Stagwell Inc. — Q3 2026 Earnings Summary

Financial Performance:

• Q3 Revenue was $816 million, a 10% year-over-year increase; Year-to-Date (YTD) Revenue was $2,306 million, also a 10% increase.
• Q3 Net Revenue was $664 million, an 8% year-over-year increase; YTD Net Revenue was $1,880 million, a 6% increase.
• Q3 Organic Net Revenue growth was 7%; YTD Organic Net Revenue growth was 5%.
• Q3 Adjusted EBITDA was $145 million, a 25% year-over-year increase; YTD Adjusted EBITDA was $343 million, a 17% increase.
• Q3 Adjusted EBITDA Margin was 22% on net revenue; YTD Adjusted EBITDA Margin was 18%.
• Q3 Net Income attributable to common shareholders was $18 million, compared to $25 million in the prior year period.
• YTD Net Loss attributable to common shareholders was $3 million, compared to income of $16 million in the prior year period.
• Q3 Earnings Per Share (EPS) was $0.07; YTD EPS was $(0.01).
• Q3 Adjusted EPS was $0.34, a 42% year-over-year increase; YTD Adjusted EPS was $0.77, compared to $0.54 in the prior year period.
• YTD Net Cash Provided by Operating Activities was $152 million, a 396% increase year-over-year.
• YTD Free Cash Flow was $52 million, a 227% increase year-over-year.
• Net leverage stood at 2.7x, a 0.7x improvement year-over-year.
• Cash and cash equivalents were $132.2 million as of September 30, 2026, compared to $104.5 million as of December 31, 2025.
• Total Liabilities were $3,479.9 million as of September 30, 2026, compared to $3,413.2 million as of December 31, 2025.

Guidance and Future Outlook:

• Raised Full-Year Adjusted EBITDA guidance to $490 million to $540 million.
• Raised Full-Year Adjusted EPS guidance to $1.07 to $1.21.
• Reiterated Total Net Revenue growth guidance of 8% to 12%.
• Reiterated Free Cash Flow Conversion guidance of 50% to 60%.
• Guidance includes anticipated impact from acquisitions or dispositions.

Business Segments and Product Lines:

• Q3 Digital Transformation Net Revenue was $119 million, an organic increase of 23% year-over-year.
• Q3 The Marketing Cloud Net Revenue was $56 million, an organic increase of 108% year-over-year.
• YTD Enterprise Technology Products contracted to date were $59 million, more than double the initial FY26 target.
• Two-Year Net Revenue Growth Stack for Digital Transformation was 38%, with a Two-Year Organic Net Revenue Growth Stack of 30%.
• Q3 Net New Business was $168 million; Last Twelve Months (LTM) Net New Business was $586 million.
• Marketing Services segment Q3 Net Revenue was $217.7 million (down 7.5% organically).
• Media & Commerce segment Q3 Net Revenue was $158.7 million (down 2.1% organically).
• Communications segment Q3 Net Revenue was $123.7 million (up 20.0% organically).

Market and Competitive Landscape:

• Secured the largest multi-agency deal in Stagwell history with ServiceNow.
• Secured its first major Federal Government win.
• Expanded partnership with Palantir.
• Management stated the company is on track to become number one in marketing transformation.

Risks and Challenges:

• Risks include unfavorable economic conditions, inflation, changing tariffs, and trade policies.
• Risks include client spending reductions, demand fluctuations, and client financial failure.
• Risks include ability to retain key employees and compete in markets.
• Risks include ability to achieve cost savings, implement strategic initiatives, and manage growth.
• Risks include ability to finance contingent payment obligations, including redeemable noncontrolling interests and deferred acquisition consideration.
• Risks include ability to identify and complete acquisitions or divestitures and realize synergies.
• Risks include development of products incorporating new technologies (AR, AI, VR) and realizing benefits from AI investments.
• Risks include adverse tax consequences, including potential changes to corporate tax rates and Canadian federal income tax.
• Risks include internal control failures, cybersecurity incidents, and geopolitical tensions.

Management Commentary and Tone:

• Mark Penn, Chairman and CEO, stated, "This is the biggest quarter in Stagwell's history," citing the pivot from primarily marketing services to AI-powered marketing transformation.
• Penn highlighted that software products, including "agentic Stagwell Machines," and the Digital Transformation segment are driving the business.
• Ryan Greene, CFO, noted the quarter was Stagwell's largest ever on virtually every metric, with organic net revenue growing more than 7% and adjusted EBITDA growing 25%.
• Greene expressed confidence in raising guidance due to results through the first three quarters and a more than 400% increase in operating cash flow year-to-date.

Other Key Points:

• Shares repurchased and cancelled during the nine months ended September 30, 2026, totaled $90.7 million.
• Capitalized software expenditures for the nine months ended September 30, 2026, were $75.9 million.
• Acquisitions, net of cash acquired, totaled $6.3 million for the nine months ended September 30, 2026.
• Tax Receivables Agreement payment was $2.6 million for the nine months ended September 30, 2026.
• Management hosted a video webcast on October 29, 2026, to discuss results.
• The company is a global challenger network transforming marketing through AI, operating in 40+ countries.