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Income Taxes | 6 Months Ended
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Jun. 30, 2025
Income Tax Disclosure [Abstract] |
Income Tax Disclosure | 14. Income Taxes Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in interim periods. The Company had an income tax expense for the three months ended June 30, 2025 of $2.7 million (on a pre-tax loss of $2.0 million resulting in an effective tax rate of (134.9)%) primarily due to the tax benefit of the small pre-tax loss being more than offset by the current losses subject to valuation allowance, withholding taxes recorded in the period, and a shortfall in deductions for share based compensation expense vested during the period. The Company had an income tax expense for the six months ended June 30, 2025 of $4.4 million (on a pre-tax loss of $5.6 million resulting in an effective tax rate of (78.7)%) primarily due to the tax benefit of the pre-tax loss being more than offset by the current losses subject to valuation allowance, withholding taxes recorded in the period, and a shortfall in deductions for share based compensation expense vested during the period. The Company had income tax expense for the three months ended June 30, 2024 of $1.2 million (on pre-tax loss of $2.8 million resulting in an effective tax rate of (41.8)%) primarily due to the tax benefit of the small pre-tax loss and a small windfall in deductions for share based compensation expense vested during the period, being more than offset by the current losses subject to valuation allowance. The Company had income tax expense for the six months ended June 30, 2024 of $3.8 million (on pre-tax loss of $1.4 million resulting in an effective tax rate of (263.3)%) primarily due to the tax benefit of the nominal pre-tax profit being more than offset by the current losses subject to valuation allowance and a shortfall in deductions for share based compensation expense vested during the period. Subsequent to the end of the second quarter of 2025, on July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted by the U.S. government. OBBBA amends U.S. tax law including provision related to bonus depreciation, research and development, and interest deduction limitations. The Company is evaluating the impact of the OBBBA on its consolidated financial statements. We do not expect the OBBBA to have a material impact on our estimated annual effective tax rate in 2025. The OECD (Organisation for Economic Co-operation and Development) has proposed a global minimum tax of 15% of reported profits (Pillar 2) that has been agreed upon in principle by over 140 countries. Many countries have taken steps to incorporate Pillar 2 model rule concepts into their domestic laws. Although the model rules provide a framework for applying the minimum tax, countries may enact Pillar 2 slightly differently than the model rules and on different timelines and may adjust domestic tax incentives in response to Pillar 2. Accordingly, we have included an estimate of the impact of Pillar 2 in our estimated annual effective tax rate and continue to evaluate the potential consequences of Pillar 2 on our longer-term financial position. On June 28, 2025, The U.S. Treasury Department announced that an understanding of accepted principles had been reached with other members of the G-7 that would implement a “side-by-side” system that would fully exclude U.S. parented groups from the Income Inclusion Rule (“IIR”) and Undertaxed Profits Rule (“UTPR”) in respect of both their domestic and foreign profits in recognition of the existing U.S. minimum tax rules to which such U.S. parented groups are subject. If this understanding is implemented for some or all jurisdictions that have enacted Pillar 2 rules, we will update our estimate of the impact of Pillar 2 in our estimated annual effective tax rate Although it is reasonably possible that a change in the balance of unrecognized tax benefits may occur within the next 12 months, based on the information currently available, we do not expect any change to be material to our unaudited consolidated financial statements. Tax Receivables Agreement In connection with the TRA, the Company is required to make cash payments to Stagwell Media equal to 85% of certain U.S. federal, state and local income tax or franchise tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of OpCo’s assets resulting from exchanges of Paired Units (defined in Note 11) for shares of Class A Common Stock or cash, as applicable, and (ii) certain other tax benefits related to us making payments under the TRA. The TRA liability is an estimate and actual amounts payable under the TRA could differ from this estimate. Effective April 4, 2025, all Paired Units were exchanged for Class A Shares in the Class C Exchange (see Note 11). As a result of the Class C Exchange, the Company recorded an increase to deferred tax asset of $204.7 million and an increase to TRA liability of $200.1 million. As of June 30, 2025, the Company has recorded a TRA liability of $225.7 million, and an associated deferred tax asset, net of amortization, of $259.2 million, in connection with the exchange of Paired Units and the projected obligations under the TRA.

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