10q10k10q10k.net

What changed in Stagwell Inc's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Stagwell Inc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+368 added−540 removedSource: 10-K (2025-03-11) vs 10-K (2023-12-31)

Top changes in Stagwell Inc's 2024 10-K

368 paragraphs added · 540 removed · 296 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

68 edited+16 added−15 removed57 unchanged
Biggest changeBPN’s Brands provide media solutions such as audience analysis, media planning, and buying across a range of digital and traditional platforms (out-of-home, paid search, social media, lead generation, programmatic, television, broadcast, among others) and includes multichannel Brands Assembly, Brand New Galaxy, Crispin Porter Bogusky, Forsman & Bodenfors, Goodstuff, Bruce Mau, digital creative & transformation consultancy Gale, B2B specialist Multiview, CX specialists Kenna, and travel media experts Ink. • The Communications Network reportable segment is comprised of a single operating segment, our specialist network that provides advocacy, strategic corporate communications, investor relations, public relations, online fundraising and other services to both corporations and political and advocacy organizations and consists of our Allison brands, SKDK brands, and Targeted Victory brands. • All Other consists of the Company’s digital innovation group and Stagwell Marketing Cloud Group, including Maru and Epicenter, and products such as ARound, PRophet and SmartAssets. • Corporate consists of corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments.
Biggest changeBPN’s Brands provide media solutions such as audience analysis, media planning, and buying across a range of digital and traditional platforms (out-of-home, paid search, social media, lead generation, programmatic, television, broadcast, among others) and includes multichannel Brands Assembly, CPB International, Stagwell Production, Vitro, Forsman & Bodenfors, Goodstuff, Bruce Mau, digital creative & transformation consultancy Gale, B2B specialist Multiview, CX specialists Kenna, and travel media experts Ink. • The Communications Network reportable segment comprises a single operating segment, our specialist network that provides advocacy, strategic corporate communications, investor relations, public relations, online fundraising and other services to both corporations and political and advocacy organizations and includes Allison, SKDK, Targeted Victory, and Consulum.
Our Market Industry Trends The digital revolution has changed where and how brands relate to consumers and created an entirely new, highly complex content and commerce ecosystem. Historically, marketing was characterized by television and brand advertising targeted to broad audiences: everyone saw the same advertisement at the same time.
Our Market Industry Trends The digital revolution has changed where and how brands relate to consumers and created an entirely new, highly complex content and commerce ecosystem. Historically, marketing was characterized by television and brand advertising targeted at broad audiences: everyone saw the same advertisement at the same time.
Our corporate objective is to accelerate the growth and improve the profitability of our Brands, and we believe Brands see strategic value in being part of the Stagwell network. Our value creation platform has three layers: Client Services, Growth Investment and Shared Services. Our Client Services layer aims to facilitate revenue growth through go-to-market support.
Our corporate objective is to accelerate growth and improve the profitability of our Brands, and we believe Brands see strategic value in being part of the Stagwell network. Our value creation platform has three layers: Client Services, Growth Investment and Shared Services. Our Client Services layer aims to facilitate revenue growth through go-to-market support.
In addition, as AI drives transformation across marketing sectors, we believe our additional focus on AI-enabled product development in the Stagwell Marketing Cloud sets us apart. Our Offering Principal Capabilities Stagwell’s Brands provide differentiated, digital-first marketing and related services to a diverse client base across many industries.
In addition, as AI drives transformation across marketing sectors, we believe our focus on digital transformation and AI-enabled product development in the Stagwell Marketing Cloud sets us apart. Our Offering Principal Capabilities Stagwell’s Brands provide differentiated, digital-first marketing and related services to a diverse client base across many industries.
Human capital management strategies are developed by senior management, including the management teams of our Brands, and are overseen at the corporate level. Our human capital management priorities include providing competitive benefits & compensation, attracting and retaining talent, supporting learning & development across the network, promoting Diversity & Inclusion, increasing employee engagement, and ensuring workplace safety.
Human capital management strategies are developed by senior management, including the management teams of our Brands, and are overseen at the corporate level. Our human capital management priorities include providing competitive benefits & compensation, attracting and retaining talent, supporting learning & development across the network, promoting diversity, increasing employee engagement, and ensuring workplace safety.
Employee Engagement Regular communication is a focus at Stagwell. We have quarterly global Town Halls to ensure staff are engaged with and organizational goals are shared.
Employee Engagement Regular communication is a focus at Stagwell. We have quarterly global Town Halls to ensure staff are engaged and organizational goals are shared.
Online now means virtually everywhere: website, mobile, social media, television, out-of-home, and immersive in-person experiences. Second, advertising is commerce. Digital platforms provide ways for brands to reach consumers directly through e-commerce. Platforms as diverse as TikTok, Instacart, and LinkedIn have created new ways for brands to interact with their customers.
Online now means virtually everywhere: website, mobile, social media, television, out-of-home, and immersive in-person experiences. Second, advertising is commerce. Digital platforms provide ways for brands to reach consumers directly through e-commerce. Platforms as diverse as Instagram, Instacart, and LinkedIn have created new ways for brands to interact with their customers.
Item 1. Business About Us Stagwell Inc. is the challenger network built to transform marketing. Stagwell delivers scaled creative performance for some of the world’s most ambitious brands, connecting creativity with leading-edge technology to harmonize the art and science of marketing.
Item 1. Business About Us Stagwell Inc. is the challenger network built to transform marketing. Stagwell delivers scaled creative performance for some of the world’s most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing.
We design and build digital platforms and experiences that support the delivery of content, commerce, services and sales. We create websites, mobile applications, back-end systems, content and data management systems, and other digital environments enabling clients to engage with consumers across the digital ecosystem.
We build digital services and products for clients. We design and build digital platforms and experiences that support the delivery of content, commerce, services and sales. We create websites, mobile applications, back-end systems, content and data management systems, and other digital environments enabling clients to engage with consumers across the digital ecosystem.
We develop omnichannel media strategies and provide coordinated execution for the placement of advertisements across the media funnel including digital channels, performance marketing and analog placements globally. Unlike legacy holding companies that own large amounts of television inventory and therefore must sell it, we take a media-agnostic approach leveraging digital technologies and media in addition to analog advertising.
We develop omnichannel media strategies and provide coordinated execution for the placement of advertisements across the media funnel including digital channels, performance marketing and analog placements globally. Unlike legacy holding companies that own large amounts of television inventory and therefore must sell it, we take a media-agnostic approach leveraging digital technologies, AI-powered targeting, and media in addition to analog advertising.
Our Shared Services layer provides unified back-office systems via Stagwell CORE (“CORE”), a platform that focuses on transitioning away from disparate teams, processes and systems and establishing a standardized platform. CORE provides centralized services across back office operational functions, including information technology (“IT”), accounts payable and receivable, real estate, enterprise-level contract administration, and accounting services.
Our Shared Services layer provides unified back-office systems via Stagwell CORE (“CORE”), a platform that focuses on transitioning away from disparate teams, processes and systems and establishing a standardized platform. CORE provides centralized services across back office operational functions, including information technology (“IT”), accounting, payroll, accounts payable and receivable, human resources, real estate, enterprise-level contract administration, and accounting services.
We have regular learning and talent events so employees across our network can feel connected to the broader portfolio of Stagwell companies and enhance collaboration. 10 Table of Contents Learning & Development At the corporate level, Stagwell invests in both our senior leadership and up-and-coming leaders through a professional development partnership with a globally recognized leadership development organization.
We have regular learning and talent events so employees across our network can feel connected to the broader portfolio of Stagwell companies and enhance collaboration. Learning & Development At the corporate level, Stagwell invests in both our senior leadership and up-and-coming leaders through a professional development partnership with a globally recognized leadership development organization.
In addition, each Brand maintains its own policies and development programs to address to its workforce and leadership goals. Stagwell has also launched Next Dimension, an intensive experiential learning opportunity to cultivate global client leaders who are transformative partners to our clients. We expect to welcome the program’s second cohort in 2024.
In addition, each Brand maintains its own policies and development programs to address its workforce and leadership goals. Stagwell has also launched Next Dimension, an intensive experiential learning opportunity to cultivate global client leaders who are transformative partners to our clients. We welcomed the program’s second cohort in 2024.
Clients also change firms as a result of the firm’s failure to meet marketing performance targets or other expectations in client service delivery. Regulatory Environment The marketing and communications services that our Brands provide are subject to laws and regulations in all of the jurisdictions in which we operate.
Clients also change firms as a result of the firm’s failure to meet marketing performance targets or other expectations in client service delivery. 10 Table of Contents Regulatory Environment The marketing and communications services that our Brands provide are subject to laws and regulations in all of the jurisdictions in which we operate.
We believe our concentration of digital capabilities today provides a competitive advantage in the marketplace and positions us to benefit from continued digital disruption in the marketing services industry. We plan to continue to invest in our core digital platforms as well as emerging technologies to effectively support marketing transformation for our clients.
We believe our concentration of digital capabilities today provides a competitive advantage in the marketplace and positions us to benefit from continued digital disruption in the marketing services industry. We plan to continue to invest in our core digital platforms as well as emerging technologies to effectively support marketing transformation for our clients. Stagwell Marketing Cloud Group.
Additionally, a centralized corporate innovation team develops and invests in proprietary digital marketing products that are distributed by Brands across the network, further enhancing the value proposition Stagwell’s Brands offer to clients. Our Strategy The key components of the Stagwell strategy are Digital, Integrated, Global, and Strategic (“DIGS”).
Additionally, a centralized corporate innovation team develops and invests in proprietary digital marketing products that are distributed by Brands across the network, further enhancing the value proposition Stagwell’s Brands offer to clients. 6 Table of Contents Our Strategy The key components of the Stagwell strategy are Digital, Integrated, Global, and Strategic (“DIGS”).
We are led by a management team with deep industry expertise and a track record of growing and managing marketing services businesses. The Stagwell platform provides a foundation to support efficient, accretive scaling of our global network and our high-growth digital transformation and digital 8 Table of Contents media capabilities.
We are led by a management team with deep industry expertise and a track record of growing and managing marketing services businesses. The Stagwell platform provides a foundation to support efficient, accretive scaling of our global network and our high-growth digital transformation and digital media capabilities.
Our Clients As of December 31, 2023, Stagwell served over 4,000 clients across a wide range of sectors, representing some of the world’s most recognized brands including: Google, Amazon, Diageo, Nike, Apple, P&G, United Airlines, Salesforce and more. In many cases, we serve the same clients in various geographic locations, across multiple disciplines, and through multiple Stagwell Brands.
Our Clients As of December 31, 2024, Stagwell served over 4,500 clients across a wide range of sectors, representing some of the world’s most recognized brands including: Google, Amazon, Diageo, Nike, Apple, P&G, United Airlines, Salesforce and more. In many cases, we serve the same clients in various geographic locations, across multiple disciplines, and through multiple Stagwell Brands.
Our Brands also face competition from consultancies, like Accenture and Deloitte, tech platforms, media companies and other services firms that offer related services. Stagwell’s Brands must compete with these other companies to maintain and grow existing client relationships and to obtain new clients and assignments.
Our Brands also face competition from consultancies, such as Accenture and Deloitte, tech platforms, media companies and other services firms that offer related services. Stagwell’s Brands must compete with these other companies to maintain and grow existing client relationships and to obtain new clients and assignments.
We also classify Digital Transformation, Performance Media & Data, Consumer Insights & Strategy, and Stagwell Marketing Cloud Group as “Digital” though Brands categorized as Creativity & Communications generate a significant portion of revenue from creativity and content delivered on digital channels and some, such as 72andSunny and Anomaly, do meaningful amounts of digital work that fluctuates as a percentage of revenue.
We also classify Digital Transformation, Performance Media & Data, Consumer Insights & Strategy, and Stagwell Marketing Cloud 4 Table of Contents Group as “Digital” though Brands categorized as Creativity & Communications also generate a significant portion of revenue from creativity and content delivered on digital channels and some agencies, such as 72andSunny and Anomaly, do meaningful amounts of digital work that fluctuates as a percentage of revenue.
In addition, these operating segments may occasionally compete with each other for new business or have business move between them. • The Brand Performance Network (“BPN”) is comprised of a single operating segment. BPN includes a unified media and data management structure with omnichannel media placement, creative media consulting, influencer and business-to-business marketing capabilities.
In addition, these operating segments may occasionally compete with each other for new business or have business move between them. • The Brand Performance Network (“BPN”) comprises a single operating segment. BPN includes a unified media and data management structure with omnichannel media placement, creative media consulting, influencer and business-to-business marketing capabilities.
At the network level, the Stagwell BPN provides a corporate structure to cost-effectively coordinate our global media placement capabilities, while our Global Affiliate Network positions our Brands to pitch for and win opportunities requiring capabilities in specific local markets.
At the network level, the Stagwell Brand Performance Network provides a corporate structure to cost-effectively coordinate our global media placement capabilities, while our Global Affiliate Network positions our Brands to pitch for and win opportunities requiring capabilities in specific local markets.
Our management team has successfully demonstrated an ability to efficiently operate, manage and grow a profitable portfolio of diverse advertising businesses through periods of dramatic changes in consumer behavior, technological advancement and economic cycles.
Our management team has successfully demonstrated an ability to efficiently operate, manage and grow a profitable portfolio of diverse advertising businesses through periods of dramatic changes in consumer behavior, technological 8 Table of Contents advancement and economic cycles.
Individual products within the Stagwell Marketing Cloud also typically compete with offerings that may be provided within broader service offerings at large global holding companies or provided on a standalone basis by technology startups or other industry participants such as Infosys, Wipro and Cognizant.
Individual products within the 3 Table of Contents Stagwell Marketing Cloud also typically compete with offerings that may be provided within broader service offerings at large global holding companies or provided on a standalone basis by technology startups or other industry participants such as Infosys, Wipro and Cognizant.
Our primary use of capital is expected to be funding diligently structured, highly accretive investment in businesses we believe will support sustainable future growth by increasing the breadth and depth of our capabilities.
Our primary use of capital is expected to be funding diligently structured, highly accretive investments in businesses that we believe will support sustainable future growth by increasing the breadth and depth of our capabilities.
In 2023, net revenue from our top 100 clients’ increased by over 7% year-over-year as we saw record last twelve months new business and increasing interest in both specific Brand capabilities as well as cross-Brand, integrated solutions that address multi-discipline client needs. Stagwell’s Brands have written contracts with many of their clients.
In 2024, net revenue from our top 100 clients increased by over 6% year-over-year as we saw record last twelve months new business and increasing interest in both specific Brand capabilities as well as cross-Brand, integrated solutions that address multi-discipline client needs. Stagwell’s Brands have written contracts with many of their clients.
Stagwell offers the capabilities marketers need in the digital age: Digital Transformation, Performance Media & Data, Consumer Insights & Strategy, Creativity & Communications, and “software as a service” (“SaaS”) and “data as a 2 Table of Contents service” (“DaaS”) technology tools within the Stagwell Marketing Cloud Group.
Stagwell offers the capabilities marketers need in the digital age: Digital Transformation, Performance Media & Data, Consumer Insights & Strategy, Creativity & Communications, and “software as a service” (“SaaS”) and “data as a service” (“DaaS”) technology tools within the Stagwell Marketing Cloud Group.
Our principal capabilities fall into five categories: 1) Stagwell Marketing Cloud Group 2) Digital Transformation 3) Performance Media & Data 4) Consumer Insights & Strategy and 5) Creativity & Communications. Taken together, these capabilities provide an integrated suite of marketing services for our blue-chip customer base. 4 Table of Contents Digital Transformation. We build digital services and products for clients.
Our principal capabilities fall into five categories: 1) Stagwell Marketing Cloud Group 2) Digital Transformation 3) Performance Media & Data 4) Consumer Insights & Strategy and 5) Creativity & Communications. Taken together, these capabilities provide an integrated suite of marketing services for our blue-chip customer base.
We believe we already have a substantial engineering presence globally – approximately 1 in 10 Stagwell employees are engineers as of December 31, 2023 – and have developed the necessary skills to support hiring, training and managing large teams outside the United States.
We already have a substantial engineering presence globally – approximately 1 in 10 Stagwell employees were engineers as of December 31, 2024 – and have developed the necessary skills to support hiring, training and managing large teams outside the United States.
As of December 31, 2023, we had over 80 Global Affiliate partners in our network. • Emerging Marketing Technologies: In addition to the advertising and marketing services market, we believe our investments in the Stagwell Marketing Cloud will position us to address new, rapidly expanding market opportunities, including marketing data, campaign martech, the metaverse, and AR and VR applications.
As of December 31, 2024, we had over 90 Global Affiliate partners in our network. • Emerging Marketing Technologies: In addition to the advertising and marketing services market, we believe our investments in the Stagwell Marketing Cloud will position us to address new, rapidly expanding market opportunities, 7 Table of Contents including marketing data, campaign martech, the metaverse, and AR and VR applications.
The operating segments offer an array of complementary services spanning our core capabilities of Digital Transformation, Performance Media & Data, Consumer Insights & Strategy, and Creativity & Communications.
The operating segments offer an array of complementary services spanning our core capabilities of Digital Transformation, Performance Media & Data, Consumer Insights & Strategy, Stagwell Marketing Cloud Group and Creativity & Communications.
Diversity & Inclusion We believe the cultures of Stagwell’s individual Brands contribute to what sets working at Stagwell apart; however, the connective tissue that we believe unites us is our vision for our Brands and people to work collaboratively across disciplines in an inclusive environment.
Corporate Culture We believe the cultures of Stagwell’s individual Brands contribute to what sets working at Stagwell apart; however, the connective tissue that we believe unites us is our vision for our Brands and people to work collaboratively across disciplines in an inclusive and open environment for all.
These partners, which we refer to as Global Affiliates, enable us to increase our local-market reach and qualify for business opportunities that require enhanced capabilities in specific local markets without taking on additional costs. As of December 31, 2023, the Global Affiliate Network included more than 80 affiliates.
These partners, which we refer to as Global Affiliates, enable us to increase our local market reach and qualify for business opportunities that require enhanced capabilities in specific local markets without taking on additional costs. As of December 31, 2024, our Global Affiliate Network included more than 80 affiliates and added coverage for Stagwell in 26 additional countries.
Stagwell has historically been largely focused in North America where the Company was founded, as well as the United Kingdom, but has expanded its global footprint to support clients globally and has a presence in more than 34 countries, and an additional more than 30 countries through our Global Affiliate Network, in each case as of December 31, 2023.
Stagwell has historically been largely focused in North America where the Company was founded, as well as the United Kingdom, but has expanded its global footprint to support clients globally and has a presence in more than 40 countries, and an additional 26 countries through our Global Affiliate Network, as of December 31, 2024.
As businesses across every sector are likely to grapple with the impact of AI, we implement AI to enable stronger operations for our clients, more efficient marketing, and new engagement methods with consumers. Performance Media & Data.
As businesses across sectors are likely to grapple with the impact of AI, we implement AI to enhance operations for our clients, more efficient marketing, and new engagement methods with consumers. Performance Media & Data.
We intend to invest in these Brands’ emerging technologies, including AI solutions, to remain at the forefront of the transformation of marketing services. • Second, we intend to pursue complementary acquisition opportunities to bolster our existing assets in areas such as digital transformation and digital media buying.
We intend to continue to invest in these Brands’ emerging technologies, including AI solutions, to remain at the forefront of the transformation of marketing services. • Second, we are pursuing complementary acquisition opportunities to bolster our existing assets in areas such as digital transformation and digital media buying. For example, we acquired Create.
Attracting & Retaining Talent Hiring and retaining transformative talent is key to Stagwell’s mission. We supplement agency-led recruiting with central recruiting support. Leveraging our scale, we have developed a broad database of global talent that further enhances our recruiting activities.
In addition, we have various stock ownership programs for eligible Stagwell employees. Attracting & Retaining Talent Hiring and retaining transformative talent is key to Stagwell’s mission. We supplement agency-led recruiting with central recruiting support. Leveraging our scale, we have developed a broad database of global talent that further enhances our recruiting activities.
In 2019, Stagwell Media made a $100 million investment into MDC, the parent company of creative powerhouses including 72andSunny, Anomaly, Crispin, Porter & Bogusky, Doner and Forsman & Bodenfors. Recognizing the potential of those companies, Stagwell’s reorganization and careful management of the portfolio turned MDC around. In August 2021, Stagwell Media completed the Transactions with MDC to become Stagwell Inc.
In 2019, Stagwell Media LP (“Stagwell Media”) made a $100 million investment into MDC Partners, Inc. (“MDC”), the parent company of creative powerhouses including 72andSunny, Anomaly, Crispin, Porter & Bogusky, Doner and Forsman & Bodenfors. Recognizing the potential of those companies, Stagwell’s reorganization and careful management of the portfolio turned MDC around.
Risk Factors. 11 Table of Contents Available Information Stagwell Inc.’s website address is www.stagwellglobal.com.
Risk Factors. Available Information Stagwell Inc.’s website address is www.stagwellglobal.com.
We develop proprietary, in-house software and related technology products, including AI-enabled communications, research, and media technology, cookie-less data platforms for advanced targeting and activation, software tools for e-commerce applications, specialty media solutions in the fast-growing augmented reality space, and innovative applications of text-messaging for consumer engagement, which we license to clients using subscription-based SaaS and DaaS models. 5 Table of Contents We group our Brands into these principal capability categories based on the source of most of their revenue.
We develop proprietary, in-house software and related technology products, including AI-enabled communications, research, and media technology, cookie-less data platforms for advanced targeting and activation, software tools for e-commerce applications, specialty media solutions in the fast-growing augmented reality space, and innovative applications of text-messaging for consumer engagement, which we license to clients using subscription-based SaaS and DaaS models. Digital Transformation.
The following table provides a breakdown of the approximate number of full-time employees across Stagwell’s three reportable segments, the All Other category, and Corporate: Segment Total Integrated Agencies Network 4,440 Brand Performance Network 4,260 Communications Network 930 All Other 260 Corporate 360 Total 10,250 Because of the personal service nature of the marketing and communications business, our talent is of significance to our success.
The following table provides a breakdown of the approximate number of full-time employees across Stagwell’s three reportable segments, the All Other category, and Corporate: Segment Total Integrated Agencies Network 5,460 Brand Performance Network 4,368 Communications Network 1,206 All Other 290 Corporate 533 Total 11,857 Because of the personal service nature of the marketing and communications business, our talent is of significance to our success.
Brands can sell their products directly on their sites, via digital platforms such as Amazon or through interactive experiences enabled by social media. Digital platforms also allow advocacy groups and political campaigns to reach constituents to mobilize support or raise funds online. Retail media networks add complexity and opportunity to brands’ consumer engagement strategies. Third, data is everywhere.
Brands can sell their products directly on their sites, via digital platforms such as Amazon or through interactive experiences enabled by social media. Digital platforms also allow advocacy groups and political campaigns to reach constituents to mobilize support or raise funds online.
We believe promoting an inclusive environment, from building internal and external partnerships, fostering the collaboration amongst our Brands, to trying out ideas and programs from our teams and Brands, will support our ability to attract and retain a diverse workforce and that the diversity of thought creates impact for our clients globally.
We believe promoting an inclusive and open environment, from building internal and external partnerships, fostering the collaboration amongst our Brands, and promoting excellence, innovation and initiative by trying out ideas and programs from our teams and Brands, will support our ability to attract and retain a creative workforce with diversity of thought that positively impacts our clients globally.
These services include strategy development, advertising creation, live events, immersive digital experiences, cross platform engagement, and social media content. We also provide strategic communications, public relations and public affairs services including media relations, thought leadership, investor and financial relations, social media, executive positioning and visibility. Stagwell Marketing Cloud Group.
We develop holistic, creativity-based content strategies and campaigns from concept to execution through to optimization. These services include strategy development, advertising creation, live events, immersive digital experiences, cross platform engagement, and social media content. We also provide strategic communications, public relations and public affairs services including media relations, thought leadership, investor and financial relations, social media, executive positioning and visibility.
Stagwell supports its Brands through access to high-quality education, resources and technology, which they can use to bring an approach to inclusive organizational design to life based on their organization’s needs.
Stagwell supports its Brands through access to high-quality education, resources and technology, which they can use based on their individual Brand’s needs.
We offer flexible paid time off as well as accommodation for civic duties, bereavement, and leaves of absence. Stagwell participates in industry-wide salary surveys and utilizes AI-powered compensation software to obtain real-time compensation survey data and analytics and support data-driven compensation decisions. In addition, we have various stock ownership programs for eligible Stagwell employees.
Health benefits are offered to full-time employees and their dependents, inclusive of domestic and/or same-sex partners. We offer flexible paid time off as well as accommodation for civic duties, bereavement, and leaves of absence. Stagwell participates in industry-wide salary surveys and utilizes AI-powered compensation software to obtain real-time compensation survey data and analytics and support data-driven compensation decisions.
Stagwell’s unified corporate team is the foundation of a powerful value creation platform focused on scaling our portfolio of marketing services firms, which we refer to as “Brands,” and driving continual network evolution.
In 2 Table of Contents August 2021, Stagwell Media’s operating business and subsidiaries completed a business combination with MDC to become Stagwell Inc. (“the Transactions”). Stagwell’s unified corporate team is the foundation of a powerful value creation platform focused on scaling our portfolio of marketing services firms, which we refer to as “Brands,” and driving continual network evolution.
Stagwell’s internal transfer policy and career portal on our intranet, The Hive, also enables employees to explore new positions with other Brands at the Company to support retention of talent within the broader network.
In addition to utilizing central resources and technology, Brand-level recruiting activities include partnerships with colleges/universities, internship programs, referral programs and diversity programs. Stagwell’s internal transfer policy and career portal on our intranet, The Hive, also enables employees to explore new positions with other Brands at the Company to support retention of talent within the broader network.
The primary source of revenue is from agency arrangements in the form of fees for services performed, commissions, and from performance incentives or bonuses. Stagwell’s Brands have written contracts with many of their clients.
The primary source of revenue is from agency arrangements in the form of fees for services performed, commissions, and from performance incentives or bonuses. Stagwell’s Brands have written contracts with many of their clients. . Human Capital As of December 31, 2024, we employed approximately 11,857 full-time employees and approximately 2,750 contractors and part-time employees.
The Company organizes its Brands into three reportable segments: “Integrated Agencies Network,” “Brand Performance Network” and the “Communications Network.” In addition, the Company combines and discloses operating segments that do not meet the aggregation criteria as “All Other.” The Company also reports corporate expenses, as further detailed below, as “Corporate.” The reportable segments are: • The Integrated Agencies Network includes five operating segments: the Anomaly Alliance, Constellation, the Doner Partner Network, Code and Theory, and National Research Group.
The Company organizes its Brands into three reportable segments: “Integrated Agencies Network,” “Brand Performance Network” and the “Communications Network.” The reportable segments are: • The Integrated Agencies Network includes five operating segments: the Anomaly Alliance, Constellation, the Doner Partner Network, Code and Theory Network, and National Research Group.
These include AI-enabled solutions in communications technology, research and insights, media, and advanced media solutions. These products are licensed to our clients using subscription-based 7 Table of Contents SaaS and DaaS models and distributed by Brands across our network.
These include AI-enabled solutions in communications technology, research and insights, media, and advanced media solutions. These products are licensed to our clients using subscription-based SaaS and DaaS models and distributed by Brands across our network. We believe the Stagwell Marketing Cloud positions us to serve in-house marketing departments and create recurring, high-value revenue streams in the future.
At the corporate level, centralized human capital management processes include the development of human resources governance and policy, executive compensation for senior leaders, benefits programs, and succession planning focusing on the performance, development and retention of key senior executives.
At the corporate level, centralized human capital management processes include the development of human resources governance and policy, executive compensation for senior leaders, benefits programs, and succession planning focusing on the performance, development and retention of key senior executives. 9 Table of Contents Benefits & Compensation Stagwell provides a range of competitive benefits including medical, dental, vision, employer-funded health savings accounts, commuter assistance, 401 (k) plans, employee stock programs and more.
The rapid rise of digital channels, convergence of advertising and commerce, explosion in addressable data and marketing technology created a paradigm shift in the industry. While legacy models still accounted for a significant share of the market in 2022, we believe they are largely underexposed to the digital areas of the market experiencing the highest levels of client demand growth.
The rapid rise of digital channels, convergence of advertising and commerce, and explosion in addressable data and marketing technology created a paradigm shift in the industry. While legacy models still accounted for a significant share of the market in 2024, we see the traditional holding company model as outdated in this rapidly evolving industry landscape.
Network Structure & Reportable Segments Stagwell maintains a 100% ownership position in substantially all of its Brands, and the remainder are majority owned with management of the Brands owning the remaining equity. Stagwell generally has rights to increase ownership of non-wholly owned subsidiaries to 100% over a defined period of time.
We’re also working with brands to integrate AI into creative processes, streamlining campaign development and saving on costs. Network Structure & Reportable Segments Stagwell maintains a 100% ownership position in substantially all of its Brands, and the remainder are majority owned with management of the Brands owning the remaining equity.
The Brands included in the operating segments that comprise the Integrated Agencies Network reportable segment are as follows: Anomaly Alliance (Anomaly), Constellation (72andSunny, Colle McVoy, Hunter, Instrument, Redscout, Team Enterprises, Harris Insights, Left Field Labs, and Movers and Shakers), the Doner Partner Network (Doner, KWT Global, Harris X, Veritas, Doner North, and Yamamoto (Brands)), Code and Theory, and National Research Group.
The Brands included in the operating segments that comprise the Integrated Agencies Network reportable segment includes: Anomaly Alliance (Anomaly, What’s Next Partners), Constellation (72andSunny, Crispin LLC, Colle McVoy, Hunter, Redscout, Team Enterprises, Harris Insights, Movers and Shakers, and Team Epiphany), the Doner Partner Network (Doner, KWT Global, Harris X, Veritas, Doner North, and Yamamoto), Code and Theory Network (Code and Theory, Instrument, Left Field Labs), and National Research Group. 5 Table of Contents These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of clients and the methods used to provide services; and (iii) the extent to which they may be impacted by global economic and geopolitical risks.
Stagwell is at the forefront of innovating with this technology, implementing these innovations across our client work, and incubating original and proprietary technology to drive business results and sits on what we refer to as the next frontier of marketing.
We believe Stagwell is at the forefront of innovating these technologies within our industry, collaborating with companies such as Adobe on AI solutions, and incubating original and proprietary technology to drive business results.
As is customary in the industry, these contracts generally provide for termination by either party on relatively short notice.
As is customary in the industry, these contracts generally provide for termination by either party on relatively short notice. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Summary” for a further discussion of Stagwell’s arrangements with its clients.
Additional expenses managed by the corporate office that are directly related to the operating segments are allocated to the appropriate reportable segment and the All Other category. 6 Table of Contents Go-To-Market Strategy Our global go-to-market strategy is key to our objective of providing our clients with a balanced combination of leading-edge technology and creative talent.
Go-To-Market Strategy Our global go-to-market strategy is key to our objective of providing our clients with a balanced combination of leading-edge technology and creative talent.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Summary” for a further discussion of Stagwell’s arrangements with its clients. 9 Table of Contents Sources of Revenue Stagwell provides a broad range of services to a large base of clients across a wide spectrum of verticals globally.
Sources of Revenue Stagwell provides a broad range of services to a large base of clients across a wide spectrum of verticals globally.
Both technologies have evolved past initial niche or enterprise use cases and are now reaching lay consumers, and businesses now are investing in making them widely accessible to consumer audiences, as seen with generative AI tools like ChatGPT and AR tools like Stagwell Marketing Cloud’s ARound.
Frontier technologies such as AI and AR are beginning to gain critical foothold, reshaping creative processes and how businesses connect. Both technologies are now widely accessible to consumer audiences as well, as seen with generative AI tools like ChatGPT and AR tools like Stagwell Marketing Cloud’s ARound.
Our engineering talent is primarily focused on building and designing digital platforms, applications, tools, and experiences for our clients and are typically more highly concentrated in our Brands categorized within our Digital Transformation primary capability.
We are focused on scaling our development capabilities in lower-cost markets, specifically nearshore in Latin America and offshore in Egypt, India, and Southeast Asia. Our engineering talent is concentrated within our Digital Transformation brands and is primarily focused on developing digital platforms, applications, tools, and experiences for our clients.
As AI in particular drives cross-sector transformation, we are delivering solutions around the “Three Es” of AI: enablement across operations, efficiency in marketing, and engagement with consumers. Finally, marketing technology is transforming the industry.
As AI in particular drives cross-sector transformation, we are helping clients build applications around AI, delivering solutions that expand generative and content capabilities, and reimagining how AI can transform consumer and digital experiences. Finally, marketing technology is transforming the industry.
We aim to expand our digital capabilities in three main ways: • First, we intend to continue to invest in our leading digital Brands like Code and Theory, Instrument and Left Field Labs. This planned investment includes funding new capabilities and supporting cross-selling via our Integrated Agencies Network, which has already created additional opportunities.
This consolidation and investment include funding new capabilities and supporting cross-selling via our Integrated Agencies Network, which has already created additional opportunities.
We have built a successful track record of “bolt-on” acquisitions such as TrueLogic Software, LLC, Ramenu S.A., Polar Bear Development S.R.L., a Latin America engineering shop, and Kettle Solutions, LLC (“Kettle”), a content and digital design firm. • Third, we intend to continue to invest in the Stagwell Marketing Cloud, a suite of technology products in development or early-stage commercialization.
Throughout the year, we continued to build on our track record of “bolt-on” digital acquisitions, including What’s Next Partners, a French digital brand and marketing consultancy, and PROS Agency, a digital PR leader in Brazil. • Third, we intend to continue to invest in the Stagwell Marketing Cloud, a suite of technology products in development or early-stage commercialization.
As connectivity grows, the value of raw data declines – but we believe the ability to derive actionable insights from the data, as Stagwell businesses do, increases. 3 Table of Contents Fourth, frontier technologies such as AI and AR are gaining critical foothold among mass consumers, reshaping how businesses connect.
As connectivity grows, the value of raw data declines – but we believe the ability to derive actionable insights from the data, as Stagwell businesses do, increases. We believe the most successful platforms will be ones that anticipate consumer demands and offer relevant analysis in digestible forms. Fourth, companies have begun to build applications around AI.
We have differentiated specialization in brand and corporate reputation tracking, theatrical and streaming content and strategy, and technology product design and marketing, and we believe our Brands are at the forefront of innovation in the field. Creativity & Communications. We develop holistic, creativity-based content strategies and campaigns from concept to execution through to optimization.
We have differentiated specializations in brand and corporate reputation tracking, theatrical and streaming content and strategy, and technology product design and marketing. Our proprietary AI-powered marketing solutions continue to provide real-time insight into consumer sentiments and brand performance with precision and at scale. Creativity & Communications.
We have targeted additional operating efficiencies related to these initiatives that we expect to implement by the end of 2024. Within our client-facing integrated and specialist networks we see further opportunity to achieve operating efficiencies by increasing our non-U.S. based engineering footprint. We are focused on scaling our development capabilities in lower-cost markets, specifically Latin America, India, and Southeast Asia.
Effective Integration at Scale We have continued to drive significant long-term operating efficiencies and pay close attention to costs. Within our client-facing integrated and specialist networks we see further opportunity to achieve operating efficiencies by increasing our non-U.S. based engineering footprint.
Led by entrepreneurs, we employ approximately 13,000 people, including contractors, in over 34 countries across the globe who drive effectiveness and improve business results for our more than 4,000 blue-chip customers as of December 31, 2023. In addition, as of December 31, 2023, our Global Affiliate Network added coverage in over 30 additional countries.
Led by entrepreneurs, our specialists in over 40 countries are unified under a single purpose: to drive effectiveness and improve business results for our more than 4,500 clients as of December 31, 2024.
Removed
ConcentricLife, which was part of Anomaly Alliance was sold on October 31, 2023. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of clients and the methods used to provide services; and (iii) the extent to which they may be impacted by global economic and geopolitical risks.
Added
Since 2021, Stagwell’s standing in the industry has grown as customers have increasingly recognized our agencies’ outstanding work — leading to accelerating net new business trends — and as we have invested in augmenting our capabilities and geographical reach. Throughout our growth, we have maintained a collaborative spirit that is integral to the Stagwell DNA.
Removed
We believe the Stagwell Marketing Cloud positions us to serve in-house marketing departments and create recurring, high-value revenue streams in the future.
Added
We believe our ability to work across business lines and geographies gives us a competitive advantage relative to many of the legacy holding company competitors. While Stagwell is still focused on growth, we believe we have the right scale, scope, and size to meet the needs of marketers worldwide.
Removed
We have also made strategic acquisitions for the Stagwell Marketing Cloud, including The People Platform (formerly Epicenter Experience), an enterprise software company that leverages mobile and location data to map and sequence complex consumer behavior patterns, and Maru Group, a leading software experience and insights data platform.
Added
Our award-winning work and new business wins are evidence that our “Goldilocks” (not too big, not too small) offering resonates with clients.
Removed
For example, in April 2022, we acquired Brand New Galaxy, a scaled provider of end-to-end e-commerce services such as DTC strategy, digital content production, automation, and complex technology implementations. The acquisition bolsters Stagwell’s broad e-commerce capabilities to service more global clients and provides significant scale in Europe.
Added
Retail media networks add complexity and opportunity to brands’ consumer engagement strategies, and influencer marketing strategies allow brands to reach consumers through trusted, individualized storytelling. Third, data is everywhere, making precise targeting even more important.
Removed
Further, in April 2023, we acquired In the Company of Huskies, a Dublin-based creative shop with services such as creative and brand marketing, strategy, and insights, which functionally expanded Stagwell’s footprint to Ireland under the Forsman & Bodenfors brand. • We maintain a Global Affiliate network that enables us to deliver creative, performance, media and technology capabilities at the scale required to serve the world’s largest marketers.
Added
We group our Brands into these principal capability categories based on the source of most of their revenue.
Removed
For example, Stagwell’s AI-enabled instant research tool Harris Quest is now operating in over a dozen countries, and signed its 150th client in 2023, and Stagwell’s shared AR product ARound has launched stadium-level experiences with professional sporting teams in Major League Baseball and the National Football League, namely the Minnesota Twins and the Los Angeles Rams.
Added
Stagwell generally has rights to increase ownership of non-wholly owned subsidiaries to 100% over a defined period of time.

… 19 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

115 edited+11 added−188 removed149 unchanged
Biggest changeThese risks include, among others: • operational and compliance challenges caused by distance, language, and cultural differences, including, in some markets, longer billing collection cycles; • the resources required to adapt our operations to local practices, laws, and regulations and any changes in such practices, laws, and regulations; • laws and regulations that may be more restrictive than those in the United States, including commercial laws that can be undeveloped, vague, inconsistently enforced, retroactively applied or frequently changed, laws governing competition, pricing, payment methods, Internet activities, real estate tenancy laws, tax and social security laws, employment and labor laws, email messaging, privacy, location services, collection, use, processing, or sharing of personal data, ownership of intellectual property, and other activities important to our business; • competition with companies or other services that understand local markets better than we do or that have pre-existing relationships with potential clients in those markets; • differing levels of social acceptance of our brand, products, and offerings; • differing levels of local demand for our digital marketing services or the prevalence of e-commerce; • exposure to business cultures in which improper business practices may be prevalent; • difficulties in managing, growing, and staffing international operations, including in countries in which foreign employees may become part of labor unions, employee representative bodies, or collective bargaining agreements, and challenges relating to work stoppages or slowdowns; • fluctuations in currency exchange rates; • inflation and actions taken by central banks to counter inflation; • adverse tax consequences, including the complexities of foreign value added tax systems, and restrictions on the repatriation of earnings; • increased financial accounting and reporting burdens, and complexities associated with implementing and maintaining adequate internal controls; • difficulties in implementing and maintaining the financial systems and processes needed to enable compliance across multiple jurisdictions; • import and export restrictions, changes in trade regulation and economic sanctions compliance; • public health concerns or emergencies, such as the COVID-19 pandemic or other outbreaks of communicable disease, which have occurred in parts of the world in which we operate; • war, geopolitical tensions and other political, social, and economic instability abroad, terrorist attacks and security concerns, such as escalating tensions in the Taiwan Strait and the ongoing conflicts between Russia and Ukraine and in Israel and Gaza; and • reduced or varied protection for intellectual property rights in some markets. 18 Table of Contents These risks could adversely affect our international operations, which could in turn adversely affect our business, financial condition, results of operations and prospects.
Biggest changeThese risks include, among others: • operational and compliance challenges caused by distance, language, and cultural differences, including, in some markets, longer billing collection cycles; • the resources required to adapt our operations to local practices, laws, and regulations and any changes in such practices, laws, and regulations; • laws and regulations that may be more restrictive than those in the United States, including commercial laws that can be undeveloped, vague, inconsistently enforced, retroactively applied or frequently changed, laws governing competition, pricing, payment methods, Internet activities, real estate tenancy laws, tax and social security laws, employment and labor laws, email messaging, privacy, location services, collection, use, processing, or sharing of personal data, ownership of intellectual property, and other activities important to our business; • exposure to business cultures in which improper business practices may be prevalent; • difficulties in managing, growing, and staffing international operations, including in countries in which foreign employees may become part of labor unions, employee representative bodies, or collective bargaining agreements, and challenges relating to work stoppages or slowdowns; • fluctuations in currency exchange rates; • adverse tax consequences, including the complexities of foreign value added tax systems, and restrictions on the repatriation of earnings; • increased financial accounting and reporting burdens, and complexities associated with implementing and maintaining adequate internal controls; • difficulties in implementing and maintaining the financial systems and processes needed to enable compliance across multiple jurisdictions; • import and export restrictions, changes in trade regulation and economic sanctions compliance; • public health concerns or emergencies, such as the COVID-19 pandemic or other outbreaks of communicable disease, which have occurred in parts of the world in which we operate; 13 Table of Contents • war, geopolitical tensions and other political, social, and economic instability abroad, terrorist attacks and security concerns, such as escalating tensions in the Taiwan Strait and the ongoing conflicts between Russia and Ukraine and in Israel and Gaza; and • reduced or varied protection for intellectual property rights in some markets.
In addition, even though we have issued public guidance in the past, we are not obligated to and may determine not to continue to do so in the future. A significant portion of our Class A Common Stock may be sold into the market in the future, which could negatively affect the market price of our Class A Common Stock.
In addition, even though we have issued public guidance in the past, we are not obligated to and may determine not to continue to do so in the future. A significant portion of our Class A Common Stock may be sold into the market in the future, which could negatively affect our stock price.
If we are not successful in defending or resolving such matters, we could be required to rebrand, redesign or stop offering these products or services, pay monetary damages or fines, enter into royalty or licensing arrangements, satisfy indemnification obligations that we have with some of our clients or make changes to our business practices, any of which could have an adverse effect on our business, reputation, results of operations, financial condition and prospects.
If we are not successful in defending or resolving such matters, we could be required to rebrand, redesign or stop offering these products or services, pay monetary damages or fines, enter into or terminate royalty or licensing arrangements, satisfy indemnification obligations that we have with some of our clients or make changes to our business practices, any of which could have an adverse effect on our business, reputation, results of operations, financial condition and prospects.
To increase our revenues and achieve favorable margins, we will need to attract additional clients or generate demand for additional services and products from existing clients, and such demand will depend on factors including clients’ and potential clients’ requirements, pre-existing vendor relationships, financial condition, strategic plans, internal resources and satisfaction with our work product and services, as well as broader economic conditions, competition and the quality of our Brands’ employees, services and reputation and the breadth of our services.
To increase our revenues and achieve favorable margins, we will need to attract additional clients or generate demand for additional services and products from existing clients, and such demand will depend on factors including clients’ and potential clients’ requirements, pre-existing vendor relationships, financial condition, strategic plans, internal resources and satisfaction with our work product and services, as well as broader economic conditions, competition and the quality of our Brands’ employees, services and reputation.
In addition, the intellectual property ownership and license rights, including copyrights, surrounding AI technologies, including generative AI, have not been fully addressed by U.S. courts or other federal, state, or international laws or regulations, and the use or adoption of third-party generative AI technologies into our offerings may result in exposure to claims of copyright infringement or other intellectual property misappropriations, which could harm our business and financial results.
In addition, the intellectual property ownership and license rights, including copyrights, surrounding AI technologies, including generative AI, have not been fully addressed by U.S. courts or other federal, state, or international laws or regulations, and the use or adoption of third-party generative AI technologies into our offerings may result in exposure to claims of copyright infringement or other intellectual property claims, which could harm our business and financial results.
Our high degree of leverage could have important consequences for us, including: • requiring us to utilize a substantial portion of our cash flows from operations to make payments on our indebtedness, reducing the availability of our cash flows to fund working capital, capital expenditures, development activity, and other general corporate purposes; • increasing our vulnerability to adverse economic, industry, or competitive developments; • exposing us to the risk of increased interest rates because substantially all of our borrowings, other than the $1,100,000 aggregate principal amount of 5.625% senior notes due 2029 (the “5.625% Notes”), are at variable rates of interest; 27 Table of Contents • making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the agreements governing our indebtedness; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, and general corporate or other purposes; and • limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting.
Our high degree of leverage could have important consequences for us, including: • requiring us to utilize a substantial portion of our cash flows from operations to make payments on our indebtedness, reducing the availability of our cash flows to fund working capital, capital expenditures, development activity, and other general corporate purposes; • increasing our vulnerability to adverse economic, industry, or competitive developments; • exposing us to the risk of increased interest rates because substantially all of our borrowings, other than the $1,100,000 aggregate principal amount of 5.625% senior notes due 2029 (the “5.625% Notes”), are at variable rates of interest; • making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the agreements governing our indebtedness; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, and general corporate or other purposes; and • limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting.
We compete on the basis of many factors, including the quality (and clients’ perceptions of the quality) of our work, our ability to protect the confidentiality of clients’ and their customers’ data, our relationships with key client personnel, our expertise in particular niche areas or disciplines, the differentiation of our offerings and our ability to provide integrated services at the scale clients require.
We compete on the basis of many factors, including the quality (and clients’ perceptions of the quality) of our work, our ability to protect the confidentiality of clients’ and their customers’ data, our relationships with key client personnel, our expertise in particular areas or disciplines, the differentiation of our offerings and our ability to provide integrated services at the scale clients require.
Any violations of these or other laws, regulations and procedures by our employees, independent contractors, subcontractors and agents, including third parties we associate with or companies we acquire, could expose us to administrative, civil or criminal penalties, fines or business restrictions, which could have a material and adverse effect on our results of operations and financial condition and would adversely affect our reputation and the market for shares of our Class A Common Stock.
Any violations of these or other laws, regulations and procedures by our employees, independent contractors, subcontractors and agents, including third parties we associate with or companies we acquire, could expose us to administrative, civil or criminal penalties, fines or business restrictions, or other remedial measures, which could have a material and adverse effect on our results of operations and financial condition and would adversely affect our reputation and the market for shares of our Class A Common Stock.
We may be unable to realize the benefits we expect from our past and future acquisitions and other strategic transactions, including the Transactions, for a variety of reasons, including due to our failure to effectively integrate newly acquired businesses into our operations, because of errors in our forecasting or for numerous other reasons, including factors that we do not control, such as the reactions of existing and potential clients, employees, investors and regulators.
We may be unable to realize the benefits we expect from our past and future acquisitions and other strategic transactions for a variety of reasons, including due to our failure to effectively integrate newly acquired businesses into our operations, errors in our forecasting or factors that we do not control, such as the reactions of existing and potential clients, employees, investors and regulators.
In addition, the distributions we receive from OpCo may at some times exceed our tax liabilities and our obligations to make payments under the Tax Receivables Agreement.
In addition, the distributions we receive from OpCo may at times exceed our tax liabilities and our obligations to make payments under the Tax Receivables Agreement.
If we conclude that any further intangible asset and goodwill values are impaired, whether as a result of underperformance in one or more reporting units, a potential recession or other disruption, interest rate increases or other factors, any resulting non-cash impairment charge could have a material adverse effect on our business, results of operations and financial condition.
If we conclude that any further intangible asset, goodwill and right-of-use lease asset values are impaired, whether as a result of underperformance in one or more reporting units, a potential recession or other disruption, interest rate increases or other factors, any resulting non-cash impairment charge could have a material adverse effect on our business, results of operations and financial condition.
If the U.S. or other foreign tax authorities change applicable tax laws, our overall taxes could increase, as well as OpCo’s obligations to make tax distributions, and our business, financial condition or results of operations may be adversely impacted. 32 Table of Contents We may face material adverse tax consequences resulting from the Transactions in Canada, the United States or other jurisdictions.
If the U.S. or other foreign tax authorities change applicable tax laws, our overall taxes could increase, as well as OpCo’s obligations to make tax distributions, and our business, financial condition or results of operations may be adversely impacted. We may face material adverse tax consequences resulting from the Transactions in Canada, the United States or other jurisdictions.
As the breadth and complexity of this infrastructure continues to grow, including as a result of the increasing reliance on, and use of, mobile technologies, social media and cloud-based services, the risk of security incidents and cyberattacks (including state-sponsored cyberattacks) has increased.
As the breadth and complexity of this infrastructure continues to grow, including as a result of the increasing reliance on, and use of, mobile technologies, social media and cloud-based services, the risk of security incidents and cyberattacks has increased.
Our systems and processes to protect against, detect, prevent, respond to and mitigate cybersecurity incidents and our organizational training for employees to develop an understanding of cybersecurity risks and threats may be unable to prevent material security breaches, theft, modification or loss of data, employee malfeasance (including improper use of social media) and additional known and unknown threats.
Our systems and processes to protect against, detect, prevent, respond to and mitigate cybersecurity incidents and our organizational training for employees to develop an understanding of cybersecurity risks and threats may be unable to prevent material security breaches, theft, modification or loss of data, employee malfeasance (including improper use 15 Table of Contents of social media) and additional known and unknown threats.
Payments we are required to make in respect of deferred acquisition consideration and noncontrolling equityholder put rights may be significantly higher than the amounts we estimate because the actual obligation adjusts based on the performance of the acquired businesses over time. If available liquidity is insufficient, we may be unable to fund contingent deferred acquisition payments.
Payments we are required to make in respect of deferred acquisition consideration and noncontrolling equity holder put rights may be significantly higher than the amounts we estimate because the actual obligation adjusts based on the performance of the acquired businesses over time. If available liquidity is insufficient, we may be unable to fund contingent deferred acquisition payments.
Laws of foreign jurisdictions, such as Canada’s Anti-Spam Law and Personal Information Protection and Electronic Documents Act, and the GDPR similarly apply to our collection, processing, storage, use, and transmission of protected data. The European Union, for example, has tightened its rules on the transferability of data to the United States.
Laws of foreign jurisdictions, such as Canada’s Anti-Spam Law and Personal Information Protection and Electronic Documents Act, and the GDPR similarly 17 Table of Contents apply to our collection, processing, storage, use, and transmission of protected data. The European Union, for example, has tightened its rules on the transferability of data to the United States.
We operate in many parts 25 Table of Contents of the world that have experienced government corruption to some degree, and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices, although adherence to local customs and practices is generally not a defense under U.S. and other anti-bribery laws.
We operate in many parts of the world that have experienced government corruption to some degree, and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices, although adherence to local customs and practices is generally not a defense under U.S. and other anti-bribery laws.
Moreover, U.S. tax laws significantly limit our ability to redomicile outside of the United States. In addition, as a result of the Redomiciliation, we incurred a significant Canadian corporate tax liability and recorded a tax receivable of $12 million included in Other Assets in our Audited Consolidated Financial Statements.
Moreover, U.S. tax laws significantly limit our ability to redomicile outside of the United States. In addition, as a result of the Redomiciliation, we incurred a significant Canadian corporate tax liability and recorded a tax receivable of $10.4 million included in Other Assets in our Audited Consolidated Financial Statements.
We have not applied to the Canadian federal tax authorities for a tax ruling relating to the Redomiciliation and do not intend to do so, and the Canadian federal tax authorities may not agree with or may otherwise challenge our position on the tax treatment of the Redomiciliation, which could result in higher Canadian corporate tax liabilities than we anticipate.
We have not applied to the Canadian federal tax authorities for a tax ruling relating to the Redomiciliation and do not intend to do so, and the Canadian federal tax authorities may not agree with or may otherwise challenge our position on the tax treatment of the Redomiciliation, which could result in higher Canadian corporate 24 Table of Contents tax liabilities than we anticipate.
There is a risk that our algorithms could produce such outcomes or other unexpected results or behaviors that could harm our reputation, business, or clients. 17 Table of Contents In addition, the use of AI and generative AI involves significant technical complexity and requires specialized expertise.
There is a risk that our algorithms could produce such outcomes or other unexpected results or behaviors that could harm our reputation, business, or clients. In addition, the use of AI and generative AI involves significant technical complexity and requires specialized expertise.
In addition, a noncontrolling equityholder in an acquired business sometimes has the right to require the us to purchase all or part of such holder’s interest, either at specified dates or upon the termination of such holder’s employment with the subsidiary or death (put rights).
In addition, a noncontrolling equity holder in an acquired business sometimes has the right to require the us to purchase all or part of such holder’s interest, either at specified dates or upon the termination of such holder’s employment with the subsidiary or death (put rights).
As a services business, our ability to attract and retain clients is an important aspect of our competitiveness, and client loss, including due to competitors, as a consequence of client consolidation, insolvency or a reduction in marketing budgets due to recessionary economic conditions, 14 Table of Contents or a shift in client spending could have a material adverse effect on our business, results of operations, financial condition and prospects.
Our ability to attract and retain clients is an important aspect of our competitiveness, and client loss, including due to competitors, as a consequence of client consolidation, insolvency or a reduction in marketing budgets due to recessionary economic conditions, or a shift in client spending could have a material adverse effect on our business, results of operations, financial condition and prospects.
We are highly leveraged. As of December 31, 2023, we had $1.1 billion of total consolidated indebtedness outstanding. Our outstanding credit agreement and notes are guaranteed by substantially all of our material domestic subsidiaries, and our outstanding credit agreement is secured by substantially all of the assets and stock of such subsidiaries.
We are highly leveraged. As of December 31, 2024, we had $1.4 billion of total consolidated indebtedness outstanding. Our outstanding credit agreement and notes are guaranteed by substantially all of our material domestic subsidiaries, and our outstanding credit agreement is secured by substantially all of the assets and stock of such subsidiaries.
We expect the amount of the cash payments that we are required to make under the Tax Receivables Agreement to be significant. Any payments made to Stagwell Media under the Tax Receivables Agreement will generally reduce the amount of overall cash flow that may have otherwise been available to us.
We expect the amount of cash payments that we are required to make under the Tax 21 Table of Contents Receivables Agreement to be significant. Any payments made to Stagwell Media under the Tax Receivables Agreement will generally reduce the amount of overall cash flow that may have otherwise been available to us.
In light of the foregoing, investors should not place undue reliance on our financial guidance and should carefully 34 Table of Contents consider any guidance we may publish in context. In addition, in recent periods our operating or financial results have not met our guidance, or we have reduced our guidance.
In light of the foregoing, investors should not place undue reliance on our financial guidance and should carefully consider any guidance we may publish in context. In addition, in recent periods our operating or financial results have not met our guidance, or we have reduced our guidance.
We have experienced, and may again experience, data security 22 Table of Contents incidents resulting from unauthorized access to our and our service providers’ systems and unauthorized acquisition of our data and our clients’ data, including inadvertent disclosure, misconfiguration of systems, phishing ransomware or malware attacks.
We have experienced, and may again experience, data security incidents resulting from unauthorized access to our and our service providers’ systems and unauthorized acquisition of our data and our clients’ data, including inadvertent disclosure, misconfiguration of systems, phishing ransomware or malware attacks.
Moreover, there has recently been an expansion of 24 Table of Contents specific rules, prohibitions, media restrictions, labeling disclosures, and warning requirements with respect to advertising for certain products.
Moreover, there has recently been an expansion of specific rules, prohibitions, media restrictions, labeling disclosures, and warning requirements with respect to advertising for certain products.
These risks are not exclusive and additional risks to which we are subject include the factors listed under “Note About Forward-Looking Statements” and the risks discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.
These risks are not exclusive and additional risks to which we are subject include the factors listed under “Forward-Looking Statements” and the risks discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.
See “—Risks Related to Our Capital Structure and Financing—Our Up-C structure places significant limitations on our cash flow because our principal asset is our interest in OpCo, and, accordingly, we depend on distributions from OpCo to pay our taxes and expenses, including payments under the Tax Receivables Agreement.” Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied.
See “—Risks Related to Our Capital Structure and Financing—Our Up-C structure places significant limitations on our cash flow and accordingly, we depend on distributions from OpCo to pay our taxes and expenses, including payments under the Tax Receivables Agreement.” Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied.
For example, inflation rates, particularly in the United States, have increased in recent years, and the effects of increased inflation and other adverse conditions on our customers have resulted and may continue to result in decreased demand for our products and services, decreased revenue, increases in our operating costs (including our labor costs), and decreased profitability, and may result in reduced liquidity and limits on our ability to access credit or otherwise raise capital.
For example, inflation rates have increased in recent years, and the effects of increased inflation and other adverse conditions on our customers have in the past resulted and may in the future result in decreased demand for our products and services, decreased revenue, increases in our operating costs (including our labor costs), and decreased profitability, and may result in reduced liquidity and limits on our ability to access credit or otherwise raise capital.
Additionally, as demand for our services and solutions increases, we may be unable to hire and retain people with the skills necessary to meet demand, and we have in the past experienced and may continue to experience wage inflation and other increases to compensation expense, which puts upward pressure on our costs and may adversely affect our profitability if we are unable to recover these increased costs.
Additionally, we may be unable to hire and retain people with the skills necessary to meet the increasing client demand, and we have in the past experienced and may continue to experience wage inflation and other increases to compensation expense, which puts upward pressure on our costs and may adversely affect our profitability if we are unable to recover these increased costs.
Some of our solutions use software made available under open source licenses, and we expect to continue to incorporate open source software in our solutions in the future.
Some of our solutions use software made available under open source licenses, and we expect to continue to incorporate open source software in our solutions in the future. Open source software is typically freely available.
In connection with the closing of the Transactions, we entered into the Tax Receivables Agreement with OpCo and Stagwell Media, pursuant to which we are required to make cash payments to Stagwell Media equal to 85% of certain U.S. 29 Table of Contents federal, state and local income tax or franchise tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of OpCo’s assets resulting from redemptions or exchanges by the other holders of OpCo’s common units, together with a corresponding number of shares of our Class C common stock, par value $0.00001 per share (the “Class C Common Stock”), for shares of our Class A Common Stock or cash, as applicable, and (ii) certain other tax benefits related to us making payments under the Tax Receivables Agreement.
In connection with the closing of the Transactions, we entered into the Tax Receivables Agreement with OpCo and Stagwell Media, pursuant to which we are required to make cash payments to Stagwell Media equal to 85% of certain U.S. federal, state and local income tax or franchise tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of OpCo’s assets resulting from redemptions or exchanges by the other holders of OpCo’s common units, together with a corresponding number of shares of our Class C Common Stock, for shares of our Class A Common Stock or cash, as applicable, and (ii) certain other tax benefits related to us making payments under the Tax Receivables Agreement.
Increased cybersecurity threats and attacks, such as security breaches, are becoming more sophisticated and pose a risk to our systems and networks.
Increased cybersecurity threats and attacks, such as security breaches, are constantly expanding, evolving, and becoming more sophisticated and pose a risk to our systems and networks.
In addition, putative securities class action lawsuits and derivative lawsuits and other stockholder claims are often brought against public companies for a variety of reasons, including but not limited to claims arising out of stock price declines and acquisition, merger or other business combination agreements.
In addition, regulatory investigations, putative securities class action lawsuits and derivative lawsuits and other stockholder claims are often brought against public companies for a variety of reasons, including but not limited to claims arising out of stock price declines, alleged breaches of fiduciary duties, and acquisition, merger or other business combination agreements.
To the extent that we are unable to generate sufficient and profitable new business from new and existing clients, our ability to grow our business, increase our revenues and achieve favorable margins will be limited, which could have a material adverse effect on our business, results of operations, financial condition and prospects.
To the extent that we are unable to generate sufficient and profitable client demand, our ability to grow our business, increase our revenues and achieve favorable margins will be limited, which could have a material adverse effect on our business, results of operations, financial condition and prospects.
Our clients may choose to terminate their contracts, or reduce their relationships with us, on a relatively short time frame and for any reason, including as a result of such competitive reviews, external factors such as economic conditions or their own financial distress, competition from other marketing services providers or clients’ dissatisfaction with our services, reputation or personnel.
Our clients may choose to terminate their contracts, or reduce their relationships with us, on a relatively short time frame and for any reason, including as a result of such competitive reviews, a reduction in marketing budgets due to external factors such as economic conditions or their own financial distress or insolvency, competition from other marketing services providers, clients’ consolidation, a shift in their spending or clients’ dissatisfaction with our services, reputation or personnel.
As of December 31, 2023, we had $565 million of availability under our revolving credit agreement. In addition, we will be permitted to add, under such credit agreement, incremental facilities, subject to certain conditions being satisfied.
As of December 31, 2024, we had $360.7 million of availability under our revolving credit agreement. In addition, we will be permitted to add, under such credit agreement, incremental facilities, subject to certain conditions being satisfied.
We are subject to many laws and regulations that restrict our international operations, including laws that prohibit activities involving restricted countries, organizations, entities and persons that have been identified as unlawful actors or that are subject to U.S. sanctions. The U.S.
We are subject to many laws and regulations in the United States and other countries in which we operate that restrict our international operations, including laws that prohibit activities involving restricted countries, organizations, entities and persons that have been identified as unlawful actors or that are subject to U.S. sanctions. The U.S.
There is competition for scarce talent with market-leading skills and capabilities in new technologies, and our competitors have directly targeted our employees with these highly sought-after skills and will likely continue to do so.
There is competition for scarce talent with market-leading skills and capabilities in new technologies, and our competitors have directly targeted our employees with such skills and will likely continue to do so.
While we take steps to ensure that we do not infringe upon, misappropriate or otherwise violate the rights of others, there may be other more pertinent rights of which we are currently unaware. The defense and prosecution of intellectual property lawsuits could result in substantial expense to us and significant diversion of effort by our technical and management personnel.
While we take steps to ensure that we do not infringe upon, misappropriate or otherwise violate the rights of others, there may be other more pertinent rights of which we are currently unaware. The defense and prosecution of intellectual property lawsuits could result in substantial expense to us.
In addition, laws and regulations related to consumer privacy, processing of personal data and use of digital tracking technologies have been proposed or enacted in the United States and certain international markets (including the European Union’s General Data Protection Regulation, or “GDPR,” the proposed updated European Union “ePrivacy Regulation” and the California Consumer Privacy Act, as amended by the California Privacy Rights Act, or “CCPA”).
Laws and regulations related to consumer privacy, processing of personal data and use of digital tracking technologies have been proposed or enacted in the United States and certain international markets (including the European Union’s General Data Protection Regulation, or “GDPR” and the California Consumer Privacy Act, as amended by the California Privacy Rights Act, or “CCPA”).
As of December 31, 2023, Stagwell Media beneficially owned approximately 56% of our outstanding shares of Class A Common Stock on an as-converted basis.
As of December 31, 2024, Stagwell Media beneficially owned approximately 57% of our outstanding shares of Class A Common Stock on an as-converted basis.
In addition, this concentration of ownership and voting power allows Mr. Penn to control our decisions, including matters requiring approval by our stockholders (such as, subject to certain limitations, the election of directors and the approval of mergers or other extraordinary transactions), regardless of whether or not other stockholders believe that the transaction is in their own best interests.
Penn to control our decisions, including matters requiring approval by our stockholders (such as, subject to certain limitations, the election of directors and the approval of mergers or other extraordinary transactions), regardless of whether or not other stockholders believe that the transaction is in their own best interests.
Furthermore, these laws and regulations may impact the efficacy and profitability of certain digital marketing and analytics services we provide to clients, making it difficult to achieve our clients’ goals.
Furthermore, these laws and regulations may impact our ability to collect and commercialize data, as well as the efficacy and profitability of certain digital marketing and analytics services we provide to clients, making it difficult to achieve our clients’ goals.
The raising of any additional capital may dilute holders’ ownership percentage in our stock. As of December 31, 2023, we had unrestricted cash and cash equivalents totaling $120 million and a borrowing capacity under our credit facility of $640.0 million, with $565 million of unused capacity available.
The raising of any additional capital may dilute holders’ ownership percentage in our stock. As of December 31, 2024, we had unrestricted cash and cash equivalents totaling $131.3 million and a borrowing capacity under our credit facility of $640.0 million, with $360.7 million of unused capacity available.
Significant judgments, estimates, and assumptions used in preparing our Audited Consolidated Financial Statements include, or may in the future include, those related to revenue recognition, business combinations, deferred acquisition consideration, noncontrolling and redeemable noncontrolling interests, goodwill and intangible assets, right-of-use lease assets, and income taxes.
Significant judgments, estimates, and assumptions used in preparing our Audited 23 Table of Contents Consolidated Financial Statements include, or may in the future include, those related to revenue recognition, business combinations, deferred acquisition consideration, noncontrolling and redeemable noncontrolling interests, goodwill and intangible assets, right-of-use lease assets, and income taxes. We may be subject to adverse tax consequences.
We also compete with smaller advertising and marketing communications businesses, and because an agency’s principal asset is often its people, barriers to entry are minimal, and relatively small brands are, on occasion, able to take all or some portion of a client’s business from a larger competitor.
We also compete with smaller businesses that operate in local or regional markets, and because an agency’s principal asset is often its people, barriers to entry are minimal, and relatively small brands are, on occasion, able to take all or some portion of a client’s business from a larger competitor.
If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our Class A Common Stock.
Any issuances of equity or convertible debt securities could cause our existing stockholders to suffer dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our Class A Common Stock.
Therefore, changes in the value of the U.S. dollar against other currencies will affect our revenues, operating income and the value of balance-sheet items, including intercompany payables and receivables, that are denominated in other currencies.
Therefore, changes in the value of the U.S. dollar against other currencies, particularly the Canadian dollar, the British Pound and the Euro, will affect our revenues, operating income and the value of balance-sheet items, including intercompany payables and receivables, which are denominated in other currencies.
Seasonality could have a more significant impact on our revenue, cash flow and operating results from period to period as a result of declines in our growth rate or if seasonal spending becomes more pronounced. Risks Related to Strategic Transactions We may not realize the benefits we expect from past and future acquisitions and other strategic transactions, including the Transactions.
Seasonality could have a more significant impact on our revenue, cash flow and operating results from period to period in the event of declines in our growth rate or if seasonal spending becomes more pronounced. Risks Related to Strategic Transactions We may not realize the expected benefits from strategic transactions.
These changes could cause our revenue and net income in U.S. dollars to be higher or lower than our results in local currency when compared against other periods. In addition, certain of our expenses are incurred in currencies other than those in which we bill for the related services.
These changes could cause our revenue and net income in U.S. dollars to be higher or lower than our results in local currency when compared against other periods and as a result may affect our financial results and competitive position. 22 Table of Contents In addition, certain of our expenses are incurred in currencies other than those in which we bill for the related services.
These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness as defined under our debt instruments. To the extent new debt is added to our current debt levels, the substantial leverage risks described above would increase. We may be unable to service all our indebtedness.
These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness as defined under our debt instruments. To the extent new debt is added to our current debt levels, the substantial leverage risks described above would increase. We may need additional capital in the future, which may not be available to us.
In addition, undiscovered vulnerabilities in our products or services could expose us or our clients to hackers or other unscrupulous third parties who develop and deploy viruses and other malicious software programs that could attack our products, services and business.
In addition, given the increasing difficulty of detecting cybersecurity threats, undiscovered vulnerabilities in our products or services could expose us or our clients to hackers or other unscrupulous third parties who develop and deploy viruses and other malicious software programs that could attack our products, services and business.
Significant judgment is required in determining our global provision for income taxes, deferred tax assets or liabilities and in evaluating our tax positions on a worldwide basis.
We and OpCo are subject to tax in multiple tax jurisdictions. Significant judgment is required in determining our global provision for income taxes, deferred tax assets or liabilities and in evaluating our tax positions on a worldwide basis.
We are generally paid in arrears for our services, and if we are unable to meet our contractual requirements, we may experience delays in collection of and/or be unable to collect our client balances, and if this occurs, our results of operations and cash flows could be adversely affected.
We are generally paid in arrears for our services, and if we are unable to meet our contractual requirements, we may experience delays in collection of and/or be unable to collect our client balances.
Open source software is typically freely available, development costs and speed up the development process, it may also present certain risks, that may be greater than those associated with the use of third-party commercial software.
While this may reduce development costs and speed up the development process, it may also present certain risks that may be greater than those associated with the use of third-party commercial software.
Because our Audited Consolidated Financial Statements are presented in U.S. dollars, we must translate revenues and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period.
As a result, we must translate revenues and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period.
Our new initiatives also have a high degree of risk, as each involves development of new software platforms or other product offerings, unproven business strategies and technologies with which we may have limited prior development or operating experience.
Our new initiatives are inherently risky, as each involves development of new software platforms or other product offerings, unproven business strategies and technologies with which we may have limited prior 12 Table of Contents development or operating experience.
We are smaller than many of our larger industry competitors, and an agency’s ability to serve clients, particularly large international clients, on a broad geographic basis and across a range of services and technologies is an important competitive consideration.
Our Brands compete with a diverse and growing set of marketing services firms and consultancies including other large multinational companies. We are smaller than many of our larger industry competitors, and an agency’s ability to serve clients, particularly large international clients, on a broad geographic basis and across a range of services and technologies is an important competitive consideration.
Our success is dependent, in large part, on our ability to keep our supply of marketing services skills and capabilities in balance with client demand around the world and our ability to attract and retain personnel with the knowledge and skills to lead our business globally.
Our success is dependent, in large part, on our ability to keep our supply of marketing services skills and capabilities in balance with client demand around the world and our ability to attract, retain, and motivate personnel with the knowledge and skills to lead our business and serve clients globally, respond quickly to rapid and ongoing changes in demand and the macroeconomic environment, and continuously innovate to grow our business.
There can be no assurance that client demand for new products, including the Stagwell Marketing Cloud and other marketing data, campaign martech, AR and VR martech applications, and AI and generative AI offerings, will exist or be sustained at the levels that we anticipate, or that any of these initiatives will gain sufficient traction or market acceptance to generate sufficient revenue to offset any new expenses or liabilities associated with these new investments.
There can be no assurance that client demand for our new products, and technologies will exist or be sustained at the levels that we anticipate, or that any of these initiatives will gain sufficient traction or market acceptance to generate sufficient revenue to offset any new expenses or liabilities associated with these new investments.
Operations outside the United States represent a significant portion of our revenues and represented approximately 19% of our revenues in 2023. The operational and financial performance of our international businesses are affected by global and regional economic conditions, competition for new business and staff, political conditions, differing regulatory environments and other issues associated with extensive international operations.
The operational and financial performance of our international businesses are affected by global and regional economic conditions, competition for new business and staff, political conditions, differing regulatory environments and other issues associated with extensive international operations.
Ultimately, if we are unable to obtain such licenses, we could be forced to cease some aspect of our business operations, which could harm our business significantly.
Ultimately, if we are unable to obtain such licenses, we could be forced to cease some aspects of our business operations, which could harm our business significantly. Our products and services use open source software.
Further in the United States, both Congress and state legislatures, along with federal regulatory authorities, have continued to increase their attention on advertising and the collection and use of data, including personal data.
Further in the United States, both Congress and state legislatures, along with federal regulatory authorities, have continued to increase their attention on advertising and the collection and use of data, including personal data. The SEC has issued rules governing disclosures regarding cybersecurity incident response, governance and risk management.
Seasonal fluctuations in marketing, research, communications and advertising activity could have a negative impact on our revenue, cash flow and operating results. Our revenue, cash flow, operating results and other key operating and performance metrics vary from quarter to quarter due to the seasonal nature of our clients’ spending on the services we provide.
Our revenue, cash flow, operating results and other key operating and performance metrics vary from quarter to quarter due to the seasonal nature of our clients’ spending on the services we provide.
The preparation of our financial statements in conformity with GAAP requires management to make judgments, estimates, and assumptions that affect the amounts reported in the Audited Consolidated Financial Statements and accompanying notes.
Our judgments or estimates relating to our critical accounting policies are based on assumptions that could change or be incorrect. The preparation of our financial statements in conformity with GAAP requires management to make judgments, estimates, and assumptions that affect the amounts reported in the Audited Consolidated Financial Statements and accompanying notes.
Our clients and vendors may also 28 Table of Contents consider our credit profile when considering whether to contract with us or negotiating contract terms, and if they were to change the terms on which they deal with us, it could have a further adverse effect on our business, prospects, results of operations and financial condition.
Our clients and vendors may also consider our credit profile when considering whether to contract with us or negotiating contract terms, and if they were to change the terms on which they deal with us, it could have a further adverse effect on our business, prospects, results of operations and financial condition. 20 Table of Contents If our available liquidity is insufficient, our financial condition could be adversely affected and we may be unable to fund contingent deferred acquisition liabilities, and any put options if exercised.
Advertising, marketing and communications expenditures are sensitive to global, national and regional macroeconomic conditions, including inflationary pressures, currency fluctuations, geopolitical uncertainty and elevated interest rates, as well as specific budgeting levels and buying patterns.
Risks Related to Our Business and Industry Our revenues are highly susceptible to declines as a result of unfavorable economic conditions. Advertising, marketing and communications expenditures are sensitive to global, national and regional macroeconomic conditions, including inflationary pressures, currency fluctuations, geopolitical uncertainty and elevated interest rates, as well as specific budgeting levels and buying patterns.
If we are unable to remediate our existing material weaknesses and implement and maintain effective internal control over financial reporting, or if future testing by us or our independent registered public accounting firm reveals further material weaknesses or other deficiencies in our internal control over financial reporting, our ability to record, process and report financial information timely and accurately could be adversely affected, and we may fail to detect or prevent material misstatements in our annual or interim consolidated financial statements that may require prospective or retrospective changes to our financial statements.
If we fail to maintain effective internal control over financial reporting, our ability to record, process and report financial information timely and accurately could be adversely affected, and we may fail to detect or prevent material misstatements in our annual or interim consolidated financial statements that may require prospective or retrospective changes to our financial statements.
Because such offerings and technologies are new, they may involve additional claims and liabilities (including, but not limited to, intellectual property claims), expenses, regulatory challenges, and other risks that we do not currently anticipate.
They may also involve additional claims and liabilities (including intellectual property claims), expenses, regulatory challenges, and other risks that we do not currently anticipate.
Our CEO and Chairman, Mark Penn, beneficially owns or controls approximately 57% of the voting power of our Common Stock. As a result, we are a “controlled company” within the meaning of the Nasdaq rules, and as a result, we qualify for exemptions from certain corporate governance requirements.
We are a “controlled company” within the meaning of the applicable rules of Nasdaq. Our CEO and Chairman, Mark Penn, beneficially owns or controls approximately 58% of the voting power of our Common Stock.
The lack of adequate legal protections of intellectual property or failure of legal remedies for related actions in jurisdictions outside of the United States could have an adverse effect on our business, results of operations, and financial condition. 26 Table of Contents If we infringe, misappropriate or otherwise violate the intellectual property rights of third parties or are subject to an intellectual property infringement or misappropriation claim, our ability to grow our business may be severely limited and our business could be adversely affected.
The lack of adequate legal protections of intellectual property or failure of legal remedies for related actions in jurisdictions outside of the United States could have an adverse effect on our business, results of operations, and financial condition. We may be subject to intellectual property infringement or misappropriation claims.
Price competition could force us to choose between lowering our prices (and suffering reduced operating margins) or losing a client’s business. Any of these negative effects could significantly impair our results of operations and financial condition. Our future financial performance is largely dependent upon our ability to compete successfully in the markets we serve.
In addition, our competitors may compete for client engagements by significantly discounting their services. Price competition could force us to choose between lowering our prices (and suffering reduced operating margins) or losing a client’s business. Our future financial performance is largely dependent upon our ability to compete successfully in the markets we serve.
Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments. If our operating and financial performance in any given period does not meet any guidance that we provide to the public, the market price for our Class A Common Stock may decline.
If our operating and financial performance in any given period does not meet any guidance that we provide to the public, the market price for our Class A Common Stock may decline.
Although we have entered into an employment agreement with Mr. Penn, the agreement has no specific duration and constitutes at-will employment. The loss of key personnel, including Mr. Penn, could disrupt our operations and have an adverse effect on our business.
Penn, the agreement has no specific duration and constitutes at-will employment. The loss of key personnel, including Mr. Penn, could disrupt our operations and have an adverse effect on our business. Our business is dependent on our ability to keep our supply of skills and resources in balance with client demand.
Our patent applications may not result in issued patents, and any patents issued as a result of our patent applications may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage. Additionally, we seek to maintain the confidentiality of certain trade secrets and other proprietary information to preserve our position in the market.
Our patent applications may not result in issued patents, and any patents issued as a result of our patent applications may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage.
In the United States, the Federal Trade Commission (the “FTC”) and other regulators at both the federal and state levels continue to seek greater regulation of the collection and processing of personal data, as well as restrictions and requirements for certain targeted advertising practices.
In the United States, the Federal Trade Commission (the “FTC”) and other regulators continue to seek greater regulation of the collection and processing of personal data, as well as restrictions and requirements for certain targeted advertising practices. We are also subject to evolving privacy laws on data processing activities related to cookies and online marketing.
These and other related factors could affect our business and reduce demand for certain of our services, which could have a material adverse effect on our results of operations and financial condition.
These and other related factors could affect our business and reduce demand for certain of our services, which could have a material adverse effect on our results of operations and financial condition. Risks Related to Litigation and Regulation Litigation, investigations or other legal proceedings could expose us to significant liabilities and have a negative impact on our reputation or business.
For example, in February 2022, following Russia’s invasion of Ukraine and the imposition of economic sanctions targeting Russia by the United States and other countries, we exited our operations in Russia.
For example, following Russia’s invasion of Ukraine and the imposition of economic sanctions targeting Russia by the United States and other countries, we suspended our business operations in Ukraine and disposed of all our businesses in Russia. The war in Ukraine is ongoing, and its duration is uncertain.

… 234 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+4 added−1 removed5 unchanged
Biggest changeOur information security team, including our Chief Technology Officer and our Senior Vice President Information Security, is responsible for day-to-day identification, assessment and management of the cybersecurity risks we face. The information security team also has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.
Biggest changeFor more information regarding the cybersecurity-related risks we face, see “Risk Factors - Risks Related to Data Privacy and Cybersecurity.” Our information security team, including our Chief Technology Officer and our Senior Vice President Information Security, is responsible for day-to-day identification, assessment and management of the cybersecurity risks we face.
Our incident response plan is also designed, depending on the circumstances, to escalate cybersecurity incidents to other members of management, report cybersecurity incidents to the Audit Committee, and support public disclosure and reporting of material incidents. Risks from Cybersecurity Threats Cybersecurity threats and attacks are becoming more sophisticated and pose a risk to our systems and information.
Our incident response plan is also designed, depending on the circumstances, to escalate cybersecurity incidents to other members of management, report cybersecurity incidents to the Audit Committee, and support public disclosure and reporting of material incidents.
The leaders of our information security team have over 40 years of combined experience in managing information security, developing cybersecurity strategy and implementing cybersecurity programs. The Chief Technology Officer is informed of and monitors the prevention, detection, mitigation and remediation of cybersecurity incidents through management of the cybersecurity risk management program described above, including our cybersecurity incident response plan.
The Chief Technology Officer is informed of and monitors the prevention, detection, mitigation and remediation of cybersecurity incidents through management of the cybersecurity risk management program described above, including our cybersecurity incident response plan.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy Our approach to risk management is designed to identify, assess, prioritize and manage major risk exposures, including material risks from cybersecurity threats, that could affect our ability to execute our corporate strategy and fulfill our business objectives.
For more information regarding the cybersecurity-related risks we face, see “Risk Factors - Risks Related to Data Privacy and Cybersecurity.” Cybersecurity Risk Management and Strategy Our approach to risk management is designed to identify, assess, prioritize and manage major risk exposures, including material risks from cybersecurity threats, which could affect our ability to execute our corporate strategy and fulfill our business objectives.
Removed
For more information regarding the cybersecurity-related risks we face, see “Risk Factors - Risks Related to Data Privacy and Cybersecurity.” 38 Table of Contents
Added
Item 1C. Cybersecurity Risks from Cybersecurity Threats Cybersecurity threats and attacks are becoming more sophisticated and pose a risk to our systems and information.
Added
Risks from Cybersecurity Threats 26 Table of Contents Cybersecurity threats and attacks are becoming more sophisticated and pose a risk to our systems and information.
Added
While, to date, we have not been subject to cybersecurity incidents that, individually or in the aggregate, have been material to our operations or financial condition, there can be no guarantee that we will not experience such an incident in the future.
Added
The information security team also has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. The leaders of our information security team have over 40 years of combined experience in managing information security, developing cybersecurity strategy and implementing cybersecurity programs.

Item 2. Properties

Properties — owned and leased real estate

5 edited+0 added−1 removed0 unchanged
Biggest changeCertain of these leases are subject to rent reviews or contain various escalation clauses and certain of our leases require our payment of various operating expenses, which may also be subject to escalation. In addition, leases related to the Company’s non-U.S. businesses are denominated in currencies other than U.S. dollars and are therefore subject to changes in foreign exchange rates.
Biggest changeThese office spaces are in suitable and well-maintained condition for Stagwell’s current operations. Certain of these leases are subject to rent reviews or contain escalation clauses and certain of our leases require our payment of various operating expenses, which may also be subject to escalation.
Reportable Segment Office Locations Integrated Agencies Network Argentina, Australia, California, Canada, China, Florida, Georgia, Germany, Illinois, India, Michigan, Minnesota, Netherlands, New York, Oregon, Pennsylvania, Philippines, and United Kingdom Brand Performance Network Australia, Brazil, California, Canada, China, Colorado, Denmark, Egypt, Florida, France, Hong Kong, India, Ireland, Japan, Korea, Maryland, Mexico, New York, Poland, Singapore, Spain, Sweden, Taiwan, Texas, United Kingdom, Utah, and Virginia Communications Network Arizona, California, China, Georgia, Germany, Japan, Minnesota, North Carolina, New York, Singapore, Thailand, Virginia, Washington, and Washington D.C.
Reportable Segment Office Locations Integrated Agencies Network Australia, California, Canada, China, Florida, France, Germany, Illinois, India, Michigan, Minnesota, Netherlands, New York, Oregon, Pennsylvania, Philippines, Texas, and United Kingdom Brand Performance Network Australia, Brazil, Canada, China, Colorado, Egypt, Florida, France, Hong Kong, India, Ireland, Japan, Korea, Malaysia, Maryland, Mexico, New York, Poland, Saudi Arabia, Singapore, Spain, Sweden, Taiwan, Texas, Ukraine, United Arab Emirates, United Kingdom, and Utah Communications Network Arizona, Bahrain, Brazil, California, China, Georgia, Germany, Japan, Massachusetts, Malaysia, Minnesota, North Carolina, New York, Saudi Arabia, Singapore, South Africa, United Arab Emirates, United Kingdom, Virginia, Washington, and Washington D.C.
All Other Argentina, Canada, and United Kingdom Corporate California, Canada, Florida, New York, United Kingdom, Washington, and Washington D.C.
All Other Argentina, China, Germany, Israel, Switzerland, United Kingdom and Washington D.C. Corporate Canada, Florida, Illinois, New York, Texas, United Kingdom, Washington, and Washington D.C.
Item 2. Properties See Note 10 of the Notes to the Audited Consolidated Financial Statements (the “Notes”) included herein included in this Form 10-K for a discussion of the Company’s lease commitments. The Company maintains office space in North America, Europe, Asia, South America, Africa, and Australia.
Item 2. Properties See Note 10 of the Notes included in this Form 10-K for a discussion of the Company’s lease commitments. The Company maintains office space in North America, Europe, Asia, South America, Africa, and Australia. These spaces are primarily used for office and administrative purposes by the Company’s employees in performing professional services.
The table below provides a brief description of all locations in which office space is maintained and the related reportable segment.
In addition, leases related to the Company’s non-U.S. businesses are denominated in currencies other than U.S. dollars and are therefore subject to changes in foreign exchange rates. The table below provides a brief description of all locations in which office spaces are maintained and the related reportable segments.
Removed
This space is primarily used for office and administrative purposes by the Company’s employees in performing professional services. This office space is in suitable and well-maintained condition for Stagwell’s current operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings In the ordinary course of business, we are involved in various legal proceedings. We do not currently expect that these proceedings will have a material adverse effect on our results of operations, cash flows or financial position. Item 4. Mine Safety Disclosures Not applicable. PART II
Biggest changeItem 3. Legal Proceedings In the ordinary course of business, we are involved in various legal proceedings. We do not currently expect that these proceedings will have a material adverse effect on our results of operations, cash flows or financial position.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+1 added−1 removed4 unchanged
Biggest changeAny future determination to declare cash dividends will be made at the discretion of our Board, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions, and other factors that the Board may deem relevant. 39 Table of Contents Unregistered Sales of Equity Securities In the three months ended December 31, 2023, the Company granted 62,704 restricted stock units underlying shares of Class A Common Stock as inducement for employment and issued 4,677,614 shares of Class A Common Stock as purchase consideration in connection with acquisitions and for additional interests in subsidiaries, in transactions exempt from registration under Section 4(a)(2) of the Securities Act.
Biggest changeAny future determination to declare cash dividends will be made at the discretion of our Board, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions, and other factors that the Board may deem relevant.
Our Board will review the Repurchase Program periodically and may authorize adjustments of its terms. Pursuant to its Credit Agreement (as defined and discussed in Note 11 of the Notes included herein) and the indenture governing the 5.625% Notes, the Company is currently limited as to the dollar value of shares it may repurchase in the open market.
The Board will review the Repurchase Program periodically and may authorize adjustments of its terms. Pursuant to its Credit Agreement (as defined and discussed in Note 11 of the Notes included herein) and the indenture governing the 5.625% Notes, the Company is currently limited as to the dollar value of shares it may repurchase in the open market.
As of March 1, 2024, the approximate number of holders of record of our Class A Common Stock and Class C Common Stock, was 650 and 1, respectively. Dividends We have never declared or paid any cash dividends on our capital stock.
As of March 3, 2025, the approximate number of holders of record of our Class A Common Stock and Class C Common Stock, was 1,770 and 1, respectively. Dividends We have never declared or paid any cash dividends on our capital stock.
The Company received no cash proceeds and no commissions were paid to any person in connection with the sale of these shares. Purchase of Equity Securities by the Issuer and Affiliated Purchasers On March 1, 2023, the Board authorized an extension and a $125,000,000 increase in the size of our previously approved stock repurchase program (the “Repurchase Program”).
The Company received no cash proceeds, and no commissions were paid to any person in connection with the sale of these shares. Purchase of Equity Securities by the Issuer and Affiliated Purchasers On November 6, 2024, the Board authorized an extension and a $125.0 million increase in the size of our previously approved stock repurchase program (the “Repurchase Program”).
Under the Repurchase Program, as amended, we may repurchase up to an aggregate of $250,000,000 of shares of our 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 March 1, 2026.
Under the Repurchase Program, as amended, we may repurchase up to an aggregate of $375.0 million of shares of our 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.
The following table details our monthly shares repurchased during the fourth quarter of 2023 and the approximate dollar value of shares that may yet be purchased pursuant to the Repurchase Program: Period Total Number of Shares Purchased (1) Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program (2) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (2) 10/1/2023 - 10/31/2023 44,082 $ 4.73 — $ 155,660,866 11/1/2023 - 11/30/2023 1,894,048 4.83 1,888,809 146,505,476 12/1/2023 - 12/31/2023 2,008,873 6.03 1,367,410 138,622,130 Total 3,947,003 $ 5.44 3,256,219 $ 138,622,130 (1) Includes information for all shares repurchased by the Company, including shares repurchased as part of the Company’s publicly announced Repurchase Program, and 690,784 shares to settle employee tax withholding obligations related to the vesting of restricted stock awards and restricted stock units.
The following table details our monthly shares repurchased during the fourth quarter of 2024 and the approximate dollar value of shares that may yet be purchased pursuant to the Repurchase Program: Period Total Number of Shares Purchased (1) Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program (2) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (2) 10/1/2024 - 10/31/2024 898,210 $ 6.62 879,140 $ 45,939,193 11/1/2024 - 11/30/2024 162,878 6.66 154,100 169,919,697 12/1/2024 - 12/31/2024 — — — 169,919,697 Total 1,061,088 $ 6.63 1,033,240 $ 169,919,697 (1) Includes information for all shares repurchased by the Company, including shares repurchased as part of the Company’s publicly announced Repurchase Program, and 27,848 shares to settle employee tax withholding obligations related to the vesting of restricted stock awards and restricted stock units. 28 Table of Contents (2) Only includes information for shares repurchased as part of the Company’s publicly announced Repurchase Program.
Removed
(2) Only includes information for shares repurchased as part of the Company’s publicly announced Repurchase Program. Item 6. [Reserved]
Added
Unregistered Sales of Equity Securities In the three months ended December 31, 2024, the Company granted 59,517 restricted stock units underlying shares of Class A Common Stock as inducement for employment and issued 5,201,062 shares of Class A Common Stock, as $38.9 million of aggregate purchase consideration, in connection with acquisitions in transactions exempt from registration under Section 4(a)(2) of the Securities Act.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

89 edited+40 added−37 removed50 unchanged
Biggest changeEarnings (Loss) Per Share Diluted EPS and Adjusted Diluted EPS for the year ended December 31, 2023 were as follows: GAAP Adjustments (1) Non-GAAP (amounts in thousands, except per share amounts) Net income attributable to Stagwell Inc. common shareholders $ 134 $ 52,712 $ 52,846 Net income attributable to Class C shareholders — 106,153 106,153 Net income attributable to Stagwell Inc. and Class C and adjusted net income $ 134 $ 158,865 $ 158,999 Weighted average number of common shares outstanding 122,170 3,628 125,798 Weighted average number of common Class C shares outstanding — 154,972 154,972 Weighted average number of shares outstanding 122,170 158,600 280,770 Diluted EPS and Adjusted Diluted EPS $ 0.00 $ 0.57 Adjustments to Net Income (loss) (1) Amortization $ 113,835 Impairment and other losses 11,395 Stock-based compensation 57,179 Deferred acquisition consideration 13,060 Gain on sale of business (94,505) Other items, net 45,147 146,111 Adjusted tax expense (26,312) 119,799 Net loss attributable to Class C shareholders 39,066 $ 158,865 Allocation of adjustments to net income Net income attributable to Stagwell Inc. common shareholders $ 52,712 Net income attributable to Class C shareholders 67,087 Net income attributable to Class C shareholders 39,066 106,153 $ 158,865 (1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary. 48 Table of Contents Diluted EPS and Adjusted Diluted EPS for the year ended December 31, 2022 were as follows: GAAP Adjustments (1) Non-GAAP (amounts in thousands, except per share amounts) Net income attributable to Stagwell Inc. common shareholders $ 19,919 $ 102,123 $ 122,042 Net income attributable to Class C shareholders 16,004 129,500 145,504 Net income attributable to Stagwell Inc. and Class C and adjusted net income $ 35,923 $ 231,623 $ 267,546 Weighted average number of common shares outstanding 130,625 — 130,625 Weighted average number of common Class C shares outstanding 165,971 — 165,971 Weighted average number of shares outstanding 296,596 — 296,596 Diluted EPS and Adjusted Diluted EPS $ 0.12 $ 0.90 Adjustments to Net income (loss) (1) Amortization $ 104,763 Impairment and other losses 122,179 Stock-based compensation 33,152 Deferred acquisition consideration (13,405) Other items, net 18,691 265,380 Adjusted tax expense (33,757) $ 231,623 (1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
Biggest changeCommon Shareholders As a result of the foregoing, net income attributable to Stagwell Inc. common shareholders for the year ended December 31, 2024, was $2.3 million, compared to net income of $0.1 million for the year ended December 31, 2023. 36 Table of Contents Earnings Per Share Diluted EPS and Adjusted Diluted EPS for the year ended December 31, 2024, were as follows: GAAP Adjustments (1) Non-GAAP (amounts in thousands, except per share amounts) Net income attributable to Stagwell Inc. common shareholders $ 2,259 $ 80,403 $ 82,662 Net income attributable to Class C shareholders — 123,942 123,942 Net income attributable to Stagwell Inc. and Class C and adjusted net income $ 2,259 $ 204,345 $ 206,604 Weighted average number of common shares outstanding 115,752 2,234 117,986 Weighted average number of common Class C shares outstanding — 151,649 151,649 Weighted average number of shares outstanding 115,752 153,883 269,635 Diluted EPS and Adjusted Diluted EPS (1) $ 0.02 $ 0.77 Adjustments to Net Income Amortization $ 122,442 Impairment and other losses 1,715 Stock-based compensation 52,161 Deferred acquisition consideration 22,995 Other items, net 49,196 248,509 Adjusted tax expense (61,308) 187,201 Net income attributable to Class C shareholders 17,144 $ 204,345 Allocation of adjustments to Net income Net income attributable to Stagwell Inc. common shareholders - add-backs $ 80,403 Net income attributable to Class C shareholders - add-backs 106,798 Net income attributable to Class C shareholders 17,144 123,942 $ 204,345 (1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary. 37 Table of Contents Diluted EPS and Adjusted Diluted EPS for the year ended December 31, 2023, were as follows: GAAP Adjustments (1) Non-GAAP (amounts in thousands, except per share amounts) Net income attributable to Stagwell Inc. common shareholders $ 134 $ 52,712 $ 52,846 Net income attributable to Class C shareholders — 106,153 106,153 Net income attributable to Stagwell Inc. and Class C and adjusted net income $ 134 $ 158,865 $ 158,999 Weighted average number of common shares outstanding 122,170 3,628 125,798 Weighted average number of common Class C shares outstanding — 154,972 154,972 Weighted average number of shares outstanding 122,170 158,600 280,770 Diluted EPS and Adjusted Diluted EPS (1) $ — $ 0.57 Adjustments to Net income Amortization $ 113,835 Impairment and other losses 11,395 Stock-based compensation 57,179 Deferred acquisition consideration 13,060 Gain on sale of business (94,505) Other items, net 45,147 146,111 Adjusted tax expense (26,312) 119,799 Net income attributable to Class C shareholders 39,066 $ 158,865 Allocation of adjustments to Net income Net income attributable to Stagwell Inc. common shareholders - add-backs $ 52,712 Net income to attributable to Class C shareholders - add-backs 67,087 Net income attributable to Class C shareholders 39,066 106,153 Net income attributable to Stagwell Inc. common shareholders $ 158,865 (1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
Cash Flows Operating Activities Cash flows provided by operating activities for the year ended December 31, 2023, were $81.0 million, primarily driven by earnings, partially offset by unfavorable working capital requirements, including the timing of media supplier payments.
Cash flows provided by operating activities for the year ended December 31, 2023 were $81.0 million, primarily driven by earnings, partially offset by unfavorable working capital requirements, including the timing of media supplier payments.
Investing Activities Cash flows provided by investing activities were $156.0 million for the year ended December 31, 2023, primarily driven by $229.5 million in proceeds from the sale of ConcentricLife, partially offset by $28.2 million in capitalized software spend, $14.2 million in capital expenditures, and $23.3 million for acquisitions, net of cash acquired.
Cash flows provided by investing activities were $156.0 million for the year ended December 31, 2023, primarily driven by $229.5 million in proceeds from the sale of ConcentricLife, partially offset by $28.2 million in capitalized software spend, $14.2 million in capital expenditures, and $23.3 million in acquisitions, net of cash acquired.
Financing Activities During the year ended December 31, 2023, cash flows used in financing activities were $339.9 million, primarily driven by $41.0 million in net borrowings under the Credit Agreement, shares repurchased and cancelled of $223.8 million, payments of deferred consideration of $49.2 million, and distributions to noncontrolling interests of $25.0 million.
During the year ended December 31, 2023, cash flows used in financing activities were $339.9 million, primarily driven by $41.0 million in net borrowings under the Credit Agreement, shares repurchased and cancelled of $223.8 million, payments of deferred consideration of $49.2 million, and distributions to noncontrolling interests of $25.0 million.
Some of these ratios and measures include, among other things, pro forma adjustments for acquisitions, one-time charges, and other items, as defined in the Credit Agreement. They are presented here to demonstrate compliance with the 58 covenants in the Credit Agreement, as non-compliance with such covenants could have a material adverse effect on the Company.
Some of these ratios and measures include, among other things, pro forma adjustments for acquisitions, one-time charges, and other items, as defined in the Credit Agreement. They are presented here to demonstrate compliance with the covenants in the Credit Agreement, as non-compliance with such covenants could have a material adverse effect on the Company.
As a result, the sum of the components, and related calculations, reported in millions may not equal the total amounts due to rounding. 42 Table of Contents The percentage changes included in the tables in Item 7 herein that are not considered meaningful are presented as “NM.” Segments The Company determines an operating segment if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has discrete financial information, and is (iii) regularly reviewed by the Chief Operating Decision Maker (“CODM”), who is Mark Penn, Chief Executive Officer and Chairman, to make decisions regarding resource allocation for the segment and assess its performance.
As a result, the sum of the components, and related calculations, reported in millions may not equal the total amounts due to rounding. 30 Table of Contents The percentage changes included in the tables in Item 7 herein that are not considered meaningful are presented as “NM.” Segments The Company determines an operating segment if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has discrete financial information, and is (iii) regularly reviewed by the Chief Operating Decision Maker (“CODM”), who is Mark Penn, Chief Executive Officer and Chairman, to make decisions regarding resource allocation for the segment and assess its performance.
New business wins and client losses occur due to a variety of factors. The two most significant factors are (i) our clients’ desire to change marketing communication firms, and (ii) the digital and data-driven products that our portfolio of marketing services firms, which we refer to as “Brands,” offer.
New business wins and client losses occur due to a variety of factors. We believe the two most significant factors are (i) our clients’ desire to change marketing communication firms, and (ii) the digital and data-driven products that our portfolio of marketing services firms, which we refer to as “Brands,” offer.
Based on the current outlook, the Company believes future cash flows from operations, together with the Company’s existing cash balance and availability of funds under 57 the Credit Agreement, will be sufficient to meet the Company’s anticipated cash needs for the next twelve months and subsequent periods.
Based on the current outlook, the Company believes future cash flows from operations, together with the Company’s existing cash balance and availability of funds under the Credit Agreement, will be sufficient to meet the Company’s anticipated cash needs for the next twelve months and subsequent periods.
The change in Operating Income was primarily attributable to a decrease in Revenue, Cost of services, and Impairment and other losses, partially offset by an increase in Office and general expenses, and Depreciation and amortization.
The increase in Operating Income was primarily attributable to an increase in Revenue and a decrease in Impairment and other losses, partially offset by an increase in Cost of services, Office and general expenses, and Depreciation and amortization.
At each reporting period, the Company assesses whether it is more likely than not that the carrying amount of its reporting units exceed their fair value. As of October 1, 2023 (the annual impairment test date), the Company performed this assessment and determined that all reporting units (11) did not have an impairment.
At each reporting period, the Company assesses whether it is more likely than not that the carrying amount of its reporting units exceed their fair value. As of October 1, 2024 (the annual impairment test date), the Company performed this assessment and determined that all reporting units (11) did not have an impairment.
Clients also change firms as a result of the firm’s failure to meet marketing performance targets or other expectations in client service delivery. 41 Table of Contents Seasonality Historically, we typically generate the highest quarterly revenue during the fourth quarter in each year.
Clients also change firms as a result of the firm’s failure to meet marketing performance targets or other expectations in client service delivery. 29 Table of Contents Seasonality Historically, we typically generate the highest quarterly revenue during the fourth quarter of each year.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis are based on and should be read in conjunction with our Audited Consolidated Financial Statements and the notes thereto included elsewhere in this Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Th e following discussion and analysis are based on and should be read in conjunction with our Audited Consolidated Financial Statements and the notes thereto included elsewhere in this Form 10-K.
The Company expects to make estimated cash payments in the future to satisfy obligations under our Tax Receivables Agreement with Stagwell Media LP and OpCo (“TRA”) (see Note 17 of the Notes included herein for additional details).
The Company expects to make estimated cash payments in the future to satisfy obligations under our 46 Table of Contents Tax Receivables Agreement with Stagwell Media LP and OpCo (“TRA”) (see Note 17 of the Notes included herein for additional details).
Periods presented prior to the first quarter of 2023 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.
Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.
Material Cash Requirements The Company’s Brands enter into contractual commitments with media providers and agreements with production companies on behalf of its clients at levels that exceed the revenue from services. Some of our Brands purchase media for clients and act as an agent for a disclosed principal.
Material Cash Requirements The Company’s Brands enter into contractual commitments with media providers and agreements with production companies on behalf of their clients at levels that exceed the revenue from services. Some of our Brands purchase media for clients and act as an agent for a disclosed principle.
The following discussion and analysis contains forward-looking statements and should be read in conjunction with the disclosures and information contained and referenced under the captions “Forward-Looking Statements” and “Risk Factors” in this Form 10-K. The following discussion and analysis also includes a discussion of certain non-GAAP financial measures.
The following discussion and analysis contain forward-looking statements and should be read in conjunction with the disclosures and information contained and referenced under the captions “Forward-Looking Statements” and “Risk Factors” in this Form 10-K. The following discussion and analysis also include a discussion of certain non-GAAP financial measures.
The change in Operating Loss was primarily attributable to an increase in Revenue, Cost of services, Office and general expenses and Depreciation and amortization, partially offset by a decrease in Impairment and other losses.
The increase in Operating Income was primarily attributable to an increase in Revenue and a decrease in Impairment and other losses and Depreciation and amortization, partially offset by an increase in Cost of services and Office and general expenses.
However, if the fair value of the reporting unit is lower than the carrying amount of the net assets assigned to the reporting unit, an impairment charge is recognized equal to the excess of the carrying amount over the fair value. 60 Determining the fair value of a reporting unit involves the use of significant estimates and assumptions.
However, if the fair value of the reporting unit is lower than the carrying amount of the net assets assigned to the reporting unit, an impairment charge is recognized equal to the excess of the carrying amount over the fair value. 50 Table of Contents Determining the fair value of a reporting unit involves the use of significant estimates and assumptions.
“Adjusted Diluted EPS” is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income (loss) attributable to Class C shareholders, excluding the impact of amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items, based on total consolidated amounts, then allocated to Stagwell Inc. common shareholders and Class C shareholders, based on their respective income allocation percentage using a normalized effective income tax rate divided by (ii) (a) the weighted average number of common shares outstanding plus (b) the weighted average number of shares of Class C Common Stock outstanding.
“Adjusted Diluted EPS” is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income (loss) attributable to Class C shareholders, excluding the impact of amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items (as defined above), based on total consolidated amounts, then allocated to Stagwell Inc. common shareholders and Class C shareholders, based on their respective income allocation percentage using a normalized effective income tax rate divided by (ii) (a) the weighted average number of common shares outstanding plus (b) the weighted average number of outstanding shares of Class C common stock par value $0.00001 per share (the “Class C Common Stock”).
Interest Expense, Net Interest expense, net for the year ended December 31, 2023 was $90.6 million compared to $76.1 million for the year ended December 31, 2022, an increase of $14.6 million, primarily attributable to higher levels of debt outstanding under the Credit Agreement (as defined and discussed in Note 11 of the Notes to the Audited Consolidated Financial Statements included herein), and a higher interest rate of borrowings on amounts outstanding under the Credit Agreement.
Interest Expense, Net Interest expense, net for the year ended December 31, 2024 was $92.3 million, compared to $90.6 million for the year ended December 31, 2023, an increase of $1.7 million, primarily attributable to higher levels of debt outstanding under the Credit Agreement (as defined and discussed in Note 11 of the Notes to the Audited Consolidated Financial Statements included herein), and a higher interest rate on amounts outstanding under the Credit Agreement.
The Company utilized a long-term average growth rate ranging from 1% to 4% and a WACC ranging from 11.50% to 20.00%. The Company believes the estimates and assumptions used in the calculations are reasonable. However, if there were an adverse change in the facts and circumstances, then an impairment charge may be necessary in the future.
The Company utilized a long-term average growth rate ranging from 1.5% to 4% and a WACC ranging from 12% to 30%. The Company believes the estimates and assumptions used in the calculations are reasonable. However, if there were an adverse change in the facts and circumstances, then an impairment charge may be necessary in the future.
See Note 11 to the Audited Consolidated Financial Statements included herein for information regarding the Company’s 5.625% Notes, and the Credit Agreement, which provides for a $640.0 million senior secured revolving credit facility maturing on August 3, 2026.
See Note 11 of the Notes included herein for information regarding the Company’s 5.625% Notes, and the Credit Agreement, which provides for a $640.0 million senior secured revolving credit facility maturing on August 3, 2026.
For the period ended December 31, 2023, the Company’s calculation of this ratio, and the maximum permitted under the Credit Agreement, respectively, were calculated based on the trailing twelve months as follows: December 31, 2023 Total Leverage Ratio 3.10 Maximum per covenant 4.25 These ratios and measures are not based on GAAP and are not presented as alternative measures of operating performance or liquidity.
For the period ended December 31, 2024, the Company’s calculation of this ratio, 47 Table of Contents and the maximum permitted under the Credit Agreement, respectively, were calculated based on the trailing twelve months as follows: December 31, 2024 Total Leverage Ratio 2.93 Maximum per covenant 4.25 These ratios and measures are not based on GAAP and are not presented as alternative measures of operating performance or liquidity.
The Company’s obligations extending beyond twelve months primarily consist of deferred acquisition consideration payments, purchases of noncontrolling interests, subsidiary awards, capital expenditures, scheduled lease obligation payments, and interest payments on borrowings under the Company’s 5.625% Notes and Credit Agreement.
The Company’s obligations extending beyond twelve months primarily consist of deferred acquisition consideration payments, purchases of noncontrolling interests, subsidiary awards, capital expenditures, scheduled lease obligation payments, and interest payments on borrowings under the Company’s 5.625% Notes (as defined in Note 11 of the Notes included herein) and Credit Agreement.
The periodic assessment of the net carrying value of the Company’s deferred tax assets under the applicable accounting rules requires significant management judgment. A change to any of these factors could impact the estimated valuation allowance and income tax expense. New Accounting Pronouncements See Note 2 of the Company’s Audited Consolidated Financial Statements included in this Form 10-K.
The periodic assessment of the net carrying value of the Company’s deferred tax assets under the applicable accounting rules requires significant management judgment. A change to any of these factors could impact the estimated valuation allowance and income tax expense. New Accounting Pronouncements See Note 3 of the Notes included in Item 8 of this Form 10-K.
“Adjusted EBITDA” is defined as Net income (loss) attributable to Stagwell Inc. common shareholders excluding non-operating income or expense to achieve operating income (loss), plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items.
“Adjusted EBITDA” is defined as Net income (loss) attributable to Stagwell Inc. common shareholders excluding non-operating income or expense to achieve operating income (loss), plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items primarily includes restructuring, certain system implementation and acquisition-related expenses.
Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer. The trade receivables transferred to the third parties were $393.9 million, $176.5 million, and $42.1 million for the years ended December 31, 2023, 2022, and 2021, respectively.
Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer. The trade receivables transferred to the third parties were $435.6 million, $393.9 million, and $176.5 million, during the years ended December 31, 2024, 2023, and 2022, respectively.
The amount collected and due to the third parties under these arrangements was $1.8 million as of December 31, 2023 and $5.7 million as of December 31, 2022. No amounts were collected and due to third parties as of December 31, 2021.
The amount collected and due to the third parties under these arrangements was $19.5 million as of December 31, 2024, $1.8 million as of December 31, 2023, and $5.7 million as of December 31, 2022.
Gain on Sale of Business The Company recognized a pre-tax gain of $94.5 million related to the sale of ConcentricLife for the year ended December 31, 2023. Other, Net Other, net for the year ended December 31, 2023 was $0.4 million of a loss, compared to a loss of $5.0 million for the year ended December 31, 2022.
Gain on Sale of Business The Company recognized a pre-tax gain of $94.5 million related to the sale of Concentric for the year ended December 31, 2023. Other, Net Other, net for the year ended December 31, 2024 was an expense of $1.4 million, compared to an expense of $0.4 million for the year ended December 31, 2023.
Other items include restructuring costs, acquisition-related expenses, and non-recurring items. The diluted weighted average shares outstanding include shares of Class C Common Stock as if converted to shares of Class A Common Stock to calculate Adjusted Diluted EPS. All amounts are in dollars unless otherwise stated. Amounts reported in millions herein are computed based on the amounts in thousands.
The diluted weighted average shares outstanding include shares of Class C Common Stock as if converted to shares of Class A Common Stock to calculate Adjusted Diluted EPS. All amounts are in U.S. dollars unless otherwise stated. Amounts reported in millions herein are computed based on the amounts in thousands.
In addition, Stagwell reports its corporate office expenses incurred in connection with the strategic resources provided to the networks, as well as certain other centrally managed expenses that are not fully allocated to the operating segments as Corporate.
The Company reports corporate expenses as “Corporate.” Corporate consists of corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments.
In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of $17.0 million, subject to continued employment and meeting certain future earnings targets, of which a portion may be settled in shares of Class A Common Stock at the Company’s discretion.
Under the agreement, the sellers are entitled to contingent consideration up to a maximum value of approximately $24 million, subject to continued employment and meeting certain future earnings targets, of which a portion may be settled in shares of Class A common stock, par value $0.001 per share (the “ Class A Common Stock ” ) at the Company’s discretion.
Income Tax Expense The Company had an income tax expense for the year ended December 31, 2023 of $40.6 million (on a pre-tax income of $91.1 million resulting in an effective tax rate of 44.5%) compared to income tax expense of $25.5 million (on pre-tax income of $75.6 million resulting in an effective tax rate of 33.7%) for the year ended December 31, 2022.
I ncome Tax Expense The Company had an income tax expense for the year ended December 31, 2024 of $13.2 million (on a pre-tax income of $37.7 million resulting in an effective tax rate of 34.9%), compared to income tax expense of $40.6 million (on pre-tax income of $91.1 million resulting in an effective tax rate of 44.5%) for the year ended December 31, 2023.
Total Debt Debt, net of debt issuance costs, as of December 31, 2023, was $1,145.8 million as compared to $1,184.7 million outstanding at December 31, 2022.
Total Debt Debt, net of debt issuance costs, as of December 31, 2024, was $1,353.6 million, compared to $1,145.8 million outstanding as of December 31, 2023.
Liquidity and Capital Resources: The following table provides summary information about the Company’s liquidity position: Year Ended December 31, 2023 2022 (dollars in thousands) Net cash provided by operating activities $ 81,007 $ 347,586 Net cash provided by (used in) investing activities 155,951 (116,275) Net cash used in financing activities (339,864) (186,736) The Company had cash and cash equivalents of $119.7 million and $220.6 million as of December 31, 2023 and December 31, 2022, respectively.
Liquidity and Capital Resources: The following table provides summary information about the Company’s liquidity position: Year Ended December 31, 2024 2023 (dollars in thousands) Net cash provided by operating activities $ 142,859 $ 81,007 Net cash (used in) provided by investing activities (162,472) 155,951 Net cash provided by (used in) financing activities 36,938 (339,864) The Company had cash and cash equivalents of $131.3 million and $119.7 million as of December 31, 2024, and December 31, 2023, respectively.
The income approach and the market approach both require the exercise of significant judgment, including judgment about the amount and timing of expected future cash flows, assumed terminal value and appropriate discount rates.
The Company applies an equal weighting to the income and market approaches for the impairment test. The income approach and the market approach both require the exercise of significant judgment, including judgment about the amount and timing of expected future cash flows, assumed terminal value and appropriate discount rates.
The increase in Office and general expenses was primarily attributable to an increase in deferred acquisition consideration, partially offset by a decrease in staff costs related to cost saving initiatives.
The increase in Cost of services was primarily attributable to higher unbillable costs and staff costs, commensurate with the increase in revenue. The increase in Office and general expenses was primarily attributable to an increase in staff costs, commensurate with the increase in revenue, partially offset by a decrease in deferred acquisition consideration.
The Company intends to finance the cash portion of these contingent payment obligations using available cash from operations, borrowings under the Credit Agreement (or any refinancings thereof), and, if necessary, through the incurrence of additional debt and/or issuance of additional equity.
Management anticipates it will finance these requirements using available cash from operations, borrowings under the Credit Agreement (or any refinancings thereof), and, if necessary, through the incurrence of additional debt and/or issuance of additional equity.
The Company generally uses a combination of the income approach, which incorporates the use of the discounted cash flow (“DCF”) method, and the market approach, which incorporates the use of earnings multiples based on market data and comparable companies. The Company applies an equal weighting to the income and market approaches for the impairment test.
The Company generally uses a combination of the income approach, which incorporates the use of the discounted cash flow (“DCF”) method, and the market approach, which incorporates the exercise of significant judgement about the use of earnings multiples based on market data and comparable companies.
As of December 31, 2023, the Company had $59.0 million of borrowings outstanding and $16.2 million of outstanding and undrawn letters of credit resulting in $564.8 million under the Credit Agreement. The Company transfers certain of its trade receivable assets to third parties under certain agreements.
As of December 31, 2024, the Company had $264.0 million of borrowings outstanding and $15.3 million of issued and undrawn letters of credit resulting in $360.7 million unused amount under the Credit Agreement. The Company transfers certain of its trade receivable assets to third parties under certain agreements.
Fees for these arrangements were recorded in Office and general expenses in the Consolidated Statements of Operations and totaled $5.4 million, $1.8 million, and $0.1 million for the years ended December 31, 2023, 2022, and 2021, respectively.
Fees for these arrangements were recorded in Office and general expenses in the Consolidated Statements of Operations and totaled $5.8 million, $5.4 million, and $1.8 million for the years ended December 31, 2024, 2023, and 2022, respectively. On November 6, 2024, the Board authorized an extension and a $125.0 million increase in the size of our Repurchase Program.
The change in Operating Income was primarily attributable to a decrease in Revenue and Cost of services, and an increase in Office and general expenses. The decrease in Cost of services was primarily attributable to lower billable costs, commensurate with lower revenue, and a decrease in staff costs associated with cost savings initiatives.
The increase in Operating Loss was primarily attributable to a decrease in Revenue and an increase in Office and general expenses and Depreciation and amortization, partially offset by a decrease in Cost of services. The decrease in Cost of Services was primarily attributable to lower unbillable costs and staff costs, commensurate with lower revenue.
Cash flows used in investing activities were $116.3 million for the year ended December 31, 2022, primarily driven by $12.8 million in capital capitalized software spend, $22.7 million in capital expenditures, and $74.2 million in acquisitions, net of cash acquired.
Investing Activities Cash flows used in investing activities were $162.5 million for the year ended December 31, 2024, primarily driven by $35.1 million in capitalized software spend, $18.9 million in capital expenditures, and $103.3 million for acquisitions, net of cash acquired.
The risk of a material loss could significantly increase in periods of severe economic downturn. The following table summarizes current and long-term requirements as of December 31, 2023.
The risk of a material loss could significantly increase in periods of severe economic downturn. 48 Table of Contents The following table and discussion below summarize current and long-term material cash requirements of the Company.
Stagwell manages its business by monitoring several financial and non-financial performance indicators. The key indicators that we focus on are revenue, operating expenses, capital expenditures and the non-GAAP financial measures described below.
The Company’s strategy is intended to challenge the industry status quo, realize returns on investment, and drive transformative growth and business performance for its clients and stakeholders. Stagwell manages its business by monitoring several financial and non-financial performance indicators. The key indicators that we focus on are revenue, operating expenses, capital expenditures and the non-GAAP financial measures described below.
During the year ended December 31, 2023, 9.9 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an aggregate value, excluding fees, of $59.5 million. These shares were repurchased at an average price of $6.00 per share.
Our Board will review the Repurchase Program periodically and may authorize adjustments of its terms. During the year ended December 31, 2024, 14.8 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an average price of $6.31 per share, for an aggregate value, excluding fees, of $93.5 million.
References to a “fiscal year” mean the Company’s year commencing on January 1 of that year and ending December 31 of that year (e.g., fiscal 2023 means the period beginning January 1, 2023, and ending December 31, 2023). 40 Table of Contents For similar operating and financial data and discussion of the Company’s year ended December 31, 2021, refer to Part II Item 7.
References to a “fiscal year” mean the Company’s year commencing on January 1 of that year and ending December 31 of that year (e.g., fiscal 2024 means the period beginning January 1, 2024, and ending December 31, 2024).
Certain of the Company’s subsidiaries grant awards to their employees providing them with an equity interest in the respective subsidiary (the “profits interests awards”). The awards generally provide the employee the right, but not the obligation, to sell its interest in the subsidiary to the Company based on a performance-based formula and, in certain cases, receive a profit share distribution.
The awards generally provide the employee with the right, but not the obligation, to sell their profits interest in the subsidiary to the Company based on a performance-based formula and, in certain cases, receive a profit share distribution. The profits interests awards are primarily settled in cash, with certain awards having stock-settlement provisions at the Company’s discretion.
The increase in Cost of services was primarily attributable to higher unbillable and staff costs, commensurate with higher revenue, and due to the acquisitions of Maru and Epicenter. The increase in Office and general expenses was primarily attributable to an increase in staff costs primarily associated with the acquisitions of Maru and Epicenter.
The increase in Cost of services was primarily attributable to an increase in billable costs and staff cost, commensurate with higher revenue as well as the inclusion of costs from acquired entities. The increase in Office and general expenses was primarily attributable to an increase in deferred acquisition consideration as well as the inclusion of costs from acquired entities.
Operating Income Operating Income for the year ended December 31, 2023 was $121.6 million, compared to $138.2 million for the year ended December 31, 2022, representing a decrease of $16.6 million.
Operating Income Operating Income for the year ended December 31, 2024, was $138.3 million, compared to $116.7 million for the year ended December 31, 2023, representing an increase of $21.6 million.
Corporate The components of operating results for the year ended December 31, 2023 compared to the year ended December 31, 2022 were as follows: Year Ended December 31, 2023 2022 Change (dollars in thousands) $ % Staff costs $ 36,938 $ 36,456 $ 482 1.3 % Administrative costs 11,472 6,655 4,817 72.4 % Adjusted EBITDA (48,410) (43,111) (5,299) 12.3 % Stock-based compensation 19,638 11,710 7,928 67.7 % Depreciation and amortization 8,218 6,925 1,293 18.7 % Other items, net 10,007 5,312 4,695 88.4 % Operating Loss $ (86,273) $ (67,058) $ (19,215) 28.7 % Operating Loss for the year ended December 31, 2023 was $86.3 million compared to $67.1 million for the year ended December 31, 2022, representing an increase of $19.2 million.
Corporate The components of operating results for the year ended December 31, 2024, compared to the year ended December 31, 2023 were as follows: Year Ended December 31, 2024 2023 Change (dollars in thousands) $ % Staff costs $ 47,736 $ 36,938 $ 10,798 29.2 % Administrative costs 16,402 11,472 4,930 43.0 % Adjusted EBITDA (64,138) (48,410) (15,728) 32.5 % Stock-based compensation 13,653 19,638 (5,985) (30.5) % Depreciation and amortization 12,137 8,218 3,919 47.7 % Impairment and other losses 215 — 215 100.0 % Other items, net 4,931 10,007 (5,076) (50.7) % Operating Loss $ (95,074) $ (86,273) $ (8,801) 10.2 % Operating Loss for the year ended December 31, 2024, was $95.1 million, compared to $86.3 million for the year ended December 31, 2023, representing an increase of $8.8 million.
A description of the non-GAAP financial measures discussed in this section and reconciliations to the comparable GAAP measures are below.
A description of the non-GAAP financial measures discussed in this section and reconciliations to the comparable GAAP measures are below. In this section, the terms “Stagwell,” “we,” “us,” “our” and the “Company” refer to Stagwell Inc. and its direct and indirect subsidiaries.
The loss in 2022 is primarily attributable to the Tax Receivables Agreement. Foreign Exchange, Net The foreign exchange loss for the year ended December 31, 2023 was $3.0 million, compared to a loss of $2.6 million for the year ended December 31, 2022, primarily attributable due to the U.S. dollar strengthening against the Euro and British Pound.
Foreign Exchange, Net The foreign exchange loss for the year ended December 31, 2024, was $1.7 million, compared to a loss of $3.0 million for the year ended December 31, 2023, primarily attributable to the movement in the British Pound.
The increase in Cost of services was primarily attributable to higher billable and unbillable costs, commensurate with the increase in revenues and an increase in staff costs due to the acquisition of BNG in 2022.
The increase in Cost of services was primarily attributable to higher billable costs and staff costs, commensurate with the increase in revenue as well as the inclusion of costs from acquired entities.
On May 4, 2023, as discussed in Note 11 of the Notes included herein, the Company amended the Credit Agreement to, among other things, increase the revolving commitments under the Credit Agreement by $140.0 million from $500.0 million to $640.0 million and permit restricted payments for share repurchases or redemptions from certain of its stockholders in an aggregate principal amount of up to $150.0 million.
The Credit Agreement provides revolving commitments of up to $640.0 million and permits restricted payments for share repurchases or redemptions from certain of its stockholders in an aggregate principal amount of up to $150.0 million.
During the year ended December 31, 2022, cash flows used in financing activities were $186.7 million, primarily driven by $63.2 million of deferred acquisition consideration payments, $39.2 million of distributions to noncontrolling interests, $70.3 million in shares repurchased and cancelled.
Financing Activities During the year ended December 31, 2024, cash flows provided by financing activities were $36.9 million, primarily driven by $205.0 million in net proceeds under the Credit Agreement, partially offset by shares repurchased and cancelled of $108.2 million, payments of deferred consideration of $29.8 million, and distributions to noncontrolling interests of $26.7 million.
Cash flows provided by operating activities for the year ended December 31, 2022, were $347.6 million, primarily driven by earnings and favorable working capital requirements.
Cash Flows Operating Activities Cash flows provided by operating activities for the year ended December 31, 2024 were $142.9 million, primarily driven by earnings, partially offset by unfavorable working capital requirements, including the timing of media supplier payments.
The increase in net acquisitions (divestitures) was primarily driven by a $33.1 million increase in revenue from the acquisitions of Maru and Epicenter. Operating Loss Operating Loss for the year ended December 31, 2023 was $18.9 million compared to $25.3 million for the year ended December 31, 2022, representing a decrease of $6.3 million.
The decrease in net acquisitions (divestitures) was primarily driven by the acquisition of Leaders, offset by the derecognition of a certain noncontrolling interest in the first quarter of 2024. Operating Loss Operating Loss for the year ended December 31, 2024, was $29.0 million, compared to $18.9 million for the year ended December 31, 2023, representing an increase of $10.1 million.
All Other The components of operating results for the year ended December 31, 2023 compared to the year ended December 31, 2022 were as follows: Year Ended December 31, 2023 2022 Change (dollars in thousands) $ % Revenue $ 46,585 $ 19,962 $ 26,623 NM Operating Expenses Cost of services 32,484 10,006 22,478 NM Office and general expenses 24,648 10,950 13,698 NM Depreciation and amortization 8,390 5,234 3,156 60.3 % Impairment and other losses — 19,041 (19,041) (100.0) % $ 65,522 $ 45,231 $ 20,291 44.9 % Operating Loss $ (18,937) $ (25,269) $ 6,332 (25.1) % 54 Year Ended December 31, 2023 2022 Change (dollars in thousands) $ % Net Revenue $ 46,585 $ 19,962 $ 26,623 NM Revenue (1) 46,585 19,962 26,623 NM Staff costs 37,416 13,963 23,453 NM Administrative costs (1) 4,689 3,940 749 19.0 % Unbillable and other costs, net 15,087 2,990 12,097 NM Adjusted EBITDA (10,607) (931) (9,676) NM Stock-based compensation 518 41 477 NM Depreciation and amortization 8,390 5,234 3,156 60.3 % Deferred acquisition consideration (1,752) — (1,752) (100.0) % Impairment and other losses — 19,041 (19,041) (100.0) % Other items, net 1,174 22 1,152 NM Operating Loss $ (18,937) $ (25,269) $ 6,332 (25.1) % (1) All Other Revenue and Administrative costs include approximately $6.0 million of eliminations of intercompany services.
All Other The components of operating results for the year ended December 31, 2024, compared to the year ended December 31, 2023 were as follows: Year Ended December 31, 2024 2023 Change (dollars in thousands) $ % Revenue $ 38,747 $ 46,585 $ (7,838) (16.8) % Operating Expenses Cost of services 25,588 32,484 (6,896) (21.2) % Office and general expenses 29,453 24,648 4,805 19.5 % Depreciation and amortization 12,718 8,390 4,328 51.6 % $ 67,759 $ 65,522 $ 2,237 3.4 % Operating Loss $ (29,012) $ (18,937) $ (10,075) 53.2 % 43 Table of Contents Year Ended December 31, 2024 2023 Change (dollars in thousands) $ % Net Revenue $ 38,884 $ 46,585 $ (7,701) (16.5) % Billable costs (137) — (137) (100.0) % Revenue (1) 38,747 46,585 (7,838) (16.8) % Billable costs (137) — (137) (100.0) % Staff costs 34,999 37,416 (2,417) (6.5) % Administrative costs (1) 6,139 4,689 1,450 30.9 % Unbillable and other costs, net 13,570 15,087 (1,517) (10.1) % Adjusted EBITDA (15,824) (10,607) (5,217) 49.2 % Stock-based compensation 904 518 386 74.5 % Depreciation and amortization 12,718 8,390 4,328 51.6 % Deferred acquisition consideration (1,321) (1,752) 431 (24.6) % Other items, net 887 1,174 (287) (24.4) % Operating Loss $ (29,012) $ (18,937) $ (10,075) 53.2 % (1) All Other Revenue and Administrative costs include approximately $8 million and $6 million of eliminations of intercompany services for the years ended December 31, 2024, and 2023, respectively.
The following discussion focuses on the operating performance of the Company for the years ended December 31, 2023 and 2022 and the financial condition of the Company as of December 31, 2023. 43 Table of Contents Results of Operations: Year Ended December 31, 2023 2022 (dollars in thousands) Revenue: Integrated Agencies Network $ 1,378,109 $ 1,474,970 Brand Performance Network 768,776 757,208 Communications Network 333,707 435,652 All Other 46,585 19,962 Total Revenue $ 2,527,177 $ 2,687,792 Operating Income $ 90,527 $ 159,228 Other Income (Expenses): Interest expense, net $ (90,644) $ (76,062) Foreign exchange, net (2,960) (2,606) Gain on sale of business 94,505 — Other, net (359) (4,975) Income before income taxes and equity in earnings of non-consolidated affiliates 91,069 75,585 Income tax expense 40,557 25,462 Income before equity in earnings of non-consolidated affiliates 50,512 50,123 Equity in (loss) of non-consolidated affiliates (8,870) (79) Net income 41,642 50,044 Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests (41,508) (30,125) Net income attributable to Stagwell Inc. common shareholders $ 134 $ 19,919 Reconciliation to Adjusted EBITDA: Net income attributable to Stagwell Inc. common shareholders $ 134 $ 19,919 Non-operating items (1) 90,393 139,309 Operating income 90,527 159,228 Depreciation and amortization 142,831 131,273 Impairment and other losses 11,395 122,179 Stock-based compensation 57,179 33,152 Deferred acquisition consideration 13,060 (13,405) Other items, net 45,147 18,691 Adjusted EBITDA $ 360,139 $ 451,118 (1) Non-operating items includes items within the Statements of Operations, below Operating Income, and above Net income (loss) attributable to Stagwell Inc. common shareholders. 44 Table of Contents YEAR ENDED DECEMBER 31, 2023 COMPARED TO YEAR ENDED DECEMBER 31, 2022 Consolidated Results of Operations The components of operating results for the year ended December 31, 2023 compared to the year ended December 31, 2022 were as follows: Year Ended December 31, 2023 2022 Change (dollars in thousands) $ % Revenue $ 2,527,177 $ 2,687,792 $ (160,615) (6.0) % Operating Expenses Cost of services 1,621,174 1,673,576 (52,402) (3.1) % Office and general expenses 661,250 601,536 59,714 9.9 % Depreciation and amortization 142,831 131,273 11,558 8.8 % Impairment and other losses 11,395 122,179 (110,784) (90.7) % $ 2,436,650 $ 2,528,564 $ (91,914) (3.6) % Operating Income $ 90,527 $ 159,228 $ (68,701) (43.1) % Year Ended December 31, 2023 2022 Change (dollars in thousands) $ % Net Revenue $ 2,146,652 $ 2,222,153 $ (75,501) (3.4) % Billable costs 380,525 465,639 (85,114) (18.3) % Revenue 2,527,177 2,687,792 (160,615) (6.0) % Billable costs 380,525 465,639 (85,114) (18.3) % Staff costs 1,389,168 1,394,317 (5,149) (0.4) % Administrative costs 259,780 254,973 4,807 1.9 % Unbillable and other costs, net 137,565 121,745 15,820 13.0 % Adjusted EBITDA 360,139 451,118 (90,979) (20.2) % Stock-based compensation 57,179 33,152 24,027 72.5 % Depreciation and amortization 142,831 131,273 11,558 8.8 % Deferred acquisition consideration 13,060 (13,405) 26,465 NM Impairment and other losses 11,395 122,179 (110,784) (90.7) % Other items, net 45,147 18,691 26,456 NM Operating Income (1) $ 90,527 $ 159,228 $ (68,701) (43.1) % (1) See the Results of Operations section above for a reconciliation of Operating Income to Net income (loss) attributable to Stagwell Inc. common shareholders.
The following discussion focuses on the operating performance of the Company for the years ended December 31, 2024, and 2023 and the financial condition of the Company as of December 31, 2024. 32 Table of Contents Results of Operations: Year Ended December 31, 2024 2023 (dollars in thousands) Revenue: Integrated Agencies Network $ 1,535,445 $ 1,418,711 Brand Performance Network 751,884 728,174 Communications Network 515,140 333,707 All Other 38,747 46,585 Total Revenue $ 2,841,216 $ 2,527,177 Operating Income $ 133,068 $ 90,527 Other Income (Expenses): Interest expense, net $ (92,317) $ (90,644) Foreign exchange, net (1,656) (2,960) Gain on sale of business — 94,505 Other, net (1,372) (359) Income before income taxes and equity in earnings of non-consolidated affiliates 37,723 91,069 Income tax expense 13,182 40,557 Income before equity in earnings of non-consolidated affiliates 24,541 50,512 Equity in income (loss) of non-consolidated affiliates 503 (8,870) Net income 25,044 41,642 Net income attributable to noncontrolling and redeemable noncontrolling interests (22,785) (41,508) Net income attributable to Stagwell Inc. common shareholders $ 2,259 $ 134 Reconciliation to Adjusted EBITDA: Net income attributable to Stagwell Inc. common shareholders $ 2,259 $ 134 Non-operating items (1) 130,809 90,393 Operating income 133,068 90,527 Depreciation and amortization 151,652 142,831 Impairment and other losses 1,715 11,395 Stock-based compensation 52,161 57,179 Deferred acquisition consideration 22,995 13,060 Other items, net 49,196 45,147 Adjusted EBITDA $ 410,787 $ 360,139 (1) Non-operating items includes items within the Statements of Operations, below Operating Income, and above Net income (loss) attributable to Stagwell Inc. common shareholders. 33 Table of Contents YEAR ENDED DECEMBER 31, 2024 COMPARED TO YEAR ENDED DECEMBER 31, 2023 Consolidated Results of Operations The components of operating results for the year ended December 31, 2024, compared to the year ended December 31, 2023, were as follows: Year Ended December 31, 2024 2023 Change (dollars in thousands) $ % Revenue $ 2,841,216 $ 2,527,177 $ 314,039 12.4 % Operating Expenses Cost of services 1,842,978 1,621,174 221,804 13.7 % Office and general expenses 711,803 661,250 50,553 7.6 % Depreciation and amortization 151,652 142,831 8,821 6.2 % Impairment and other losses 1,715 11,395 (9,680) (84.9) % $ 2,708,148 $ 2,436,650 $ 271,498 11.1 % Operating Income $ 133,068 $ 90,527 $ 42,541 47.0 % Year Ended December 31, 2024 2023 Change (dollars in thousands) $ % Net Revenue $ 2,296,662 $ 2,152,454 $ 144,208 6.7 % Billable costs 544,554 374,723 169,831 45.3 % Revenue 2,841,216 2,527,177 314,039 12.4 % Billable costs 544,554 374,723 169,831 45.3 % Staff costs 1,449,706 1,389,168 60,538 4.4 % Administrative costs 281,707 259,780 21,927 8.4 % Unbillable and other costs, net 154,462 143,367 11,095 7.7 % Adjusted EBITDA 410,787 360,139 50,648 14.1 % Stock-based compensation 52,161 57,179 (5,018) (8.8) % Depreciation and amortization 151,652 142,831 8,821 6.2 % Deferred acquisition consideration 22,995 13,060 9,935 76.1 % Impairment and other losses 1,715 11,395 (9,680) (84.9) % Other items, net 49,196 45,147 4,049 9.0 % Operating Income (1) $ 133,068 $ 90,527 $ 42,541 47.0 % (1) See the Results of Operations section above for a reconciliation of Operating Income to Net income (loss) attributable to Stagwell Inc. common shareholders.
Net Revenue The components of the fluctuations in net revenue for the year ended December 31, 2023 compared to the year ended December 31, 2022 were as follows: Net Revenue - Components of Change Change Year Ended December 31, 2022 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Year Ended December 31, 2023 Organic Total (dollars in thousands) Brand Performance Network $667,882 $848 $13,377 $(14,005) $220 $668,102 (2.1)% —% Component % change 0.1% 2.0% (2.1)% —% The decline in organic net revenue was primarily attributable to lower spending and client losses in the retail, consumer products, transportation and travel, and healthcare sectors.
Net Revenue The components of the fluctuations in net revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023, were as follows: Net Revenue - Components of Change Change Year Ended December 31, 2023 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Year Ended December 31, 2024 Organic Total (dollars in thousands) Brand Performance Network $627,810 $2,220 $2,252 $18,948 $23,420 $651,230 3.0% 3.7% Component % change 0.4% 0.4% 3.0% 3.7% The increase in organic net revenue was primarily attributable to new clients and increased spending by existing clients in the consumer products and food and beverage sectors.
The liability is adjusted quarterly based on changes in current information affecting each subsidiary’s current operating results and the impact this information will have on future results included in the calculation of the estimated liability. These adjustments are recorded in the Consolidated Statements of Operations. Goodwill .
At each reporting date, the Company models each business’ future performance, including revenue, EBITDA growth, to estimate the value of each deferred acquisition consideration liability. The liability is adjusted quarterly based on changes in current information affecting each subsidiary’s current operating results and the impact this information will have on future results included in the calculation of the estimated liability.
On March 1, 2023, the Board authorized an extension and a $125.0 million increase in the size of our stock repurchase program ( the “Repurchase Program”) to an aggregate of $250.0 million, with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program, as amended, will expire on March 1, 2026.
Under the Repurchase Program, as amended, we may repurchase up to an aggregate of $375.0 million of shares of our 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.
See Note 9 of the Notes included herein for additional information regarding contingent deferred acquisition consideration. When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances.
When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the incremental purchase may be required of the Company, the amounts are recorded as redeemable noncontrolling interests in mezzanine equity.
Stagwell’s strategy is to build, grow and acquire market-leading businesses that deliver the modern suite of services that marketers need to thrive in a rapidly evolving business environment. Stagwell’s differentiation lies in its creative roots and proven entrepreneurial leaders, which together with innovations in technology and data, bring transformational marketing, activation, communications and strategic consulting services to clients.
Executive Summary Overview Stagwell conducts its business through its networks, which provide marketing and business solutions that realize the potential of combining data and creativity. Stagwell’s strategy is to build, grow, and acquire market-leading businesses that deliver the modern suite of services that marketers need to thrive in a rapidly evolving business environment.
The decrease in Cost of services was primarily attributable to lower billable costs commensurate with lower revenues, partially offset by an increase in unbillable costs primarily due to the acquisition of Maru, and an increase in stock-based compensation expense.
The increase in Office and general expenses was primarily attributable to an increase in staff costs, commensurate with the increase in revenue, the inclusion of costs from acquired entities and an increase in deferred acquisition consideration, partially offset by a decrease in stock-based compensation.
The increase in net acquisitions (divestitures) was primarily driven by a $12.5 million increase in revenue from the acquisitions of BNG and Huskies. Operating Income Operating Income for the year ended December 31, 2023 was $38.2 million, compared to $15.7 million for the year ended December 31, 2022, representing an increase of $22.6 million.
Operating Income Operating Income for the year ended December 31, 2024, was $41.5 million, compared to $43.2 million for the year ended December 31, 2023, representing a decrease of $1.7 million, primarily attributable to an increase in Cost of services and Office and general expenses, partially offset by an increase in Revenue.
Adjusted EBITDA decreased $35.2 million, primarily driven by a decrease in Operating Income, partially offset by an increase in expenses added-back to EBITDA, primarily Deferred acquisition consideration as discussed above.
Deferred acquisition consideration increased $18.7 million, primarily attributable to an increase in the fair value of a certain obligation. Adjusted EBITDA increased $65.1 million, primarily driven by an increase in Revenue, partially offset by an increase in expenses, as discussed above.
The increase in Office and general expenses was primarily attributable to an increase in stock-based compensation expense, partially offset by a decrease in staff costs due to cost saving initiatives. Depreciation and amortization expense increased $6.4 million, primarily attributable to the acceleration of amortization associated with the discontinuation of a certain trade name.
The increase in Office and general expenses was primarily attributable to an increase in staff costs as a result of a change in the organization structure of certain Brands. Depreciation and amortization increased $4.3 million, primarily attributable to the acceleration of amortization of certain tradenames.
The difference in the effective tax rate of 44.5% in the year ended December 31, 2023 as compared to 33.7% in the year ended December 31, 2022 was primarily due to the change in pre-tax income, tax expense on gain on sale of business in 2023, tax benefit of impairments in 2022, increase in valuation allowance in 2023, lower share-based compensation windfalls, and unfavorable return to provision adjustments in 2023 offset by an increase in tax benefit from disregarded entity structure in 2023, and out-of-period adjustments in 2022.
The difference in the effective tax rate of 34.9% in the year ended December 31, 2024, compared to 44.5% in the year ended December 31, 2023, is primarily due to a decrease on gain related to sale of business, and a change in prior period adjustments offset by an increase in foreign tax and a reduction in tax benefits for share based compensation Noncontrolling and Redeemable Noncontrolling Interests The effect of noncontrolling and redeemable noncontrolling interests for the year ended December 31, 2024 was income of $22.8 million, compared to an income of $41.5 million for the year ended December 31, 2023.
The Company recognized an impairment and other losses charge of $122.2 million for the year ended December 31, 2022, primarily related to the impairment of goodwill totaling $116.7 million, and impairment of right-of-use lease assets and related leasehold improvements totaling $2.6 million.
Impairment and other losses for the year ended December 31, 2024 was $1.5 million. This was attributable to a charge to reduce the carrying value of a right-of-use lease asset and related leasehold improvements.
Stock-based compensation increased $24.0 million primarily attributable to new awards granted in 2023, the modification of certain stock-appreciation rights, and the increase in the fair value of certain profits interest awards.
Stock-based compensation expense decreased $6.0 million, primarily attributable to a decrease in the fair value and number of awards.
The decrease in Cost of services was primarily attributable to lower billable and unbillable costs, commensurate with lower revenue, and lower staff costs associated with cost savings initiatives, partially offset by an increase in stock-based compensation expense. 50 Table of Contents Stock-based compensation expense increased $14.0 million primarily attributable to new awards granted in 2023 and an increase in the fair value of certain profits interest awards.
The increase in Operating Loss was primarily attributable to an increase in Staff costs, partially offset by a decrease in Stock-based compensation. 45 Table of Contents Staff costs increased $10.8 million, primarily as a result of an increase in headcount, higher health insurance costs and a reduction in bonus expense in 2023 related to cost savings initiatives.
Revenue Revenue for the year ended December 31, 2023 was $46.6 million, compared to $20.0 million for the year ended December 31, 2022, an increase of $26.6 million. 55 Net Revenue The components of the fluctuations in net revenue for the year ended December 31, 2023 compared to the year ended December 31, 2022 were as follows: Net Revenue - Components of Change Change Year Ended December 31, 2022 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Year Ended December 31, 2023 Organic Total (dollars in thousands) All Other $19,962 $(354) $35,135 $(8,157) $26,624 $46,586 (40.9)% NM Component % change (1.8)% NM (40.9)% NM The decline in organic net revenue was primarily attributable to budget cuts and client losses from clients in the communications industry ($2.0 million), with the remaining amount ($6.1 million) representing the elimination of intercompany revenue during the year ended December 31, 2023.
Revenue Revenue for the year ended December 31, 2024, was $38.7 million, compared to $46.6 million for the year ended December 31, 2023, a decrease of $7.8 million. 44 Table of Contents Net Revenue The components of the fluctuations in net revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023, were as follows: Net Revenue - Components of Change Change Year Ended December 31, 2023 Foreign Currency Net Acquisitions (Divestitures) Organic Total Change Year Ended December 31, 2024 Organic Total (dollars in thousands) All Other $46,585 $(984) $(609) $(6,108) $(7,701) $38,884 (13.1)% (16.5)% Component % change (2.1)% (1.3)% (13.1)% (16.5)% The decrease in organic net revenue was primarily attributable to budget cuts and client losses from clients in the food and beverage, travel and transportation, consumer products, healthcare, and financial services sectors.
The CODM uses Adjusted EBITDA as a key metric, to evaluate the operating and financial performance of a segment, identify trends affecting the segments, develop projections and make strategic business decisions. The Company made changes to its internal management and reporting structure in the first quarter of 2023, resulting in an update to our reportable segments (Networks).
All segments follow the same basis of presentation and accounting policies as those described throughout the Notes included herein. The CODM uses Adjusted EBITDA (as defined above) as a key metric, to evaluate the operating and financial performance of a segment, identify trends affecting the segments, develop projections and make strategic business decisions.
The ultimate amount payable in the future relating to these transactions will vary because it is dependent on the future results of operations of the subject businesses and the timing of when these rights are exercised. 59 Critical Accounting Estimates Stagwell has prepared the Audited Consolidated Financial Statements in accordance with GAAP and pursuant to the rules and regulations of the SEC for reporting financial information on Form 10-K.
See Note 14 of the Notes included in Item 8 of this Form 10-K for additional information regarding these material commitments. 49 Table of Contents Critical Accounting Estimates Stagwell has prepared the Audited Consolidated Financial Statements in accordance with GAAP and pursuant to the rules and regulations of the SEC for reporting financial information on Form 10-K.
The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $138.6 million as of December 31, 2023. The Board will review the Repurchase Program periodically and may authorize adjustments of its terms. The Repurchase Program may be suspended, modified or discontinued at any time without prior notice.
The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $169.9 million as of December 31, 2024.
This was primarily attributable to a charge of $10.0 million to reduce the carrying value of four of its right-of-use lease assets and related leasehold improvements. The right-of-use lease assets and related leasehold improvements related to three agencies within the Integrated Agencies Network and one agency within the Brand Performance Network.
This was attributable to charges to reduce the carrying value of right-of-use lease assets and related leasehold improvements within the Integrated Agencies Network and Corporate. Impairment and other losses for the year ended December 31, 2023 was $11.4 million, primarily related to the impairment of right-of-use lease assets totaling $6.9 million and the associated leasehold improvements totaling $3.1 million.
(2) Does not include amounts expected to be paid in shares of Class A Common Stock. As of December 31, 2023, $29.3 million of the deferred acquisition consideration is expected to be settled in shares of Class A Common Stock. Deferred acquisition consideration on the balance sheet consists of deferred obligations related to contingent and fixed purchase price payments.
The 63.7 million reflected in the above table is included in the Consolidated Balance Sheet as of December 31, 2024, and does not include $38.4 million expected to be paid in shares of Class A Common Stock. In addition, certain of the Company’s deferred acquisition consideration is tied to continued employment of certain personnel of the acquired subsidiaries.
The change in Operating Income was primarily attributable to a decrease in Revenue, Cost of services, and Impairment and other losses, and an increase in Office and general expenses, and Depreciation and amortization.
Operating Income Operating Income for the year ended December 31, 2024, was $77.4 million, compared to $35.9 million for the year ended December 31, 2023, representing an increase of $41.5 million. The change in Operating Income was primarily attributable to an increase in Revenue, partially offset by an increase in Cost of services and Office and general expenses.

… 86 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−1 removed2 unchanged
Biggest changeImpairment Risk: For the year ended December 31, 2023, the Company recorded an impairment charge of $11.4 million to reduce the carrying value of four of its right-of-use lease assets and related leasehold improvements and a long-lived asset, specifically a trade name.
Biggest changeImpairment Risk: For the year ended December 31, 2024, the Company recorded an impairment charge of $1.7 million to reduce the carrying value of its right-of-use lease assets and related leasehold improvements. See Note 10 of the Notes included herein for additional information.
With regard to our variable rate debt, a 10% increase or decrease in interest rates would change our annual interest expense by $2.5 million. 61 Foreign Exchange: While the Company primarily conducts business in markets that use the U.S. dollar, the Canadian dollar, the Euro and the British Pound, its non-U.S. operations transact business in numerous different currencies.
With regard to our variable rate debt, a 10% increase or decrease in interest rates would change our annual interest expense by $2.9 million. Foreign Exchange: While the Company primarily conducts business in markets that use the U.S. dollar, the Canadian dollar, the Euro and the British Pound, its non-U.S. operations transact business in numerous different currencies.
The effects of currency exchange rate fluctuations on the translation of the Company’s results of operations are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 2 of the Company’s Audited Consolidated Financial Statements included in the 2023 Form 10-K.
The effects of currency exchange rate fluctuations on the translation of the Company’s results of operations are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 2 of the Company’s Audited Consolidated Financial Statements included in this Form 10-K.
For the most part, revenues and expenses incurred related to the non-U.S. operations are denominated in their functional currency. This reduces the impact that fluctuations in exchange rates will have on profit margins. Translation of intercompany debt, which is not intended to be repaid, is included in cumulative translation adjustments.
For the most part, revenues 51 Table of Contents and expenses incurred related to the non-U.S. operations are denominated in their functional currency. This reduces the impact that fluctuations in exchange rates will have on profit margins. Translation of intercompany debt, which is not intended to be repaid, is included in cumulative translation adjustments.
See the Significant Accounting Policies section in the “Notes to Audited Consolidated Financial Statements” of the Company’s 2023 Form 10-K for information related to impairment testing for Goodwill, Right-of-use lease assets and long-lived assets and the risk of potential impairment charges in future periods.
See the Significant Accounting Policies section in the “Notes to Audited Consolidated Financial Statements” of this Form 10-K for information related to impairment testing for Goodwill, Right-of-use lease assets and long-lived assets and the risk of potential impairment charges in future periods.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk In the normal course of business, the Company is exposed to market risk related to interest rates, foreign currencies and impairment risk. Debt Instruments: At December 31, 2023, the Company’s debt obligations consisted of amounts outstanding under its Credit Agreement and the 5.625% Notes.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk In the normal course of business, the Company is exposed to market risk related to interest rates, foreign currencies and impairment risk. Debt Instruments: As of December 31, 2024, the Company’s debt obligations consisted of amounts outstanding under its Credit Agreement and the 5.625% Notes.
See the Critical Accounting Estimates section in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information related to the risk of potential impairment charges in future periods.
See the Critical Accounting Estimates section in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K for information related to the risk of potential impairment charges in future periods.
The 5.625% Notes bear a fixed 5.625% interest rate. The Credit Agreement bears interest at variable rates based upon SOFR, EURIBOR, and SONIA depending on the duration of the borrowing product. The Company’s ability to obtain the required bank syndication commitments depends in part on conditions in the bank market at the time of syndication.
The Credit Agreement bears interest at variable rates based upon SOFR, EURIBOR, and SONIA depending on the duration of the borrowing product. The Company’s ability to obtain the required bank syndication commitments depends in part on conditions in the bank market at the time of syndication.
Removed
On April 28, 2022, the Company amended its Credit Agreement. This amendment replaced references to LIBOR with references to SOFR.

Other STGW 10-K year-over-year comparisons