million for the remainder of 2026, 2027, 2028 and 2029, respectively.
The Company enters into long-term, non-cancellable contracts with partner associations that include revenue or profit-sharing commitments related to the provision of its services. These contracts may also include provisions that require the partner associations to meet certain performance targets prior to any obligation to the Company. As of September 30, 2026, the Company estimates its future minimum commitments under these non-cancellable agreements to be $4.5 million, $8.8 million, $5.7 million, $3.3 million and $1.3 million for the remainder of 2026, 2027, 2028, 2029 and 2030, respectively.
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10. Share Capital
Class A Common Stock
There are 1.0 billion shares of Class A Common Stock authorized, of which 244.6 million shares were issued and outstanding as of September 30, 2026. Each share of Class A Common Stock carries one vote and represents an economic interest in the Company.
Class C Common Stock
There are 250.0 million shares of Class C Common Stock authorized as of September 30, 2026. There were no shares of Class C Common Stock outstanding as of September 30, 2026.
Class A Common Stock Repurchases
The Company may purchase shares of outstanding Class A Common Stock under its Repurchase Program. Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices, including through trading plans that may be adopted in accordance with Rule 10b5-1 of the Exchange Act, as amended, in privately negotiated transactions, or through other means, 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 Corporation 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.
On March 4, 2026, the independent and disinterested members of the Board authorized an extension and a $350.0 million increase in the size of our previously approved stock repurchase program (the “Repurchase Program”). Under the Repurchase Program, as amended, we may repurchase up to an aggregate of $725.0 million of shares of our outstanding Class A Common Stock, with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program will expire on March 4, 2029.
During the nine months ended September 30, 2026, 12.1 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an average price of $6.23 per share, for an aggregate value, excluding fees, of $75.3 million. The repurchased shares included 6.2 million shares of Class A Common Stock repurchased from executive officers and other employees, to satisfy their tax obligations resulting from the Class C Exchange (as described in Note 8 of the Notes included herein), at a price of $6.17 per share, for an aggregate purchase price of $38.2 million. Additionally, during the nine months ended September 30, 2026, 2.7 million shares in the amount of $15.4 million were withheld for taxes from the Class A Common Stock vested during the period.
11. Fair Value Measurements
A fair value measurement assumes a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. The hierarchy for observable and unobservable inputs used to measure fair value into three broad levels is described below:
•Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
•Level 2 - Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
•Level 3 - Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.
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Financial Instruments that are not Measured at Fair Value on a Recurring Basis
The following table presents certain information for our financial liability that is not measured at fair value on a recurring basis as of September 30, 2026 and December 31, 2025:
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| 5.625% Notes | $ | $ | $ | $ | |||||||||||||||||||
The fair value of this instrument is based on quoted market prices in markets that are not active. Therefore, this debt is classified as Level 2 within the fair value hierarchy.
Financial Instruments Measured at Fair Value on a Recurring Basis
Contingent deferred acquisition consideration, redeemable noncontrolling interests, and profits interest awards are considered Level 3 fair value measurement and are measured and adjusted at each reporting period at fair value. The estimated liability is determined in accordance with models of each business’ future performance, including revenue growth and free cash flows. These models are dependent upon significant assumptions, such as the growth rate of the earnings of the relevant subsidiary during the contractual period and the discount rate. These growth rates are consistent with the Company’s long-term forecasts. As of September 30, 2026, the discount rate used to measure these liabilities ranged from 3.5 % to 7.9 %.
As these estimates require the use of assumptions about future performance, which are uncertain at the time of estimation, the fair value measurements presented on the Unaudited Consolidated Balance Sheets are subject to uncertainty.
See Note 6, Note 8, and Note 12 of the Notes included herein for additional information regarding contingent deferred acquisition consideration, redeemable non-controlling interests, and profits interest awards, respectively.
As of September 30, 2026, and December 31, 2025, the carrying amount of the Company’s financial instruments, including cash, cash equivalents, accounts receivable and accounts payable, approximated fair value because of their short-term maturity.
Non-financial Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
12. Supplemental Information
Stock-Based Awards
Stock-based compensation recognized for awards authorized under the Company’s employee stock incentive plans during the three and nine months ended September 30, 2026 was $28.2 million and $62.7 million, respectively, and for the three and nine months ended September 30, 2025 was $13.1 million and $37.3 million, respectively. This was included as a component of stock-based compensation in Office and general expenses and Cost of services within the Unaudited Consolidated Statements of Operations.
Certain of the Company’s subsidiaries grant awards to their employees providing them with an equity interest in the respective subsidiary (the “profits interests awards”). The profits interests awards generally provide the employee with the right, but not the obligation, to sell their profits interest in the subsidiary to the Company based on a performance-based formula and, in certain cases, receive a profit share distribution. The profits interests awards are primarily settled in cash, with certain awards having stock-settlement provisions at the Company’s discretion. The corresponding liability associated with these profits interests awards was $7.8 million and $12.8 million as of September 30, 2026 and December 31, 2025, respectively, and was included as a component of Accruals and other liabilities and Other Liabilities on the Unaudited Consolidated Balance Sheets. For the three months ended September 30, 2026, the change in the fair value of these awards resulted in an increase in stock-based compensation expense of $0.7 million. For the nine months ended September 30, 2026, the change in the fair value of these awards resulted in a decrease in stock-based compensation expense of $1.0 million. For the three months ended September 30, 2025, there was no stock-based compensation expense recorded for these awards. For the nine months ended September 30, 2025, the change in the fair value of these awards resulted in an increase in stock-based compensation expense of $8.0 million. This was included as a component of stock-based compensation in Cost of services within the Unaudited Consolidated Statements of Operations.
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Transfer of Accounts Receivable
The Company transfers certain of its trade receivable assets to third parties under certain agreements. Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer.
The trade receivables transferred to the third parties were $158.1 million, and $493.0 million for the three and nine months ended September 30, 2026, respectively, and were $122.6 million and $366.1 million for the three and nine months ended September 30, 2025, respectively. The amount collected and due to the third parties under these arrangements was $32.1 million, and $21.2 million as of September 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 $1.7 million, and $5.2 million for the three and nine months ended September 30, 2026, respectively, and totaled $1.3 million, and $4.1 million for the three and nine months ended September 30, 2025, respectively.
Related Party Transactions
In the ordinary course of business, the Company enters into transactions with related parties, including its affiliates. The transactions may range in the nature and value of services underlying the arrangements. The Company provides marketing and advertising services to a client where the founder of the client has a significant interest in the Company and recorded $8.3 million, and $18.7 million of related party revenue for the three and nine months ended September 30, 2026, respectively, and $1.1 million, and $3.0 million of related party revenue for the three and nine months ended September 30, 2025, respectively. As of September 30, 2026, amounts due from this related party totaled $5.0 million and were included in Accounts receivable, net on the Unaudited Consolidated Balance Sheets.
During the three and nine months ended September 30, 2026, the Company extended short-term cash advances to certain employees. These advances are due within one year from the date of issuance. As of September 30, 2026, the outstanding balance of employee advances was $27.5 million and was included in Other current assets on the Unaudited Consolidated Balance Sheets.
Defined Benefit Pension Plan Settlement
During the three and nine months ended September 30, 2026, the Company completed a settlement of its frozen defined benefit pension obligation. All active and deferred participants were given the choice to receive their benefit in the form of a lump sum payment or continuing annuity through an insurance company. The plan was sponsored by one of the subsidiaries of the Company. In connection with the settlement, the Company recognized a pre-tax settlement gain of $3.4 million, in Other, net in the Unaudited Consolidated Statements of Operations.
13. Income Taxes
Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in interim periods.
For the three months ended September 30, 2026, the Company had an income tax expense of $10.9 million (on a pre-tax income of $28.8 million resulting in an effective tax rate of 37.7 %) compared to income tax expense for the three months ended September 30, 2025 of $9.6 million (on a pre-tax income of $33.3 million resulting in an effective tax rate of 28.7 %).
The effective tax rate increased by 9.0 percentage points compared with the prior-year period, and income tax expense increased by $1.3 million. The increase in the tax rate primarily related to a higher estimated annual effective tax rate and increased losses for which no tax benefit was recognized, offset by state tax refunds applied in the current period, and other discrete items.
For the nine months ended September 30, 2026, the Company had an income tax expense of $7.6 million (on a pre-tax income of $2.9 million resulting in an effective tax rate of 265.3 %) compared to income tax expense for the nine months ended September 30, 2025 of $14.0 million (on a pre-tax income of $27.7 million resulting in an effective tax rate of 50.3 %).
The effective tax rate increased by 215.0 percentage points compared with the prior-year period, and income tax expense decreased by $6.4 million. The increase in the tax rate primarily related to the significant decline in pre-tax income in 2026 and increased losses for which no tax benefit was recognized, offset by state tax refunds applied in the current period, and other discrete items.
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Tax Receivable Agreement
In connection with the Company’s Tax Receivable Agreement (“TRA”), the Company is required to make cash payments to Stagwell Media equal to 85% of certain U.S. federal, state and local income tax or franchise tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of the assets of Stagwell Global LLC (“OpCo”), the Company’s only operating subsidiary, resulting from exchanges of Paired Units (each share of Class C Common Stock is paired with a corresponding common unit of OpCo, a “Paired Unit”) for shares of Class A Common Stock or cash, as applicable, and (ii) certain other tax benefits related to us making payments under the TRA.
Effective April 4, 2025, all Paired Units were exchanged for Class A Shares. As a result of the Class C Exchange, the Company recorded an increase to its deferred tax asset balance by $237.9 million and an increase to its TRA liability balance by $229.7 million. The total TRA liability and the associated deferred tax balances, net of amortization, in connection with the exchange of Paired Units and the projected obligations under the TRA were as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||
(dollars in thousands) | |||||||||||
Tax Receivable Agreement liability (1) | $ | $ | |||||||||
Deferred tax assets (2) | |||||||||||
(1) TRA liability as of December 31, 2025 includes $2.6 million short-term liability included under Accruals and other liabilities on the Unaudited Consolidated Balance Sheets. The Company paid $2.6 million of TRA liability during the nine months ended September 30, 2026. As a result, no short-term TRA liability remained outstanding as of September 30, 2026.
(2) Deferred tax asset balances, net of deferred tax liabilities, on the Unaudited Consolidated Balance Sheets were $280.2 million and $281.1 million as of September 30, 2026 and December 31, 2025, respectively, principally due to jurisdictional netting.
14. Segment Information
The Company determines an operating segment if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has discrete financial information, and is (iii) regularly reviewed by the Chief Operating Decision Maker (“CODM”), who is Mark Penn, Chief Executive Officer and Chairman, to make decisions regarding resource allocation for the segment and assess its performance. Once operating segments are identified, the Company performs an analysis to determine if aggregation of operating segments is applicable. This determination is based upon a quantitative analysis of the expected and historic average long-term profitability for each operating segment, together with a qualitative assessment to determine if operating segments have similar operating characteristics. All segments follow the same basis of presentation and accounting policies as those described throughout the Notes included herein.
The CODM uses Adjusted EBITDA as a key metric to evaluate the operating and financial performance of a segment, identify trends affecting the segments, develop projections and make strategic business decisions. Adjusted EBITDA is defined as Net income (loss) attributable to Stagwell Inc. common shareholders excluding non-operating income or expense, 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.
On September 30, 2025, the Company reorganized its organizational structure to better reflect how the Company manages its business and goes to market, to simplify reporting and to provide clearer visibility into performance trends across its service offerings. The reorganization also seeks to enhance consistency in the Company’s portfolio of services and improve the transparency and comparability of financial information provided to investors.
As a result of the reorganization, the Company identified five operating and reportable segments: “Marketing Services,” “Digital Transformation,” “Media & Commerce,” “Communications,” and “The Marketing Cloud.” Prior period presented has been recast to reflect the reclassification of Brands within the reportable segments. Based on the segment analysis, management concluded that the operating segments do not exhibit similar economic characteristics or share other aggregation criteria. As a result, none of our operating segments are aggregated for reporting purposes. Further, as a result of the reorganization, certain reporting units have been redefined, and the composition of others has changed. The new structure fairly reflects the allocation of the Company’s resources, thereby improving comparability for investors and supporting the Company’s long-term strategic objectives. The composition of these segments is as follows:
•The Marketing Services segment delivers a broad range of services across four closely related client needs: creative, research, experiential, and social media solutions designed to build and elevate brands. Capabilities include developing
25
breakthrough brand campaigns, providing consumer insights through advanced research methodologies, creating immersive experiential marketing programs and social engagement strategies that connect brands with audiences across digital platforms. By combining creative excellence, data-driven insights, and innovative experiences, Marketing Services empowers organizations to differentiate themselves in the marketplace, drive audience engagement, and achieve measurable business results. These services employ a wide variety of artificial intelligence (“AI”)-powered services in the delivery, such as AI-powered creative production and data analysis. Brands in this segment include, but are not limited to, creative agencies 72 and Sunny and Anomaly, research agencies NRG and Harris Insights, experiential agency TEAM and Sport Beach, and social agency Movers & Shakers.
•The Digital Transformation segment designs, implements and activates modern digital ecosystems that enable brand and customer experiences through the integration of strategy, design, and technology. This segment helps clients modernize their digital infrastructure, enhance customer engagement, and accelerate enterprise transformation. Its capabilities span the delivery of digital products and experiences that connect brand storytelling with technology, including website and content development, digital campaigns, product and platform design, AI-native strategies and integration, and implementation of marketing technology (“MarTech”) products and solutions for customers. It also provides managed services, staff augmentation, and engineering expertise across various delivery models, offering system integration, full-stack development, and ongoing platform management. Additionally, Digital Transformation connects digital ecosystems to physical experiences through innovative, technology-driven customer engagements, such as business-to-business (“B2B”) platforms and multimodal activations that blend physical and digital environments using augmented reality (“AR”), virtual reality (“VR”), and emerging technologies. Together, these capabilities empower organizations to transform their digital presence and drive sustained business growth. Brands in this segment include, but are not limited to, strategy and design agencies Code and Theory and Instrument, development and implementation agency TrueLogic, and digital activation agency Left Field Labs.
•The Media & Commerce segment delivers integrated AI-based data solutions that drive audience engagement and business growth through media buying, owned media platforms, commerce enablement, and Customer Relationship Management (“CRM”) strategies. Its capabilities include planning and executing media campaigns across global platforms, leveraging data-driven approaches to optimize reach and effectiveness across first-party data, second-party data, and third-party data, and providing commerce and CRM tools that connect brands with consumers throughout the purchase journey. The segment also offers specialized media platforms and translation services to support targeted communication and market expansion. By combining expertise in media strategy, commerce activation, and audience analytics, Media & Commerce empowers organizations to maximize their marketing investments and achieve measurably efficient commercial outcomes. Brands in this segment include, but are not limited to, media buying and strategy agency Stagwell Media, owned media platforms Reach TV, and commerce and CRM agency Gale.
•The Communications segment provides a leading edge set of solutions designed to help organizations build, protect, and enhance their reputation across diverse audiences and channels. Its capabilities include strategic communications, public relations, and advocacy services that leverage AI and data-driven insights to craft compelling narratives and influence public perception. The segment also offers expertise in targeted communications, corporate public affairs consulting, crisis management, and stakeholder engagement, ensuring clients can respond effectively to emerging issues and opportunities. Advocacy services encompass strategic political campaign management, grassroots mobilization, and fundraising expertise that reach across the political spectrum. By combining deep industry knowledge with innovative digital approaches to media and advocacy, Communications empowers organizations to connect with key audiences, shape conversations, and achieve their strategic objectives. Brands in this segment include, but are not limited to, Allison, Consulum, SKDK and Targeted Victory.
•The Marketing Cloud segment delivers a comprehensive suite of technology solutions for in-house marketers. Its key products cover a range of areas. Advanced research tools that enable real-time customer insights through syndicated and Do It Yourself (“DIY”) generative AI-drafted surveys, AI-driven text analysis, and predictive analytics. Communications technology that aggregates data from millions of sources, including news, social media, print, and TV/radio broadcasts, on a daily basis to monitor, analyze, and respond to market trends. Media studio products that leverage first-party, third-party, and proprietary data to provide actionable audience insights and attribution analytics and advanced media platforms that encompass audience engagement solutions such as AR, quick response (“QR”) codes, and loyalty programs, all designed to collect consumer data and generate actionable insights. Solutions in this segment are sold as SaaS or DaaS offerings, or licensed as software, as appropriate. Together, these capabilities empower marketers to understand, engage, and influence their audiences with precision and agility. Brands in this segment include, but are not limited to, QUEST, Unicepta, and The Machines.
“Corporate, eliminations and other” consists of revenue generated by the Other business components, elimination of certain intercompany revenue and expenses, and corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These corporate office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by
26
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.
| Three Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Marketing Services | Digital Transformation | Media & Commerce | Communications | The Marketing Cloud | Total | |||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Revenue (1) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Billable costs | ||||||||||||||||||||||||||||||||||||||
| Staff costs | ||||||||||||||||||||||||||||||||||||||
| Administrative costs | ||||||||||||||||||||||||||||||||||||||
Unbillable and other costs, net (2) | ||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||
Corporate, eliminations and other | ( | |||||||||||||||||||||||||||||||||||||
| Total Consolidated Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
| Deferred acquisition consideration | ||||||||||||||||||||||||||||||||||||||
| Impairment and other losses | ||||||||||||||||||||||||||||||||||||||
| Other items, net | ||||||||||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||||||||
| Other income (expenses): | ||||||||||||||||||||||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||||||||||||||||||||
| Foreign exchange, net | ||||||||||||||||||||||||||||||||||||||
| Other, net | ||||||||||||||||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||||||||||||||
| Income before income taxes and equity in earnings of non-consolidated affiliates | ||||||||||||||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||||||||||||||
| Income before equity in earnings of non-consolidated affiliates | ||||||||||||||||||||||||||||||||||||||
| Equity in income of non-consolidated affiliates | ||||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling and redeemable noncontrolling interests | ( | |||||||||||||||||||||||||||||||||||||
| Net income attributable to Stagwell Inc. common shareholders | $ | |||||||||||||||||||||||||||||||||||||
(1) Total consolidated revenue of $816.0 million reflects revenue generated by the Other business components and intercompany elimination of $10.2 million.
(2) For each reportable segment, Unbillable and other costs, net include costs to fulfill customer contract requirements such as research and subscription related costs, audience measurement, data and analytics, panels and survey costs, amortization of capitalized software marketed externally, and also includes travel related expenses.
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| Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Marketing Services | Digital Transformation | Media & Commerce | Communications | The Marketing Cloud | Total | |||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Revenue (1) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Billable costs | ||||||||||||||||||||||||||||||||||||||
| Staff costs | ||||||||||||||||||||||||||||||||||||||
| Administrative costs | ||||||||||||||||||||||||||||||||||||||
Unbillable and other costs, net (2) | ||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||
Corporate, eliminations and other | ( | |||||||||||||||||||||||||||||||||||||
| Total Consolidated Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
| Deferred acquisition consideration | ||||||||||||||||||||||||||||||||||||||
| Impairment and other losses | ||||||||||||||||||||||||||||||||||||||
| Other items, net | ||||||||||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||||||||
| Other income (expenses): | ||||||||||||||||||||||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||||||||||||||||||||
| Foreign exchange, net | ( | |||||||||||||||||||||||||||||||||||||
| Other, net | ||||||||||||||||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||||||||||||||
| Income before income taxes and equity in earnings of non-consolidated affiliates | ||||||||||||||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||||||||||||||
| Loss before equity in earnings of non-consolidated affiliates | ( | |||||||||||||||||||||||||||||||||||||
| Equity in income of non-consolidated affiliates | ||||||||||||||||||||||||||||||||||||||
| Net loss | ( | |||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | ||||||||||||||||||||||||||||||||||||||
| Net loss attributable to Stagwell Inc. common shareholders | $ | ( | ||||||||||||||||||||||||||||||||||||
(1) Total consolidated revenue of $2,306.5 million reflects revenue generated by the Other business components and intercompany elimination of $28.2 million.
(2) For each reportable segment, Unbillable and other costs, net include costs to fulfill customer contract requirements such as research and subscription related costs, audience measurement, data and analytics, panels and survey costs, amortization of capitalized software marketed externally, and also includes travel related expenses.
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| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Marketing Services | Digital Transformation | Media & Commerce | Communications | The Marketing Cloud | Total | |||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Revenue (1) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Billable costs | ||||||||||||||||||||||||||||||||||||||
| Staff costs | ||||||||||||||||||||||||||||||||||||||
| Administrative costs | ||||||||||||||||||||||||||||||||||||||
Unbillable and other costs, net (2) | ||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | ( | |||||||||||||||||||||||||||||||||||||
Corporate, eliminations and other | ( | |||||||||||||||||||||||||||||||||||||
| Total Consolidated Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
| Deferred acquisition consideration | ( | |||||||||||||||||||||||||||||||||||||
| Impairment and other losses | ||||||||||||||||||||||||||||||||||||||
| Other items, net | ||||||||||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||||||||
| Other expenses: | ||||||||||||||||||||||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||||||||||||||||||||
| Foreign exchange, net | ( | |||||||||||||||||||||||||||||||||||||
| Other, net | ( | |||||||||||||||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||||||||||||||
| Income before income taxes and equity in earnings of non-consolidated affiliates | ||||||||||||||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||||||||||||||
| Income before equity in earnings of non-consolidated affiliates | ||||||||||||||||||||||||||||||||||||||
| Equity in loss of non-consolidated affiliates | ( | |||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | ||||||||||||||||||||||||||||||||||||||
| Net income attributable to Stagwell Inc. common shareholders | $ | |||||||||||||||||||||||||||||||||||||
(1) Total consolidated revenue of $743.0 million reflects an intercompany elimination of $7.3 million.
(2) For each reportable segment, Unbillable and other costs, net include costs to fulfill customer contract requirements such as research and subscription related costs, audience measurement, data and analytics, panels and survey costs, amortization of capitalized software marketed externally, and also includes travel related expenses.
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| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Marketing Services | Digital Transformation | Media & Commerce | Communications | The Marketing Cloud | Total | |||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Revenue (1) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Billable costs | ||||||||||||||||||||||||||||||||||||||
| Staff costs | ||||||||||||||||||||||||||||||||||||||
| Administrative costs | ||||||||||||||||||||||||||||||||||||||
Unbillable and other costs, net (2) | ||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | ( | |||||||||||||||||||||||||||||||||||||
Corporate, eliminations and other | ( | |||||||||||||||||||||||||||||||||||||
| Total Consolidated Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||||||||
| Deferred acquisition consideration | ( | |||||||||||||||||||||||||||||||||||||
| Impairment and other losses | ||||||||||||||||||||||||||||||||||||||
| Other items, net | ||||||||||||||||||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||||||||||||||
| Other expenses: | ||||||||||||||||||||||||||||||||||||||
| Interest expense, net | ( | |||||||||||||||||||||||||||||||||||||
| Foreign exchange, net | ( | |||||||||||||||||||||||||||||||||||||
| Other, net | ( | |||||||||||||||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||||||||||||||
| Income before income taxes and equity in earnings of non-consolidated affiliates | ||||||||||||||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||||||||||||||
| Income before equity in earnings of non-consolidated affiliates | ||||||||||||||||||||||||||||||||||||||
| Equity in income of non-consolidated affiliates | ||||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling and redeemable noncontrolling interests | ||||||||||||||||||||||||||||||||||||||
| Net income attributable to Stagwell Inc. common shareholders | $ | |||||||||||||||||||||||||||||||||||||
(1) Total consolidated revenue of $2,101.6 million reflects an intercompany elimination of $17.4 million.
(2) For each reportable segment, Unbillable and other costs, net include costs to fulfill customer contract requirements such as research and subscription related costs, audience measurement, data and analytics, panels and survey costs, amortization of capitalized software marketed externally, and also includes travel related expenses.
The Company’s long-lived tangible assets (i.e., Right-of-use lease assets - operating leases and Fixed assets, net) were $259.3 million ($196.0 million in the United States and $63.4 million in all other countries) as of September 30, 2026 and $286.6 million ($211.6 million in the United States and $75.0 million in all other countries) as of December 31, 2025.
The Company’s CODM does not use segment assets to allocate resources or to assess performance of the segments and therefore, total segment assets have not been disclosed.
See Note 4 of the Notes included herein for a summary of the Company’s revenue by geographic region for the three and nine months ended September 30, 2026 and 2025.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis are based on and should be read in conjunction with our Unaudited Consolidated Financial Statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the period ended September 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 caption “Forward-Looking Statements” in this Form 10-Q and 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.
In this section, the terms “Stagwell,” “we,” “us,” “our” and the “Company” refer to Stagwell Inc. and its direct and indirect subsidiaries. References to a “fiscal year” mean the Company’s year commencing on January 1 of that year and ending December 31 of that year (e.g., fiscal 2026 means the period beginning January 1, 2026, and ending December 31, 2026).
Executive Summary
Overview
Stagwell conducts its business through its segments, which provide marketing and business solutions that realize the potential of combining data and creativity. Stagwell’s strategy is to build, grow, and acquire market-leading businesses that deliver the modern suite of services that marketers need to thrive in a rapidly evolving business environment. We believe Stagwell’s differentiation lies in its digital-first and technology-based roots and proven entrepreneurial leaders, which together with innovations in technology and data, bring transformational marketing, activation, communications and strategic consulting services to clients. Stagwell leverages its range of services in an integrated manner, offering strategic, creative and innovative solutions that are technologically forward and media-agnostic. The Company’s strategy is intended to challenge the industry status quo, realize returns on investment, and drive transformative growth and business performance for its clients and stakeholders.
Stagwell manages its business by monitoring several financial and non-financial performance indicators. The key indicators that we focus on are revenue, operating expenses, staff cost ratio, capital expenditures, net income (loss), net income (loss) attributable to Stagwell Inc. common shareholders, net income (loss) per share and the non-GAAP financial measures including Adjusted EBITDA, 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.
Recent Developments
On October 23, 2026, the Company acquired all of the outstanding stock of Publisher First, Inc., doing business as Freestar, which assists online publishers in monetizing the media on their sites, for $50.0 million: $30.0 million in 3,442,043 shares of Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”) and $20.0 million in cash, subject to post-closing adjustments. The sellers can also earn up to $60.0 million in contingent consideration if future earnings targets are met, plus a share of earnings above those targets. The Company may settle part of the contingent consideration in stock, and payments to certain holders are subject to their continued employment. Due to the timing of the acquisition, the Company is currently evaluating the purchase price allocation, including the fair value of the consideration transferred and the assets acquired and liabilities assumed.
Significant Factors Affecting our Business and Results of Operations
The most significant factors affecting our business and results of operations include national, regional, and local economic conditions, our clients’ profitability, mergers and acquisitions of our clients, changes in top management of our clients and our ability to retain and attract key employees. New business wins and client losses occur due to a variety of factors. We believe the two most significant factors are (i) our clients’ desire to change marketing communication firms, and (ii) the digital and data-driven products that our portfolio of marketing services firms, which we refer to as “Brands,” offer. A client may choose to change marketing communication firms for several reasons, such as a change in leadership where new management wants to
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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.
Seasonality
Historically, we typically generate the highest quarterly revenue during the fourth quarter of each year. The highest volumes of retail related consumer marketing increase with the back-to-school season through the end of the holiday season. In addition, within our Communications segment, client concentration increases during election years due to the cyclical nature of our advocacy services.
Non-GAAP Financial Measures
The Company reports its financial results in accordance with GAAP. In addition, the Company has included non-GAAP financial measures and ratios, which management uses to operate the business, which it believes provide useful supplemental information to both management and readers of this report in making period-to-period comparisons in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by GAAP and should not be construed as an alternative to other titled measures determined in accordance with GAAP. The non-GAAP financial measures included are “net revenue,” “organic net revenue growth (decline),” “Adjusted EBITDA,” “Free Cash Flow,” and “Adjusted Diluted EPS.”
“Net revenue” refers to revenue excluding billable costs. The Company believes billable costs and their fluctuations are not indicative of the operating performance of its underlying business.
“Organic net revenue growth (decline)” reflects the year-over-year change in the Company’s reported net revenue attributable to the Company’s management of the entities it owns. We calculate organic net revenue growth (decline) by subtracting the net impact of acquisitions (divestitures) and the impact of foreign currency exchange fluctuations from the aggregate year-over-year increase or decrease in the Company’s reported net revenue.
The net impact of acquisitions (divestitures) reflects the year-over-year change in the Company’s reported net revenue attributable to the impact of all individual entities that were acquired or divested in the current and prior year. We calculate the impact of an acquisition as follows: (a) for an entity acquired during the current year, we present the entity’s current period reported revenue as the impact of the acquisition in the current year; and (b) for an entity acquired in the prior year, we present an amount equal to the entity’s current year net revenue for the same period during which we didn’t own the entity in the prior year as the impact of the acquisition in the current year. We calculate the impact of a divestiture as follows: (a) for a divestiture in the current year, we present the entity’s prior year net revenue for the same period during which we no longer owned it in the current year as impact of the divestiture in the current year; and (b) for a divestiture in the prior year, we present the entity’s prior year net revenue for the period during which we owned it in the prior year as impact of the divestiture in the current year. We calculate the impact of any acquisition or divestiture without adjusting for foreign currency exchange fluctuations.
The impact of foreign currency exchange fluctuations reflects the year-over-year change in the Company’s reported net revenue attributable to changes in foreign currency exchange rates. We calculate the impact of foreign currency exchange fluctuations for the portion of the reporting period in which we recognized revenue from a foreign entity in both the current year and the prior year. The impact is calculated as the difference between (1) reported prior period net revenue (converted to U.S. dollars at historical foreign currency exchange rates) and (2) prior period net revenue converted to U.S. dollars at current period foreign exchange rates.
“Adjusted EBITDA” is defined as Net income (loss) attributable to Stagwell Inc. common shareholders excluding non-operating income or expense, 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 include restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expenses, and other non-recurring income and expenses. Adjusted EBITDA for our reportable segments is reconciled to Operating income (loss), as Net income (loss) is not relevant for a reportable segment financial metric.
“Free Cash Flow” is defined as consolidated net cash flow from operations less cash outflow from capital expenditures and capitalized software, excluding material nonrecurring capital purchases.
“Adjusted Diluted EPS” is defined as 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
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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.
All amounts are in U.S. dollars unless otherwise stated. Amounts reported in millions herein are computed based on the amounts in thousands. As a result, the sum of the components, and related calculations, reported in millions may not equal the total amounts due to rounding.
The percentage changes included in the tables in Item 2 herein that are not considered meaningful are presented as “NM.”
Segments
The Company’s Chief Operating Decision Maker uses Adjusted EBITDA as a key metric to evaluate the operating and financial performance of a segment, identify trends affecting the segments, develop projections and make strategic business decisions.
On September 30, 2025, the Company reorganized its organizational structure to better reflect how the Company manages its business and goes to market, to simplify reporting and to provide clearer visibility into performance trends across its service offerings. The reorganization also seeks to enhance consistency in the Company’s portfolio of services and improve the transparency and comparability of financial information provided to investors.
As a result of the reorganization, the Company now has five operating and reportable segments: “Marketing Services,” “Digital Transformation,” “Media & Commerce,” “Communications,” and “The Marketing Cloud.” Prior period presented has been recast to reflect the reclassification of Brands within the reportable segments. Based on the segment analysis, management concluded that the operating segments do not exhibit similar economic characteristics or share other aggregation criteria. As a result, none of our operating segments are aggregated for reporting purposes. Further, as a result of the reorganization, certain reporting units have been redefined, and the composition of others has changed. The new structure fairly reflects the allocation of the Company’s resources, thereby improving comparability for investors and supporting the Company’s long-term strategic objectives. The composition of these segments is as follows:
•The Marketing Services segment delivers a broad range of services across four closely related client needs: creative, research, experiential, and social media solutions designed to build and elevate brands. Capabilities include developing breakthrough brand campaigns, providing consumer insights through advanced research methodologies, creating immersive experiential marketing programs and social engagement strategies that connect brands with audiences across digital platforms. By combining creative excellence, data-driven insights, and innovative experiences, Marketing Services empowers organizations to differentiate themselves in the marketplace, drive audience engagement, and achieve measurable business results. These services employ a wide variety of artificial intelligence (“AI”)-powered services in the delivery, such as AI-powered creative production and data analysis. Brands in this segment include, but are not limited to, creative agencies 72 and Sunny and Anomaly, research agencies NRG and Harris Insights, experiential agency TEAM and Sport Beach, and social agency Movers & Shakers.
•The Digital Transformation segment designs, implements and activates modern digital ecosystems that enable brand and customer experiences through the integration of strategy, design, and technology. This segment helps clients modernize their digital infrastructure, enhance customer engagement, and accelerate enterprise transformation. Its capabilities span the delivery of digital products and experiences that connect brand storytelling with technology, including website and content development, digital campaigns, product and platform design, AI-native strategies and integration, and implementation of marketing technology (“MarTech”) products and solutions for customers. It also provides managed services, staff augmentation, and engineering expertise across various delivery models, offering system integration, full-stack development, and ongoing platform management. Additionally, Digital Transformation connects digital ecosystems to physical experiences through innovative, technology-driven customer engagements, such as business-to-business (“B2B”) platforms and multimodal activations that blend physical and digital environments using augmented reality (“AR”), virtual reality (“VR”), and emerging technologies. Together, these capabilities empower organizations to transform their digital presence and drive sustained business growth. Brands in this segment include, but are not limited to, strategy and design agencies Code and Theory and Instrument, development and implementation agency TrueLogic, and digital activation agency Left Field Labs.
•The Media & Commerce segment delivers integrated AI-based data solutions that drive audience engagement and business growth through media buying, owned media platforms, commerce enablement, and Customer Relationship Management (“CRM”) strategies. Its capabilities include planning and executing media campaigns across global platforms, leveraging data-driven approaches to optimize reach and effectiveness across first-party data, second-party data, and third-party data, and providing commerce and CRM tools that connect brands with consumers throughout the purchase journey. The segment also offers specialized media platforms and translation services to support targeted communication and market expansion. By combining expertise in media strategy, commerce activation, and audience analytics, Media & Commerce empowers organizations to maximize their marketing investments and achieve measurably efficient commercial outcomes. Brands in this segment include, but are not limited to, media buying and strategy agency Stagwell Media, owned media platforms Reach TV, and commerce and CRM agency Gale.
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•The Communications segment provides a leading edge set of solutions designed to help organizations build, protect, and enhance their reputation across diverse audiences and channels. Its capabilities include strategic communications, public relations, and advocacy services that leverage AI and data-driven insights to craft compelling narratives and influence public perception. The segment also offers expertise in targeted communications, corporate public affairs consulting, crisis management, and stakeholder engagement, ensuring clients can respond effectively to emerging issues and opportunities. Advocacy services encompass strategic political campaign management, grassroots mobilization, and fundraising expertise that reach across the political spectrum. By combining deep industry knowledge with innovative digital approaches to media and advocacy, Communications empowers organizations to connect with key audiences, shape conversations, and achieve their strategic objectives. Brands in this segment include, but are not limited to, Allison, Consulum, SKDK and Targeted Victory.
•The Marketing Cloud segment delivers a comprehensive suite of technology solutions for in-house marketers. Its key products cover a range of areas. Advanced research tools that enable real-time customer insights through syndicated and Do It Yourself (“DIY”) generative AI-drafted surveys, AI-driven text analysis, and predictive analytics. Communications technology that aggregates data from millions of sources, including news, social media, print, and TV/radio broadcasts, on a daily basis to monitor, analyze, and respond to market trends. Media studio products that leverage first-party, third-party, and proprietary data to provide actionable audience insights and attribution analytics and advanced media platforms that encompass audience engagement solutions such as AR, quick response (“QR”) codes, and loyalty programs, all designed to collect consumer data and generate actionable insights. Solutions in this segment are sold as SaaS or DaaS offerings, or licensed as software, as appropriate. Together, these capabilities empower marketers to understand, engage, and influence their audiences with precision and agility. Brands in this segment include, but are not limited to, QUEST, Unicepta, and The Machines.
“Corporate, eliminations and other” consists of revenue generated by the Other business components, elimination of certain intercompany revenue and expenses, and corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These corporate office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, and (iv) certain other professional fees managed by the corporate office.
The following discussion focuses on the operating performance of the Company for the three and nine months ended September 30, 2026 and 2025 and the financial condition of the Company as of September 30, 2026.
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Results of Operations and Reconciliation of Net Income (Loss) to Adjusted EBITDA:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Marketing Services | $ | 255,445 | $ | 291,089 | $ | 786,650 | $ | 817,294 | |||||||||||||||
| Digital Transformation | 127,176 | 104,445 | 349,756 | 294,301 | |||||||||||||||||||
| Media & Commerce | 176,857 | 183,112 | 534,561 | 509,416 | |||||||||||||||||||
| Communications | 210,913 | 145,086 | 552,767 | 420,556 | |||||||||||||||||||
| The Marketing Cloud | 55,825 | 26,576 | 110,963 | 77,380 | |||||||||||||||||||
| Corporate, eliminations and other | (10,189) | (7,310) | (28,220) | (17,391) | |||||||||||||||||||
| Total revenue | $ | 816,027 | $ | 742,998 | $ | 2,306,477 | $ | 2,101,556 | |||||||||||||||
| Operating income | $ | 48,059 | $ | 60,913 | $ | 69,247 | $ | 102,370 | |||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||
| Interest expense, net | (23,993) | (25,196) | (69,587) | (72,007) | |||||||||||||||||||
| Foreign exchange, net | 2,244 | (366) | (172) | (484) | |||||||||||||||||||
Other, net | 2,526 | (2,032) | 3,394 | (2,143) | |||||||||||||||||||
Income before income taxes and equity in earnings of non-consolidated affiliates | 28,836 | 33,319 | 2,882 | 27,736 | |||||||||||||||||||
| Income tax expense | 10,882 | 9,555 | 7,646 | 13,950 | |||||||||||||||||||
| Income (loss) before equity in earnings of non-consolidated affiliates | 17,954 | 23,764 | (4,764) | 13,786 | |||||||||||||||||||
| Equity in income (loss) of non-consolidated affiliates | 442 | (1) | 512 | 18 | |||||||||||||||||||
| Net income (loss) | 18,396 | 23,763 | (4,252) | 13,804 | |||||||||||||||||||
| Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests | (277) | 856 | 1,282 | 2,637 | |||||||||||||||||||
| Net income (loss) attributable to Stagwell Inc. common shareholders | $ | 18,119 | $ | 24,619 | $ | (2,970) | $ | 16,441 | |||||||||||||||
| Reconciliation to Adjusted EBITDA: | |||||||||||||||||||||||
| Net income (loss) attributable to Stagwell Inc. common shareholders | $ | 18,119 | $ | 24,619 | $ | (2,970) | $ | 16,441 | |||||||||||||||
Non-operating items (1) | 29,940 | 36,294 | 72,217 | 85,929 | |||||||||||||||||||
| Operating income | 48,059 | 60,913 | 69,247 | 102,370 | |||||||||||||||||||
| Depreciation and amortization | 48,300 | 44,260 | 136,395 | 127,635 | |||||||||||||||||||
| Impairment and other losses | 1,028 | 466 | 1,219 | 466 | |||||||||||||||||||
| Stock-based compensation | 28,920 | 12,646 | 61,735 | 44,143 | |||||||||||||||||||
| Deferred acquisition consideration | 7,675 | (13,348) | 26,766 | (9,911) | |||||||||||||||||||
Other items, net (2) | 10,854 | 11,050 | 47,846 | 27,868 | |||||||||||||||||||
| Adjusted EBITDA | $ | 144,836 | $ | 115,987 | $ | 343,208 | $ | 292,571 | |||||||||||||||
(1) Non-operating items includes items within the Statements of Operations, below Operating income, and above Net income (loss) attributable to Stagwell Inc. common shareholders. | |||||||||||||||||||||||
(2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses. | |||||||||||||||||||||||
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THREE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2025
Consolidated Results of Operations
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
| Three Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
| Revenue | $ | 816,027 | $ | 742,998 | $ | 73,029 | 9.8 | % | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of services | 511,698 | 470,937 | 40,761 | 8.7 | % | ||||||||||||||||||||||||
| Office and general expenses | 206,942 | 166,422 | 40,520 | 24.3 | % | ||||||||||||||||||||||||
| Depreciation and amortization | 48,300 | 44,260 | 4,040 | 9.1 | % | ||||||||||||||||||||||||
| Impairment and other losses | 1,028 | 466 | 562 | 120.6 | % | ||||||||||||||||||||||||
| $ | 767,968 | $ | 682,085 | $ | 85,883 | 12.6 | % | ||||||||||||||||||||||
| Operating income | $ | 48,059 | $ | 60,913 | $ | (12,854) | (21.1) | % | |||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | ||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||||||||
Revenue | $ | 816,027 | $ | 742,998 | $ | 73,029 | 9.8 | % | ||||||||||||||||||||||||
| Billable costs | 152,010 | 128,476 | 23,534 | 18.3 | % | |||||||||||||||||||||||||||
| Net Revenue | 664,017 | 100.0 | % | 614,522 | 100.0 | % | 49,495 | 8.1 | % | |||||||||||||||||||||||
| Staff costs | 385,617 | 58.1 | % | 387,210 | 63.0 | % | (1,593) | (0.4) | % | |||||||||||||||||||||||
| Administrative costs | 82,758 | 12.5 | % | 70,387 | 11.5 | % | 12,371 | 17.6 | % | |||||||||||||||||||||||
| Unbillable and other costs, net | 50,806 | 7.7 | % | 40,938 | 6.7 | % | 9,868 | 24.1 | % | |||||||||||||||||||||||
| Adjusted EBITDA | 144,836 | 21.8 | % | 115,987 | 18.9 | % | 28,849 | 24.9 | % | |||||||||||||||||||||||
| Stock-based compensation | 28,920 | 4.4 | % | 12,646 | 2.1 | % | 16,274 | 128.7 | % | |||||||||||||||||||||||
| Depreciation and amortization | 48,300 | 7.3 | % | 44,260 | 7.2 | % | 4,040 | 9.1 | % | |||||||||||||||||||||||
| Deferred acquisition consideration | 7,675 | 1.2 | % | (13,348) | (2.2) | % | 21,023 | NM | ||||||||||||||||||||||||
| Impairment and other losses | 1,028 | 0.2 | % | 466 | 0.1 | % | 562 | 120.6 | % | |||||||||||||||||||||||
Other items, net (1) | 10,854 | 1.6 | % | 11,050 | 1.8 | % | (196) | (1.8) | % | |||||||||||||||||||||||
Operating income (2) | $ | 48,059 | 7.2 | % | $ | 60,913 | 9.9 | % | $ | (12,854) | (21.1) | % | ||||||||||||||||||||
(1) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses. | ||||||||||||||||||||||||||||||||
(2) See the Results of Operations section above for a reconciliation of Operating Income to Net income (loss) attributable to Stagwell Inc. common shareholders. | ||||||||||||||||||||||||||||||||
Revenue
Revenue for the three months ended September 30, 2026 was $816.0 million, compared to $743.0 million for the three months ended September 30, 2025, an increase of $73.0 million.
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Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Services | $ | 239,961 | $ | (176) | $ | (3,996) | $ | (18,108) | $ | (22,280) | $ | 217,681 | (7.5) | % | (9.3) | % | |||||||||||||||||||||||||||||||
| Digital Transformation | 96,111 | (233) | 599 | 22,182 | 22,548 | 118,659 | 23.1 | % | 23.5 | % | |||||||||||||||||||||||||||||||||||||
| Media & Commerce | 162,542 | (432) | — | (3,366) | (3,798) | 158,744 | (2.1) | % | (2.3) | % | |||||||||||||||||||||||||||||||||||||
| Communications | 96,631 | 72 | 7,657 | 19,324 | 27,053 | 123,684 | 20.0 | % | 28.0 | % | |||||||||||||||||||||||||||||||||||||
| The Marketing Cloud | 26,571 | 304 | — | 28,808 | 29,112 | 55,683 | 108.4 | % | 109.6 | % | |||||||||||||||||||||||||||||||||||||
| Corporate, eliminations and other | (7,294) | 12 | — | (3,152) | (3,140) | (10,434) | 43.2 | % | 43.0 | % | |||||||||||||||||||||||||||||||||||||
| $ | 614,522 | $ | (453) | $ | 4,260 | $ | 45,688 | $ | 49,495 | $ | 664,017 | 7.4 | % | 8.1 | % | ||||||||||||||||||||||||||||||||
| Component % change | (0.1)% | 0.7% | 7.4% | 8.1% | |||||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2026, net revenue increased $49.5 million, or 8.1%, to $664.0 million. The increase was driven principally by organic growth of $45.7 million, or 7.4%, and $4.3 million from acquisitions, net of dispositions, partially offset by a $0.5 million unfavorable impact from foreign currency.
Organic growth was driven primarily by The Marketing Cloud, Digital Transformation, and Communications segments. The Marketing Cloud increased $28.8 million, or 108.4%, driven by software sales associated with The Machine and increased demand for research products. Digital Transformation increased $22.2 million, or 23.1%, driven by marketing workflow redesign and optimization assignments centered around technology development and system implementations, including The Machines. Communications increased $19.3 million, or 20.0%, reflecting growth in public relations and strategic communications including campaign strategy, high volume low dollar fundraising, and media campaigns associated with the U.S. election cycle. These increases were partially offset by declines in Marketing Services of $18.1 million, or 7.5%, and Media & Commerce of $3.4 million, or 2.1%. The decline in Marketing Services resulted from the timing of the transition from completed engagements to recently awarded work, reduced spending by certain beverage clients driven by secular changes in the industry and the non-recurrence of one time projects in the prior year.
Acquisitions, net of dispositions contributed $4.3 million to the increase in net revenue, primarily from the acquisitions of Wavelength Strategy LLC (“Wavelength”) and QStrauss Consulting S.A.S. and QStrauss Consulting LLC (collectively, “QStrauss”), partially offset by the divestiture of a non-core Brand in the Marketing Services segment.
Expenses
Cost of services increased $40.8 million, or 8.7%, compared with an increase in Revenue of 9.8%. The increase was primarily driven by $23.5 million of higher Billable costs, $9.9 million of higher Unbillable and other costs, net, and $8.4 million of higher Stock-based compensation.
Office and general expenses increased $40.5 million, or 24.3%, compared with Net revenue growth of 8.1%. The increase included $21.0 million of higher Deferred acquisition consideration and $7.9 million of higher performance Stock-based compensation. The remaining increase in Office and general expenses was $11.6 million, with the increase primarily reflecting software and technology investments to support Net revenue growth.
From a functional operating cost perspective, Staff, Administrative and Unbillable and other costs, net, increased $20.6 million. Administrative and Unbillable and other costs, net, increased $22.2 million, primarily reflecting investments in software, product development and commercialization initiatives, including automation and AI capabilities. Staff costs decreased $1.6 million despite Organic net revenue growth of 7.4%, resulting in a 4.9 percentage point improvement in Staff costs as a percentage of Net revenue. The decrease reflected active management of the Staff cost base and productivity gains from shared services, AI-enabled workflow automation and the deployment of the Stagwell Content Supply Chain, which more than offset continued investment in client-facing leadership, sales, account management and other growth resources.
Stock-based compensation increased $16.3 million, primarily attributable to an increase in performance based awards granted in the current year as a greater proportion of total annual incentive compensation compared to the prior year.
37
Deferred acquisition consideration increased $21.0 million, primarily reflecting changes in the estimated fair value of contingent consideration liabilities based on updated performance expectations for certain acquired businesses.
Operating Income
Operating income decreased $12.9 million, or 21.1%, and operating margin decreased to 7.2% from 9.9%. The operating benefits from Net revenue growth, lower Staff costs and operating leverage across Administrative and Unbillable and other costs, net, were more than offset by a $41.9 million increase in expenses, consisting of $21.0 million of higher Deferred acquisition consideration, $16.3 million of higher Stock-based compensation, $4.0 million of higher Depreciation and amortization and $0.6 million of higher Impairment and other losses.
Interest Expense, Net
Interest expense, net for the three months ended September 30, 2026 was $24.0 million, compared to $25.2 million for the three months ended September 30, 2025, a decrease of $1.2 million. This decrease was primarily attributable to improved working capital performance as well as a lower weighted average interest rate.
Foreign Exchange, Net
Foreign exchange, net was a gain of $2.2 million for the three months ended September 30, 2026, compared to a loss of $0.4 million for the three months ended September 30, 2025, a favorable change of $2.6 million. The change mostly reflects remeasurement of foreign-currency cash, intercompany receivables/payables and intercompany loans held by our U.K., U.S., Canadian and Asia-Pacific (“APAC”) entities.
Income Tax (Benefit) Expense
For the three months ended September 30, 2026, the Company had an income tax expense of $10.9 million (on a pre-tax income of $28.8 million resulting in an effective tax rate of 37.7%) compared to income tax expense for the three months ended September 30, 2025 of $9.6 million (on a pre-tax income of $33.3 million resulting in an effective tax rate of 28.7%).
The effective tax rate increased by 9.0 percentage points compared with the prior-year period, and income tax expense increased by $1.3 million. The increase in the tax rate primarily related to a higher estimated annual effective tax rate and increased losses for which no tax benefit was recognized, offset by state tax refunds applied in the current period, and other discrete items.
Noncontrolling and Redeemable Noncontrolling Interests
The effect of noncontrolling and redeemable noncontrolling interests for the three months ended September 30, 2026 was income of $0.3 million, compared to loss of $0.9 million for the three months ended September 30, 2025. The change reflects the mix of income and loss generated by entities that are not wholly owned by the Company.
Net Income Attributable to Stagwell Inc. Common Shareholders
As a result of the foregoing, net income attributable to Stagwell Inc. common shareholders for the three months ended September 30, 2026 and 2025 was $18.1 million and $24.6 million, respectively.
Adjusted EBITDA
Adjusted EBITDA increased $28.8 million, or 24.9%, and Adjusted EBITDA margin increased 2.9 percentage points to 21.8% of Net revenue from 18.9%. The margin improvement reflected a favorable mix of higher-margin revenue and the improvement in Staff costs as a percentage of Net revenue discussed above.
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Earnings Per Share
Diluted EPS and Adjusted Diluted EPS for the three months ended September 30, 2026 were as follows:
| GAAP | Adjustments (1) | Non-GAAP | ||||||||||||||||||
(amounts in thousands, except per share amounts) | ||||||||||||||||||||
| Net income attributable to Stagwell Inc. common shareholders and adjusted net income | $ | 18,119 | $ | 67,859 | $ | 85,978 | ||||||||||||||
Diluted - Weighted average number of common shares outstanding | 250,989 | — | 250,989 | |||||||||||||||||
Diluted EPS and Adjusted Diluted EPS (1) | $ | 0.07 | $ | 0.34 | ||||||||||||||||
| Adjustments to Net income | ||||||||||||||||||||
Amortization | $ | 42,884 | ||||||||||||||||||
| Impairment and other losses | 1,028 | |||||||||||||||||||
| Stock-based compensation | 28,920 | |||||||||||||||||||
| Deferred acquisition consideration | 7,675 | |||||||||||||||||||
Other Items, net (2) | 7,409 | |||||||||||||||||||
| $ | 87,916 | |||||||||||||||||||
Adjustment to GAAP income tax expense (3) | (20,057) | |||||||||||||||||||
| $ | 67,859 | |||||||||||||||||||
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
(2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses.
(3) Represents the difference between the income tax expense of $10.9 million at an effective tax rate of 37.7% on a GAAP basis and the income tax expense of $30.9 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
39
Diluted EPS and Adjusted Diluted EPS for the three months ended September 30, 2025 were as follows:
| GAAP | Adjustments (1) | Non-GAAP | ||||||||||||||||||
| (amounts in thousands, except per share amounts) | ||||||||||||||||||||
| Net income attributable to Stagwell Inc. common shareholders | $ | 24,619 | $ | 38,575 | $ | 63,194 | ||||||||||||||
Diluted - Weighted average number of common shares outstanding | 259,583 | — | 259,583 | |||||||||||||||||
Diluted EPS and Adjusted Diluted EPS (1) | $ | 0.09 | $ | 0.24 | ||||||||||||||||
| Adjustments to Net income | ||||||||||||||||||||
Amortization | $ | 38,707 | ||||||||||||||||||
| Impairment and other losses | 466 | |||||||||||||||||||
| Stock-based compensation | 12,646 | |||||||||||||||||||
| Deferred acquisition consideration | (13,348) | |||||||||||||||||||
Other items, net (2) | 13,333 | |||||||||||||||||||
| $ | 51,804 | |||||||||||||||||||
Adjustment to GAAP income tax expense (3) | (13,229) | |||||||||||||||||||
| $ | 38,575 | |||||||||||||||||||
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
(2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses.
(3) Represents the difference between the income tax expense of $9.6 million at an effective tax rate of 28.7% on a GAAP basis and the income tax expense of $22.8 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
Marketing Services
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 255,445 | $ | 291,089 | $ | (35,644) | (12.2) | % | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Cost of services | 177,514 | 186,117 | (8,603) | (4.6) | % | |||||||||||||||||||||
| Office and general expenses | 50,854 | 53,283 | (2,429) | (4.6) | % | |||||||||||||||||||||
| Depreciation and amortization | 11,841 | 12,820 | (979) | (7.6) | % | |||||||||||||||||||||
| $ | 240,209 | $ | 252,220 | $ | (12,011) | (4.8) | % | |||||||||||||||||||
| Operating income | $ | 15,236 | $ | 38,869 | $ | (23,633) | (60.8) | % | ||||||||||||||||||
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| Three Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | |||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
Revenue | $ | 255,445 | $ | 291,089 | $ | (35,644) | (12.2) | % | |||||||||||||||||||||
| Billable costs | 37,764 | 51,128 | (13,364) | (26.1) | % | ||||||||||||||||||||||||
| Net Revenue | 217,681 | 100.0 | % | 239,961 | 100.0 | % | (22,280) | (9.3) | % | ||||||||||||||||||||
| Staff costs | 126,795 | 58.2 | % | 138,310 | 57.6 | % | (11,515) | (8.3) | % | ||||||||||||||||||||
| Administrative costs | 24,677 | 11.3 | % | 26,835 | 11.2 | % | (2,158) | (8.0) | % | ||||||||||||||||||||
| Unbillable and other costs, net | 24,254 | 11.1 | % | 17,187 | 7.2 | % | 7,067 | 41.1 | % | ||||||||||||||||||||
| Adjusted EBITDA | 41,955 | 19.3 | % | 57,629 | 24.0 | % | (15,674) | (27.2) | % | ||||||||||||||||||||
| Stock-based compensation | 11,717 | 5.4 | % | 4,240 | 1.8 | % | 7,477 | 176.3 | % | ||||||||||||||||||||
| Depreciation and amortization | 11,841 | 5.4 | % | 12,820 | 5.3 | % | (979) | (7.6) | % | ||||||||||||||||||||
| Deferred acquisition consideration | — | — | % | (500) | (0.2) | % | 500 | (100.0) | % | ||||||||||||||||||||
| Other items, net | 3,161 | 1.5 | % | 2,200 | 0.9 | % | 961 | 43.7 | % | ||||||||||||||||||||
| Operating income | $ | 15,236 | 7.0 | % | $ | 38,869 | 16.2 | % | $ | (23,633) | (60.8) | % | |||||||||||||||||
Revenue
Revenue for the three months ended September 30, 2026 was $255.4 million, compared to $291.1 million for the three months ended September 30, 2025, a decrease of $35.6 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Services | $ | 239,961 | $ | (176) | $ | (3,996) | $ | (18,108) | $ | (22,280) | $ | 217,681 | (7.5)% | (9.3)% | |||||||||||||||||||||||||||||||||
| Component % change | (0.1) | % | (1.7) | % | (7.5) | % | (9.3) | % | |||||||||||||||||||||||||||||||||||||||
Net revenue decreased $22.3 million, or 9.3%, to $217.7 million. The decrease was driven principally by an $18.1 million, or 7.5%, organic decline, and a $4.0 million, or 1.7%, decline from dispositions.
The decline in organic Net revenue was driven primarily by lower research, experiential, and creative services, partially offset by growth in social media solutions. Creative and experiential services reflected the timing of the transition from completed engagements to recently awarded work, reduced spending by certain beverage clients driven by secular changes in the industry and the non-recurrence of one time projects in the prior year.
Dispositions reduced Net revenue by $4.0 million, primarily reflecting the divestiture of a non-core experiential brand.
41
Expenses
Cost of services decreased $8.6 million, or 4.6%, compared with a 12.2% decrease in Revenue. The decrease was primarily driven by $13.4 million of lower Billable costs and $2.0 million of lower expenses associated with a divested brand, partially offset by $6.2 million of higher Stock-based compensation.
Office and general expenses decreased $2.4 million, or 4.6%, compared with a 9.3% decrease in Net revenue. The decrease was primarily driven by $2.4 million of lower Staff costs and $1.1 million of savings from the consolidation of the Company’s real-estate footprint, partially offset by a $0.5 million increase in Deferred acquisition consideration.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, decreased $6.6 million in aggregate. Staff costs decreased $11.5 million, reflecting actions to align the Staff cost base with lower Net revenue and efficiencies from shared services, AI-enabled workflow automation and the Stagwell Content Supply Chain. Administrative costs decreased $2.2 million, consistent with the Office and general expense savings discussed above. These decreases were partially offset by a $7.1 million increase in Unbillable and other costs, net, primarily reflecting higher creative production costs and the expansion of Sport Beach within experiential.
Operating Income
Operating income decreased $23.6 million, or 60.8%, and operating margin decreased to 7.0% from 16.2%. The decrease was driven principally by the reduction in revenues, partially offset by management actions to reduce staff and other administrative costs to align with the lower revenue, as discussed above.
Adjusted EBITDA
Adjusted EBITDA decreased $15.7 million or 27.2%, and Adjusted EBITDA margin decreased 4.7 percentage points to 19.3% of Net revenue from 24.0%. The decrease primarily reflected lower Net revenue and higher Unbillable and other costs, net, partially offset by lower Staff and Administrative costs, as discussed above.
Digital Transformation
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
| Three Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
| Revenue | $ | 127,176 | $ | 104,445 | $ | 22,731 | 21.8 | % | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of services | 72,805 | 63,337 | 9,468 | 14.9 | % | ||||||||||||||||||||||||
| Office and general expenses | 23,659 | 18,464 | 5,195 | 28.1 | % | ||||||||||||||||||||||||
| Depreciation and amortization | 6,256 | 5,932 | 324 | 5.5 | % | ||||||||||||||||||||||||
| $ | 102,720 | $ | 87,733 | $ | 14,987 | 17.1 | % | ||||||||||||||||||||||
| Operating income | $ | 24,456 | $ | 16,712 | $ | 7,744 | 46.3 | % | |||||||||||||||||||||
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| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | ||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||||||||
Revenue | $ | 127,176 | $ | 104,445 | $ | 22,731 | 21.8 | % | ||||||||||||||||||||||||
| Billable costs | 8,517 | 8,334 | 183 | 2.2 | % | |||||||||||||||||||||||||||
| Net Revenue | 118,659 | 100.0 | % | 96,111 | 100.0 | % | 22,548 | 23.5 | % | |||||||||||||||||||||||
| Staff costs | 73,620 | 62.0 | % | 62,845 | 65.4 | % | 10,775 | 17.1 | % | |||||||||||||||||||||||
| Administrative costs | 6,830 | 5.8 | % | 6,981 | 7.3 | % | (151) | (2.2) | % | |||||||||||||||||||||||
| Unbillable and other costs, net | 71 | 0.1 | % | 401 | 0.4 | % | (330) | (82.3) | % | |||||||||||||||||||||||
| Adjusted EBITDA | 38,138 | 32.1 | % | 25,884 | 26.9 | % | 12,254 | 47.3 | % | |||||||||||||||||||||||
| Stock-based compensation | 3,675 | 3.1 | % | 934 | 1.0 | % | 2,741 | 293.5 | % | |||||||||||||||||||||||
| Depreciation and amortization | 6,256 | 5.3 | % | 5,932 | 6.2 | % | 324 | 5.5 | % | |||||||||||||||||||||||
| Deferred acquisition consideration | 3,433 | 2.9 | % | 1,874 | 1.9 | % | 1,559 | 83.2 | % | |||||||||||||||||||||||
| Other items, net | 318 | 0.3 | % | 432 | 0.4 | % | (114) | (26.4) | % | |||||||||||||||||||||||
| Operating income | $ | 24,456 | 20.6 | % | $ | 16,712 | 17.4 | % | $ | 7,744 | 46.3 | % | ||||||||||||||||||||
Revenue
Revenue for the three months ended September 30, 2026 was $127.2 million, compared to $104.4 million for the three months ended September 30, 2025, an increase of $22.7 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026, compared to the three months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Digital Transformation | $ | 96,111 | $ | (233) | $ | 599 | $ | 22,182 | $ | 22,548 | $ | 118,659 | 23.1% | 23.5% | |||||||||||||||||||||||||||||||||
| Component % change | (0.2) | % | 0.6 | % | 23.1 | % | 23.5 | % | |||||||||||||||||||||||||||||||||||||||
Net revenue increased $22.5 million, or 23.5%, to $118.7 million. The increase reflected $22.2 million, or 23.1%, of organic growth and $0.6 million, or 0.6%, from acquisitions, partially offset by $0.2 million, or 0.2%, from unfavorable foreign currency movements.
Organic net revenue increased $22.2 million, or 23.1%, driven primarily by expanded scopes of work with existing clients and new client wins fueled by demand for marketing workflow transformation. Growth sources included workflow and technology design and implementation planning to support adoption, as well as forward deployed engineers and other technical resources embedded within clients. Growth drivers also included broader integrated client engagements in which Digital Transformation capabilities were delivered alongside other services across the Company. The acquisition of QStrauss, a Colombian technology consulting company specializing in marketing technology and digital experience services, contributed $0.6 million to Net revenue.
Expenses
Cost of services increased $9.5 million, or 14.9%, compared with Revenue growth of 21.8%. The lower rate of Cost of services growth reflected improved operating leverage as hiring and other Staff cost growth trailed Revenue growth, together with productivity gains from AI-enabled development and coding workflows. The improvement was achieved while continuing to invest in account management resources.
43
Office and general expenses increased $5.2 million, or 28.1%, compared with Net revenue growth of 23.5%. The increase was primarily driven by $2.4 million of higher Stock-based compensation, $1.6 million of higher Deferred acquisition consideration, and $1.7 million of higher Staff costs.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, increased $10.3 million in aggregate, or 14.7%, compared with Net revenue growth of 23.5%. Staff costs increased $10.8 million, or 17.1%, while Administrative and Unbillable and other costs, net, decreased $0.5 million in aggregate. Staff costs declined to 62.0% of Net revenue from 65.4%, a 3.4 percentage point improvement, reflecting the operating leverage discussed above.
Operating Income
Operating income increased $7.7 million, or 46.3%, and operating margin increased to 20.6% from 17.4%. The increase was driven principally by the strong growth in revenue, offset by proportionately lower increases in compensation and administrative expenses, as described above.
Adjusted EBITDA
Adjusted EBITDA increased $12.3 million, or 47.3%, and Adjusted EBITDA margin increased 5.2 percentage points to 32.1% of Net revenue from 26.9%. The margin improvement reflected strong demand for marketing workflow transformation and a favorable mix of higher value strategy, design and technology services, together with operating leverage from productivity gains and disciplined hiring relative to revenue growth. The improvement was achieved while continuing to invest in account management, sales, client leadership and business development resources to support growth.
Media & Commerce
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
| Three Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
| Revenue | $ | 176,857 | $ | 183,112 | $ | (6,255) | (3.4) | % | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of services | 105,690 | 110,783 | (5,093) | (4.6) | % | ||||||||||||||||||||||||
| Office and general expenses | 57,551 | 54,455 | 3,096 | 5.7 | % | ||||||||||||||||||||||||
| Depreciation and amortization | 8,601 | 7,524 | 1,077 | 14.3 | % | ||||||||||||||||||||||||
| $ | 171,842 | $ | 172,762 | $ | (920) | (0.5) | % | ||||||||||||||||||||||
| Operating income | $ | 5,015 | $ | 10,350 | $ | (5,335) | (51.5) | % | |||||||||||||||||||||
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| Three Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | |||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
Revenue | $ | 176,857 | $ | 183,112 | $ | (6,255) | (3.4) | % | |||||||||||||||||||||
| Billable costs | 18,113 | 20,570 | (2,457) | (11.9) | % | ||||||||||||||||||||||||
| Net Revenue | 158,744 | 100.0 | % | 162,542 | 100.0 | % | (3,798) | (2.3) | % | ||||||||||||||||||||
| Staff costs | 95,403 | 60.1 | % | 98,212 | 60.4 | % | (2,809) | (2.9) | % | ||||||||||||||||||||
| Administrative costs | 26,650 | 16.8 | % | 24,225 | 14.9 | % | 2,425 | 10.0 | % | ||||||||||||||||||||
| Unbillable and other costs, net | 16,917 | 10.7 | % | 15,554 | 9.6 | % | 1,363 | 8.8 | % | ||||||||||||||||||||
| Adjusted EBITDA | 19,774 | 12.5 | % | 24,551 | 15.1 | % | (4,777) | (19.5) | % | ||||||||||||||||||||
| Stock-based compensation | 1,230 | 0.8 | % | 1,111 | 0.7 | % | 119 | 10.7 | % | ||||||||||||||||||||
| Depreciation and amortization | 8,601 | 5.4 | % | 7,524 | 4.6 | % | 1,077 | 14.3 | % | ||||||||||||||||||||
| Deferred acquisition consideration | 1,216 | 0.8 | % | 1,413 | 0.9 | % | (197) | (13.9) | % | ||||||||||||||||||||
| Other items, net | 3,712 | 2.3 | % | 4,153 | 2.6 | % | (441) | (10.6) | % | ||||||||||||||||||||
| Operating income | $ | 5,015 | 3.2 | % | $ | 10,350 | 6.4 | % | $ | (5,335) | (51.5) | % | |||||||||||||||||
Revenue
Revenue for the three months ended September 30, 2026 was $176.9 million, compared to $183.1 million for the three months ended September 30, 2025, a decrease of $6.3 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Media & Commerce | $ | 162,542 | $ | (432) | $ | — | $ | (3,366) | $ | (3,798) | $ | 158,744 | (2.1)% | (2.3)% | |||||||||||||||||||||||||||||||||
| Component % change | (0.3) | % | — | % | (2.1) | % | (2.3) | % | |||||||||||||||||||||||||||||||||||||||
Net revenue decreased $3.8 million, or 2.3%, to $158.7 million. The decrease reflected $3.4 million, or 2.1%, of organic decline and $0.4 million, or 0.3%, from unfavorable foreign currency movements.
Organic net revenue accounted for almost the entire net revenue decline, decreasing by $3.4 million, or 2.1%. The decrease reflected the net effect of an $8.1 million, or 8.8%, decrease in media buying, partially offset by a $4.9 million, or 7.3%, increase in commerce and CRM and media platform services. Media buying decreased primarily due to $4.9 million of lower client activity in the fashion and beauty sectors and $3.2 million of reduced client marketing spend in the Middle East due to the ongoing conflict in the region. Commerce and CRM and media platform services increased primarily due to new client wins in the technology and travel sectors.
Expenses
Cost of services decreased $5.1 million, or 4.6%, compared with a 3.4% decrease in Revenue. The decrease included a $2.5 million reduction in Billable costs. The remaining decrease in the Cost of services was primarily driven by lower Staff costs.
Office and general expenses increased $3.1 million, or 5.7%, compared with a 2.3% decrease in Net revenue, primarily reflecting investments in product development and the rebranding and positioning of Stagwell Media.
45
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, increased $1.0 million in aggregate. Staff costs decreased $2.8 million, or 2.9%, reflecting actions to align the Staff cost base with lower Net revenue and efficiencies from automation of media buying and other operational initiatives, partially offset by continued investment in senior leadership and client-facing resources. Administrative costs increased $2.4 million, or 10.0%, and Unbillable and other costs, net, increased $1.4 million, or 8.8%, primarily reflecting investments in product development and the rebranding and positioning of Stagwell Media.
Operating Income
Operating income decreased $5.3 million, or 51.5%, and operating margin decreased to 3.2% from 6.4%, driven principally by the decline in Net revenue and operating expenses, as discussed above.
Adjusted EBITDA
Adjusted EBITDA decreased $4.8 million, or 19.5%, and Adjusted EBITDA margin decreased 2.6 percentage points to 12.5% of Net revenue from 15.1%. The decline reflected lower Net revenue and increased investment in product development, the rebranding and positioning of Stagwell Media, and senior leadership, partially offset by actions to align Staff costs with Net revenue.
Communications
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 210,913 | $ | 145,086 | $ | 65,827 | 45.4 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 142,867 | 100,076 | 42,791 | 42.8 | % | |||||||||||||||||||||
| Office and general expenses | 28,123 | 19,391 | 8,732 | 45.0 | % | |||||||||||||||||||||
| Depreciation and amortization | 6,925 | 6,363 | 562 | 8.8 | % | |||||||||||||||||||||
| Impairment and other losses | — | 222 | (222) | (100.0) | % | |||||||||||||||||||||
| $ | 177,915 | $ | 126,052 | $ | 51,863 | 41.1 | % | |||||||||||||||||||
| Operating income | $ | 32,998 | $ | 19,034 | $ | 13,964 | 73.4 | % | ||||||||||||||||||
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| Three Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | |||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
| Revenue | $ | 210,913 | $ | 145,086 | $ | 65,827 | 45.4 | % | |||||||||||||||||||||
| Billable costs | 87,229 | 48,455 | 38,774 | 80.0 | % | ||||||||||||||||||||||||
| Net Revenue | 123,684 | 100.0 | % | 96,631 | 100.0 | % | 27,053 | 28.0 | % | ||||||||||||||||||||
| Staff costs | 59,939 | 48.5 | % | 56,650 | 58.6 | % | 3,289 | 5.8 | % | ||||||||||||||||||||
| Administrative costs | 13,432 | 10.9 | % | 12,516 | 13.0 | % | 916 | 7.3 | % | ||||||||||||||||||||
| Unbillable and other costs, net | 2,455 | 2.0 | % | 2,344 | 2.4 | % | 111 | 4.7 | % | ||||||||||||||||||||
| Adjusted EBITDA | 47,858 | 38.7 | % | 25,121 | 26.0 | % | 22,737 | 90.5 | % | ||||||||||||||||||||
| Stock-based compensation | 4,221 | 3.4 | % | 1,594 | 1.6 | % | 2,627 | 164.8 | % | ||||||||||||||||||||
| Depreciation and amortization | 6,925 | 5.6 | % | 6,363 | 6.6 | % | 562 | 8.8 | % | ||||||||||||||||||||
| Deferred acquisition consideration | 3,013 | 2.4 | % | (3,716) | (3.8) | % | 6,729 | NM | |||||||||||||||||||||
| Impairment and other losses | — | — | % | 222 | 0.2 | % | (222) | (100.0) | % | ||||||||||||||||||||
| Other items, net | 701 | 0.6 | % | 1,624 | 1.7 | % | (923) | (56.8) | % | ||||||||||||||||||||
| Operating income | $ | 32,998 | 26.7 | % | $ | 19,034 | 19.7 | % | $ | 13,964 | 73.4 | % | |||||||||||||||||
Revenue
Revenue for the three months ended September 30, 2026 was $210.9 million, compared to $145.1 million for the three months ended September 30, 2025, an increase of $65.8 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026, compared to the three months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Communications | $ | 96,631 | $ | 72 | $ | 7,657 | $ | 19,324 | $ | 27,053 | $ | 123,684 | 20.0 | % | 28.0 | % | |||||||||||||||||||||||||||||||
| Component % change | 0.1 | % | 7.9 | % | 20.0 | % | 28.0 | % | |||||||||||||||||||||||||||||||||||||||
Net revenue increased $27.1 million, or 28.0%, to $123.7 million. The increase reflected $19.3 million, or 20.0%, of organic growth, $7.7 million, or 7.9%, from acquisitions and $0.1 million, or 0.1%, from favorable foreign currency movements.
Organic net revenue increased $19.3 million, or 20.0%, driven by growth in public affairs, strategic communications, and political services. Growth in public affairs and strategic communications reflected increased corporate activity, expanded client scopes and new business wins. Political services increased as a result of higher campaign strategy, low dollar fundraising and media campaign activity associated with the U.S. election cycle.
The acquisition of Wavelength, a digital advocacy and communications company, contributed $7.7 million to Net revenue in the period.
Expenses
Cost of services increased $42.8 million, or 42.8%, compared with Revenue growth of 45.4%. The increase primarily included $38.8 million of higher Billable costs and $1.5 million of expenses from acquired entities.
47
Office and general expenses increased $8.7 million, or 45.0%, compared with Net revenue growth of 28.0%. The increase primarily included $6.7 million of higher Deferred acquisition consideration and $0.7 million of higher Stock-based compensation.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, increased $4.3 million in aggregate, or 6.0%, at a rate significantly below Net revenue growth of 28.0%. Staff costs increased $3.3 million, resulting in a 10.2 percentage point improvement in Staff costs as a percentage of Net revenue. The improvement reflected higher margins associated with fundraising activities and media placement fees and commissions, higher-value campaign strategy services and active management of the Staff cost base relative to Net revenue growth across the segment.
Operating Income
Operating income increased $14.0 million, or 73.4%, and operating margin increased 7.0 percentage points to 26.7% from 19.7%. The increase was driven principally by the strong growth in Net revenue offset partially by increases in related Billable costs and higher Deferred acquisition consideration, as discussed above.
Adjusted EBITDA
Adjusted EBITDA increased $22.7 million, or 90.5%, and Adjusted EBITDA margin increased 12.7 percentage points to 38.7% of Net revenue from 26.0%. The margin improvement reflected strong Organic net revenue growth, favorable business mix, and significant operating leverage across the segment, as Net revenue growth substantially exceeded growth in the operating cost base.
48
The Marketing Cloud
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 55,825 | $ | 26,576 | $ | 29,249 | 110.1 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 16,849 | 15,097 | 1,752 | 11.6 | % | |||||||||||||||||||||
| Office and general expenses | 15,720 | 1,908 | 13,812 | 723.9 | % | |||||||||||||||||||||
| Depreciation and amortization | 5,995 | 6,455 | (460) | (7.1) | % | |||||||||||||||||||||
| Impairment and other losses | 1,028 | 244 | 784 | 321.3 | % | |||||||||||||||||||||
| $ | 39,592 | $ | 23,704 | $ | 15,888 | 67.0 | % | |||||||||||||||||||
| Operating income | $ | 16,233 | $ | 2,872 | $ | 13,361 | 465.2 | % | ||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | |||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
| Revenue | $ | 55,825 | $ | 26,576 | $ | 29,249 | 110.1 | % | |||||||||||||||||||||
| Billable costs | 142 | 5 | 137 | NM | |||||||||||||||||||||||||
| Net Revenue | 55,683 | 100.0 | % | 26,571 | 100.0 | % | 29,112 | 109.6 | % | ||||||||||||||||||||
| Staff costs | 16,572 | 29.8 | % | 17,969 | 67.6 | % | (1,397) | (7.8) | % | ||||||||||||||||||||
| Administrative costs | 5,291 | 9.5 | % | 3,068 | 11.5 | % | 2,223 | 72.5 | % | ||||||||||||||||||||
| Unbillable and other costs, net | 9,165 | 16.5 | % | 6,898 | 26.0 | % | 2,267 | 32.9 | % | ||||||||||||||||||||
| Adjusted EBITDA | 24,655 | 44.3 | % | (1,364) | (5.1) | % | 26,019 | NM | |||||||||||||||||||||
| Stock-based compensation | 400 | 0.7 | % | 200 | 0.8 | % | 200 | 100.0 | % | ||||||||||||||||||||
| Depreciation and amortization | 5,995 | 10.8 | % | 6,455 | 24.3 | % | (460) | (7.1) | % | ||||||||||||||||||||
| Deferred acquisition consideration | 13 | — | % | (12,419) | (46.7) | % | 12,432 | NM | |||||||||||||||||||||
| Impairment and other losses | 1,028 | 1.8 | % | 244 | 0.9 | % | 784 | 321.3 | % | ||||||||||||||||||||
| Other items, net | 986 | 1.8 | % | 1,284 | 4.8 | % | (298) | (23.2) | % | ||||||||||||||||||||
| Operating income | $ | 16,233 | 29.2 | % | $ | 2,872 | 10.8 | % | $ | 13,361 | 465.2 | % | |||||||||||||||||
Revenue
Revenue for the three months ended September 30, 2026 was $55.8 million, compared to $26.6 million for the three months ended September 30, 2025, an increase of $29.2 million.
49
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| The Marketing Cloud | $ | 26,571 | $ | 304 | $ | — | $ | 28,808 | $ | 29,112 | $ | 55,683 | 108.4 | % | 109.6 | % | |||||||||||||||||||||||||||||||
| Component % change | 1.1 | % | — | % | 108.4 | % | 109.6 | % | |||||||||||||||||||||||||||||||||||||||
Net revenue increased $29.1 million, or 109.6%, to $55.7 million. The increase reflected $28.8 million, or 108.4%, of organic growth and $0.3 million, or 1.1%, from favorable foreign currency movements.
Organic net revenue accounted for nearly the entire increase in net revenue increasing by $28.8 million, or 108.4%, driven primarily by growth in software sales associated with The Machine and an increase in research products and services.
Expenses
Cost of services increased $1.8 million, or 11.6%, compared with Revenue growth of 110.1%. The lower rate of Cost of services growth primarily reflected the increase in higher margin software sales associated with The Machine, which requires less direct labor than the Company’s services-based offerings, with software delivery costs, including maintenance, computing usage and storage, generally incurred over the related customer contract periods.
Office and general expenses increased $13.8 million, or 723.9%, compared with Net Revenue growth of 109.6%. The increase included $12.4 million of higher Deferred acquisition consideration and $0.2 million of higher Stock-based compensation. The remaining increase in expense was driven primarily by continued investment in product development, technology, commercialization resources, and dedicated sales teams to support The Machine, research products and the broader Marketing Cloud platform.
From a functional operating-cost perspective, Staff costs decreased $1.4 million, or 7.8%, despite Net revenue growth of 109.6%, resulting in a 37.8 percentage point improvement in Staff costs as a percentage of Net revenue, to 29.8% from 67.6%. The improvement primarily reflected the increased contribution from software sales discussed above. Unbillable and other costs, net, increased $2.3 million, reflecting costs associated with the growth of The Machine and the broader Marketing Cloud platform.
Operating Income
Operating income increased $13.4 million, or 465.2%, and operating margin increased 18.4 percentage points to 29.2% from 10.8% driven principally by the strong revenue growth, offset partially by the increase in Deferred acquisition consideration and investment spending, as discussed above.
Adjusted EBITDA
Adjusted EBITDA increased $26.0 million, from a loss of $1.4 million in the prior year period to income of $24.7 million, and Adjusted EBITDA margin improved to 44.3% of Net revenue from negative 5.1% in the prior year period. The margin improvement primarily reflected growth in software sales associated with The Machine, partially offset by continued investment in dedicated sales teams, product development, technology and commercialization resources.
50
Corporate
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Staff costs | $ | 16,099 | $ | 16,362 | $ | (263) | (1.6) | % | ||||||||||||||||||
| Administrative costs | 9,373 | (938) | 10,311 | NM | ||||||||||||||||||||||
| Adjusted EBITDA | (25,472) | (15,424) | (10,048) | 65.1 | % | |||||||||||||||||||||
| Stock-based compensation | 7,677 | 4,567 | 3,110 | 68.1 | % | |||||||||||||||||||||
| Depreciation and amortization | 8,651 | 5,166 | 3,485 | 67.5 | % | |||||||||||||||||||||
| Other items, net | 1,976 | 1,357 | 619 | 45.6 | % | |||||||||||||||||||||
| Operating loss | $ | (43,776) | $ | (26,514) | $ | (17,262) | 65.1 | % | ||||||||||||||||||
Expenses
Administrative costs increased $10.3 million, primarily reflecting an $8.9 million increase in software licensing fees and product development costs associated with investments in automation and AI. The increase was partially offset by a $3.7 million increase in Corporate administrative costs allocated to the Brands through the Company’s shared services platform, reflecting efficiencies from centralized operations and automation.
Stock-based compensation increased $3.1 million, primarily reflecting an increase in awards granted during the current year as a greater proportion of annual incentive compensation was allocated to stock-based awards compared with the prior year.
Depreciation and amortization increased $3.5 million, primarily reflecting investments in enterprise technology infrastructure and internally developed software.
Operating Loss
Operating loss increased $17.3 million, or 65.1%, to $43.8 million. The increase is driven principally by the higher costs in administration and compensation, as discussed above.
NINE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2025
Consolidated Results of Operations
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
| Revenue | $ | 2,306,477 | $ | 2,101,556 | $ | 204,921 | 9.8 | % | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of services | 1,488,293 | 1,342,240 | 146,053 | 10.9 | % | ||||||||||||||||||||||||
| Office and general expenses | 611,323 | 528,845 | 82,478 | 15.6 | % | ||||||||||||||||||||||||
| Depreciation and amortization | 136,395 | 127,635 | 8,760 | 6.9 | % | ||||||||||||||||||||||||
| Impairment and other losses | 1,219 | 466 | 753 | 161.6 | % | ||||||||||||||||||||||||
| $ | 2,237,230 | $ | 1,999,186 | $ | 238,044 | 11.9 | % | ||||||||||||||||||||||
| Operating income | $ | 69,247 | $ | 102,370 | $ | (33,123) | (32.4) | % | |||||||||||||||||||||
51
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | ||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||||||||
Revenue | $ | 2,306,477 | $ | 2,101,556 | $ | 204,921 | 9.8 | % | ||||||||||||||||||||||||
| Billable costs | 426,253 | 324,718 | 101,535 | 31.3 | % | |||||||||||||||||||||||||||
Net revenue | 1,880,224 | 100.0 | % | 1,776,838 | 100.0 | % | 103,386 | 5.8 | % | |||||||||||||||||||||||
| Staff costs | 1,150,185 | 61.2 | % | 1,136,742 | 64.0 | % | 13,443 | 1.2 | % | |||||||||||||||||||||||
| Administrative costs | 239,473 | 12.7 | % | 218,223 | 12.3 | % | 21,250 | 9.7 | % | |||||||||||||||||||||||
| Unbillable and other costs, net | 147,358 | 7.8 | % | 129,302 | 7.3 | % | 18,056 | 14.0 | % | |||||||||||||||||||||||
| Adjusted EBITDA | 343,208 | 18.3 | % | 292,571 | 16.5 | % | 50,637 | 17.3 | % | |||||||||||||||||||||||
| Stock-based compensation | 61,735 | 3.3 | % | 44,143 | 2.5 | % | 17,592 | 39.9 | % | |||||||||||||||||||||||
| Depreciation and amortization | 136,395 | 7.3 | % | 127,635 | 7.2 | % | 8,760 | 6.9 | % | |||||||||||||||||||||||
| Deferred acquisition consideration | 26,766 | 1.4 | % | (9,911) | (0.6) | % | 36,677 | NM | ||||||||||||||||||||||||
| Impairment and other losses | 1,219 | 0.1 | % | 466 | — | % | 753 | 161.6 | % | |||||||||||||||||||||||
Other items, net (1) | 47,846 | 2.5 | % | 27,868 | 1.6 | % | 19,978 | 71.7 | % | |||||||||||||||||||||||
Operating income (2) | $ | 69,247 | 3.7 | % | $ | 102,370 | 5.8 | % | $ | (33,123) | (32.4) | % | ||||||||||||||||||||
(1) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses. | ||||||||||||||||||||||||||||||||
(2) See the Results of Operations section above for a reconciliation of Operating income to Net loss attributable to Stagwell Inc. common shareholders. | ||||||||||||||||||||||||||||||||
*Consolidated amounts in the table above are net of eliminations. | ||||||||||||||||||||||||||||||||
Revenue
Revenue for the nine months ended September 30, 2026 was $2,306.5 million, compared to $2,101.6 million for the nine months ended September 30, 2025, an increase of $204.9 million.
Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Services | $ | 692,760 | $ | 3,086 | $ | (7,740) | $ | (15,436) | $ | (20,090) | $ | 672,670 | (2.2) | % | (2.9) | % | |||||||||||||||||||||||||||||||||||||||||||
| Digital Transformation | 277,091 | (617) | 3,826 | 45,734 | 48,943 | 326,034 | 16.5 | % | 17.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Media & Commerce | 459,911 | 1,855 | 4,185 | (191) | 5,849 | 465,760 | — | % | 1.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Communications | 285,447 | 1,041 | 10,271 | 36,114 | 47,426 | 332,873 | 12.7 | % | 16.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| The Marketing Cloud | 77,364 | 2,863 | — | 30,576 | 33,439 | 110,803 | 39.5 | % | 43.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate, eliminations and other | (15,735) | (8) | — | (12,173) | (12,181) | (27,916) | 77.4 | % | 77.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 1,776,838 | $ | 8,220 | $ | 10,542 | $ | 84,624 | $ | 103,386 | $ | 1,880,224 | 4.8 | % | 5.8 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Component % change | 0.5 | % | 0.6 | % | 4.8 | % | 5.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
52
For the nine months ended September 30, 2026, Net revenue increased $103.4 million, or 5.8%, to $1,880.2 million. The increase reflected $84.6 million, or 4.8%, of organic growth, $10.5 million, or 0.6%, from net acquisitions and $8.2 million, or 0.5%, from favorable foreign currency movements.
Organic growth was driven primarily by Digital Transformation, Communications and The Marketing Cloud. Digital Transformation increased $45.7 million, or 16.5%, driven by demand for marketing workflow transformation, including workflow and technology design, implementation planning and embedded technical resources. Communications increased $36.1 million, or 12.7%, reflecting growth in public affairs and strategic communications and increased political activity associated with the U.S. election cycle. The Marketing Cloud increased $30.6 million, or 39.5%, primarily reflecting software sales associated with The Machine and increased demand for research products and services. These increases were partially offset by a $15.4 million, or 2.2%, decline in Marketing Services resulting from the timing of the transition from completed engagements to recently awarded work, reduced spending by certain beverage clients driven by secular changes in the industry and the non-recurrence of one time projects in the prior year.
Acquisitions, net of dispositions contributed $10.5 million to Net revenue, primarily reflecting the acquisitions of Wavelength and QStrauss and the prior year acquisitions of JetFuel Studio LLC and Powered by JetFuel LLC (collectively, “Jetfuel”), Create Group Holding Limited (“Create”), and ADK Global (“ADK”), partially offset by the divestiture of a non-core Brand in the Marketing Services segment.
Expenses
Cost of services increased $146.1 million, or 10.9%, compared with Revenue growth of 9.8%. The increase was primarily driven by $101.5 million of higher Billable costs, $18.1 million of higher Unbillable and other costs, net, $3.4 million of higher Staff costs, $5.3 million of expenses from acquired entities, and $7.0 million of higher Stock-based compensation.
Office and general expenses increased $82.5 million, or 15.6%, compared with Net revenue growth of 5.8%. The increase included $36.7 million of higher Deferred acquisition consideration, $20.9 million of higher software and technology expenses, and $10.6 million of higher Stock-based compensation. The remaining increase in Office and general expenses was $14.3 million, primarily attributable to non‑recurring payroll tax and insurance adjustments.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, increased $52.7 million in aggregate. Staff costs increased $13.4 million, or 1.2%, below Organic net revenue growth of 4.8%, resulting in a 2.8 percentage point improvement in Staff costs as a percentage of Net revenue. The improvement reflected productivity gains from shared services, AI-enabled workflow automation and the Stagwell Content Supply Chain, while continuing to invest in client-facing leadership, sales, account management and other growth resources. Administrative costs increased $21.3 million and Unbillable and other costs, net, increased $18.1 million, primarily reflecting investments in software, product development and commercialization initiatives, including automation and AI capabilities.
Stock-based compensation increased $17.6 million, primarily reflecting an increase in awards granted during the current year, as a greater proportion of annual incentive compensation was allocated to stock-based awards compared with the prior year.
Deferred acquisition consideration increased $36.7 million, primarily reflecting changes in the estimated fair value of contingent consideration liabilities based on updated performance expectations for certain acquired businesses.
Operating Income
Operating income decreased $33.1 million, or 32.4%, and operating margin decreased to 3.7% from 5.8%. The decrease included a $63.8 million increase in expenses, consisting of $36.7 million higher Deferred acquisition consideration, $17.6 million of higher Stock-based compensation, $8.8 million of higher Depreciation and amortization and $0.8 million of higher Impairment and other losses.
Interest Expense, Net
Interest expense, net for the nine months ended September 30, 2026 was $69.6 million, compared to $72.0 million for the nine months ended September 30, 2025, a decrease of $2.4 million. This decrease was primarily attributable to improved working capital performance as well as a lower average interest rate.
Foreign Exchange, Net
The foreign exchange loss for the nine months ended September 30, 2026, was $0.2 million, compared to a loss of $0.5 million for the nine months ended September 30, 2025, a favorable change of $0.3 million.
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Income Tax Expense
For the nine months ended September 30, 2026, the Company had an income tax expense of $7.6 million (on a pre-tax income of $2.9 million resulting in an effective tax rate of 265.3%) compared to income tax expense for the nine months ended September 30, 2025 of $14.0 million (on a pre-tax income of $27.7 million resulting in an effective tax rate of 50.3%).
The effective tax rate increased by 215.0 percentage points compared with the prior-year period, and income tax expense decreased by $6.4 million. The increase in the tax rate primarily related to the significant decline in pre-tax income in 2026 and increased losses for which no tax benefit was recognized, offset by state tax refunds applied in the current period, and other discrete items.
Noncontrolling and Redeemable Noncontrolling Interests
The effect of Noncontrolling and redeemable noncontrolling interests for the nine months ended September 30, 2026 was a loss of $1.3 million, compared to a loss of $2.6 million for the nine months ended September 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.
Net (Loss) Income Attributable to Stagwell Inc. Common Shareholders
As a result of the foregoing, Net loss attributable to Stagwell Inc. common shareholders for the nine months ended September 30, 2026 was $3.0 million, compared to a net income of $16.4 million for the nine months ended September 30, 2025.
Adjusted EBITDA
Adjusted EBITDA increased $50.6 million, or 17.3%, and Adjusted EBITDA margin increased 1.8 percentage points to 18.3% of Net revenue from 16.5%. The margin improvement reflected Net revenue growth in excess of growth in the operating cost base, including a 2.8 percentage point improvement in Staff costs as a percentage of Net revenue. The improvement was achieved while continuing to invest in product development, technology, commercialization capabilities, and growth initiatives across the Company’s businesses.
Earnings Per Share
Diluted EPS and Adjusted Diluted EPS for the nine months ended September 30, 2026 were as follows:
| GAAP | Adjustments (1) | Non-GAAP | ||||||||||||||||||
| (amounts in thousands, except per share amounts) | ||||||||||||||||||||
| Net (loss) income attributable to Stagwell Inc. common shareholders | $ | (2,970) | $ | 193,633 | $ | 190,663 | ||||||||||||||
Diluted - Weighted average number of common shares outstanding | 247,131 | — | 247,131 | |||||||||||||||||
Diluted EPS and Adjusted Diluted EPS (1) | $ | (0.01) | $ | 0.77 | ||||||||||||||||
| Adjustments to Net (loss) income | ||||||||||||||||||||
| Amortization | $ | 119,962 | ||||||||||||||||||
| Impairment and other losses | 1,219 | |||||||||||||||||||
| Stock-based compensation | 61,735 | |||||||||||||||||||
| Deferred acquisition consideration | 26,766 | |||||||||||||||||||
Other items, net (2) | 44,401 | |||||||||||||||||||
| $ | 254,083 | |||||||||||||||||||
Adjustment to GAAP income tax expense (3) | (60,450) | |||||||||||||||||||
| $ | 193,633 | |||||||||||||||||||
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
(2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses.
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(3) Represents the difference between the income tax expense of $7.6 million at an effective tax rate of 265.3% on a GAAP basis and the income tax expense of $68.1 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
Diluted EPS and Adjusted Diluted EPS for the nine months ended September 30, 2025 were as follows:
| GAAP | Adjustments (1) | Non-GAAP | ||||||||||||||||||
(amounts in thousands, except per share amounts) | ||||||||||||||||||||
| Net income attributable to Stagwell Inc. common shareholders | $ | 16,441 | $ | 134,175 | $ | 150,616 | ||||||||||||||
| Net loss attributable to Class C shareholders | (6,637) | — | (6,637) | |||||||||||||||||
| Net income attributable to Stagwell Inc. and Class C shareholders and adjusted net income | $ | 9,804 | $ | 134,175 | $ | 143,979 | ||||||||||||||
Diluted - Weighted average number of common shares outstanding | 214,557 | — | 214,557 | |||||||||||||||||
| Weighted average number of shares of Class C Common Stock outstanding | 52,216 | — | 52,216 | |||||||||||||||||
Diluted - Weighted average number of shares outstanding | 266,773 | — | 266,773 | |||||||||||||||||
Diluted EPS and Adjusted Diluted EPS (1) | $ | 0.04 | $ | 0.54 | ||||||||||||||||
| Adjustments to Net income | ||||||||||||||||||||
Amortization | $ | 107,281 | ||||||||||||||||||
| Impairment and other losses | 466 | |||||||||||||||||||
| Stock-based compensation | 44,143 | |||||||||||||||||||
| Deferred acquisition consideration | (9,911) | |||||||||||||||||||
Other items, net (2) | 30,151 | |||||||||||||||||||
| $ | 172,130 | |||||||||||||||||||
Adjustment to GAAP income tax expense (3) | (37,955) | |||||||||||||||||||
| $ | 134,175 | |||||||||||||||||||
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
(2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses.
(3) Represents the difference between the income tax expense of $14.0 million at an effective tax rate of 50.3% on a GAAP basis and the income tax expense of $51.9 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
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Marketing Services
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
| Revenue | $ | 786,650 | $ | 817,294 | $ | (30,644) | (3.7) | % | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of services | 535,117 | 530,712 | 4,405 | 0.8 | % | ||||||||||||||||||||||||
| Office and general expenses | 150,329 | 153,178 | (2,849) | (1.9) | % | ||||||||||||||||||||||||
| Depreciation and amortization | 36,749 | 39,556 | (2,807) | (7.1) | % | ||||||||||||||||||||||||
| $ | 722,195 | $ | 723,446 | $ | (1,251) | (0.2) | % | ||||||||||||||||||||||
| Operating income | $ | 64,455 | $ | 93,848 | $ | (29,393) | (31.3) | % | |||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | |||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
Revenue | $ | 786,650 | $ | 817,294 | $ | (30,644) | (3.7) | % | |||||||||||||||||||||
| Billable costs | 113,980 | 124,534 | (10,554) | (8.5) | % | ||||||||||||||||||||||||
Net revenue | 672,670 | 100.0 | % | 692,760 | 100.0 | % | (20,090) | (2.9) | % | ||||||||||||||||||||
| Staff costs | 390,338 | 58.0 | % | 401,036 | 57.9 | % | (10,698) | (2.7) | % | ||||||||||||||||||||
| Administrative costs | 74,036 | 11.0 | % | 83,338 | 12.0 | % | (9,302) | (11.2) | % | ||||||||||||||||||||
| Unbillable and other costs, net | 75,327 | 11.2 | % | 61,801 | 8.9 | % | 13,526 | 21.9 | % | ||||||||||||||||||||
| Adjusted EBITDA | 132,969 | 19.8 | % | 146,585 | 21.2 | % | (13,616) | (9.3) | % | ||||||||||||||||||||
| Stock-based compensation | 24,649 | 3.7 | % | 14,832 | 2.1 | % | 9,817 | 66.2 | % | ||||||||||||||||||||
| Depreciation and amortization | 36,749 | 5.5 | % | 39,556 | 5.7 | % | (2,807) | (7.1) | % | ||||||||||||||||||||
| Deferred acquisition consideration | (1,969) | (0.3) | % | (4,784) | (0.7) | % | 2,815 | (58.8) | % | ||||||||||||||||||||
| Other items, net | 9,085 | 1.4 | % | 3,133 | 0.5 | % | 5,952 | 190.0 | % | ||||||||||||||||||||
| Operating income | $ | 64,455 | 9.6 | % | $ | 93,848 | 13.5 | % | $ | (29,393) | (31.3) | % | |||||||||||||||||
Revenue
Revenue for the nine months ended September 30, 2026 was $786.7 million, compared to $817.3 million for the nine months ended September 30, 2025, a decrease of $30.6 million.
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Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Services | $ | 692,760 | $ | 3,086 | $ | (7,740) | $ | (15,436) | $ | (20,090) | $ | 672,670 | (2.2) | % | (2.9) | % | |||||||||||||||||||||||||||||||
| Component % change | 0.4 | % | (1.1) | % | (2.2) | % | (2.9) | % | |||||||||||||||||||||||||||||||||||||||
Net revenue decreased $20.1 million, or 2.9%, to $672.7 million. The decrease reflected $15.4 million, or 2.2%, of organic decline and $7.7 million, or 1.1%, from acquisitions, net of dispositions, partially offset by $3.1 million, or 0.4%, from favorable foreign currency movements.
Organic net revenue decreased $15.4 million, or 2.2%, primarily reflecting declines in creative and experiential services, partially offset by growth in research and social media solutions. Creative services reflected timing of the transition from completed engagements to recently awarded work and the non-recurrence of one time projects in the prior year. Experiential services declined primarily due to lower beverage and spirits client spending, partially offset by demand for large scale activations through Sport Beach. Research increased due to new client wins and expanded client relationships across the technology, financial services, and professional services sectors.
Acquisitions, net of dispositions reduced Net revenue by $7.7 million, primarily reflecting the divestiture of an experiential brand, partially offset by the prior year acquisition of Jetfuel.
Expenses
Cost of services increased $4.4 million, or 0.8%, compared with a 3.7% decrease in Revenue. The increase was primarily driven by $6.0 million of higher Stock-based compensation and $13.5 million of higher Unbillable and other costs, net, partially offset by $10.6 million of lower Billable costs and $3.3 million of lower expenses associated with acquired and divested entities.
Office and general expenses decreased $2.8 million, or 1.9%, compared with a 2.9% decrease in Net revenue. The decrease was primarily driven by actions to align the Staff cost base with lower Net revenue and efficiencies from shared services, AI-enabled workflow automation and the Stagwell Content Supply Chain, partially offset by $2.8 million of higher Deferred acquisition consideration and $3.8 million of higher Stock-based compensation.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, decreased $6.5 million in aggregate. Staff costs decreased $10.7 million and Administrative costs decreased $9.3 million, reflecting actions to align the cost base with lower Net revenue, efficiencies from shared services and AI-enabled workflow automation, and savings from the consolidation of the Company’s real-estate footprint. These decreases were partially offset by a $13.5 million increase in Unbillable and other costs, net, primarily reflecting increased research-related costs and expanded experiential activities associated with Sport Beach.
Stock-based compensation increased $9.8 million, primarily reflecting an increase in awards granted in the current year as a greater proportion of annual incentive compensation was allocated to stock-based awards compared with the prior year.
Other items, net increased $6.0 million, primarily reflecting the absence of a $3.5 million gain recognized in the prior-year period associated with a lease termination as part of the Company’s real estate consolidation initiatives and $1.1 million of higher severance expense.
Operating Income
Operating income decreased $29.4 million, or 31.3%, and operating margin decreased to 9.6% from 13.5%. The decrease was driven principally by the reduction in revenues, partially offset by management actions to reduce staff and other administrative costs to align with the lower revenue, as discussed above. Operating income was also adversely affected by a $6.0 million increase in Other items, net, primarily reflecting the absence of a prior year lease termination gain and higher severance expense.
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Adjusted EBITDA
Adjusted EBITDA decreased $13.6 million, or 9.3%, and Adjusted EBITDA margin decreased 1.4 percentage points to 19.8% of Net revenue from 21.2%. The decline primarily reflected lower Net revenue and higher research and experiential related costs, partially offset by lower Staff and Administrative costs from actions to align the cost base with Net revenue.
Digital Transformation
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
| Revenue | $ | 349,756 | $ | 294,301 | $ | 55,455 | 18.8 | % | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of services | 206,534 | 179,510 | 27,024 | 15.1 | % | ||||||||||||||||||||||||
| Office and general expenses | 71,277 | 57,752 | 13,525 | 23.4 | % | ||||||||||||||||||||||||
| Depreciation and amortization | 18,011 | 17,250 | 761 | 4.4 | % | ||||||||||||||||||||||||
| $ | 295,822 | $ | 254,512 | $ | 41,310 | 16.2 | % | ||||||||||||||||||||||
| Operating income | $ | 53,934 | $ | 39,789 | $ | 14,145 | 35.6 | % | |||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | |||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
Revenue | $ | 349,756 | $ | 294,301 | $ | 55,455 | 18.8 | % | |||||||||||||||||||||
| Billable costs | 23,722 | 17,210 | 6,512 | 37.8 | % | ||||||||||||||||||||||||
Net revenue | 326,034 | 100.0 | % | 277,091 | 100.0 | % | 48,943 | 17.7 | % | ||||||||||||||||||||
| Staff costs | 208,901 | 64.1 | % | 186,972 | 67.5 | % | 21,929 | 11.7 | % | ||||||||||||||||||||
| Administrative costs | 20,966 | 6.4 | % | 19,599 | 7.1 | % | 1,367 | 7.0 | % | ||||||||||||||||||||
| Unbillable and other costs, net | 381 | 0.1 | % | 1,178 | 0.4 | % | (797) | (67.7) | % | ||||||||||||||||||||
| Adjusted EBITDA | 95,786 | 29.4 | % | 69,342 | 25.0 | % | 26,444 | 38.1 | % | ||||||||||||||||||||
| Stock-based compensation | 8,368 | 2.6 | % | 3,081 | 1.1 | % | 5,287 | 171.6 | % | ||||||||||||||||||||
| Depreciation and amortization | 18,011 | 5.5 | % | 17,250 | 6.2 | % | 761 | 4.4 | % | ||||||||||||||||||||
| Deferred acquisition consideration | 13,535 | 4.2 | % | 7,729 | 2.8 | % | 5,806 | 75.1 | % | ||||||||||||||||||||
| Other items, net | 1,938 | 0.6 | % | 1,493 | 0.5 | % | 445 | 29.8 | % | ||||||||||||||||||||
| Operating income | $ | 53,934 | 16.5 | % | $ | 39,789 | 14.4 | % | $ | 14,145 | 35.6 | % | |||||||||||||||||
Revenue
Revenue for the nine months ended September 30, 2026 was $349.8 million, compared to $294.3 million for the nine months ended September 30, 2025, an increase of $55.5 million.
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Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Digital Transformation | $ | 277,091 | $ | (617) | $ | 3,826 | $ | 45,734 | $ | 48,943 | $ | 326,034 | 16.5 | % | 17.7 | % | |||||||||||||||||||||||||||||||
| Component % change | (0.2) | % | 1.4 | % | 16.5 | % | 17.7 | % | |||||||||||||||||||||||||||||||||||||||
Net revenue increased $48.9 million, or 17.7%, to $326.0 million. The increase reflected $45.7 million, or 16.5%, of organic growth and $3.8 million, or 1.4%, from acquisitions, partially offset by $0.6 million, or 0.2%, from unfavorable foreign currency movements.
Organic net revenue increased $45.7 million, or 16.5%, reflecting expanded scope with existing clients and new client wins driven by demand for workflow transformation, particularly among enterprise technology clients. Demand included workflow and technology design and implementation planning to support adoption, as well as forward deployed engineers and other technical resources embedded within clients. Digital Transformation capabilities were also delivered as part of broader integrated client engagements across the Company. Digital activation contributed to the increase through expanded enterprise software activation engagements and additional work with existing clients, partially offset by the completion of certain prior year engagements.
Acquisitions contributed $3.8 million to Net revenue, primarily reflecting the prior year acquisition of Create and the current year acquisition of QStrauss.
Expenses
Cost of services increased $27.0 million, or 15.1%, compared with Revenue growth of 18.8%. The increase was primarily driven by $18.7 million of higher Staff costs, $6.5 million of higher Billable costs, and $1.5 million of expenses from acquired entities. The lower rate of Cost of services growth reflected hiring and Staff cost growth below Revenue growth, together with productivity gains from AI-enabled development and coding workflows. The improvement was achieved while continuing to invest in account management resources.
Office and general expenses increased $13.5 million, or 23.4%, compared with Net revenue growth of 17.7%. The increase included $5.8 million of higher Deferred acquisition consideration and $4.8 million of higher Stock-based compensation. The remaining increase in Office and general expenses was $2.9 million, primarily reflecting continued investment in client leadership, sales and business development resources to support Net revenue growth.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, increased at a rate below Net revenue growth. Staff costs increased $21.9 million, or 11.7%, resulting in a 3.4 percentage point improvement in Staff costs as a percentage of Net revenue. The improvement reflected the hiring discipline and productivity gains discussed above.
Operating Income
Operating income increased $14.1 million, or 35.6%, and operating margin increased 2.1 percentage points to 16.5% from 14.4%. The increase was partially offset by $5.8 million of higher Deferred acquisition consideration, $5.3 million of higher Stock-based compensation and $0.8 million of higher Depreciation and amortization.
Adjusted EBITDA
Adjusted EBITDA increased $26.4 million, or 38.1%, and Adjusted EBITDA margin increased 4.4 percentage points to 29.4% of Net revenue from 25.0%. The margin improvement reflected Organic net revenue growth of 16.5% in excess of growth in the operating cost base, driven by strong demand for workflow transformation and productivity gains from AI enabled development and coding workflows, while continuing to invest in account management, client leadership, sales and business development resources.
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Media & Commerce
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, were as follows:
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
| Revenue | $ | 534,561 | $ | 509,416 | $ | 25,145 | 4.9 | % | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of services | 331,931 | 310,085 | 21,846 | 7.0 | % | ||||||||||||||||||||||||
| Office and general expenses | 173,347 | 163,551 | 9,796 | 6.0 | % | ||||||||||||||||||||||||
| Depreciation and amortization | 24,319 | 22,211 | 2,108 | 9.5 | % | ||||||||||||||||||||||||
| Impairment and other losses | 191 | — | 191 | 100.0 | % | ||||||||||||||||||||||||
| $ | 529,788 | $ | 495,847 | $ | 33,941 | 6.8 | % | ||||||||||||||||||||||
| Operating income | $ | 4,773 | $ | 13,569 | $ | (8,796) | (64.8) | % | |||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | |||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
Revenue | $ | 534,561 | $ | 509,416 | $ | 25,145 | 4.9 | % | |||||||||||||||||||||
| Billable costs | 68,801 | 49,505 | 19,296 | 39.0 | % | ||||||||||||||||||||||||
Net revenue | 465,760 | 100.0 | % | 459,911 | 100.0 | % | 5,849 | 1.3 | % | ||||||||||||||||||||
| Staff costs | 291,338 | 62.6 | % | 291,228 | 63.3 | % | 110 | — | % | ||||||||||||||||||||
| Administrative costs | 74,902 | 16.1 | % | 70,963 | 15.4 | % | 3,939 | 5.6 | % | ||||||||||||||||||||
| Unbillable and other costs, net | 45,820 | 9.8 | % | 44,486 | 9.7 | % | 1,334 | 3.0 | % | ||||||||||||||||||||
| Adjusted EBITDA | 53,700 | 11.5 | % | 53,234 | 11.6 | % | 466 | 0.9 | % | ||||||||||||||||||||
| Stock-based compensation | 2,871 | 0.6 | % | 3,302 | 0.7 | % | (431) | (13.1) | % | ||||||||||||||||||||
| Depreciation and amortization | 24,319 | 5.2 | % | 22,211 | 4.8 | % | 2,108 | 9.5 | % | ||||||||||||||||||||
| Deferred acquisition consideration | 9,854 | 2.1 | % | 2,942 | 0.6 | % | 6,912 | 234.9 | % | ||||||||||||||||||||
| Impairment and other losses | 191 | — | % | — | — | % | 191 | 100.0 | % | ||||||||||||||||||||
| Other items, net | 11,692 | 2.5 | % | 11,210 | 2.4 | % | 482 | 4.3 | % | ||||||||||||||||||||
| Operating income | $ | 4,773 | 1.0 | % | $ | 13,569 | 3.0 | % | $ | (8,796) | (64.8) | % | |||||||||||||||||
Revenue
Revenue for the nine months ended September 30, 2026 was $534.6 million, compared to $509.4 million for the nine months ended September 30, 2025, an increase of $25.1 million.
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Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Media & Commerce | $ | 459,911 | $ | 1,855 | $ | 4,185 | $ | (191) | $ | 5,849 | $ | 465,760 | — | % | 1.3 | % | |||||||||||||||||||||||||||||||
| Component % change | 0.4 | % | 0.9 | % | — | % | 1.3 | % | |||||||||||||||||||||||||||||||||||||||
Net revenue increased $5.8 million, or 1.3%, to $465.8 million. The increase reflected $4.2 million, or 0.9%, from acquisitions and $1.9 million, or 0.4%, from favorable foreign currency movements, partially offset by a $0.2 million organic decline.
Organic net revenue decreased $0.2 million. The decrease reflected the net effect of an $8.5 million decline in media buying, offset by increases of $5.7 million in media platform services and $2.6 million in commerce and CRM. Media buying decreased primarily due to $6.1 million of reduced client marketing spend in the Middle East due to the ongoing conflict in the region. Media platform services and commerce and CRM increased primarily due to higher connected television advertising related to the World Cup, expansion of in-flight connectivity partnerships, growth in travel media publications, and new client wins.
Acquisitions contributed $4.2 million to Net revenue, primarily reflecting the prior year acquisition of ADK.
Expenses
Cost of services increased $21.8 million, or 7.0%, compared with Revenue growth of 4.9%. The increase was primarily driven by $19.3 million of higher Billable costs and $4.2 million of expenses from acquired entities.
Office and general expenses increased $9.8 million, or 6.0%, compared with Net revenue growth of 1.3%. The increase included $1.9 million of expenses from acquired entities and $6.9 million of higher Deferred acquisition consideration, partially offset by $0.4 million of lower Stock-based compensation. The remaining increase in Office and general expenses was $1.4 million, primarily reflecting investments in product development and the rebranding and positioning of Stagwell Media.
From a functional operating-cost perspective, Administrative costs increased $3.9 million, or 5.6%, and Unbillable and other costs, net, increased $1.3 million, or 3.0%, primarily reflecting investments in product development and the rebranding and positioning of Stagwell Media.
Operating Income
Operating income decreased $8.8 million, or 64.8%, and operating margin decreased 2.0 percentage points to 1.0% from 3.0%. The decrease was primarily driven by $6.9 million of higher Deferred acquisition consideration, $2.1 million of higher Depreciation and amortization and $0.2 million of higher Impairment and other losses, partially offset by $0.4 million of lower Stock-based compensation.
Adjusted EBITDA
Adjusted EBITDA increased $0.5 million, or 0.9%, while Adjusted EBITDA margin decreased slightly to 11.5% of Net revenue from 11.6%. The relatively stable Adjusted EBITDA and margin reflected modest Net revenue growth and actions to align Staff costs with Net revenue, offset by continued investment in senior leadership, product development and the rebranding and positioning of Stagwell Media.
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Communications
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
| Revenue | $ | 552,767 | $ | 420,556 | $ | 132,211 | 31.4 | % | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of services | 382,804 | 293,082 | 89,722 | 30.6 | % | ||||||||||||||||||||||||
| Office and general expenses | 80,210 | 64,012 | 16,198 | 25.3 | % | ||||||||||||||||||||||||
| Depreciation and amortization | 19,972 | 19,349 | 623 | 3.2 | % | ||||||||||||||||||||||||
| Impairment and other losses | — | 222 | (222) | (100.0) | % | ||||||||||||||||||||||||
| $ | 482,986 | $ | 376,665 | $ | 106,321 | 28.2 | % | ||||||||||||||||||||||
| Operating income | $ | 69,781 | $ | 43,891 | $ | 25,890 | 59.0 | % | |||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | |||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
Revenue | $ | 552,767 | $ | 420,556 | $ | 132,211 | 31.4 | % | |||||||||||||||||||||
| Billable costs | 219,894 | 135,109 | 84,785 | 62.8 | % | ||||||||||||||||||||||||
Net revenue | 332,873 | 100.0 | % | 285,447 | 100.0 | % | 47,426 | 16.6 | % | ||||||||||||||||||||
| Staff costs | 178,086 | 53.5 | % | 172,273 | 60.4 | % | 5,813 | 3.4 | % | ||||||||||||||||||||
| Administrative costs | 40,634 | 12.2 | % | 37,042 | 13.0 | % | 3,592 | 9.7 | % | ||||||||||||||||||||
| Unbillable and other costs, net | 6,291 | 1.9 | % | 7,103 | 2.5 | % | (812) | (11.4) | % | ||||||||||||||||||||
| Adjusted EBITDA | 107,862 | 32.4 | % | 69,029 | 24.2 | % | 38,833 | 56.3 | % | ||||||||||||||||||||
| Stock-based compensation | 9,131 | 2.7 | % | 6,760 | 2.4 | % | 2,371 | 35.1 | % | ||||||||||||||||||||
| Depreciation and amortization | 19,972 | 6.0 | % | 19,349 | 6.8 | % | 623 | 3.2 | % | ||||||||||||||||||||
| Deferred acquisition consideration | 4,773 | 1.4 | % | (4,879) | (1.7) | % | 9,652 | NM | |||||||||||||||||||||
| Impairment and other losses | — | — | % | 222 | 0.1 | % | (222) | (100.0) | % | ||||||||||||||||||||
| Other items, net | 4,205 | 1.3 | % | 3,686 | 1.3 | % | 519 | 14.1 | % | ||||||||||||||||||||
| Operating income | $ | 69,781 | 21.0 | % | $ | 43,891 | 15.4 | % | $ | 25,890 | 59.0 | % | |||||||||||||||||
Revenue
Revenue for the nine months ended September 30, 2026 was $552.8 million compared to $420.6 million for the nine months ended September 30, 2025, an increase of $132.2 million.
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Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Communications | $ | 285,447 | $ | 1,041 | $ | 10,271 | $ | 36,114 | $ | 47,426 | $ | 332,873 | 12.7 | % | 16.6 | % | |||||||||||||||||||||||||||||||
| Component % change | 0.4 | % | 3.6 | % | 12.7 | % | 16.6 | % | |||||||||||||||||||||||||||||||||||||||
Net revenue increased $47.4 million, or 16.6%, to $332.9 million. The increase reflected $36.1 million, or 12.7%, of organic growth, $10.3 million, or 3.6%, from net acquisitions and $1.0 million, or 0.4%, from favorable foreign currency movements.
Organic net revenue increased $36.1 million, or 12.7%, driven by growth in public affairs, strategic communications, and political services. Growth in public affairs and strategic communications reflected increased corporate activity, expanded client scopes and new business wins. Political services increased because of higher campaign strategy, high volume of low dollar fundraising and media campaign activity associated with the U.S. election cycle.
Acquisitions contributed $10.3 million to Net revenue, primarily reflecting the acquisition of Wavelength.
Expenses
Cost of services increased $89.7 million, or 30.6%, compared with Revenue growth of 31.4%. The increase included $84.8 million of higher Billable costs and $2.9 million of expenses from acquired entities.
Office and general expenses increased $16.2 million, or 25.3%, compared with Net revenue growth of 16.6%. The increase primarily included $9.7 million of higher Deferred acquisition consideration and $1.9 million of higher Stock-based compensation.
From a functional operating-cost perspective, Staff costs increased $5.8 million, or 3.4%, significantly below Organic net revenue growth of 12.7%, resulting in a 6.9 percentage point improvement in Staff costs as a percentage of Net revenue. The improvement reflected higher margins associated with fundraising activities and media placement fees and commissions, higher-value campaign strategy services and active management of the Staff cost base relative to Net revenue growth across the segment.
Operating Income
Operating income increased $25.9 million, or 59.0%, and operating margin increased 5.6 percentage points to 21.0% from 15.4%. The increase was partially offset by $9.7 million of higher Deferred acquisition consideration, $2.4 million of higher Stock-based compensation, and $0.6 million of higher Depreciation and amortization, partially offset by $0.2 million of lower Impairment and other losses.
Adjusted EBITDA
Adjusted EBITDA increased $38.8 million, or 56.3%, and Adjusted EBITDA margin increased 8.2 percentage points to 32.4% of Net revenue from 24.2%. The margin improvement reflected strong Organic net revenue growth, favorable business mix and operating leverage across the segment, as Net revenue growth substantially exceeded growth in the operating cost base.
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The Marketing Cloud
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
| Revenue | $ | 110,963 | $ | 77,380 | $ | 33,583 | 43.4 | % | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of services | 47,930 | 41,673 | 6,257 | 15.0 | % | ||||||||||||||||||||||||
| Office and general expenses | 48,820 | 32,556 | 16,264 | 50.0 | % | ||||||||||||||||||||||||
| Depreciation and amortization | 18,945 | 17,436 | 1,509 | 8.7 | % | ||||||||||||||||||||||||
| Impairment and other losses | 1,028 | 244 | 784 | 321.3 | % | ||||||||||||||||||||||||
| $ | 116,723 | $ | 91,909 | $ | 24,814 | 27.0 | % | ||||||||||||||||||||||
| Operating loss | $ | (5,760) | $ | (14,529) | $ | 8,769 | (60.4) | % | |||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||
| 2026 | % of Net Revenue | 2025 | % of Net Revenue | Change | |||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||
Revenue | $ | 110,963 | $ | 77,380 | $ | 33,583 | 43.4 | % | |||||||||||||||||||||
| Billable costs | 160 | 16 | 144 | 900.0 | % | ||||||||||||||||||||||||
Net revenue | 110,803 | 100.0 | % | 77,364 | 100.0 | % | 33,439 | 43.2 | % | ||||||||||||||||||||
| Staff costs | 51,460 | 46.4 | % | 52,001 | 67.2 | % | (541) | (1.0) | % | ||||||||||||||||||||
| Administrative costs | 18,003 | 16.2 | % | 11,582 | 15.0 | % | 6,421 | 55.4 | % | ||||||||||||||||||||
| Unbillable and other costs, net | 23,962 | 21.6 | % | 18,399 | 23.8 | % | 5,563 | 30.2 | % | ||||||||||||||||||||
| Adjusted EBITDA | 17,378 | 15.7 | % | (4,618) | (6.0) | % | 21,996 | NM | |||||||||||||||||||||
| Stock-based compensation | 906 | 0.8 | % | 541 | 0.7 | % | 365 | 67.5 | % | ||||||||||||||||||||
| Depreciation and amortization | 18,945 | 17.1 | % | 17,436 | 22.5 | % | 1,509 | 8.7 | % | ||||||||||||||||||||
| Deferred acquisition consideration | 573 | 0.5 | % | (10,919) | (14.1) | % | 11,492 | NM | |||||||||||||||||||||
| Impairment and other losses | 1,028 | 0.9 | % | 244 | 0.3 | % | 784 | 321.3 | % | ||||||||||||||||||||
| Other items, net | 1,686 | 1.5 | % | 2,609 | 3.4 | % | (923) | (35.4) | % | ||||||||||||||||||||
| Operating loss | $ | (5,760) | (5.2) | % | $ | (14,529) | (18.8) | % | $ | 8,769 | (60.4) | % | |||||||||||||||||
Revenue
Revenue for the nine months ended September 30, 2026 was $111.0 million compared to $77.4 million for the nine months ended September 30, 2025, an increase of $33.6 million.
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Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2026 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| The Marketing Cloud | $ | 77,364 | $ | 2,863 | $ | — | $ | 30,576 | $ | 33,439 | $ | 110,803 | 39.5 | % | 43.2 | % | |||||||||||||||||||||||||||||||
| Component % change | 3.7 | % | — | % | 39.5 | % | 43.2 | % | |||||||||||||||||||||||||||||||||||||||
Net revenue increased $33.4 million, or 43.2%, to $110.8 million. The increase reflected $30.6 million, or 39.5%, of organic growth and $2.9 million, or 3.7%, from favorable foreign currency movements.
Organic net revenue increased $30.6 million, or 39.5%, driven primarily by growth in software sales associated with The Machine and increased demand for research products and services.
Expenses
Cost of services increased $6.3 million, or 15.0%, compared with Revenue growth of 43.4%. The lower rate of Cost of services growth primarily reflected the growth in software sales associated with The Machine and research products, which require less direct labor than the Company’s services-based offerings. Software delivery costs, including maintenance, computing usage and storage, are generally incurred over the related customer contract periods.
Office and general expenses increased $16.3 million, or 50.0%, compared with Net revenue growth of 43.2%. The increase included $11.5 million of higher Deferred acquisition consideration and $0.3 million of higher Stock-based compensation. The remaining increase in Office and general expenses was $4.5 million, primarily reflecting continued investment in product development, technology, commercialization resources and dedicated sales teams to support The Machine, research products and the broader Marketing Cloud platform.
From a functional operating-cost perspective, Staff costs decreased $0.5 million despite Net revenue growth of 43.2%, resulting in a 20.8 percentage point improvement in Staff costs as a percentage of Net revenue, to 46.4% from 67.2%. The improvement primarily reflected the increased contribution from software sales discussed above. Unbillable and other costs, net, increased $5.6 million, reflecting costs associated with the growth of The Machine and the broader Marketing Cloud platform.
Operating Loss
Operating loss decreased $8.8 million, or 60.4%, and operating margin improved to a loss of 5.2% from a loss of 18.8%. The improvement was partially offset by $11.5 million of higher Deferred acquisition consideration, $1.5 million of higher Depreciation and amortization, $0.8 million of higher Impairment and other losses and $0.4 million of higher Stock-based compensation.
Adjusted EBITDA
Adjusted EBITDA improved $22.0 million, from a loss of $4.6 million in the prior year period to income of $17.4 million, and Adjusted EBITDA margin improved to 15.7% of Net revenue from a negative 6.0% in the prior year period. The improvement primarily reflected growth in software sales associated with The Machine and research products, partially offset by continued investment in dedicated sales teams, product development, technology and commercialization resources.
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Corporate
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||||||||
| Staff costs | $ | 48,087 | $ | 41,238 | $ | 6,849 | 16.6 | % | ||||||||||||||||||||||||
| Administrative costs | 17,507 | (2,001) | 19,508 | NM | ||||||||||||||||||||||||||||
| Adjusted EBITDA | (65,594) | (39,237) | (26,357) | 67.2 | % | |||||||||||||||||||||||||||
| Stock-based compensation | 15,810 | 15,627 | 183 | 1.2 | % | |||||||||||||||||||||||||||
| Depreciation and amortization | 18,276 | 11,833 | 6,443 | 54.4 | % | |||||||||||||||||||||||||||
| Other items, net | 11,925 | 5,737 | 6,188 | 107.9 | % | |||||||||||||||||||||||||||
| Operating loss | $ | (111,605) | $ | (72,434) | $ | (39,171) | 54.1 | % | ||||||||||||||||||||||||
Expenses
Staff costs increased $6.8 million, primarily reflecting investments in sales, growth and account management resources, certain senior leadership hires and higher healthcare-related insurance claims.
Administrative costs increased $19.5 million, primarily reflecting a $26.3 million increase in software licensing fees and product development costs associated with investments in automation and AI, partially offset by an $11.0 million increase in Corporate administrative costs allocated to the Brands through the Company’s shared services platform.
Depreciation and amortization increased $6.4 million, primarily reflecting investments in enterprise technology infrastructure and internally developed software.
Operating Loss
Operating loss increased $39.2 million or 54.1% to $111.6 million. The increase included $6.4 million of higher Depreciation and amortization and $0.2 million of higher Stock-based compensation. Operating loss was also adversely affected by a $6.2 million increase in Other items, net. The remaining increase in operating loss was $26.4 million, primarily reflecting the investments in technology, product development, automation and AI discussed above, partially offset by efficiencies from the Company’s shared services platform.
Liquidity and Capital Resources:
The following table provides summary information about the Company’s liquidity position and capital resources:
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net cash provided by operating activities | $ | 152,279 | $ | 30,713 | $ | 121,566 | 395.8 | % | |||||||||||||||
| Net cash used in investing activities | (113,910) | (80,759) | (33,151) | 41.0 | % | ||||||||||||||||||
| Net cash (used in) provided by financing activities | (11,606) | 44,227 | (55,833) | (126.2) | % | ||||||||||||||||||
The Company had cash and cash equivalents of $132.2 million and $104.5 million as of September 30, 2026, and December 31, 2025, respectively.
Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2026 was $152.3 million, an increase of $121.6 million, or 395.8%, compared to the prior-year period. The increase was primarily driven by $81.3 million improvement in working capital and $58.4 million of favorable changes in non-cash adjustments. Although these non-cash items contributed to the higher net loss, they did not affect operating cash flows.
The $81.3 million year-over-year reduction in working capital usage primarily reflected favorable changes of $122.4 million in accruals including accrued media, largely due to timing and improved payment terms with certain vendors and also due to the impact of certain acquisitions, $31.0 million in other current assets primarily due to lower prepaid media assets, and
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$7.2 million in accounts payable. These changes were partially offset by unfavorable changes of $32.6 million in advance billings due to the timing of billing, and 48.1 million in accounts receivable due to increased sales to be billed and timing of client collections.
Favorable changes in non-cash items primarily reflected a $36.7 million increase in the adjustment to deferred acquisition liabilities, driven by the timing and performance of certain acquisitions, a $17.6 million increase in stock-based compensation due to the increased number of awards granted in the current year as a greater proportion of annual incentive compensation was allocated to stock-based awards, and an $8.8 million increase in depreciation and amortization associated with continued investments in AI and automation technologies.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2026 was $113.9 million, an increase of $33.2 million, or 41.0%, compared to the prior-year period. The increase of $30.5 million primarily attributable to higher capitalized software expenditures related to continued investment in AI capabilities, automation technologies, The Machine, the Stagwell Content Supply Chain, and other technology-enabled platforms intended to support future growth and operating efficiency.
Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2026 was $11.6 million, an increase of $55.8 million, compared to the prior-year period. The change primarily reflected an $88.0 million lower net borrowings under the Credit Agreement and a $2.6 million TRA payment made in 2026. These uses of cash were partially offset by decreases of $15.8 million in deferred consideration payments, $14.5 million in share repurchases and $1.1 million in distributions to noncontrolling interest holders. In addition, the prior-year period included $3.8 million of debt financing costs that did not recur in the current period.
Liquidity
The Company expects to maintain sufficient cash and/or available borrowings to fund operations for the next twelve months and subsequent periods. The Company has historically maintained and expanded its business using cash generated from operating activities, funds available under the Credit Agreement, and other initiatives, such as obtaining additional debt, equity and receivable financing. The Company is party to a senior secured revolving credit facility with a five-year maturity with a syndicate of banks (as amended the “Credit Agreement”). The Credit Agreement provides for revolving commitments of up to $750 million and matures on April 23, 2030. On March 27, 2026, the Company entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement, which expanded its ability to borrow in non-U.S. dollar currencies and increased the annual limits on certain permitted restricted payments, including stock repurchases or redemptions and repurchases of equity interests from Company employees.
As of September 30, 2026, the Company had cash and cash equivalents of $132.2 million and $410.3 million of available borrowing capacity under its Credit Agreement. Outstanding borrowings under the Credit Agreement were $323.7 million, and $16.0 million of issued and undrawn letters of credit. The Company believes cash flow from operations, existing cash balances, and available capacity under the Credit Agreement will be sufficient to meet its anticipated operating, investing, financing, and acquisition-related obligations for the next twelve months.
The Company transfers certain of its trade receivable assets to third parties under certain agreements. Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer.
The trade receivables transferred to the third parties were $158.1 million, and $493.0 million for the three and nine months ended September 30, 2026, respectively, and were $122.6 million and $366.1 million for the three and nine months ended September 30, 2025, respectively. The amount collected and due to the third parties under these arrangements was $32.1 million, and $21.2 million as of September 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 $1.7 million, and $5.2 million for the three and nine months ended September 30, 2026, respectively, and totaled $1.3 million, and $4.1 million for the three and nine months ended September 30, 2025, respectively.
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The Company may purchase shares of outstanding Class A Common Stock under its Repurchase Program. Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices, including through trading plans that may be adopted in accordance with Rule 10b5-1 of the Exchange Act, as amended, in privately negotiated transactions, or through other means, 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 Corporation 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.
During the nine months ended September 30, 2026, 12.1 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an average price of $6.23 per share, for an aggregate value, excluding fees, of $75.3 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 nine months ended September 30, 2026, 2.7 million shares in the amount of $15.4 million were withheld for taxes from the Class A Common Stock vested during the period.
The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $325.7 million as of September 30, 2026.
The Company’s obligations extending beyond twelve months primarily consist of deferred acquisition consideration payments, purchases of redeemable noncontrolling interests, subsidiary awards, capital expenditures, scheduled lease obligation payments, and interest payments on borrowings under the Company’s 5.625% Notes (as defined in Note 7 of the Notes 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 Receivable Agreement (“TRA”), which remains in effect after the final exchange of Class C Common Stock (see Note 13 of the Notes included herein for additional details). The amount and timing of any payments under the TRA are contingent on the Company achieving certain tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize. Based on the current outlook, the Company believes future cash flows from operations, together with the Company’s existing cash balance and availability of funds under the Credit Agreement, will be sufficient to meet the Company’s anticipated cash needs for the next twelve months and subsequent periods. The Company’s ability to make payments will depend on future performance, which is subject to general economic conditions, the competitive environment and other factors, including those described in this Form 10-Q and in the Company’s other SEC filings.
Total Debt
As of September 30, 2026, Debt, net of debt issuance costs, was $1,414.6 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.
As of September 30, 2026, the Company was in compliance with all of the terms and conditions of the Credit Agreement, and management believes, based on its current financial projections, that the Company will be in compliance with its covenants over the next twelve months.
If the Company loses all or a substantial portion of its lines of credit under the Credit Agreement, or if the Company uses the maximum available amount under the agreement, it will be required to seek other sources of liquidity. If the Company were unable to find these sources of liquidity, for example, through an equity offering or access to the capital markets, the Company’s ability to fund its working capital needs and any contingent obligations with respect to acquisitions and redeemable noncontrolling interests would be adversely affected.
Pursuant to the Credit Agreement, the Company must maintain a Total Leverage Ratio (as defined in the Credit Agreement) below an established threshold. For the period ended September 30, 2026, the Company’s calculation of this ratio, and the maximum permitted under the Credit Agreement, respectively, were calculated based on the trailing twelve months as follows:
| September 30, 2026 | |||||
| Total Leverage Ratio | 2.79 | ||||
| Maximum per covenant | 4.25 | ||||
These ratios and measures are not based on GAAP and are not presented as alternative measures of operating performance or liquidity. Some of these ratios and measures include, among other things, pro forma adjustments for acquisitions, one-time charges, and other items, as defined in the Credit Agreement. They are presented here to demonstrate compliance with the
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covenants in the Credit Agreement, as non-compliance with such covenants could have a material adverse effect on the Company.
Material Cash Requirements
To the extent required under a particular client engagement, Stagwell’s Brands enter into contractual commitments with media providers, production companies and other third parties on behalf of their clients at levels that exceed the revenue from the services. In most of these transactions, the Brands act as the clients’ “Agent for a Disclosed Principal” where the Brands’ risk is mitigated by sequential payment liability, i.e., the Brands’ obligation to pay a third party is tolled until 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.
Deferred acquisition consideration on the balance sheet consists of deferred obligations related to contingent purchase price payments and retention payments tied to continued employment of specific personnel. See Note 6 of the Notes included herein for additional information regarding contingent deferred acquisition consideration.
When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the incremental purchase may be required of the Company, the amounts are recorded as redeemable noncontrolling interests in mezzanine equity. See Note 8 of the Notes included herein for additional information regarding noncontrolling interests and redeemable noncontrolling interests.
Certain of the Company’s subsidiaries grant awards to their employees providing them with an equity interest in the respective subsidiary (the “profits interests awards”). The awards generally provide the employee with the right, but not the obligation, to sell their profits interest in the subsidiary to the Company on a performance-based formula and, in certain cases, receive a profit share distribution. The profits interests awards are primarily settled in cash, with certain awards having stock-settlement provisions at the Company’s discretion. The corresponding liability associated with these profits interests awards is included as a component of Accruals and other liabilities and Other liabilities on the Consolidated Balance Sheets. See Note 12 of the Notes included herein for additional information regarding these material commitments.
The Company enters into certain long-term non-cancellable contracts for services such as revenue or profit share arrangements, cloud-based services, or software licensing. See Note 9 of the Notes included herein for additional information regarding these material commitments.
Critical Accounting Estimates
See Note 2 of the Company’s 2025 Form 10-K for information regarding the Company’s critical accounting estimates.
Website Access to Company Reports and Information
Stagwell Inc.’s Internet website address is www.stagwellglobal.com. The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to the Exchange Act, will be made available free of charge through the Company’s website as soon as reasonably practical after those reports are electronically filed with, or furnished to, the SEC. The Company announces material information to the public through a variety of means, including filings with the SEC, press releases, public conference calls, and its website. The Company uses these channels, as well as social media, including X (formerly Twitter) (@stagwell) and (@Mark_Penn), Instagram (@stagwellglobal) and its LinkedIn page (https://www.linkedin.com/company/stagwell/), to communicate with investors and the public about the Company, its products and services, and other matters. Therefore, investors, the media, and others interested in the Company are encouraged to review the information the Company makes public in these locations, as such information could be deemed to be material information. Information on or that can be accessed through the Company’s websites or these social media channels is not part of this Form 10-Q, and the Company’s website addresses and social media channels are included herein as inactive textual references only.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, the Company is exposed to market risk related to interest rates, foreign currencies and impairment risk.
Debt Instruments: As of September 30, 2026, the Company’s debt obligations consisted of amounts outstanding under its Credit Agreement and the 5.625% Notes. The Credit Agreement bears interest at variable rates, based upon SOFR, EURIBOR, SONIA, and CORRA, depending on the currency and duration of the borrowing instrument. The Company’s ability to raise debt financing on acceptable terms, or at all, and to obtain the required bank syndication commitments depends in part on prevailing conditions in the credit and bank lending markets at the time of syndication.
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With regard to variable rate debt, a 10% increase or decrease in interest rates would change our annual interest expense by $2.8 million.
Foreign Exchange: While the Company primarily conducts business in markets that use the U.S. dollar, the Canadian dollar, the Euro and the British Pound, its non-U.S. operations transact business in numerous different currencies. The Company’s results of operations are subject to risk from the translation to the U.S. dollar of the revenue and expenses of its non-U.S. operations. The effects of currency exchange rate fluctuations on the translation of the Company’s results of operations are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 2 of the Company’s Audited Consolidated Financial Statements included in the 2025 Form 10-K. For the most part, revenues and expenses incurred related to the non-U.S. operations are denominated in their functional currency. This reduces the impact that fluctuations in exchange rates will have on profit margins. Translation of intercompany debt, which is not intended to be repaid, is included in cumulative translation adjustments. Translation of current intercompany balances is included in net income (loss). From time to time, the Company may enter into foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.
See the Significant Accounting Policies section in the “Notes to Audited Consolidated Financial Statements” of the 2025 Form 10-K for information related to impairment testing for Goodwill, Right-of-use lease assets and long-lived assets and the risk of potential impairment charges in future periods. See the Critical Accounting Estimates section in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2025 Form 10-K for information related to the risk of potential impairment charges in future periods.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”), who is our principal executive officer, and Chief Financial Officer (“CFO”), who is our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
We conducted an evaluation, under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rules 13a-15(b) and 15d-15(b) of the Exchange Act. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2026.
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of business, we are involved in various legal proceedings. We do not currently expect that these proceedings will have a material adverse effect on our results of operations, cash flows or financial position.
Item 1A. Risk Factors
There have been no material changes to the risk factors in Part I, Item 1A “Risk Factors” of our 2025 Form 10-K. These risks could materially and adversely affect our business, results of operations, financial condition, cash flows, projected results and future prospects. These risks are not exclusive and additional risks which we are subject to include the factors listed under “Forward-Looking Statements” and the risks described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
In the three months ended September 30, 2026, the Company issued 77,717 restricted stock units underlying shares of Class A Common Stock as inducement for employment and issued 254,727 shares of Class A Common Stock as purchase consideration valued at $2.0 million, in connection with an acquisition exempt from registration under Section 4(a)(2) of the Securities Act. The Company received no cash proceeds and no commissions were paid to any person in connection with the issuance of these shares.
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Purchase of Equity Securities by the Issuer and Affiliated Purchasers
On March 4, 2026, the independent and disinterested members of the Board authorized an extension and a $350.0 million increase in the size of our previously approved stock repurchase program (the “Repurchase Program”). Under the Repurchase Program, as amended, we may repurchase up to an aggregate of $725.0 million of shares of our outstanding Class A Common Stock, with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program will expire on March 4, 2029.
Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices (including through trading plans that may be adopted in accordance with Rule 10b5-1 of the Exchange Act), in privately negotiated transactions, or through other means, 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 Corporation 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. The Board will review the Repurchase Program periodically and may authorize adjustments of its terms. Pursuant to its Credit Agreement (as defined and discussed in Note 7 of the Notes to the Unaudited Consolidated Financial Statements included herein) and the indenture governing the 5.625% Notes, the Company is currently limited as to the dollar value of shares it may repurchase in the open market.
The following table details our monthly shares repurchased during the third quarter of 2026 and the approximate dollar value of shares that may yet be purchased pursuant to the Repurchase Program:
| Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Program (2) | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (2) | ||||||||||||||||||||||
7/1/2026 - 7/31/2026 | 26,762 | $ | 6.79 | — | $ | 328,009,852 | ||||||||||||||||||||
8/1/2026 - 8/31/2026 | 143,061 | $ | 8.93 | 110,071 | $ | 327,036,707 | ||||||||||||||||||||
9/1/2026 - 9/30/2026 | 150,000 | $ | 8.65 | 150,000 | $ | 325,736,827 | ||||||||||||||||||||
| Total | 319,823 | $ | 8.62 | 260,071 | $ | 325,736,827 | ||||||||||||||||||||
(1) Includes information for all shares repurchased by the Company, including shares repurchased as part of the Company’s publicly announced Repurchase Program, and 59,752 shares to settle employee tax withholding obligations related to the vesting of restricted stock units.
(2) Only includes information for shares repurchased as part of the Company’s publicly announced Repurchase Program.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Other Information
During the quarterly period covered by this Form 10-Q, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K).
Unregistered Sales of Equity Securities.
On October 23, 2026, the Company entered into an agreement (the “Acquisition Agreement”) to purchase all of the outstanding stock of Publisher First, Inc., doing business as Freestar (“Freestar”), which assists online publishers in monetizing the media on their sites, from the owners of Freestar (the “Sellers”). Pursuant to the Acquisition Agreement, at closing of the transaction on October 23, 2026, the Company issued 3,442,043 shares of Class A Common Stock in payment of $30.0 million of the $50.0 million payable at closing. In addition, pursuant to the Agreement, the Company has contingent obligations to make up to $60 million in payments based on Freestar’s achievement of specified financial performance targets for the one-year period beginning January 1, 2027, the one-year period beginning January 1, 2028, the two-year period beginning January 1, 2027, and the two-year period beginning January 1, 2029. The Company may elect to pay up to a maximum of $40 million of the contingent payments, if any, in Class A Common Stock.
The issuance of Class A Common Stock to the Sellers pursuant to the Agreement is exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. The Company will receive no cash proceeds and no commissions will be paid to any person in connection with the issuance.
Item 6. Exhibits
The exhibits required by this item are listed on the Exhibit Index.
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EXHIBIT INDEX
| Exhibit No. | Description | |||||||
Second Amended and Restated Certificate of Incorporation of Stagwell Inc., as amended (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on May 9, 2023). | ||||||||
| Amended and Restated Bylaws of Stagwell Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed on August 2, 2021). | ||||||||
| First Amendment, dated as of July 28, 2026, to the Second Amended and Restated Employment Agreement by and between the Company and Mark Penn (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on August 3, 2026). | ||||||||
| SARs Agreement, dated as of August 1, 2026, by and between the Company and Mark Penn (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on August 3, 2026). | ||||||||
Certification by Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.* | ||||||||
Certification by Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.* | ||||||||
| Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | ||||||||
| Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | ||||||||
| 101 | Interactive Data File, for the period ended September 30, 2026. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.* | |||||||
| 104 | Cover Page Interactive Data File. The cover page XBRL tags are embedded within the inline XBRL document and are included in Exhibit 101.* | |||||||
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| STAGWELL INC. | |||||
| /s/ Mark Penn | |||||
| Mark Penn | |||||
| Chairman of the Board and Chief Executive Officer (Principal Executive Officer) | |||||
| October 29, 2026 | |||||
/s/ Ryan J. Greene | |||||
Ryan J. Greene | |||||
| Chief Financial Officer (Principal Financial Officer) | |||||
| October 29, 2026 | |||||
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Exhibit 31.1
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
I, Mark Penn, certify that:
1.I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2026 of Stagwell Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: October 29, 2026 | /s/ MARK PENN | |||||||
| By: | Mark Penn | |||||||
| Title: | Chairman and Chief Executive Officer | |||||||
| (Principal Executive Officer) | ||||||||
Exhibit 31.2
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
I, Ryan J. Greene, certify that:
1.I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2026 of Stagwell Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: October 29, 2026 | /s/ RYAN J. GREENE | |||||||
| By: | Ryan J. Greene | |||||||
| Title: | Chief Financial Officer | |||||||
| (Principal Financial Officer) | ||||||||
Exhibit 32.1
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
In connection with the quarterly report of Stagwell Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Penn, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: October 29, 2026 | ||||||||
| /s/ MARK PENN | ||||||||
| By: | Mark Penn | |||||||
| Title: | Chairman and Chief Executive Officer | |||||||
| (Principal Executive Officer) | ||||||||
Exhibit 32.2
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
In connection with the quarterly report of Stagwell Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ryan J. Greene, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: October 29, 2026 | ||||||||
| /s/ RYAN J. GREENE | ||||||||
| By: | Ryan J. Greene | |||||||
| Title: | Chief Financial Officer | |||||||
| (Principal Financial Officer) | ||||||||