Revenue Growth of 6%, Led by 42% Growth in Advocacy

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

Adjusted EBITDA of $86 million; Adjusted EBITDA Margin of 16%

EPS of $(0.03); Adjusted EPS of $0.14

Announces Record Net New Business Led by Largest New Business Win

Net New Business of $113 million in Q2; LTM Net New Business of $324 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%

NEW YORK, Aug. 1, 2024 /PRNewswire/ -- (NASDAQ: STGW) – Stagwell Inc. ("Stagwell") today announced financial results for the three and six months ended June 30, 2024.

"Stagwell delivered solid results this quarter with record-smashing net new business wins for the quarter of $113 million, bringing our last twelve-month net new business figure to $324 million," said Chairman and CEO, Mark Penn.

SECOND QUARTER RESULTS:

  • Q2 Revenue of $671 million, an increase of 6% versus the prior year period; H1 Revenue of $1.3 billion, an increase of 7% versus the prior year period
  • Q2 Net Loss attributable to Stagwell Inc. Common Shareholders of $3 million versus $3 million in the prior year period; H1 Net Loss attributable to Stagwell Inc. Common Shareholders of $4 million versus Income of $2 million in the prior year period
  • Q2 Adjusted EBITDA of $86 million, a decrease of 6% versus the prior year period; H1 Adjusted EBITDA of $176 million, an increase of 8% versus the prior year period
  • Q2 Adjusted EBITDA Margin of 16% on net revenue; H1 Adjusted EBITDA Margin of 16% on net revenue.
  • Q2 Earnings Per Share Attributable to Stagwell Inc. Common Shareholders of $(0.03) versus $(0.03) in the prior year period; H1 Earnings Per Share Attributable to Stagwell Inc. Common Shareholders of $(0.04) versus $(0.01) in the prior year period.
  • Q2 Adjusted Earnings Per Share attributable to Stagwell Inc. Common Shareholders of $0.14 versus $0.18 in the prior year period; H1 Adjusted Earnings Per Share attributable to Stagwell Inc. Common Shareholders of $0.30 versus $0.31 in the prior year period.
  • Net new business wins of $113 million in the second quarter, last twelve-month net new business wins of $324 million.
  • Q2 Net Revenue of $554 million, an increase of 2% versus the prior year period; H1 Net Revenue of $1.1 billion, an increase of 2% versus the prior year period
  • Q2 Organic Net Revenue increased 1.2% versus the prior year period; H1 Organic Net Revenue increased 1.5% versus the prior year period
Announces Record Net New Business of $113 million in Q2 2024, led by Largest New Business Win in Company History

Mark Penn, Chairman and CEO, said, "Stagwell delivered solid results this quarter with record-smashing net new business wins of $113 million, bringing our last twelve-month net new business figure to $324 million. Success for the year continues to build, with new business wins from General Motors, Macy's, Target, and Zales just coming online to bolster H2. Additionally, the momentum is continuing, with wins already coming in Q3, and an active political season that has been energized even further by recent developments. 

We are at a critical inflection point as we grow our capabilities, enabling us to land $20 to $40 million remits, while expanding our AI deployments, Stagwell Marketing Cloud capabilities, and our global reach. We are seeing these strategies come together now to set the stage for a strong H2 and 2025," added Penn. 

Frank Lanuto, Chief Financial Officer, commented: "Driven by record-breaking net new business and strong growth in Creativity & Communications, Advocacy, and Performance Media & Data, Stagwell delivered solid second quarter revenue of $671 million, a 6% increase over the prior year. While improving our comp-to-net revenue ratio, we invested in initiatives to build and convert our revenue pipeline into new business, including the successful SPORT BEACH activation at Cannes. The multiple $10 million-plus wins in Q2 and early Q3 confirm our growth strategy and bolster our confidence in 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.

Video Webcast

Management will host a video webcast on Thursday, August 1, 2024, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three and six months ended June 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 Revenue: "Organic revenue growth" and "Organic 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, 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 Israel and Gaza), 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
June 30,

Six Months Ended
June 30,

2024

2023

2024

2023

Revenue

$    671,168

$    632,265

$ 1,341,227

$ 1,254,709

Operating Expenses






Cost of services

438,912

402,431

883,438

816,329

Office and general expenses

168,133

162,522

331,476

321,358

Depreciation and amortization

42,001

35,488

76,837

68,965

Impairment and other losses

215

10,562

1,715

10,562

649,261

611,003

1,293,466

1,217,214

Operating Income (Loss)

21,907

21,262

47,761

37,495

Other income (expenses):






Interest expense, net

(23,533)

(23,680)

(44,498)

(41,869)

Foreign exchange, net

(1,355)

(1,478)

(3,613)

(2,148)

Other, net

193

(416)

(1,074)

(196)

(24,695)

(25,574)

(49,185)

(44,213)

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

(2,788)

(4,312)

(1,424)

(6,718)

Income tax expense

1,165

437

3,750

673

Loss before equity in earnings of non-consolidated affiliates

(3,953)

(4,749)

(5,174)

(7,391)

Equity in income (loss) of non-consolidated affiliates

(1)

(216)

507

(443)

Net loss

(3,954)

(4,965)

(4,667)

(7,834)

Net loss attributable to noncontrolling and redeemable noncontrolling interests

989

1,771

420

6,029

Net loss attributable to Stagwell Inc. common shareholders

$       (2,965)

$       (3,194)

$       (4,247)

$       (1,805)

Earnings (Loss) Per Common Share:






   Basic

$         (0.03)

$         (0.03)

$         (0.04)

$         (0.01)

   Diluted

$         (0.03)

$         (0.03)

$         (0.04)

$         (0.01)

Weighted Average Number of Common Shares Outstanding:






   Basic

113,484

115,400

113,059

120,272

   Diluted

113,484

115,400

113,059

120,272

 

SCHEDULE 2

STAGWELL INC.

UNAUDITED COMPONENTS OF NET REVENUE CHANGE

(amounts in thousands)




Net Revenue - Components of Change




Change

Three Months
Ended June
30, 2023

Foreign Currency

Net Acquisitions (Divestitures)

Organic

Total Change

Three Months
Ended June
30, 2024

Organic

Total






Integrated Agencies Network

$        320,146

$             (389)

$           1,859

$               254

$           1,724

$       321,870

0.1 %

0.5 %

Brand Performance Network

154,470

(149)

544

2,243

2,638

157,108

1.5 %

1.7 %

Communications Network

61,645

(99)

3,179

7,668

10,748

72,393

12.4 %

17.4 %

All Other

8,600

(412)

(1,605)

(3,562)

(5,579)

3,021

(41.4) %

(64.9) %

$        544,861

$         (1,049)

$           3,977

$           6,603

$           9,531

$       554,392

1.2 %

1.7 %





Net Revenue - Components of Change




Change

Six Months
Ended June
30, 2023

Foreign Currency

Net Acquisitions (Divestitures)

Organic

Total Change

Six Months
Ended June
30, 2024

Organic

Total






Integrated Agencies Network

$        624,333

$               (19)

$           1,502

$       (11,174)

$         (9,691)

$       614,642

(1.8) %

(1.6) %

Brand Performance Network

306,122

1,376

2,252

9,920

$         13,548

319,670

3.2 %

4.4 %

Communications Network

114,616

(146)

3,451

$         21,960

$         25,265

139,881

19.2 %

22.0 %

All Other

21,452

(568)

(3,296)

(4,935)

(8,799)

12,653

(23.0) %

(41.0) %

$     1,066,523

$               643

$           3,909

$         15,771

$         20,323

$    1,086,846

1.5 %

1.9 %

(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 June 30, 2024


Integrated
Agencies
Network

Brand
Performance
Network

Communications
Network

All Other

Corporate

Total

Net Revenue

$     321,870

$        157,108

$                 72,393

$         3,021

$               —

$    554,392

Billable costs

63,263

20,137

33,177

199

—

116,776

Revenue

385,133

177,245

105,570

3,220

—

671,168












Billable costs

63,263

20,137

33,177

199

—

116,776

Staff costs

195,193

99,264

41,131

7,607

12,154

355,349

Administrative costs

33,902

24,525

8,379

(3,740)

6,468

69,534

Unbillable and other costs, net

24,780

15,613

710

2,303

—

43,406

Adjusted EBITDA (1)

67,995

17,706

22,173

(3,149)

(18,622)

86,103












Stock-based compensation

4,849

1,445

827

252

(1,498)

5,875

Depreciation and amortization

19,472

11,715

3,090

4,944

2,780

42,001

Deferred acquisition consideration

2,531

1,272

3,433

—

—

7,236

Impairment and other losses

—

—

—

—

215

215

Other items, net (1)

4,029

3,268

390

430

752

8,869

Operating income (loss)

$       37,114

$                    6

$                 14,433

$       (8,775)

$     (20,871)

$      21,907

(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 Six Months Ended June 30, 2024


Integrated
Agencies
Network

Brand
Performance
Network

Communications
Network

All Other

Corporate

Total

Net Revenue

$    614,642

$        319,670

$               139,881

$    12,653

$              —

$ 1,086,846

Billable costs

123,210

71,537

59,435

199

—

254,381

Revenue

737,852

391,207

199,316

12,852

—

1,341,227












Billable costs

123,210

71,537

59,435

199

—

254,381

Staff costs

381,727

197,695

80,395

15,428

22,261

697,506

Administrative costs

64,504

46,596

17,083

(531)

9,045

136,697

Unbillable and other costs, net

40,308

30,179

846

4,891

—

76,224

Adjusted EBITDA (1)

128,103

45,200

41,557

(7,135)

(31,306)

176,419












Stock-based compensation

14,170

3,488

1,876

350

2,107

21,991

Depreciation and amortization

38,853

19,229

5,984

7,365

5,406

76,837

Deferred acquisition consideration

4,576

495

2,319

—

—

7,390

Impairment and other losses

1,500

—

—

—

215

1,715

Other items, net (1)

9,540

8,287

672

604

1,622

20,725

Operating income (loss)

$      59,464

$          13,701

$                 30,706

$  (15,454)

$    (40,656)

$       47,761

(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 June 30, 2023


Integrated
Agencies
Network

Brand
Performance
Network

Communications
Network

All Other

Corporate

Total

Net Revenue

$    320,146

$         154,470

$                   61,645

$      8,600

$              —

$    544,861

Billable costs

45,489

22,263

19,652

—

—

87,404

Revenue

365,635

176,733

81,297

8,600

—

632,265












Billable costs

45,489

22,263

19,652

—

—

87,404

Staff costs

191,694

97,384

38,357

10,246

8,437

346,118

Administrative costs

30,636

22,652

8,714

(3,800)

8,065

66,267

Unbillable and other costs, net

22,710

13,953

126

4,510

9

41,308

Adjusted EBITDA (1)

75,106

20,481

14,448

(2,356)

(16,511)

91,168












Stock-based compensation

1,131

874

418

127

7,996

10,546

Depreciation and amortization

20,510

8,252

2,719

2,066

1,941

35,488

Deferred acquisition consideration

1,109

161

(893)

15

—

392

Impairment and other losses

10,562

—

—

—

—

10,562

Other items, net (1)

4,683

3,231

488

787

3,729

12,918

Operating income (loss)

$      37,111

$             7,963

$                   11,716

$    (5,351)

$    (30,177)

$      21,262

(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 Six Months Ended June 30, 2023


Integrated
Agencies
Network

Brand
Performance
Network

Communications
Network

All Other

Corporate

Total

Net Revenue

$    624,333

$        306,122

$                114,616

$    21,452

$              —

$ 1,066,523

Billable costs

82,507

72,539

33,140

—

—

188,186

Revenue

706,840

378,661

147,756

21,452

—

1,254,709












Billable costs

82,507

72,539

33,140

—

—

188,186

Staff costs

387,859

193,444

78,434

20,733

15,261

695,731

Administrative costs

62,017

43,583

17,470

(605)

12,042

134,507

Unbillable and other costs, net

39,492

25,666

252

7,485

—

72,895

Adjusted EBITDA (1)

134,965

43,429

18,460

(6,161)

(27,303)

163,390












Stock-based compensation

9,419

1,441

925

159

10,606

22,550

Depreciation and amortization

39,460

16,189

5,432

4,014

3,870

68,965

Deferred acquisition consideration

7,100

(1,018)

(354)

(1,248)

—

4,480

Impairment and other losses

10,562

—

—

—

—

10,562

Other items, net (1)

7,775

5,156

1,093

787

4,527

19,338

Operating income (loss)

$      60,649

$          21,661

$                  11,364

$    (9,873)

$    (46,306)

$       37,495

(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 June 30, 2024



GAAP

Adjustments

Non-GAAP

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

$            (2,965)

$            18,935

$            15,970

Net income attributable to Class C shareholders

—

22,828

22,828

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

$            (2,965)

$            41,763

$            38,798







Weighted average number of common shares outstanding

113,484

5,281

118,765

Weighted average number of common Class C shares outstanding

—

151,649

151,649

Weighted average number of shares outstanding

113,484

156,930

270,414







Diluted EPS and Adjusted Diluted EPS

$              (0.03)


$                0.14














Adjustments to Net income (loss) (1)

Amortization


$            35,008

Impairment and other losses


215

Stock-based compensation


5,875

Deferred acquisition consideration


7,236

Other items, net


8,869





57,203

Adjusted tax expense


(12,905)





44,298

Net loss attributable to Class C shareholders


(2,535)





$            41,763








Allocation of adjustments to net income (loss) 1





Net income attributable to Stagwell Inc. common shareholders


$            18,935








Net income attributable to Class C shareholders


25,363

Net loss attributable to Class C shareholders


(2,535)





22,828





$            41,763


(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 Six Months Ended June 30, 2024



GAAP

Adjustments

Non-GAAP

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

$            (4,247)

$            38,415

$            34,168

Net income attributable to Class C shareholders

—

47,382

47,382

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

(4,247)

85,797

81,550







Weighted average number of common shares outstanding

113,059

4,760

117,819

Weighted average number of common Class C shares outstanding

—

151,649

151,649

Weighted average number of shares outstanding

113,059

156,409

269,468







Diluted EPS and Adjusted Diluted EPS

$              (0.04)


$                0.30














Adjustments to Net Income (loss) (1)

Amortization


$            63,211

Impairment and other losses


1,715

Stock-based compensation


21,991

Deferred acquisition consideration


7,390

Other items, net


20,725





115,032

Adjusted tax expense


(25,653)





89,379

Net loss attributable to Class C shareholders


(3,582)





$            85,797








Allocation of adjustments to net income (loss) 1

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


$            38,415








Net income attributable to Class C shareholders - add-backs


50,964

Net income attributable to Class C shareholders


(3,582)





47,382





$            85,797


(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 June 30, 2023



GAAP

Adjustments

Non-GAAP

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

$            (3,194)

$            23,369

$            20,175

Net income (loss) attributable to Class C shareholders

—

28,971

28,971

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

(3,194)

52,340

49,146







Weighted average number of common shares outstanding

115,400

9,135

124,535

Weighted average number of common Class C shares outstanding

—

155,821

155,821

Weighted average number of shares outstanding

115,400

164,956

280,356














Diluted EPS and Adjusted Diluted EPS

$              (0.03)


$                0.18







Adjustments to Net income (loss) (1)

Amortization


$            28,690

Impairment and other losses


10,562

Stock-based compensation


10,546

Deferred acquisition consideration


392

Other items, net


12,918





63,108

Adjusted tax expense


(9,997)





53,111

Net income attributable to Class C shareholders - add-backs


(771)

Net loss attributable to Class C shareholders


$            52,340








Allocation of adjustments to Net income (loss)





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


$            23,369








Net income attributable to Class C shareholders - add-backs


$            29,742

Net loss attributable to Class C shareholders


(771)





28,971





$            52,340


(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 Six Months Ended June 30, 2023



GAAP

Adjustments

Non-GAAP

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

$            (1,805)

$            41,734

$            39,929

Net income (loss) attributable to Class C shareholders

—

50,381

50,381

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

(1,805)

92,115

90,310







Weighted average number of common shares outstanding

120,272

9,356

129,628

Weighted average number of common Class C shares outstanding


158,351

158,351

Weighted average number of shares outstanding

120,272

167,707

287,979














Diluted EPS and Adjusted Diluted EPS

$              (0.01)


$                0.31














Adjustments to Net income (loss) (1)

Amortization


$            55,422

Impairment and other losses


10,562

Stock-based compensation


22,550

Deferred acquisition consideration


4,480

Other items, net


19,338





112,352

Adjusted tax expense


(17,503)





$            94,849

Net loss attributable to Class C shareholders


(2,734)





$            92,115








Allocation of adjustments to net income (loss)





Net income attributable to Stagwell Inc. common shareholders


41,734








Net income to attributable to Class C shareholders


53,115

Net loss attributable to Class C shareholders


(2,734)





50,381

Net income attributable to Stagwell Inc. common shareholders


$            92,115









(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)


June 30, 2024

December 31, 2023




ASSETS


Current Assets


Cash and cash equivalents

$                  136,078

$                  119,737

Accounts receivable, net

732,236

697,178

Expenditures billable to clients

126,144

114,097

Other current assets

105,951

94,054

Total Current Assets

1,100,409

1,025,066

Fixed assets, net

78,829

77,825

Right-of-use assets - operating leases

234,340

254,278

Goodwill

1,504,650

1,498,815

Other intangible assets, net

778,181

818,220

Other assets

96,271

92,843

Total Assets

$               3,792,680

$               3,767,047

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


Current Liabilities


Accounts payable

$                  388,819

$                  414,980

Accrued media

218,625

291,777

Accruals and other liabilities

205,644

233,046

Advance billings

320,547

301,674

Current portion of lease liabilities - operating leases

63,908

65,899

Current portion of deferred acquisition consideration

24,045

66,953

Total Current Liabilities

1,221,588

1,374,329

Long-term debt

1,422,226

1,145,828

Long-term portion of deferred acquisition consideration

46,996

34,105

Long-term lease liabilities - operating leases

262,760

281,307

Deferred tax liabilities, net

41,720

40,509

Other liabilities

56,359

54,905

Total Liabilities

3,051,649

2,930,983

Redeemable Noncontrolling Interests

11,107

10,792

Commitments, Contingencies and Guarantees


Shareholders' Equity


Common shares - Class A & B

112

118

Common shares - Class C

2

2

Paid-in capital

292,616

348,494

Retained earnings

16,771

21,148

Accumulated other comprehensive loss

(17,931)

(13,067)

Stagwell Inc. Shareholders' Equity

291,570

356,695

Noncontrolling interests

438,354

468,577

Total Shareholders' Equity

729,924

825,272

Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity

$               3,792,680

$               3,767,047

 

SCHEDULE 12

STAGWELL INC.

UNAUDITED SUMMARY CASH FLOW DATA

(amounts in thousands)


Six Months Ended June 30,

2024

2023

Cash flows from operating activities:


Net income

$                   (4,667)

$                   (7,834)

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


Stock-based compensation

21,991

22,550

Depreciation and amortization

76,837

68,965

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

39,534

38,517

Impairment and other losses

1,715

10,562

Deferred income taxes

3,797

(639)

Adjustment to deferred acquisition consideration

7,390

4,480

Other, net

3,850

(3,284)

Changes in working capital:


Accounts receivable

(30,157)

4,255

Expenditures billable to clients

(6,516)

(13,180)

Other assets

(5,776)

4,117

Accounts payable

(28,576)

(20,217)

Accrued expenses and other liabilities

(114,353)

(172,159)

Advance billings

12,092

(32,795)

Current portion of lease liabilities - operating leases

(41,924)

(44,272)

Deferred acquisition related payments

(2,855)

(3,212)

Net cash used in operating activities

(67,618)

(144,146)

Cash flows from investing activities:


Capital expenditures

(13,990)

(7,953)

Acquisitions, net of cash acquired

(20,350)

(4,965)

Capitalized software

(17,076)

(10,356)

Other

(767)

(6,844)

Net cash used in investing activities

(52,183)

(30,118)

Cash flows from financing activities:


Repayment of borrowings under revolving credit facility

(761,000)

(800,500)

Proceeds from borrowings under revolving credit facility

1,036,000

1,102,500

Shares repurchased and cancelled

(86,934)

(199,363)

Distributions to noncontrolling interests

(22,483)

(15,408)

Payment of deferred consideration

(23,963)

(28,558)

Purchase of noncontrolling interest

(3,316)

—

Debt issuance costs

—

(150)

Net cash provided by financing activities

138,304

58,521

Effect of exchange rate changes on cash and cash equivalents

(2,162)

438

Net increase (decrease) in cash and cash equivalents

16,341

(115,305)

Cash and cash equivalents at beginning of period

119,737

220,589

Cash and cash equivalents at end of period

$                 136,078

$                 105,284

 

Stagwell is the challenger network built to transform marketing. (PRNewsfoto/Stagwell Inc.)

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SOURCE Stagwell Inc.

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