Stagwell Inc.

10/29/2026 | Press release | Distributed by Public on 10/29/2026 13:35

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis are based on and should be read in conjunction with our Unaudited Consolidated Financial Statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the period ended September 30, 2026 (the "Form 10-Q"). The following discussion and analysis contain forward-looking statements and should be read in conjunction with the disclosures and information contained and referenced under the caption "Forward-Looking Statements" in this Form 10-Q and under the captions "Forward-Looking Statements" and "Risk Factors" in the 2025 Form 10-K, our Quarterly Reports on Form 10-Q, and in other documents we file with the SEC from time to time. The following discussion and analysis also include a discussion of certain non-GAAP financial measures. A description of the non-GAAP financial measures discussed in this section and reconciliations to the comparable United States ("U.S.") generally accepted accounting principles ("GAAP") measures are below.
In this section, the terms "Stagwell," "we," "us," "our" and the "Company" refer to Stagwell Inc. and its direct and indirect subsidiaries. References to a "fiscal year" mean the Company's year commencing on January 1 of that year and ending December 31 of that year (e.g., fiscal 2026 means the period beginning January 1, 2026, and ending December 31, 2026).
Executive Summary
Overview
Stagwell conducts its business through its segments, which provide marketing and business solutions that realize the potential of combining data and creativity. Stagwell's strategy is to build, grow, and acquire market-leading businesses that deliver the modern suite of services that marketers need to thrive in a rapidly evolving business environment. We believe Stagwell's differentiation lies in its digital-first and technology-based roots and proven entrepreneurial leaders, which together with innovations in technology and data, bring transformational marketing, activation, communications and strategic consulting services to clients. Stagwell leverages its range of services in an integrated manner, offering strategic, creative and innovative solutions that are technologically forward and media-agnostic. The Company's strategy is intended to challenge the industry status quo, realize returns on investment, and drive transformative growth and business performance for its clients and stakeholders.
Stagwell manages its business by monitoring several financial and non-financial performance indicators. The key indicators that we focus on are revenue, operating expenses, staff cost ratio, capital expenditures, net income (loss), net income (loss) attributable to Stagwell Inc. common shareholders, net income (loss) per share and the non-GAAP financial measures including Adjusted EBITDA, Organic net revenue growth (decline), Free cash flow at consolidated level, and Adjusted Diluted EPS, as defined and described below. Revenue growth is analyzed by reviewing a mix of measurements, including (i) growth by major geographic location, (ii) growth from existing clients and the addition of new clients, (iii) growth by service line, (iv) growth from currency changes, and (v) growth from acquisitions. In addition to monitoring the foregoing financial indicators, the Company assesses and monitors several non-financial performance indicators relating to the business performance of our segments. These indicators may include the Company's recent new client win/loss record; the depth and scope of a pipeline of potential new client account activity; the overall quality of the services provided to clients; and the relative strength of the Company's next generation team that is in place as part of a potential succession plan to succeed the current senior executive team.
Recent Developments
On October 23, 2026, the Company acquired all of the outstanding stock of Publisher First, Inc., doing business as Freestar, which assists online publishers in monetizing the media on their sites, for $50.0 million: $30.0 million in 3,442,043 shares of Class A Common Stock, par value $0.001 per share (the "Class A Common Stock") and $20.0 million in cash, subject to post-closing adjustments. The sellers can also earn up to $60.0 million in contingent consideration if future earnings targets are met, plus a share of earnings above those targets. The Company may settle part of the contingent consideration in stock, and payments to certain holders are subject to their continued employment. Due to the timing of the acquisition, the Company is currently evaluating the purchase price allocation, including the fair value of the consideration transferred and the assets acquired and liabilities assumed.
Significant Factors Affecting our Business and Results of Operations
The most significant factors affecting our business and results of operations include national, regional, and local economic conditions, our clients' profitability, mergers and acquisitions of our clients, changes in top management of our clients and our ability to retain and attract key employees. New business wins and client losses occur due to a variety of factors. We believe the two most significant factors are (i) our clients' desire to change marketing communication firms, and (ii) the digital and data-driven products that our portfolio of marketing services firms, which we refer to as "Brands," offer. A client may choose to change marketing communication firms for several reasons, such as a change in leadership where new management wants to
retain a Brand that it may have previously worked with. In addition, if the client merges with or is acquired by another company, the marketing communication firm is often changed. Clients also change firms as a result of the firm's failure to meet marketing performance targets or other expectations in client service delivery.
Seasonality
Historically, we typically generate the highest quarterly revenue during the fourth quarter of each year. The highest volumes of retail related consumer marketing increase with the back-to-school season through the end of the holiday season. In addition, within our Communications segment, client concentration increases during election years due to the cyclical nature of our advocacy services.
Non-GAAP Financial Measures
The Company reports its financial results in accordance with GAAP. In addition, the Company has included non-GAAP financial measures and ratios, which management uses to operate the business, which it believes provide useful supplemental information to both management and readers of this report in making period-to-period comparisons in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by GAAP and should not be construed as an alternative to other titled measures determined in accordance with GAAP. The non-GAAP financial measures included are "net revenue," "organic net revenue growth (decline)," "Adjusted EBITDA," "Free Cash Flow," and "Adjusted Diluted EPS."
"Net revenue" refers to revenue excluding billable costs. The Company believes billable costs and their fluctuations are not indicative of the operating performance of its underlying business.
"Organic net revenue growth (decline)" reflects the year-over-year change in the Company's reported net revenue attributable to the Company's management of the entities it owns. We calculate organic net revenue growth (decline) by subtracting the net impact of acquisitions (divestitures) and the impact of foreign currency exchange fluctuations from the aggregate year-over-year increase or decrease in the Company's reported net revenue.
The net impact of acquisitions (divestitures) reflects the year-over-year change in the Company's reported net revenue attributable to the impact of all individual entities that were acquired or divested in the current and prior year. We calculate the impact of an acquisition as follows: (a) for an entity acquired during the current year, we present the entity's current period reported revenue as the impact of the acquisition in the current year; and (b) for an entity acquired in the prior year, we present an amount equal to the entity's current year net revenue for the same period during which we didn't own the entity in the prior year as the impact of the acquisition in the current year. We calculate the impact of a divestiture as follows: (a) for a divestiture in the current year, we present the entity's prior year net revenue for the same period during which we no longer owned it in the current year as impact of the divestiture in the current year; and (b) for a divestiture in the prior year, we present the entity's prior year net revenue for the period during which we owned it in the prior year as impact of the divestiture in the current year. We calculate the impact of any acquisition or divestiture without adjusting for foreign currency exchange fluctuations.
The impact of foreign currency exchange fluctuations reflects the year-over-year change in the Company's reported net revenue attributable to changes in foreign currency exchange rates. We calculate the impact of foreign currency exchange fluctuations for the portion of the reporting period in which we recognized revenue from a foreign entity in both the current year and the prior year. The impact is calculated as the difference between (1) reported prior period net revenue (converted to U.S. dollars at historical foreign currency exchange rates) and (2) prior period net revenue converted to U.S. dollars at current period foreign exchange rates.
"Adjusted EBITDA" is defined as Net income (loss) attributable to Stagwell Inc. common shareholders excluding non-operating income or expense, income tax expense or benefit, equity in income or loss of non-consolidated entities and net income or loss attributable to noncontrolling and redeemable noncontrolling interest holders to achieve Operating income (loss), plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, impairment and other losses, and other items. Other items primarily include restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expenses, and other non-recurring income and expenses. Adjusted EBITDA for our reportable segments is reconciled to Operating income (loss), as Net income (loss) is not relevant for a reportable segment financial metric.
"Free Cash Flow" is defined as consolidated net cash flow from operations less cash outflow from capital expenditures and capitalized software, excluding material nonrecurring capital purchases.
"Adjusted Diluted EPS" is defined as Adjusted Net Income (loss) attributable to Stagwell Inc. common and Class C shareholders, divided by the diluted weighted average shares outstanding. Adjusted Net Income represents net income (loss) attributable to Stagwell Inc. common and Class C shareholders, excluding amortization, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items (as defined above), allocated between the two share classes based on their respective income allocation percentages using a normalized effective tax rate. The diluted weighted average shares outstanding includes the diluted weighted average common shares outstanding
plus Class C common stock, par value $0.00001 per share (the "Class C Common Stock") as if converted to shares of Class A Common Stock if not included because they were anti-dilutive.
All amounts are in U.S. dollars unless otherwise stated. Amounts reported in millions herein are computed based on the amounts in thousands. As a result, the sum of the components, and related calculations, reported in millions may not equal the total amounts due to rounding.
The percentage changes included in the tables in Item 2 herein that are not considered meaningful are presented as "NM."
Segments
The Company's Chief Operating Decision Maker uses Adjusted EBITDA as a key metric to evaluate the operating and financial performance of a segment, identify trends affecting the segments, develop projections and make strategic business decisions.
On September 30, 2025, the Company reorganized its organizational structure to better reflect how the Company manages its business and goes to market, to simplify reporting and to provide clearer visibility into performance trends across its service offerings. The reorganization also seeks to enhance consistency in the Company's portfolio of services and improve the transparency and comparability of financial information provided to investors.
As a result of the reorganization, the Company now has five operating and reportable segments: "Marketing Services," "Digital Transformation," "Media & Commerce," "Communications," and "The Marketing Cloud." Prior period presented has been recast to reflect the reclassification of Brands within the reportable segments. Based on the segment analysis, management concluded that the operating segments do not exhibit similar economic characteristics or share other aggregation criteria. As a result, none of our operating segments are aggregated for reporting purposes. Further, as a result of the reorganization, certain reporting units have been redefined, and the composition of others has changed. The new structure fairly reflects the allocation of the Company's resources, thereby improving comparability for investors and supporting the Company's long-term strategic objectives. The composition of these segments is as follows:
•The Marketing Services segment delivers a broad range of services across four closely related client needs: creative, research, experiential, and social media solutions designed to build and elevate brands. Capabilities include developing breakthrough brand campaigns, providing consumer insights through advanced research methodologies, creating immersive experiential marketing programs and social engagement strategies that connect brands with audiences across digital platforms. By combining creative excellence, data-driven insights, and innovative experiences, Marketing Services empowers organizations to differentiate themselves in the marketplace, drive audience engagement, and achieve measurable business results. These services employ a wide variety of artificial intelligence ("AI")-powered services in the delivery, such as AI-powered creative production and data analysis. Brands in this segment include, but are not limited to, creative agencies 72 and Sunny and Anomaly, research agencies NRG and Harris Insights, experiential agency TEAM and Sport Beach, and social agency Movers & Shakers.
•The Digital Transformation segment designs, implements and activates modern digital ecosystems that enable brand and customer experiences through the integration of strategy, design, and technology. This segment helps clients modernize their digital infrastructure, enhance customer engagement, and accelerate enterprise transformation. Its capabilities span the delivery of digital products and experiences that connect brand storytelling with technology, including website and content development, digital campaigns, product and platform design, AI-native strategies and integration, and implementation of marketing technology ("MarTech") products and solutions for customers. It also provides managed services, staff augmentation, and engineering expertise across various delivery models, offering system integration, full-stack development, and ongoing platform management. Additionally, Digital Transformation connects digital ecosystems to physical experiences through innovative, technology-driven customer engagements, such as business-to-business ("B2B") platforms and multimodal activations that blend physical and digital environments using augmented reality ("AR"), virtual reality ("VR"), and emerging technologies. Together, these capabilities empower organizations to transform their digital presence and drive sustained business growth. Brands in this segment include, but are not limited to, strategy and design agencies Code and Theory and Instrument, development and implementation agency TrueLogic, and digital activation agency Left Field Labs.
•The Media & Commerce segment delivers integrated AI-based data solutions that drive audience engagement and business growth through media buying, owned media platforms, commerce enablement, and Customer Relationship Management ("CRM") strategies. Its capabilities include planning and executing media campaigns across global platforms, leveraging data-driven approaches to optimize reach and effectiveness across first-party data, second-party data, and third-party data, and providing commerce and CRM tools that connect brands with consumers throughout the purchase journey. The segment also offers specialized media platforms and translation services to support targeted communication and market expansion. By combining expertise in media strategy, commerce activation, and audience analytics, Media & Commerce empowers organizations to maximize their marketing investments and achieve measurably efficient commercial outcomes. Brands in this segment include, but are not limited to, media buying and strategy agency Stagwell Media, owned media platforms Reach TV, and commerce and CRM agency Gale.
•The Communications segment provides a leading edge set of solutions designed to help organizations build, protect, and enhance their reputation across diverse audiences and channels. Its capabilities include strategic communications, public relations, and advocacy services that leverage AI and data-driven insights to craft compelling narratives and influence public perception. The segment also offers expertise in targeted communications, corporate public affairs consulting, crisis management, and stakeholder engagement, ensuring clients can respond effectively to emerging issues and opportunities. Advocacy services encompass strategic political campaign management, grassroots mobilization, and fundraising expertise that reach across the political spectrum. By combining deep industry knowledge with innovative digital approaches to media and advocacy, Communications empowers organizations to connect with key audiences, shape conversations, and achieve their strategic objectives. Brands in this segment include, but are not limited to, Allison, Consulum, SKDK and Targeted Victory.
•The Marketing Cloud segment delivers a comprehensive suite of technology solutions for in-house marketers. Its key products cover a range of areas. Advanced research tools that enable real-time customer insights through syndicated and Do It Yourself ("DIY") generative AI-drafted surveys, AI-driven text analysis, and predictive analytics. Communications technology that aggregates data from millions of sources, including news, social media, print, and TV/radio broadcasts, on a daily basis to monitor, analyze, and respond to market trends. Media studio products that leverage first-party, third-party, and proprietary data to provide actionable audience insights and attribution analytics and advanced media platforms that encompass audience engagement solutions such as AR, quick response ("QR") codes, and loyalty programs, all designed to collect consumer data and generate actionable insights. Solutions in this segment are sold as SaaS or DaaS offerings, or licensed as software, as appropriate. Together, these capabilities empower marketers to understand, engage, and influence their audiences with precision and agility. Brands in this segment include, but are not limited to, QUEST, Unicepta, and The Machines.
"Corporate, eliminations and other" consists of revenue generated by the Other business components, elimination of certain intercompany revenue and expenses, and corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These corporate office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, and (iv) certain other professional fees managed by the corporate office.
The following discussion focuses on the operating performance of the Company for the three and nine months ended September 30, 2026 and 2025 and the financial condition of the Company as of September 30, 2026.
Results of Operations and Reconciliation of Net Income (Loss) to Adjusted EBITDA:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(dollars in thousands)
Revenue:
Marketing Services $ 255,445 $ 291,089 $ 786,650 $ 817,294
Digital Transformation 127,176 104,445 349,756 294,301
Media & Commerce 176,857 183,112 534,561 509,416
Communications 210,913 145,086 552,767 420,556
The Marketing Cloud 55,825 26,576 110,963 77,380
Corporate, eliminations and other (10,189) (7,310) (28,220) (17,391)
Total revenue $ 816,027 $ 742,998 $ 2,306,477 $ 2,101,556
Operating income $ 48,059 $ 60,913 $ 69,247 $ 102,370
Other income (expenses):
Interest expense, net (23,993) (25,196) (69,587) (72,007)
Foreign exchange, net 2,244 (366) (172) (484)
Other, net
2,526 (2,032) 3,394 (2,143)
Income before income taxes and equity in earnings of non-consolidated affiliates
28,836 33,319 2,882 27,736
Income tax expense 10,882 9,555 7,646 13,950
Income (loss) before equity in earnings of non-consolidated affiliates 17,954 23,764 (4,764) 13,786
Equity in income (loss) of non-consolidated affiliates 442 (1) 512 18
Net income (loss) 18,396 23,763 (4,252) 13,804
Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests (277) 856 1,282 2,637
Net income (loss) attributable to Stagwell Inc. common shareholders $ 18,119 $ 24,619 $ (2,970) $ 16,441
Reconciliation to Adjusted EBITDA:
Net income (loss) attributable to Stagwell Inc. common shareholders $ 18,119 $ 24,619 $ (2,970) $ 16,441
Non-operating items (1)
29,940 36,294 72,217 85,929
Operating income 48,059 60,913 69,247 102,370
Depreciation and amortization 48,300 44,260 136,395 127,635
Impairment and other losses 1,028 466 1,219 466
Stock-based compensation 28,920 12,646 61,735 44,143
Deferred acquisition consideration 7,675 (13,348) 26,766 (9,911)
Other items, net (2)
10,854 11,050 47,846 27,868
Adjusted EBITDA $ 144,836 $ 115,987 $ 343,208 $ 292,571
(1) Non-operating items includes items within the Statements of Operations, below Operating income, and above Net income (loss) attributable to Stagwell Inc. common shareholders.
(2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses.
THREE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2025
Consolidated Results of Operations
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
Three Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 816,027 $ 742,998 $ 73,029 9.8 %
Operating expenses
Cost of services 511,698 470,937 40,761 8.7 %
Office and general expenses 206,942 166,422 40,520 24.3 %
Depreciation and amortization 48,300 44,260 4,040 9.1 %
Impairment and other losses 1,028 466 562 120.6 %
$ 767,968 $ 682,085 $ 85,883 12.6 %
Operating income $ 48,059 $ 60,913 $ (12,854) (21.1) %
Three Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue
$ 816,027 $ 742,998 $ 73,029 9.8 %
Billable costs 152,010 128,476 23,534 18.3 %
Net Revenue 664,017 100.0 % 614,522 100.0 % 49,495 8.1 %
Staff costs 385,617 58.1 % 387,210 63.0 % (1,593) (0.4) %
Administrative costs 82,758 12.5 % 70,387 11.5 % 12,371 17.6 %
Unbillable and other costs, net 50,806 7.7 % 40,938 6.7 % 9,868 24.1 %
Adjusted EBITDA 144,836 21.8 % 115,987 18.9 % 28,849 24.9 %
Stock-based compensation 28,920 4.4 % 12,646 2.1 % 16,274 128.7 %
Depreciation and amortization 48,300 7.3 % 44,260 7.2 % 4,040 9.1 %
Deferred acquisition consideration 7,675 1.2 % (13,348) (2.2) % 21,023 NM
Impairment and other losses 1,028 0.2 % 466 0.1 % 562 120.6 %
Other items, net (1)
10,854 1.6 % 11,050 1.8 % (196) (1.8) %
Operating income (2)
$ 48,059 7.2 % $ 60,913 9.9 % $ (12,854) (21.1) %
(1) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses.
(2) See the Results of Operations section above for a reconciliation of Operating Income to Net income (loss) attributable to Stagwell Inc. common shareholders.
Revenue
Revenue for the three months ended September 30, 2026 was $816.0 million, compared to $743.0 million for the three months ended September 30, 2025, an increase of $73.0 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Three Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Three Months Ended September 30, 2026 Organic Total
(dollars in thousands)
Marketing Services $ 239,961 $ (176) $ (3,996) $ (18,108) $ (22,280) $ 217,681 (7.5) % (9.3) %
Digital Transformation 96,111 (233) 599 22,182 22,548 118,659 23.1 % 23.5 %
Media & Commerce 162,542 (432) - (3,366) (3,798) 158,744 (2.1) % (2.3) %
Communications 96,631 72 7,657 19,324 27,053 123,684 20.0 % 28.0 %
The Marketing Cloud 26,571 304 - 28,808 29,112 55,683 108.4 % 109.6 %
Corporate, eliminations and other (7,294) 12 - (3,152) (3,140) (10,434) 43.2 % 43.0 %
$ 614,522 $ (453) $ 4,260 $ 45,688 $ 49,495 $ 664,017 7.4 % 8.1 %
Component % change (0.1)% 0.7% 7.4% 8.1%
For the three months ended September 30, 2026, net revenue increased $49.5 million, or 8.1%, to $664.0 million. The increase was driven principally by organic growth of $45.7 million, or 7.4%, and $4.3 million from acquisitions, net of dispositions, partially offset by a $0.5 million unfavorable impact from foreign currency.
Organic growth was driven primarily by The Marketing Cloud, Digital Transformation, and Communications segments. The Marketing Cloud increased $28.8 million, or 108.4%, driven by software sales associated with The Machine and increased demand for research products. Digital Transformation increased $22.2 million, or 23.1%, driven by marketing workflow redesign and optimization assignments centered around technology development and system implementations, including The Machines. Communications increased $19.3 million, or 20.0%, reflecting growth in public relations and strategic communications including campaign strategy, high volume low dollar fundraising, and media campaigns associated with the U.S. election cycle. These increases were partially offset by declines in Marketing Services of $18.1 million, or 7.5%, and Media & Commerce of $3.4 million, or 2.1%. The decline in Marketing Services resulted from the timing of the transition from completed engagements to recently awarded work, reduced spending by certain beverage clients driven by secular changes in the industry and the non-recurrence of one time projects in the prior year.
Acquisitions, net of dispositions contributed $4.3 million to the increase in net revenue, primarily from the acquisitions of Wavelength Strategy LLC ("Wavelength") and QStrauss Consulting S.A.S. and QStrauss Consulting LLC (collectively, "QStrauss"), partially offset by the divestiture of a non-core Brand in the Marketing Services segment.
Expenses
Cost of services increased $40.8 million, or 8.7%, compared with an increase in Revenue of 9.8%. The increase was primarily driven by $23.5 million of higher Billable costs, $9.9 million of higher Unbillable and other costs, net, and $8.4 million of higher Stock-based compensation.
Office and general expenses increased $40.5 million, or 24.3%, compared with Net revenue growth of 8.1%. The increase included $21.0 million of higher Deferred acquisition consideration and $7.9 million of higher performance Stock-based compensation. The remaining increase in Office and general expenses was $11.6 million, with the increase primarily reflecting software and technology investments to support Net revenue growth.
From a functional operating cost perspective, Staff, Administrative and Unbillable and other costs, net, increased $20.6 million. Administrative and Unbillable and other costs, net, increased $22.2 million, primarily reflecting investments in software, product development and commercialization initiatives, including automation and AI capabilities. Staff costs decreased $1.6 million despite Organic net revenue growth of 7.4%, resulting in a 4.9 percentage point improvement in Staff costs as a percentage of Net revenue. The decrease reflected active management of the Staff cost base and productivity gains from shared services, AI-enabled workflow automation and the deployment of the Stagwell Content Supply Chain, which more than offset continued investment in client-facing leadership, sales, account management and other growth resources.
Stock-based compensation increased $16.3 million, primarily attributable to an increase in performance based awards granted in the current year as a greater proportion of total annual incentive compensation compared to the prior year.
Deferred acquisition consideration increased $21.0 million, primarily reflecting changes in the estimated fair value of contingent consideration liabilities based on updated performance expectations for certain acquired businesses.
Operating Income
Operating income decreased $12.9 million, or 21.1%, and operating margin decreased to 7.2% from 9.9%. The operating benefits from Net revenue growth, lower Staff costs and operating leverage across Administrative and Unbillable and other costs, net, were more than offset by a $41.9 million increase in expenses, consisting of $21.0 million of higher Deferred acquisition consideration, $16.3 million of higher Stock-based compensation, $4.0 million of higher Depreciation and amortization and $0.6 million of higher Impairment and other losses.
Interest Expense, Net
Interest expense, net for the three months ended September 30, 2026 was $24.0 million, compared to $25.2 million for the three months ended September 30, 2025, a decrease of $1.2 million. This decrease was primarily attributable to improved working capital performance as well as a lower weighted average interest rate.
Foreign Exchange, Net
Foreign exchange, net was a gain of $2.2 million for the three months ended September 30, 2026, compared to a loss of $0.4 million for the three months ended September 30, 2025, a favorable change of $2.6 million. The change mostly reflects remeasurement of foreign-currency cash, intercompany receivables/payables and intercompany loans held by our U.K., U.S., Canadian and Asia-Pacific ("APAC") entities.
Income Tax (Benefit) Expense
For the three months ended September 30, 2026, the Company had an income tax expense of $10.9 million (on a pre-tax income of $28.8 million resulting in an effective tax rate of 37.7%) compared to income tax expense for the three months ended September 30, 2025 of $9.6 million (on a pre-tax income of $33.3 million resulting in an effective tax rate of 28.7%).
The effective tax rate increased by 9.0 percentage points compared with the prior-year period, and income tax expense increased by $1.3 million. The increase in the tax rate primarily related to a higher estimated annual effective tax rate and increased losses for which no tax benefit was recognized, offset by state tax refunds applied in the current period, and other discrete items.
Noncontrolling and Redeemable Noncontrolling Interests
The effect of noncontrolling and redeemable noncontrolling interests for the three months ended September 30, 2026 was income of $0.3 million, compared to loss of $0.9 million for the three months ended September 30, 2025. The change reflects the mix of income and loss generated by entities that are not wholly owned by the Company.
Net Income Attributable to Stagwell Inc. Common Shareholders
As a result of the foregoing, net income attributable to Stagwell Inc. common shareholders for the three months ended September 30, 2026 and 2025 was $18.1 million and $24.6 million, respectively.
Adjusted EBITDA
Adjusted EBITDA increased $28.8 million, or 24.9%, and Adjusted EBITDA margin increased 2.9 percentage points to 21.8% of Net revenue from 18.9%. The margin improvement reflected a favorable mix of higher-margin revenue and the improvement in Staff costs as a percentage of Net revenue discussed above.
Earnings Per Share
Diluted EPS and Adjusted Diluted EPS for the three months ended September 30, 2026 were as follows:
GAAP
Adjustments (1)
Non-GAAP
(amounts in thousands, except per share amounts)
Net income attributable to Stagwell Inc. common shareholders and adjusted net income $ 18,119 $ 67,859 $ 85,978
Diluted - Weighted average number of common shares outstanding
250,989 - 250,989
Diluted EPS and Adjusted Diluted EPS (1)
$ 0.07 $ 0.34
Adjustments to Net income
Amortization
$ 42,884
Impairment and other losses 1,028
Stock-based compensation 28,920
Deferred acquisition consideration 7,675
Other Items, net (2)
7,409
$ 87,916
Adjustment to GAAP income tax expense (3)
(20,057)
$ 67,859
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
(2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses.
(3) Represents the difference between the income tax expense of $10.9 million at an effective tax rate of 37.7% on a GAAP basis and the income tax expense of $30.9 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
Diluted EPS and Adjusted Diluted EPS for the three months ended September 30, 2025 were as follows:
GAAP
Adjustments (1)
Non-GAAP
(amounts in thousands, except per share amounts)
Net income attributable to Stagwell Inc. common shareholders $ 24,619 $ 38,575 $ 63,194
Diluted - Weighted average number of common shares outstanding
259,583 - 259,583
Diluted EPS and Adjusted Diluted EPS (1)
$ 0.09 $ 0.24
Adjustments to Net income
Amortization
$ 38,707
Impairment and other losses 466
Stock-based compensation 12,646
Deferred acquisition consideration (13,348)
Other items, net (2)
13,333
$ 51,804
Adjustment to GAAP income tax expense (3)
(13,229)
$ 38,575
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
(2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses.
(3) Represents the difference between the income tax expense of $9.6 million at an effective tax rate of 28.7% on a GAAP basis and the income tax expense of $22.8 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
Marketing Services
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
Three Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 255,445 $ 291,089 $ (35,644) (12.2) %
Operating expenses
Cost of services 177,514 186,117 (8,603) (4.6) %
Office and general expenses 50,854 53,283 (2,429) (4.6) %
Depreciation and amortization 11,841 12,820 (979) (7.6) %
$ 240,209 $ 252,220 $ (12,011) (4.8) %
Operating income $ 15,236 $ 38,869 $ (23,633) (60.8) %
Three Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue
$ 255,445 $ 291,089 $ (35,644) (12.2) %
Billable costs 37,764 51,128 (13,364) (26.1) %
Net Revenue 217,681 100.0 % 239,961 100.0 % (22,280) (9.3) %
Staff costs 126,795 58.2 % 138,310 57.6 % (11,515) (8.3) %
Administrative costs 24,677 11.3 % 26,835 11.2 % (2,158) (8.0) %
Unbillable and other costs, net 24,254 11.1 % 17,187 7.2 % 7,067 41.1 %
Adjusted EBITDA 41,955 19.3 % 57,629 24.0 % (15,674) (27.2) %
Stock-based compensation 11,717 5.4 % 4,240 1.8 % 7,477 176.3 %
Depreciation and amortization 11,841 5.4 % 12,820 5.3 % (979) (7.6) %
Deferred acquisition consideration - - % (500) (0.2) % 500 (100.0) %
Other items, net 3,161 1.5 % 2,200 0.9 % 961 43.7 %
Operating income $ 15,236 7.0 % $ 38,869 16.2 % $ (23,633) (60.8) %
`
Revenue
Revenue for the three months ended September 30, 2026 was $255.4 million, compared to $291.1 million for the three months ended September 30, 2025, a decrease of $35.6 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Three Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Three Months Ended September 30, 2026 Organic Total
(dollars in thousands)
Marketing Services $ 239,961 $ (176) $ (3,996) $ (18,108) $ (22,280) $ 217,681 (7.5)% (9.3)%
Component % change (0.1) % (1.7) % (7.5) % (9.3) %
Net revenue decreased $22.3 million, or 9.3%, to $217.7 million. The decrease was driven principally by an $18.1 million, or 7.5%, organic decline, and a $4.0 million, or 1.7%, decline from dispositions.
The decline in organic Net revenue was driven primarily by lower research, experiential, and creative services, partially offset by growth in social media solutions. Creative and experiential services reflected the timing of the transition from completed engagements to recently awarded work, reduced spending by certain beverage clients driven by secular changes in the industry and the non-recurrence of one time projects in the prior year.
Dispositions reduced Net revenue by $4.0 million, primarily reflecting the divestiture of a non-core experiential brand.
Expenses
Cost of services decreased $8.6 million, or 4.6%, compared with a 12.2% decrease in Revenue. The decrease was primarily driven by $13.4 million of lower Billable costs and $2.0 million of lower expenses associated with a divested brand, partially offset by $6.2 million of higher Stock-based compensation.
Office and general expenses decreased $2.4 million, or 4.6%, compared with a 9.3% decrease in Net revenue. The decrease was primarily driven by $2.4 million of lower Staff costs and $1.1 million of savings from the consolidation of the Company's real-estate footprint, partially offset by a $0.5 million increase in Deferred acquisition consideration.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, decreased $6.6 million in aggregate. Staff costs decreased $11.5 million, reflecting actions to align the Staff cost base with lower Net revenue and efficiencies from shared services, AI-enabled workflow automation and the Stagwell Content Supply Chain. Administrative costs decreased $2.2 million, consistent with the Office and general expense savings discussed above. These decreases were partially offset by a $7.1 million increase in Unbillable and other costs, net, primarily reflecting higher creative production costs and the expansion of Sport Beach within experiential.
Operating Income
Operating income decreased $23.6 million, or 60.8%, and operating margin decreased to 7.0% from 16.2%. The decrease was driven principally by the reduction in revenues, partially offset by management actions to reduce staff and other administrative costs to align with the lower revenue, as discussed above.
Adjusted EBITDA
Adjusted EBITDA decreased $15.7 million or 27.2%, and Adjusted EBITDA margin decreased 4.7 percentage points to 19.3% of Net revenue from 24.0%. The decrease primarily reflected lower Net revenue and higher Unbillable and other costs, net, partially offset by lower Staff and Administrative costs, as discussed above.
Digital Transformation
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
Three Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 127,176 $ 104,445 $ 22,731 21.8 %
Operating expenses
Cost of services 72,805 63,337 9,468 14.9 %
Office and general expenses 23,659 18,464 5,195 28.1 %
Depreciation and amortization 6,256 5,932 324 5.5 %
$ 102,720 $ 87,733 $ 14,987 17.1 %
Operating income $ 24,456 $ 16,712 $ 7,744 46.3 %
Three Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue
$ 127,176 $ 104,445 $ 22,731 21.8 %
Billable costs 8,517 8,334 183 2.2 %
Net Revenue 118,659 100.0 % 96,111 100.0 % 22,548 23.5 %
Staff costs 73,620 62.0 % 62,845 65.4 % 10,775 17.1 %
Administrative costs 6,830 5.8 % 6,981 7.3 % (151) (2.2) %
Unbillable and other costs, net 71 0.1 % 401 0.4 % (330) (82.3) %
Adjusted EBITDA 38,138 32.1 % 25,884 26.9 % 12,254 47.3 %
Stock-based compensation 3,675 3.1 % 934 1.0 % 2,741 293.5 %
Depreciation and amortization 6,256 5.3 % 5,932 6.2 % 324 5.5 %
Deferred acquisition consideration 3,433 2.9 % 1,874 1.9 % 1,559 83.2 %
Other items, net 318 0.3 % 432 0.4 % (114) (26.4) %
Operating income $ 24,456 20.6 % $ 16,712 17.4 % $ 7,744 46.3 %
Revenue
Revenue for the three months ended September 30, 2026 was $127.2 million, compared to $104.4 million for the three months ended September 30, 2025, an increase of $22.7 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026, compared to the three months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Three Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Three Months Ended September 30, 2026 Organic Total
(dollars in thousands)
Digital Transformation $ 96,111 $ (233) $ 599 $ 22,182 $ 22,548 $ 118,659 23.1% 23.5%
Component % change (0.2) % 0.6 % 23.1 % 23.5 %
Net revenue increased $22.5 million, or 23.5%, to $118.7 million. The increase reflected $22.2 million, or 23.1%, of organic growth and $0.6 million, or 0.6%, from acquisitions, partially offset by $0.2 million, or 0.2%, from unfavorable foreign currency movements.
Organic net revenue increased $22.2 million, or 23.1%, driven primarily by expanded scopes of work with existing clients and new client wins fueled by demand for marketing workflow transformation. Growth sources included workflow and technology design and implementation planning to support adoption, as well as forward deployed engineers and other technical resources embedded within clients. Growth drivers also included broader integrated client engagements in which Digital Transformation capabilities were delivered alongside other services across the Company. The acquisition of QStrauss, a Colombian technology consulting company specializing in marketing technology and digital experience services, contributed $0.6 million to Net revenue.
Expenses
Cost of services increased $9.5 million, or 14.9%, compared with Revenue growth of 21.8%. The lower rate of Cost of services growth reflected improved operating leverage as hiring and other Staff cost growth trailed Revenue growth, together with productivity gains from AI-enabled development and coding workflows. The improvement was achieved while continuing to invest in account management resources.
Office and general expenses increased $5.2 million, or 28.1%, compared with Net revenue growth of 23.5%. The increase was primarily driven by $2.4 million of higher Stock-based compensation, $1.6 million of higher Deferred acquisition consideration, and $1.7 million of higher Staff costs.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, increased $10.3 million in aggregate, or 14.7%, compared with Net revenue growth of 23.5%. Staff costs increased $10.8 million, or 17.1%, while Administrative and Unbillable and other costs, net, decreased $0.5 million in aggregate. Staff costs declined to 62.0% of Net revenue from 65.4%, a 3.4 percentage point improvement, reflecting the operating leverage discussed above.
Operating Income
Operating income increased $7.7 million, or 46.3%, and operating margin increased to 20.6% from 17.4%. The increase was driven principally by the strong growth in revenue, offset by proportionately lower increases in compensation and administrative expenses, as described above.
Adjusted EBITDA
Adjusted EBITDA increased $12.3 million, or 47.3%, and Adjusted EBITDA margin increased 5.2 percentage points to 32.1% of Net revenue from 26.9%. The margin improvement reflected strong demand for marketing workflow transformation and a favorable mix of higher value strategy, design and technology services, together with operating leverage from productivity gains and disciplined hiring relative to revenue growth. The improvement was achieved while continuing to invest in account management, sales, client leadership and business development resources to support growth.
Media & Commerce
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
Three Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 176,857 $ 183,112 $ (6,255) (3.4) %
Operating expenses
Cost of services 105,690 110,783 (5,093) (4.6) %
Office and general expenses 57,551 54,455 3,096 5.7 %
Depreciation and amortization 8,601 7,524 1,077 14.3 %
$ 171,842 $ 172,762 $ (920) (0.5) %
Operating income $ 5,015 $ 10,350 $ (5,335) (51.5) %
Three Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue
$ 176,857 $ 183,112 $ (6,255) (3.4) %
Billable costs 18,113 20,570 (2,457) (11.9) %
Net Revenue 158,744 100.0 % 162,542 100.0 % (3,798) (2.3) %
Staff costs 95,403 60.1 % 98,212 60.4 % (2,809) (2.9) %
Administrative costs 26,650 16.8 % 24,225 14.9 % 2,425 10.0 %
Unbillable and other costs, net 16,917 10.7 % 15,554 9.6 % 1,363 8.8 %
Adjusted EBITDA 19,774 12.5 % 24,551 15.1 % (4,777) (19.5) %
Stock-based compensation 1,230 0.8 % 1,111 0.7 % 119 10.7 %
Depreciation and amortization 8,601 5.4 % 7,524 4.6 % 1,077 14.3 %
Deferred acquisition consideration 1,216 0.8 % 1,413 0.9 % (197) (13.9) %
Other items, net 3,712 2.3 % 4,153 2.6 % (441) (10.6) %
Operating income $ 5,015 3.2 % $ 10,350 6.4 % $ (5,335) (51.5) %
Revenue
Revenue for the three months ended September 30, 2026 was $176.9 million, compared to $183.1 million for the three months ended September 30, 2025, a decrease of $6.3 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Three Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Three Months Ended September 30, 2026 Organic Total
(dollars in thousands)
Media & Commerce $ 162,542 $ (432) $ - $ (3,366) $ (3,798) $ 158,744 (2.1)% (2.3)%
Component % change (0.3) % - % (2.1) % (2.3) %
Net revenue decreased $3.8 million, or 2.3%, to $158.7 million. The decrease reflected $3.4 million, or 2.1%, of organic decline and $0.4 million, or 0.3%, from unfavorable foreign currency movements.
Organic net revenue accounted for almost the entire net revenue decline, decreasing by $3.4 million, or 2.1%. The decrease reflected the net effect of an $8.1 million, or 8.8%, decrease in media buying, partially offset by a $4.9 million, or 7.3%, increase in commerce and CRM and media platform services. Media buying decreased primarily due to $4.9 million of lower client activity in the fashion and beauty sectors and $3.2 million of reduced client marketing spend in the Middle East due to the ongoing conflict in the region. Commerce and CRM and media platform services increased primarily due to new client wins in the technology and travel sectors.
Expenses
Cost of services decreased $5.1 million, or 4.6%, compared with a 3.4% decrease in Revenue. The decrease included a $2.5 million reduction in Billable costs. The remaining decrease in the Cost of services was primarily driven by lower Staff costs.
Office and general expenses increased $3.1 million, or 5.7%, compared with a 2.3% decrease in Net revenue, primarily reflecting investments in product development and the rebranding and positioning of Stagwell Media.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, increased $1.0 million in aggregate. Staff costs decreased $2.8 million, or 2.9%, reflecting actions to align the Staff cost base with lower Net revenue and efficiencies from automation of media buying and other operational initiatives, partially offset by continued investment in senior leadership and client-facing resources. Administrative costs increased $2.4 million, or 10.0%, and Unbillable and other costs, net, increased $1.4 million, or 8.8%, primarily reflecting investments in product development and the rebranding and positioning of Stagwell Media.
Operating Income
Operating income decreased $5.3 million, or 51.5%, and operating margin decreased to 3.2% from 6.4%, driven principally by the decline in Net revenue and operating expenses, as discussed above.
Adjusted EBITDA
Adjusted EBITDA decreased $4.8 million, or 19.5%, and Adjusted EBITDA margin decreased 2.6 percentage points to 12.5% of Net revenue from 15.1%. The decline reflected lower Net revenue and increased investment in product development, the rebranding and positioning of Stagwell Media, and senior leadership, partially offset by actions to align Staff costs with Net revenue.
Communications
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
Three Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 210,913 $ 145,086 $ 65,827 45.4 %
Operating Expenses
Cost of services 142,867 100,076 42,791 42.8 %
Office and general expenses 28,123 19,391 8,732 45.0 %
Depreciation and amortization 6,925 6,363 562 8.8 %
Impairment and other losses - 222 (222) (100.0) %
$ 177,915 $ 126,052 $ 51,863 41.1 %
Operating income $ 32,998 $ 19,034 $ 13,964 73.4 %
Three Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue $ 210,913 $ 145,086 $ 65,827 45.4 %
Billable costs 87,229 48,455 38,774 80.0 %
Net Revenue 123,684 100.0 % 96,631 100.0 % 27,053 28.0 %
Staff costs 59,939 48.5 % 56,650 58.6 % 3,289 5.8 %
Administrative costs 13,432 10.9 % 12,516 13.0 % 916 7.3 %
Unbillable and other costs, net 2,455 2.0 % 2,344 2.4 % 111 4.7 %
Adjusted EBITDA 47,858 38.7 % 25,121 26.0 % 22,737 90.5 %
Stock-based compensation 4,221 3.4 % 1,594 1.6 % 2,627 164.8 %
Depreciation and amortization 6,925 5.6 % 6,363 6.6 % 562 8.8 %
Deferred acquisition consideration 3,013 2.4 % (3,716) (3.8) % 6,729 NM
Impairment and other losses - - % 222 0.2 % (222) (100.0) %
Other items, net 701 0.6 % 1,624 1.7 % (923) (56.8) %
Operating income $ 32,998 26.7 % $ 19,034 19.7 % $ 13,964 73.4 %
Revenue
Revenue for the three months ended September 30, 2026 was $210.9 million, compared to $145.1 million for the three months ended September 30, 2025, an increase of $65.8 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026, compared to the three months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Three Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Three Months Ended September 30, 2026 Organic Total
(dollars in thousands)
Communications $ 96,631 $ 72 $ 7,657 $ 19,324 $ 27,053 $ 123,684 20.0 % 28.0 %
Component % change 0.1 % 7.9 % 20.0 % 28.0 %
Net revenue increased $27.1 million, or 28.0%, to $123.7 million. The increase reflected $19.3 million, or 20.0%, of organic growth, $7.7 million, or 7.9%, from acquisitions and $0.1 million, or 0.1%, from favorable foreign currency movements.
Organic net revenue increased $19.3 million, or 20.0%, driven by growth in public affairs, strategic communications, and political services. Growth in public affairs and strategic communications reflected increased corporate activity, expanded client scopes and new business wins. Political services increased as a result of higher campaign strategy, low dollar fundraising and media campaign activity associated with the U.S. election cycle.
The acquisition of Wavelength, a digital advocacy and communications company, contributed $7.7 million to Net revenue in the period.
Expenses
Cost of services increased $42.8 million, or 42.8%, compared with Revenue growth of 45.4%. The increase primarily included $38.8 million of higher Billable costs and $1.5 million of expenses from acquired entities.
Office and general expenses increased $8.7 million, or 45.0%, compared with Net revenue growth of 28.0%. The increase primarily included $6.7 million of higher Deferred acquisition consideration and $0.7 million of higher Stock-based compensation.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, increased $4.3 million in aggregate, or 6.0%, at a rate significantly below Net revenue growth of 28.0%. Staff costs increased $3.3 million, resulting in a 10.2 percentage point improvement in Staff costs as a percentage of Net revenue. The improvement reflected higher margins associated with fundraising activities and media placement fees and commissions, higher-value campaign strategy services and active management of the Staff cost base relative to Net revenue growth across the segment.
Operating Income
Operating income increased $14.0 million, or 73.4%, and operating margin increased 7.0 percentage points to 26.7% from 19.7%. The increase was driven principally by the strong growth in Net revenue offset partially by increases in related Billable costs and higher Deferred acquisition consideration, as discussed above.
Adjusted EBITDA
Adjusted EBITDA increased $22.7 million, or 90.5%, and Adjusted EBITDA margin increased 12.7 percentage points to 38.7% of Net revenue from 26.0%. The margin improvement reflected strong Organic net revenue growth, favorable business mix, and significant operating leverage across the segment, as Net revenue growth substantially exceeded growth in the operating cost base.
The Marketing Cloud
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
Three Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 55,825 $ 26,576 $ 29,249 110.1 %
Operating Expenses
Cost of services 16,849 15,097 1,752 11.6 %
Office and general expenses 15,720 1,908 13,812 723.9 %
Depreciation and amortization 5,995 6,455 (460) (7.1) %
Impairment and other losses 1,028 244 784 321.3 %
$ 39,592 $ 23,704 $ 15,888 67.0 %
Operating income $ 16,233 $ 2,872 $ 13,361 465.2 %
Three Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue $ 55,825 $ 26,576 $ 29,249 110.1 %
Billable costs 142 5 137 NM
Net Revenue 55,683 100.0 % 26,571 100.0 % 29,112 109.6 %
Staff costs 16,572 29.8 % 17,969 67.6 % (1,397) (7.8) %
Administrative costs 5,291 9.5 % 3,068 11.5 % 2,223 72.5 %
Unbillable and other costs, net 9,165 16.5 % 6,898 26.0 % 2,267 32.9 %
Adjusted EBITDA 24,655 44.3 % (1,364) (5.1) % 26,019 NM
Stock-based compensation 400 0.7 % 200 0.8 % 200 100.0 %
Depreciation and amortization 5,995 10.8 % 6,455 24.3 % (460) (7.1) %
Deferred acquisition consideration 13 - % (12,419) (46.7) % 12,432 NM
Impairment and other losses 1,028 1.8 % 244 0.9 % 784 321.3 %
Other items, net 986 1.8 % 1,284 4.8 % (298) (23.2) %
Operating income $ 16,233 29.2 % $ 2,872 10.8 % $ 13,361 465.2 %
Revenue
Revenue for the three months ended September 30, 2026 was $55.8 million, compared to $26.6 million for the three months ended September 30, 2025, an increase of $29.2 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Three Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Three Months Ended September 30, 2026 Organic Total
(dollars in thousands)
The Marketing Cloud $ 26,571 $ 304 $ - $ 28,808 $ 29,112 $ 55,683 108.4 % 109.6 %
Component % change 1.1 % - % 108.4 % 109.6 %
Net revenue increased $29.1 million, or 109.6%, to $55.7 million. The increase reflected $28.8 million, or 108.4%, of organic growth and $0.3 million, or 1.1%, from favorable foreign currency movements.
Organic net revenue accounted for nearly the entire increase in net revenue increasing by $28.8 million, or 108.4%, driven primarily by growth in software sales associated with The Machine and an increase in research products and services.
Expenses
Cost of services increased $1.8 million, or 11.6%, compared with Revenue growth of 110.1%. The lower rate of Cost of services growth primarily reflected the increase in higher margin software sales associated with The Machine, which requires less direct labor than the Company's services-based offerings, with software delivery costs, including maintenance, computing usage and storage, generally incurred over the related customer contract periods.
Office and general expenses increased $13.8 million, or 723.9%, compared with Net Revenue growth of 109.6%. The increase included $12.4 million of higher Deferred acquisition consideration and $0.2 million of higher Stock-based compensation. The remaining increase in expense was driven primarily by continued investment in product development, technology, commercialization resources, and dedicated sales teams to support The Machine, research products and the broader Marketing Cloud platform.
From a functional operating-cost perspective, Staff costs decreased $1.4 million, or 7.8%, despite Net revenue growth of 109.6%, resulting in a 37.8 percentage point improvement in Staff costs as a percentage of Net revenue, to 29.8% from 67.6%. The improvement primarily reflected the increased contribution from software sales discussed above. Unbillable and other costs, net, increased $2.3 million, reflecting costs associated with the growth of The Machine and the broader Marketing Cloud platform.
Operating Income
Operating income increased $13.4 million, or 465.2%, and operating margin increased 18.4 percentage points to 29.2% from 10.8% driven principally by the strong revenue growth, offset partially by the increase in Deferred acquisition consideration and investment spending, as discussed above.
Adjusted EBITDA
Adjusted EBITDA increased $26.0 million, from a loss of $1.4 million in the prior year period to income of $24.7 million, and Adjusted EBITDA margin improved to 44.3% of Net revenue from negative 5.1% in the prior year period. The margin improvement primarily reflected growth in software sales associated with The Machine, partially offset by continued investment in dedicated sales teams, product development, technology and commercialization resources.
Corporate
The components of operating results for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 were as follows:
Three Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Staff costs $ 16,099 $ 16,362 $ (263) (1.6) %
Administrative costs 9,373 (938) 10,311 NM
Adjusted EBITDA (25,472) (15,424) (10,048) 65.1 %
Stock-based compensation 7,677 4,567 3,110 68.1 %
Depreciation and amortization 8,651 5,166 3,485 67.5 %
Other items, net 1,976 1,357 619 45.6 %
Operating loss $ (43,776) $ (26,514) $ (17,262) 65.1 %
Expenses
Administrative costs increased $10.3 million, primarily reflecting an $8.9 million increase in software licensing fees and product development costs associated with investments in automation and AI. The increase was partially offset by a $3.7 million increase in Corporate administrative costs allocated to the Brands through the Company's shared services platform, reflecting efficiencies from centralized operations and automation.
Stock-based compensation increased $3.1 million, primarily reflecting an increase in awards granted during the current year as a greater proportion of annual incentive compensation was allocated to stock-based awards compared with the prior year.
Depreciation and amortization increased $3.5 million, primarily reflecting investments in enterprise technology infrastructure and internally developed software.
Operating Loss
Operating loss increased $17.3 million, or 65.1%, to $43.8 million. The increase is driven principally by the higher costs in administration and compensation, as discussed above.
NINE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2025
Consolidated Results of Operations
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Nine Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 2,306,477 $ 2,101,556 $ 204,921 9.8 %
Operating expenses
Cost of services 1,488,293 1,342,240 146,053 10.9 %
Office and general expenses 611,323 528,845 82,478 15.6 %
Depreciation and amortization 136,395 127,635 8,760 6.9 %
Impairment and other losses 1,219 466 753 161.6 %
$ 2,237,230 $ 1,999,186 $ 238,044 11.9 %
Operating income $ 69,247 $ 102,370 $ (33,123) (32.4) %
Nine Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue
$ 2,306,477 $ 2,101,556 $ 204,921 9.8 %
Billable costs 426,253 324,718 101,535 31.3 %
Net revenue
1,880,224 100.0 % 1,776,838 100.0 % 103,386 5.8 %
Staff costs 1,150,185 61.2 % 1,136,742 64.0 % 13,443 1.2 %
Administrative costs 239,473 12.7 % 218,223 12.3 % 21,250 9.7 %
Unbillable and other costs, net 147,358 7.8 % 129,302 7.3 % 18,056 14.0 %
Adjusted EBITDA 343,208 18.3 % 292,571 16.5 % 50,637 17.3 %
Stock-based compensation 61,735 3.3 % 44,143 2.5 % 17,592 39.9 %
Depreciation and amortization 136,395 7.3 % 127,635 7.2 % 8,760 6.9 %
Deferred acquisition consideration 26,766 1.4 % (9,911) (0.6) % 36,677 NM
Impairment and other losses 1,219 0.1 % 466 - % 753 161.6 %
Other items, net (1)
47,846 2.5 % 27,868 1.6 % 19,978 71.7 %
Operating income (2)
$ 69,247 3.7 % $ 102,370 5.8 % $ (33,123) (32.4) %
(1) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses.
(2) See the Results of Operations section above for a reconciliation of Operating income to Net loss attributable to Stagwell Inc. common shareholders.
*Consolidated amounts in the table above are net of eliminations.
Revenue
Revenue for the nine months ended September 30, 2026 was $2,306.5 million, compared to $2,101.6 million for the nine months ended September 30, 2025, an increase of $204.9 million.
Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Nine Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Nine Months Ended September 30, 2026 Organic Total
(dollars in thousands)
Marketing Services $ 692,760 $ 3,086 $ (7,740) $ (15,436) $ (20,090) $ 672,670 (2.2) % (2.9) %
Digital Transformation 277,091 (617) 3,826 45,734 48,943 326,034 16.5 % 17.7 %
Media & Commerce 459,911 1,855 4,185 (191) 5,849 465,760 - % 1.3 %
Communications 285,447 1,041 10,271 36,114 47,426 332,873 12.7 % 16.6 %
The Marketing Cloud 77,364 2,863 - 30,576 33,439 110,803 39.5 % 43.2 %
Corporate, eliminations and other (15,735) (8) - (12,173) (12,181) (27,916) 77.4 % 77.4 %
$ 1,776,838 $ 8,220 $ 10,542 $ 84,624 $ 103,386 $ 1,880,224 4.8 % 5.8 %
Component % change 0.5 % 0.6 % 4.8 % 5.8 %
For the nine months ended September 30, 2026, Net revenue increased $103.4 million, or 5.8%, to $1,880.2 million. The increase reflected $84.6 million, or 4.8%, of organic growth, $10.5 million, or 0.6%, from net acquisitions and $8.2 million, or 0.5%, from favorable foreign currency movements.
Organic growth was driven primarily by Digital Transformation, Communications and The Marketing Cloud. Digital Transformation increased $45.7 million, or 16.5%, driven by demand for marketing workflow transformation, including workflow and technology design, implementation planning and embedded technical resources. Communications increased $36.1 million, or 12.7%, reflecting growth in public affairs and strategic communications and increased political activity associated with the U.S. election cycle. The Marketing Cloud increased $30.6 million, or 39.5%, primarily reflecting software sales associated with The Machine and increased demand for research products and services. These increases were partially offset by a $15.4 million, or 2.2%, decline in Marketing Services resulting from the timing of the transition from completed engagements to recently awarded work, reduced spending by certain beverage clients driven by secular changes in the industry and the non-recurrence of one time projects in the prior year.
Acquisitions, net of dispositions contributed $10.5 million to Net revenue, primarily reflecting the acquisitions of Wavelength and QStrauss and the prior year acquisitions of JetFuel Studio LLC and Powered by JetFuel LLC (collectively, "Jetfuel"), Create Group Holding Limited ("Create"), and ADK Global ("ADK"), partially offset by the divestiture of a non-core Brand in the Marketing Services segment.
Expenses
Cost of services increased $146.1 million, or 10.9%, compared with Revenue growth of 9.8%. The increase was primarily driven by $101.5 million of higher Billable costs, $18.1 million of higher Unbillable and other costs, net, $3.4 million of higher Staff costs, $5.3 million of expenses from acquired entities, and $7.0 million of higher Stock-based compensation.
Office and general expenses increased $82.5 million, or 15.6%, compared with Net revenue growth of 5.8%. The increase included $36.7 million of higher Deferred acquisition consideration, $20.9 million of higher software and technology expenses, and $10.6 million of higher Stock-based compensation. The remaining increase in Office and general expenses was $14.3 million, primarily attributable to non-recurring payroll tax and insurance adjustments.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, increased $52.7 million in aggregate. Staff costs increased $13.4 million, or 1.2%, below Organic net revenue growth of 4.8%, resulting in a 2.8 percentage point improvement in Staff costs as a percentage of Net revenue. The improvement reflected productivity gains from shared services, AI-enabled workflow automation and the Stagwell Content Supply Chain, while continuing to invest in client-facing leadership, sales, account management and other growth resources. Administrative costs increased $21.3 million and Unbillable and other costs, net, increased $18.1 million, primarily reflecting investments in software, product development and commercialization initiatives, including automation and AI capabilities.
Stock-based compensation increased $17.6 million, primarily reflecting an increase in awards granted during the current year, as a greater proportion of annual incentive compensation was allocated to stock-based awards compared with the prior year.
Deferred acquisition consideration increased $36.7 million, primarily reflecting changes in the estimated fair value of contingent consideration liabilities based on updated performance expectations for certain acquired businesses.
Operating Income
Operating income decreased $33.1 million, or 32.4%, and operating margin decreased to 3.7% from 5.8%. The decrease included a $63.8 million increase in expenses, consisting of $36.7 million higher Deferred acquisition consideration, $17.6 million of higher Stock-based compensation, $8.8 million of higher Depreciation and amortization and $0.8 million of higher Impairment and other losses.
Interest Expense, Net
Interest expense, net for the nine months ended September 30, 2026 was $69.6 million, compared to $72.0 million for the nine months ended September 30, 2025, a decrease of $2.4 million. This decrease was primarily attributable to improved working capital performance as well as a lower average interest rate.
Foreign Exchange, Net
The foreign exchange loss for the nine months ended September 30, 2026, was $0.2 million, compared to a loss of $0.5 million for the nine months ended September 30, 2025, a favorable change of $0.3 million.
Income Tax Expense
For the nine months ended September 30, 2026, the Company had an income tax expense of $7.6 million (on a pre-tax income of $2.9 million resulting in an effective tax rate of 265.3%) compared to income tax expense for the nine months ended September 30, 2025 of $14.0 million (on a pre-tax income of $27.7 million resulting in an effective tax rate of 50.3%).
The effective tax rate increased by 215.0 percentage points compared with the prior-year period, and income tax expense decreased by $6.4 million. The increase in the tax rate primarily related to the significant decline in pre-tax income in 2026 and increased losses for which no tax benefit was recognized, offset by state tax refunds applied in the current period, and other discrete items.
Noncontrolling and Redeemable Noncontrolling Interests
The effect of Noncontrolling and redeemable noncontrolling interests for the nine months ended September 30, 2026 was a loss of $1.3 million, compared to a loss of $2.6 million for the nine months ended September 30, 2025. The amounts were driven by the mix of income and loss derived from entities not entirely owned by the Company. Additionally, the change was driven by the Class C Exchange during the second quarter of 2025, which increased the loss allocated to Stagwell Inc.'s common shareholders.
Net (Loss) Income Attributable to Stagwell Inc. Common Shareholders
As a result of the foregoing, Net loss attributable to Stagwell Inc. common shareholders for the nine months ended September 30, 2026 was $3.0 million, compared to a net income of $16.4 million for the nine months ended September 30, 2025.
Adjusted EBITDA
Adjusted EBITDA increased $50.6 million, or 17.3%, and Adjusted EBITDA margin increased 1.8 percentage points to 18.3% of Net revenue from 16.5%. The margin improvement reflected Net revenue growth in excess of growth in the operating cost base, including a 2.8 percentage point improvement in Staff costs as a percentage of Net revenue. The improvement was achieved while continuing to invest in product development, technology, commercialization capabilities, and growth initiatives across the Company's businesses.
Earnings Per Share
Diluted EPS and Adjusted Diluted EPS for the nine months ended September 30, 2026 were as follows:
GAAP
Adjustments (1)
Non-GAAP
(amounts in thousands, except per share amounts)
Net (loss) income attributable to Stagwell Inc. common shareholders $ (2,970) $ 193,633 $ 190,663
Diluted - Weighted average number of common shares outstanding
247,131 - 247,131
Diluted EPS and Adjusted Diluted EPS (1)
$ (0.01) $ 0.77
Adjustments to Net (loss) income
Amortization $ 119,962
Impairment and other losses 1,219
Stock-based compensation 61,735
Deferred acquisition consideration 26,766
Other items, net (2)
44,401
$ 254,083
Adjustment to GAAP income tax expense (3)
(60,450)
$ 193,633
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
(2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses.
(3) Represents the difference between the income tax expense of $7.6 million at an effective tax rate of 265.3% on a GAAP basis and the income tax expense of $68.1 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
Diluted EPS and Adjusted Diluted EPS for the nine months ended September 30, 2025 were as follows:
GAAP
Adjustments (1)
Non-GAAP
(amounts in thousands, except per share amounts)
Net income attributable to Stagwell Inc. common shareholders $ 16,441 $ 134,175 $ 150,616
Net loss attributable to Class C shareholders (6,637) - (6,637)
Net income attributable to Stagwell Inc. and Class C shareholders and adjusted net income $ 9,804 $ 134,175 $ 143,979
Diluted - Weighted average number of common shares outstanding
214,557 - 214,557
Weighted average number of shares of Class C Common Stock outstanding 52,216 - 52,216
Diluted - Weighted average number of shares outstanding
266,773 - 266,773
Diluted EPS and Adjusted Diluted EPS (1)
$ 0.04 $ 0.54
Adjustments to Net income
Amortization
$ 107,281
Impairment and other losses 466
Stock-based compensation 44,143
Deferred acquisition consideration (9,911)
Other items, net (2)
30,151
$ 172,130
Adjustment to GAAP income tax expense (3)
(37,955)
$ 134,175
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
(2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring income and expenses.
(3) Represents the difference between the income tax expense of $14.0 million at an effective tax rate of 50.3% on a GAAP basis and the income tax expense of $51.9 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments.
Marketing Services
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Nine Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 786,650 $ 817,294 $ (30,644) (3.7) %
Operating expenses
Cost of services 535,117 530,712 4,405 0.8 %
Office and general expenses 150,329 153,178 (2,849) (1.9) %
Depreciation and amortization 36,749 39,556 (2,807) (7.1) %
$ 722,195 $ 723,446 $ (1,251) (0.2) %
Operating income $ 64,455 $ 93,848 $ (29,393) (31.3) %
Nine Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue
$ 786,650 $ 817,294 $ (30,644) (3.7) %
Billable costs 113,980 124,534 (10,554) (8.5) %
Net revenue
672,670 100.0 % 692,760 100.0 % (20,090) (2.9) %
Staff costs 390,338 58.0 % 401,036 57.9 % (10,698) (2.7) %
Administrative costs 74,036 11.0 % 83,338 12.0 % (9,302) (11.2) %
Unbillable and other costs, net 75,327 11.2 % 61,801 8.9 % 13,526 21.9 %
Adjusted EBITDA 132,969 19.8 % 146,585 21.2 % (13,616) (9.3) %
Stock-based compensation 24,649 3.7 % 14,832 2.1 % 9,817 66.2 %
Depreciation and amortization 36,749 5.5 % 39,556 5.7 % (2,807) (7.1) %
Deferred acquisition consideration (1,969) (0.3) % (4,784) (0.7) % 2,815 (58.8) %
Other items, net 9,085 1.4 % 3,133 0.5 % 5,952 190.0 %
Operating income $ 64,455 9.6 % $ 93,848 13.5 % $ (29,393) (31.3) %
Revenue
Revenue for the nine months ended September 30, 2026 was $786.7 million, compared to $817.3 million for the nine months ended September 30, 2025, a decrease of $30.6 million.
Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Nine Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Nine Months Ended September 30, 2026 Organic Total
(dollars in thousands)
Marketing Services $ 692,760 $ 3,086 $ (7,740) $ (15,436) $ (20,090) $ 672,670 (2.2) % (2.9) %
Component % change 0.4 % (1.1) % (2.2) % (2.9) %
Net revenue decreased $20.1 million, or 2.9%, to $672.7 million. The decrease reflected $15.4 million, or 2.2%, of organic decline and $7.7 million, or 1.1%, from acquisitions, net of dispositions, partially offset by $3.1 million, or 0.4%, from favorable foreign currency movements.
Organic net revenue decreased $15.4 million, or 2.2%, primarily reflecting declines in creative and experiential services, partially offset by growth in research and social media solutions. Creative services reflected timing of the transition from completed engagements to recently awarded work and the non-recurrence of one time projects in the prior year. Experiential services declined primarily due to lower beverage and spirits client spending, partially offset by demand for large scale activations through Sport Beach. Research increased due to new client wins and expanded client relationships across the technology, financial services, and professional services sectors.
Acquisitions, net of dispositions reduced Net revenue by $7.7 million, primarily reflecting the divestiture of an experiential brand, partially offset by the prior year acquisition of Jetfuel.
Expenses
Cost of services increased $4.4 million, or 0.8%, compared with a 3.7% decrease in Revenue. The increase was primarily driven by $6.0 million of higher Stock-based compensation and $13.5 million of higher Unbillable and other costs, net, partially offset by $10.6 million of lower Billable costs and $3.3 million of lower expenses associated with acquired and divested entities.
Office and general expenses decreased $2.8 million, or 1.9%, compared with a 2.9% decrease in Net revenue. The decrease was primarily driven by actions to align the Staff cost base with lower Net revenue and efficiencies from shared services, AI-enabled workflow automation and the Stagwell Content Supply Chain, partially offset by $2.8 million of higher Deferred acquisition consideration and $3.8 million of higher Stock-based compensation.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, decreased $6.5 million in aggregate. Staff costs decreased $10.7 million and Administrative costs decreased $9.3 million, reflecting actions to align the cost base with lower Net revenue, efficiencies from shared services and AI-enabled workflow automation, and savings from the consolidation of the Company's real-estate footprint. These decreases were partially offset by a $13.5 million increase in Unbillable and other costs, net, primarily reflecting increased research-related costs and expanded experiential activities associated with Sport Beach.
Stock-based compensation increased $9.8 million, primarily reflecting an increase in awards granted in the current year as a greater proportion of annual incentive compensation was allocated to stock-based awards compared with the prior year.
Other items, net increased $6.0 million, primarily reflecting the absence of a $3.5 million gain recognized in the prior-year period associated with a lease termination as part of the Company's real estate consolidation initiatives and $1.1 million of higher severance expense.
Operating Income
Operating income decreased $29.4 million, or 31.3%, and operating margin decreased to 9.6% from 13.5%. The decrease was driven principally by the reduction in revenues, partially offset by management actions to reduce staff and other administrative costs to align with the lower revenue, as discussed above. Operating income was also adversely affected by a $6.0 million increase in Other items, net, primarily reflecting the absence of a prior year lease termination gain and higher severance expense.
Adjusted EBITDA
Adjusted EBITDA decreased $13.6 million, or 9.3%, and Adjusted EBITDA margin decreased 1.4 percentage points to 19.8% of Net revenue from 21.2%. The decline primarily reflected lower Net revenue and higher research and experiential related costs, partially offset by lower Staff and Administrative costs from actions to align the cost base with Net revenue.
Digital Transformation
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Nine Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 349,756 $ 294,301 $ 55,455 18.8 %
Operating expenses
Cost of services 206,534 179,510 27,024 15.1 %
Office and general expenses 71,277 57,752 13,525 23.4 %
Depreciation and amortization 18,011 17,250 761 4.4 %
$ 295,822 $ 254,512 $ 41,310 16.2 %
Operating income $ 53,934 $ 39,789 $ 14,145 35.6 %
Nine Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue
$ 349,756 $ 294,301 $ 55,455 18.8 %
Billable costs 23,722 17,210 6,512 37.8 %
Net revenue
326,034 100.0 % 277,091 100.0 % 48,943 17.7 %
Staff costs 208,901 64.1 % 186,972 67.5 % 21,929 11.7 %
Administrative costs 20,966 6.4 % 19,599 7.1 % 1,367 7.0 %
Unbillable and other costs, net 381 0.1 % 1,178 0.4 % (797) (67.7) %
Adjusted EBITDA 95,786 29.4 % 69,342 25.0 % 26,444 38.1 %
Stock-based compensation 8,368 2.6 % 3,081 1.1 % 5,287 171.6 %
Depreciation and amortization 18,011 5.5 % 17,250 6.2 % 761 4.4 %
Deferred acquisition consideration 13,535 4.2 % 7,729 2.8 % 5,806 75.1 %
Other items, net 1,938 0.6 % 1,493 0.5 % 445 29.8 %
Operating income $ 53,934 16.5 % $ 39,789 14.4 % $ 14,145 35.6 %
Revenue
Revenue for the nine months ended September 30, 2026 was $349.8 million, compared to $294.3 million for the nine months ended September 30, 2025, an increase of $55.5 million.
Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Nine Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Nine Months Ended September 30, 2026 Organic Total
(dollars in thousands)
Digital Transformation $ 277,091 $ (617) $ 3,826 $ 45,734 $ 48,943 $ 326,034 16.5 % 17.7 %
Component % change (0.2) % 1.4 % 16.5 % 17.7 %
Net revenue increased $48.9 million, or 17.7%, to $326.0 million. The increase reflected $45.7 million, or 16.5%, of organic growth and $3.8 million, or 1.4%, from acquisitions, partially offset by $0.6 million, or 0.2%, from unfavorable foreign currency movements.
Organic net revenue increased $45.7 million, or 16.5%, reflecting expanded scope with existing clients and new client wins driven by demand for workflow transformation, particularly among enterprise technology clients. Demand included workflow and technology design and implementation planning to support adoption, as well as forward deployed engineers and other technical resources embedded within clients. Digital Transformation capabilities were also delivered as part of broader integrated client engagements across the Company. Digital activation contributed to the increase through expanded enterprise software activation engagements and additional work with existing clients, partially offset by the completion of certain prior year engagements.
Acquisitions contributed $3.8 million to Net revenue, primarily reflecting the prior year acquisition of Create and the current year acquisition of QStrauss.
Expenses
Cost of services increased $27.0 million, or 15.1%, compared with Revenue growth of 18.8%. The increase was primarily driven by $18.7 million of higher Staff costs, $6.5 million of higher Billable costs, and $1.5 million of expenses from acquired entities. The lower rate of Cost of services growth reflected hiring and Staff cost growth below Revenue growth, together with productivity gains from AI-enabled development and coding workflows. The improvement was achieved while continuing to invest in account management resources.
Office and general expenses increased $13.5 million, or 23.4%, compared with Net revenue growth of 17.7%. The increase included $5.8 million of higher Deferred acquisition consideration and $4.8 million of higher Stock-based compensation. The remaining increase in Office and general expenses was $2.9 million, primarily reflecting continued investment in client leadership, sales and business development resources to support Net revenue growth.
From a functional operating-cost perspective, Staff, Administrative and Unbillable and other costs, net, increased at a rate below Net revenue growth. Staff costs increased $21.9 million, or 11.7%, resulting in a 3.4 percentage point improvement in Staff costs as a percentage of Net revenue. The improvement reflected the hiring discipline and productivity gains discussed above.
Operating Income
Operating income increased $14.1 million, or 35.6%, and operating margin increased 2.1 percentage points to 16.5% from 14.4%. The increase was partially offset by $5.8 million of higher Deferred acquisition consideration, $5.3 million of higher Stock-based compensation and $0.8 million of higher Depreciation and amortization.
Adjusted EBITDA
Adjusted EBITDA increased $26.4 million, or 38.1%, and Adjusted EBITDA margin increased 4.4 percentage points to 29.4% of Net revenue from 25.0%. The margin improvement reflected Organic net revenue growth of 16.5% in excess of growth in the operating cost base, driven by strong demand for workflow transformation and productivity gains from AI enabled development and coding workflows, while continuing to invest in account management, client leadership, sales and business development resources.
Media & Commerce
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, were as follows:
Nine Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 534,561 $ 509,416 $ 25,145 4.9 %
Operating expenses
Cost of services 331,931 310,085 21,846 7.0 %
Office and general expenses 173,347 163,551 9,796 6.0 %
Depreciation and amortization 24,319 22,211 2,108 9.5 %
Impairment and other losses 191 - 191 100.0 %
$ 529,788 $ 495,847 $ 33,941 6.8 %
Operating income $ 4,773 $ 13,569 $ (8,796) (64.8) %
Nine Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue
$ 534,561 $ 509,416 $ 25,145 4.9 %
Billable costs 68,801 49,505 19,296 39.0 %
Net revenue
465,760 100.0 % 459,911 100.0 % 5,849 1.3 %
Staff costs 291,338 62.6 % 291,228 63.3 % 110 - %
Administrative costs 74,902 16.1 % 70,963 15.4 % 3,939 5.6 %
Unbillable and other costs, net 45,820 9.8 % 44,486 9.7 % 1,334 3.0 %
Adjusted EBITDA 53,700 11.5 % 53,234 11.6 % 466 0.9 %
Stock-based compensation 2,871 0.6 % 3,302 0.7 % (431) (13.1) %
Depreciation and amortization 24,319 5.2 % 22,211 4.8 % 2,108 9.5 %
Deferred acquisition consideration 9,854 2.1 % 2,942 0.6 % 6,912 234.9 %
Impairment and other losses 191 - % - - % 191 100.0 %
Other items, net 11,692 2.5 % 11,210 2.4 % 482 4.3 %
Operating income $ 4,773 1.0 % $ 13,569 3.0 % $ (8,796) (64.8) %
Revenue
Revenue for the nine months ended September 30, 2026 was $534.6 million, compared to $509.4 million for the nine months ended September 30, 2025, an increase of $25.1 million.
Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Nine Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Nine Months Ended September 30, 2026 Organic Total
(dollars in thousands)
Media & Commerce $ 459,911 $ 1,855 $ 4,185 $ (191) $ 5,849 $ 465,760 - % 1.3 %
Component % change 0.4 % 0.9 % - % 1.3 %
Net revenue increased $5.8 million, or 1.3%, to $465.8 million. The increase reflected $4.2 million, or 0.9%, from acquisitions and $1.9 million, or 0.4%, from favorable foreign currency movements, partially offset by a $0.2 million organic decline.
Organic net revenue decreased $0.2 million. The decrease reflected the net effect of an $8.5 million decline in media buying, offset by increases of $5.7 million in media platform services and $2.6 million in commerce and CRM. Media buying decreased primarily due to $6.1 million of reduced client marketing spend in the Middle East due to the ongoing conflict in the region. Media platform services and commerce and CRM increased primarily due to higher connected television advertising related to the World Cup, expansion of in-flight connectivity partnerships, growth in travel media publications, and new client wins.
Acquisitions contributed $4.2 million to Net revenue, primarily reflecting the prior year acquisition of ADK.
Expenses
Cost of services increased $21.8 million, or 7.0%, compared with Revenue growth of 4.9%. The increase was primarily driven by $19.3 million of higher Billable costs and $4.2 million of expenses from acquired entities.
Office and general expenses increased $9.8 million, or 6.0%, compared with Net revenue growth of 1.3%. The increase included $1.9 million of expenses from acquired entities and $6.9 million of higher Deferred acquisition consideration, partially offset by $0.4 million of lower Stock-based compensation. The remaining increase in Office and general expenses was $1.4 million, primarily reflecting investments in product development and the rebranding and positioning of Stagwell Media.
From a functional operating-cost perspective, Administrative costs increased $3.9 million, or 5.6%, and Unbillable and other costs, net, increased $1.3 million, or 3.0%, primarily reflecting investments in product development and the rebranding and positioning of Stagwell Media.
Operating Income
Operating income decreased $8.8 million, or 64.8%, and operating margin decreased 2.0 percentage points to 1.0% from 3.0%. The decrease was primarily driven by $6.9 million of higher Deferred acquisition consideration, $2.1 million of higher Depreciation and amortization and $0.2 million of higher Impairment and other losses, partially offset by $0.4 million of lower Stock-based compensation.
Adjusted EBITDA
Adjusted EBITDA increased $0.5 million, or 0.9%, while Adjusted EBITDA margin decreased slightly to 11.5% of Net revenue from 11.6%. The relatively stable Adjusted EBITDA and margin reflected modest Net revenue growth and actions to align Staff costs with Net revenue, offset by continued investment in senior leadership, product development and the rebranding and positioning of Stagwell Media.
Communications
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Nine Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 552,767 $ 420,556 $ 132,211 31.4 %
Operating expenses
Cost of services 382,804 293,082 89,722 30.6 %
Office and general expenses 80,210 64,012 16,198 25.3 %
Depreciation and amortization 19,972 19,349 623 3.2 %
Impairment and other losses - 222 (222) (100.0) %
$ 482,986 $ 376,665 $ 106,321 28.2 %
Operating income $ 69,781 $ 43,891 $ 25,890 59.0 %
Nine Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue
$ 552,767 $ 420,556 $ 132,211 31.4 %
Billable costs 219,894 135,109 84,785 62.8 %
Net revenue
332,873 100.0 % 285,447 100.0 % 47,426 16.6 %
Staff costs 178,086 53.5 % 172,273 60.4 % 5,813 3.4 %
Administrative costs 40,634 12.2 % 37,042 13.0 % 3,592 9.7 %
Unbillable and other costs, net 6,291 1.9 % 7,103 2.5 % (812) (11.4) %
Adjusted EBITDA 107,862 32.4 % 69,029 24.2 % 38,833 56.3 %
Stock-based compensation 9,131 2.7 % 6,760 2.4 % 2,371 35.1 %
Depreciation and amortization 19,972 6.0 % 19,349 6.8 % 623 3.2 %
Deferred acquisition consideration 4,773 1.4 % (4,879) (1.7) % 9,652 NM
Impairment and other losses - - % 222 0.1 % (222) (100.0) %
Other items, net 4,205 1.3 % 3,686 1.3 % 519 14.1 %
Operating income $ 69,781 21.0 % $ 43,891 15.4 % $ 25,890 59.0 %
Revenue
Revenue for the nine months ended September 30, 2026 was $552.8 million compared to $420.6 million for the nine months ended September 30, 2025, an increase of $132.2 million.
Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Nine Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Nine Months Ended September 30, 2026 Organic Total
(dollars in thousands)
Communications $ 285,447 $ 1,041 $ 10,271 $ 36,114 $ 47,426 $ 332,873 12.7 % 16.6 %
Component % change 0.4 % 3.6 % 12.7 % 16.6 %
Net revenue increased $47.4 million, or 16.6%, to $332.9 million. The increase reflected $36.1 million, or 12.7%, of organic growth, $10.3 million, or 3.6%, from net acquisitions and $1.0 million, or 0.4%, from favorable foreign currency movements.
Organic net revenue increased $36.1 million, or 12.7%, driven by growth in public affairs, strategic communications, and political services. Growth in public affairs and strategic communications reflected increased corporate activity, expanded client scopes and new business wins. Political services increased because of higher campaign strategy, high volume of low dollar fundraising and media campaign activity associated with the U.S. election cycle.
Acquisitions contributed $10.3 million to Net revenue, primarily reflecting the acquisition of Wavelength.
Expenses
Cost of services increased $89.7 million, or 30.6%, compared with Revenue growth of 31.4%. The increase included $84.8 million of higher Billable costs and $2.9 million of expenses from acquired entities.
Office and general expenses increased $16.2 million, or 25.3%, compared with Net revenue growth of 16.6%. The increase primarily included $9.7 million of higher Deferred acquisition consideration and $1.9 million of higher Stock-based compensation.
From a functional operating-cost perspective, Staff costs increased $5.8 million, or 3.4%, significantly below Organic net revenue growth of 12.7%, resulting in a 6.9 percentage point improvement in Staff costs as a percentage of Net revenue. The improvement reflected higher margins associated with fundraising activities and media placement fees and commissions, higher-value campaign strategy services and active management of the Staff cost base relative to Net revenue growth across the segment.
Operating Income
Operating income increased $25.9 million, or 59.0%, and operating margin increased 5.6 percentage points to 21.0% from 15.4%. The increase was partially offset by $9.7 million of higher Deferred acquisition consideration, $2.4 million of higher Stock-based compensation, and $0.6 million of higher Depreciation and amortization, partially offset by $0.2 million of lower Impairment and other losses.
Adjusted EBITDA
Adjusted EBITDA increased $38.8 million, or 56.3%, and Adjusted EBITDA margin increased 8.2 percentage points to 32.4% of Net revenue from 24.2%. The margin improvement reflected strong Organic net revenue growth, favorable business mix and operating leverage across the segment, as Net revenue growth substantially exceeded growth in the operating cost base.
The Marketing Cloud
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Nine Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Revenue $ 110,963 $ 77,380 $ 33,583 43.4 %
Operating expenses
Cost of services 47,930 41,673 6,257 15.0 %
Office and general expenses 48,820 32,556 16,264 50.0 %
Depreciation and amortization 18,945 17,436 1,509 8.7 %
Impairment and other losses 1,028 244 784 321.3 %
$ 116,723 $ 91,909 $ 24,814 27.0 %
Operating loss $ (5,760) $ (14,529) $ 8,769 (60.4) %
Nine Months Ended September 30,
2026 % of Net Revenue 2025 % of Net Revenue Change
(dollars in thousands)
$ %
Revenue
$ 110,963 $ 77,380 $ 33,583 43.4 %
Billable costs 160 16 144 900.0 %
Net revenue
110,803 100.0 % 77,364 100.0 % 33,439 43.2 %
Staff costs 51,460 46.4 % 52,001 67.2 % (541) (1.0) %
Administrative costs 18,003 16.2 % 11,582 15.0 % 6,421 55.4 %
Unbillable and other costs, net 23,962 21.6 % 18,399 23.8 % 5,563 30.2 %
Adjusted EBITDA 17,378 15.7 % (4,618) (6.0) % 21,996 NM
Stock-based compensation 906 0.8 % 541 0.7 % 365 67.5 %
Depreciation and amortization 18,945 17.1 % 17,436 22.5 % 1,509 8.7 %
Deferred acquisition consideration 573 0.5 % (10,919) (14.1) % 11,492 NM
Impairment and other losses 1,028 0.9 % 244 0.3 % 784 321.3 %
Other items, net 1,686 1.5 % 2,609 3.4 % (923) (35.4) %
Operating loss $ (5,760) (5.2) % $ (14,529) (18.8) % $ 8,769 (60.4) %
Revenue
Revenue for the nine months ended September 30, 2026 was $111.0 million compared to $77.4 million for the nine months ended September 30, 2025, an increase of $33.6 million.
Net Revenue
The components of the fluctuations in Net revenue for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Net Revenue - Components of Change Change
Nine Months Ended September 30, 2025 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Nine Months Ended September 30, 2026 Organic Total
(dollars in thousands)
The Marketing Cloud $ 77,364 $ 2,863 $ - $ 30,576 $ 33,439 $ 110,803 39.5 % 43.2 %
Component % change 3.7 % - % 39.5 % 43.2 %
Net revenue increased $33.4 million, or 43.2%, to $110.8 million. The increase reflected $30.6 million, or 39.5%, of organic growth and $2.9 million, or 3.7%, from favorable foreign currency movements.
Organic net revenue increased $30.6 million, or 39.5%, driven primarily by growth in software sales associated with The Machine and increased demand for research products and services.
Expenses
Cost of services increased $6.3 million, or 15.0%, compared with Revenue growth of 43.4%. The lower rate of Cost of services growth primarily reflected the growth in software sales associated with The Machine and research products, which require less direct labor than the Company's services-based offerings. Software delivery costs, including maintenance, computing usage and storage, are generally incurred over the related customer contract periods.
Office and general expenses increased $16.3 million, or 50.0%, compared with Net revenue growth of 43.2%. The increase included $11.5 million of higher Deferred acquisition consideration and $0.3 million of higher Stock-based compensation. The remaining increase in Office and general expenses was $4.5 million, primarily reflecting continued investment in product development, technology, commercialization resources and dedicated sales teams to support The Machine, research products and the broader Marketing Cloud platform.
From a functional operating-cost perspective, Staff costs decreased $0.5 million despite Net revenue growth of 43.2%, resulting in a 20.8 percentage point improvement in Staff costs as a percentage of Net revenue, to 46.4% from 67.2%. The improvement primarily reflected the increased contribution from software sales discussed above. Unbillable and other costs, net, increased $5.6 million, reflecting costs associated with the growth of The Machine and the broader Marketing Cloud platform.
Operating Loss
Operating loss decreased $8.8 million, or 60.4%, and operating margin improved to a loss of 5.2% from a loss of 18.8%. The improvement was partially offset by $11.5 million of higher Deferred acquisition consideration, $1.5 million of higher Depreciation and amortization, $0.8 million of higher Impairment and other losses and $0.4 million of higher Stock-based compensation.
Adjusted EBITDA
Adjusted EBITDA improved $22.0 million, from a loss of $4.6 million in the prior year period to income of $17.4 million, and Adjusted EBITDA margin improved to 15.7% of Net revenue from a negative 6.0% in the prior year period. The improvement primarily reflected growth in software sales associated with The Machine and research products, partially offset by continued investment in dedicated sales teams, product development, technology and commercialization resources.
Corporate
The components of operating results for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 were as follows:
Nine Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Staff costs $ 48,087 $ 41,238 $ 6,849 16.6 %
Administrative costs 17,507 (2,001) 19,508 NM
Adjusted EBITDA (65,594) (39,237) (26,357) 67.2 %
Stock-based compensation 15,810 15,627 183 1.2 %
Depreciation and amortization 18,276 11,833 6,443 54.4 %
Other items, net 11,925 5,737 6,188 107.9 %
Operating loss $ (111,605) $ (72,434) $ (39,171) 54.1 %
Expenses
Staff costs increased $6.8 million, primarily reflecting investments in sales, growth and account management resources, certain senior leadership hires and higher healthcare-related insurance claims.
Administrative costs increased $19.5 million, primarily reflecting a $26.3 million increase in software licensing fees and product development costs associated with investments in automation and AI, partially offset by an $11.0 million increase in Corporate administrative costs allocated to the Brands through the Company's shared services platform.
Depreciation and amortization increased $6.4 million, primarily reflecting investments in enterprise technology infrastructure and internally developed software.
Operating Loss
Operating loss increased $39.2 million or 54.1% to $111.6 million. The increase included $6.4 million of higher Depreciation and amortization and $0.2 million of higher Stock-based compensation. Operating loss was also adversely affected by a $6.2 million increase in Other items, net. The remaining increase in operating loss was $26.4 million, primarily reflecting the investments in technology, product development, automation and AI discussed above, partially offset by efficiencies from the Company's shared services platform.
Liquidity and Capital Resources:
The following table provides summary information about the Company's liquidity position and capital resources:
Nine Months Ended September 30,
2026 2025 Change
(dollars in thousands)
$ %
Net cash provided by operating activities $ 152,279 $ 30,713 $ 121,566 395.8 %
Net cash used in investing activities (113,910) (80,759) (33,151) 41.0 %
Net cash (used in) provided by financing activities (11,606) 44,227 (55,833) (126.2) %
The Company had cash and cash equivalents of $132.2 million and $104.5 million as of September 30, 2026, and December 31, 2025, respectively.
Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2026 was $152.3 million, an increase of $121.6 million, or 395.8%, compared to the prior-year period. The increase was primarily driven by $81.3 million improvement in working capital and $58.4 million of favorable changes in non-cash adjustments. Although these non-cash items contributed to the higher net loss, they did not affect operating cash flows.
The $81.3 million year-over-year reduction in working capital usage primarily reflected favorable changes of $122.4 million in accruals including accrued media, largely due to timing and improved payment terms with certain vendors and also due to the impact of certain acquisitions, $31.0 million in other current assets primarily due to lower prepaid media assets, and
$7.2 million in accounts payable. These changes were partially offset by unfavorable changes of $32.6 million in advance billings due to the timing of billing, and 48.1 million in accounts receivable due to increased sales to be billed and timing of client collections.
Favorable changes in non-cash items primarily reflected a $36.7 million increase in the adjustment to deferred acquisition liabilities, driven by the timing and performance of certain acquisitions, a $17.6 million increase in stock-based compensation due to the increased number of awards granted in the current year as a greater proportion of annual incentive compensation was allocated to stock-based awards, and an $8.8 million increase in depreciation and amortization associated with continued investments in AI and automation technologies.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2026 was $113.9 million, an increase of $33.2 million, or 41.0%, compared to the prior-year period. The increase of $30.5 million primarily attributable to higher capitalized software expenditures related to continued investment in AI capabilities, automation technologies, The Machine, the Stagwell Content Supply Chain, and other technology-enabled platforms intended to support future growth and operating efficiency.
Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2026 was $11.6 million, an increase of $55.8 million, compared to the prior-year period. The change primarily reflected an $88.0 million lower net borrowings under the Credit Agreement and a $2.6 million TRA payment made in 2026. These uses of cash were partially offset by decreases of $15.8 million in deferred consideration payments, $14.5 million in share repurchases and $1.1 million in distributions to noncontrolling interest holders. In addition, the prior-year period included $3.8 million of debt financing costs that did not recur in the current period.
Liquidity
The Company expects to maintain sufficient cash and/or available borrowings to fund operations for the next twelve months and subsequent periods. The Company has historically maintained and expanded its business using cash generated from operating activities, funds available under the Credit Agreement, and other initiatives, such as obtaining additional debt, equity and receivable financing. The Company is party to a senior secured revolving credit facility with a five-year maturity with a syndicate of banks (as amended the "Credit Agreement"). The Credit Agreement provides for revolving commitments of up to $750 million and matures on April 23, 2030. On March 27, 2026, the Company entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement, which expanded its ability to borrow in non-U.S. dollar currencies and increased the annual limits on certain permitted restricted payments, including stock repurchases or redemptions and repurchases of equity interests from Company employees.
As of September 30, 2026, the Company had cash and cash equivalents of $132.2 million and $410.3 million of available borrowing capacity under its Credit Agreement. Outstanding borrowings under the Credit Agreement were $323.7 million, and $16.0 million of issued and undrawn letters of credit. The Company believes cash flow from operations, existing cash balances, and available capacity under the Credit Agreement will be sufficient to meet its anticipated operating, investing, financing, and acquisition-related obligations for the next twelve months.
The Company transfers certain of its trade receivable assets to third parties under certain agreements. Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer.
The trade receivables transferred to the third parties were $158.1 million, and $493.0 million for the three and nine months ended September 30, 2026, respectively, and were $122.6 million and $366.1 million for the three and nine months ended September 30, 2025, respectively. The amount collected and due to the third parties under these arrangements was $32.1 million, and $21.2 million as of September 30, 2026 and December 31, 2025, respectively, and was included as a component of Accruals and other liabilities on the Unaudited Consolidated Balance Sheets. Fees for these arrangements were recorded in Office and general expenses in the Unaudited Consolidated Statements of Operations and totaled $1.7 million, and $5.2 million for the three and nine months ended September 30, 2026, respectively, and totaled $1.3 million, and $4.1 million for the three and nine months ended September 30, 2025, respectively.
The Company may purchase shares of outstanding Class A Common Stock under its Repurchase Program. Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices, including through trading plans that may be adopted in accordance with Rule 10b5-1 of the Exchange Act, as amended, in privately negotiated transactions, or through other means, provided they are determined to be in the best interests of our Company and our stockholders and subject to compliance with the provisions of applicable law, including the Delaware General Corporation Law and securities laws. The timing and number of shares repurchased under the Repurchase Program will depend on a variety of factors, including the performance of our stock price, general market and economic conditions, regulatory requirements, the availability of funds, dilution, including from our equity incentive plans and employee stock purchase plan, and other considerations we deem relevant, such as any disproportionate impact such repurchases may have on our shareholders. The Repurchase Program may be suspended, modified, or discontinued at any time without prior notice. Our Board of Directors will review the Repurchase Program periodically and may authorize adjustments of its terms.
During the nine months ended September 30, 2026, 12.1 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an average price of $6.23 per share, for an aggregate value, excluding fees, of $75.3 million. The repurchased shares included 6.2 million shares of Class A Common Stock repurchased from executive officers and other employees at a price of $6.17 per share, for an aggregate purchase price of $38.2 million. Additionally, during the nine months ended September 30, 2026, 2.7 million shares in the amount of $15.4 million were withheld for taxes from the Class A Common Stock vested during the period.
The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $325.7 million as of September 30, 2026.
The Company's obligations extending beyond twelve months primarily consist of deferred acquisition consideration payments, purchases of redeemable noncontrolling interests, subsidiary awards, capital expenditures, scheduled lease obligation payments, and interest payments on borrowings under the Company's 5.625% Notes (as defined in Note 7 of the Notes to the Unaudited Consolidated Financial Statements included herein) and Credit Agreement. The Company expects to make estimated cash payments in the future to satisfy obligations under our Tax Receivable Agreement ("TRA"), which remains in effect after the final exchange of Class C Common Stock (see Note 13 of the Notes included herein for additional details). The amount and timing of any payments under the TRA are contingent on the Company achieving certain tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize. Based on the current outlook, the Company believes future cash flows from operations, together with the Company's existing cash balance and availability of funds under the Credit Agreement, will be sufficient to meet the Company's anticipated cash needs for the next twelve months and subsequent periods. The Company's ability to make payments will depend on future performance, which is subject to general economic conditions, the competitive environment and other factors, including those described in this Form 10-Q and in the Company's other SEC filings.
Total Debt
As of September 30, 2026, Debt, net of debt issuance costs, was $1,414.6 million, compared to $1,326.0 million outstanding as of December 31, 2025. See Note 7 of the Notes to the Unaudited Consolidated Financial Statements included herein for information regarding the Company's 5.625% Notes and the Credit Agreement.
As of September 30, 2026, the Company was in compliance with all of the terms and conditions of the Credit Agreement, and management believes, based on its current financial projections, that the Company will be in compliance with its covenants over the next twelve months.
If the Company loses all or a substantial portion of its lines of credit under the Credit Agreement, or if the Company uses the maximum available amount under the agreement, it will be required to seek other sources of liquidity. If the Company were unable to find these sources of liquidity, for example, through an equity offering or access to the capital markets, the Company's ability to fund its working capital needs and any contingent obligations with respect to acquisitions and redeemable noncontrolling interests would be adversely affected.
Pursuant to the Credit Agreement, the Company must maintain a Total Leverage Ratio (as defined in the Credit Agreement) below an established threshold. For the period ended September 30, 2026, the Company's calculation of this ratio, and the maximum permitted under the Credit Agreement, respectively, were calculated based on the trailing twelve months as follows:
September 30, 2026
Total Leverage Ratio 2.79
Maximum per covenant 4.25
These ratios and measures are not based on GAAP and are not presented as alternative measures of operating performance or liquidity. Some of these ratios and measures include, among other things, pro forma adjustments for acquisitions, one-time charges, and other items, as defined in the Credit Agreement. They are presented here to demonstrate compliance with the
covenants in the Credit Agreement, as non-compliance with such covenants could have a material adverse effect on the Company.
Material Cash Requirements
To the extent required under a particular client engagement, Stagwell's Brands enter into contractual commitments with media providers, production companies and other third parties on behalf of their clients at levels that exceed the revenue from the services. In most of these transactions, the Brands act as the clients' "Agent for a Disclosed Principal" where the Brands' risk is mitigated by sequential payment liability, i.e., the Brands' obligation to pay a third party is tolled until the Brand receives the underlying payment from the client, thereby safeguarding the Brand in the event of a client default. To further protect against client default, Stagwell takes additional precautions, including the procurement of credit insurance. While Stagwell has historically had a very low incidence of default, Stagwell is still exposed to the risk of significant uncollectible receivables from its clients, and the risk of a material loss could significantly increase in periods of severe economic downturn.
Deferred acquisition consideration on the balance sheet consists of deferred obligations related to contingent purchase price payments and retention payments tied to continued employment of specific personnel. See Note 6 of the Notes included herein for additional information regarding contingent deferred acquisition consideration.
When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the incremental purchase may be required of the Company, the amounts are recorded as redeemable noncontrolling interests in mezzanine equity. See Note 8 of the Notes included herein for additional information regarding noncontrolling interests and redeemable noncontrolling interests.
Certain of the Company's subsidiaries grant awards to their employees providing them with an equity interest in the respective subsidiary (the "profits interests awards"). The awards generally provide the employee with the right, but not the obligation, to sell their profits interest in the subsidiary to the Company on a performance-based formula and, in certain cases, receive a profit share distribution. The profits interests awards are primarily settled in cash, with certain awards having stock-settlement provisions at the Company's discretion. The corresponding liability associated with these profits interests awards is included as a component of Accruals and other liabilities and Other liabilities on the Consolidated Balance Sheets. See Note 12 of the Notes included herein for additional information regarding these material commitments.
The Company enters into certain long-term non-cancellable contracts for services such as revenue or profit share arrangements, cloud-based services, or software licensing. See Note 9 of the Notes included herein for additional information regarding these material commitments.
Critical Accounting Estimates
See Note 2 of the Company's 2025 Form 10-K for information regarding the Company's critical accounting estimates.
Website Access to Company Reports and Information
Stagwell Inc.'s Internet website address is www.stagwellglobal.com. The Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to the Exchange Act, will be made available free of charge through the Company's website as soon as reasonably practical after those reports are electronically filed with, or furnished to, the SEC. The Company announces material information to the public through a variety of means, including filings with the SEC, press releases, public conference calls, and its website. The Company uses these channels, as well as social media, including X (formerly Twitter) (@stagwell) and (@Mark_Penn), Instagram (@stagwellglobal) and its LinkedIn page (https://www.linkedin.com/company/stagwell/), to communicate with investors and the public about the Company, its products and services, and other matters. Therefore, investors, the media, and others interested in the Company are encouraged to review the information the Company makes public in these locations, as such information could be deemed to be material information. Information on or that can be accessed through the Company's websites or these social media channels is not part of this Form 10-Q, and the Company's website addresses and social media channels are included herein as inactive textual references only.
Stagwell Inc. published this content on October 29, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 29, 2026 at 19:35 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]