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STAGWELL INC. (NASDAQ: STGW) REPORTS RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

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Stagwell Inc. (NASDAQ: STGW) reported strong Q3 2024 results with revenue reaching $711 million, up 15% year-over-year. The company achieved 8% organic net revenue growth and $111 million in Adjusted EBITDA with a 19% margin. Digital Transformation led growth with 25% increase, while net new business hit $101 million in Q3. The company maintained its 2024 guidance and announced a $125 million increase in its stock repurchase program to $375 million total. Q3 earnings per share were $0.03, with adjusted EPS at $0.22.

Stagwell Inc. (NASDAQ: STGW) ha riportato risultati solidi per il terzo trimestre del 2024, con ricavi che hanno raggiunto 711 milioni di dollari, in aumento del 15% rispetto all'anno precedente. L'azienda ha ottenuto una crescita organica dei ricavi netti dell'8% e un EBITDA rettificato di 111 milioni di dollari con un margine del 19%. La Trasformazione Digitale ha guidato la crescita con un incremento del 25%, mentre il nuovo business netto ha raggiunto 101 milioni di dollari nel Q3. L'azienda ha mantenuto le previsioni per il 2024 e ha annunciato un incremento di 125 milioni di dollari nel suo programma di riacquisto di azioni, portando il totale a 375 milioni di dollari. Gli utili per azione del terzo trimestre sono stati di 0,03 dollari, con un EPS rettificato di 0,22 dollari.

Stagwell Inc. (NASDAQ: STGW) reportó resultados sólidos para el tercer trimestre de 2024, con ingresos alcanzando 711 millones de dólares, un aumento del 15% en comparación con el año anterior. La compañía logró un crecimiento orgánico de ingresos netos del 8% y un EBITDA ajustado de 111 millones de dólares con un margen del 19%. La Transformación Digital impulsó el crecimiento con un incremento del 25%, mientras que el nuevo negocio neto alcanzó 101 millones de dólares en el Q3. La empresa mantuvo su previsión para 2024 y anunció un aumento de 125 millones de dólares en su programa de recompra de acciones, llevando el total a 375 millones de dólares. Las ganancias por acción del tercer trimestre fueron de 0,03 dólares, con un EPS ajustado de 0,22 dólares.

Stagwell Inc. (NASDAQ: STGW)는 2024년 3분기 실적이 강세를 보였으며, 수익은 7억 1100만 달러에 도달해 전년 대비 15% 증가했습니다. 회사는 8%의 유기적 순수익 성장1억 1100만 달러의 조정 EBITDA를 달성했으며, 마진은 19%입니다. 디지털 전환이 25%의 성장을 이끌었고, 3분기 순 신규 사업은 1억 0100만 달러에 도달했습니다. 회사는 2024년 수익 전망을 유지하며, 주식 매입 프로그램을 1억 2500만 달러 증가시켜 총 3억 7500만 달러로 늘렸습니다. 3분기 주당 순이익은 0.03달러였으며, 조정 EPS는 0.22달러였습니다.

Stagwell Inc. (NASDAQ: STGW) a rapporté des résultats solides pour le troisième trimestre 2024, avec des revenus atteignant 711 millions de dollars, soit une augmentation de 15% par rapport à l'année précédente. L'entreprise a réalisé une croissance organique des revenus nets de 8% et un EBITDA ajusté de 111 millions de dollars avec une marge de 19%. La transformation numérique a conduit à une croissance de 25%, tandis que les nouvelles affaires nettes ont atteint 101 millions de dollars au T3. L'entreprise a maintenu ses prévisions pour 2024 et a annoncé une augmentation de 125 millions de dollars de son programme de rachat d'actions, portant le total à 375 millions de dollars. Les bénéfices par action pour le troisième trimestre étaient de 0,03 dollar, avec un BPA ajusté à 0,22 dollar.

Stagwell Inc. (NASDAQ: STGW) hat im dritten Quartal 2024 starke Ergebnisse gemeldet, mit einem Umsatz von 711 Millionen Dollar, was einem Anstieg von 15% im Vergleich zum Vorjahr entspricht. Das Unternehmen erzielte ein organisches Umsatzwachstum von 8% sowie ein bereinigtes EBITDA von 111 Millionen Dollar mit einer Marge von 19%. Die digitale Transformation führte das Wachstum mit einem Anstieg von 25%, während das Netto-Neugeschäft im Q3 101 Millionen Dollar erreichte. Das Unternehmen bestätigte seine Prognose für 2024 und kündigte eine Erhöhung um 125 Millionen Dollar für sein Aktienrückkaufprogramm an, das nun insgesamt 375 Millionen Dollar beträgt. Der Gewinn pro Aktie im dritten Quartal betrug 0,03 Dollar, während das bereinigte EPS bei 0,22 Dollar lag.

Positive
  • Revenue growth of 15% YoY to $711 million in Q3
  • Digital Transformation revenue grew 25% YoY
  • Strong organic net revenue growth of 8%
  • Adjusted EBITDA increased 9% to $111 million
  • Record LTM net new business of $345 million
  • $125 million increase in stock repurchase program
Negative
  • Minimal net income of $3 million in Q3
  • YTD Net Loss of $1 million

Insights

A strong quarter with several positive indicators: 15% revenue growth to $711 million, 8% organic net revenue growth and Adjusted EBITDA of $111 million representing a healthy 19% margin. The Digital Transformation segment's 25% growth is particularly impressive, driven by AI-related opportunities.

Key positives include record net new business of $345 million LTM, expanded relationships with major clients like Adobe and Microsoft and a $125 million increase in share buyback authorization. The company maintained its full-year guidance, suggesting confidence in Q4 execution.

The balance sheet appears solid with good cash flow conversion targeted at 50%. The increased stock repurchase program to $375 million total shows management's confidence and commitment to shareholder returns.

The digital marketing landscape is evolving rapidly with AI integration becoming a key differentiator. Stagwell's strong performance in Digital Transformation (25% growth) indicates they're successfully capitalizing on this trend. The Adobe partnership particularly stands out as a strategic win that positions them well in the enterprise market.

The political advertising segment timing aligns perfectly with the election cycle, providing a predictable revenue boost. The combination of political spending and AI-driven digital transformation creates multiple growth vectors. Market share gains evidenced by record new business wins suggest their competitive position is strengthening against traditional advertising holding companies.

Q3 YoY Revenue Growth of 15%, With 25% Growth in Digital Transformation

Q3 YoY Net Revenue Growth of 8%, Organic Net Revenue Growth of 8%, Digital Transformation Net Revenue Growth of 18%

Q3 Net Income Attributable to Stagwell Inc. Common Shareholders of $3 million

Q3 Adjusted EBITDA of $111 million; Adjusted EBITDA Margin of 19%

Q3 EPS of $0.03; Adjusted EPS of $0.22

Seventh Consecutive Quarter of Record LTM Net New Business

Net New Business of $101 million in Q3; LTM Net New Business of $345 million

Reaffirm Guidance for 2024 of Organic Net Revenue Growth of 5% to 7%; Adjusted EBITDA of $400 million to $450 million; Free Cash Flow Conversion of ~50%

Company Announces $125 Million Increase in Stock Repurchase Program

NEW YORK, Nov. 7, 2024  /PRNewswire/ -- (NASDAQ: STGW) – Stagwell Inc. ("Stagwell") today announced financial results for the three and nine months ended September 30, 2024.

THIRD QUARTER RESULTS:

  • Q3 Revenue of $711 million, an increase of 15% versus the prior year period; YTD Revenue of $2.1 billion, an increase of 10% versus the prior year period
  • Q3 Net Revenue of $580 million, an increase of 8% versus the prior year period; YTD Net Revenue of $1.7 billion, an increase of 4% versus the prior year period
  • Q3 Organic Net Revenue increased 8% versus the prior year period; YTD Organic Net Revenue increased 4% versus the prior year period
  • Q3 Net Income attributable to Stagwell Inc. Common Shareholders of $3 million versus $1 million in the prior year period; YTD Net Loss attributable to Stagwell Inc. Common Shareholders of $1 million versus $1 million in the prior year period
  • Q3 Adjusted EBITDA of $111 million, an increase of 9% versus the prior year period; YTD Adjusted EBITDA of $288 million, an increase of 8% versus the prior year period
  • Q3 Adjusted EBITDA Margin of 19% on net revenue; YTD Adjusted EBITDA Margin of 17% on net revenue
  • Q3 Earnings Per Share Attributable to Stagwell Inc. Common Shareholders of $0.03 versus $0.00 in the prior year period; YTD Earnings Per Share Attributable to Stagwell Inc. Common Shareholders of $(0.01) versus $(0.01) in the prior year period
  • Q3 Adjusted Earnings Per Share attributable to Stagwell Inc. Common Shareholders of $0.22 versus $0.18 in the prior year period; YTD Adjusted Earnings Per Share attributable to Stagwell Inc. Common Shareholders of $0.52 versus $0.45 in the prior year period
  • Net new business of $101 million in the third quarter, last twelve-month net new business of $345 million

 

See "Non-GAAP Financial Measures" below for explanations and reconciliations of the Company's non-GAAP financial measures.

Mark Penn, Chairman and CEO, said, "Stagwell delivered 15% year-over-year revenue growth in the third quarter, led by a return to double-digit growth from our Digital Transformation capability as AI has required companies to rethink the ways they engage with consumers. On the heels of our single largest deal to date with Adobe and expanded relationships with leading brands like United and Microsoft, net new business of over $100 million in the third quarter brings our last twelve-month net new business figure to $345 million, another record for Stagwell.

"New business momentum, robust performance from Digital Transformation, and the culmination of a political season that broke fundraising records, gives us confidence that our vision is resonating with customers, and sets the stage for a strong close to H2," added Penn. 

Frank Lanuto, Chief Financial Officer, commented: "Stagwell posted growth across all our principal capabilities in the third quarter, as the inflection we anticipated played out. Driven by double-digit growth in both Digital Transformation and the Stagwell Marketing Cloud, we delivered third quarter revenue of $711 million. Simultaneously, we grew our adjusted EBITDA to $111 million, representing a 19% margin on net revenue, an improvement of approximately 15 bps over the prior year. These results give us confidence to reiterate our full-year guidance."

Financial Outlook

2024 financial guidance is reiterated as follows:

  • Organic Net Revenue growth of 5% to 7%
  • Organic Net Revenue excluding Advocacy growth of 4% to 5%
  • Adjusted EBITDA of $400 million to $450 million
  • Free Cash Flow Conversion of approximately 50%
  • Adjusted EPS of $0.75 - $0.88
  • Guidance assumes no impact from foreign exchange, acquisitions or dispositions.

 

* The Company has excluded a quantitative reconciliation with respect to the Company's 2024 guidance under the "unreasonable efforts" exception in Item 10(e)(1)(i)(B) of Regulation S-K. See "Non-GAAP Financial Measures" below for additional information.

Stock Repurchase Program

On November 6, 2024, the Board of Directors authorized an extension and a $125,000,000 increase in the size of Stagwell's previously approved stock repurchase program (the "Repurchase Program"). Under the Repurchase Program, as amended, Stagwell may repurchase up to an aggregate of $375,000,000 of shares of its outstanding Class A common stock, with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program will expire on November 6, 2027.

Video Webcast

Management will host a video webcast on Thursday, November 7, 2024, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three and nine months ended September 30, 2024. The video webcast will be accessible at https://stgw.io/Earnings. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the webcast.

A recording of the webcast will be accessible one hour after the webcast and available for ninety days at www.stagwellglobal.com

Stagwell Inc.

Stagwell is the challenger network built to transform marketing. We deliver scaled creative performance for the world's most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing. Led by entrepreneurs, our specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com

Contacts

For Investors: 
Ben Allanson
IR@stagwellglobal.com 

For Press:
Beth Sidhu
PR@stagwellglobal.com 

Non-GAAP Financial Measures

In addition to its reported results, Stagwell Inc. has included in this earnings release certain financial results that the Securities and Exchange Commission (SEC) defines as "non-GAAP Financial Measures." Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results. Such non-GAAP financial measures include the following:

(1) Organic Net Revenue: "Organic net revenue growth" and "Organic net revenue 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 impact of an acquisition as follows: (a) for an entity acquired during the current year, we present the entity's prior year net revenue for the same period during which we owned it in the current year as impact of the acquisition in the current year; and (b) for an entity acquired in the prior year, we present the entity's prior year net revenue for the period during which we did not own the entity in the prior year as impact of the acquisition in the current year. We calculate impact of a divestiture as follows: (a) for a divestiture in the current year, we present the entity's prior year net revenue for the same period during which we no longer owned it in the current year as impact of the divestiture in the current year; and (b) for a divestiture in the prior year, we present the entity's prior year net revenue for the period during which we owned it in the prior year as impact of the divestiture in the current year. We calculate the impact of any acquisition or divestiture without adjusting for foreign currency exchange fluctuations. The impact of foreign currency exchange fluctuations reflects the year-over-year change in the Company's reported net revenue attributable to changes in foreign currency exchange rates. We calculate the impact of foreign currency exchange fluctuations for the portion of the reporting period in which we recognized revenue from a foreign entity in both the current year and the prior year. The impact is calculated as the difference between (1) reported prior period net revenue (converted to U.S. dollars at historical foreign currency exchange rates) and (2) prior period net revenue converted to U.S. dollars at current period foreign exchange rates.

(2) Net New Business: Estimate of annualized revenue for new wins less annualized revenue for losses incurred in the period.

(3) Adjusted EBITDA: defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items.

(4) Adjusted Diluted EPS is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income attributable to Class C shareholders, excluding amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items, divided by (ii) (a) the per weighted average number of common shares outstanding plus (b) the weighted average number of Class C shares outstanding, (if dilutive). Other items includes restructuring costs, acquisition-related expenses, and non-recurring items, and subject to the anti-dilution rules.

(5) Free Cash Flow: defined as Adjusted EBITDA less capital expenditures, change in net working capital, cash taxes, interest, and distributions to minority interests, but excludes contingent M&A payments. Free Cash Flow Conversion is the percentage of adjusted EBITDA.

Included in this earnings release are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures.

This document contains forward-looking statements. within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company's representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company's beliefs and expectations, future financial performance, growth, and future prospects, the Company's strategy, business and economic trends and growth, technological leadership and differentiation, potential and completed acquisitions, anticipated operating efficiencies and synergies and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as "aim," "anticipate," "assume," "believe," "continue," "could," "create," "develop," "estimate," "expect," "focus," "forecast," "foresee," "future," "goal," "guidance," "in development," "intend," "likely," "look," "maintain," "may," "ongoing," "opportunity," "outlook," "plan," "possible," "potential," "predict," "probable," "project," "should," "target," "will," "would" or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section. 

Forward-looking statements in this document are based on certain key expectations and assumptions made by the Company. Although the management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The material assumptions upon which such forward-looking statements are based include, among others, assumptions with respect to general business, economic and market conditions, the competitive environment, anticipated and unanticipated tax consequences and anticipated and unanticipated costs. These forward-looking statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company's control. Therefore, you should not place undue reliance on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:

  • risks associated with international, national and regional unfavorable economic conditions that could affect the Company or its clients;
  • demand for the Company's services, which may precipitate or exacerbate other risks and uncertainties;
  • inflation and actions taken by central banks to counter inflation;
  • the Company's ability to attract new clients and retain existing clients; 
  • the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
  • financial failure of the Company's clients;
  • the Company's ability to retain and attract key employees;
  • the Company's ability to compete in the markets in which it operates;
  • the Company's ability to achieve its cost saving initiatives;
  • the Company's implementation of strategic initiatives;
  • the Company's ability to remain in compliance with its debt agreements and the Company's ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration;
  • the Company's ability to manage its growth effectively;
  • the Company's ability to identify, complete and integrate acquisitions that complement and expand the Company's business capabilities and realize cost savings, synergies or other anticipated benefits of newly acquired businesses, or that even if realized, such benefits may take longer to realize than expected;
  • the Company's ability to identify and complete divestitures and to achieve the anticipated benefits therefrom;
  • the Company's ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products;
  • the Company's use of artificial intelligence, including generative artificial intelligence;
  • adverse tax consequences for the Company, its operations and its stockholders, that may differ from the expectations of the Company, including that future changes in tax laws, potential increases to corporate tax rates in the United States and disagreements with tax authorities on the Company's determinations that may result in increased tax costs;
  • adverse tax consequences in connection with the Transactions, including the incurrence of material Canadian federal income tax (including material "emigration tax");
  • the Company's unremediated material weaknesses in internal control over financial reporting and its ability to establish and maintain an effective system of internal control over financial reporting, including the risk that the Company's internal controls will fail to detect misstatements in its financial statements;
  • the Company's ability to accurately forecast its future financial performance and provide accurate guidance;
  • the Company's ability to protect client data from security incidents or cyberattacks;
  • economic disruptions resulting from war and other geopolitical tensions (such as the ongoing military conflicts between Russia and Ukraine and in the Middle East), terrorist activities and natural disasters;
  • stock price volatility; and
  • foreign currency fluctuations.

Investors should carefully consider these risk factors, other risk factors described herein, and the additional risk factors outlined in more detail in our 2023 Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on March 11, 2024, and accessible on the SEC's website at www.sec.gov, under the caption "Risk Factors," and in the Company's other SEC filings.

 

SCHEDULE 1

STAGWELL INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share amounts)



Three Months Ended
September 30,


Nine Months Ended
September 30,


2024


2023


2024


2023

Revenue

$    711,281


$    617,573


$ 2,052,508


$ 1,872,282

Operating Expenses








Cost of services

457,018


384,980


1,340,456


1,201,309

Office and general expenses

176,440


160,021


507,916


481,379

Depreciation and amortization

36,044


38,830


112,881


107,795

Impairment and other losses



1,715


10,562


669,502


583,831


1,962,968


1,801,045

Operating Income (Loss)

41,779


33,742


89,540


71,237

Other income (expenses):








Interest expense, net

(23,781)


(25,886)


(68,279)


(67,755)

Foreign exchange, net

1,312


(140)


(2,301)


(2,288)

Other, net

249


(271)


(825)


(467)


(22,220)


(26,297)


(71,405)


(70,510)

Income before income taxes and equity in earnings of non-consolidated affiliates

19,559


7,445


18,135


727

Income tax expense

5,691


4,324


9,441


4,997

Income (loss) before equity in earnings of non-consolidated affiliates

13,868


3,121


8,694


(4,270)

Equity in income (loss) of non-consolidated affiliates

(4)


(4)


503


(447)

Net income (loss)

13,864


3,117


9,197


(4,717)

Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests

(10,593)


(2,464)


(10,173)


3,565

Net income (loss) attributable to Stagwell Inc. common shareholders

$         3,271


$            653


$          (976)


$       (1,152)

Earnings (Loss) Per Common Share:








   Basic

$           0.03


$           0.01


$         (0.01)


$         (0.01)

   Diluted

$           0.03


$              —


$         (0.01)


$         (0.01)

Weighted Average Number of Common Shares Outstanding:








   Basic

108,198


110,787


111,436


118,772

   Diluted

112,190


265,006


111,436


274,864

 

SCHEDULE 2

STAGWELL INC.

UNAUDITED COMPONENTS OF NET REVENUE CHANGE

(amounts in thousands)





Net Revenue - Components of Change






Change


Three Months
Ended
September 30,
2023


Foreign
Currency


Net
Acquisitions
(Divestitures)


Organic


Total Change


Three Months
Ended
September
30, 2024


Organic


Total







Integrated Agencies Network

$        306,327


$               217


$               906


$         16,294


$         17,417


$       323,744


5.3 %


5.7 %

Brand Performance Network

153,169


767



2,984


3,751


156,920


1.9 %


2.4 %

Communications Network

62,416


79


2,970


20,755


23,804


86,220


33.3 %


38.1 %

All Other

12,952


(253)


(263)


873


357


13,309


6.7 %


2.8 %


$        534,864


$               810


$           3,613


$         40,906


$         45,329


$       580,193


7.6 %


8.5 %

 




Net Revenue - Components of Change






Change


Nine Months
Ended
September 30,
2023


Foreign
Currency


Net
Acquisitions
(Divestitures)


Organic


Total Change


Nine Months
Ended
September
30, 2024


Organic


Total







Integrated Agencies Network

$        930,660


$               200


$           2,408


$           5,118


$           7,726


$       938,386


0.5 %


0.8 %

Brand Performance Network

459,291


2,145


2,252


12,902


$         17,299


476,590


2.8 %


3.8 %

Communications Network

177,032


(70)


6,421


$         42,718


$         49,069


226,101


24.1 %


27.7 %

All Other

34,404


(822)


(3,559)


(4,061)


(8,442)


25,962


(11.8) %


(24.5) %


$     1,601,387


$           1,453


$           7,522


$         56,677


$         65,652


$    1,667,039


3.5 %


4.1 %


(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.


Note: The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

 

SCHEDULE 3

STAGWELL INC.

UNAUDITED SEGMENT OPERATING RESULTS

(amounts in thousands)


For the Three Months Ended September 30, 2024



Integrated
Agencies
Network


Brand
Performance
Network


Communications
Network


All Other


Corporate


Total

Net Revenue

$     323,744


$        156,920


$                 86,220


$       13,309


$               —


$    580,193

Billable costs

65,924


15,429


49,760


(25)



131,088

Revenue

389,668


172,349


135,980


13,284



711,281













Billable costs

65,924


15,429


49,760


(25)



131,088

Staff costs

198,252


98,716


42,644


9,207


13,160


361,979

Administrative costs

31,593


22,600


9,034


3,978


2,351


69,556

Unbillable and other costs, net

15,993


16,498


424


4,574



37,489

Adjusted EBITDA (1)

77,906


19,106


34,118


(4,450)


(15,511)


111,169













Stock-based compensation

11,000


1,500


855


379


3,201


16,935

Depreciation and amortization

19,878


7,295


3,023


2,573


3,275


36,044

Deferred acquisition consideration

1,114


(6,949)


6,778


(383)



560

Other items, net (1)

3,664


8,076


1,432


98


2,581


15,851

Operating income (loss)

$       42,250


$            9,184


$                 22,030


$       (7,117)


$     (24,568)


$      41,779


(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.


Note: The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

 

SCHEDULE 4

STAGWELL INC.

UNAUDITED SEGMENT OPERATING RESULTS

(amounts in thousands)


For the Nine Months Ended September 30, 2024



Integrated
Agencies
Network


Brand
Performance
Network


Communications
Network


All Other


Corporate


Total

Net Revenue

$    938,386


$        476,590


$               226,101


$    25,962


$              —


$ 1,667,039

Billable costs

189,134


86,966


109,195


174



385,469

Revenue

1,127,520


563,556


335,296


26,136



2,052,508













Billable costs

189,134


86,966


109,195


174



385,469

Staff costs

579,979


296,411


123,039


24,635


35,421


1,059,485

Administrative costs

96,097


69,196


26,117


3,447


11,396


206,253

Unbillable and other costs, net

56,301


46,677


1,270


9,465



113,713

Adjusted EBITDA (1)

206,009


64,306


75,675


(11,585)


(46,817)


287,588













Stock-based compensation

25,170


4,988


2,731


729


5,308


38,926

Depreciation and amortization

58,731


26,524


9,007


9,938


8,681


112,881

Deferred acquisition consideration

5,690


(6,454)


9,097


(383)



7,950

Impairment and other losses

1,500





215


1,715

Other items, net (1)

13,204


16,363


2,104


702


4,203


36,576

Operating income (loss)

$    101,714


$          22,885


$                 52,736


$  (22,571)


$    (65,224)


$       89,540


(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.


Note: The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

 

SCHEDULE 5

STAGWELL INC.

UNAUDITED SEGMENT OPERATING RESULTS

(amounts in thousands)


For the Three Months Ended September 30, 2023



Integrated
Agencies
Network


Brand
Performance
Network


Communications
Network


All Other


Corporate


Total

Net Revenue

$    306,327


$         153,169


$                   62,416


$    12,952


$              —


$    534,864

Billable costs

51,742


10,904


20,089


(26)



82,709

Revenue

358,069


164,073


82,505


12,926



617,573













Billable costs

51,742


10,904


20,089


(26)



82,709

Staff costs

185,034


95,488


37,412


10,391


10,589


338,914

Administrative costs

30,983


20,580


7,626


1,849


1,301


62,339

Unbillable and other costs, net

14,173


12,868


84


4,717



31,842

Adjusted EBITDA (1)

76,137


24,233


17,294


(4,005)


(11,890)


101,769













Stock-based compensation

6,051


2,399


1,252


268


2,095


12,065

Depreciation and amortization

22,817


8,971


2,784


2,138


2,120


38,830

Deferred acquisition consideration

1,018


2,130


3,757


(504)



6,401

Other items, net (1)

6,047


3,337


244


292


811


10,731

Operating income (loss)

$      40,204


$             7,396


$                      9,257


$    (6,199)


$    (16,916)


$      33,742


(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items.


Note: The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

 

SCHEDULE 6

STAGWELL INC.

UNAUDITED SEGMENT OPERATING RESULTS

(amounts in thousands)


For the Nine Months Ended September 30, 2023



Integrated
Agencies
Network


Brand
Performance
Network


Communications
Network


All Other


Corporate


Total

Net Revenue

$    930,660


$        459,291


$                177,032


$    34,404


$              —


$ 1,601,387

Billable costs

134,249


83,443


53,229


(26)



270,895

Revenue

1,064,909


542,734


230,261


34,378



1,872,282













Billable costs

134,249


83,443


53,229


(26)



270,895

Staff costs

572,893


288,932


115,846


31,124


25,850


1,034,645

Administrative costs

93,000


64,163


25,096


1,244


13,343


196,846

Unbillable and other costs, net

53,665


38,534


336


12,202



104,737

Adjusted EBITDA (1)

211,102


67,662


35,754


(10,166)


(39,193)


265,159













Stock-based compensation

15,470


3,840


2,177


427


12,701


34,615

Depreciation and amortization

62,277


25,160


8,216


6,152


5,990


107,795

Deferred acquisition consideration

8,118


1,112


3,403


(1,752)



10,881

Impairment and other losses

10,562






10,562

Other items, net (1)

13,822


8,493


1,337


1,079


5,338


30,069

Operating income (loss)

$    100,853


$          29,057


$                  20,621


$  (16,072)


$    (63,222)


$       71,237


(1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net.


Note: The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

 

SCHEDULE 7

STAGWELL INC.

UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)

(amounts in thousands, except per share amounts)


For the Three Months Ended September 30, 2024




GAAP


Adjustments


Non-GAAP

Net income attributable to Stagwell Inc. common shareholders


$              3,271


$            19,762


$            23,033

Net income attributable to Class C shareholders



36,060


36,060

Net income attributable to Stagwell Inc. and Class C shareholders and adjusted net income


$              3,271


$            55,822


$            59,093








Weighted average number of common shares outstanding


112,190


1,497


113,687

Weighted average number of common Class C shares outstanding



151,649


151,649

Weighted average number of shares outstanding


112,190


153,146


265,336








Diluted EPS and Adjusted Diluted EPS


$                0.03




$                0.22








Adjustments to Net income (1)

Amortization




$            28,659



Stock-based compensation




16,935



Deferred acquisition consideration




560



Other items, net




15,851







62,005



Adjusted tax expense




(15,615)







46,390



Net loss attributable to Class C shareholders




9,432







$            55,822










Allocation of adjustments to Net income







Net income attributable to Stagwell Inc. common shareholders - add-backs




$            19,762










Net income attributable to Class C shareholders - add-backs




26,628



Net income attributable to Class C shareholders




9,432







36,060







$            55,822




(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.

 

SCHEDULE 8

STAGWELL INC.

UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)

(amounts in thousands, except per share amounts)


For the Nine Months Ended September 30, 2024




GAAP


Adjustments


Non-GAAP

Net income (loss) attributable to Stagwell Inc. common shareholders


$               (976)


$            58,177


$            57,201

Net income attributable to Class C shareholders



83,442


83,442

Net income (loss) attributable to Stagwell Inc. and Class C and adjusted net income 


$               (976)


$          141,619


$          140,643








Weighted average number of common shares outstanding


111,436


5,780


117,216

Weighted average number of common Class C shares outstanding



151,649


151,649

Weighted average number of shares outstanding


111,436


157,429


268,865








Diluted EPS and Adjusted Diluted EPS


$              (0.01)




$                0.52








Adjustments to Net Income (loss) (1)

Amortization




$            91,870



Impairment and other losses




1,715



Stock-based compensation




38,926



Deferred acquisition consideration




7,950



Other items, net




36,576







177,037



Adjusted tax expense




(41,268)







135,769



Net loss attributable to Class C shareholders




5,850







$          141,619










Allocation of adjustments to net income (loss) 1

Net income attributable to Stagwell Inc. common shareholders - add-backs




$            58,177










Net income attributable to Class C shareholders - add-backs




77,592



Net income attributable to Class C shareholders




5,850







83,442







$          141,619




(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.

 

SCHEDULE 9

STAGWELL INC.

UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)

(amounts in thousands, except per share amounts)


For the Three Months Ended September 30, 2023




GAAP


Adjustments


Non-GAAP

Net income attributable to Stagwell Inc. common shareholders


$                 653


$            20,844


$            21,497

Net income attributable to Class C shareholders


33


26,530


26,563

Net income attributable to Stagwell Inc. and Class C and adjusted net income


$                 686


$            47,374


$            48,060








Weighted average number of common shares outstanding


113,357


5,663


119,020

Weighted average number of common Class C shares outstanding


151,649



151,649

Weighted average number of shares outstanding


265,006


5,663


270,669








Diluted EPS and Adjusted Diluted EPS


$                    —




$                0.18








Adjustments to Net income (1)

Amortization




$            31,182



Stock-based compensation




12,065



Deferred acquisition consideration




6,401



Other items, net




10,731







60,379



Adjusted tax expense




(13,005)







$            47,374




(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.

 

SCHEDULE 10

STAGWELL INC.

UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)

(amounts in thousands, except per share amounts)


For the Nine Months Ended September 30, 2023




GAAP


Adjustments


Non-GAAP

Net income (loss) attributable to Stagwell Inc. common shareholders


$            (1,152)


$            57,927


$            56,775

Net income attributable to Class C shareholders


(2,702)


73,725


71,023

Net income (loss) attributable to Stagwell Inc. and Class C and adjusted net income 


$            (3,854)


$          131,652


$          127,798








Weighted average number of common shares outstanding


118,772


10,736


129,508

Weighted average number of common Class C shares outstanding


156,092



156,092

Weighted average number of shares outstanding


274,864


10,736


285,600








Diluted EPS and Adjusted Diluted EPS


$              (0.01)




$                0.45








Adjustments to Net income (loss) (1)

Amortization




$            86,605



Impairment and other losses




10,562



Stock-based compensation




34,615



Deferred acquisition consideration




10,881



Other items, net




30,069







172,732



Adjusted tax expense




(41,080)







$          131,652




(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.

 

SCHEDULE 11

STAGWELL INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(amounts in thousands)




September 30, 2024


December 31, 2023





ASSETS




Current Assets




Cash and cash equivalents

$                  145,807


$                  119,737

Accounts receivable, net

716,394


697,178

Expenditures billable to clients

137,443


114,097

Other current assets

108,187


94,054

Total Current Assets

1,107,831


1,025,066

Fixed assets, net

77,766


77,825

Right-of-use assets - operating leases

223,194


254,278

Goodwill

1,521,005


1,498,815

Other intangible assets, net

769,596


818,220

Other assets

97,425


92,843

Total Assets

$               3,796,817


$               3,767,047

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS ("RNCI"), AND SHAREHOLDERS' EQUITY




Current Liabilities




Accounts payable

$                  338,649


$                  414,980

Accrued media

206,512


291,777

Accruals and other liabilities

210,146


233,046

Advance billings

338,789


301,674

Current portion of lease liabilities - operating leases

61,897


65,899

Current portion of deferred acquisition consideration

8,618


66,953

Total Current Liabilities

1,164,611


1,374,329

Long-term debt

1,463,925


1,145,828

Long-term portion of deferred acquisition consideration

53,055


34,105

Long-term lease liabilities - operating leases

250,388


281,307

Deferred tax liabilities, net

41,728


40,509

Other liabilities

60,220


54,905

Total Liabilities

3,033,927


2,930,983

Redeemable Noncontrolling Interests

18,618


10,792

Commitments, Contingencies and Guarantees




Shareholders' Equity




Common shares - Class A & B

110


118

Common shares - Class C

2


2

Paid-in capital

287,941


348,494

Retained earnings

11,416


21,148

Accumulated other comprehensive loss

(13,057)


(13,067)

Stagwell Inc. Shareholders' Equity

286,412


356,695

Noncontrolling interests

457,860


468,577

Total Shareholders' Equity

744,272


825,272

Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity

$               3,796,817


$               3,767,047

 

SCHEDULE 12

STAGWELL INC.

UNAUDITED SUMMARY CASH FLOW DATA

(amounts in thousands)



Nine Months Ended September 30,


2024


2023

Cash flows from operating activities:




Net income

$                     9,197


$                   (4,717)

Adjustments to reconcile net income to cash used in operating activities:




Stock-based compensation

38,926


34,615

Depreciation and amortization

112,881


107,795

Amortization of right-of-use lease assets and lease liability interest

58,052


57,583

Impairment and other losses

1,715


10,562

Deferred income taxes

(3,446)


(5,635)

Adjustment to deferred acquisition consideration

7,950


10,881

Other, net

6,371


(4,248)

Changes in working capital:




Accounts receivable

(6,212)


(25,405)

Expenditures billable to clients

(15,705)


(36,217)

Other assets

(9,068)


6,539

Accounts payable

(94,160)


(49,204)

Accrued expenses and other liabilities

(121,647)


(152,216)

Advance billings

23,984


(1,759)

Current portion of lease liabilities - operating leases

(63,956)


(67,095)

Deferred acquisition related payments

(14,112)


(9,021)

Net cash used in operating activities

(69,230)


(127,542)

Cash flows from investing activities:




Capital expenditures

(16,728)


(12,205)

Acquisitions, net of cash acquired

(23,781)


(6,678)

Capitalized software

(19,320)


(19,026)

Other

(6,656)


(6,939)

Net cash used in investing activities

(66,485)


(44,848)

Cash flows from financing activities:




Repayment of borrowings under revolving credit facility

(1,176,000)


(1,250,500)

Proceeds from borrowings under revolving credit facility

1,492,000


1,562,500

Shares repurchased and cancelled

(101,249)


(203,958)

Distributions to noncontrolling interests

(23,583)


(24,538)

Payment of deferred consideration

(28,721)


(31,666)

Purchase of noncontrolling interest

(3,316)


Debt issuance costs


(150)

Net cash provided by financing activities

159,131


51,688

Effect of exchange rate changes on cash and cash equivalents

2,654


(1,182)

Net increase (decrease) in cash and cash equivalents

26,070


(121,884)

Cash and cash equivalents at beginning of period

119,737


220,589

Cash and cash equivalents at end of period

$                 145,807


$                   98,705

 

 

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SOURCE Stagwell Inc.

FAQ

What was Stagwell's (STGW) Q3 2024 revenue growth?

Stagwell reported Q3 2024 revenue growth of 15% year-over-year, reaching $711 million.

What is Stagwell's (STGW) Q3 2024 Adjusted EBITDA?

Stagwell's Q3 2024 Adjusted EBITDA was $111 million, representing a 19% margin on net revenue.

How much did Stagwell (STGW) increase its stock repurchase program in November 2024?

Stagwell increased its stock repurchase program by $125 million to a total of $375 million, extending it through November 6, 2027.

What was Stagwell's (STGW) net new business in Q3 2024?

Stagwell reported net new business of $101 million in Q3 2024, with last twelve-month net new business reaching $345 million.

Stagwell Inc.

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