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Income Taxes | 9 Months Ended
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Sep. 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 September 30, 2025 of $9.6 million (on a pre-tax income of $33.3 million resulting in an effective tax rate of 28.7%) compared to income tax expense of $5.7 million (on pre-tax income of $19.6 million resulting in an effective tax rate of 29.1%) for the three months ended September 30, 2024. The difference in the effective tax rate of 28.7% in the three months ended September 30, 2025, as compared to 29.1% in the three months ended September 30, 2024, was primarily due to a reduction in interest related to uncertain tax positions and reduction in shortfall of deductions for share based compensation expense vested during the period, offset by an increase in current losses subject to valuation allowance. The Company had an income tax expense for the nine months ended September 30, 2025 of $14.0 million (on a pre-tax income of $27.7 million resulting in an effective tax rate of 50.3%) compared to income tax expense of $9.4 million (on pre-tax income of $18.1 million resulting in an effective tax rate of 52.1%) for the nine months ended September 30, 2024. The difference in the effective tax rate of 50.3% in the nine months ended September 30, 2025, as compared to 52.1% in the nine months ended September 30, 2024, was primarily due to a reduction in interest related to uncertain tax positions and a reduction in shortfall of deductions for share based compensation expense vested during the period, offset by a decrease in the benefit of the disregarded entity structure due to the full exchange in April 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. This has an immaterial impact to our estimated annual effective tax rate in the current quarter. 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. 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 Company’s Tax Receivable Agreement (“TRA”), the Company was 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 the assets of Stagwell Global LLC, the Company’s only operating subsidiary (“OpCo”) resulting from exchanges of Paired Units (each share of Class C Common Stock was paired with a corresponding common unit of OpCo and each such paired share of Class C Common Stock and common unit of OpCo, a “Paired Unit”), 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 $203.4 million and an increase to TRA liability of $200.3 million. As of September 30, 2025, the Company has recorded a TRA liability of $225.9 million, and an associated deferred tax asset, net of amortization, of $256.7 million, in connection with the exchange of Paired Units and the projected obligations under the TRA.

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