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Segment Information | 9 Months Ended
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Sep. 30, 2024
Segment Reporting [Abstract] |
Segment Information | 16. Segment Information The Company determines an operating segment if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has discrete financial information, and is (iii) regularly reviewed by the Chief Operating Decision Maker (“CODM”), who is Mark Penn, Chief Executive Officer and Chairman, to make decisions regarding resource allocation for the segment and assess its performance. Once operating segments are identified, the Company performs an analysis to determine if aggregation of operating segments is applicable. This determination is based upon a quantitative analysis of the expected and historic average long-term profitability for each operating segment, together with a qualitative assessment to determine if operating segments have similar operating characteristics. The CODM uses Adjusted EBITDA (defined below) as a key metric, to evaluate the operating and financial performance of a segment, identify trends affecting the segments, develop projections and make strategic business decisions. Adjusted EBITDA is defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items. The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. Periods presented prior to the first quarter of 2024 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments. The Company has three reportable segments as follows: “Integrated Agencies Network,” “Brand Performance Network” and the “Communications Network.” In addition, the Company combines and discloses operating segments that do not meet the aggregation criteria, and includes the elimination of certain intercompany services, as “All Other.” This segment also includes the elimination of intercompany revenue. The Company also reports corporate expenses, as further detailed below, as “Corporate.” All segments follow the same basis of presentation and accounting policies as those described throughout the Notes included herein. •The Integrated Agencies Network includes five operating segments: the Anomaly Alliance, Constellation, the Doner Partner Network, Code and Theory, and National Research Group. The operating segments offer an array of complementary services spanning our core capabilities of Digital Transformation, Performance Media & Data, Consumer Insights & Strategy, Stagwell Marketing Cloud Group and Creativity & Communications. The Brands included in the operating segments that comprise the Integrated Agencies Network reportable segment are as follows: Anomaly Alliance (Anomaly), Constellation (72andSunny, Crispin LLC, Colle McVoy, Hunter, Redscout, Team Enterprises, Harris Insights, Movers and Shakers, and Team Epiphany), the Doner Partner Network (Doner, KWT Global, Harris X, Veritas, Doner North, and Yamamoto), Code and Theory (Code and Theory, Instrument, Left Field Labs), and National Research Group. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of clients and the methods used to provide services; and (iii) the extent to which they may be impacted by global economic and geopolitical risks. In addition, these operating segments may occasionally compete with each other for new business or have business move between them. •The Brand Performance Network (“BPN”) is comprised of a single operating segment. BPN includes a unified media and data management structure with omnichannel media placement, creative media consulting, influencer and business-to-business marketing capabilities. Our Brands in this segment aim to provide scaled creative performance through developing and executing sophisticated omnichannel campaign strategies leveraging significant amounts of consumer data. BPN’s Brands provide media solutions such as audience analysis, media planning, and buying across a range of digital and traditional platforms (out-of-home, paid search, social media, lead generation, programmatic, television, broadcast, among others) and includes multichannel Brands Assembly, Brand New Galaxy, Vitro, Forsman & Bodenfors, Goodstuff, Bruce Mau, digital creative & transformation consultancy Gale, B2B specialist Multiview, CX specialists Kenna, and travel media experts Ink. •The Communications Network reportable segment is comprised of a single operating segment, our specialist network that provides advocacy, strategic corporate communications, investor relations, public relations, online fundraising and other services to both corporations and political and advocacy organizations and consists of our Allison brands, SKDK brands, and Targeted Victory brands. •All Other consists of the Company’s digital innovation group and Stagwell Marketing Cloud Group, including Maru, Epicenter and Leaders, and products such as ARound, PRophet and SmartAssets. •Corporate consists of corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, and (iv) certain other professional fees managed by the corporate office. Additional expenses managed by the corporate office that are directly related to the operating segments are allocated to the appropriate reportable segment and the All Other category.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
| (dollars in thousands) |  |
Revenue: |
Integrated Agencies Network | $ | 389,668 |  |  | $ | 358,069 |  |  | $ | 1,127,520 |  |  | $ | 1,064,909 |  |  |
Brand Performance Network | 172,349 |  |  | 164,073 |  |  | 563,556 |  |  | 542,734 |  |  |
Communications Network | 135,980 |  |  | 82,505 |  |  | 335,296 |  |  | 230,261 |  |  |
All Other | 13,284 |  |  | 12,926 |  |  | 26,136 |  |  | 34,378 |  |  |
Total Revenue | $ | 711,281 |  |  | $ | 617,573 |  |  | $ | 2,052,508 |  |  | $ | 1,872,282 |  |  |
Adjusted EBITDA: |  |  |  |  |  |  |  |  |
Integrated Agencies Network | $ | 77,906 |  |  | $ | 76,137 |  |  | $ | 206,009 |  |  | $ | 211,102 |  |  |
Brand Performance Network | 19,106 |  |  | 24,233 |  |  | 64,306 |  |  | 67,662 |  |  |
Communications Network | 34,118 |  |  | 17,294 |  |  | 75,675 |  |  | 35,754 |  |  |
All Other | (4,450) |  |  | (4,005) |  |  | (11,585) |  |  | (10,166) |  |  |
Corporate | (15,511) |  |  | (11,890) |  |  | (46,817) |  |  | (39,193) |  |  |
Total Adjusted EBITDA | $ | 111,169 |  |  | $ | 101,769 |  |  | $ | 287,588 |  |  | $ | 265,159 |  |  |
Depreciation and amortization | $ | (36,044) |  |  | $ | (38,830) |  |  | $ | (112,881) |  |  | $ | (107,795) |  |  |
Impairment and other losses | — |  |  | — |  |  | (1,715) |  |  | (10,562) |  |  |
Stock-based compensation | (16,935) |  |  | (12,065) |  |  | (38,926) |  |  | (34,615) |  |  |
Deferred acquisition consideration | (560) |  |  | (6,401) |  |  | (7,950) |  |  | (10,881) |  |  |
Other items, net | (15,851) |  |  | (10,731) |  |  | (36,576) |  |  | (30,069) |  |  |
Total Operating Income | $ | 41,779 |  |  | $ | 33,742 |  |  | $ | 89,540 |  |  | $ | 71,237 |  |  |
Other Income (expenses): |  |  |  |  |  |  |  |  |
Interest expense, net | $ | (23,781) |  |  | $ | (25,886) |  |  | $ | (68,279) |  |  | $ | (67,755) |  |  |
Foreign exchange, net | 1,312 |  |  | (140) |  |  | (2,301) |  |  | (2,288) |  |  |
Other, net | 249 |  |  | (271) |  |  | (825) |  |  | (467) |  |  |
Income before income taxes and equity in earnings of non-consolidated affiliates | 19,559 |  |  | 7,445 |  |  | 18,135 |  |  | 727 |  |  |
Income tax expense | 5,691 |  |  | 4,324 |  |  | 9,441 |  |  | 4,997 |  |  |
Income (loss) before equity in earnings of non-consolidated affiliates | 13,868 |  |  | 3,121 |  |  | 8,694 |  |  | (4,270) |  |  |
Equity in income (loss) of non-consolidated affiliates | (4) |  |  | (4) |  |  | 503 |  |  | (447) |  |  |
Net income (loss) | 13,864 |  |  | 3,117 |  |  | 9,197 |  |  | (4,717) |  |  |
Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests | (10,593) |  |  | (2,464) |  |  | (10,173) |  |  | 3,565 |  |  |
Net income (loss) attributable to Stagwell Inc. common shareholders | $ | 3,271 |  |  | $ | 653 |  |  | $ | (976) |  |  | $ | (1,152) |  |  |
The Company’s long-lived assets (i.e., Right-of-use-lease assets-operating leases and Fixed asset, net) was $301.0 million ($238.5 million in the United States and $62.4 million in all other countries) as of September 30, 2024 and $332.1 million ($268.5 million in the United States and $63.6 million in all other countries) as of December 31, 2023. The Company’s CODM does not use segment assets to allocate resources or to assess performance of the segments and therefore, total segment assets have not been disclosed. See Note 4 of the Notes included herein for a summary of the Company’s revenue by geographic region for the three and nine months ended September 30, 2024 and 2023.

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