Core Insights - Stagwell and Żabka Polska have launched a joint venture to create In-Pulse, a consumer analytics and engagement tool tailored for the Polish market [1][2] - In-Pulse aims to provide real-time insights into Polish consumer behavior, leveraging Żabka's retail presence and Stagwell's data analytics expertise [2][7] Company Overview - Stagwell is a challenger network focused on transforming marketing through data-driven solutions and creative performance [3][10] - Żabka Polska operates over 11,600 convenience stores in Poland, handling approximately 4.1 million transactions daily and serving over 10 million users through its Żappka app [3][12] In-Pulse Functionality - In-Pulse operates through a five-step process: data collection, customer dialogue, product testing, targeted marketing, and effectiveness evaluation [4][8] - The tool aggregates anonymous consumer data to provide insights into preferences, shopping patterns, and spending habits [2][5] Market Impact - In-Pulse is positioned to enhance understanding of Polish consumer dynamics, crucial for the retail and fast-moving consumer goods sectors [7][9] - The collaboration is expected to help Polish businesses adapt to changing consumer needs and align their offerings with market trends [9][12]

Core Insights - Stagwell has appointed Slavi Samardzija as Chief Data and Platforms Officer to lead its data and platform strategy [1][3] - Samardzija has over 25 years of experience in data and technology, focusing on helping Fortune 500 companies enhance their marketing through data [2][3] - The company aims to advance its AI-powered orchestration operating system, The Machine, under Samardzija's leadership [3][4] Company Overview - Stagwell is a challenger holding company focused on transforming marketing by integrating creativity with technology [4] - The company operates in over 45 countries and aims to drive effectiveness and improve business results for its clients [4]

Group 1 - Mark Penn, a Harvard alumnus and CEO of Stagwell, will lead a Fireside Chat at the HAE Startup World Cup Regional on September 12, 2025, at Harvard Medical School [1][3] - The event aims to provide insights on trendspotting and strategic decision-making for founders, emphasizing the importance of recognizing market signals [2][3] - The Startup World Cup Regional will feature twelve startups founded by Harvard alumni, competing for a chance to win a $1 million investment prize from Pegasus Tech Ventures [3][4] Group 2 - Pegasus Tech Ventures, a global venture capital firm with $2 billion in assets under management, organizes the Startup World Cup and partners with the HAE Accelerator [5] - The Startup World Cup is recognized as the leading startup pitch competition globally, with over 100 regional competitions across more than 60 countries [4][5]

Core Insights - The appointment of Margaret Key as CEO of Allison Asia and Executive Director of Stagwell Asia Pacific aims to enhance communications capabilities and client support in the Asia Pacific region [1][5][6] Company Overview - Allison Worldwide is a global communications agency focused on driving growth, innovation, and positive change for clients, with a diverse range of expertise [6] - Stagwell is a challenger holding company that aims to transform marketing by connecting creativity with technology to improve business results for clients [7] Leadership Background - Margaret Key has over two decades of experience in the industry, previously serving as CEO of Publicis' MSL Group, where she transformed the agency into a cohesive network and achieved significant business growth [3][5] - Key has also worked at Edelman and Burson-Marsteller in the Asia Pacific region [3] Industry Recognition - Margaret Key has received multiple awards, including Campaign Asia's Women to Watch and APAC Regional Consultancy of the Year, highlighting her influence and success in the industry [4] Strategic Goals - As CEO of Allison Asia, Key will oversee organizational growth in APAC, including expansion plans and business strategy [5] - In her role at Stagwell, she will focus on regional market development and enhancing client engagement through integration within the Stagwell network [5][6]

Core Insights - The AGA-sponsored survey conducted by The Harris Poll reveals that IBS symptoms disrupt patients' productivity and personal activities for an average of 19 days each month, significantly affecting both personal and professional life [1][2] Patient Impact - IBS symptoms interfere with productivity at work or school for nearly 11 days per month on average, in addition to disrupting personal activities for eight days per month [3] - Patients are missing more work or school days due to gastrointestinal symptoms than they were a decade ago, with an increase from 2.1 days in 2015 to 3.6 days in 2024 [3] - A significant percentage of patients (58%) report spending less time with family and friends due to their symptoms, an increase from 48% in 2015 [3] Symptom Management - While fewer patients report their symptoms as very or extremely bothersome (43% in 2024 compared to 62% in 2015), 76% still find it somewhat or very difficult to manage their symptoms [4] - Less than one in three patients (31% in 2024) can accurately predict whether they will experience symptoms on a given day, consistent with 29% in 2015 [4] Emotional and Social Effects - A significant number of patients (72%) do not feel like themselves due to their symptoms, and 69% feel their symptoms prevent them from reaching their full potential [6] - The survey highlights that IBS continues to challenge patients in making plans and impacts their self-perception [5] Treatment Landscape - Despite advancements in treatment options over the last decade, patients and healthcare providers predominantly rely on over-the-counter treatments and lifestyle adjustments rather than prescription medications [7] - Among patients who have tried prescription medications, only 18% for IBS-C and 19% for IBS-D find them among the most helpful treatments [8] - The most common recommendations from healthcare providers include avoiding situations with limited bathroom access (77%) and difficulty in planning due to unpredictable symptoms (72%) [8] Provider-Patient Interaction - Approximately 45% of healthcare providers say they will recommend or prescribe a specific IBS treatment requested by patients, but only about 14% of patients often make such requests [9] - Most patients with IBS-C and IBS-D (78% each) are satisfied with their current treatments, but only about 25% for IBS-C and 26% for IBS-D are very satisfied [10] Opportunities for Improvement - Compared to 2015, more physicians report that effective relief of abdominal pain (49% vs. 39%) and the availability of treatment options (49% vs. 34%) are lacking in IBS treatment today [10] - The findings indicate a need for further improvement in treatment efficacy and patient satisfaction [10]

Group 1 - Stagwell Inc. is participating in three investor conferences in August 2025, showcasing its commitment to engaging with investors [1][5]. - The conferences include the Morgan Stanley Media & Communications Corporate Access Day on August 12, the Rosenblatt 5th Annual Tech Summit on August 19, and the Seaport Research Partners Annual Summer Investor Conference on August 20 [5]. - Stagwell aims to connect culture-moving creativity with leading-edge technology to enhance marketing effectiveness for its clients [3]. Group 2 - Stagwell operates as a challenger network with a focus on transforming marketing through scaled creative performance [3]. - The company has a presence in over 45 countries, unifying its specialists under a single purpose to drive effectiveness and improve business results [3]. - Interested parties can find more information about Stagwell's investor events and programming on their official website [2].

Core Insights - Stagwell reported Q2 2025 GAAP revenue of $707 million, exceeding analyst estimates of $693.77 million, marking a 5% year-over-year increase [1][2] - Adjusted EPS (non-GAAP) was $0.17, surpassing expectations by $0.01 and reflecting a 21.4% rise from the previous year [1][2] - The company experienced a GAAP net loss of $0.02 per share, an improvement from a loss of $0.03 in the same quarter last year [1][2] Financial Performance - Q2 2025 Adjusted EPS (non-GAAP) was $0.17, compared to estimates of $0.16 and $0.14 in Q2 2024, representing a 21.4% increase [2] - GAAP revenue reached $707 million, exceeding the estimate of $693.77 million and up from $671 million in Q2 2024, reflecting a 5.4% increase [2] - Net revenue (non-GAAP) was $598 million, an 8.0% increase from $554 million in Q2 2024 [2] - Adjusted EBITDA for Q2 2025 was $93 million, up 8.1% from $86 million in the prior year [2] Business Strategy and Focus - Stagwell is a technology-focused marketing network offering advertising, digital transformation, strategic communications, and data-driven services globally [3] - The company emphasizes digital transformation, investing in AI-enabled marketing and cloud platforms, and expanding its global footprint through acquisitions and partnerships [4] Segment Performance - Integrated Agencies Network segment saw a 7.2% year-over-year increase in net revenue and a 14.0% rise in adjusted EBITDA [6] - Brand Performance Network experienced a 1.4% decline in net revenue and a 12.0% decrease in adjusted EBITDA [6] - Communications Network reported a slight revenue increase but a 12.7% drop in profitability [6] - The All Other segment increased net revenue nearly sevenfold but continued to operate at a loss [6] Business Development and Client Growth - Stagwell achieved record net new business of $117 million in Q2 2025, following $130 million in Q1 2025, with a total of $451 million in net new business over the last twelve months [7] - The company reported strong performance among its top 25 customers, with revenue growth of 26% in Q2 2025 [9] Financial Outlook - Management reiterated FY2025 guidance, projecting approximately 8% net revenue growth, adjusted EBITDA of $410–$460 million, and adjusted EPS of $0.75–$0.88 [10] - The leadership team highlighted a strong pipeline of new business and continued demand for digital transformation services [10]

PART I. FINANCIAL INFORMATION This part presents Stagwell Inc.'s unaudited consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Stagwell Inc.'s unaudited consolidated financial statements for the three and six months ended June 30, 2025 and 2024, including statements of operations, comprehensive income (loss), balance sheets, cash flows, and shareholders' equity, along with detailed notes explaining accounting policies, acquisitions, revenue disaggregation, debt, equity, and other financial disclosures [Unaudited Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, operating income, and net loss for the specified periods Consolidated Statements of Operations | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Revenue | $706,818 | $671,168 | $1,358,558 | $1,341,227 | | Operating Income | $23,172 | $21,907 | $41,457 | $47,761 | | Net loss | $(4,634) | $(3,954) | $(9,959) | $(4,667) | | Net loss attributable to Stagwell Inc. common shareholders | $(5,261) | $(2,965) | $(8,178) | $(4,247) | | Basic Loss Per Common Share | $(0.02) | $(0.03) | $(0.04) | $(0.04) | | Diluted Loss Per Common Share | $(0.02) | $(0.03) | $(0.06) | $(0.04) | [Unaudited Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section presents the company's net loss and other comprehensive income (loss) components Consolidated Statements of Comprehensive Income (Loss) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net loss | $(4,634) | $(3,954) | $(9,959) | $(4,667) | | Other comprehensive income (loss) - Foreign currency translation adjustment | $24,068 | $(5,479) | $34,566 | $(12,625) | | Comprehensive income (loss) for the period | $19,434 | $(9,433) | $24,607 | $(17,292) | | Comprehensive income (loss) attributable to Stagwell Inc. common shareholders | $18,807 | $(4,964) | $20,361 | $(9,110) | [Unaudited Consolidated Balance Sheets](index=7&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific dates Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Total Current Assets | $1,263,067 | $1,135,148 | | Total Assets | $4,317,175 | $3,908,221 | | Total Current Liabilities | $1,464,471 | $1,367,296 | | Total Liabilities | $3,535,979 | $3,122,904 | | Total Shareholders' Equity | $771,948 | $776,905 | [Unaudited Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities Consolidated Cash Flow Summary | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :---------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by (used in) operating activities | $54,738 | $(67,618) | | Net cash used in investing activities | $(34,936) | $(52,183) | | Net cash provided by financing activities | $21,062 | $138,304 | | Net increase in cash and cash equivalents | $49,970 | $16,341 | | Cash and cash equivalents at end of period | $181,309 | $136,078 | - Cash income taxes paid increased to **$14.3 million** in H1 2025 from **$10.6 million** in H1 2024. Cash interest paid increased to **$46.8 million** in H1 2025 from **$42.4 million** in H1 2024[28](index=28&type=chunk) [Unaudited Consolidated Statements of Shareholders' Equity](index=10&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) This section tracks changes in the company's equity, including share capital and noncontrolling interests - As of June 30, 2025, Stagwell Inc. Shareholders' Equity was **$750.1 million**, up from **$331.7 million** at December 31, 2024. This significant increase is primarily due to the conversion of Class C to Class A shares, which resulted in a reclassification of **$447.4 million** from noncontrolling interests to paid-in capital[31](index=31&type=chunk)[34](index=34&type=chunk) - The Company repurchased and cancelled **13,005 thousand** shares of Class A Common Stock for **$68.17 million** during the six months ended June 30, 2025[34](index=34&type=chunk) [Notes to the Unaudited Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20the%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited consolidated financial statements, covering the Company's business and accounting policies, recent accounting pronouncements, significant acquisitions in 2025 and 2024, disaggregated revenue data, loss per share computations, deferred acquisition consideration, lease obligations, debt structure, noncontrolling interests, commitments, contingencies, guarantees, share capital activities, fair value measurements, supplemental information on stock-based awards and accounts receivable transfers, income taxes, related party transactions, and segment information [Note 1. Business and Basis of Presentation](index=14&type=section&id=Note%201.%20Business%20and%20Basis%20of%20Presentation) This note describes Stagwell Inc.'s business model and the basis for preparing its financial statements - Stagwell Inc. provides marketing and business solutions by combining data and creativity, aiming to build, grow, and acquire market-leading businesses in a rapidly evolving environment[42](index=42&type=chunk) - The unaudited consolidated interim financial statements are prepared in accordance with GAAP and SEC rules for interim reporting, with certain information and disclosures omitted from footnotes[43](index=43&type=chunk) [Note 2. New Accounting Pronouncements](index=14&type=section&id=Note%202.%20New%20Accounting%20Pronouncements) This note discusses the impact of recently issued accounting standards on the company's financial reporting - ASU 2024-03 (Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures) is effective for annual periods beginning after December 15, 2026, and interim periods after December 15, 2027, requiring disaggregated income statement expense information. The Company is evaluating its impact[45](index=45&type=chunk) - ASU 2023-09 (Income Taxes - Improvements to Income Tax Disclosures) is effective for annual periods beginning after December 15, 2024, requiring disaggregated information on effective tax rate reconciliation and taxes paid. Interim disclosures are not impacted[46](index=46&type=chunk) [Note 3. Acquisitions](index=15&type=section&id=Note%203.%20Acquisitions) This note details the company's significant acquisitions, including purchase prices and strategic rationale - In 2025, Stagwell acquired ADK Global (**$25.7 million**), Jetfuel Studio LLC (**$22.2 million**), and Create Group Holding Limited (**$15.7 million**), expanding its marketing solutions in APAC, experiential marketing, and digital communications in the Middle East, respectively. These acquisitions involved a mix of cash, Class A common stock, and deferred payments, with contingent consideration tied to future performance[48](index=48&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) - In 2024, key acquisitions included UNICEPTA Holding GmbH (**$62 million**), Consulum (Cayman) Limited (**$82.8 million**), Team Epiphany, LLC (**$16.7 million**), L.D.R.S. Group Ltd. (**$7 million**), PROS Agency (**$8.5 million**), What's Next Partners (**$5 million**), and Sidekick Live Limited (**$6 million**). These acquisitions bolstered media monitoring, government advisory, consumer marketing, and other specialized services, with significant goodwill recorded[55](index=55&type=chunk)[62](index=62&type=chunk)[71](index=71&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) Acquisition Summary | Acquisition (2025) | Purchase Price (approx.) | Payment Method (Primary) | Goodwill Assigned (approx.) | Segment | | :----------------- | :----------------------- | :----------------------- | :-------------------------- | :-------------------------- | | ADK Global | $25.7 million | Cash | N/A (purchase price not final) | Brand Performance Network | | Jetfuel | $22.2 million | Cash & Class A Stock | $11.9 million | Integrated Agencies Network | | Create | $15.7 million | Cash & Class A Stock | $7.3 million | Integrated Agencies Network | | Acquisition (2024) | Purchase Price (approx.) | Payment Method (Primary) | Goodwill Assigned (approx.) | Segment | | :----------------- | :----------------------- | :----------------------- | :-------------------------- | :-------------------------- | | Unicepta | $62 million | Cash & Class A Stock | $34.6 million | Stagwell Marketing Cloud Group | | Consulum | $82.8 million | Cash & Class A Stock | $16.7 million | Communications Network | | Epiphany | $16.7 million | Cash & Class A Stock | $8.5 million | Integrated Agencies Network | | Leaders | $7 million | Cash & Class A Stock | $4.9 million | All Other | | PROS | $8.5 million | Cash & Class A Stock | $5.4 million | Communications Network | | WNP | $5 million | Cash | $5.4 million | Integrated Agencies Network | | Sidekick | $6 million | Cash & Class A Stock | $2.2 million | Communications Network | [Note 4. Revenue](index=21&type=section&id=Note%204.%20Revenue) This note disaggregates revenue by principal capabilities and geographical locations - Stagwell's primary revenue sources are fees for services, commissions, and performance incentives from its marketing services firms (Brands) globally[79](index=79&type=chunk) Revenue by Principal Capabilities | Principal Capabilities | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Digital Transformation | $125,947 | $125,342 | $242,413 | $241,101 | | Creativity and Communications | $340,762 | $316,761 | $643,796 | $608,414 | | Performance Media and Data | $112,368 | $116,541 | $222,185 | $273,561 | | Consumer Insights and Strategy | $49,655 | $47,717 | $98,546 | $93,486 | | Stagwell Marketing Cloud Group | $78,086 | $64,807 | $151,618 | $124,665 | | **Total Revenue** | **$706,818** | **$671,168** | **$1,358,558** | **$1,341,227** | Revenue by Geographical Location | Geographical Location | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | United States | $557,395 | $551,080 | $1,070,013 | $1,114,730 | | United Kingdom | $38,051 | $40,515 | $75,935 | $78,276 | | Other | $111,372 | $79,573 | $212,610 | $148,221 | | **Total** | **$706,818** | **$671,168** | **$1,358,558** | **$1,341,227** | - Contract assets (fees and reimbursable costs not yet invoiced) increased to **$192.2 million** as of June 30, 2025, from **$135.9 million** at December 31, 2024. Advance billings (contract liabilities) increased to **$339.6 million** from **$294.6 million** over the same period, primarily due to **$231.1 million** of revenue recognized from prior period advance billings[82](index=82&type=chunk)[83](index=83&type=chunk) - As of June 30, 2025, the Company had **$174.7 million** in unsatisfied performance obligations for contracts longer than one year, with **48%** expected to be recognized in 2025[85](index=85&type=chunk) [Note 5. Loss Per Share](index=24&type=section&id=Note%205.%20Loss%20Per%20Share) This note provides the computation of basic and diluted loss per common share Loss Per Share Details | Metric | 3 Months Ended June 30, 2025 (in thousands, except per share) | 3 Months Ended June 30, 2024 (in thousands, except per share) | 6 Months Ended June 30, 2025 (in thousands, except per share) | 6 Months Ended June 30, 2024 (in thousands, except per share) | | :------------------------------------------------------- | :------------------------------------------------------------ | :------------------------------------------------------------ | :------------------------------------------------------------ | :------------------------------------------------------------ | | Net loss attributable to Stagwell Inc. common shareholders | $(5,261) | $(2,965) | $(8,178) | $(4,247) |\n| Basic Loss Per Share | $(0.02) | $(0.03) | $(0.04) | $(0.04) |\n| Diluted Loss Per Share | $(0.02) | $(0.03) | $(0.06) | $(0.04) |\n| Weighted Average Number of Common Shares Outstanding (Basic) | 260,774 | 113,484 | 186,843 | 113,059 |\n| Weighted Average Number of Common Shares Outstanding (Diluted) | 260,774 | 113,484 | 265,600 | 113,059 | - Anti-dilutive shares for the six months ended June 30, 2025, included **7,503 thousand** Class A Shares to settle deferred acquisition obligations, **4,812 thousand** Stock Appreciation Rights and Restricted Awards, and **60 thousand** Employee Stock Purchase Plan shares[87](index=87&type=chunk) [Note 6. Deferred Acquisition Consideration](index=28&type=section&id=Note%206.%20Deferred%20Acquisition%20Consideration) This note explains the accounting for deferred acquisition payments and their fair value adjustments - Deferred acquisition consideration includes contingent purchase price payments and retention payments tied to continued employment. Non-employment contingent arrangements are remeasured at fair value each period, while employment-contingent arrangements are expensed over the vesting period[91](index=91&type=chunk) Deferred Acquisition Consideration Movement | Metric | 6 Months Ended June 30, 2025 (in thousands) | Year Ended December 31, 2024 (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Beginning balance | $102,115 | $101,058 | | Payments | $(16,103) | $(67,895) | | Adjustments | $3,437 | $23,005 | | Additions | — | $46,598 | | Currency translation adjustment | $2,214 | $(651) | | Ending balance | $91,663 | $102,115 | - As of June 30, 2025, **$40.0 million** of the deferred acquisition consideration is expected to be settled in Class A Common Stock[92](index=92&type=chunk) [Note 7. Leases](index=28&type=section&id=Note%207.%20Leases) This note outlines the company's lease obligations, right-of-use assets, and lease costs - The Company leases office space globally, classified as operating leases expiring between 2025 and 2036. Lease costs are recognized straight-line over the lease term[93](index=93&type=chunk)[94](index=94&type=chunk) Lease Cost Breakdown | Lease Cost Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :---------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Operating lease cost | $16,957 | $18,702 | $34,075 | $39,648 | | Variable lease cost | $5,138 | $5,889 | $11,145 | $11,826 | | Sublease rental income | $(2,161) | $(1,935) | $(4,296) | $(4,415) | | **Total lease cost** | **$19,934** | **$22,656** | **$40,924** | **$47,059** | - As of June 30, 2025, the weighted average remaining lease term was **5.6 years**, and the weighted average discount rate was **5.8%**. Total lease liability was **$288.3 million**[99](index=99&type=chunk)[100](index=100&type=chunk) [Note 8. Debt](index=29&type=section&id=Note%208.%20Debt) This note details the company's debt structure, including credit agreements and notes Debt Structure | Debt Instrument | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------- | :--------------------------- | :------------------------------- | | Credit Agreement | $377,000 | $264,000 | | 5.625% Notes | $1,100,000 | $1,100,000 | | Debt issuance costs | $(12,758) | $(10,376) | | **Total long-term debt** | **$1,464,242** | **$1,353,624** | - Interest expense, net for the six months ended June 30, 2025, was **$46.4 million**, up from **$43.5 million** in the prior year. The Credit Agreement was amended on April 23, 2025, increasing the borrowing limit from **$640 million** to **$750 million** and extending maturity to April 30, 2030. The Company was in compliance with all debt covenants as of June 30, 2025[101](index=101&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[106](index=106&type=chunk) [Note 9. Noncontrolling and Redeemable Noncontrolling Interests](index=30&type=section&id=Note%209.%20Noncontrolling%20and%20Redeemable%20Noncontrolling%20Interests) This note explains the accounting for noncontrolling interests and their impact on equity - Net loss attributable to noncontrolling and redeemable noncontrolling interests for the six months ended June 30, 2025, was **$1.781 million**, compared to a loss of **$0.420 million** in the prior year[108](index=108&type=chunk) - On April 4, 2025, Stagwell Media LP exchanged all **151,648,741** shares of Class C Common Stock for an equal number of Class A Common Stock, eliminating Class C noncontrolling interests. Total noncontrolling interests decreased to **$21.8 million** as of June 30, 2025, from **$445.2 million** at December 31, 2024, primarily due to this conversion[109](index=109&type=chunk) - Redeemable noncontrolling interests increased to **$9.2 million** as of June 30, 2025, from **$8.4 million** at December 31, 2024. These obligations are subject to certain conditions and staggered exercise dates between 2025 and 2031[109](index=109&type=chunk) [Note 10. Commitments, Contingencies, and Guarantees](index=31&type=section&id=Note%2010.%20Commitments%2C%20Contingencies%2C%20and%20Guarantees) This note discloses the company's legal proceedings, contractual commitments, and guarantees - The Company is involved in various legal proceedings but does not expect a material adverse effect on its financial condition. It also provides indemnification guarantees for asset purchasers, with no significant payments historically[111](index=111&type=chunk)[112](index=112&type=chunk) - As of June 30, 2025, significant commitments include **$15.3 million** in undrawn letters of credit, **$1.2 million** for two operating leases not yet commenced, and future minimum commitments under long-term non-cancellable contracts: **$20.9 million** for partner associations (through 2030), **$47.1 million** for cloud services (through 2029), and **$37.5 million** for a software license agreement (through 2027)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) [Note 11. Share Capital](index=32&type=section&id=Note%2011.%20Share%20Capital) This note describes changes in the company's share capital, including stock repurchases and conversions - On April 4, 2025, all **151,648,741** shares of Class C Common Stock were exchanged for an equal number of newly issued Class A Common Stock, resulting in no Class C shares outstanding as of June 30, 2025[119](index=119&type=chunk) - The Company has a stock repurchase program authorizing up to **$375 million** of Class A Common Stock, expiring November 6, 2027. During the six months ended June 30, 2025, **10.6 million** shares were repurchased for **$53.3 million**. The remaining repurchase value was **$116.4 million** as of June 30, 2025[120](index=120&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) [Note 12. Fair Value Measurements](index=33&type=section&id=Note%2012.%20Fair%20Value%20Measurements) This note explains the fair value hierarchy and measurements for financial instruments - The Company uses a three-level hierarchy for fair value measurements: Level 1 (quoted active market prices), Level 2 (observable prices corroborated by market data), and Level 3 (unobservable inputs). The **5.625%** Notes are classified as Level 2, with a fair value of **$1,054.4 million** as of June 30, 2025, compared to a carrying amount of **$1,100.0 million**[125](index=125&type=chunk)[132](index=132&type=chunk) - Contingent deferred acquisition consideration is a Level 3 fair value measurement, adjusted each reporting period based on models of future performance, including revenue growth and free cash flows. Discount rates for these liabilities ranged from **4.7%** to **7.9%** as of June 30, 2025[126](index=126&type=chunk) [Note 13. Supplemental Information](index=33&type=section&id=Note%2013.%20Supplemental%20Information) This note provides additional details on stock-based compensation and accounts receivable transfers - Stock-based compensation for employee stock incentive plans was **$23.4 million** for the six months ended June 30, 2025, up from **$19.1 million** in the prior year. The liability for profits interests awards, primarily cash-settled, was **$21.4 million** as of June 30, 2025, contributing an **$8.0 million** increase to stock-based compensation for the six months ended June 30, 2025[131](index=131&type=chunk)[133](index=133&type=chunk) - The Company transferred **$243.5 million** in trade receivables to third parties for the six months ended June 30, 2025, incurring **$2.8 million** in fees, up from **$141.7 million** transferred and **$1.9 million** in fees in the prior year[135](index=135&type=chunk) [Note 14. Income Taxes](index=34&type=section&id=Note%2014.%20Income%20Taxes) This note details the company's income tax expense, effective tax rate, and deferred tax assets - For the six months ended June 30, 2025, the Company reported an income tax expense of **$4.4 million** on a pre-tax loss of **$5.6 million**, resulting in an effective tax rate of (**78.7%)**. This was primarily due to current losses subject to valuation allowance, withholding taxes, and a shortfall in share-based compensation deductions[138](index=138&type=chunk) - The recently enacted One Big Beautiful Bill Act (OBBBA) and the proposed OECD global minimum tax (Pillar 2) are being evaluated for their impact on the Company's financial statements and effective tax rate, with no material impact expected from OBBBA in 2025[141](index=141&type=chunk)[142](index=142&type=chunk) - Following the Class C Exchange on April 4, 2025, the Company recorded a **$204.7 million** increase to deferred tax assets and a **$200.1 million** increase to its Tax Receivables Agreement (TRA) liability. As of June 30, 2025, the TRA liability was **$225.7 million**[146](index=146&type=chunk) [Note 15. Related Party Transactions](index=35&type=section&id=Note%2015.%20Related%20Party%20Transactions) This note discloses transactions with related parties, including revenue from services Related Party Revenue | Service Type | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Marketing and advertising services | $1,261 | $1,172 | $1,884 | $1,282 | | Marketing and website development services | $689 | $514 | $1,452 | $1,269 | | Polling services | $130 | $363 | $130 | $823 | | Polling and public relation services | $161 | $194 | $267 | $298 | | **Total Revenue from Related Parties** | **$2,241** | **$2,243** | **$3,733** | **$3,672** | - As of June 30, 2025, **$2.7 million** was due from employees for loans made in 2022 to purchase noncontrolling interest in a subsidiary[147](index=147&type=chunk) [Note 16. Segment Information](index=35&type=section&id=Note%2016.%20Segment%20Information) This note provides financial data for the company's reportable segments, including revenue and Adjusted EBITDA - The Company operates through three reportable segments: Integrated Agencies Network, Brand Performance Network, and Communications Network, with 'All Other' for non-aggregated operating segments and 'Corporate' for central expenses. Adjusted EBITDA is the key metric used by the CODM (CEO Mark Penn) to evaluate segment performance[148](index=148&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) Segment Performance (Q2 2025) | Segment (3 Months Ended June 30, 2025) | Revenue (in thousands) | Adjusted EBITDA (in thousands) | | :------------------------------------- | :--------------------- | :----------------------------- | | Integrated Agencies Network | $406,190 | $77,510 | | Brand Performance Network | $170,099 | $15,581 | | Communications Network | $106,128 | $19,355 | | All Other | $24,401 | $(6,945) | | Corporate | N/A | $(12,646) | | **Total Consolidated** | **$706,818** | **$92,855** | Segment Performance (H1 2025) | Segment (6 Months Ended June 30, 2025) | Revenue (in thousands) | Adjusted EBITDA (in thousands) | | :------------------------------------- | :--------------------- | :----------------------------- | | Integrated Agencies Network | $783,544 | $154,679 | | Brand Performance Network | $332,317 | $27,124 | | Communications Network | $193,756 | $31,112 | | All Other | $48,941 | $(13,275) | | Corporate | N/A | $(26,203) | | **Total Consolidated** | **$1,358,558** | **$173,437** | - Long-lived assets totaled **$285.0 million** as of June 30, 2025, with **$214.9 million** in the United States and **$70.1 million** in other countries[160](index=160&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of Stagwell Inc.'s financial condition and results of operations for the three and six months ended June 30, 2025 and 2024. It covers the Company's business overview, key performance indicators, significant factors affecting the business, seasonality, definitions of non-GAAP financial measures, and a comprehensive review of consolidated and segment-level performance, liquidity, capital resources, and critical accounting estimates [Executive Summary](index=41&type=section&id=Executive%20Summary) This section summarizes Stagwell's strategy, key performance indicators, and significant business factors - Stagwell's strategy focuses on building, growing, and acquiring market-leading businesses that offer modern marketing and business solutions, leveraging data, creativity, and technology for transformative growth[165](index=165&type=chunk) - Key performance indicators monitored include revenue, operating expenses, capital expenditures, net income (loss), net income (loss) per share, and non-GAAP measures like net revenue and Adjusted EBITDA. Revenue growth is analyzed by geography, client activity, principal capability, currency changes, and acquisitions[166](index=166&type=chunk) - Significant factors affecting the business include economic conditions, client profitability, M&A of clients, changes in client management, and the ability to attract and retain key employees. New business wins and client losses are primarily driven by clients' desire to change marketing firms and the digital/data-driven products offered by Stagwell's Brands[167](index=167&type=chunk) - The Company typically generates its highest quarterly revenue in the fourth quarter, with client concentration in the Communications Network increasing during election years due to advocacy Brands[168](index=168&type=chunk) - Non-GAAP financial measures used include 'net revenue' (revenue excluding billable costs), 'organic net revenue growth (decline)' (year-over-year change in net revenue adjusted for acquisitions/divestitures and foreign currency), 'Adjusted EBITDA' (Net income excluding non-operating items, plus D&A, stock-based comp, deferred acquisition adjustments, and other items), and 'Adjusted Diluted EPS'[170](index=170&type=chunk)[171](index=171&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) [Results of Operations: Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=45&type=section&id=THREE%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20COMPARED%20TO%20THREE%20MONTHS%20ENDED%20JUNE%2030%2C%202024) For the three months ended June 30, 2025, Stagwell Inc. reported a **5.3%** increase in total revenue to **$706.8 million** and a **5.8%** increase in operating income to **$23.2 million**, compared to the same period in 2024. Net revenue grew by **7.9%** to **$598.1 million**, driven by acquisitions and organic growth in the Integrated Agencies Network and All Other segments, despite declines in Brand Performance and Communications Networks. Adjusted EBITDA increased by **7.8%** to **$92.9 million**. Net loss attributable to common shareholders widened to **$5.3 million** from **$3.0 million**, primarily due to higher stock-based compensation and income tax expense [Consolidated Results of Operations](index=45&type=section&id=Consolidated%20Results%20of%20Operations%20%28Three%20Months%29) This section presents a consolidated overview of the company's financial performance for the period Consolidated Results (Q2 2025) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Revenue | $706,818 | $671,168 | $35,650 | 5.3% | | Operating Income | $23,172 | $21,907 | $1,265 | 5.8% | | Net Revenue | $598,129 | $554,392 | $43,737 | 7.9% | | Adjusted EBITDA | $92,855 | $86,103 | $6,752 | 7.8% | | Net loss attributable to Stagwell Inc. common shareholders | $(5,261) | $(2,965) | $(2,296) | 77.4% | | Diluted EPS | $(0.02) | $(0.03) | $0.01 | (33.3)% | | Adjusted Diluted EPS | $0.17 | $0.14 | $0.03 | 21.4% | - Organic net revenue increased by **$3.3 million** (**0.6%**), primarily due to new wins and increased spending in automotive and retail sectors, partially offset by client budget cuts in consumer products. Net acquisitions contributed **$37.2 million** to net revenue growth[185](index=185&type=chunk) - Stock-based compensation increased by **$14.1 million** (**239.6%**), mainly due to higher fair value of profit interest awards and more awards expensed, alongside a reversal of expense in Q2 2024. Deferred acquisition consideration decreased by **$10.5 million** due to fair value reductions[189](index=189&type=chunk)[190](index=190&type=chunk) - Income tax expense for Q2 2025 was **$2.7 million** on a pre-tax loss of **$2.0 million**, resulting in an effective tax rate of (**134.9%)**, primarily due to current losses subject to valuation allowance and withholding taxes[191](index=191&type=chunk) [Integrated Agencies Network](index=49&type=section&id=Integrated%20Agencies%20Network%20%28Three%20Months%29) This section analyzes the financial performance of the Integrated Agencies Network segment Integrated Agencies Network Performance (Q2 2025) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Revenue | $406,190 | $385,133 | $21,057 | 5.5% | | Net Revenue | $344,888 | $321,870 | $23,018 | 7.2% | | Operating Income | $46,101 | $37,114 | $8,987 | 24.2% | | Adjusted EBITDA | $77,510 | $67,995 | $9,515 | 14.0% | - Organic net revenue increased by **4.1%**, driven by new client wins and increased spending in technology, retail, and automotive sectors. Acquisitions of Jetfuel and Create also contributed to net revenue growth[200](index=200&type=chunk) - Operating Income increased by **$9.0 million**, primarily due to higher revenue and decreased office and general expenses, partially offset by increased cost of services. Stock-based compensation increased by **$7.4 million** due to higher fair value of profit interest awards[201](index=201&type=chunk)[202](index=202&type=chunk) [Brand Performance Network](index=50&type=section&id=Brand%20Performance%20Network%20%28Three%20Months%29) This section analyzes the financial performance of the Brand Performance Network segment Brand Performance Network Performance (Q2 2025) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Revenue | $170,099 | $177,245 | $(7,146) | (4.0)% | | Net Revenue | $154,868 | $157,108 | $(2,240) | (1.4)% | | Operating Income | $102 | $6 | $96 | NM | | Adjusted EBITDA | $15,581 | $17,706 | $(2,125) | (12.0)% | - Organic net revenue decreased by **3.0%**, primarily due to lower client spending in the Communication sector. Operating Income increased by **$0.1 million**, despite a decline in net revenue, due to a larger decline in cost of services[207](index=207&type=chunk)[208](index=208&type=chunk) - Depreciation and amortization decreased by **$3.6 million**, mainly due to accelerated amortization of certain tradenames in Q2 2024[209](index=209&type=chunk) [Communications Network](index=52&type=section&id=Communications%20Network%20%28Three%20Months%29) This section analyzes the financial performance of the Communications Network segment Communications Network Performance (Q2 2025) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Revenue | $106,128 | $105,570 | $558 | 0.5% | | Net Revenue | $74,342 | $72,393 | $1,949 | 2.7% | | Operating Income | $14,481 | $14,433 | $48 | 0.3% | | Adjusted EBITDA | $19,355 | $22,173 | $(2,818) | (12.7)% | - Organic net revenue decreased by **12.5%**, primarily due to reduced spending in Public Affairs (following the 2024 presidential election year) and client losses/budget cuts in Consumer Products and Healthcare. The acquisition of Consulum drove an increase in net acquisitions[213](index=213&type=chunk) - Deferred acquisition consideration decreased by **$5.8 million**, mainly due to a reduction in the fair value of a certain Brand[215](index=215&type=chunk) [All Other](index=53&type=section&id=All%20Other%20%28Three%20Months%29) This section analyzes the financial performance of the All Other operating segments All Other Segment Performance (Q2 2025) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Revenue | $24,401 | $3,220 | $21,181 | 657.8% | | Net Revenue | $24,031 | $3,021 | $21,010 | 695.5% | | Operating Loss | $(13,945) | $(8,775) | $(5,170) | 58.9% | | Adjusted EBITDA | $(6,945) | $(3,149) | $(3,796) | 120.5% | - Organic net revenue increased by **126.4%**, driven by new wins and increased spending in technology and consumer products. Acquisitions of Leaders and Unicepta significantly contributed to net acquisitions[220](index=220&type=chunk) - Operating Loss increased by **$5.2 million**, primarily due to higher Cost of services (**$10.4 million** increase) and Office and general expenses (**$16.0 million** increase) from acquired entities, despite increased revenue[221](index=221&type=chunk)[222](index=222&type=chunk) [Corporate](index=55&type=section&id=Corporate%20%28Three%20Months%29) This section details the financial performance and expenses attributable to corporate functions Corporate Segment Performance (Q2 2025) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Staff costs | $12,978 | $12,154 | $824 | 6.8% | | Administrative costs | $(332) | $6,468 | $(6,800) | NM | | Adjusted EBITDA | $(12,646) | $(18,622) | $5,976 | (32.1)% | | Operating Loss | $(23,567) | $(20,871) | $(2,696) | 12.9% | - Operating Loss increased by **$2.7 million**, primarily due to a **$7.4 million** increase in stock-based compensation, influenced by an increase in awards and a reversal of expense in Q2 2024[223](index=223&type=chunk)[224](index=224&type=chunk) [Results of Operations: Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=55&type=section&id=SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20COMPARED%20TO%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202024) For the six months ended June 30, 2025, Stagwell Inc. reported a **1.3%** increase in total revenue to **$1,358.6 million**, but a **13.2%** decrease in operating income to **$41.5 million**, compared to the same period in 2024. Net revenue grew by **6.9%** to **$1,162.3 million**, driven by acquisitions and organic growth in the Integrated Agencies Network and All Other segments, partially offset by declines in Brand Performance and Communications Networks. Adjusted EBITDA decreased by **1.7%** to **$173.4 million**. Net loss attributable to common shareholders widened to **$8.2 million** from **$4.2 million**, primarily due to increased expenses, including stock-based compensation and depreciation, and higher interest expense [Consolidated Results of Operations](index=55&type=section&id=Consolidated%20Results%20of%20Operations%20%28Six%20Months%29) This section presents a consolidated overview of the company's financial performance for the period Consolidated Results (H1 2025) | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Revenue | $1,358,558 | $1,341,227 | $17,331 | 1.3% | | Operating Income | $41,457 | $47,761 | $(6,304) | (13.2)% | | Net Revenue | $1,162,316 | $1,086,846 | $75,470 | 6.9% | | Adjusted EBITDA | $173,437 | $176,419 | $(2,982) | (1.7)% | | Net loss attributable to Stagwell Inc. common shareholders | $(8,178) | $(4,247) | $(3,931) | 92.6% |\n| Diluted EPS | $(0.06) | $(0.04) | $(0.02) | 50.0% |\n| Adjusted Diluted EPS | $0.29 | $0.30 | $(0.01) | (3.3)% | - Organic net revenue increased by **$5.9 million** (**0.5%**), driven by new wins and increased spending in technology and retail sectors, partially offset by client budget cuts in consumer products. Net acquisitions contributed **$68.7 million** to net revenue growth[228](index=228&type=chunk) - Cost of services decreased by **$12.1 million**, but excluding billable costs, increased by **$46.0 million** due to acquired entities. Office and general expenses increased by **$30.9 million** due to acquired entities and higher staff costs[231](index=231&type=chunk) - Stock-based compensation increased by **$9.5 million** (**43.2%**), primarily due to higher fair value of profit interest awards and more awards expensed. Depreciation and amortization increased by **$6.5 million** due to business acquisitions[232](index=232&type=chunk)[233](index=233&type=chunk) - Interest expense, net increased by **$2.3 million** to **$46.8 million**, primarily due to higher debt levels under the Credit Agreement. Foreign exchange loss decreased to **$0.1 million** from **$3.6 million**[234](index=234&type=chunk)[235](index=235&type=chunk) - Income tax expense for H1 2025 was **$4.4 million** on a pre-tax loss of **$5.6 million**, resulting in an effective tax rate of (**78.7%)**, primarily due to current losses subject to valuation allowance and withholding taxes[236](index=236&type=chunk) [Integrated Agencies Network](index=60&type=section&id=Integrated%20Agencies%20Network%20%28Six%20Months%29) This section analyzes the financial performance of the Integrated Agencies Network segment Integrated Agencies Network Performance (H1 2025) | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Revenue | $783,544 | $737,852 | $45,692 | 6.2% | | Net Revenue | $670,682 | $614,642 | $56,040 | 9.1% | | Operating Income | $94,144 | $59,464 | $34,680 | 58.3% | | Adjusted EBITDA | $154,679 | $128,103 | $26,576 | 20.7% | - Organic net revenue increased by **6.9%**, driven by new client wins and higher spending in technology, retail, automotive, and financials sectors. Acquisitions of Jetfuel and Create also contributed to net acquisitions[245](index=245&type=chunk) - Operating Income increased by **$34.7 million**, primarily due to higher net revenue and decreased office and general expenses. Other items, net decreased by **$8.5 million**, mainly due to a **$3.5 million** gain on lease termination and a **$3.5 million** decrease in severance[246](index=246&type=chunk)[248](index=248&type=chunk) [Brand Performance Network](index=61&type=section&id=Brand%20Performance%20Network%20%28Six%20Months%29) This section analyzes the financial performance of the Brand Performance Network segment Brand Performance Network Performance (H1 2025) | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Revenue | $332,317 | $391,207 | $(58,890) | (15.1)% | | Net Revenue | $301,726 | $319,670 | $(17,944) | (5.6)% | | Operating Income | $183 | $13,701 | $(13,518) | (98.7)% | | Adjusted EBITDA | $27,124 | $45,200 | $(18,076) | (40.0)% | - Organic net revenue decreased by **6.0%**, primarily due to decreased spending by existing clients in the business services and transportation sectors. Operating Income decreased by **$13.5 million**, largely due to the decline in net revenue[253](index=253&type=chunk)[254](index=254&type=chunk) [Communications Network](index=63&type=section&id=Communications%20Network%20%28Six%20Months%29) This section analyzes the financial performance of the Communications Network segment Communications Network Performance (H1 2025) | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Revenue | $193,756 | $199,316 | $(5,560) | (2.8)% | | Net Revenue | $141,340 | $139,881 | $1,459 | 1.0% | | Operating Income | $19,029 | $30,706 | $(11,677) | (38.0)% | | Adjusted EBITDA | $31,112 | $41,557 | $(10,445) | (25.1)% | - Organic net revenue decreased by **17.0%**, primarily due to lower advocacy services compared to the 2024 election year and client losses/budget cuts in healthcare and consumer products. The acquisition of Consulum contributed to net acquisitions[258](index=258&type=chunk) - Operating Income decreased by **$11.7 million**, driven by decreased revenue, increased cost of services (due to acquired entities), and higher depreciation and amortization (**$4.2 million** increase)[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) [All Other](index=64&type=section&id=All%20Other%20%28Six%20Months%29) This section analyzes the financial performance of the All Other operating segments All Other Segment Performance (H1 2025) | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Revenue | $48,941 | $12,852 | $36,089 | 280.8% | | Net Revenue | $48,568 | $12,653 | $35,915 | 283.8% | | Operating Loss | $(25,979) | $(15,454) | $(10,525) | 68.1% | | Adjusted EBITDA | $(13,275) | $(7,135) | $(6,140) | 86.1% | - Organic net revenue increased by **49.2%**, driven by new wins and increased spending in consumer products and technology sectors. Acquisitions of Leaders and Unicepta significantly contributed to net acquisitions[265](index=265&type=chunk) - Operating Loss increased by **$10.5 million**, primarily due to higher Cost of services (**$17.2 million** increase) and Office and general expenses (**$27.5 million** increase) from acquired entities and software license fees, despite increased revenue[266](index=266&type=chunk)[267](index=267&type=chunk) [Corporate](index=66&type=section&id=Corporate%20%28Six%20Months%29) This section details the financial performance and expenses attributable to corporate functions Corporate Segment Performance (H1 2025) | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------- | | Staff costs | $24,876 | $22,261 | $2,615 | 11.7% | | Administrative costs | $1,327 | $9,045 | $(7,718) | (85.3)% | | Adjusted EBITDA | $(26,203) | $(31,306) | $5,103 | (16.3)% | | Operating Loss | $(45,920) | $(40,656) | $(5,264) | 12.9% | - Operating Loss increased by **$5.3 million**, primarily due to a **$9.0 million** increase in stock-based compensation expense, influenced by an increase in awards and a reversal of expense in Q2 2024[270](index=270&type=chunk)[271](index=271&type=chunk) [Liquidity and Capital Resources](index=66&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, debt, and ability to meet its financial obligations Cash Flow Summary | Cash Flow Activity | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :---------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by (used in) operating activities | $54,738 | $(67,618) | | Net cash used in investing activities | $(34,936) | $(52,183) | | Net cash provided by financing activities | $21,062 | $138,304 | - Cash and cash equivalents increased to **$181.3 million** as of June 30, 2025, from **$131.3 million** at December 31, 2024. The Company expects to maintain sufficient liquidity through cash and available borrowings under its Credit Agreement, which was increased to **$750 million** with **$357.7 million** unused capacity as of June 30, 2025[272](index=272&type=chunk) - Operating activities provided **$54.7 million** in cash for H1 2025, a significant improvement from **$67.6 million** used in H1 2024. Investing activities used **$34.9 million**, primarily for capitalized software and capital expenditures. Financing activities provided **$21.1 million**, mainly from net borrowings under the Credit Agreement, partially offset by share repurchases and deferred consideration payments[279](index=279&type=chunk)[280](index=280&type=chunk)[282](index=282&type=chunk) - Total debt, net of issuance costs, was **$1,464.2 million** as of June 30, 2025, up from **$1,353.6 million** at December 31, 2024. The Company was in compliance with all debt covenants, maintaining a Total Leverage Ratio of **3.16** against a maximum of **4.25**[284](index=284&type=chunk)[285](index=285&type=chunk)[287](index=287&type=chunk) - Material cash requirements include deferred acquisition payments, purchases of noncontrolling interests, subsidiary awards, capital expenditures, lease obligations, and interest payments. The Company also has long-term non-cancellable contracts for services like revenue/profit share, cloud services, and software licensing[278](index=278&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk) [Critical Accounting Estimates](index=69&type=section&id=Critical%20Accounting%20Estimates) This section highlights the company's key accounting estimates that require significant judgment - Information regarding the Company's critical accounting estimates is referenced in Note 2 of the 2024 Form 10-K[294](index=294&type=chunk) [Website Access to Company Reports and Information](index=69&type=section&id=Website%20Access%20to%20Company%20Reports%20and%20Information) This section provides information on how to access Stagwell Inc.'s public filings and investor communications - Stagwell Inc. makes its SEC filings (10-K, 10-Q, 8-K) available free of charge on its website (

Financial Data and Key Metrics Changes - The company reported net revenue of $598 million, an increase of 8% year-over-year, with a 10% growth excluding advocacy [23] - Adjusted EBITDA for the quarter was $93 million, representing a 16% margin, flat compared to the prior year, but increased by more than 23% year-over-year when excluding advocacy [15][27] - Cash flow from operations improved by $122 million year-to-date, setting the company on track to achieve a 45% free cash flow conversion by year-end [16][22] Business Line Data and Key Metrics Changes - Digital transformation net revenue grew 6% to $109 million, with a 12% increase excluding advocacy [23] - The Marketing Cloud posted $66 million in net revenue, a 28% year-over-year increase, and 38% growth excluding advocacy [23] - The leading creative agency, 72andSunny, grew net revenues by 19% year-over-year, while the research firm NRG grew by 13% [14] Market Data and Key Metrics Changes - Major tech clients grew by 11% this quarter, with five of the top six clients being large tech companies [13] - The healthcare sector saw a 36% increase in revenue, contributing to the overall growth in digital transformation [23] - The top 25 customers generated over $175 million in net revenue, a 26% increase year-over-year [9] Company Strategy and Development Direction - The company is focusing on digital transformation and AI integration, investing approximately $20 million per quarter in operational expenses to adapt to new technologies [6] - A new content supply chain management system is being developed in partnership with Adobe, expected to enhance efficiency and reduce costs by about 15% [8] - The company is prioritizing integration of acquired companies and scaling technology initiatives to drive growth and efficiency [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance, citing a positive economic outlook and a robust client pipeline [4][5] - The company anticipates organic growth to accelerate in the second half of the year, driven by increased client spending and reduced churn [11][12] - Management highlighted the importance of AI in enhancing service offerings and operational efficiency [40][41] Other Important Information - The company completed the acquisition of ADK Global, expanding its presence in 10 new Asia Pacific markets [18] - Stock repurchase program saw nearly 10 million shares bought back at attractive multiples [18] - The company is reiterating its full-year 2025 guidance, expecting total net revenue growth of approximately 8% and adjusted EBITDA between $410 million to $460 million [29] Q&A Session Summary Question: What gives confidence in acceleration in the back half of the year? - Management noted strong growth in the first half and a historical pattern of client advancement in the second half, particularly around the holiday season [34][35] Question: What has driven the improvement in cash flows? - The improvement is attributed to enhanced working capital management, real-time visibility into cash flows, and renegotiation of vendor terms [36][38] Question: How does the company view the opportunity around marketing for AI native companies? - The company believes it is well-positioned to assist tech clients in designing AI experiences, which will generate significant work [40][41] Question: What are the expected cost savings from the new machine? - The machine is expected to simplify tasks and improve efficiency, potentially reducing costs by about 15% [43][44] Question: How does the company view the trajectory of net new business heading into the second half? - Management is optimistic about the growing net available pipeline and expects strong performance in the fall pitch season [46][47] Question: What is the potential for government contracts? - Management sees considerable opportunity in government contracts, which can provide stability and larger contract sizes [48][64] Question: How does the company plan to strengthen its media business? - The company is focusing on technological efficiency rather than scale, with plans to enhance its media offerings through new technology tools [52][53]

Group 1: Earnings Performance - Stagwell reported quarterly earnings of $0.17 per share, matching the Zacks Consensus Estimate, and an increase from $0.14 per share a year ago [1] - The company had revenues of $706.82 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 1.37% and up from $671.17 million year-over-year [2] - Over the last four quarters, Stagwell has surpassed consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Stagwell shares have declined approximately 21.6% since the beginning of the year, contrasting with the S&P 500's gain of 8.2% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $0.25 on revenues of $747.16 million, and for the current fiscal year, it is $0.84 on revenues of $2.93 billion [7] Group 3: Industry Context - The Advertising and Marketing industry, to which Stagwell belongs, is currently ranked in the top 20% of over 250 Zacks industries, indicating a favorable outlook [8] - Research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than a factor of 2 to 1 [8]