STGW · Stagwell Inc.

Stagwell Inc. delivered Q1 2026 results with revenue of $704 million, reflecting 8% year-over-year growth driven by contributions across segments, particularly Digital Transformation which grew net revenue 9% to $97 million and achieved a two-year organic growth stack of 22%. Total net revenue increased 4% to $585 million, aligning with budget, supported by organic growth of 1.6%, net acquisitions of $8.8 million, and a $7.1 million foreign currency tailwind. Despite GAAP operating income declining to $9.6 million from $18.3 million due to higher expenses, Adjusted EBITDA rose 9% to $90 million, or 15% of net revenue, reflecting cost controls in staff and administrative expenses amid investments in AI and growth initiatives. The GAAP net loss attributable to common shareholders widened to $13 million from $3 million, with diluted EPS at $(0.05), but adjusted diluted EPS improved 31% to $0.17, aided by share repurchases reducing the share count to under 250 million. Record net new business of $141 million in Q1, bringing LTM to $486 million, underscores strong pipeline momentum, including first government contracts and expansions with clients like Adobe. Cash from operations improved markedly to $(26) million from $(60) million, with financing activities providing $69 million net inflows primarily from revolver activity. Balance sheet shows cash up to $115 million, long-term debt at $1.44 billion. Management, led by CEO Mark Penn, highlighted acceleration in Digital Transformation via AI agentic applications and client churn reduction over 10% YoY through AI-powered accountability. CFO Ryan Greene noted cost discipline enabling EBITDA expansion and positive ratings outlook. Full-year guidance remains unchanged at 8-12% net revenue growth, $475-525 million Adjusted EBITDA, 50-60% free cash flow conversion, and $0.98-1.12 adjusted EPS, signaling confidence in strategic execution amid macroeconomic challenges.