STGW

Stagwell (STGW) drew fresh investor attention after reporting quarterly results that included 11% revenue growth and a higher full-year adjusted EPS outlook, supported by new client wins and increased use of its AI-driven marketing tools. Against this backdrop, Stagwell’s share price has climbed 31.61% over the past 90 days, and the year-to-date share price return of 86.15% points to strong recent momentum. The 1-year total shareholder return of 55.29% shows how that shift compares with a more modest 5-year total shareholder return of 1.67%. Spot similar momentum plays by scanning our hand picked 20 high quality undiscovered gems that share Stagwell’s mix of earnings traction and under the radar pricing. After that sharp move, the real fork in the road for Stagwell is simple. Does it make sense to accept today’s post earnings price or wait and hope the recent enthusiasm cools? The valuation numbers give some clues next. Stagwell’s most followed narrative pegs fair value at $9.71 per share, a touch above the last close of $8.81. This frames today’s post earnings move in a different light. Read the complete narrative. Want to see what sits behind that margin story? The narrative leans on steadier revenue growth, sharply higher profitability, and a very different earnings multiple than today. It is worth examining which forecasts would need to materialize for that $9.71 fair value to hold up. Result: Fair Value of $9.71 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Stagwell’s reliance on a small group of large tech clients and the ongoing integration of past acquisitions could quickly weaken that 9.4% undervaluation narrative. Find out about the key risks to this Stagwell narrative. The popular Stagwell narrative leans on future earnings and a fair value of $9.71, yet today the stock trades on a P/E of 133x. That is far above the US Media industry at 20.7x, the peer average at 40.6x, and the fair ratio of 31.1x. Is that a margin of safety or a valuation risk? For a closer look at what this wide gap could mean in practice, including how far the P/E might move toward the fair ratio under different scenarios, See what the numbers say about this price — find out in our valuation breakdown. If this mix of optimism and concern around Stagwell leaves you undecided, act quickly and check the facts for yourself. To weigh both sides clearly, start with the 3 key rewards and 2 important warning signs. If Stagwell has caught your attention, do not stop here. The market rarely serves up just one opportunity at a time, and you do not want to overlook other compelling setups. Target potential mispricing by scanning our 54 high quality undervalued stocks that combine solid fundamentals with prices that may not fully reflect their underlying strength. Build staying power into your portfolio by reviewing the list of solid balance sheet and fundamentals (52 results) that can better handle tough conditions and surprise headlines. Stack the odds toward stability by checking the 75 resilient stocks with low risk scores that score well on our risk metrics and may help smooth out portfolio swings. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include STGW. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Q2 YoY Revenue Growth of 11% to $786 million; Q2 YoY Net Revenue Growth of 6% to $632 million Q2 YoY Digital Transformation Organic Net Revenue Growth of 18%; Two-Year Digital Transformation Organic Net Revenue Growth Stack of 29% Q2 EPS of $(0.03); Q2 Adjusted EPS Growth YoY of 39% to $0.25 Q2 Net Loss Attributable to Stagwell Inc. Common Shareholders of $8 million; Q2 Adjusted EBITDA Growth YoY of 15% to $109 million Record Net New Business of $171 million in Q2; LTM Net New Business of $540 million Raise Full-Year 2026 Adjusted EPS Guidance to $1.03 to $1.17 NEW YORK CITY, NY / ACCESS Newswire / July 30, 2026 / (NASDAQ:STGW) - Stagwell Inc. ("Stagwell") today announced financial results for the three and six months ended June 30, 2026. SECOND QUARTER RESULTS: Q2 Revenue of $786 million, an increase of 11% versus the prior year period; YTD Revenue of $1,490 million, an increase of 10%; Q2 Revenue increased 10% organically versus the prior year period; YTD Revenue increased 8% organically; Q2 Net Revenue of $632 million, an increase of 6% versus the prior year period; YTD Net Revenue of $1,216 million, an increase of 5%; Q2 Net Revenue increased 5% organically versus the prior year period; YTD Net Revenue increased 3% organically; Q2 Digital Transformation Net Revenue of $107 million, an organic increase of 18% versus the prior year period; Two-Year Net Revenue Growth Stack for Digital Transformation of 34%, Two-Year Organic Net Revenue Growth Stack for Digital Transformation of 29%; Q2 Net Loss attributable to Stagwell Inc. Common Shareholders of $8 million versus $5 million in the prior year period; YTD Net Loss attributable to Stagwell Inc. Common Shareholders of $21 million versus $8 million in the prior year period; Q2 Adjusted EBITDA of $109 million, an increase of 15% versus the prior year period; YTD Adjusted EBITDA of $198 million an increase of 12%; Q2 Adjusted EBITDA Margin of 17% on net revenue; YTD Adjusted EBITDA Margin of 16%; Q2 Loss Per Share attributable to Stagwell Inc. Common Shareholders of $(0.03) versus $(0.02); YTD Loss Per Share attributable to Stagwell Inc. Common Shareholders of $(0.08) versus $(0.06) in the prior year period; Q2 Adjusted Earnings Per Share attributable to Stagwell Inc. Common Shareholders of $0.25 versus $0.18; YTD Adjusted Earnings Per Share attributable to Stagwell Inc. Common Shareholders of $0.42 versus $0.30 in the prior year period; YTD Net Cash provided by Operating Activities of $64 million versus $55 million in the prior year period; Net new business of $171 million in the second quarter, last twelve-month net new business of $540 million See "Non-GAAP Financial Measures" below for explanations and reconciliations of the Company's non-GAAP financial measures. "Our second quarter results demonstrate Stagwell is thriving in today's AI era. Stagwell's unique combination of software, services and engineers is being embraced by the industry leading to another record-breaking Net New Business quarter of $171 million, highlighted by recent wins with IBM, Adobe, Mondelez and Heineken," said Mark Penn, Chairman and CEO of Stagwell. "Our organic net revenue growth continues to accelerate, led by 18% growth in our Digital Transformation segment, and 12% growth in Communications as the political cycle starts to ramp up. Strong growth, combined with proactive cost management and share repurchases, means we are raising our adjusted EPS outlook for the year today, and we expect to deliver double-digit growth in the second half, the lions' share of which will be organic." Ryan Greene, Chief Financial Officer, added: "This was Stagwell's biggest ever second quarter. As we grew our top-line, we controlled costs to expand adjusted EBITDA 15% year-over-year to $109 million. These strong results, combined with continued share repurchases, resulted in 39% growth in adjusted EPS to $0.25. We are firmly on course to deliver on our full-year outlook, including our raised adjusted EPS guidance." Financial Outlook 2026 financial guidance is updated as follows: Adjusted EPS guidance is raised to $1.03 - $1.17 (from $0.98 - $1.12) Total Net Revenue growth of 8% to 12% is reiterated Adjusted EBITDA of $475 million to $525 million is reiterated Free Cash Flow Conversion of 50% to 60% is reiterated Guidance includes anticipated impact from acquisitions or dispositions. * The Company has excluded a quantitative reconciliation with respect to the Company's 2026 guidance under the "unreasonable efforts" exception in Item 10(e)(1)(i)(B) of Regulation S-K. See "Non-GAAP Financial Measures" below for additional information. Video Webcast Management will host a video webcast on Thursday, July 30, 2026, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three and six months ended June 30, 2026. The video webcast will be accessible at https://edge.media-server.com/mmc/p/zd4zz6jw/. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the webcast. A recording of the webcast will be accessible one hour after the webcast and available for ninety days at www.stagwellglobal.com. Stagwell Inc. Stagwell is the global challenger network transforming marketing through AI. We deliver scaled creative performance for the world's most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing. Led by entrepreneurs, our specialists in 45+ countries are unified under a single purpose: to drive effectiveness and improve business results for our clients. Join us at www.stagwellglobal.com. Contacts For Investors:Ben [email protected] For Press:Lena [email protected] Non-GAAP Financial Measures In addition to its reported results, Stagwell Inc. has included in this earnings release certain financial results that the Securities and Exchange Commission ("SEC") defines as "non-GAAP Financial Measures." Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results. Such non-GAAP financial measures include the following: (1) Organic Net Revenue: "Organic net revenue growth" and "Organic net revenue decline" reflects the year-over-year change in the Company's reported net revenue attributable to the Company's management of the entities it owns. We calculate organic net revenue growth (decline) by subtracting the net impact of acquisitions (divestitures) and the impact of foreign currency exchange fluctuations from the aggregate year-over-year increase or decrease in the Company's reported net revenue. The net impact of acquisitions (divestitures) reflects the year-over-year change in the Company's reported net revenue attributable to the impact of all individual entities that were acquired or divested in the current and prior year. We calculate impact of an acquisition as follows: (a) for an entity acquired during the current year, we present the entity's current period reported revenue as the impact of the acquisition in the current year; and (b) for an entity acquired in the prior year, we present an amount equal to the entity's current year net revenue for the same period during which we didn't own the entity in the prior year as the impact of the acquisition in the current year. We calculate impact of a divestiture as follows: (a) for a divestiture in the current year, we present the entity's prior year net revenue for the same period during which we no longer owned it in the current year as impact of the divestiture in the current year; and (b) for a divestiture in the prior year, we present the entity's prior year net revenue for the period during which we owned it in the prior year as impact of the divestiture in the current year. We calculate the impact of any acquisition or divestiture without adjusting for foreign currency exchange fluctuations. The impact of foreign currency exchange fluctuations reflects the year-over-year change in the Company's reported net revenue attributable to changes in foreign currency exchange rates. We calculate the impact of foreign currency exchange fluctuations for the portion of the reporting period in which we recognized revenue from a foreign entity in both the current year and the prior year. The impact is calculated as the difference between (1) reported prior period net revenue (converted to U.S. dollars at historical foreign currency exchange rates) and (2) prior period net revenue converted to U.S. dollars at current period foreign exchange rates. (2) Net New Business: Estimate of annualized revenue for new wins less annualized revenue for losses incurred in the period. (3) Adjusted EBITDA: is defined as Net income (loss) attributable to Stagwell Inc. common shareholders excluding non-operating income or expense, income tax expense or benefit, equity in income or loss of non-consolidated entities and net income or loss attributable to noncontrolling and redeemable noncontrolling interest holders to achieve Operating income (loss), plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, impairment and other losses, and other items. Other items primarily includes restructuring, certain system implementation costs, working capital administrative fees and acquisition-related expenses. Adjusted EBITDA for our reportable segments is reconciled to Operating income (loss), as Net income (loss) is not relevant for reportable segment financial metric. (4) Adjusted Diluted EPS: is defined as Adjusted Net Income (loss) attributable to Stagwell Inc. common and Class C shareholders, divided by the diluted weighted average shares outstanding. Adjusted Net Income represents net income (loss) attributable to Stagwell Inc. common and Class C shareholders, excluding amortization, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items (as defined above), allocated between the two share classes based on their respective income allocation percentages using a normalized effective tax rate. The diluted weighted average shares outstanding includes the diluted weighted average common shares outstanding plus Class C common stock, par value $0.00001 per share (the "Class C Common Stock") as if converted to shares of Class A Common Stock if not included because they were anti-dilutive. (5) Free Cash Flow: defined as consolidated net cash flow from operations less cash outflow from capital expenditures and capitalized software, excluding material nonrecurring capital purchases. Free Cash Flow Conversion is the percentage of adjusted EBITDA. Included in this earnings release are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures. This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company's representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company's beliefs and expectations, future financial performance, growth, and future prospects, the Company's strategy, business and economic trends and growth, technological leadership and differentiation, potential and completed acquisitions, anticipated and actual operating efficiencies and synergies and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as "ability," "aim," "anticipate," "assume," "believe," "better," "build," "consider," "continue," "could," "develop," "depend," "drive," "enhance," "estimate," "expect," "focus," "forecast," "future," "grow," "guidance," "improve," "intend," "likely," "maintain," "may," "ongoing," "outlook," "plan," "position," "possible," "potential," "probable," "project," "seek," "should," "target," "will," "would" or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section. Forward-looking statements in this document are based on certain key expectations and assumptions made by the Company. Although the management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The material assumptions upon which such forward-looking statements are based include, among others, assumptions with respect to general business, economic and market conditions, the competitive environment, anticipated and unanticipated tax consequences and anticipated and unanticipated costs. These forward-looking statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company's control. Therefore, you should not place undue reliance on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following: risks associated with international, national and regional unfavorable economic conditions, including the effect of changing tariffs and other trade policies, inflation and other macroeconomic factors that could affect the Company or its clients; demand for the Company's services, which may precipitate or exacerbate other risks and uncertainties; inflation and actions taken by central banks to counter inflation; the Company's ability to attract new clients and retain existing clients; the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements; financial failure of the Company's clients; the Company's ability to retain and attract key employees; the Company's ability to compete in the markets in which it operates; the Company's ability to achieve its cost saving initiatives; the Company's implementation of strategic initiatives; the Company's ability to remain in compliance with its debt agreements and the Company's ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests, deferred acquisition consideration and profit interests; the Company's ability to manage its growth effectively; the Company's ability to identify and complete acquisitions or other strategic transactions that complement and expand the Company's business capabilities and successfully integrate newly acquired businesses into the Company's operations, retain key employees, and realize cost savings, synergies and other related anticipated benefits within the expected time period; the Company's ability to identify and complete divestitures and to achieve the anticipated benefits therefrom; the Company's ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products; the Company's use of artificial intelligence, including generative artificial intelligence; adverse tax consequences for the Company, its operations and its stockholders, that may differ from the expectations of the Company, including that recent or future changes in tax laws, potential changes to corporate tax rates in the United States and disagreements with tax authorities on the Company's determinations that may result in increased tax costs; adverse tax consequences in connection with the business combination that formed the Company in August 2021, including the incurrence of material Canadian federal income tax (including material "emigration tax"); the Company's ability to maintain an effective system of internal control over financial reporting, including the risk that the Company's internal controls will fail to detect misstatements in its financial statements; the Company's ability to accurately forecast its future financial performance and provide accurate guidance; the Company's ability to protect client data from security incidents or cyberattacks; economic disruptions resulting from war and other economic and geopolitical tensions (such as the ongoing military conflicts in Iran and the Middle East, and between Russia and Ukraine), terrorist activities, natural disasters, public health events, and tariff and trade policies; stock price volatility; and foreign currency fluctuations. Investors should carefully consider these risk factors, the additional risk factors outlined under the caption "Risk Factors" in this Form 10-K, and in the Company's other filings with the Securities and Exchange Commission (the "SEC") which are accessible on the SEC's website at www.sec.gov. SCHEDULE 1STAGWELL INC. AND SUBSIDIARIESUNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS(amounts in thousands, except per share amounts) SCHEDULE 2STAGWELL INC.UNAUDITED COMPONENTS OF NET REVENUE CHANGE(amounts in thousands) (1) See Non-GAAP Financial Measures section above for the definition of Organic Net Revenue. SCHEDULE 3STAGWELL INC. AND SUBSIDIARIESUNAUDITED COMPONENTS OF NET REVENUE CHANGE(amounts in thousands) (1) See Non-GAAP Financial Measures section above for the definition of Organic Net Revenue. SCHEDULE 4STAGWELL INC.UNAUDITED SEGMENT OPERATING RESULTS(amounts in thousands) For the Three Months Ended June 30, 2026 (1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net. SCHEDULE 5STAGWELL INC. AND SUBSIDIARIESUNAUDITED SEGMENT OPERATING RESULTS(amounts in thousands) For the Six Months Ended June 30, 2026 (1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net. SCHEDULE 6STAGWELL INC. AND SUBSIDIARIESUNAUDITED SEGMENT OPERATING RESULTS(amounts in thousands) For the Three Months Ended June 30, 2025 (1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items. SCHEDULE 7STAGWELL INC.UNAUDITED SEGMENT OPERATING RESULTS(amounts in thousands) (1) See Non-GAAP Financial Measures section above for the definition of Adjusted EBITDA and Other items, net. SCHEDULE 8STAGWELL INC.UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)(amounts in thousands, except per share amounts) For the Three Months Ended June 30, 2026 (1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary. (2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring expenses. (3) Represents the difference between the income tax benefit of $0.3 million at an effective tax rate of 3.8% on a GAAP basis and the income tax expense of $21.8 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments. SCHEDULE 9STAGWELL INC. AND SUBSIDIARIESUNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)(amounts in thousands, except per share amounts) For the Six Months Ended June 30, 2026 (1) See Non-GAAP Financial Measures section above for the definition of Adjusted Diluted EPS. (2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring expenses. (3) Represents the difference between the income tax benefit of $3.2 million at an effective tax rate of 12.5% on a GAAP basis and the income tax expense of $37.2 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments. SCHEDULE 10STAGWELL INC.UNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)(amounts in thousands, except per share amounts) For the Three Months Ended June 30, 2025 1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary. (2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring expenses. (3) Represents the difference between the income tax expense of $2.7 million at an effective tax rate of (134.9)% on a GAAP basis and the income tax expense of $16.6 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments. SCHEDULE 11STAGWELL INC. AND SUBSIDIARIESUNAUDITED RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP MEASURE)(amounts in thousands, except per share amounts) For the Six Months Ended June 30, 2025 1) See Non-GAAP Financial Measures section above for the definition of Adjusted Diluted EPS. (2) Other items, net, primarily includes restructuring, certain system implementation costs, working capital administrative fees, acquisition-related expense, and other non-recurring expenses. (3) Represents the difference between the income tax benefit of $4.4 million at an effective tax rate of (78.7)% on a GAAP basis and the income tax expense of $29.1 million at an effective tax rate of 26.5% on a non-GAAP basis. The difference reflects the tax impact of non-GAAP adjustments. SCHEDULE 12STAGWELL INC. AND SUBSIDIARIESUNAUDITED CONSOLIDATED BALANCE SHEETS(amounts in thousands) SCHEDULE 13STAGWELL INC. AND SUBSIDIARIESUNAUDITED SUMMARY CASH FLOW DATA(amounts in thousands) SOURCE: Stagwell View the original press release on ACCESS Newswire

Interested in Stagwell Inc.? Here are five stocks we like better. Strong Q2 performance: Revenue rose 11% to $786 million, organic revenue increased 10%, and adjusted EBITDA grew 15% to $108.7 million as margins expanded to 17.2%. Adjusted EPS climbed 39% to $0.25. AI-driven demand and new business fueled growth: Digital transformation organic net revenue surged 18% and communications grew 12%, while record net new business reached $171 million. Stagwell also secured $16 million in committed enterprise technology revenue and expects to exceed its $25 million annual bookings target for AI products. Outlook maintained, EPS raised: Full-year revenue, EBITDA and free-cash-flow guidance remained unchanged, but adjusted EPS guidance increased to $1.03–$1.17 due largely to share repurchases. Cost savings, improving cash flow and planned debt reduction are expected to lower leverage toward the mid-two-times range by year-end. Stagwell (NASDAQ:STGW) reported second-quarter results marked by accelerating organic growth, higher profitability and record net new business, as the marketing services company emphasized demand for AI-enabled digital transformation and communications work. Revenue increased 11% year over year to $786 million, while net revenue rose 6% to $632 million, Chief Financial Officer Ryan Greene said. Organic revenue grew 10% and organic net revenue grew 5%, which Greene described as the company’s strongest growth rate in the past six quarters. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Adjusted EBITDA rose 15% to $108.7 million, and the adjusted EBITDA margin expanded 143 basis points to 17.2%. Adjusted earnings per share increased 39% year over year to $0.25, aided by both EBITDA growth and a lower share count following repurchases. Chairman and Chief Executive Officer Mark Penn said the company’s digital transformation segment was a principal growth driver, posting 18% organic net revenue growth to $107 million. The segment generated a 30% margin during the quarter, its highest since the merger, according to Greene. → 3 Value ETFs to Consider as Growth Stocks Lag Behind Penn attributed the performance to demand for work combining business strategy, technology, creativity and AI transformation. He said clients are moving away from commoditized IT services and seeking partners that can help redesign consumer communications and workflows around AI. “AI is the tech transformation that we were built for,” Penn said, adding that the company expects the demand to be sustainable over the long term. He said approximately 75% of coding work is now performed agentically, improving efficiency while Stagwell pursues higher-level client assignments. → 5 AI Stocks Are Pulling Back—Which Growth Catalysts Still Look Strongest? Communications organic net revenue increased 12% to $112 million, its strongest second quarter since the merger. Penn said political activity is beginning to contribute to the segment’s growth and should accelerate ahead of November’s midterm elections, while public relations work has also continued to rebound. Other segment results included: Marketing Cloud organic net revenue growth of 4% to $27 million, supported by demand for AI-embedded products and subscription offerings. Marketing Services net revenue of $243 million, up 0.5% organically. Greene said major creative assignments awarded during the quarter are expected to scale in the second half and support stronger growth in 2027. Media and Commerce organic net revenue growth of 1% to $155 million. Geographically, U.S. organic net revenue increased 7.1%, while U.K. organic net revenue rose 13.4%. Stagwell reported $171 million in net new business, its highest level to date and 45% above the prior-year second quarter, Penn said. New assignments included IBM’s creative business, expanded work with Adobe, Visit California, Hershey, Mondelez, Heineken, Haier Europe, Navy Federal Credit Union and Allegiant Air. Penn said the company expects its cumulative year-end new-business pipeline to be about 30% higher than the prior year. He characterized the wins as evidence that clients are seeking a combination of creativity, technology and agility from agencies. The company is also developing an enterprise suite of agentic marketing products, including The Machine, the Knowledge Machine, the Targeting Machine and The Media Machine. Penn said Stagwell had secured $16 million in committed enterprise technology revenue during the first half, with another $16 million in its pipeline. The company remains on track to exceed its initial $25 million annual bookings goal for the products, he said. Stagwell’s Targeting Machine, or SATS, is built on Palantir’s Foundry platform, while the company has also expanded its relationship with Adobe. Penn said the company is adding sales teams to support technology-product distribution alongside its traditional marketing-services sales infrastructure. Greene said Stagwell has implemented about $70 million in annualized savings since launching a cost-reduction program in April 2025 and remains on track for $80 million to $100 million of savings by year-end. Staff costs declined 280 basis points year over year to 60.9% of net revenue, the company’s lowest second-quarter labor ratio in four years. Year-to-date cash flow from operations was $63.7 million, up $9 million, or 16%, from the first half of the prior year. Stagwell expects operating cash flow to improve through the remainder of the year because of business seasonality and anticipated election-related communications activity. The company’s revolver balance was $360 million at quarter-end, with $374 million in unused borrowing capacity. Net leverage stood at 3.04 times, and management said it expects to exit the year with leverage in the mid-two-times range. During the quarter, Stagwell repurchased approximately 5.9 million shares at an average price of $6.22 each. Through the first half, it repurchased about 14.4 million shares for $88 million at an average price of $6.10 per share. Shares outstanding at the end of the second quarter were 244.4 million, down 6.4% from a year earlier. Stagwell maintained its full-year guidance for net revenue growth of 8% to 12%, adjusted EBITDA of $475 million to $525 million, and free-cash-flow conversion of 50% to 60% of adjusted EBITDA. However, the company raised its adjusted EPS outlook to $1.03 to $1.17, primarily reflecting year-to-date share repurchases. Management said growth in the second half is expected to be overwhelmingly organic, led by digital transformation and communications. Penn said Stagwell expects some acquisitions in the second half but does not anticipate any transaction that would be “huge or disruptive.” He said capital allocation will remain balanced among debt reduction, share buybacks, capital expenditures and selective small- to midsize acquisitions. Stagwell Inc is a modern marketing and communications network that partners with global organizations to drive brand growth through data-driven insights and creative solutions. The company operates a diversified portfolio of specialized agencies and technology platforms, offering services that span digital marketing, advertising, public relations, consumer and market research, social media strategy, and commerce consulting. By integrating research, creative, media, and technology under a unified network, Stagwell aims to deliver end-to-end marketing solutions tailored to the evolving needs of clients in sectors such as technology, healthcare, consumer goods, and financial services. Founded in 2015 by long-time political strategist and pollster Mark Penn, Stagwell has expanded organically and through strategic acquisitions to build capabilities across the marketing value chain. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Stagwell Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Stagwell Inc (NASDAQ:STGW) reported its strongest second quarter ever with 10% organic revenue growth and 5% organic net revenue growth. Digital transformation segment saw 18% organic net revenue growth, driven by AI adoption and high-value work. Adjusted EBITDA increased 15% year-over-year to $109 million, with margins expanding 140 basis points to 17.2%. Net new business of $171 million was a record high, winning major accounts like IBM, Hershey, and Mondelez from legacy competitors. Adjusted EPS grew 39% year-over-year to $0.25, supported by strong EBITDA growth and share buybacks. Marketing services segment only achieved 0.5% organic net revenue growth, indicating slower performance in creative assignments. Media and commerce segment grew just 1% organically, lagging behind other segments. Net leverage remains elevated at 3.04 times, though the company targets mid-twos by year-end. Free cash flow conversion is still targeted at 50-60% of adjusted EBITDA, suggesting room for improvement. The company expects minimal M&A activity in 2026, relying heavily on organic growth which may limit diversification. Here are the key highlights from the Stagwell Inc (NASDAQ:STGW) Q2 2026 earnings call, focusing on the most significant Q&A exchanges. Warning! GuruFocus has detected 10 Warning Signs with STGW. Is STGW fairly valued? Test your thesis with our free DCF calculator. Q: Can you talk about what is driving the strong level of growth in digital transformation and if it is sustainable into the back half of 2026 and 2027?A: (Mark Penn, Chairman and CEO) I think it's sustainable for about 10 years. The conversion to AI is the primary driver. Every company that touches the consumer will have to redo how they communicate based on AI, creating an enormous backlog of work for firms like ours that focus on that last mile. We have the largest pipeline in history for these services, and we are getting higher-level assignments while working more efficiently, with about 75% of coding now done identically. Q: Agency peers are talking about a tougher environment for new business. Is Stagwell seeing any shortage of opportunities, and why is the company performing so well in competitive pitches?A: (Mark Penn, Chairman and CEO) We are seeing competitive differences come to the fore. While others have stepped back from creativity, we stepped up with premium creativity powered by AI, which is winning in the marketplace. This is why we won major accounts from legacy players. We have also opened pipelines in government and globally, and our new structure in the UK is resulting in double-digit organic growth. Q: How are you using AI to accelerate revenues and lower costs?A: (Mark Penn, Chairman and CEO) We set out a year and a half ago to infuse AI throughout every process. Our strong internal technology team has been at the forefront of implementing AI across the enterprise. Ryan (CFO) has been applying AI to back-office services, and our engineers are applying agentic coding to make work faster, simpler, and better. This is defining Stagwell as the leading transformer of marketing today. Q: Can you talk about the margin trajectory within the digital transformation business, particularly in the second half and into 2027?A: (Mark Penn, Chairman and CEO) The products we are delivering are becoming more efficient due to our smart use of AI internally. Client demand is high because they need this work done now to save money. Their focus is on getting online as quickly as possible, which supports our margin trajectory. Q: How do you think about capital allocation in the back half of the year, specifically regarding M&A, stock buybacks, and debt paydown?A: (Mark Penn, Chairman and CEO) We did not make many acquisitions in the first half, so there will be some in the second half, but the year will be primarily organic. Our capital allocation will be balanced: we aim to hit a debt ratio in the mid-twos by year-end, continue buybacks, fund CapEx, and do some acquisitions. As our stock value goes up, it becomes even more effective to do certain transactions. Q: How is the political business looking for the back half of the year and looking ahead to 2028?A: (Mark Penn, Chairman and CEO) Political is on track. Midterm elections are typically close in size to the past Presidential election. The day after the midterms, the Presidential race will start, so we expect significant political work in the second half of 2027 with the Presidential primaries. This is going to be a political supercycle unlike anything in modern history. Q: Regarding the enterprise tech products (like the Machine), you mentioned $16 million in committed revenue and a $16 million pipeline. Where are you at in that build, and what are you looking for through the rest of the year?A: (Mark Penn, Chairman and CEO) Our teams are 100% on track. We set a $25 million first-year goal for bookings and are on track to achieve it. We are now building the sales infrastructure to sell these products, which is different from our marketing services sales. This will work collaboratively with our existing client base and then expand to the outside market, and we expect it to really explode next year. Q: What is the strategy for M&A? Will the acquisitions be smaller or bigger?A: (Mark Penn, Chairman and CEO) I don't see anything huge or disruptive at this point. We have a pattern of buying small and mid-sized companies in areas with excellent growth potential that continue our path to global full service. We have also been successfully diversifying into owned media properties and will continue to look at acquisitions in that area. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Stagwell (STGW) came out with quarterly earnings of $0.25 per share, beating the Zacks Consensus Estimate of $0.17 per share. This compares to earnings of $0.17 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +47.06%. A quarter ago, it was expected that this marketing communications company would post earnings of $0.18 per share when it actually produced earnings of $0.17, delivering a surprise of -5.56%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Stagwell, which belongs to the Zacks Advertising and Marketing industry, posted revenues of $786.31 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 5.10%. This compares to year-ago revenues of $706.82 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Stagwell shares have added about 65.2% since the beginning of the year versus the S&P 500's gain of 6.9%. While Stagwell has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Stagwell was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.31 on $811.27 million in revenues for the coming quarter and $1.00 on $3.14 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Advertising and Marketing is currently in the bottom 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Banzai International, Inc. (BNZI), another stock in the same industry, has yet to report results for the quarter ended June 2026. This company is expected to post quarterly loss of $2.92 per share in its upcoming report, which represents a year-over-year change of +95.8%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Banzai International, Inc.'s revenues are expected to be $2.8 million, down 14.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Stagwell Inc. (STGW) : Free Stock Analysis Report Banzai International, Inc. (BNZI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Stagwell (STGW) has drawn fresh attention after reporting Q4 and full year 2025 results, which highlighted its digital transformation and Marketing Cloud segments, alongside a planned US$400 million share repurchase program. See our latest analysis for Stagwell. The Q4 update and share buyback plan come after a strong run in the stock, with a 48.2% year to date share price return and a 68.51% total shareholder return over the past year. This suggests momentum has been building as investors reassess growth prospects and risks. If Stagwell's focus on AI powered marketing has your attention, this could be a good moment to broaden your research and check out 60 profitable AI stocks that aren't just burning cash With the stock up 68.5% over the past year and trading at an intrinsic discount of about 19%, the key question for you is simple: is there still a buying opportunity here, or is the market already pricing in future growth? At a last close of $7.01 versus a most-followed fair value of $6.50, the current price sits above the narrative's central estimate while still leaning on strong growth and margin assumptions. Read the complete narrative. Curious how a company with thin current margins, ambitious growth targets and a lower future P/E expectation still lands near today's price? The full narrative lays out a detailed revenue path, margin expansion story and share count assumptions that sit behind that $6.50 fair value anchor. Result: Fair Value of $6.50 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, the narrative could be upended if high net leverage constrains investment or if clients accelerate shifting marketing work in house, which could pressure revenue and margins. Find out about the key risks to this Stagwell narrative. While the most followed narrative pegs fair value at $6.50, our DCF model points to a future cash flow value of $36.60, implying Stagwell trades at about 81% below that estimate. That is a wide gap. Which set of assumptions do you trust more? To see how those cash flow assumptions are built and stress test them against your own view of the business, Look into how the SWS DCF model arrives at its fair value. Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Stagwell for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 46 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. With mixed signals on value and future prospects, this is a moment to move quickly, review the details yourself, and weigh up 3 key rewards and 3 important warning signs If Stagwell has sharpened your interest, do not stop here. Use the Simply Wall Street Screener to quickly spot other opportunities that match your style. Target dependable income and focus on companies that combine higher yields with resilience using the 10 dividend fortresses. Hunt for quality at a discount by filtering for businesses that look attractively priced on fundamentals with the 46 high quality undervalued stocks. Prioritise stability and sleep easier at night by scanning for companies with stronger finances and lower risk profiles through the 64 resilient stocks with low risk scores. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include STGW. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Management is executing a strategic pivot from traditional marketing services to a platform-based model featuring self-service AI applications and agentic marketing operating systems. Record net new business of $141 million in Q1 was driven by a shift toward large-scale enterprise wins and a 15% growth in the top 100 client base. The Digital Transformation segment remains the primary growth engine, achieving 9% net revenue growth and a 22% two-year organic stack as clients seek measurable ROI through tech integration. Operational efficiency improved through a 110 basis point reduction in payroll as a percent of net revenue, with savings being reinvested into AI engineering and a doubled new business team. Management is addressing historical small-client churn through a new AI-enabled client accountability program, aiming to convert these efficiencies into 2-3 points of organic growth. The company is aggressively utilizing its buyback program, having repurchased 7.3 million shares in Q1, based on management's view that the stock is significantly undervalued at 6x free cash flow. Management expects organic net revenue growth to accelerate to double digits by Q3 and Q4, supported by a record political advocacy super cycle and large creative contract closings. The new Enterprise AI Solutions team is targeting a $25 million sales goal for 2026, with $12 million already booked and expectations for a 'hockey stick' growth trajectory in 2027. Guidance for 2026 assumes a ramp in election-related revenues starting in the second quarter, which is expected to continue growing each quarter thereafter. The company expects to exit 2026 with net leverage in the mid-2s, driven by disciplined cost allocation and a target free cash flow conversion of 50% to 60% of adjusted EBITDA. Strategic expansion into the government sector is expected to add hundreds of millions to the pipeline, leveraging partnerships with Palantir and Deloitte for massive contracts. A strengthening dollar and regional conflicts in the Middle East temporarily muted international growth and delayed one product launch from Q1 to Q2. Deferred acquisition consideration was reduced to $50 million and is expected to be negligible by year-end, signaling a shift in capital allocation toward internal tech and buybacks. The Media and Commerce segment continues to burn off the impact of a significant prior-year client loss, with recovery expected to follow a holiday-weighted seasonal pattern. Management noted that while legacy competitors are seeing shrinkage, Stagwell is positioning itself to disrupt long-standing 'holdco' relationships in CPG and healthcare. Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management reported a shift from legal concerns to urgent demand for AI integration, resulting in 600 new leads from the Adobe Summit alone. The company has already achieved 50% of its first-year sales quota for new AI products within the first few months of the year. Growth is not solely dependent on AI; it is underpinned by several large-scale creative contracts currently in final negotiations and a record-breaking political pipeline. Management expressed high confidence because the necessary clients for the second-half surge are already 'in the bank'. Stagwell has instituted an accountability system where every client, regardless of size, is assigned a specific person responsible for reporting needs into an AI monitoring engine. The goal is to reduce churn by 25%, which management believes could contribute 2 to 3 percentage points to total organic growth. Direct impact is limited to approximately 3% of the business related to Middle East tourism, which management expects to bounce back quickly. Management stated they see no evidence of clients pulling back or making contingency plans due to macro factors, as AI investment remains a 'must-have' priority. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.

Image source: The Motley Fool. Thursday, April 30, 2026 at 8:30 a.m. ET Chairman and Chief Executive Officer — Mark Penn Chief Financial Officer — Ryan Greene Chief Brand and Communications Officer — Lena Petersen Mark Penn: Thank you, Lena. This is a pivotal moment in the Stagwell story as we continue to achieve our vision of extending in services from global full service to platform self-service AI applications. We're hitting major milestones on both ends of that vision while keeping costs under control and increasing our earnings per share. Together, these developments should produce an incredible 2026. First, our net new business is hitting records, and we are now regularly achieving large-scale wins. The first quarter was a record, and our wins are about $80 million ahead of wins last year at this time. We're closing in on 4 new major assignments under final negotiations and we just signed our first 5-year nearly $60 million government contract this week. Second, our new enterprise tech products and sales organization are on track towards hitting the first sales goal of $25 million with $12 million booked, and we are just getting our sales operation in place. Demand for the new products is strong with a growing pipeline. Our Digital Transformation segment continues to lead the way in growth. Third, this quarter is in line with expectations, as indicated on the last call, and we are building towards a record-breaking second half of the year with the combination of new business and the kickoff of an advocacy super cycle. We reiterate guidance and express even further confidence given this quarter's organic net revenue growth is actually the strongest in Q1 in at least 4 years. We expect growth to accelerate to double digits by Q3 and Q4. Revenue grew 8% to $704 million and net revenue grew 4% to $585 million. We saw growth across all 5 of our segments in the first quarter, led by a 9% jump in Digital Transformation. Digging into the Digital Transformation results, the 2-year organic net revenue stack for the segment tells a particularly impressive story with growth of more than 22% in Q1. This continues an improving trend in this metric that we have seen for the last 8 quarters. Given the strong start to the year, we expect the Digital Transformation segment to accelerate to mid-teens growth in the second half. AI and our understanding of how to apply it is a huge tailwind for us. Past weakness in Communications has reversed and the segment grew more than 6%, principally on the backs of new corporate assignments as the political season was not yet underway, but will be in full swing in the last 2 quarters. All advocacy work is now within the single Communications segment, and the companies are diversifying their work for more nonprofits, universities and localized retail marketing. By region, the U.S. led the way this quarter with over 8% organic revenue growth with over 3% organic net revenue growth and double-digit growth in adjusted EBITDA. International efforts outside the U.K. were muted by a strengthening dollar and slowdowns in the Middle East tourism and technology, which we expect to be temporary. Adjusted EBITDA grew 9% year-over-year to $90 million, representing a margin of 15.3%, an improvement of 75 basis points versus last year. This reflects prudent cost controls across the business. Our first quarter labor ratio declined to 63.9%, even as we invested in our go-to-market engine. We are reinvesting these efficiencies in growth to take advantage of the AI opportunities. In the first quarter, we bought back approximately 7.3 million shares. Our shares outstanding at the end of the quarter was down to about 246 million shares, down by about 19 million shares since last April and down about 50 million shares since August 2021. As a result, EPS for the quarter was $0.17, 31% higher than a year ago. Continued improvements in cash management means cash flow from operations improved by $34 million versus the first quarter of last year. This puts us on target to hit $250 million to $300 million in free cash flow with almost no deferred acquisition payments. Acquisitions have been dialed back as we are investing heavily in buybacks and in new technology, as I previously outlined last month. As I also predicted on the last call, we saw a surge in wins to start the year with record-breaking first quarter net new business coming in at $141 million, putting our last 12 months at $486 million. Our winning streak is continuing into this quarter as well with several important wins to be announced shortly. As I mentioned earlier, our government contract effort is also picking up steam and having success. This is adding hundreds of millions of dollars to our pipeline, and we have multiple large pitches coming up. When it makes sense, we are partnering with established players like Deloitte and Palantir on massive contracts. We continue to focus on driving organic growth through larger assignments, previously the domain of our 3 major competitors and reducing the high churn rate among our smaller customers. We have taken 2 major steps to execute that strategy, and we expect it to pay off in 2026 and in raising 2027 estimates. First, we have doubled the size of the new business team, announcing significant new hires, including Nicole Souza as Chief Growth Officer for North America, who brings with her 25 years of experience, most recently at Publicis. Second, to reduce client churn, we've instituted a client accountability program so that every client, no matter what its size has a person responsible for it. We're receiving frequent reports fed into an AI engine that monitors and reports on client needs and trends. We have seen our top 100 clients grow by 15% in size, and we've decreased client churn across the business by more than 10% versus 1Q 2025 as we roll out these programs. As to our emerging Enterprise Services and Software business, we are innovating with the products and driving early sales. In addition to the over $100 million of Marketing Cloud revenue, we are building an additional stream of software and service revenue housed in the Digital Transformation segment based on 3 key products: The Machine, an agentic marketing operating system, which brings together a company's entire marketing stack; SATs, the Stagwell Agentic Targeting system that brings together a secure mix of client and our proprietary data with the power of Palantir's targeting; and Stagwell Search+, a new set of tools for managing search in the world of AI answers. We announced the addition of Michael Twidell to lead our Enterprise AI Solutions team and organize our sales and go-to-market efforts. He is quickly building a team. We are building the most cutting-edge comprehensive agentic marketing system available today. We believe every company will need an agentic marketing operations operating system, or MOOS, as I like to call it, to unite their ever-burgeoning volume of enterprise applications and data. Since officially launching the machine, we have 3 active engagements that are part of the initial $12 million booked, including Con Edison, a well-known electric utility, a division at Microsoft and a soon-to-be announced global spirits brand. We also currently have 9 active opportunities with 2 deep into scoping, the rest spanning industries from public sector to financial services. SATs will be sold both with the machine and individually. It's also in testing with multiple client engagements, including a Fortune 500 client and a global lifestyle accessories brand. Working together with Palantir, we are adding key features that take users from audience identification through to media placement and assessment on an agentic basis. Stagwell Search+, our tool to help brands optimize in AI search and beyond was described by senior Google leaders as "genuinely differentiating," and we are now working regionally with Google industry heads to support client adoption. We're partnering with key leaders, including The Trade Desk, AppLovin and Adobe. Last week, we announced a joint initiative with Adobe called the Creative Intelligence System, which creates agentic personas to surface insights specifically for marketers in the financial sector who use Adobe as their system of record. This is a major pivot to the sales of AI application services and software, and we are now on the verge of bringing it all together, going to market with significant sales and installations this year and the ability to hockey stick it in 2027. Stagwell is on the verge of expanded growth that will carry through '26 into '27 and '28. Leg 1 of that growth is from the political super cycle, which will ramp starting in midyear and then with the presidential race starting the day after the midterms. Expenditures and political efforts have expanded fourfold since 2008, and we believe it can double again. Leg 2 is the unique combination of services and software we are now offering, which is at the sweet spot of what clients need to adopt AI and shift new models of marketing. And leg 3 is our expanded wins of new clients at scale, displacing long-term holdco relationships. We are coming into the CPG and health care spaces with superior talent offerings against hollowed out creative shops, and we are moving to disrupt their long-standing government contract relationships. While aged legacy companies are seeing shrinkage, we continue to grow year after year and have an unlimited growth runway ahead of us. We will continue to diversify the business into new high-touch areas as the business of marketing changes and into AI-based services and software that is a must-have for marketing today. We're growing our top and bottom lines. We're expanding our margins. We're delivering strong free cash flow. We continue to be significantly undervalued no matter how you look at the metrics for a healthy growing company like us at the forefront of its field. How many companies with this profile do you know are trading at 6x free cash flow. That's why we will continue to be aggressive with our buyback. We have hundreds of millions of dollars in our buyback runway. We will use it. With that, I'd like to hand it over to Ryan, who will walk you through some of the financials in more detail. Ryan Greene: Thank you. Good morning, and thank you for joining us. Today, I will share additional information about our first quarter's financial performance and how we are tracking towards our full year goals. Before beginning, I want to reiterate what we discussed on the fourth quarter call. Our first quarter is where we lay the foundation for growth throughout the year. And we go through a cycle of departing clients leaving January 1 and new clients coming on typically from April to June. Results in the quarter were firmly in line with our expectations across all metrics. We expect to deliver accelerating sequential growth in the second quarter and throughout the year. Starting with the top line. Revenue increased 8% year-over-year to $704 million, and net revenue increased 3.6% to $585 million. All 5 segments delivered revenue and net revenue growth during the quarter. Growth was led by Digital Transformation segment with net revenue rising 9% year-over-year to $96.5 million, driven by increasing demand for integrated technology solutions paired with services that deliver measurable ROI in a changing market. The Marketing Cloud grew 5.3% to $26.5 million, driven by demand for our AI-enabled communication technology platforms and research offerings that help clients track sentiment in real time, gain faster insight and more actionable insights into customer behaviors. Some of the other divisions are now selling Marketing Cloud products and retaining the revenue there. One product in the Middle East was pushed to Q2 due to regional conflicts, while BERA, our brand modeling product, grew 28% year-over-year and the Harris Quest family of products grew 19%. The new enterprise software products are not accounted for in the Marketing Cloud, but are in the Digital Transformation segment. Media and Commerce continued its rebound, delivering 2.3% net revenue growth to $149.5 million. Performance was driven by improving new business momentum and expanding relationships as clients increasingly lean into the segment's integrated media, creative and loyalty capabilities. Continued investment in media technology and AI-enabled platforms, combined with disciplined cost management supports stronger operating leverage across the segment. Marketing Services maintained its momentum despite elevated prior year comparables, growing 1.1% to $217.6 million. Performance was led by our creative and research agencies and our centralized production group nearly doubled net revenue as we continue to bring more production in-house. And finally, Communications grew 6.4% year-over-year to $96.8 million, largely driven by new corporate assignments as our communication firms deliver their product lines to undertake more localized marketing for retailers and other outlets. We expect election-related revenues to ramp up in the second quarter and to continue to grow each quarter thereafter. As we grew to our top line, we continue to take steps to manage our costs. Payroll as a percent of net revenue declined by 110 basis points year-over-year to 63.9%, while G&A as a percent of net revenue declined by approximately 50 basis points to 19.6%. In the first quarter, we expanded the rollout of tech deployment through our businesses in anticipation of actions, actioning the balance of the cost savings we announced last year. The total action savings since April last year amount to $54 million, firmly on track to achieve the $80 million to $100 million that we previously outlined with these savings flowing through the P&L during 2026 and fully reflected in 2027. These improvements were partially offset by purposeful actions to strengthen our go-to-market expertise through expanding our new business team, which we aim to double in 2026 and Marketing Cloud sales force. Additionally, we increased our investment in our AI and technology capabilities. This includes OpEx investments into our tech products, including the machine and our Palantir partnership as well as bringing in further experts to strengthen our technical expertise in AI and data. Adjusted EBITDA in the first quarter was $89.7 million, representing a margin of 15.3%. This reflects year-over-year growth of 9% and margin expansion of 75 basis points. This improvement in adjusted EBITDA, together with the impact of share repurchases I will discuss shortly, drove adjusted EPS of $0.17, a 31% increase versus the first quarter last year. Cash management continues to be a core focus for Stagwell, and we delivered further progress early in the year. Cash flow from operations improved by $34 million versus first quarter last year, driven primarily by stronger working capital execution. That improvement translated into an $18 million year-over-year increase in free cash flow within the quarter, keeping us firmly on track to achieve our full year free cash flow conversion target of 50% to 60% of adjusted EBITDA. These improvements in cash flow reduced our revolver balance at quarter end to $350 million, a $25 million or approximately 7% reduction versus the first quarter of 2025. Lower net debt and year-over-year growth in adjusted EBITDA drove a 0.17 turn improvement in our net leverage, bringing leverage down to 3.11x. Our continued progress on leverage and cash has been reflected in recent ratings actions with Moody's reaffirming our B1 rating and revising our outlook to positive in late March. We remain on track to exit 2026 with net leverage in the mid-2s, reflecting the combination of our growing adjusted EBITDA, disciplined cost allocation and improving free cash flow generation. Turning to capital allocation. We repurchased approximately 7.3 million shares during the quarter at an average price of $6.16 representing approximately $45 million of deployment. We continue to invest in our technology platforms, including the machine, our partnership with Palantir and the Marketing Cloud offerings. Capital expenditures and capitalized software totaled $33 million in the first quarter, and we continue to expect full year investment levels to be consistent with 2025. As Mark noted, the momentum behind these products supports this level of investment, and we expect them to begin driving growth across the segment in the second half of the year. Deferred acquisition consideration totaled approximately $50 million at quarter end, down roughly $43 million versus prior year period. As previously noted, we expect deferred acquisition consideration to be negligible by year-end. First quarter results, coupled with excellent new business trends that Mark highlighted, give us confidence in our full year guidance of total net revenue growth of 8% to 12%, adjusted EBITDA of $475 million to $525 million and free cash flow conversion of 50% to 60% and adjusted earnings per share of $0.98 to $1.12. Thank you, and I will turn it back over to Lena for questions. Lena Petersen: [Operator Instructions] Let's start with a question from Steve at Wells Fargo. Digital Transformation continues to track well. Can you talk about the underlying trends here in terms of new customers, expansion with existing customers and also speak to what kinds of projects we're working on in a world with far more AI adoption in marketing services? Ryan Greene: I think we're finding that there is tremendous demand out there. Now we've come from the stage of what's AI; "Oh my God, what's legal say about AI"; to "I better have AI." And I think that we're seeing with the machine, like lots of pitches, same thing with the SaaS product. You see that we're getting big name customers. We're going first, obviously, to existing customers and offering this. But we just went to the Adobe Summit, and we got over 600 leads, right, and that kind of tremendous interest in the product. So I think the answer to your question is really, people want to put AI into their marketing. We've got a full suite of agentic tools here. We're going to existing customers first, but we're really out -- we've just organized our sales force. We just went to Adobe Summit, picked up 600 leads. And I think that's how this thing is going really about as well as I could expect. And we've gotten 50% of our first year quota really in the first couple of months. Lena Petersen: Great. So Steve has one more question, which is, I think last year, you cycled off of a client loss that dragged Media segment down. As we look into 2026, what's your outlook for media? And how should we expect it to trend throughout the year? Mark Penn: Yes. I mean we're still in the Media burning off from the Q1 H&R Block client that was there. So that kind of is fully out. And so that means our -- we don't have somebody else with a big Q1. So we think that the media stuff comes later in the year. I think right now, we run really strong. If you look, particularly GALE has been out there winning really significant contract after contracts. I think that, that's going to be probably the biggest area of kind of Media growth that we -- that I see coming down the pike. We, of course, have given now -- we have a new head of the entire division, and he's been reorganizing the media. We're adding the technology. So our media is going to be more holiday pattern. Our political is going to be more holiday -- more or less holiday season pattern as well. And I think I see us growing across the year. And I think you're going to particularly see that pattern, both in the whole company and with media. Lena Petersen: Okay. We've got a question from Mark at Benchmark. Your guidance implies an acceleration in the second half of the year. Could you discuss how much the second half acceleration is dependent on AI product scaling versus advocacy tailwinds and existing client expansion? Mark Penn: I think it's not dependent as much on AI scaling as it is on -- number one, we know that a number of large-scale creative contracts are closing. We know that our pipeline for general digital transformation work is really about as strong as we've ever seen that pipeline. And it is also -- and the third element is the political season, which really, again, promises to be another record political season. I think people -- I've never heard of people talking about midterms 6 months out like they were tomorrow. So I think those 3 elements when we started out, say, what gives us increased confidence? Well, we just won the biggest government contract. We know that we're closing on 3 or 4 other assignments now that are in final contracting and signing stage, which are mixed across Creative and Media. We know the political super cycle is coming, and we already have the clients in the bank. Lena Petersen: So a question came in asking for you to elaborate on the comments about advocacy agencies and specifically seeing how they're seeing more work from corporate rather than political clients? Mark Penn: Yes. I think that in the long term here, I ran originally where you recall an advocacy, and we were always diversifying by the end of it, Microsoft was my biggest client. And so I think we're seeing those -- all of those companies now taking more public affairs, more particularly suited to local work around retail establishments in communities. We're seeing those kinds of assignments. We're seeing more nonprofits, universities, hospitals, those kinds of clients that really work well as they begin to really diversify. Remember, we've taken the whole Communications segment now and put it together into a single unit under a single manager. Lena Petersen: Excellent. So turning to new business. Laura at Needham was asking, could you dig a little deeper into the record net new business quarter? Can you talk about the areas where Stagwell is seeing strength? Or what verticals are driving the improvement in pipeline? And is the mix of your new clients changing? What are the margins on new clients versus historical client base? Mark Penn: Okay. So I think the -- in terms of new clients, I think digital transformation and creative are the 2 spots where we are seeing really strong flood of new business. I think that we're also -- as you can see, we're getting out there with the new products. But in terms of what I call the regular pitch flow, when I look at that and I look at the wins and the wins are significantly ahead of what we've ever seen, and so I think that's kind of where the new ones. I think in terms of margin for the new clients, I think those margins are at or better than the previous. I think that as we scale up to bigger clients, we are not finding that we have -- that the margin is going to be reduced on those clients. It's really quite the opposite. We have a lot of smaller, lower-margin clients that are sort of cycling out of the system. And just in terms of the fact that our longevity with larger clients is 5x our longevity with smaller clients, just what you spend on marketing and remarketing and getting those smaller clients, just taking that overhead out gives them a higher margin. Lena Petersen: So we have a number of questions coming in about the improvements in churn we're seeing in the business. Could you discuss what improvements in churn might look like through the rest of the year? And what impact we might -- that might have on our top line? Mark Penn: Yes. Look, our goal is to cut the churn by about 25% right? We've seen -- we've seen a change already as we've told kind of everybody to focus on it. We're putting in place the system, what I call the accountability system where every single client, no matter how small, we'll have someone responsible for it, has to report on it. Look, many of these are small projects. We don't count small projects, by the way, under $500,000 in net new business. But -- so we'll separate out the small projects from the clients that should grow, and we're really focused. But our goal, if we're successful, we could get 2 or 3 points of organic growth out of that system. I think we are trying a dual-track approach, double where we've been successful, obviously, in the net new business, put a real focus on trying to mitigate what's been taking us down, which is small client churn. And those 2 together, I think, are key factors here in improving organic growth over the next -- over this year and permanently. Lena Petersen: Okay. A question for Ryan. Could you talk about the key drivers of the 30% plus improvement in adjusted EPS this quarter? Ryan Greene: Yes, sure. So it's really a function of 2 things. We have seen significant growth in our adjusted EBITDA, which has increased our numerator, but we also have been aggressive with our share buyback, purchasing 7.3 million shares in the quarter for about $45 million. And so we lowered the denominator with us realizing the stock has been undervalued. We've got aggressive, and we're seeing the reflect of that in our adjusted EPS growing 31%. Lena Petersen: Great. I think we have time for one more question from Jeff at B. Riley. He's asking a question about the macro. What are you hearing from your client base regarding if and how they might alter their marketing plans as a result of the Middle East conflict, oil prices or headwinds and the macroeconomic impact that could materialize if the conflict is prolonged? And what assumptions are you making about potential macro impact included in your guidance for 2026? Mark Penn: Well, look, I think the only direct impact on us is Mid East tourism is not exactly the flourishing at the moment. We expect, though, when this is over, it will bounce back quickly and that a lot of these clients will then -- they will be like post pandemic, but that is -- but really only about 3% of our business is out there, but it is -- but that is some impact on us. We are not right now, as you can see, as the stock market continues, we don't see clients making contingency plans about this. We don't see clients pulling back about this. We don't see clients altering their plans right now. I think for those in America right now, remember, gasoline prices or oil prices were above $100 a barrel for 3.5 years of the Obama administration, parts of the Biden administration. This is not what we're -- this is not like a pandemic, massive pullback. We're just not seeing that right now. And we're -- remember, people are going to pretty much lock their holiday plans in the next 2 or 3 months. So there's not a lot of time here for change. We're seeing, in fact, tremendous investment in AI, tremendous focus on the fact that every company needs to redo its connection with AI. And we don't see any pullback from that whatsoever. And that and the political sphere, which is going to be, I think, again, a very strong season, no matter what happens in the Mid East, I think those 2 basic trends, which are the most important for us as a company are really strong and intact for this year. Lena Petersen: Okay. Our final question is a question from Jason. And what have you learned about the opportunities in the government sector over the past year? And how do you think the opportunity for Stagwell has changed as you've been engaged in these contract discussions? Mark Penn: Well, I set that out as an initiative that I knew would take time. I think that we've moved a long way in the initiative. As I say, you should see in the next 2 weeks, a formal announcement of the contract I alluded to, which is a real breakthrough. We've picked up 2 or 3 other smaller government-related contracts and assignments. But now we're really ready with the team, the accounting, the structure in order to bid on the largest contracts like the post office and the Navy to bring in good partners to, because these are massive contracts and to really to compete. And for the first time, I think, for some of these agencies to have a brand-new competitor. And so far, I can say from the ones that we've won or just about to win, that has played out pretty well for us. Lena Petersen: On that note, that was our last question. Thank you to everyone for joining us. We'll see you next quarter. Before you buy stock in Stagwell, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Stagwell wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $504,832!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,223,471!* Now, it’s worth noting Stock Advisor’s total average return is 971% — a market-crushing outperformance compared to 202% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 1, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Stagwell (STGW) Q1 2026 Earnings Transcript was originally published by The Motley Fool

Stagwell reported a record $141 million in net new business in Q1 (LTM $486 million), is closing multiple large assignments including a nearly $60 million five‑year government contract, and is prioritizing bigger wins while cutting churn. The company’s AI and enterprise product effort is gaining early traction, with $12 million booked toward a $25 million first‑year sales goal for offerings like The Machine, SATS and Stagwell Search+, supported by partnerships with Palantir, Google and Adobe. Financials and capital allocation improved: revenue rose 8% to $704 million, adjusted EBITDA increased ~9% to about $90 million with margins up 75 bps, Stagwell repurchased ~7.3 million shares for roughly $45 million, boosted free cash flow, lowered net leverage to 3.11x, and reiterated full‑year guidance. Interested in Stagwell Inc.? Here are five stocks we like better. Stagwell (NASDAQ:STGW) reported first-quarter 2026 results that management said were “firmly in line with our expectations,” while emphasizing a strong start in net new business and continued investment in AI-enabled products and sales capabilities. Chairman and CEO Mark Penn said the company is “hitting major milestones” in its effort to expand from full-service marketing offerings into “platform self-service AI applications,” while CFO Ryan Greene highlighted cost controls, margin expansion, and improved cash flow. Penn said the company’s net new business hit a record in the first quarter, totaling $141 million and bringing the last 12 months to $486 million. He added that wins were about $80 million ahead of the same point last year and that the company was “closing in on four new major assignments under final negotiations.” Penn also said Stagwell signed its “first five-year, nearly $60 million government contract” during the week of the call, with a formal announcement expected within two weeks. → Corning Beats Q1 Estimates but Drops 9% on Guidance Miss Management described a strategy focused on winning larger assignments and reducing churn among smaller clients. Penn said Stagwell doubled the size of its new business team and announced several hires, including Nicole Souza as Chief Growth Officer for North America. He also pointed to a “client accountability program” designed to ensure every client has an owner and to use AI monitoring tools to track client needs and trends. According to Penn, the company’s top 100 clients grew 15% in size and client churn declined by more than 10% versus the first quarter of 2025 as the programs have rolled out. In response to an analyst question on new business, Penn said digital transformation and creative were the strongest areas. He also said margins on new clients were “at or better than the previous,” arguing that as Stagwell moves toward larger clients, margin pressure has not increased and that smaller, lower-margin clients were “cycling out of the system.” → Is Oracle Undervalued as Cloud Growth Accelerates? Penn positioned AI adoption as a tailwind, saying clients have moved from asking what AI is and what legal teams say about it to a mindset of “I better have AI.” He said Stagwell’s new enterprise tech products and sales organization were tracking toward an initial sales goal of $25 million, with $12 million booked. The company described three key products housed in the Digital Transformation segment: The Machine, which Penn described as an “agentic marketing operations operating system” that brings together a company’s marketing stack. SATS (Stagwell Agentic Targeting System), which combines client and proprietary data with “the power of Palantir’s targeting.” Stagwell Search+, tools for managing search “in the world of AI answers.” Penn said three active engagements for The Machine were included in the $12 million booked: Con Edison, a division at Microsoft, and a “soon-to-be-announced Global Spirits brand.” He added that Stagwell had nine active opportunities, with two deep in scoping, spanning industries including public sector and financial services. → The $880M Bet to Survive Real Estate's Reset On demand generation, Penn said Stagwell attended the Adobe Summit and collected “over 600 leads,” adding that the company had achieved “50% of our first year quota” in the first couple months after organizing its sales force. He also said Search+ was described by senior Google leaders as “genuinely differentiating,” and the company is working with Google industry heads on adoption. Penn also noted partnerships with The Trade Desk, AppLovin, and Adobe, including a recently announced initiative with Adobe called the Creative Intelligence System for financial-sector marketers using Adobe as their system of record. For the first quarter, Stagwell reported revenue growth of 8% to $704 million and net revenue growth of about 3.6% to $585 million. Penn said net revenue grew 4% and noted growth across all five segments, led by Digital Transformation. Greene said Digital Transformation net revenue rose 9% year-over-year to $96.5 million, driven by demand for integrated technology solutions paired with services. The Marketing Cloud grew 5.3% to $26.5 million, reflecting demand for AI-enabled communications platforms and research offerings; Greene noted that one Middle East product shifted into the second quarter due to regional conflicts. He also cited growth in specific products, including BERA (up 28%) and the Harris Quest family of products (up 19%). Other segment results cited by management included: Media and Commerce: net revenue growth of 2.3% to $149.5 million, which Greene attributed to improving new business momentum and expanded relationships. Marketing Services: net revenue growth of 1.1% to $217.6 million, led by creative and research agencies; Greene said the centralized production group “nearly doubled” net revenue as more production moved in-house. Communications: net revenue growth of 6.4% to $96.8 million, driven largely by new corporate assignments, with election-related revenue expected to ramp beginning in the second quarter, according to Greene. Adjusted EBITDA increased about 9% to $89.7 million (Penn cited $90 million), and Stagwell posted an adjusted EBITDA margin of 15.3%, up 75 basis points year-over-year. Greene said payroll as a percentage of net revenue declined 110 basis points to 63.9%, while G&A declined about 50 basis points to 19.6%. Stagwell repurchased approximately 7.3 million shares in the quarter for roughly $45 million at an average price of $6.16, Greene said. Penn said shares outstanding ended the quarter at about 246 million, down about 19 million since last April and down about 50 million since August 2021. Adjusted EPS was $0.17, up 31% from the prior-year quarter. Greene attributed the increase to both higher adjusted EBITDA and the reduced share count from buybacks. Greene said cash flow from operations improved by $34 million versus the first quarter of last year due mainly to better working capital execution, contributing to an $18 million year-over-year increase in free cash flow for the quarter. The company ended the quarter with $350 million on its revolver, down $25 million from the year-ago period, and net leverage improved to 3.11 times, a 0.17 turn improvement. Greene also noted that Moody’s reaffirmed Stagwell’s B1 rating and revised its outlook to positive in late March. Management reiterated full-year guidance for total net revenue growth of 8% to 12%, adjusted EBITDA of $475 million to $525 million, free cash flow conversion of 50% to 60% of adjusted EBITDA, and adjusted EPS of $0.98 to $1.12. Asked about what drives expected second-half acceleration, Penn said it was less dependent on AI product scaling than on large creative contracts nearing completion, a strong digital transformation pipeline, and what he called a “political super cycle.” He said Stagwell expects growth to accelerate to double digits by the third and fourth quarters and said the company already has political clients “in the bank.” On the macro environment, Penn said the only direct impact the company was seeing related to Middle East tourism, which he characterized as about 3% of Stagwell’s business. He said Stagwell was not currently seeing clients make contingency plans, pull back, or alter marketing plans due to the conflict, and he emphasized continued investment in AI as a major theme. Regarding government opportunities, Penn said Stagwell has built the team, accounting, and structure needed to compete for larger contracts and has begun partnering with firms such as Deloitte and Palantir on “massive contracts.” He described the newly won government contract as a “real breakthrough” and said the company is preparing to bid for large opportunities such as the post office and the Navy. Stagwell Inc is a modern marketing and communications network that partners with global organizations to drive brand growth through data-driven insights and creative solutions. The company operates a diversified portfolio of specialized agencies and technology platforms, offering services that span digital marketing, advertising, public relations, consumer and market research, social media strategy, and commerce consulting. By integrating research, creative, media, and technology under a unified network, Stagwell aims to deliver end-to-end marketing solutions tailored to the evolving needs of clients in sectors such as technology, healthcare, consumer goods, and financial services. Founded in 2015 by long-time political strategist and pollster Mark Penn, Stagwell has expanded organically and through strategic acquisitions to build capabilities across the marketing value chain. The article "Stagwell Q1 Earnings Call Highlights" was originally published by MarketBeat.