Stagwell Inc.
11/06/2025 | Press release | Distributed by Public on 11/06/2025 10:41
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Thefollowing 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, 2025 (the "Form 10-Q"). The following discussion and analysis contain forward-looking statements and should be read in conjunction with the disclosures and information contained and referenced under the captions "Forward-Looking Statements" and "Risk Factors" in this Form 10-Q. The following discussion and analysis also include a discussion of certain non-GAAP financial measures. A description of the non-GAAP financial measures discussed in this section and reconciliations to the comparable GAAP measures are below.
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 2025 means the period beginning January 1, 2025, and ending December 31, 2025).
Executive Summary
Overview
Stagwell conducts its business through its networks, which provide marketing and business solutions that realize the potential of combining data and creativity. Stagwell's strategy is to build, grow, and acquire market-leading businesses that deliver the modern suite of services that marketers need to thrive in a rapidly evolving business environment. We believe Stagwell's differentiation lies in its creative roots and proven entrepreneurial leaders, which together with innovations in technology and data, bring transformational marketing, activation, communications and strategic consulting services to clients. Stagwell leverages its range of services in an integrated manner, offering strategic, creative and innovative solutions that are technologically forward and media-agnostic. The Company's strategy is intended to challenge the industry status quo, realize returns on investment, and drive transformative growth and business performance for its clients and stakeholders.
Stagwell manages its business by monitoring several financial and non-financial performance indicators. The key indicators that we focus on are revenue, operating expenses, capital expenditures, net income (loss), net income (loss) attributable to Stagwell Inc. common shareholders, net income (loss) per share and the non-GAAP financial measures described below. Revenue growth is analyzed by reviewing a mix of measurements, including (i) growth by major geographic location, (ii) growth from existing clients and the addition of new clients, (iii) growth by principal capability, (iv) growth from currency changes, and (v) growth from acquisitions. In addition to monitoring the foregoing financial indicators, the Company assesses and monitors several non-financial performance indicators relating to the business performance of our networks. These indicators may include a network's recent new client win/loss record; the depth and scope of a pipeline of potential new client account activity; the overall quality of the services provided to clients; and the relative strength of the network's next generation team that is in place as part of a potential succession plan to succeed the current senior executive team.
Recent Developments
On October 30, 2025, the Company sold a Brand, which was included in the Marketing Services segment, for $12.6 million in cash resulting in an estimated pre-tax loss of approximately $3 million. The divestiture did not represent a strategic shift that would have a major effect on the Company's consolidated results of operations, and therefore its results of operations were not reported as discontinued operations.
Significant Factors Affecting our Business and Results of Operations
The most significant factors affecting our business and results of operations include national, regional, and local economic conditions, our clients' profitability, mergers and acquisitions of our clients, changes in top management of our clients and our ability to retain and attract key employees. New business wins and client losses occur due to a variety of factors. We believe the two most significant factors are (i) our clients' desire to change marketing communication firms, and (ii) the digital and data-driven products that our portfolio of marketing services firms, which we refer to as "Brands," offer. A client may choose to change marketing communication firms for several reasons, such as a change in leadership where new management wants to retain a Brand that it may have previously worked with. In addition, if the client is merged or acquired by another company, the marketing communication firm is often changed. Clients also change firms as a result of the firm's failure to meet marketing performance targets or other expectations in client service delivery.
Seasonality
Historically, we typically generate the highest quarterly revenue during the fourth quarter of each year. In addition, within our Communications segment, client concentration increases during election years due to the cyclical nature of our advocacy Brands. The highest volumes of retail related consumer marketing increase with the back-to-school season through the end of the holiday season.
Non-GAAP Financial Measures
The Company reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). In addition, the Company has included non-GAAP financial measures and ratios, which management uses to operate the business, which it believes provide useful supplemental information to both management and readers of this report in making period-to-period comparisons in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by GAAP and should not be construed as an alternative to other titled measures determined in accordance with GAAP. The non-GAAP financial measures included are "net revenue," "organic net revenue growth (decline)," "Adjusted EBITDA," and "Adjusted Diluted EPS."
"Net revenue" refers to revenue excluding billable costs. The Company believes billable costs and their fluctuations are not indicative of the operating performance of its underlying business.
"Organic net revenue growth (decline)" reflects the year-over-year change in the Company's reported net revenue attributable to the Company's management of the entities it owns. We calculate organic net revenue growth (decline) by subtracting the net impact of acquisitions (divestitures) and the impact of foreign currency exchange fluctuations from the aggregate year-over-year increase or decrease in the Company's reported net revenue.
The net impact of acquisitions (divestitures) reflects the year-over-year change in the Company's reported net revenue attributable to the impact of all individual entities that were acquired or divested in the current and prior year. Beginning with the quarter ended September 30, 2025, we calculate the impact of an acquisition as follows: (a) for an entity acquired during the current year, we present the entity's current period reported revenue as the impact of the acquisition in the current year; and (b) for an entity acquired in the prior year, we present an amount equal to the entity's current year net revenue for the same period during which we didn't own the entity in the prior year as the impact of the acquisition in the current year. Previously, we calculated the impact of an acquisition as follows: (a) for an entity acquired during the current year, we presented the entity's prior year net revenue for the same period during which we owned it in the current year as impact of the acquisition in the current year; and (b) for an entity acquired in the prior year, we presented the entity's prior year net revenue for the period during which we did not own the entity in the prior year as impact of the acquisition in the current year. We believe that this change in the method of calculating the impact of an acquisition results in a measurement of organic net revenue growth (decline) that better reflects the effect of our management of an acquired entity by including the revenue of the acquired entity in such measurement after we have owned it for 12 months. We calculate impact of a divestiture as follows: (a) for a divestiture in the current year, we present the entity's prior year net revenue for the same period during which we no longer owned it in the current year as impact of the divestiture in the current year; and (b) for a divestiture in the prior year, we present the entity's prior year net revenue for the period during which we owned it in the prior year as impact of the divestiture in the current year. We calculate the impact of any acquisition or divestiture without adjusting for foreign currency exchange fluctuations.
The impact of foreign currency exchange fluctuations reflects the year-over-year change in the Company's reported net revenue attributable to changes in foreign currency exchange rates. We calculate the impact of foreign currency exchange fluctuations for the portion of the reporting period in which we recognized revenue from a foreign entity in both the current year and the prior year. The impact is calculated as the difference between (1) reported prior period net revenue (converted to U.S. dollars at historical foreign currency exchange rates) and (2) prior period net revenue converted to U.S. dollars at current period foreign exchange rates.
"Adjusted EBITDA" is defined as Net income (loss) attributable to Stagwell Inc. common shareholders excluding non-operating income or expense to achieve operating income (loss), plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, impairment and other losses, and other items. Other items primarily includes restructuring, certain system implementation and acquisition-related expenses. Adjusted EBITDA for our reportable segments is reconciled to Operating Income (Loss), as Net Income (Loss) is not a relevant reportable segment financial metric.
"Adjusted Diluted EPS" is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income (loss) attributable to Class C shareholders, excluding the impact of amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items (as defined above), based on total consolidated amounts, then allocated to Stagwell Inc. common shareholders and Class C shareholders, based on their respective income allocation percentage using a normalized effective income tax rate divided by (ii) the diluted weighted average shares outstanding. The diluted weighted average shares outstanding is calculated as (a) the diluted weighted average number of common shares outstanding plus (b) the shares of Class C Common Stock 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.
During the three months ended 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." Periods presented prior to the third quarter of 2025 have 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. In accordance with ASC 350-20, Intangibles-Goodwill and Other: Goodwill, when changes occur in the composition of reporting units, the Company is required to reallocate goodwill to the affected reporting units using a relative fair value approach and perform goodwill impairment testing for impacted reporting units both immediately before and after the reorganization. As part of the reorganization, goodwill was reallocated. The Company performed the required goodwill impairment assessments as of the date of the reorganization. The assessment indicated that the estimated fair value of each impacted reporting unit exceeded its carrying amount both immediately prior to and immediately subsequent to the reallocation of goodwill. Accordingly, no goodwill impairment was recognized. The goodwill balance as of September 30, 2025, for Marketing Services, Digital Transformation, Media & Commerce, Communications and The Marketing Cloud was $529.7 million, $308.7 million, $419.9 million, $252.9 million and $86.1 million, respectively. 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 Servicessegment 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&Sunny and Anomaly, research agencies NRG and Harris Insights, experiential agency TEAM, and social agency Crispin.
•TheDigital Transformationsegment 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 implementation, and Martech integration. 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 & Commercesegment delivers integrated AI-based data solutions that drive audience engagement and business growth through media buying, 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 customer relationship management tools that connect brands with consumers throughout the purchase journey. The segment also offers specialized media platforms and translation services to support targeted communication and market expansion. By combining expertise in media strategy, commerce activation, and audience
analytics, Media & Commerce empowers organizations to maximize their marketing investments and achieve measurably efficient commercial outcomes. Brands in this segment include, but are not limited to, media buying and strategy agency Assembly Global, commerce and CRM agency Gale, and media platform Ink.
•TheCommunicationssegment 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, 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, strategic communications agencies Allison and Consulum, and advocacy services agencies SKDK and Targeted Victory.
•The Marketing Cloud segment delivers a comprehensive suite of technology solutions for in-house marketers, combining SaaS and DaaS offerings. Its key products cover a range of areas. Advanced research tools that enable real-time customer insights through syndicated and Do It Yourself (DIY) generative AI-drafted surveys, AI-driven text analysis, and predictive analytics. Communications technology that aggregates data from millions of sources, including news, social media, print, and TV/radio broadcasts, on a daily basis to monitor, analyze, and respond to market trends. Media studio products that leverage first-party, third-party, and proprietary data to provide actionable audience insights and attribution analytics and advanced media platforms that encompass audience engagement solutions such as AR, quick response (QR) codes, and loyalty programs, all designed to collect consumer data and generate actionable insights. Together, these capabilities empower marketers to understand, engage, and influence their audiences with precision and agility. Brands in this segment include, but are not limited to, QUEST, Unicepta, Smart Assets and ARound.
The Company reports corporate expenses as "Corporate and eliminations" which consists of office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, (iv) certain other professional fees managed by the corporate office, and v) the elimination of certain intercompany services and revenue.
The following discussion focuses on the operating performance of the Company for the three and nine months ended September 30, 2025 and 2024 and the financial condition of the Company as of September 30, 2025.
Results of Operations:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Marketing Services | $ | 297,195 | $ | 267,675 | $ | 839,457 | $ | 782,371 | |||||||||||||||
| Digital Transformation | 103,710 | 88,292 | 292,188 | 248,976 | |||||||||||||||||||
| Media & Commerce | 174,738 | 159,595 | 479,648 | 521,963 | |||||||||||||||||||
| Communications | 144,947 | 184,665 | 420,215 | 473,957 | |||||||||||||||||||
| The Marketing Cloud | 27,187 | 11,443 | 78,785 | 25,823 | |||||||||||||||||||
| Eliminations | (4,779) | (389) | (8,737) | (582) | |||||||||||||||||||
| Total Revenue | $ | 742,998 | $ | 711,281 | $ | 2,101,556 | $ | 2,052,508 | |||||||||||||||
| Operating Income | $ | 60,913 | $ | 41,779 | $ | 102,370 | $ | 89,540 | |||||||||||||||
| Other Income (Expenses): | |||||||||||||||||||||||
| Interest expense, net | $ | (25,196) | $ | (23,781) | $ | (72,007) | $ | (68,279) | |||||||||||||||
| Foreign exchange, net | (366) | 1,312 | (484) | (2,301) | |||||||||||||||||||
|
Other, net
|
(2,032) | 249 | (2,143) | (825) | |||||||||||||||||||
|
Income before income taxes and equity in earnings of non-consolidated affiliates
|
33,319 | 19,559 | 27,736 | 18,135 | |||||||||||||||||||
| Income tax expense | 9,555 | 5,691 | 13,950 | 9,441 | |||||||||||||||||||
| Income before equity in earnings of non-consolidated affiliates | 23,764 | 13,868 | 13,786 | 8,694 | |||||||||||||||||||
|
Equity in income (loss) of non-consolidated affiliates
|
(1) | (4) | 18 | 503 | |||||||||||||||||||
| Net income | 23,763 | 13,864 | 13,804 | 9,197 | |||||||||||||||||||
| Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests | 856 | (10,593) | 2,637 | (10,173) | |||||||||||||||||||
| Net income (loss) attributable to Stagwell Inc. common shareholders | $ | 24,619 | $ | 3,271 | $ | 16,441 | $ | (976) | |||||||||||||||
| Reconciliation to Adjusted EBITDA: | |||||||||||||||||||||||
| Net income (loss) attributable to Stagwell Inc. common shareholders | $ | 24,619 | $ | 3,271 | $ | 16,441 | $ | (976) | |||||||||||||||
|
Non-operating items(1)
|
36,294 | 38,508 | 85,929 | 90,516 | |||||||||||||||||||
| Operating income | 60,913 | 41,779 | 102,370 | 89,540 | |||||||||||||||||||
| Depreciation and amortization | 44,260 | 36,044 | 127,635 | 112,881 | |||||||||||||||||||
| Impairment and other losses | 466 | - | 466 | 1,715 | |||||||||||||||||||
| Stock-based compensation | 12,646 | 16,935 | 44,143 | 38,926 | |||||||||||||||||||
| Deferred acquisition consideration | (13,348) | 560 | (9,911) | 7,950 | |||||||||||||||||||
| Other items, net | 9,645 | 15,851 | 23,316 | 36,576 | |||||||||||||||||||
| Adjusted EBITDA | $ | 114,582 | $ | 111,169 | $ | 288,019 | $ | 287,588 | |||||||||||||||
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(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.
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THREE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2024
Consolidated Results of Operations
The components of operating results for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 were as follows:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 742,998 | $ | 711,281 | $ | 31,717 | 4.5 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 470,937 | 457,018 | 13,919 | 3.0 | % | |||||||||||||||||||||
| Office and general expenses | 166,422 | 176,440 | (10,018) | (5.7) | % | |||||||||||||||||||||
| Depreciation and amortization | 44,260 | 36,044 | 8,216 | 22.8 | % | |||||||||||||||||||||
| Impairment and other losses | 466 | - | 466 | 100.0 | % | |||||||||||||||||||||
| $ | 682,085 | $ | 669,502 | $ | 12,583 | 1.9 | % | |||||||||||||||||||
| Operating Income | $ | 60,913 | $ | 41,779 | $ | 19,134 | 45.8 | % | ||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 614,522 | $ | 580,193 | $ | 34,329 | 5.9 | % | |||||||||||||||
| Billable costs | 128,476 | 131,088 | (2,612) | (2.0) | % | ||||||||||||||||||
| Revenue | 742,998 | 711,281 | 31,717 | 4.5 | % | ||||||||||||||||||
| Billable costs | 128,476 | 131,088 | (2,612) | (2.0) | % | ||||||||||||||||||
| Staff costs | 387,210 | 361,979 | 25,231 | 7.0 | % | ||||||||||||||||||
| Administrative costs | 71,792 | 69,556 | 2,236 | 3.2 | % | ||||||||||||||||||
| Unbillable and other costs, net | 40,938 | 37,489 | 3,449 | 9.2 | % | ||||||||||||||||||
| Adjusted EBITDA | 114,582 | 111,169 | 3,413 | 3.1 | % | ||||||||||||||||||
| Stock-based compensation | 12,646 | 16,935 | (4,289) | (25.3) | % | ||||||||||||||||||
| Depreciation and amortization | 44,260 | 36,044 | 8,216 | 22.8 | % | ||||||||||||||||||
| Deferred acquisition consideration | (13,348) | 560 | (13,908) | NM | |||||||||||||||||||
| Impairment and other losses | 466 | - | 466 | 100.0 | % | ||||||||||||||||||
| Other items, net | 9,645 | 15,851 | (6,206) | (39.2) | % | ||||||||||||||||||
|
Operating Income (1)
|
$ | 60,913 | $ | 41,779 | $ | 19,134 | 45.8 | % | |||||||||||||||
|
(1) See the Results of Operations section above for a reconciliation of Operating Income to Net income (loss) attributable to Stagwell Inc. common shareholders.
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Revenue
Revenue for the three months ended September 30, 2025 was $743.0 million, compared to $711.3 million for the three months ended September 30, 2024, an increase of $31.7 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Services | $ | 225,411 | $ | 989 | $ | 4,970 | $ | 14,724 | $ | 20,683 | $ | 246,094 | 6.5 | % | 9.2 | % | |||||||||||||||||||||||||||||||
| Digital Transformation | 85,270 | (99) | 4,356 | 5,849 | 10,106 | 95,376 | 6.9 | % | 11.9 | % | |||||||||||||||||||||||||||||||||||||
| Media & Commerce | 145,558 | 1,109 | 2,782 | 4,708 | 8,599 | 154,157 | 3.2 | % | 5.9 | % | |||||||||||||||||||||||||||||||||||||
| Communications | 112,563 | 214 | 7,291 | (23,576) | (16,071) | 96,492 | (20.9) | % | (14.3) | % | |||||||||||||||||||||||||||||||||||||
| The Marketing Cloud | 11,443 | 416 | 14,567 | 756 | 15,739 | 27,182 | 6.6 | % | 137.5 | % | |||||||||||||||||||||||||||||||||||||
| Eliminations | (52) | - | - | (4,727) | (4,727) | (4,779) | NM | NM | |||||||||||||||||||||||||||||||||||||||
| $ | 580,193 | $ | 2,629 | $ | 33,966 | $ | (2,266) | $ | 34,329 | $ | 614,522 | (0.4) | % | 5.9 | % | ||||||||||||||||||||||||||||||||
| Component % change | 0.5% | 5.9% | (0.4)% | 5.9% | |||||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2025 organic net revenue decreased $2.3 million, or 0.4%. The decrease was primarily attributable to lower advocacy services following the 2024 election season and a decrease in client spending in the consumer products sectors, partially offset by new wins and increased spending by clients in the retail sector. The increase in net acquisitions (divestitures) was impacted by the acquisitions of JetFuel Studio LLC and Powered by JetFuel LLC ("Jetfuel"), Create Group Holding Limited ("Create"), ADK Global ("ADK"), Consulum (Cayman) Limited ("Consulum"), L.D.R.S. Group Ltd. ("Leaders"), and UNICEPTA Holding GmbH ("Unicepta").
The geographic mix in net revenues for the three months ended September 30, 2025 and 2024 is as follows:
| Three Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| United States | $ | 474,343 | $ | 469,092 | |||||||
| United Kingdom | 40,488 | 39,854 | |||||||||
| Other | 99,691 | 71,247 | |||||||||
| Total | $ | 614,522 | $ | 580,193 | |||||||
Operating Income
Operating Income for the three months ended September 30, 2025 was $60.9 million, compared to $41.8 million for the three months ended September 30, 2024, representing an increase of $19.1 million. The change in Operating Income was primarily attributable to an increase in Net revenue of $34.3 million and a decrease in Office and general expenses, partially offset by an increase in Cost of services excluding Billable costs, and Depreciation and amortization.
Cost of services increased by $13.9 million. Excluding the decline in Billable costs of $2.6 million, Cost of services increased $16.5 million, primarily attributable to higher staff costs due to the inclusion of costs from acquired entities.
The decrease in Office and general expenses of $10.0 million was primarily attributable to a decrease in deferred acquisition consideration expense, partially offset by an increase in staff costs due to the inclusion of costs from acquired entities and increase in technology related expenses.
Stock-based compensation decreased by $4.3 million, primarily due to an increase in the fair value of profit interest awards in the third quarter of 2024, partially offset by an increase in the fair value and number of awards expensed compared to last year.
Deferred acquisition consideration decreased by $13.9 million, primarily attributable to a reduction in the fair value of the deferred acquisition consideration liability associated with certain Brands.
Depreciation and amortization increased by $8.2 million, primarily attributable to the Company's acquisition of businesses.
Interest Expense, Net
Interest expense, net for the three months ended September 30, 2025 was $25.2 million, compared to $23.8 million for the three months ended September 30, 2024, an increase of $1.4 million, primarily attributable to higher levels of debt outstanding under the Credit Agreement (as defined and discussed in Note 8 of the Notes to the Unaudited Consolidated Financial Statements included herein), partially offset by a lower average interest rate.
Foreign Exchange, Net
The foreign exchange loss for the three months ended September 30, 2025 was $0.4 million, compared to a gain of $1.3 million for the three months ended September 30, 2024, primarily attributable to the movement in the British Pound and Euro.
Income Tax Expense
The Company had an 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%) compared to income tax expense of $5.7 million (on pre-tax income of $19.6 million resulting in an effective tax rate of 29.1%) for the three months ended September 30, 2024.
The difference in the effective tax rate of 28.7% in the three months ended September 30, 2025, as compared to 29.1% in the three months ended September 30, 2024, was primarily due to a reduction in interest related to uncertain tax positions and a reduction in shortfall of deductions for share based compensation expense vested during the period, offset by an increase in current losses subject to valuation allowance.
Noncontrolling and Redeemable Noncontrolling Interests
The effect of noncontrolling and redeemable noncontrolling interests for the three months ended September 30, 2025 was loss of $0.9 million, compared to income of $10.6 million for the three months ended September 30, 2024. The amounts are 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 (as defined and discussed in Note 9 of the Notes included herein) during the second quarter of 2025.
Net Income (Loss) 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, 2025 was $24.6 million, compared to net income of $3.3 million for the three months ended September 30, 2024.
Earnings Per Share
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 and adjusted net income | $ | 24,619 | $ | 38,147 | $ | 62,766 | ||||||||||||||
|
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 | 11,928 | |||||||||||||||||||
| $ | 50,399 | |||||||||||||||||||
|
Adjusted tax expense
|
(12,252) | |||||||||||||||||||
| $ | 38,147 | |||||||||||||||||||
(1)Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
Diluted EPS and Adjusted Diluted EPS for the three months ended September 30, 2024 were as follows:
| GAAP |
Adjustments (1)
|
Non-GAAP | ||||||||||||||||||
| (amounts in thousands, except per share amounts) | ||||||||||||||||||||
| Net income attributable to Stagwell Inc. common shareholders | $ | 3,271 | $ | 19,762 | $ | 23,033 | ||||||||||||||
| Net income attributable to Class C shareholders | - | 36,060 | 36,060 | |||||||||||||||||
| Net income attributable to Stagwell Inc. and Class C and adjusted net income | $ | 3,271 | $ | 55,822 | $ | 59,093 | ||||||||||||||
|
Diluted - Weighted average number of common shares outstanding
|
112,190 | - | 112,190 | |||||||||||||||||
| Weighted average number of common Class C shares outstanding | - | 151,649 | 151,649 | |||||||||||||||||
|
Diluted - Weighted average number of shares outstanding
|
112,190 | 151,649 | 263,839 | |||||||||||||||||
|
Diluted EPS and Adjusted Diluted EPS (1)
|
$ | 0.03 | $ | 0.22 | ||||||||||||||||
| Adjustments to Net income | ||||||||||||||||||||
|
Amortization
|
$ | 28,659 | ||||||||||||||||||
| Stock-based compensation | 16,935 | |||||||||||||||||||
| Deferred acquisition consideration | 560 | |||||||||||||||||||
| Other items, net | 15,851 | |||||||||||||||||||
| 62,005 | ||||||||||||||||||||
|
Adjusted tax expense
|
(15,615) | |||||||||||||||||||
| 46,390 | ||||||||||||||||||||
| Net income attributable to Class C shareholders | 9,432 | |||||||||||||||||||
| $ | 55,822 | |||||||||||||||||||
| Allocation of adjustments to Net income | ||||||||||||||||||||
|
Net income attributable to Stagwell Inc. common shareholders - add-backs
|
$ | 19,762 | ||||||||||||||||||
|
Net income attributable to Class C shareholders - add-backs
|
26,628 | |||||||||||||||||||
| Net income attributable to Class C shareholders | 9,432 | |||||||||||||||||||
| 36,060 | ||||||||||||||||||||
| $ | 55,822 | |||||||||||||||||||
(1)Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
Adjusted EBITDA
Adjusted EBITDA for the three months ended September 30, 2025 was $114.6 million, compared to $111.2 million for the three months ended September 30, 2024, representing an increase of $3.4 million, primarily driven by an increase in Net revenue, partially offset by an increase in Staff costs due to the inclusion of costs from acquired entities, as discussed above.
Marketing Services
The components of operating results for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 were as follows:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 297,195 | $ | 267,675 | $ | 29,520 | 11.0 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 191,902 | 179,668 | 12,234 | 6.8 | % | |||||||||||||||||||||
| Office and general expenses | 54,786 | 53,447 | 1,339 | 2.5 | % | |||||||||||||||||||||
| Depreciation and amortization | 13,012 | 13,572 | (560) | (4.1) | % | |||||||||||||||||||||
| $ | 259,700 | $ | 246,687 | $ | 13,013 | 5.3 | % | |||||||||||||||||||
| Operating Income | $ | 37,495 | $ | 20,988 | $ | 16,507 | 78.6 | % | ||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 246,094 | $ | 225,411 | $ | 20,683 | 9.2 | % | |||||||||||||||
| Billable costs | 51,101 | 42,264 | 8,837 | 20.9 | % | ||||||||||||||||||
| Revenue | 297,195 | 267,675 | 29,520 | 11.0 | % | ||||||||||||||||||
| Billable costs | 51,101 | 42,264 | 8,837 | 20.9 | % | ||||||||||||||||||
| Staff costs | 144,354 | 139,694 | 4,660 | 3.3 | % | ||||||||||||||||||
| Administrative costs | 27,919 | 26,825 | 1,094 | 4.1 | % | ||||||||||||||||||
| Unbillable and other costs, net | 17,227 | 15,435 | 1,792 | 11.6 | % | ||||||||||||||||||
| Adjusted EBITDA | 56,594 | 43,457 | 13,137 | 30.2 | % | ||||||||||||||||||
| Stock-based compensation | 4,346 | 6,001 | (1,655) | (27.6) | % | ||||||||||||||||||
| Depreciation and amortization | 13,012 | 13,572 | (560) | (4.1) | % | ||||||||||||||||||
| Deferred acquisition consideration | (500) | (151) | (349) | 231.1 | % | ||||||||||||||||||
| Other items, net | 2,241 | 3,047 | (806) | (26.5) | % | ||||||||||||||||||
| Operating Income | $ | 37,495 | $ | 20,988 | $ | 16,507 | 78.6 | % | |||||||||||||||
Revenue
Revenue for the three months ended September 30, 2025 was $297.2 million, compared to $267.7 million for the three months ended September 30, 2024, an increase of $29.5 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Services | $ | 225,411 | $ | 989 | $ | 4,970 | $ | 14,724 | $ | 20,683 | $ | 246,094 | 6.5% | 9.2% | |||||||||||||||||||||||||||||||||
| Component % change | 0.4 | % | 2.2 | % | 6.5 | % | 9.2 | % | |||||||||||||||||||||||||||||||||||||||
The increase in organic net revenue was primarily attributable to new client wins and increased spending in the retail and financials sectors, partially offset by lower spending due to budget cuts by large clients in the consumer products sectors. The increase in net acquisitions (divestitures) was primarily driven by the acquisition of Jetfuel.
Operating Income
Operating Income for the three months ended September 30, 2025 was $37.5 million, compared to $21.0 million for the three months ended September 30, 2024, representing an increase of $16.5 million. The increase in Operating Income was primarily attributable to an increase in Net revenue of $20.7 million, partially offset by an increase in Cost of services excluding Billable costs. Cost of services increased $12.2 million. Excluding the decline in Billable costs of $8.8 million, Cost of services increased $3.4 million, primarily attributable to higher staff costs.
Adjusted EBITDA increased by $13.1 million, primarily driven by an increase in Net revenue, as discussed above.
Digital Transformation
The components of operating results for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 were as follows:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 103,710 | $ | 88,292 | $ | 15,418 | 17.5 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 62,601 | 51,862 | 10,739 | 20.7 | % | |||||||||||||||||||||
| Office and general expenses | 18,464 | 17,339 | 1,125 | 6.5 | % | |||||||||||||||||||||
| Depreciation and amortization | 5,932 | 5,536 | 396 | 7.2 | % | |||||||||||||||||||||
| $ | 86,997 | $ | 74,737 | $ | 12,260 | 16.4 | % | |||||||||||||||||||
| Operating Income | $ | 16,713 | $ | 13,555 | $ | 3,158 | 23.3 | % | ||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 95,376 | $ | 85,270 | $ | 10,106 | 11.9 | % | |||||||||||||||
| Billable costs | 8,334 | 3,022 | 5,312 | 175.8 | % | ||||||||||||||||||
| Revenue | 103,710 | 88,292 | 15,418 | 17.5 | % | ||||||||||||||||||
| Billable costs | 8,334 | 3,022 | 5,312 | 175.8 | % | ||||||||||||||||||
| Staff costs | 62,123 | 56,384 | 5,739 | 10.2 | % | ||||||||||||||||||
| Administrative costs | 6,981 | 5,036 | 1,945 | 38.6 | % | ||||||||||||||||||
| Unbillable and other costs, net | 387 | 368 | 19 | 5.2 | % | ||||||||||||||||||
| Adjusted EBITDA | 25,885 | 23,482 | 2,403 | 10.2 | % | ||||||||||||||||||
| Stock-based compensation | 934 | 2,617 | (1,683) | (64.3) | % | ||||||||||||||||||
| Depreciation and amortization | 5,932 | 5,536 | 396 | 7.2 | % | ||||||||||||||||||
| Deferred acquisition consideration | 1,874 | 1,265 | 609 | 48.1 | % | ||||||||||||||||||
| Other items, net | 432 | 509 | (77) | (15.1) | % | ||||||||||||||||||
| Operating Income | $ | 16,713 | $ | 13,555 | $ | 3,158 | 23.3 | % | |||||||||||||||
Revenue
Revenue for the three months ended September 30, 2025 was $103.7 million, compared to $88.3 million for the three months ended September 30, 2024, an increase of $15.4 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2025, compared to the three months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Digital Transformation | $ | 85,270 | $ | (99) | $ | 4,356 | $ | 5,849 | $ | 10,106 | $ | 95,376 | 6.9% | 11.9% | |||||||||||||||||||||||||||||||||
| Component % change | (0.1) | % | 5.1 | % | 6.9 | % | 11.9 | % | |||||||||||||||||||||||||||||||||||||||
The increase in organic net revenue was primarily attributable to new client wins and increased spending in the communications and consumer products sectors. The increase in net acquisitions (divestitures) was primarily driven by the acquisition of Create.
Operating Income
Operating Income for the three months ended September 30, 2025 was $16.7 million, compared to $13.6 million for the three months ended September 30, 2024, representing an increase of $3.2 million. The increase in Operating Income was primarily attributable to an increase in Net revenue of $10.1 million, partially offset by an increase in Cost of services excluding Billable costs. Cost of services increased $10.7 million. Excluding the decline in Billable costs of $5.3 million, Cost of services increased $5.4 million, primarily attributable to higher staff costs and the inclusion of costs from acquired entities.
Media & Commerce
The components of operating results for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 were as follows:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 174,738 | $ | 159,595 | $ | 15,143 | 9.5 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 104,600 | 95,950 | 8,650 | 9.0 | % | |||||||||||||||||||||
| Office and general expenses | 51,706 | 45,237 | 6,469 | 14.3 | % | |||||||||||||||||||||
| Depreciation and amortization | 7,332 | 6,509 | 823 | 12.6 | % | |||||||||||||||||||||
| $ | 163,638 | $ | 147,696 | $ | 15,942 | 10.8 | % | |||||||||||||||||||
| Operating Income | $ | 11,100 | $ | 11,899 | $ | (799) | (6.7) | % | ||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 154,157 | $ | 145,558 | $ | 8,599 | 5.9 | % | |||||||||||||||
| Billable costs | 20,581 | 14,037 | 6,544 | 46.6 | % | ||||||||||||||||||
| Revenue | 174,738 | 159,595 | 15,143 | 9.5 | % | ||||||||||||||||||
| Billable costs | 20,581 | 14,037 | 6,544 | 46.6 | % | ||||||||||||||||||
| Staff costs | 91,365 | 88,390 | 2,975 | 3.4 | % | ||||||||||||||||||
| Administrative costs | 22,966 | 20,171 | 2,795 | 13.9 | % | ||||||||||||||||||
| Unbillable and other costs, net | 15,196 | 16,357 | (1,161) | (7.1) | % | ||||||||||||||||||
| Adjusted EBITDA | 24,630 | 20,640 | 3,990 | 19.3 | % | ||||||||||||||||||
| Stock-based compensation | 1,005 | 1,359 | (354) | (26.0) | % | ||||||||||||||||||
| Depreciation and amortization | 7,332 | 6,509 | 823 | 12.6 | % | ||||||||||||||||||
| Deferred acquisition consideration | 1,413 | (6,948) | 8,361 | NM | |||||||||||||||||||
| Other items, net | 3,780 | 7,821 | (4,041) | (51.7) | % | ||||||||||||||||||
| Operating Income | $ | 11,100 | $ | 11,899 | $ | (799) | (6.7) | % | |||||||||||||||
Revenue
Revenue for the three months ended September 30, 2025 was $174.7 million, compared to $159.6 million for the three months ended September 30, 2024, an increase of $15.1 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Media & Commerce | $ | 145,558 | $ | 1,109 | $ | 2,782 | $ | 4,708 | $ | 8,599 | $ | 154,157 | 3.2% | 5.9% | |||||||||||||||||||||||||||||||||
| Component % change | 0.8 | % | 1.9 | % | 3.2 | % | 5.9 | % | |||||||||||||||||||||||||||||||||||||||
The increase in organic net revenue was primarily attributable to new client wins in the financials and technology sectors, partially offset by lower spending due to budget cuts by large clients in the food and beverage and retail sectors. The increase in net acquisitions (divestitures) was primarily driven by the acquisition of ADK.
Operating Income
Operating Income for the three months ended September 30, 2025 was $11.1 million, compared to $11.9 million for the three months ended September 30, 2024, representing a decrease of $0.8 million. The change in Operating Income was primarily attributable to an increase in Net revenue of $8.6 million more than offset by an increase in Cost of services excluding Billable costs and Office and general expenses. Cost of services increased $8.7 million. Excluding the decline in Billable costs of $6.5 million, Cost of services increased $2.2 million, primarily attributable to higher staff costs due to the inclusion of costs from acquired entities.
The increase in Office and general expenses of $6.5 million was primarily attributable to an increase in Deferred acquisition consideration.
Deferred acquisition consideration increased $8.4 million, primarily as a result of reduction in expenses in the third quarter of 2024 due to decrease in the fair value of a certain Brand.
Adjusted EBITDA increased $4.0 million, primarily due to an increase in Net revenue partially offset by an increase in expenses, as discussed above.
Communications
The components of operating results for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 were as follows:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 144,947 | $ | 184,665 | $ | (39,718) | (21.5) | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 99,977 | 124,354 | (24,377) | (19.6) | % | |||||||||||||||||||||
| Office and general expenses | 19,391 | 29,804 | (10,413) | (34.9) | % | |||||||||||||||||||||
| Depreciation and amortization | 6,363 | 4,473 | 1,890 | 42.3 | % | |||||||||||||||||||||
| Impairment and other losses | 222 | - | 222 | 100.0 | % | |||||||||||||||||||||
| $ | 125,953 | $ | 158,631 | $ | (32,678) | (20.6) | % | |||||||||||||||||||
|
Operating Income
|
$ | 18,994 | $ | 26,034 | $ | (7,040) | (27.0) | % | ||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 96,492 | $ | 112,563 | $ | (16,071) | (14.3) | % | |||||||||||||||
| Billable costs | 48,455 | 72,102 | (23,647) | (32.8) | % | ||||||||||||||||||
| Revenue | 144,947 | 184,665 | (39,718) | (21.5) | % | ||||||||||||||||||
| Billable costs | 48,455 | 72,102 | (23,647) | (32.8) | % | ||||||||||||||||||
| Staff costs | 56,650 | 55,518 | 1,132 | 2.0 | % | ||||||||||||||||||
| Administrative costs | 12,516 | 11,668 | 848 | 7.3 | % | ||||||||||||||||||
| Unbillable and other costs, net | 2,245 | 2,848 | (603) | (21.2) | % | ||||||||||||||||||
| Adjusted EBITDA | 25,081 | 42,529 | (17,448) | (41.0) | % | ||||||||||||||||||
| Stock-based compensation | 1,594 | 3,394 | (1,800) | (53.0) | % | ||||||||||||||||||
| Depreciation and amortization | 6,363 | 4,473 | 1,890 | 42.3 | % | ||||||||||||||||||
| Deferred acquisition consideration | (3,716) | 6,778 | (10,494) | (154.8) | % | ||||||||||||||||||
| Impairment and other losses | 222 | - | 222 | 100.0 | % | ||||||||||||||||||
| Other items, net | 1,624 | 1,850 | (226) | (12.2) | % | ||||||||||||||||||
|
Operating Income
|
$ | 18,994 | $ | 26,034 | $ | (7,040) | (27.0) | % | |||||||||||||||
Revenue
Revenue for the three months ended September 30, 2025 was $144.9 million, compared to $184.7 million for the three months ended September 30, 2024, a decrease of $39.7 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2025, compared to the three months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Communications | $ | 112,563 | $ | 214 | $ | 7,291 | $ | (23,576) | $ | (16,071) | $ | 96,492 | (20.9) | % | (14.3) | % | |||||||||||||||||||||||||||||||
| Component % change | 0.2 | % | 6.5 | % | (20.9) | % | (14.3) | % | |||||||||||||||||||||||||||||||||||||||
The decrease in organic net revenue was primarily attributable to decreased spending, primarily due to lower advocacy services as compared to higher spending in 2024 associated with the 2024 elections, and decreased spending in the consumer products sector due to client losses and budget cuts. The increase in net acquisitions (divestitures) was primarily driven by the acquisition of Consulum.
Operating Income
Operating Income for the three months ended September 30, 2025 was $19.0 million, compared to $26.0 million for the three months ended September 30, 2024, representing a decrease of $7.0 million. The decrease in Operating Income was primarily attributable to a decrease in Net Revenue of $16.1 million partially offset by a decrease in Office and general expenses. Cost of services decreased by $24.4 million. Excluding the decline in Billable costs of $23.6 million, Cost of services decreased by $0.8 million.
The decrease in Office and general expenses of $10.4 million was primarily attributable to a decrease in Deferred acquisition consideration.
Deferred acquisition consideration decreased $10.5 million, primarily as a result of a decrease in the fair value of a certain Brand.
Adjusted EBITDA decreased $17.4 million, primarily due to a decrease in Net revenue, as discussed above.
The Marketing Cloud
The components of operating results for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 were as follows:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 27,187 | $ | 11,443 | $ | 15,744 | 137.6 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 14,136 | 5,554 | 8,582 | 154.5 | % | |||||||||||||||||||||
| Office and general expenses | 3,155 | 9,341 | (6,186) | (66.2) | % | |||||||||||||||||||||
| Depreciation and amortization | 6,455 | 2,679 | 3,776 | 140.9 | % | |||||||||||||||||||||
| Impairment and other losses | 244 | - | 244 | 100.0 | % | |||||||||||||||||||||
| $ | 23,990 | $ | 17,574 | $ | 6,416 | 36.5 | % | |||||||||||||||||||
| Operating Income (Loss) | $ | 3,197 | $ | (6,131) | $ | 9,328 | (152.1) | % | ||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 27,182 | $ | 11,443 | $ | 15,739 | 137.5 | % | |||||||||||||||
| Billable costs | 5 | - | 5 | 100.0 | % | ||||||||||||||||||
| Revenue | 27,187 | 11,443 | 15,744 | 137.6 | % | ||||||||||||||||||
| Billable costs | 5 | - | 5 | 100.0 | % | ||||||||||||||||||
| Staff costs | 18,763 | 8,887 | 9,876 | 111.1 | % | ||||||||||||||||||
| Administrative costs | 3,663 | 3,505 | 158 | 4.5 | % | ||||||||||||||||||
| Unbillable and other costs, net | 5,883 | 2,481 | 3,402 | 137.1 | % | ||||||||||||||||||
| Adjusted EBITDA | (1,127) | (3,430) | 2,303 | (67.1) | % | ||||||||||||||||||
| Stock-based compensation | 200 | 363 | (163) | (44.9) | % | ||||||||||||||||||
| Depreciation and amortization | 6,455 | 2,679 | 3,776 | 140.9 | % | ||||||||||||||||||
| Deferred acquisition consideration | (12,419) | (384) | (12,035) | NM | |||||||||||||||||||
| Impairment and other losses | 244 | - | 244 | 100.0 | % | ||||||||||||||||||
| Other items, net | 1,196 | 43 | 1,153 | NM | |||||||||||||||||||
| Operating Income (Loss) | $ | 3,197 | $ | (6,131) | $ | 9,328 | (152.1) | % | |||||||||||||||
Revenue
Revenue for the three months ended September 30, 2025 was $27.2 million, compared to $11.4 million for the three months ended September 30, 2024, an increase of $15.7 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Three Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| The Marketing Cloud | $ | 11,443 | $ | 416 | $ | 14,567 | $ | 756 | $ | 15,739 | $ | 27,182 | 6.6 | % | NM | ||||||||||||||||||||||||||||||||
| Component % change | 3.6 | % | NM | 6.6 | % | NM | |||||||||||||||||||||||||||||||||||||||||
The increase in net acquisitions (divestitures) was primarily driven by the acquisitions of Leaders and Unicepta.
Operating Income (Loss)
Operating Income for the three months ended September 30, 2025 was $3.2 million, compared to a loss of $6.1 million for the three months ended September 30, 2024. The increase in Operating Income was primarily attributable to an increase in Net revenue and a decrease in Office and general expenses, partially offset by an increase in Costs of services.
The increase in Cost of services of $8.6 million was primarily attributable to higher staff costs and unbillable costs primarily due to the inclusion of costs from acquired entities.
The decrease in Office and general expenses of $6.2 million was primarily attributable to a decrease in Deferred acquisition consideration, partially offset by higher staff costs and the inclusion of costs from acquired entities.
Deferred acquisition consideration decreased $12.0 million, primarily as a result of a decrease in the fair value of a certain Brand.
Corporate
The components of operating results for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 were as follows:
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Staff costs | $ | 16,362 | $ | 13,160 | $ | 3,202 | 24.3 | % | |||||||||||||||
| Administrative costs | 47 | 2,351 | (2,304) | (98.0) | % | ||||||||||||||||||
| Adjusted EBITDA | (16,409) | (15,511) | (898) | 5.8 | % | ||||||||||||||||||
| Stock-based compensation | 4,567 | 3,201 | 1,366 | 42.7 | % | ||||||||||||||||||
| Depreciation and amortization | 5,166 | 3,275 | 1,891 | 57.7 | % | ||||||||||||||||||
| Other items, net | 372 | 2,581 | (2,209) | (85.6) | % | ||||||||||||||||||
| Operating Loss | $ | (26,514) | $ | (24,568) | $ | (1,946) | 7.9 | % | |||||||||||||||
Operating Loss for the three months ended September 30, 2025 was $26.5 million, compared to $24.6 million for the three months ended September 30, 2024, representing an increase of $1.9 million. The increase in Operating Loss was primarily attributable to higher Staff costs, Stock-based compensation, and Depreciation and amortization, partially offset by a decrease in Administrative costs.
Staff costs increased by $3.2 million, primarily due to higher insurance claims.
Administrative costs decreased $2.3 million, primarily due to lower professional and legal fees due to a decrease in the number of acquisitions.
NINE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2024
Consolidated Results of Operations
The components of operating results for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 2,101,556 | $ | 2,052,508 | $ | 49,048 | 2.4 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 1,342,240 | 1,340,456 | 1,784 | 0.1 | % | |||||||||||||||||||||
| Office and general expenses | 528,845 | 507,916 | 20,929 | 4.1 | % | |||||||||||||||||||||
| Depreciation and amortization | 127,635 | 112,881 | 14,754 | 13.1 | % | |||||||||||||||||||||
| Impairment and other losses | 466 | 1,715 | (1,249) | (72.8) | % | |||||||||||||||||||||
| $ | 1,999,186 | $ | 1,962,968 | $ | 36,218 | 1.8 | % | |||||||||||||||||||
| Operating Income | $ | 102,370 | $ | 89,540 | $ | 12,830 | 14.3 | % | ||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 1,776,838 | $ | 1,667,039 | $ | 109,799 | 6.6 | % | |||||||||||||||
| Billable costs | 324,718 | 385,469 | (60,751) | (15.8) | % | ||||||||||||||||||
| Revenue | 2,101,556 | 2,052,508 | 49,048 | 2.4 | % | ||||||||||||||||||
| Billable costs | 324,718 | 385,469 | (60,751) | (15.8) | % | ||||||||||||||||||
| Staff costs | 1,136,742 | 1,059,485 | 77,257 | 7.3 | % | ||||||||||||||||||
| Administrative costs | 222,775 | 206,253 | 16,522 | 8.0 | % | ||||||||||||||||||
| Unbillable and other costs, net | 129,302 | 113,713 | 15,589 | 13.7 | % | ||||||||||||||||||
| Adjusted EBITDA | 288,019 | 287,588 | 431 | 0.1 | % | ||||||||||||||||||
| Stock-based compensation | 44,143 | 38,926 | 5,217 | 13.4 | % | ||||||||||||||||||
| Depreciation and amortization | 127,635 | 112,881 | 14,754 | 13.1 | % | ||||||||||||||||||
| Deferred acquisition consideration | (9,911) | 7,950 | (17,861) | (224.7) | % | ||||||||||||||||||
| Impairment and other losses | 466 | 1,715 | (1,249) | (72.8) | % | ||||||||||||||||||
| Other items, net | 23,316 | 36,576 | (13,260) | (36.3) | % | ||||||||||||||||||
|
Operating Income (1)
|
$ | 102,370 | $ | 89,540 | $ | 12,830 | 14.3 | % | |||||||||||||||
|
(1) 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 nine months ended September 30, 2025 was $2,101.6 million, compared to $2,052.5 million for the nine months ended September 30, 2024, an increase of $49.0 million.
Net Revenue
The components of the fluctuations in net revenue for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Services | $ | 658,175 | $ | 1,473 | $ | 2,916 | $ | 52,303 | $ | 56,692 | $ | 714,867 | 7.9 | % | 8.6 | % | |||||||||||||||||||||||||||||||
| Digital Transformation | 239,613 | (275) | 8,196 | 27,444 | 35,365 | 274,978 | 11.5 | % | 14.8 | % | |||||||||||||||||||||||||||||||||||||
| Media & Commerce | 439,783 | 1,651 | 2,675 | (12,254) | (7,928) | 431,855 | (2.8) | % | (1.8) | % | |||||||||||||||||||||||||||||||||||||
| Communications | 303,890 | 162 | 29,002 | (47,948) | (18,784) | 285,106 | (15.8) | % | (6.2) | % | |||||||||||||||||||||||||||||||||||||
| The Marketing Cloud | 25,823 | 455 | 53,523 | (1,032) | 52,946 | 78,769 | (4.0) | % | NM | ||||||||||||||||||||||||||||||||||||||
| Eliminations | (245) | - | - | (8,492) | (8,492) | (8,737) | NM | NM | |||||||||||||||||||||||||||||||||||||||
| $ | 1,667,039 | $ | 3,466 | $ | 96,312 | $ | 10,021 | $ | 109,799 | $ | 1,776,838 | 0.6 | % | 6.6 | % | ||||||||||||||||||||||||||||||||
| Component % change | 0.2 | % | 5.8 | % | 0.6 | % | 6.6 | % | |||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2025, organic net revenue increased by $10.0 million, or 0.6%. The increase was primarily attributable to new wins and increased spending by clients in the technology, retail, automotive and financials sectors. This increase was partially offset by losses and a decrease in client spending due to budget cuts in the consumer products sector and lower advocacy services as compared to higher spending in 2024 associated with the 2024 elections. The increase in net acquisitions (divestitures) was impacted by the acquisitions of Jetfuel, Create, ADK, Consulum, Leaders, and Unicepta.
The geographic mix in Net revenue for the nine months ended September 30, 2025 and 2024 was as follows:
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| United States | $ | 1,379,268 | $ | 1,350,022 | |||||||
| United Kingdom | 113,346 | 116,040 | |||||||||
| Other | 284,224 | 200,977 | |||||||||
| Total | $ | 1,776,838 | $ | 1,667,039 | |||||||
Operating Income
Operating Income for the nine months ended September 30, 2025, was $102.4 million, compared to $89.5 million for the nine months ended September 30, 2024, representing an increase of $12.8 million. The increase in Operating Income was primarily attributable to an increase in Net revenue of $109.8 million partially offset by an increase in Cost of services, excluding Billable costs, Office and general expenses, and Depreciation and amortization.
Cost of services increased by $1.8 million. Excluding the decline in Billable costs of $60.8 million, Cost of services increased $62.6 million, primarily attributable to the inclusion of expenses of acquired entities.
Office and general expenses increased by $20.9 million, primarily attributable to higher software license fees and staff costs and the inclusion of expenses of acquired entities. This was partially offset by a decrease in deferred acquisition consideration expense and a decrease in occupancy costs primarily attributable to a lease termination during the first quarter of 2025 that resulted in a gain on termination of $3.5 million and the expiration of office leases in 2024.
Stock-based compensation increased by $5.2 million, primarily due to an increase in the fair value of profit interest awards and an increase in the number of awards expensed, compared to last year, partially offset by a reversal of expense in the second quarter of 2024 associated with stock-based performance awards for which the performance targets were not met.
Deferred acquisition consideration decreased by $17.9 million, primarily attributable to a reduction in the fair value of the deferred acquisition consideration liability associated with certain Brands.
Depreciation and amortization increased by $14.8 million, primarily attributable to the Company's acquisition of businesses.
Interest Expense, Net
Interest expense, net for the nine months ended September 30, 2025 was $72.0 million, compared to $68.3 million for the nine months ended September 30, 2024, an increase of $3.7 million, primarily attributable to higher levels of debt outstanding under the Credit Agreement (as defined and discussed in Note 8 of the Notes to the Unaudited Consolidated Financial Statements included herein), partially offset by a lower average interest rate.
Foreign Exchange, Net
The foreign exchange loss for the nine months ended September 30, 2025, was $0.5 million, compared to a loss of $2.3 million for the nine months ended September 30, 2024, primarily attributable to the movement in the British Pound and Euro.
Income Tax Expense
The Company had an 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%) compared to income tax expense of $9.4 million (on pre-tax income of $18.1 million resulting in an effective tax rate of 52.1%) for the nine months ended September 30, 2024.
The difference in the effective tax rate of 50.3% in the nine months ended September 30, 2025, as compared to 52.1% in the nine months ended September 30, 2024, was primarily due to a reduction in interest related to uncertain tax positions and a reduction in shortfall of deductions for share based compensation expense vested during the period, offset by a decrease in the benefit of the disregarded entity structure due to the full exchange in April 2025.
Noncontrolling and Redeemable Noncontrolling Interests
The effect of noncontrolling and redeemable noncontrolling interests for the nine months ended September 30, 2025 was a loss of $2.6 million, compared to an income of $10.2 million for the nine months ended September 30, 2024. The amounts are 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.
Net Income (Loss) Attributable to Stagwell Inc. Common Shareholders
As a result of the foregoing, net income attributable to Stagwell Inc. common shareholders for the nine months ended September 30, 2025 was $16.4 million, compared to a net loss of $1.0 million for the nine months ended September 30, 2024.
Earnings Per Share
Diluted EPS and Adjusted Diluted EPS for the nine months ended September 30, 2025 were as follows:
| GAAP |
Adjustments
|
Non-GAAP | ||||||||||||||||||
| (amounts in thousands, except per share amounts) | ||||||||||||||||||||
| Net income attributable to Stagwell Inc. common shareholders | $ | 16,441 | $ | 131,430 | $ | 147,871 | ||||||||||||||
|
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 | $ | 131,430 | $ | 141,234 | ||||||||||||||
|
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 | $ | 0.53 | ||||||||||||||||
|
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 | 25,599 | |||||||||||||||||||
| 167,578 | ||||||||||||||||||||
| Adjusted tax expense | (36,148) | |||||||||||||||||||
| $ | 131,430 | |||||||||||||||||||
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
Diluted EPS and Adjusted Diluted EPS for the nine months ended September 30, 2024 were as follows:
| GAAP |
Adjustments
|
Non-GAAP | ||||||||||||||||||
|
(amounts in thousands, except per share amounts)
|
||||||||||||||||||||
| Net income (loss) attributable to Stagwell Inc. common shareholders | $ | (976) | $ | 58,177 | $ | 57,201 | ||||||||||||||
| Net income attributable to Class C shareholders | - | 83,442 | 83,442 | |||||||||||||||||
|
Net income (loss) attributable to Stagwell Inc. and Class C shareholders and adjusted net income
|
$ | (976) | $ | 141,619 | $ | 140,643 | ||||||||||||||
|
Diluted - Weighted average number of common shares outstanding
|
111,436 | - | 111,436 | |||||||||||||||||
| Weighted average number of shares of Class C Common Stock outstanding | - | 151,649 | 151,649 | |||||||||||||||||
|
Diluted - Weighted average number of shares outstanding
|
111,436 | 151,649 | 263,085 | |||||||||||||||||
|
Diluted EPS and Adjusted Diluted EPS (1)
|
$ | (0.01) | $ | 0.53 | ||||||||||||||||
| Adjustments to Net income (loss) | ||||||||||||||||||||
|
Amortization
|
$ | 91,870 | ||||||||||||||||||
| Impairment and other losses | 1,715 | |||||||||||||||||||
| Stock-based compensation | 38,926 | |||||||||||||||||||
| Deferred acquisition consideration | 7,950 | |||||||||||||||||||
| Other items, net | 36,576 | |||||||||||||||||||
| 177,037 | ||||||||||||||||||||
|
Adjusted tax expense
|
(41,268) | |||||||||||||||||||
| 135,769 | ||||||||||||||||||||
| Net loss attributable to Class C shareholders | 5,850 | |||||||||||||||||||
| $ | 141,619 | |||||||||||||||||||
|
Allocation of adjustments to Net income (loss)
|
||||||||||||||||||||
| Net income attributable to Stagwell Inc. common shareholders | $ | 58,177 | ||||||||||||||||||
|
Net income attributable to Class C shareholders - add-backs
|
77,592 | |||||||||||||||||||
| Net income attributable to Class C shareholders | 5,850 | |||||||||||||||||||
| 83,442 | ||||||||||||||||||||
| $ | 141,619 | |||||||||||||||||||
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
Adjusted EBITDA
Adjusted EBITDA for the nine months ended September 30, 2025 was $288.0 million, compared to $287.6 million for the nine months ended September 30, 2024, representing an increase of $0.4 million, primarily driven by an increase in Net revenue, partially offset by an increase in expenses, as discussed above.
Marketing Services
The components of operating results for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 839,457 | $ | 782,371 | $ | 57,086 | 7.3 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 547,744 | 530,492 | 17,252 | 3.3 | % | |||||||||||||||||||||
| Office and general expenses | 158,316 | 156,495 | 1,821 | 1.2 | % | |||||||||||||||||||||
| Depreciation and amortization | 40,141 | 40,426 | (285) | (0.7) | % | |||||||||||||||||||||
| Impairment and other losses | - | 1,500 | (1,500) | (100.0) | % | |||||||||||||||||||||
| $ | 746,201 | $ | 728,913 | $ | 17,288 | 2.4 | % | |||||||||||||||||||
| Operating Income | $ | 93,256 | $ | 53,458 | $ | 39,798 | 74.4 | % | ||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 714,867 | $ | 658,175 | $ | 56,692 | 8.6 | % | |||||||||||||||
| Billable costs | 124,590 | 124,196 | 394 | 0.3 | % | ||||||||||||||||||
| Revenue | 839,457 | 782,371 | 57,086 | 7.3 | % | ||||||||||||||||||
| Billable costs | 124,590 | 124,196 | 394 | 0.3 | % | ||||||||||||||||||
| Staff costs | 421,226 | 407,948 | 13,278 | 3.3 | % | ||||||||||||||||||
| Administrative costs | 86,433 | 74,293 | 12,140 | 16.3 | % | ||||||||||||||||||
| Unbillable and other costs, net | 60,230 | 53,176 | 7,054 | 13.3 | % | ||||||||||||||||||
| Adjusted EBITDA | 146,978 | 122,758 | 24,220 | 19.7 | % | ||||||||||||||||||
| Stock-based compensation | 15,069 | 15,002 | 67 | 0.4 | % | ||||||||||||||||||
| Depreciation and amortization | 40,141 | 40,426 | (285) | (0.7) | % | ||||||||||||||||||
| Deferred acquisition consideration | (4,784) | 2,000 | (6,784) | NM | |||||||||||||||||||
| Impairment and other losses | - | 1,500 | (1,500) | (100.0) | % | ||||||||||||||||||
| Other items, net | 3,296 | 10,372 | (7,076) | (68.2) | % | ||||||||||||||||||
| Operating Income | $ | 93,256 | $ | 53,458 | $ | 39,798 | 74.4 | % | |||||||||||||||
Revenue
Revenue for the nine months ended September 30, 2025 was $839.5 million, compared to $782.4 million for the nine months ended September 30, 2024, an increase of $57.1 million.
Net Revenue
The components of the fluctuations in net revenue for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Services | $ | 658,175 | $ | 1,473 | $ | 2,916 | $ | 52,303 | $ | 56,692 | $ | 714,867 | 7.9 | % | 8.6 | % | |||||||||||||||||||||||||||||||
| Component % change | 0.2 | % | 0.4 | % | 7.9 | % | 8.6 | % | |||||||||||||||||||||||||||||||||||||||
The increase in organic net revenue was primarily attributable to new client wins and higher spending in the technology, retail, automotive, and financials sectors. This increase was partially offset by losses and decrease in client spending due to budget cuts in the consumer products sector. The increase in net acquisitions (divestitures) was primarily driven by the acquisition of Jetfuel.
Operating Income
Operating Income for the nine months ended September 30, 2025, was $93.3 million, compared to $53.5 million for the nine months ended September 30, 2024, representing an increase of $39.8 million. The increase in Operating Income was primarily attributable to an increase in Net revenue, partially offset by higher Cost of services.
The increase in Cost of services of $17.3 million was primarily attributable to higher staff costs due to growth in revenue and inclusion of costs from acquired entities.
Deferred acquisition consideration decreased $6.8 million, primarily attributable to a reduction in the fair value of the deferred acquisition consideration liability associated with certain Brands.
Other items, net decreased $7.1 million, primarily attributable to a lease termination during the first quarter of 2025 resulting in a gain on termination of $3.5 million and a decrease in severance of $1.5 million.
Adjusted EBITDA increased by $24.2 million, primarily driven by higher Net revenue, partially offset by an increase in Cost of services, as discussed above.
Digital Transformation
The components of operating results for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 292,188 | $ | 248,976 | $ | 43,212 | 17.4 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 177,397 | 154,641 | 22,756 | 14.7 | % | |||||||||||||||||||||
| Office and general expenses | 57,752 | 52,863 | 4,889 | 9.2 | % | |||||||||||||||||||||
| Depreciation and amortization | 17,250 | 16,813 | 437 | 2.6 | % | |||||||||||||||||||||
| $ | 252,399 | $ | 224,317 | $ | 28,082 | 12.5 | % | |||||||||||||||||||
| Operating Income | $ | 39,789 | $ | 24,659 | $ | 15,130 | 61.4 | % | ||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 274,978 | $ | 239,613 | $ | 35,365 | 14.8 | % | |||||||||||||||
| Billable costs | 17,210 | 9,363 | 7,847 | 83.8 | % | ||||||||||||||||||
| Revenue | 292,188 | 248,976 | 43,212 | 17.4 | % | ||||||||||||||||||
| Billable costs | 17,210 | 9,363 | 7,847 | 83.8 | % | ||||||||||||||||||
| Staff costs | 184,886 | 166,965 | 17,921 | 10.7 | % | ||||||||||||||||||
| Administrative costs | 19,599 | 15,707 | 3,892 | 24.8 | % | ||||||||||||||||||
| Unbillable and other costs, net | 1,151 | 788 | 363 | 46.1 | % | ||||||||||||||||||
| Adjusted EBITDA | 69,342 | 56,153 | 13,189 | 23.5 | % | ||||||||||||||||||
| Stock-based compensation | 3,081 | 8,102 | (5,021) | (62.0) | % | ||||||||||||||||||
| Depreciation and amortization | 17,250 | 16,813 | 437 | 2.6 | % | ||||||||||||||||||
| Deferred acquisition consideration | 7,729 | 3,690 | 4,039 | 109.5 | % | ||||||||||||||||||
| Other items, net | 1,493 | 2,889 | (1,396) | (48.3) | % | ||||||||||||||||||
| Operating Income | $ | 39,789 | $ | 24,659 | $ | 15,130 | 61.4 | % | |||||||||||||||
Revenue
Revenue for the nine months ended September 30, 2025 was $292.2 million, compared to $249.0 million for the nine months ended September 30, 2024, an increase of $43.2 million.
Net Revenue
The components of the fluctuations in net revenue for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Digital Transformation | $ | 239,613 | $ | (275) | $ | 8,196 | $ | 27,444 | $ | 35,365 | $ | 274,978 | 11.5 | % | 14.8 | % | |||||||||||||||||||||||||||||||
| Component % change | (0.1) | % | 3.4 | % | 11.5 | % | 14.8 | % | |||||||||||||||||||||||||||||||||||||||
The increase in organic net revenue was primarily attributable to new client wins and higher spending in the technology and communications sectors. The increase in net acquisitions (divestitures) was primarily driven by the acquisition of Create.
Operating Income
Operating Income for the nine months ended September 30, 2025 was $39.8 million, compared to $24.7 million for the nine months ended September 30, 2024, representing an increase of $15.1 million. The increase in Operating Income was primarily attributable to an increase in Net revenue of $35.4 million, partially offset by an increase in Cost of services excluding Billable costs. Cost of services increased $22.8 million. Excluding the increase in Billable costs of $7.8 million, Cost of services increased $15.0 million, primarily due to higher staff costs as well as the inclusion of costs from acquired entities.
Deferred acquisition consideration increased $4.0 million, primarily attributable to an increase in the fair value of the deferred acquisition consideration liability associated with a certain Brand.
Adjusted EBITDA increased by $13.2 million, primarily driven by an increase in Operating Income, as discussed above.
Media & Commerce
The components of operating results for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, were as follows:
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 479,648 | $ | 521,963 | $ | (42,315) | (8.1) | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 289,048 | 323,772 | (34,724) | (10.7) | % | |||||||||||||||||||||
| Office and general expenses | 155,030 | 144,796 | 10,234 | 7.1 | % | |||||||||||||||||||||
| Depreciation and amortization | 21,626 | 24,149 | (2,523) | (10.4) | % | |||||||||||||||||||||
| $ | 465,704 | $ | 492,717 | $ | (27,013) | (5.5) | % | |||||||||||||||||||
| Operating Income | $ | 13,944 | $ | 29,246 | $ | (15,302) | (52.3) | % | ||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 431,855 | $ | 439,783 | $ | (7,928) | (1.8) | % | |||||||||||||||
| Billable costs | 47,793 | 82,180 | (34,387) | (41.8) | % | ||||||||||||||||||
| Revenue | 479,648 | 521,963 | (42,315) | (8.1) | % | ||||||||||||||||||
| Billable costs | 47,793 | 82,180 | (34,387) | (41.8) | % | ||||||||||||||||||
| Staff costs | 269,318 | 265,576 | 3,742 | 1.4 | % | ||||||||||||||||||
| Administrative costs | 67,097 | 61,509 | 5,588 | 9.1 | % | ||||||||||||||||||
| Unbillable and other costs, net | 43,833 | 46,244 | (2,411) | (5.2) | % | ||||||||||||||||||
| Adjusted EBITDA | 51,607 | 66,454 | (14,847) | (22.3) | % | ||||||||||||||||||
| Stock-based compensation | 3,065 | 4,399 | (1,334) | (30.3) | % | ||||||||||||||||||
| Depreciation and amortization | 21,626 | 24,149 | (2,523) | (10.4) | % | ||||||||||||||||||
| Deferred acquisition consideration | 2,942 | (6,453) | 9,395 | NM | |||||||||||||||||||
| Other items, net | 10,030 | 15,113 | (5,083) | (33.6) | % | ||||||||||||||||||
| Operating Income | $ | 13,944 | $ | 29,246 | $ | (15,302) | (52.3) | % | |||||||||||||||
Revenue
Revenue for the nine months ended September 30, 2025 was $479.6 million, compared to $522.0 million for the nine months ended September 30, 2024, a decrease of $42.3 million.
Net Revenue
The components of the fluctuations in net revenue for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Media & Commerce | $ | 439,783 | $ | 1,651 | $ | 2,675 | $ | (12,254) | $ | (7,928) | $ | 431,855 | (2.8) | % | (1.8) | % | |||||||||||||||||||||||||||||||
| Component % change | 0.4 | % | 0.6 | % | (2.8) | % | (1.8) | % | |||||||||||||||||||||||||||||||||||||||
The decrease in organic net revenue was primarily attributable to decreased spending by existing clients in the business services and food and beverage sectors.
Operating Income
Operating Income for the nine months ended September 30, 2025 was $13.9 million, compared to $29.2 million for the nine months ended September 30, 2024, representing a decrease of $15.3 million. The decrease in Operating Income was primarily attributable to a decrease in Net revenue of $7.9 million and an increase in Office and general expenses. Cost of services decreased $34.7 million. Excluding the decline in Billable costs of $34.4 million, Cost of services decreased $0.3 million.
The increase in Office and general expenses of $10.2 million was primarily attributable to an increase in deferred acquisition consideration expense.
Deferred acquisition consideration increased by $9.4 million, primarily attributable to an increase in the fair value of a certain Brand in 2025 and a decrease in the fair value of a certain Brand in 2024.
Adjusted EBITDA decreased by $14.8 million, primarily due to a decrease in Operating Income, as discussed above.
Communications
The components of operating results for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 420,215 | $ | 473,957 | $ | (53,742) | (11.3) | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 292,889 | 318,241 | (25,352) | (8.0) | % | |||||||||||||||||||||
| Office and general expenses | 64,012 | 74,209 | (10,197) | (13.7) | % | |||||||||||||||||||||
| Depreciation and amortization | 19,349 | 13,544 | 5,805 | 42.9 | % | |||||||||||||||||||||
| Impairment and other losses | 222 | - | 222 | 100.0 | % | |||||||||||||||||||||
| $ | 376,472 | $ | 405,994 | $ | (29,522) | (7.3) | % | |||||||||||||||||||
| Operating Income | $ | 43,743 | $ | 67,963 | $ | (24,220) | (35.6) | % | ||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 285,106 | $ | 303,890 | $ | (18,784) | (6.2) | % | |||||||||||||||
| Billable costs | 135,109 | 170,067 | (34,958) | (20.6) | % | ||||||||||||||||||
| Revenue | 420,215 | 473,957 | (53,742) | (11.3) | % | ||||||||||||||||||
| Billable costs | 135,109 | 170,067 | (34,958) | (20.6) | % | ||||||||||||||||||
| Staff costs | 172,273 | 162,715 | 9,558 | 5.9 | % | ||||||||||||||||||
| Administrative costs | 37,042 | 33,689 | 3,353 | 10.0 | % | ||||||||||||||||||
| Unbillable and other costs, net | 6,910 | 7,958 | (1,048) | (13.2) | % | ||||||||||||||||||
| Adjusted EBITDA | 68,881 | 99,528 | (30,647) | (30.8) | % | ||||||||||||||||||
| Stock-based compensation | 6,760 | 5,467 | 1,293 | 23.7 | % | ||||||||||||||||||
| Depreciation and amortization | 19,349 | 13,544 | 5,805 | 42.9 | % | ||||||||||||||||||
| Deferred acquisition consideration | (4,879) | 9,097 | (13,976) | NM | |||||||||||||||||||
| Impairment and other losses | 222 | - | 222 | 100.0 | % | ||||||||||||||||||
| Other items, net | 3,686 | 3,457 | 229 | 6.6 | % | ||||||||||||||||||
| Operating Income | $ | 43,743 | $ | 67,963 | $ | (24,220) | (35.6) | % | |||||||||||||||
Revenue
Revenue for the nine months ended September 30, 2025 was $420.2 million compared to $474.0 million for the nine months ended September 30, 2024, a decrease of $53.7 million.
Net Revenue
The components of the fluctuations in net revenue for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Communications | $ | 303,890 | $ | 162 | $ | 29,002 | $ | (47,948) | $ | (18,784) | $ | 285,106 | (15.8) | % | (6.2) | % | |||||||||||||||||||||||||||||||
| Component % change | 0.1 | % | 9.5 | % | (15.8) | % | (6.2) | % | |||||||||||||||||||||||||||||||||||||||
The decrease in organic net revenue was primarily attributable to decreased spending, primarily due to lower advocacy services as compared to higher spending in 2024 associated with the 2024 elections and decreased spending in the healthcare and consumer products due to client losses and budget cuts. The increase in net acquisitions (divestitures) was primarily driven by the acquisition of Consulum.
Operating Income
Operating Income for the nine months ended September 30, 2025 was $43.7 million, compared to $68.0 million for the nine months ended September 30, 2024, representing a decrease of $24.2 million. The decrease in Operating Income was primarily attributable to a decrease in Net revenue of $18.8 million and an increase in Cost of services excluding Billable costs, and Depreciation and amortization, partially offset by a decrease in Office and general expenses.
Cost of services decreased $25.4 million. Excluding the decline in Billable costs of $35.0 million, Cost of services increased $9.6 million due to the inclusion of costs from acquired entities.
The decrease in Office and general expenses of $10.2 million was primarily attributable to a decrease in Deferred acquisition consideration.
Deferred acquisition consideration decreased by $14.0 million, primarily attributable to a decrease in the fair value of a certain Brand, partially offset by an increase in the fair value of certain Brands.
Depreciation and amortization increased by $5.8 million, primarily attributable to the inclusion of costs from acquired entities.
Adjusted EBITDA decreased by $30.6 million, primarily due to a decrease in Operating Income, as discussed above.
The Marketing Cloud
The components of operating results for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| $ | % | |||||||||||||||||||||||||
| Revenue | $ | 78,785 | $ | 25,823 | $ | 52,962 | 205.1 | % | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||
| Cost of services | 40,539 | 13,811 | 26,728 | 193.5 | % | |||||||||||||||||||||
| Office and general expenses | 35,939 | 23,225 | 12,714 | 54.7 | % | |||||||||||||||||||||
| Depreciation and amortization | 17,436 | 9,309 | 8,127 | 87.3 | % | |||||||||||||||||||||
| Impairment and other losses | 244 | - | 244 | 100.0 | % | |||||||||||||||||||||
| $ | 94,158 | $ | 46,345 | $ | 47,813 | 103.2 | % | |||||||||||||||||||
| Operating Loss | $ | (15,373) | $ | (20,522) | $ | 5,149 | (25.1) | % | ||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net Revenue | $ | 78,769 | $ | 25,823 | $ | 52,946 | 205.0 | % | |||||||||||||||
| Billable costs | 16 | - | 16 | 100.0 | % | ||||||||||||||||||
| Revenue | 78,785 | 25,823 | 52,962 | 205.1 | % | ||||||||||||||||||
| Billable costs | 16 | - | 16 | 100.0 | % | ||||||||||||||||||
| Staff costs | 53,683 | 21,024 | 32,659 | 155.3 | % | ||||||||||||||||||
| Administrative costs | 13,531 | 9,659 | 3,872 | 40.1 | % | ||||||||||||||||||
| Unbillable and other costs, net | 17,178 | 5,547 | 11,631 | 209.7 | % | ||||||||||||||||||
| Adjusted EBITDA | (5,623) | (10,407) | 4,784 | (46.0) | % | ||||||||||||||||||
| Stock-based compensation | 541 | 648 | (107) | (16.5) | % | ||||||||||||||||||
| Depreciation and amortization | 17,436 | 9,309 | 8,127 | 87.3 | % | ||||||||||||||||||
| Deferred acquisition consideration | (10,919) | (384) | (10,535) | NM | |||||||||||||||||||
| Impairment and other losses | 244 | - | 244 | 100.0 | % | ||||||||||||||||||
| Other items, net | 2,448 | 542 | 1,906 | 351.7 | % | ||||||||||||||||||
| Operating Loss | $ | (15,373) | $ | (20,522) | $ | 5,149 | (25.1) | % | |||||||||||||||
Revenue
Revenue for the nine months ended September 30, 2025 was $78.8 million compared to $25.8 million for the nine months ended September 30, 2024, an increase of $53.0 million.
Net Revenue
The components of the fluctuations in net revenue for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Net Revenue - Components of Change | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2024 | Foreign Currency | Net Acquisitions (Divestitures) | Organic | Total Change | Nine Months Ended September 30, 2025 | Organic | Total | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| The Marketing Cloud | $ | 25,823 | $ | 455 | $ | 53,523 | $ | (1,032) | $ | 52,946 | $ | 78,769 | (4.0) | % | NM | ||||||||||||||||||||||||||||||||
| Component % change | 1.8 | % | NM | (4.0) | % | NM | |||||||||||||||||||||||||||||||||||||||||
The increase in net acquisitions (divestitures) was primarily driven by the acquisitions of Leaders and Unicepta.
Operating Loss
Operating Loss for the nine months ended September 30, 2025 was $15.4 million compared to $20.5 million for the nine months ended September 30, 2024, representing a decrease of $5.1 million. The decrease in Operating Loss was primarily attributable to an increase in Net revenue, partially offset by an increase in Cost of Services, Office and general expenses, and Depreciation and amortization.
Cost of services increased $26.7 million, primarily attributable to the inclusion of costs from acquired entities.
Office and general expenses increased $12.7 million primarily due to higher staff costs and the inclusion of costs from acquired entities, partially offset by a decrease in deferred acquisition consideration expense.
Deferred acquisition consideration decreased by $10.5 million, primarily attributable to a decrease in the fair value of a certain Brand.
Depreciation and amortization increased by $8.1 million, primarily attributable to the inclusion of costs from acquired entities.
Adjusted EBITDA increased by $4.8 million, primarily due to a decrease in Operating Loss, as discussed above.
Corporate
The components of operating results for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows:
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Staff costs | $ | 41,238 | $ | 35,421 | $ | 5,817 | 16.4 | % | |||||||||||||||
| Administrative costs | 1,373 | 11,396 | (10,023) | (88.0) | % | ||||||||||||||||||
| Adjusted EBITDA | (42,611) | (46,817) | 4,206 | (9.0) | % | ||||||||||||||||||
| Stock-based compensation | 15,627 | 5,308 | 10,319 | 194.4 | % | ||||||||||||||||||
| Depreciation and amortization | 11,833 | 8,681 | 3,152 | 36.3 | % | ||||||||||||||||||
| Impairment and other losses | - | 215 | (215) | (100.0) | % | ||||||||||||||||||
| Other items, net | 2,363 | 4,203 | (1,840) | (43.8) | % | ||||||||||||||||||
| Operating Loss | $ | (72,434) | $ | (65,224) | $ | (7,210) | 11.1 | % | |||||||||||||||
Operating Loss
Operating Loss for the nine months ended September 30, 2025 was $72.4 million compared to $65.2 million for the nine months ended September 30, 2024, representing an increase of $7.2 million, primarily attributable to higher Stock-based compensation.
Stock-based compensation expense increased by $10.3 million, primarily attributable to an increase in the number of awards partially offset by a decrease in the fair value of the awards, and a reversal of expense in the second quarter of 2024 associated with stock-based performance awards for which the performance targets were not met.
Liquidity and Capital Resources:
The following table provides summary information about the Company's liquidity position and capital resources:
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | 30,713 | $ | (69,230) | $ | 99,943 | (144.4) | % | |||||||||||||||
| Net cash used in investing activities | (80,759) | (66,485) | (14,274) | 21.5 | % | ||||||||||||||||||
| Net cash provided by financing activities | 44,227 | 159,131 | (114,904) | (72.2) | % | ||||||||||||||||||
The Company had cash and cash equivalents of $132.2 million and $131.3 million as of September 30, 2025, and December 31, 2024, respectively.
Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2025 was $30.7 million, an increase of $99.9 million, or 144.4%, compared to the same period in the prior year. This improvement primarily reflected the increase in operating income of $12.8 million driven by an increase in revenue, as well as a $103.2 million increase in working capital primarily attributable to stronger working capital management and changes in non-cash items included in the operating income.
The improvement in working capital was driven by an improved billing and collection process, which resulted in favorable changes in advance billings of $44.0 million and expenditures billable to clients of $42.0 million. Additionally, there were net favorable changes in accounts payable and accruals of $41.4 million as a result of improved payment terms with significant service providers. This was partially offset by an unfavorable change in other assets of $44.3 million due to certain media assets and deferred compensation arrangements. In aggregate, these and other immaterial changes in working capital resulted in a net increase of $103.2 million.
Changes in non-cash items included in operating income consisted primarily of a decrease of $17.9 million in the fair value of deferred acquisition liabilities driven by the lower than projected performance of acquisitions, partially offset by an increase of $14.8 million in depreciation and amortization resulting from higher capital investment, and increases in stock-based compensation and deferred income tax expense of $5.2 million and $6.7 million, respectively.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2025 was $80.8 million, an increase of $14.3 million, or 21.5%, compared to the same period in the prior year. This increase was primarily driven by increases in capitalized software and capex expenditure of $26.0 million and $9.6 million, respectively. These increases were partially offset by a decrease in cash used for acquisitions by $17.6 million
Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2025 was $44.2 million, a decrease of $114.9 million, or 72.2%, compared to the same period in the prior year. This decline was primarily driven by a decrease of $141.7 million in net proceeds borrowed under the Credit Agreement (as defined and discussed in Note 8 of the Notes included herein) and increases in debt financing cost and shares repurchases of $3.8 million and $3.9 million, respectively. The decline was partially offset by decreases in distributions to noncontrolling interests and payments of deferred consideration of $18.6 million and $12.6 million, respectively.
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 and equity financing. On April 23, 2025, the Company entered into an amendment to the Credit Agreement, which increased the limit of borrowing to $750 million and extended the maturity date to April 30, 2030, as described in more detail in Note 8 of the Notes included herein. As of September 30, 2025, the Company had $438.3 million of borrowings outstanding and $14.9 million of issued and undrawn letters of credit, resulting in $296.7 million unused borrowing capacity under the Credit Agreement.
The Company transfers certain of its trade receivable assets to third parties under certain agreements. Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer.
The trade receivables transferred to the third parties were $122.6 million and $366.1 million for the three and nine months ended September 30, 2025, respectively, and $78.3 million and $224.8 million for the three and nine months ended September 30, 2024. The amount collected and due to the third parties under these arrangements was $14.6 million as of September 30, 2025 and $19.5 million as of December 31, 2024. Fees for these arrangements were recorded in Office and general expenses in the Unaudited Consolidated Statements of Operations and totaled $1.3 million and $4.1 million for the three and nine months ended September 30, 2025, respectively, and $1.0 million and $3.0 million for the three and nine months ended September 30, 2024.
The Company may repurchase up to an aggregate of $375.0 million of shares of our outstanding Class A Common Stock under its stock repurchase program (the "Repurchase Program"). The Repurchase Program will expire on November 6, 2027.
Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices, including through trading plans that may be adopted in accordance with Rule 10b5-1 of the Exchange Act, as amended, in privately negotiated transactions, or through other means. The timing and number of shares repurchased under the Repurchase Program will depend on a variety of factors, including the performance of our stock price, general market and economic conditions, regulatory requirements, the availability of funds, and other considerations we deem relevant. The Repurchase Program may be suspended, modified, or discontinued at any time without prior notice. Our Board of Directors will review the Repurchase Program periodically and may authorize adjustments of its terms.
During the nine months ended September 30, 2025, 17.6 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an average price of $5.12 per share, for an aggregate value, excluding fees, of $90.0 million.
The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $79.6 million as of September 30, 2025.
The Company's obligations extending beyond twelve months primarily consist of deferred acquisition consideration payments, purchases of noncontrolling interests, subsidiary awards, capital expenditures, scheduled lease obligation payments, and interest payments on borrowings under the Company's 5.625% Notes (as defined in Note 8 of the Notes included herein) and Credit Agreement. The Company expects to make estimated cash payments in the future to satisfy obligations under our TRA, which remains in effect after the final exchange of Paired Units (see Note 14 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, 2025, Debt, net of debt issuance costs, was $1,526.3 million, compared to $1,353.6 million outstanding as of December 31, 2024. See Note 8 of the Notes included herein for information regarding the Company's 5.625% Notes and the Credit Agreement.
As of September 30, 2025, the Company was in compliance with all of the terms and conditions of the Credit Agreement, and management believes, based on its current financial projections, that the Company will be in compliance with its covenants over the next twelve months.
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, 2025, 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, 2025 | |||||
| Total Leverage Ratio | 3.45 | ||||
| Maximum per covenant | 4.25 | ||||
These ratios and measures are not based on GAAP and are not presented as alternative measures of operating performance or liquidity. Some of these ratios and measures include, among other things, pro forma adjustments for acquisitions, one-time charges, and other items, as defined in the Credit Agreement. They are presented here to demonstrate compliance with the covenants in the Credit Agreement, as non-compliance with such covenants could have a material adverse effect on the Company.
Material Cash Requirements
To the extent required under a particular client engagement, Stagwell's Brands enter into contractual commitments with media providers, production companies and other third parties on behalf of their clients at levels that exceed the revenue from the services. In most of these transactions, the Brands act as the clients' "Agent for a Disclosed Principal" where the Brands' risk is mitigated by sequential payment liability, i.e., the brands' obligation to pay a third party is tolled until it receives the underlying payment from the client thereby safeguarding the Brand in the event of a client default. To further protect against client default, Stagwell takes additional precautions, including the procurement of credit insurance. While Stagwell has historically had a very low incidence of default, Stagwell is still exposed to the risk of significant uncollectible receivables from its clients and the risk of a material loss could significantly increase in periods of severe economic downturn.
Deferred acquisition consideration on the balance sheet consists of deferred obligations related to contingent purchase price payments and retention payments tied to continued employment of specific personnel. See Note 6 of the Notes included herein for additional information regarding contingent deferred acquisition consideration.
When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the incremental purchase may be required of the Company, the amounts are recorded as redeemable noncontrolling interests in mezzanine equity. See Note 9 of the Notes included herein for additional information regarding noncontrolling interests and redeemable noncontrolling interests.
Certain of the Company's subsidiaries grant awards to their employees providing them with an equity interest in the respective subsidiary (the "profits interests awards"). The awards generally provide the employee with the right, but not the obligation, to sell their profits interest in the subsidiary to the Company based on a performance-based formula and, in certain cases, receive a profit share distribution. The profits interests awards are primarily settled in cash, with certain awards having stock-settlement provisions at the Company's discretion. The corresponding liability associated with these profits interests awards is included as a component of Accruals and other liabilities and Other liabilities on the Consolidated Balance Sheets.
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 10 of the Notes included herein for additional information regarding these material commitments.
Critical Accounting Estimates
See Note 2 of the Company's 2024 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 inclusion of the Company's website addresses and social media channels are inactive textual references only.
Stagwell Inc. published this content on November 06, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 06, 2025 at 16:41 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]