What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-03-11 compared with 2023-03-06 · 951 added, 702 removed, 1071 unchanged (61% of the section changed)

Financial Statements and Supplementary Data

STAGWELL INC.

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements:

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

R eport of Independent Registered Public Accounting Firm (P CAOB ID No.

Consolidated Statements of Operations for each of the Three Years in the Period Ended December 31, 202 3

Consolidated Statements of Comprehensive Income (Loss) for each of the Three Years in the Period Ended December 31, 202 3

Consolidated Balance Sheets as of December 31, 202 3 and 202 2

Consolidated Statements of Cash Flows for each of the Three Years in the Period Ended December 31, 202 3

Consolidated Statements of Shareholders’ Equity for each of the Three Years in the Period Ended December 31, 202 3

Notes to Audited Consolidated Financial Statements

Financial Statement Schedules:

Schedule II — Valuation and Qualifying Accounts for each of the Three Years in the Period Ended December 31, 202 3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Stagwell Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Stagwell Inc.

and subsidiaries (the “Company”) as of December 31, 2023, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the year ended December 31, 2023, including the related notes and schedule of valuation and qualifying accounts for the year ended December 31, 2023 appearing under Item 15(a) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date as the Company (i) lacked a sufficient complement of resources with an appropriate level of accounting knowledge, experience and training;

(ii) did not design and maintain an effective risk assessment process at a precise enough level;

(iii) did not design and maintain effective controls over information and communication;

(iv) did not design and maintain effective monitoring controls;

and (v) did not design and maintain effective control activities that address relevant risks across all business processes covering all significant accounts, including controls over the review of journal entries, account reconciliations and segregation of duties in the finance and accounting functions.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses referred to above are described in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A.

We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management's report referred to above.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessments – Brand Performance Network Reporting Unit and Certain Reporting Units in the Integrated Agencies Network, Communications Network, and All Other Segments

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s goodwill balance was $1,499 million as of December 31, 2023, and the goodwill associated with the Brand Performance Network Reporting Unit, Integrated Agencies Network segment, Communications Network segment, and All Other segment was $442 million, $881 million, $137 million, and $39 million, respectively.

Management tests goodwill for impairment, at the reporting unit level, annually as of October 1st of each year, or more frequently if indicators of potential impairment exist.

For reporting units for which the qualitative assessment concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, management performs a quantitative impairment test, which compares the fair value of the reporting unit to its carrying amount.

If the fair value of the reporting unit exceeds the carrying amount of the net assets assigned to that reporting unit, goodwill is not considered impaired.

Determining the fair value of a reporting unit involves the use of significant estimates and assumptions.

Management generally uses a combination of the income approach, which incorporates the use of the discounted cash flow method, and the market approach, which incorporates the use of earnings multiples based on market data and comparable companies, and applies an equal weighting to the income and market approaches for the impairment test.

The income approach and the market approach both require the exercise of significant judgment, including judgment about the amount and timing of expected future cash flows, assumed terminal value and appropriate discount rates.

The expected cash flows are developed from the Company’s long-range planning process using projections of operating results and related cash flows based on assumed revenue growth rates, EBITDA margin, long-term growth rates, and discount rates based on a reporting unit’s weighted average cost of capital.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments for the Brand Performance Network reporting unit and certain reporting units in the Integrated Agencies Network, Communications Network, and All Other segments (collectively the “aforementioned reporting units”) is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the aforementioned reporting units;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, EBITDA margin, long-term growth rates, discount rates, comparable companies, and earnings multiples for the aforementioned reporting units;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

As described in the “Opinions on the Financial Statements and Internal Control over Financial Reporting” section, material weaknesses were identified that impacted this matter.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others, (i) evaluating and determining the nature and extent of audit procedures performed and evidence obtained that are responsive to the material weaknesses identified;

(ii) testing management’s process for developing the fair value estimate of the aforementioned reporting units;

(iii) evaluating the appropriateness of the income and market approaches used by management;

(iv) testing the completeness and accuracy of underlying data used in the income and market approaches;

and (v) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, EBITDA margin, long-term growth rates, discount rates,

comparable companies, and earnings multiples.

Evaluating management’s assumptions related to revenue growth rates, EBITDA margin, and long-term growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the aforementioned reporting units;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income and market approaches;

(ii) the weighting of the approaches;

and (iii) the reasonableness of the long-term growth rates, discount rates, comparable companies, and earnings multiples assumptions for each of the reporting units.

/s/ PricewaterhouseCoopers LLP

March 11, 2024

We have served as the Company’s auditor since 2023.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Stagwell, Inc.

1 unchanged sentence

We have audited the accompanying consolidated balance sheets of Stagwell, Inc.

and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and schedules listed in the Index at Item 15 (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 6, 2023, expressed an adverse opinion on the Company’s internal control over financial reporting because of material weaknesses.

and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes and schedules listed in the Index at Item 15 (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

9 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue — Refer to Notes 2 and 5 to the financial statements

Critical Audit Matter Description

The Company’s revenue is primarily derived from the provision of marketing and communications services which includes strategy, creative and production for advertising campaigns, public relations services including strategy, editorial, crisis support or issues management, online fundraising, media training, influencer engagement and events management, media-based solutions to drive brand performance, including buying and planning, experiential marketing and application/website design and development.

Each of the Company’s operating companies (referred to as Brands) generate revenue from one or more of these services.

The Brands have numerous customers and contracts, under a variety of contract terms and provisions.

The volume of such contracts and the diversity of the terms in such contracts introduces significant complexity in assessing the accounting under the revenue accounting standard.

This complexity includes the critical judgements around defining performance obligations and the recognition of revenue when or as the customer obtains control of the promised services in an amount that reflects the consideration expected to be received in exchange for those services, including the determination of presentation as principal or agent.

Given the volume and diversity of the Company’s contracts, performing audit procedures to evaluate whether revenue was appropriately recorded, required a high degree of auditor judgement and an increased extent of audit effort and is therefore considered a critical audit matter.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the testing of the Company’s application of revenue accounting standard to their revenue contracts included the following, among others:

• Assessed the nature and amount of revenue recorded by Brand and evaluated the overall application of the revenue accounting standard,

• Selected a sample of contracts, specifically including individually material revenue contracts, across the Brands and types of contracts.

Testing included consideration of the specific application of the revenue accounting standard, including the identification of the performance obligation(s), the evaluation of the methods applied in the recognition and measurement of revenue, and the verification of the timing of delivery, transaction price and performance of services related to the revenue recorded, including the determination of presentation as principal or agent

• Tested the mathematical accuracy of revenue recorded for each selection based on audit evidence obtained.

Goodwill — Refer to Notes 2 and 8 to the financial statements

Critical Audit Matter Description

The Company’s goodwill has been derived from numerous acquisitions, including but not limited to the merger with MDC Partners in August 2021.

As a result, the Company has over 30 reporting units, each having similar but different revenue streams and business models.

Management performed a quantitative impairment analysis for a number of reporting units to determine their fair values using the income approach and market approach.

This determination of the fair value requires management to make significant estimates and assumptions.

Such assumptions include forecasted business performance (both revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) based on the strategic operating plan), discount rates, and market multiples.

Given the volume of reporting units where a quantitative impairment analysis was performed and differences in their underlying revenue streams and business models, performing audit procedures to evaluate the reasonableness of the Company’s estimates and assumptions within the goodwill impairment assessment required a high degree of auditor judgment and an increased extent of effort and is therefore considered a critical audit matter.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the testing of the Company’s goodwill impairment assessment included the following, among others:

• Assessed the amount of goodwill by reporting unit and evaluated the sensitivity of changes in the assumptions on the results of the impairment test for the reporting unit,

• Based on this assessment, within certain reporting units, we

◦ Assessed the reasonableness of the Company’s forecasted revenue growth and EBITDA margin by comparing the forecasts to historical results and external economic data including peers, industry data and wider economic forecasts,

◦ Evaluated the Company’s ability to accurately forecast future revenue and EBITDA by comparing actual results to the Company's historical forecasts,

◦ Evaluated whether the forecasts were consistent with evidence obtained in other areas of the audit,

◦ With the assistance of our fair value specialists, evaluated the reasonableness of the discount rates and market multiples used by evaluating the methodology selected by the Company and by:

◦ Testing the source information underlying the determination of the market multiples and discount rates and testing the mathematical accuracy of the calculations.

◦ Developing a range of independent estimates and comparing those to the discount rate selected by the Company.

◦ Assessing the methodology applied in the discount rate calculation against market practice valuation techniques.

◦ Comparing the market multiples selected for each reporting unit to that of its guideline peer companies.

/s/ Deloitte & Touche LLP

March 6, 2023

We have served as the Company’s auditor since 2020.

STAGWELL INC.

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements:

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Statements of Operations for each of the T hree Years in the Period Ended December 31, 20 2 2

Consolidated Statements of Comprehensive Income ( Loss ) for each of the T hree Years in the Period Ended December 31, 202 2

Consolidated Balance Sheets as of December 31, 202 2 and 202 1

Consolidated Statements of Cash Flows for each of the T hree Years in the Period Ended December 31, 20 2 2

Consolidated Statements of Shareholders’ Equity for each of the T hree Years in the Period Ended December 31, 202 2

Notes to Audited Consolidated Financial Statements

Financial Statement Schedules:

Schedule II — Valuation and Qualifying Accounts for each of the T hree Years in the Period Ended December 31, 202 2

March 6, 2023 (March 11, 2024 as to the effects of the restatement discussed in Note 21)

We began serving as the Company’s auditor in 2020.

In 2023 we became the predecessor auditor.

STAGWELL INC.

15 unchanged sentences

Foreign exchange, net ( 2,960 ) ( 2,606 ) ( 3,332 )

Other, net ( 7,059 ) 50,058 544

Gain on sale of business

94,505 — 43,038

( 359 ) ( 4,975 ) 7,020

542 ( 83,643 ) 14,832

Income before income taxes and equity in earnings of non-consolidated affiliates

2 unchanged sentences

Income before equity in earnings of non-consolidated affiliates

Equity in income (loss) of non-consolidated affiliates ( 79 ) ( 240 ) 58

50,512 50,123 36,160

Net income attributable to noncontrolling and redeemable noncontrolling interests

Equity in (loss) of non-consolidated affiliates

( 8,870 ) ( 79 ) ( 240 )

41,642 50,044 35,920

Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests ( 41,508 ) ( 30,125 ) ( 14,884 )

Net income attributable to Stagwell Inc.

common shareholders

Income Per Common Share:

Net income attributable to Stagwell Inc.

common shareholders $ 0.22 $ ( 0.04 ) N/A

Net income attributable to Stagwell Inc.

common shareholders $ 0.17 $ ( 0.04 ) N/A

$ 134 $ 19,919 $ 21,036

Earnings (Loss) Per Common Share:

Basic $ — $ 0.16 $ ( 0.04 )

Diluted $ — $ 0.12 $ ( 0.04 )

Weighted Average Number of Common Shares Outstanding:

Basic 124,262 90,426 N/A

Diluted 296,596 90,426 N/A

Basic 117,259 124,262 90,426

Diluted 122,170 296,596 90,426

See Notes to the Audited Consolidated Financial Statements .

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(amounts in thousands)

1 unchanged sentence

2023 2022 2021

COMPREHENSIVE INCOME

Net income $ 65,842 $ 35,920 $ 71,461

Other comprehensive loss

Foreign currency translation adjustment ( 37,751 ) ( 6,000 ) 2,371

Benefit plan adjustment 4,088 722 —

Net unrealized loss on available for sale investment — — ( 5,156 )

COMPREHENSIVE INCOME (LOSS)

$ 41,642 $ 50,044 $ 35,920

Other comprehensive (loss) - Foreign currency translation adjustment 7,996 ( 37,773 ) ( 6,000 )

Other comprehensive income - Benefit plan adjustment

338 4,088 722

Other comprehensive (loss)

8,334 ( 33,685 ) ( 5,278 )

Comprehensive income for the period

Comprehensive loss attributable to the noncontrolling and redeemable noncontrolling interests

49,976 16,359 30,642

Comprehensive (income) loss attributable to the noncontrolling and redeemable noncontrolling interests ( 47,431 ) ( 6,640 ) ( 14,884 )

Comprehensive income (loss) attributable to Stagwell Inc.

39 unchanged sentences

Paid-in capital 348,494 491,899

Accumulated income (deficit) 29,445 ( 6,982 )

Retained earnings 21,148 22,095

Accumulated other comprehensive loss ( 13,067 ) ( 15,478 )

12 unchanged sentences

Cash flows from operating activities:

Net income $ 65,842 $ 35,920 $ 71,461

$ 41,642 $ 50,044 $ 35,920

Adjustments to reconcile net income to cash provided by operating activities:

1 unchanged sentence

Depreciation and amortization 142,831 131,273 77,503

Amortization of right-of-use lease assets and lease liability interest

76,653 77,368 58,982

Impairment and other losses 11,395 122,179 16,240

Provision for bad debt expense 7,755 2,031 6,222

Deferred income taxes 19,443 ( 18,241 ) ( 3,818 )

Adjustment to deferred acquisition consideration 13,060 ( 13,405 ) 18,721

Gain on sale of asset — ( 43,440 ) —

Interest from preferred investments — — ( 600 )

Transaction costs contributed by Stagwell Media LP — — 10,160

Foreign currency translation loss on foreign denominated debt — — 721

Gain on sale of business ( 94,505 ) — ( 43,440 )

Other, net 8,313 ( 22 ) 568

6 unchanged sentences

Advance billings ( 41,137 ) ( 27,062 ) 76,021

Current portion of lease liabilities - operating leases ( 87,629 ) ( 86,525 ) ( 53,360 )

Deferred acquisition related payments ( 15,400 ) ( 10,793 ) ( 5,351 )

3 unchanged sentences

Capital expenditures ( 14,238 ) ( 22,663 ) ( 8,797 )

Current period acquisitions, net of cash acquired ( 74,234 ) 150,346 ( 14,732 )

Acquisitions, net of cash acquired ( 23,339 ) ( 74,234 ) 150,346

Capitalized software ( 28,175 ) ( 12,774 ) ( 13,829 )

Proceeds from sale of business, net 229,484 — 37,232

Capitalized software and other ( 19,378 ) ( 14,829 ) ( 9,599 )

Net cash (used in) provided by investing activities

Other ( 7,781 ) ( 6,604 ) ( 1,000 )

Net cash provided by (used in) investing activities

155,951 ( 116,275 ) 163,952

2 unchanged sentences

Proceeds from borrowings under revolving credit facility ( 1,986,500 ) 1,255,500 516,669

Shares acquired and cancelled ( 18,729 ) ( 841 ) —

Distributions to noncontrolling interests and other ( 39,197 ) — —

Shares repurchased and cancelled ( 223,835 ) ( 70,269 ) ( 841 )

Distributions to noncontrolling interests ( 24,964 ) ( 39,197 ) —

Payment of deferred consideration ( 49,221 ) ( 63,170 ) —

Contributions — — 1,554

Purchase of noncontrolling interest — ( 3,600 ) ( 37,500 )

1 unchanged sentence

Debt issuance costs ( 844 ) — ( 15,053 )

Payment of contingent consideration — — ( 500 )

Distributions — — ( 233,203 )

Repurchase of 7.50% Senior Notes — — ( 884,398 )

Net cash used in financing activities

( 339,864 ) ( 186,736 ) ( 273,414 )

Effect of exchange rate changes on cash and cash equivalents 2,054 ( 7,995 ) 158

Net increase (decrease) in cash and cash equivalents ( 100,852 ) 36,580 91,552

STAGWELL INC.

4 unchanged sentences

2023 2022 2021

Repurchase of 7.50% Senior Notes — ( 884,398 ) —

Repurchase of Common Stock ( 51,540 ) — —

Net cash used in financing activities

( 186,736 ) ( 273,414 ) ( 80,141 )

Effect of exchange rate changes on cash and cash equivalents ( 7,995 ) 158 ( 321 )

Net increase in cash and cash equivalents 36,580 91,552 28,597

Cash and cash equivalents at beginning of period 220,589 184,009 92,457

7 unchanged sentences

Issuance of redeemable noncontrolling interest — — 27,820

Net unrealized gain on available for sale investment — — 5,156

Establishment of a deferred tax asset related to the exchange — 30,556 —

14 unchanged sentences

Class A & B Common Shares -

Class C Paid-in Capital Accumulated Income (Deficit) Accumulated Other Comprehensive Loss Stagwell Inc.

Class C Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income

Stagwell Inc.

Shareholders' Equity Noncontrolling Interests Shareholders' Equity

2 unchanged sentences

131,724 $ 132 160,909 $ 2 $ 491,899 $ 22,095 $ ( 15,478 ) $ 498,650 $ 430,164 $ 928,814

— — — — — 134 — 134 41,508 41,642

Other comprehensive income

— — — — — — 2,411 2,411 5,923 8,334

Total other comprehensive income

— — — — — 134 2,411 2,545 47,431 49,976

Distributions to noncontrolling interests — — — — — — — — ( 19,164 ) ( 19,164 )

Purchases of noncontrolling interest — — — — 3,257 — — 3,257 — 3,257

Changes in redemption value of RNCI — — — — — ( 442 ) — ( 442 ) — ( 442 )

Restricted awards granted or vested 5,548 6 — — 462 — — 468 — 468

Shares repurchased and cancelled ( 35,527 ) ( 36 ) — — ( 225,469 ) — — ( 225,505 ) — ( 225,505 )

Restricted shares forfeited ( 67 ) — — — — — — — — —

Stock-based compensation — — — — 49,674 — — 49,674 — 49,674

Change in ownership held by Class C holders — — — — ( 10,858 ) — — ( 10,858 ) 10,858 —

Shares issued, acquisitions 7,530 8 — — 41,152 — — 41,160 — 41,160

Conversion of Class C to Class A shares 9,260 9 ( 9,260 ) — ( 9 ) — — — — —

1 ( 1 ) — — ( 1,614 ) ( 639 ) ( 2,254 ) ( 712 ) ( 2,966 )

Balance at December 31, 2023

118,469 $ 118 151,649 $ 2 $ 348,494 $ 21,148 $ ( 13,067 ) $ 356,695 $ 468,577 $ 825,272

(1) The Other line within Paid-in Capital includes $ 1.6 million resulting from the modification of certain stock-appreciation rights from equity to cash settled that were subsequently exercised in equity.

See Notes to the Audited Consolidated Financial Statements .

STAGWELL INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - (continued)

(amounts in thousands)

Year Ended December 31, 2022

Common Shares -

Class A & B Common Shares -

Class C Paid-in Capital Retained Earnings Accumulated Other ComprehensiveLoss

Stagwell Inc.

Shareholders' Equity Noncontrolling Interests Shareholders' Equity

Shares Amount Shares Amount

Balance at December 31, 2021 118,252 $ 118 179,970 $ 2 $ 382,893 $ ( 6,982 ) $ ( 5,278 ) $ 370,753 $ 508,287 $ 879,040

Net income — — — — — 19,919 — 19,919 30,125 50,044

1 unchanged sentence

— — — — — — ( 10,200 ) ( 10,200 ) ( 23,485 ) ( 33,685 )

Total other comprehensive income (loss) — — — — — 19,919 ( 10,200 ) 9,719 6,640 16,359

Distributions to noncontrolling interests — — — — — — — — ( 29,957 ) ( 29,957 )

1 unchanged sentence

Acquisition of noncontrolling interest — — — — — — — — 2,667 2,667

Shares issued (Acquisition) 175 — — — 1,178 — — 1,178 — 1,178

Changes in redemption value of RNCI — — — — 8,711 — 8,711 — 8,711

Restricted awards granted or vested 3,940 4 — — ( 4 ) — — — — —

Shares repurchased and cancelled (withheld for payroll taxes) ( 2,531 ) ( 3 ) — — ( 18,729 ) — — ( 18,732 ) — ( 18,732 )

Shares repurchased and cancelled ( 9,725 ) ( 10 ) — — ( 70,269 ) — — ( 70,279 ) — ( 70,279 )

Restricted shares forfeited ( 221 ) — — — — — — — — —

Shares repurchased and cancelled (Approved plan) ( 7,194 ) ( 7 ) — — ( 51,540 ) — — ( 51,547 ) — ( 51,547 )

Stock-based compensation — — — — 34,974 — — 34,974 — 34,974

Shares issued, acquisitions 175 — — — 1,178 — — 1,178 — 1,178

Conversion of Class C to Class A shares 19,061 19 ( 19,061 ) — 47,911 — — 47,930 ( 47,930 ) —

Finalization of Stagwell Inc’s tax basis in Stagwell Global, LLC

— — — — 119,470 — — 119,470 — 119,470

Finalization of MDC acquisition accounting and associated impact on Stagwell Inc.

2 unchanged sentences

Balance at December 31, 2022 131,724 $ 132 160,909 $ 2 $ 491,899 $ 22,095 $ ( 15,478 ) $ 498,650 $ 430,164 $ 928,814

131,724 $ 132 160,909 $ 2 $ 491,899 $ 29,445 $ ( 38,941 ) $ 482,537 $ 462,097 $ 944,634

See Notes to the Audited Consolidated Financial Statements

6 unchanged sentences

Class A & B Common Shares -

Class C Paid-in Capital Accumulated Income (Deficit) Other Comprehensive Loss Stagwell Inc.

Class C Paid-in Capital Retained Earnings

Accumulated Other Comprehensive Loss

Stagwell Inc.

Shareholders' Equity Noncontrolling Interests Shareholders' Equity

3 unchanged sentences

Other comprehensive loss ( 375 ) — — — — — — — — — ( 375 ) — ( 375 )

Total other comprehensive income

24,367 — — — — — — — — — 24,367 14,884 39,251

Contributions 250 — — — — — — — — — 250 — 250

23 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - (continued)

(amounts in thousands)

Year Ended December 31, 2020

Members' capital Convertible Preference Shares Common Shares -

Class A & B Common Shares -

Class C Paid-in Capital Accumulated Income (Deficit) Other Comprehensive Income Stagwell Inc.

Shareholders' Equity Noncontrolling Interests Shareholders' Equity

Shares Amount Shares Amount Shares Amount

Balance at December 31, 2019 $ 316,960 — $ — — $ — — $ — $ — $ — $ — $ 316,960 $ 31,577 $ 348,537

Net income attributable to Stagwell Inc.

56,356 — — — — — — — — — 56,356 18,231 74,587

Other comprehensive loss ( 2,785 ) — — — — — — — — — ( 2,785 ) — ( 2,785 )

Contributions 95,434 — — — — — — — — — 95,434 — 95,434

Distributions ( 108,468 ) — — — — — — — — — ( 108,468 ) ( 7,075 ) ( 115,543 )

Changes in redemption value of RNCI ( 128 ) — — — — — — — — — ( 128 ) — ( 128 )

Other 1,387 — — — — — — — — — 1,387 ( 2,946 ) ( 1,559 )

Balance at December 31, 2020 $ 358,756 — $ — — $ — — $ — $ — $ — $ — $ 358,756 $ 39,787 $ 398,543

See notes to the audited Consolidated Financial Statements

STAGWELL INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands, unless otherwise stated)

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Business and Basis of Presentation

Stagwell Inc.

(the “Company,” “we,” or “Stagwell”), incorporated under the laws of Delaware, conducts its business through its networks and their Brands (“Brands”), which provide marketing and business solutions that realize the potential of combining data and creativity.

(the “Company,” “we,” or “Stagwell”), incorporated under the laws of Delaware, conducts its business through its networks and its portfolio of marketing services firms (“Brands”), which provide marketing and business solutions that realize the potential of combining data and creativity.

Stagwell’s strategy is to build, grow and acquire market-leading businesses that deliver the modern suite of services that marketers need to thrive in a rapidly evolving business environment.

5 unchanged sentences

(“MDC”) and Stagwell Media LP (“Stagwell Media”) announced that they had entered into the Transaction Agreement, providing for the combination of MDC with the operating businesses and subsidiaries of Stagwell Media (the “Stagwell Subject Entities”).

The Stagwell Subject Entities comprised Stagwell Marketing Group LLC (“Stagwell Marketing” or “SMG”) and its direct and indirect subsidiaries.

On August 2, 2021, we completed the combination of MDC and the operating businesses and subsidiaries of Stagwell Media and a series related transactions (such combination and transactions, the “Transactions”).

The Stagwell Subject Entities comprised Stagwell Marketing and its direct and indirect subsidiaries.

On August 2, 2021, we completed the combination of MDC and the operating businesses and subsidiaries of Stagwell Media and a series of related transactions (such combination and transactions, the “Transactions”).

The Transactions were treated as a reverse acquisition for financial reporting purposes, with MDC treated as the legal acquirer and Stagwell Marketing treated as the accounting acquirer.

1 unchanged sentence

See Note 4 of the Notes included herein for information in connection with the acquisition of MDC.

The accompanying financial statements reflect all adjustments, consisting of normal recurring accruals, which in the opinion of management are necessary for a fair presentation, in all material respects, of the information contained therein.

Intercompany balances and transactions have been eliminated in consolidation.

Certain reclassifications have been made to the prior year financial information to conform to the current year presentation.

We have revised the presentation of Current Liabilities to separately present Accrued media, which was previously included in Accruals and other liabilities, of $ 237,794 as of December 31, 2021.

As a result, the accompanying Consolidated Balance Sheet has been revised to correct the immaterial classification error by decreasing the previously reported amount for Accruals and other liabilities as of December 31, 2021, by the $ 237,794 of Accrued media.

The revision had no effect on our previously reported Total Current Liabilities, or on any other previously reported amounts in our Audited Consolidated Financial Statements for the year ended December 31, 2021.

Revision of Previously Issued Consolidated Financial Statements

In connection with the preparation of the consolidated financial statements during 2023, the Company identified the following errors in the areas of income taxes, noncontrolling interests, and accumulated other comprehensive loss related to its previously filed 2022 annual consolidated financial statements.

• In the first quarter of 2023, we identified an error related to foreign currency gains and losses not being allocated from Accumulated other comprehensive loss to noncontrolling interest shareholders.

Noncontrolling interests and Accumulated other comprehensive loss was overstated by approximately $ 23.5 million .

There was no impact to Total Shareholders’ Equity as of December 31, 2022.

Also, we identified a $ 2.1 million understatement of income tax expense, and overstatement to income tax payable (Accruals and Other Liabilities) and deferred tax asset (Other Current Assets) of $ 2.4 million and $ 4.5 million , respectively, relating to an error in the calculation of valuation allowances.

These errors were originally corrected within the first quarter of 2023 as management determined the errors were not material to the quarterly financial statements as of and for the three months ended March 31, 2023.

• In the second quarter of 2023, we identified an error related to an understatement of income tax expense and income tax payable (Accruals and Other Liabilities) by $ 5.3 million due to incorrect applications of tax payments.

The Company also identified a misclassification of $ 12.9 million as a result of improper netting of income tax receivables (Other Current Assets) and payables (Accruals and Other Liabilities).

This error resulted in an incremental $ 7.3 million misclassification of income tax receivables and payables as of March 31, 2023, which was originally corrected within the second quarter of 2023 as management determined the errors were not material to the quarterly financial statements as of and for the three and six months ended June 30, 2023.

• In the fourth quarter of 2023, we identified an incremental $ 10.4 million understatement of tax expense as well as balance sheet misclassification between income tax accounts included within Other Current Assets, Other Assets, Accruals and Other Liabilities, and Deferred Tax Liabilities.

These errors were related to the incorrect applications of tax payments, and the incorrect calculation of deferred tax balances for items mainly associated with interest expense, intangible assets, fixed assets, state tax, basis adjustment for partnership, and the related valuation allowance.

We also identified an error in our tax receivable agreement (TRA) liability calculation which resulted in a $ 2.1 million overstatement of other expenses and of Other Liabilities.

The Company evaluated the impact of all errors identified throughout 2023 individually and in the aggregate and concluded they are not material to its previously issued 2022 annual consolidated financial statements.

As a result, the Company has revised its 2022 consolidated financial statements to reflect the effects of these adjustments, which were originally recorded out-of-period in the 2023 interim financial statements.

See Note 21 of the Notes included herein for additional information.

The 2022 balances presented within the 2023 Form 10-K reflect the effects of the corrections.

The Company will effect the revision of the 2023 interim consolidated financial statements the next time such financial statements are presented.

See Note 22 of the Notes included herein for additional information regarding the unaudited quarterly financial information.

The 2022 interim consolidated financial statements previously issued through September 30, 2022 were not affected by these errors.

Recent Developments

On March 1, 2023, the board of directors authorized an extension and a $ 125,000 increase in the size of the stock repurchase program (the “Repurchase Program”) to an aggregate of $ 250,000 , with any previous purchases under the Repurchase Program continuing to count against that limit.

The Repurchase Program, as amended, will expire on March 1, 2026.

On January 2, 2024, the Company acquired 100% of the interests in Team Epiphany, LLC., for $ 15.8 million of which $ 10.8 million was paid in cash and 798,000 shares of Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”), subject to post-closing adjustments.

In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of $ 17.0 million, subject to continued employment and meeting certain future earnings targets, of which a portion may be settled in shares of Class A Common Stock at the Company’s discretion.

On March 1, 2024, the Company acquired 100% of the interests in Sidekick Live Limited., for £ 4.5 million of which £ 3.6 million (approximately $ 4.6 million) was paid in cash and 195,000 shares of Class A Common Stock, par value $0.001 per share, subject to post-closing adjustments.

In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of £ 8.0 million (approximately $ 10.2 million), subject to continued employment requirements and meeting certain future earnings targets, of which a portion may be settled in shares of Class A Common Stock at the Company’s discretion.

Significant Accounting Policies

1 unchanged sentence

Principles of Consolidation .

The accompanying consolidated financial statements include the accounts of Stagwell Inc.

The accompanying Audited Consolidated Financial Statements include the accounts of Stagwell Inc.

and its domestic and international controlled subsidiaries that are not considered variable interest entities, and variable interest entities for which the Company is the primary beneficiary.

3 unchanged sentences

These estimates and assumptions affect the reported amounts of assets and liabilities including goodwill, intangible assets, contingent deferred acquisition consideration, redeemable noncontrolling interests, deferred tax assets, right-of-use lease assets and the amounts of revenue and expenses reported during the period.

These estimates are evaluated on an ongoing basis and are based on historical experience, current conditions and

various other assumptions believed to be reasonable under the circumstances.

These estimates are evaluated on an ongoing basis and are based on historical experience, current conditions and various other assumptions believed to be reasonable under the circumstances.

These estimates require the use of assumptions about future performance, which are uncertain at the time of estimation.

To the extent actual results differ from the assumptions used, results of operations and cash flows could be materially affected.

As of December 31, 2023, the effects of global macroeconomic and geopolitical uncertainty on the Company’s business, results of operations and financial condition continue to evolve.

As a result, many of the Company’s estimates and assumptions continue to require increased judgment and carry a higher degree of variability and volatility.

As events continue to evolve and additional information becomes available, the Company’s estimates may change materially in the future.

The Company applies the fair value measurement guidance for financial assets and liabilities that are required to be measured at fair value and for non-financial assets and liabilities that are not required to be measured at fair value on a recurring basis, including goodwill, right-of-use lease assets and other identifiable intangible assets.

1 unchanged sentence

Concentration of Credit Risk .

The Company provides marketing communications services to clients who operate in most industry sectors.

Credit is granted to qualified clients in the ordinary course of business.

7 unchanged sentences

Trade receivables are stated at invoiced amounts less allowances for doubtful accounts.

The allowances represent estimated uncollectible receivables associated with potential customer defaults usually due to customers’ potential insolvency.

The allowances include amounts for certain customers where a risk of default has been specifically identified.

The assessment of the likelihood of customer defaults is based on various factors, including the length of time the receivables are past due, historical experience and existing economic conditions.

Allowance for doubtful accounts was $ 10,369 and $ 5,638 at December 31, 2022 and December 31, 2021, respectively.

Sale of Accounts Receivable.

The Company transfers certain of its trade receivable assets to third parties under agreements to sell certain of its accounts receivables.

The allowances represent expected losses using a current expected credit loss model.

The Allowance for doubtful accounts is based on expected future uncollectible accounts receivable and is estimated considering forecasts of future economic conditions in addition to information about past events and current conditions.

Allowance for doubtful accounts was $ 7.1 million and $ 10.4 million at December 31, 2023 and December 31, 2022, respectively.

Transfer of Accounts Receivable.

The Company transfers certain of its trade receivable assets to third parties under certain agreements.

Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer.

Accordingly, the Company accounts for the transfers as sales of trade receivables by recognizing an increase to cash and a decrease to accounts receivable when the receivables are transferred, with the proceeds being included in cash flows from operating activities in the Consolidated Statements of Cash Flows.

The trade receivables transferred to the third parties under these arrangements were $ 176,497 , $ 42,097 and $ 44,172 , during the years ended December 31, 2022, 2021 and 2020, respectively.

The amount collected and due to the third parties under these arrangements was $ 5,703 as of December 31, 2022.

No amounts were collected and due to third parties as of December 31, 2021 and 2020.

Fees for these arrangements were recorded in Office and general expenses in the Consolidated Statements of Operations and totaled $ 1,817 , $ 110 , and $ 185 for the years ended December 31, 2022, 2021 and 2020, respectively.

The trade receivables transferred to the third parties were $ 393.9 million, $ 176.5 million and $ 42.1 million, during the years ended December 31, 2023, 2022, and 2021, respectively.

The amount collected and due to the third parties under these arrangements was $ 1.8 million as of December 31, 2023 and $ 5.7 million as of December 31, 2022.

No amounts were collected and due to third parties as of December 31, 2021.

Fees for these arrangements were recorded in Office and general expenses in the Consolidated Statements of Operations and totaled $ 5.4 million, $ 1.8 million, and $ 0.1 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Expenditures Billable to Clients .

6 unchanged sentences

Repairs and maintenance costs are expensed as incurred.

Accumulated depreciation was $ 59,445 and $ 35,895 at December 31, 2022 and December 31, 2021, respectively.

The Company recognizes on the Consolidated Balance Sheets, at the time of lease commencement, a right-of-use lease asset and a lease liability, initially measured at the present value of the lease payments.

14 unchanged sentences

Determining the fair value of a reporting unit involves the use of significant estimates and assumptions.

The Company uses a combination of the income approach, which incorporates the use of the discounted cash flow (“DCF”) method, and the market approach, which incorporates the use of earnings and revenue multiples based on market data.

The Company generally applies an equal weighting to the income and market approaches for the impairment test.

The Company generally uses a combination of the income approach, which incorporates the use of the discounted cash flow (“DCF”) method, and the market approach, which incorporates the use of earnings multiples based on market data and comparable companies.

The Company applies an equal weighting to the income and market approaches for the impairment test.

The income approach

and the market approach both require the exercise of significant judgment, including judgment about the amount and timing of expected future cash flows, assumed terminal value and appropriate discount rates.

The DCF estimates incorporate expected cash flows that represent a spectrum of the amount and timing of possible cash flows of each reporting unit from a market participant perspective.

The expected cash flows are developed from the Company’s long-range planning process using projections of operating results and related cash flows based on assumed long-term growth rates, demand trends and appropriate discount rates based on a reporting unit’s WACC as determined by considering the observable WACC of comparable companies and factors specific to the reporting unit.

The expected cash flows are developed from the Company’s long-range planning process using projections of operating results and related cash flows based on assumed revenue growth rates, EBITDA margin, long-term growth rates, and appropriate discount rates based on a reporting unit’s WACC as determined by considering the observable WACC of comparable companies and factors specific to the reporting unit.

The terminal value is estimated using a constant growth method which requires an assumption about the expected long-term growth rate.

15 unchanged sentences

Certain acquisitions include an initial payment at the time of closing and provide for future additional contingent purchase price payments.

Contingent purchase price obligations for these transactions are recorded as deferred acquisition consideration liabilities on the Consolidated Balance Sheets, at the acquisition date fair value and are remeasured at each reporting period.

Contingent purchase price obligations for these transactions are recorded as deferred acquisition consideration liabilities on the balance sheet.

Arrangements that are not contingent upon future employment are initially measured at the acquisition date fair value and are remeasured at each reporting period.

Arrangements that are contingent upon future employment are expensed as earned over the respective vesting (employment) period.

These liabilities are derived from the projected performance of the acquired entity.

These arrangements may be dependent on future events, such as the growth rate of the earnings of the relevant subsidiary during the contractual period.

At each reporting date, the Company models each business’ future performance, including revenue growth and free cash flows, to estimate the value of each deferred acquisition consideration liability.

The liability is adjusted quarterly based on changes in current information affecting each subsidiary’s current operating results and the impact this information

will have on future results included in the calculation of the estimated liability.

These adjustments are recorded in deferred acquisition consideration expense within Office and general expenses in the Consolidated Statement of Operations.

In instances where such contingent payments require the sellers’ continuous employment with the Company after the transaction, they are recorded as compensation expense in Office and general expenses in the Consolidated Statements of Operations.

At each reporting date, the Company models each business’ future performance, such as revenue and EBITDA growth, to estimate the value of each deferred acquisition consideration liability.

The liability is adjusted quarterly based on changes in current information affecting each subsidiary’s current operating results and the impact this information will have on future results included in the calculation of the estimated liability.

These adjustments are recorded in Office and general expenses in the Consolidated Statements of Operations.

Redeemable Noncontrolling Interests .

Many of the Company’s acquisitions include contractual arrangements where the noncontrolling shareholders may require the Company to purchase such noncontrolling shareholders’ incremental ownership interests under certain circumstances.

The Company may have similar call options under the same contractual terms.

Certain of the Company’s acquisitions include contractual arrangements where the noncontrolling shareholders may require the Company to purchase such noncontrolling shareholders’ incremental ownership interests under certain circumstances.

The Company sometimes has similar call options under the same contractual terms.

The amount of consideration under these contractual arrangements is not a fixed amount, but rather is dependent upon various valuation formulas, such as the average earnings of the relevant subsidiary through the date of exercise or the growth rate of the earnings of the relevant subsidiary during that period.

In the event that an incremental purchase may be required by the Company, the amounts are recorded in Redeemable Noncontrolling Interests in mezzanine equity on the Consolidated Balance Sheets at their acquisition date fair value and adjusted for changes to their estimated redemption value through Retained earnings or Paid-in capital (when at an accumulated deficit) in the Consolidated Balance Sheets (but not less than their initial redemption value), except for foreign currency translation adjustments.

In the event that an incremental purchase may be required by the Company, the amounts are recorded in Redeemable Noncontrolling Interests in mezzanine equity on the Consolidated Balance Sheets at their acquisition date fair value and adjusted for changes to their estimated redemption value through Retained earnings or Paid-in capital (if at an accumulated deficit) in the Consolidated Balance Sheets (but not less than their initial redemption value), except for foreign currency translation adjustments.

These adjustments will not impact the calculation of earnings (loss) per share if the redemption values are less than the estimated fair values.

2 unchanged sentences

Any difference between the purchase price and noncontrolling interest is recorded to Paid-in capital in the Consolidated Balance Sheets.

In circumstances where the purchase of shares of an equity investment results in obtaining control, the existing carrying value of the investment is remeasured to the acquisition date fair value and any gain or loss is recognized in the Consolidated Statement Operations.

In circumstances where the purchase of shares of an equity investment results in obtaining

control, the existing carrying value of the investment is remeasured to the acquisition date fair value and any gain or loss is recognized in the Consolidated Statement of Operations.

Revenue Recognition .

7 unchanged sentences

Income Taxes.

We account for income taxes using the asset and liability method.

Under the asset and liability method, deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases.

The Company accounts for income taxes using the asset and liability method.

Deferred tax assets and liabilities are measured using enacted tax rates and laws expected to be in effect when the differences are expected to reverse.

8 unchanged sentences

The measurement of the compensation cost for these awards is based on using the Black-Scholes option pricing model and is recorded in Operating income over the service period, in this case the award’s vesting period.

The assumption for expected volatility is based on the historical volatility of a peer group of market participants as the Company has limited historical volatility.

The assumption for expected volatility is based on a blended rate which includes historical volatility of a peer group of market participants and historical volatility of the Company as the Company has limited historical volatility.

The Company has adopted the straight-line attribution method for determining the compensation cost to be recorded during each accounting period.

Forfeitures for all awards are recognized as they occur.

The Company commences recording compensation expense related to awards that are based on performance conditions under the straight-line attribution method when it is probable that such performance conditions will be met.

Certain of the Company’s subsidiaries grant awards to their employees providing them with an equity interest in the respective subsidiary (the “profits interests awards”).

The awards generally provide the employee the right, but not the obligation, to sell their profits interest in the subsidiary to the Company based on a performance-based formula and, in certain cases, receive a profit share distribution.

The profits interests awards are primarily settled in cash, with certain awards having stock-settlement provisions at the Company’s discretion.

The corresponding liability associated with these profits interests awards is included as a component of Accruals and other liabilities and Other liabilities on the Consolidated Balance Sheets.

See Note 15 of the Notes included herein for further details on these awards.

Share Buybacks .

In 2022, the Company began repurchasing its own Class A common stock, par value $.001 per share (the “Class A Common Stock”), as part of a publicly announced stock repurchase plan.

The Company accounts for these

repurchases by reducing the value of our Class A Common Stock for the par value of the shares repurchased and account for the difference between the price paid for the Class A Common Stock, excluding fees, and the par value of such stock to Paid-in capital.

The Company may purchase shares of Class A Common Stock under its stock repurchase program (the “Repurchase Program”) as well as repurchases outside of the Repurchase Program.

The Company accounts for these repurchases by reducing the value of our Class A Common Stock for the par value of the shares repurchased and account for the difference between the price paid for the Class A Common Stock, excluding fees, and the par value of such stock to Paid-in capital.

See Note 15 of the Notes included herein for further details of our share buyback plan .

2 unchanged sentences

Under the defined contribution plans, these subsidiaries, in some cases, make annual contributions to participants’ accounts which are subject to vesting.

The Company’s contribution expense pursuant to these plans was approximately $ 19,000 , $ 10,000 , and $ 4,000 for the years ended December 31, 2022, 2021, and 2020, respectively.

The Company’s contribution expense pursuant to these plans was $ 20.5 million, $ 19.0 million, and $ 10.0 million for the years ended December 31, 2023, 2022, and 2021, respectively.

The Company also has a defined benefit pension plan.

See Note 12 of the Notes included herein for additional information on the defined benefit plan.

Income (Loss) per Common Share .

Basic income (loss) per common share is based upon the weighted average number of common shares outstanding during each period.

Diluted income (loss) per common share is based on the above, in addition, if dilutive, common share equivalents, which include stock appreciation rights, and unvested restricted stock and restricted stock units as well as shares of Class C Common Stock.

Earnings (Loss) per Common Share .

Basic earnings (loss) per common share is based upon the weighted average number of common shares outstanding during each period.

Diluted earnings (loss) per common share is based on the above, in addition,

if dilutive, common share equivalents, which include stock appreciation rights, and unvested restricted stock and restricted stock units as well as shares of Class C Common stock, par value $0.00001 per share (the “Class C Common Stock”).

In periods of net loss, all potentially issuable common shares are excluded from diluted net loss per common share because they are anti-dilutive.

7 unchanged sentences

New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board, (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, and in January 2021 subsequently issued ASU 2021-01, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

ASU 2020-04 is effective upon issuance, through December 31, 2022.

The Combined Credit Agreement (as defined in Note 11 of the Notes included herein) is the Company’s only contractual arrangement that referenced LIBOR and is impacted by ASU 2020-04.

On April 28, 2022, the Company amended the Combined Credit Agreement.

Among other things, this amendment replaced any references to LIBOR with references to the Secured Overnight Financing Rate (“SOFR”).

Based on the Company’s assessment, the Company has elected to apply the optional expedient and treat the contract modifications as a continuation of an existing contract.

This election does not have a material effect on our results of operations or financial position.

See Note 11 of the Notes included herein for more information.

In December 2023, the Financial Accounting Standards Board, (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures (“ASU 2023-09”), to enhance the transparency and decision usefulness of income tax disclosures by requiring disaggregated information about an entity’s effective tax rate reconciliation, as well as information on taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024.

The Company is evaluating the impact of the adoption of this guidance on the Company’s financial statements and disclosures.

In November 2023, the FASB issued Accounting Standards Update ASU 2023-07, Segment Reporting (Topic 280) Improvements to Segment Disclosures (“ASU 2023-07”), to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The Company is evaluating the impact of the new requirements, effective for the Company’s 2024 Financial Statements, to determine the level of disclosure of segment expenses.

2023 Acquisitions

On November 1, 2023, the Company acquired Movers and Shakers, a digital creative company, for $ 15.0 million, of which $ 10.2 million was paid in cash and 1.0 million shares of Class A common stock, par value $0.001 per share (the “Class A Common Stock”), subject to post-closing adjustments.

In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of $ 35.0 million, subject to meeting certain future earnings targets and continued employment, of which a portion may be settled in shares of Class A Common Stock at the Company’s discretion.

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of Movers and Shakers and expected growth related to new customer relationships.

Goodwill of $ 8.2 million was assigned to the Integrated Agencies Network reportable segment.

The goodwill is fully deductible for income tax purposes.

The purchase price accounting is not yet final as the Company may still make adjustments due to changes in post-closing adjustments.

On October 2, 2023, the Company acquired Left Field Labs (“LFL”), a digital experience design and strategy company, for $ 13.2 million, of which $ 9.4 million was paid in cash and 825 thousand shares of Class A Common Stock, subject to post-closing adjustments.

In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of $ 51.0 million, subject to continued employment and meeting certain future earnings targets, of which a portion may be settled in shares of Class A Common Stock at the Company’s discretion.

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of LFL and expected growth related to new customer relationships.

Goodwill of $ 8.7 million was assigned to the Integrated Agencies Network reportable segment.

The goodwill is fully deductible for income tax purposes.

The purchase price accounting is not yet final as the Company may still make adjustments due to changes in post-closing adjustments.

On July 3, 2023, the Company acquired Tinsel Experiential Design LLC (“Tinsel”), a marketing and design company, for $ 2.5 million in cash consideration, subject to post-closing adjustments.

In connection with the acquisition, the sellers are entitled to contingent consideration, subject to continued employment, and meeting certain future earnings targets.

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of Tinsel and expected growth related to new customer relationships.

Goodwill of $ 1.6 million was assigned to the Integrated Agencies Network reportable segment.

The goodwill is fully deductible for income tax purposes.

The purchase price accounting is not yet final as the Company may still make adjustments due to changes in post-closing adjustments.

On April 25, 2023, the Company acquired Huskies, Ltd.

(“Huskies”), for € 5.2 million ($ 5.6 million) of cash consideration, of which € 0.9 million ($ 1.0 million) is deferred, subject to post-closing adjustments.

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of Huskies and expected growth related to new customer relationships and geographic expansion.

Goodwill of $ 2.6 million was assigned to the Brand Performance Network reportable segment.

The goodwill is non-deductible for income tax purposes.

The purchase price accounting is not yet final as the Company may still make adjustments due to changes in post-closing adjustments.

2022 Acquisitions

Acquisition of Brand New Galaxy

On April 19, 2022, the Company acquired Brand New Galaxy (“BNG”), for approximately $ 20,695 of cash consideration, as well as contingent consideration up to a maximum value of $ 50,000 .

The contingent consideration is due upon meeting certain future earnings targets through 2024, with approximately 67 % payable in cash and 33 % payable in Stagwell Inc.

Class A Common Stock.

The consideration has been allocated to the assets acquired and assumed liabilities of BNG based upon preliminary estimated fair values, with any excess purchase price allocated to goodwill.

The preliminary purchase price allocation is as follows:

On April 19, 2022, the Company acquired Brand New Galaxy (“BNG”), for $ 20.9 million of cash consideration, as well as contingent consideration up to a maximum value of $ 50.0 million.

The contingent consideration is due upon meeting certain future earnings targets through 2024, with approximately 67 % payable in cash and 33 % payable in shares of Class A Common Stock.

The consideration has been allocated to the assets acquired and assumed liabilities of BNG based upon fair values, with any excess purchase price allocated to goodwill.

The purchase price allocation is as follows:

(dollars in thousands)

Cash and cash equivalents $ 2,766

11 unchanged sentences

Purchase price consideration $ 37,685

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce of BNG.

Goodwill of $ 24,423 was assigned to the Brand Performance Network reportable segment.

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of BNG.

Goodwill of $ 24.6 million was assigned to the Brand Performance Network reportable segment.

The majority of the goodwill is non-deductible for income tax purposes.

3 unchanged sentences

The following table presents the details of identifiable intangible assets acquired:

Estimated Fair Value Estimated Useful Life in Years

Fair Value Estimated Useful Life in Years

(dollars in thousands)

Customer relationships $ 6,150 10

2 unchanged sentences

Total acquired intangible assets $ 12,740

Pro Forma Financial Information (unaudited)

Pro Forma Financial Information

The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if it occurred as of January 1, 2021.

The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time.

Year Ended December 31,

Year Ended December 31, 2022 Year Ended December 31, 2021

(dollars in thousands)

Revenue $ 2,698,018 $ 1,501,568

Net income $ 49,299 $ 36,864

Revenue and net loss attributable to BNG, included within the year ended December 31, 2022 Consolidated Statements of Operations was $ 20,544 and $ 67 , respectively.

The purchase price accounting is not yet final as the Company may still make adjustments due to changes in working capital.

Revenue attributable to BNG, included within the Consolidated Statements of Operations for the year ended December 31, 2023 was $ 30.1 million, and Net loss was $ 1.5 million.

Revenue attributable to BNG, included within the Consolidated Statements of Operations for the year ended December 31, 2022 was $ 20.5 million, and Net income was $ 0.1 million.

Acquisition of TMA Direct, Inc.

On May 31, 2022, the Company acquired approximately 87 % of TMA Direct, Inc.

(“TMA Direct”) for approximately $ 17,247 of cash consideration and approximately $ 457 of deferred acquisition payments.

The Company was also granted an option to purchase the remaining 13 % minority interest in TMA Direct for up to approximately $ 13,330 .

The consideration has been allocated to the assets acquired and assumed liabilities of TMA Direct based upon estimated fair values, with any excess purchase price allocated to goodwill.

(“TMA Direct”) for $ 17.2 million of cash consideration and $ 0.5 million of deferred acquisition payments.

The Company was also granted an option to purchase the remaining 13 % minority interest in TMA Direct for up to $ 13.3 million.

The consideration has been allocated to the assets acquired and assumed liabilities of TMA Direct based upon fair values, with any excess purchase price allocated to goodwill.

The purchase price allocation is as follows:

(dollars in thousands)

Accounts receivable $ 582

7 unchanged sentences

Purchase price consideration $ 17,704

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce of TMA Direct.

Goodwill of $ 6,569 was assigned to the Communications Network reportable segment.

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of TMA Direct.

Goodwill of $ 6.6 million was assigned to the Communications Network reportable segment.

The majority of the goodwill is deductible for income tax purposes.

4 unchanged sentences

Fair Value Estimated Useful Life in Years

(dollars in thousands)

Customer relationships $ 11,400 10

1 unchanged sentence

Total acquired intangible assets $ 13,200

Pro Forma Financial Information (unaudited)

Pro Forma Financial Information

The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if it occurred as of January 1, 2021.

Year Ended December 31,

Year Ended December 31, 2022 Year Ended December 31, 2021

(dollars in thousands)

Revenue $ 2,691,622 $ 1,481,727

Net income $ 51,397 $ 39,386

Revenue and net income attributable to TMA Direct, included within the year ended December 31, 2022 Consolidated Statements of Operations was $ 7,659 and $ 889 , respectively.

Revenue attributable to TMA Direct, included within the Consolidated Statements of Operations for the year ended December 31, 2023 was $ 11.0 million, and Net income was $ 1.1 million.

Revenue attributable to TMA Direct, included within the Consolidated Statements of Operations for the year ended December 31, 2022 was $ 7.7 million, and Net income was $ 0.9 million.

Acquisition of Maru Group Limited Ltd.

On October 3, 2022, the Company acquired Maru Group Limited Ltd.

(“Maru”) for approximately £ 23,000 (approximately $ 25,793 ) in cash consideration.

The consideration has been allocated to the assets acquired and assumed liabilities of Maru based upon preliminary estimated fair values, with any excess purchase price allocated to goodwill.

The preliminary purchase price allocation is as follows:

(“Maru”) for £ 23.0 million ($ 25.8 million) in cash consideration.

The consideration has been allocated to the assets acquired and assumed liabilities of Maru based upon fair values, with any excess purchase price allocated to goodwill.

The purchase price allocation is as follows:

(dollars in thousands)

Cash and cash equivalents $ 1,033

7 unchanged sentences

Advance billings ( 6,462 )

Deferred tax liability ( 3,328 )

Other liabilities ( 2,891 )

2 unchanged sentences

Purchase price consideration $ 25,794

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce of Maru and the expected growth related to new customer relationships and geographic expansion.

Goodwill of $ 24,204 was assigned to the All Other reportable segment.

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of Maru and expected growth related to new customer relationships and geographic expansion.

Goodwill of $ 26.0 million was assigned to the All Other reportable segment.

The goodwill is partially deductible for income tax purposes.

3 unchanged sentences

The following table presents the details of identifiable intangible assets acquired:

Estimated Fair Value Estimated Useful Life in Years

Estimated Useful Life in Years

(dollars in thousands)

Customer relationships $ 4,900 10

2 unchanged sentences

Total acquired intangible assets $ 14,300

Pro Forma Financial Information (unaudited)

Pro Forma Financial Information

The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if it occurred as of January 1, 2021.

Year Ended December 31,

(dollars in thousands)

Revenue $ 2,717,667 $ 1,512,791

Net income $ 36,043 $ 15,167

Revenue and net loss attributable to Maru, included within the year ended December 31, 2022 Consolidated Statements of Operations was $ 8,786 and $ 2,135 , respectively.

Revenue attributable to Maru, included within the Consolidated Statements of Operations for the year ended December 31, 2023 was $ 32.1 million and Net loss was $ 10.8 million.

Revenue attributable to Maru, included within the Consolidated Statements of Operations for the year ended December 31, 2022 was $ 8.8 million, and Net loss was $ 2.1 million.

Acquisition of Wolfgang, LLC.

On October 3, 2022, the Company acquired the remaining 80 % interest that it did not already own in Wolfgang, LLC., (“Wolfgang”) for approximately $ 3,750 in cash consideration and 175 shares of Class A Common Stock with a fair value of $ 1,178 , subject to post-closing adjustments.

The consideration has been allocated to the assets acquired and assumed liabilities of Wolfgang based upon preliminary estimated fair values, with any excess purchase price allocated to goodwill.

The preliminary purchase price allocation is as follows:

On October 3, 2022, the Company acquired the remaining 80 % interest that it did not already own in Wolfgang, LLC (“Wolfgang”) for $ 3.8 million in cash consideration and 175 thousand shares of Class A Common Stock with a fair value of $ 1.2 million.

The consideration has been allocated to the assets acquired and assumed liabilities of Wolfgang based upon fair values, with any excess purchase price allocated to goodwill.

The purchase price allocation is as follows:

(dollars in thousands)

Cash and cash equivalents $ 1,606

7 unchanged sentences

Purchase price consideration including fair value of previously owned interest $ 6,160

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce of Wolfgang.

Goodwill of $ 2,451 was assigned to the Integrated Agencies Network reportable segment.

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of Wolfgang.

Goodwill of $ 2.5 million was assigned to the Integrated Agencies Network reportable segment.

The majority of the goodwill is deductible for income tax purposes.

1 unchanged sentence

We amortize purchased intangible assets on a straight-line basis over their respective useful lives.

The weighted average life of the total acquired identifiable intangible assets is five years .

The following table presents the details of identifiable intangible assets acquired:

Estimated Fair Value Estimated Useful Life in Years

Customer relationships $ 1,055 5

Total acquired intangible assets $ 1,055

Pro Forma Financial Information (unaudited)

The weighted average life of the total acquired identifiable intangible assets is approximately five years .

Pro Forma Financial Information

The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if it occurred as of January 1, 2021.

Year Ended December 31,

(dollars in thousands)

Revenue $ 2,696,733 $ 1,474,303

Net income $ 51,398 $ 36,538

Revenue and net loss attributable to Wolfgang, included within the year ended December 31, 2022 Consolidated Statements of Operations was $ 2,072 and $ 297 , respectively.

Revenue attributable to Wolfgang, included within the Consolidated Statements of Operations for the year ended December 31, 2023 was $ 5.7 million, and Net income was $ 0.7 million.

Revenue attributable to Wolfgang, included within the Consolidated Statements of Operations for the year ended December 31, 2022 was $ 2.1 million, and Net loss was $ 0.3 million.

Acquisition of Epicenter Experience LLC.

On October 3, 2022, the Company acquired the assets of Epicenter Experience LLC., (“Epicenter”) for approximately $ 9,864 in cash consideration, subject to post-closing adjustments, as well as contingent consideration up to a maximum value of $ 5,000 .

The contingent consideration is subject to meeting certain future earnings targets through 2024 and can be paid up to 25% in Class A Common Stock.

The consideration has been allocated to the assets acquired and assumed liabilities of Epicenter based upon preliminary estimated fair values.

The preliminary purchase price allocation is as follows:

On October 3, 2022, the Company acquired the assets of Epicenter Experience LLC (“Epicenter”) for $ 9.9 million in cash consideration, as well as contingent consideration up to a maximum value of $ 5.0 million.

The contingent consideration is subject to meeting certain future earnings targets through 2024 and can be paid up to 25% in shares of Class A Common Stock.

The consideration has been allocated to the assets acquired and assumed liabilities of Epicenter based upon fair values.

The purchase price allocation is as follows:

(dollars in thousands)

Accounts receivable $ 901

6 unchanged sentences

Purchase price consideration $ 11,864

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce of Epicenter.

Goodwill of $ 4,416 was assigned to the All Other reportable segment.

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of Epicenter.

Goodwill of $ 4.4 million was assigned to the All Other reportable segment.

The majority of the goodwill is deductible for income tax purposes.

1 unchanged sentence

We amortize purchased intangible assets on a straight-line basis over their respective useful lives.

The weighted average life of the total acquired identifiable intangible assets is five years .

The following table presents the details of identifiable intangible assets acquired:

Estimated Fair Value Estimated Useful Life in Years

Developed technology $ 7,300 5

Total acquired intangible assets $ 7,300

Pro Forma Financial Information (unaudited)

The weighted average life of the total acquired identifiable intangible assets is approximately five years .

Pro Forma Financial Information

The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if it occurred as of January 1, 2021.

Year Ended December 31,

(dollars in thousands)

Revenue $ 2,690,969 $ 1,473,183

Net income $ 49,652 $ 35,810

Revenue and net loss attributable to Epicenter, included within the year ended December 31, 2022 Consolidated Statements of Operations was $ 1,028 and $ 1,183 , respectively.

Other Acquisitions

On July 12, 2022, the Company acquired PEP Group Holdings B.V.

(“PEP Group”), an omnichannel content creation and adaption production company for approximately $ 521 in cash consideration, subject to post-closing adjustments, as well as contingent consideration up to a maximum value of € 2,553 .

The contingent consideration is subject to meeting certain future earnings targets through 2025.

On July 15, 2022, the Company acquired Apollo Program II Inc.

(“Apollo”), a real-time artificial intelligence-powered software-as-a-service platform, for approximately $ 2,300 in cash consideration, subject to post-closing adjustments, as well as guaranteed deferred payments of $ 1,000 and $ 1,500 on or prior to July 1, 2023 and July 1, 2024, respectively.

Revenue attributable to Epicenter, included within the Consolidated Statements of Operations for the year ended December 31, 2023 was $ 4.3 million, and Net loss was $ 0.7 million.

Revenue attributable to Epicenter, included within the Consolidated Statements of Operations for the year ended December 31, 2022 was $ 1.0 million, and Net loss was $ 1.2 million.

2021 Acquisitions

3 unchanged sentences

On August 2, 2021 (the “Closing Date”), we completed the combination of MDC and the Stagwell Subject Entities and a series of steps and related transactions (such combination and transactions, the “Transactions”).

In connection with the Transactions, among other things, (i) MDC completed a series of transactions pursuant to which it emerged as a wholly owned subsidiary of the Company, converted into a Delaware limited liability company and changed its name to Midas OpCo Holdings LLC, and subsequently to Stagwell Global LLC (“OpCo”);

In connection with the Transactions, among other things, (i) MDC completed a series of transactions pursuant to which it emerged as a wholly owned subsidiary of the Company, converted into a Delaware limited liability company and changed its name to Midas OpCo Holdings LLC (“OpCo”), (which name was subsequently to Stagwell Global LLC);

(ii) Stagwell Media contributed the equity interests of Stagwell Marketing and its direct and indirect subsidiaries to OpCo;

7 unchanged sentences

Under the acquisition method of accounting, the assets and liabilities of MDC, as the accounting acquiree, were recorded at their respective fair value as of the date the Transactions were completed.

On August 2, 2021, an aggregate of 179,970 shares of the Company’s Class C common stock, par value $0.00001 per share (the “Class C Common Stock”), were issued to Stagwell Media in exchange for $ 1.80 .

On August 2, 2021, an aggregate of 180.0 million shares of the Company’s Class C Common Stock were issued to Stagwell Media in exchange for $ 1.80 .

The Class C Common Stock does not participate in the earnings of the Company.

Additionally, an aggregate of 179,970 OpCo common units were issued to Stagwell Media in exchange for the equity interests of the Stagwell Subject Entities (the “Stagwell OpCo Contribution”).

The fair value of the purchase consideration was $ 429,062 , consisting of approximately 80,000 shares of the Company’s Class A Common Stock, Class B common stock, par value $ 0.001 per share (the “Class B Common Stock”), and common stock equivalents based on a per share price of approximately $ 5.42 , the closing stock price on the date of the combination.

Additionally, an aggregate of 180.0 million OpCo common units were issued to Stagwell Media in exchange for the equity interests of the Stagwell Subject Entities (the “Stagwell OpCo Contribution”).

The fair value of the purchase consideration was $ 429.1 million, consisting of 80.0 million shares of the Company’s Class A Common Stock, Class B common stock, par value $ 0.001 per share (the “Class B Common Stock”), and common stock equivalents based on a per share price of $ 5.42 , the closing stock price on the date of the combination.

ASC 805 requires the allocation of the purchase price consideration to the fair value of the identified assets acquired and liabilities assumed upon consummation of a business combination.

3 unchanged sentences

The purchase price allocation is as follows:

(dollars in thousands)

Cash and cash equivalents $ 130,197

22 unchanged sentences

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce of MDC.

Goodwill of $ 932,582 , $ 285,396 and $ 72,369 was assigned to the Integrated Agencies Network, the Brand Performance Network and the Communications Network reportable segments, respectively.

Goodwill of $ 932.6 million, $ 285.4 million and $ 72.4 million was assigned to the Integrated Agencies Network, the Brand Performance Network and the Communications Network reportable segments, respectively.

The majority of the goodwill is non-deductible for income tax purposes.

Goodwill has been updated from the previously reported amount of $ 1,299,374 as of December 31, 2021 to reflect a change in certain assets and liabilities.

Goodwill has been updated from the previously reported amount of $ 1,299.4 million as of December 31, 2021 to reflect a change in certain assets and liabilities.

There has been no change that impacts the Consolidated Statement of Operations.

4 unchanged sentences

Fair Value Estimated Useful Life in Years

(dollars in thousands)

Trade Names $ 98,000 10

5 unchanged sentences

Years Ended December 31,

(dollars in thousands)

Revenue $ 2,224,343 $ 2,087,025

The pro forma net loss was nominal for the years ended December 31, 2021 and 2020.

Revenue attributable to MDC, included within the year ended December 31, 2021 Consolidated Statements of Operations was $ 605,448 .

Revenue attributable to MDC, included within the year ended December 31, 2021 Consolidated Statements of Operations was $ 605.4 million.

The net loss included within the year ended December 31, 2021 Consolidated Statements of Operations was nominal.

Transaction expenses were approximately $ 15,000 for the twelve months ended December 31, 2021.

Transaction expenses were $ 15.0 million for the twelve months ended December 31, 2021.

Acquisition of GoodStuff Holdings Limited

On December 31, 2021, the Company acquired GoodStuff Holdings Limited (“Goodstuff”) for approximately £ 21,000 (approximately $ 28,188 ) of cash consideration as well as contingent consideration up to a maximum of £ 22,000 .

The cash consideration included an initial payment of £ 8,000 , an excess working capital payment of approximately £ 9,000 and approximately £ 4,000 of deferred payments.

On December 31, 2021, the Company acquired GoodStuff Holdings Limited (“Goodstuff”) for £ 21.0 million ($ 28.2 million) of cash consideration as well as contingent consideration up to a maximum of £ 22.0 million.

The cash consideration included an initial payment of £ 8.0 million, an excess working capital payment of £ 9.0 million and £ 4.0 million of deferred payments.

The contingent consideration is tied to employees’ service and will be recognized as deferred acquisition consideration expense through 2026.

Therefore, only the cash consideration has been allocated to the assets acquired and assumed liabilities of Goodstuff based upon their fair values, with any excess purchase price allocated to goodwill.

The purchase price allocation is as follows:

Cash and cash equivalents $ 30,985

Accounts receivable 28,685

Other current assets 3,207

Fixed assets 237

Right-of-use lease assets - operating leases 2,060

Identifiable intangible assets 14,974

Other assets 55

Accounts payable ( 6,344 )

Accruals and other liabilities ( 27,353 )

Advance billings ( 15,956 )

Current portion of lease liabilities ( 857 )

Income taxes payable ( 967 )

Long-term portion of lease liabilities ( 3,744 )

Other liabilities ( 1,204 )

Net assets assumed 23,778

Goodwill 4,410

Purchase price consideration $ 28,188

Therefore, only the cash consideration has been allocated to the $ 23.8 million of assets acquired and assumed liabilities of Goodstuff based upon their fair values, with any excess purchase price allocated to goodwill.

The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributed to the assembled workforce of Goodstuff.

Goodwill of $ 4,410 was assigned to the Brand Performance Network reportable segment.

Goodwill of $ 4.4 million was assigned to the Brand Performance Network reportable segment.

The majority of the goodwill is non-deductible for income tax purposes.

2 unchanged sentences

The weighted average life of the total acquired identifiable intangible assets is approximately ten years.

The following table presents the details of identifiable intangible assets acquired:

Fair Value Estimated Useful Life in Years

Trade Names $ 1,349 15

Customer Relationships 13,625 10

Total Acquired Intangible Assets $ 14,974

Trade names had a fair value of $ 1.3 million with an estimated useful life of fifteen years , and customer relationships had a fair value of $ 13.6 million with an estimated useful life of ten years .

Pro Forma Financial Information (unaudited)

1 unchanged sentence

Years Ended December 31,

Revenue $ 1,488,532 $ 902,577

Net Income 38,719 72,715

For the years ended December 31, 2021 and 2020, pro forma revenue was $ 1,488.5 million and $ 902.6 million, respectively, and net income was $ 38.7 million and $ 72.7 million, respectively.

Other Acquisitions

On July 12, 2022, the Company acquired PEP Group Holdings B.V., an omnichannel content creation and adaption production company for $ 0.5 million in cash consideration, as well as contingent consideration up to a maximum value of € 2.6 million.

The contingent consideration is subject to meeting certain future earnings targets through 2025.

On July 15, 2022, the Company acquired Apollo Program II Inc., a real-time artificial intelligence-powered software-as-a-service platform, for $ 2.3 million in cash consideration, as well as guaranteed deferred payments of $ 1.0 million and $ 1.5 million on or prior to July 1, 2023 and July 1, 2024, respectively.

On October 31, 2023, the Company sold ConcentricLife, which was included in Integrated Agencies Network, to a strategic buyer for $ 245.0 million in cash resulting in a pre-tax gain of $ 94.5 million.

The gain was recognized within Gain on sale of business within the Consolidated Statements of Operations.

The divestiture did not represent a strategic shift that would have a major effect on the Company’s consolidated results of operations, and therefore its results of operations were not reported as discontinued operations.

On September 15, 2021, the Company sold Reputation Defender, which was included in All Other Network, to a strategic buyer for $ 40.0 million resulting in a gain of $ 43.0 million.

The gain was recognized within Gain on sale of business within the Consolidated Statements of Operations.

2022 Purchases of Noncontrolling Interests

On April 1, 2022, the Company acquired the remaining interest in Hello Design, LLC (“Hello Design”) that it did not already own for an aggregate purchase price of $ 4,600 , comprised of a closing cash payment of $ 3,600 and a contingent deferred acquisition payment of $ 1,000 .

The contingent deferred payment was based on the financial results of the underlying business through the end of 2022 with the payment due in 2023.

On April 1, 2022, the Company acquired the remaining interest in Hello Design, LLC (“Hello Design”) that it did not already own for an aggregate purchase price of $ 4.6 million, comprised of a closing cash payment of $ 3.6 million and a contingent deferred acquisition payment of $ 1.0 million.

The contingent deferred payment of $ 1.0 million was paid in the second quarter of 2023.

2021 Purchases of Noncontrolling Interests

On October 1, 2021, the Company entered into an agreement to purchase the approximate 27 % remaining interest of Targeted Victory it did not already own, stipulating the purchase of 13.3 % on October 1, 2021 and the remaining 13.3 % on July 31, 2023, with the option for the seller to delay the second purchase until July 31, 2025.

The purchase price of $ 73,898 was comprised of a contingent deferred acquisition payment and redeemable noncontrolling interest with estimated present values at the acquisition date of $ 46,618 and $ 27,280 , respectively.

The purchase price of $ 73.9 million was comprised of a contingent deferred acquisition payment and redeemable noncontrolling interest with estimated present values at the acquisition date of $ 46.6 million and $ 27.3 million, respectively.

The contingent deferred payment and redeemable noncontrolling interest were based on the financial results of the underlying business through July 2023 and July 2025, respectively.

In addition, at the option of the Company, up to 50 % of the total purchase price can be paid in shares of Class A Common Stock and in no event may the purchase price exceed $ 135,000 .

On December 1, 2021, the Company acquired the approximate 27 % remaining interest of Concentric it did not already own for an aggregate purchase price of $ 8,058 , comprised of a closing cash payment of $ 1,581 and contingent deferred acquisition payments with an estimated present value at the acquisition date of $ 6,477 .

The contingent deferred payments were based on the financial results of the underlying business through 2022 with final payment due in 2023.

On December 31, 2021, the Company acquired the approximate 49 % remaining interest of Instrument it did not already own for an aggregate purchase price of $ 157,072 , comprised of a closing payment of $ 37,500 in cash and $ 37,500 in shares of Class A Common Stock and deferred acquisition payments with an estimated present value at the acquisition date of $ 82,072 , with approximately 40% to be paid in shares of Class A Common Stock.

The deferred payments are not contingent and will be paid in 2023 and 2024.

2021 Disposition

On September 15, 2021, the Company sold Reputation Defender to a strategic buyer for approximately $ 40,000 resulting in a gain of approximately $ 43,000 .

The gain was recognized within Other, net within the Consolidated Statements of Operations.

2020 Acquisitions

On February 14, 2020, the Company acquired Sloane & Company (“Sloane”) for approximately $ 24,400 of total consideration.

Total consideration included a cash payment of $ 19,600 and contingent deferred acquisition consideration of $ 4,800 .

On August 14, 2020, the Company acquired Kettle Solutions, LLC (“Kettle”) for approximately $ 5,400 of total consideration.

Total consideration included a cash payment of $ 4,900 , plus an additional $ 500 due upon the finalization of Kettle’s working capital accounts, as outlined in the purchase agreement.

The purchase agreement also offers the previous owners of Kettle an additional $ 11,900 in deferred consideration.

On October 30, 2020, the Company acquired TrueLogic Software, LLC, Ramenu S.A., and Polar Bear Development S.R.L.

(collectively referred to as “Truelogic”), for approximately $ 17,300 of total consideration.

Total consideration included a cash payment of $ 8,900 , the acquisition date fair value of the contingent deferred acquisition consideration of $ 7,900 , and an additional $ 500 due upon the finalization of Truelogic’s working capital accounts, as outlined in the purchase agreement.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of each acquisition:

Sloane Kettle Truelogic Total

Cash, cash equivalents and restricted cash $ — $ 49 $ 90 $ 139

Accounts receivable and other current assets 2,768 2,732 2,958 8,458

Other noncurrent assets — 172 10 182

Intangible assets 5,900 1,930 9,500 17,330

Property and equipment 72 58 50 180

Right-of-use lease assets – operating leases — 533 201 734

Accounts payable and other current liabilities ( 469 ) ( 552 ) ( 1,063 ) ( 2,084 )

Advanced billings ( 130 ) ( 310 ) ( 429 ) ( 869 )

Operating lease liabilities — ( 533 ) ( 201 ) ( 734 )

Goodwill 16,275 1,323 6,184 23,782

Total net assets acquired $ 24,416 $ 5,402 $ 17,300 $ 47,118

Goodwill recognized on the Sloane, Kettle and Truelogic acquisitions is fully-deductible for income tax purposes.

The following table reports the fair value of intangible assets acquired, including the corresponding weighted average amortization periods, as of the date of each acquisition:

Weighted Average Amortization Period Sloane Kettle Truelogic Total

Customer relationships 10 years $ 4,600 $ 1,600 $ 9,100 $ 15,300

Trade names 11 years 1,300 330 400 2,030

Total $ 5,900 $ 1,930 $ 9,500 $ 17,330

The following table summarizes the total revenue and net income included in the Consolidated Statements of Operations for the year ended December 31, 2020 from the date of each acquisition:

Year Ended December 31, 2020

Revenue $ 22,381

Net Income 2,685

Pro Forma Financial Information (unaudited)

The unaudited pro forma information for the periods set forth below gives effect to the 2020 acquisitions as if they had occurred as of January 1, 2020.

The pro forma information is presented for informational purposes only and is not necessarily

indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time:

Year Ended December 31, 2020

Revenue $ 911,203

Net Income 75,767

In addition, at the option of the Company, up to 50 % of the total purchase price can be paid in shares of Class A Common Stock and in no event may the purchase price exceed $ 135.0 million.

On December 1, 2021, the Company acquired the approximate 27 % remaining interest of ConcentricLife it did not already own for an aggregate purchase price of $ 8.1 million, comprised of a closing cash payment of $ 1.6 million and contingent deferred acquisition payments with an estimated present value at the acquisition date of $ 6.5 million.

The contingent deferred payments were based on the financial results of the underlying business.

On December 31, 2021, the Company acquired the approximate 49 % remaining interest of Instrument it did not already own for an aggregate purchase price of $ 157.1 million, comprised of a closing payment of $ 37.5 million in cash and $ 37.5 million in shares of Class A Common Stock and deferred acquisition payments with an estimated present value at the acquisition date of $ 82.1 million, with approximately 40 % to be paid in shares of Class A Common Stock.

The deferred payments are not contingent.

The Company’s revenue recognition policies are established in accordance with ASC 606, and accordingly, revenue is recognized when control of the promised goods or services is transferred to our clients, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

The Stagwell network provides an extensive range of services to our clients, offering a variety of marketing and communication capabilities including strategy, creative and production for advertising campaigns across a variety of platforms (print, digital, social media, television broadcast), public relations services including strategy, editorial, crisis support or issues management, online fundraising, media training, influencer engagement and events management.

We also provide media-based solutions to drive brand performance, including buying and planning across a range of platforms (out-of-home, paid search, social media, lead generation, programmatic, television broadcast), experiential marketing and application/website design and development.

3 unchanged sentences

For such arrangements, revenue is allocated to each performance obligation based on its relative stand-alone selling price.

Stand-alone selling prices are determined based on the prices charged to clients or using expected cost plus margin.

Stand-alone selling prices are determined based on the prices charged to clients on a stand-alone basis or using expected cost plus margin.

The determination of our performance obligations is specific to the services included within each contract.

1 unchanged sentence

Contracts that contain services that can be provided on a stand-alone basis, that are not significantly integrated or interdependent, and that do not significantly modify or customize each other, are typically considered separate performance obligations.

Typically, these services are creative (or strategy), production, experiential marketing, media planning and media buying.

Typically, these services are creative (or strategy), production, experiential marketing and media planning and media buying arrangements.

Certain of the Company’s contracts consist of a single performance obligation.

16 unchanged sentences

Accordingly, for these contracts the Company has included reimbursed expenses in revenue.

In other arrangements

where a third-party supplier, rather than the Company, is primarily responsible for the integration of services into the final deliverables, and thus the Company is solely arranging for the third-party supplier to provide these services to our client, we generally act as agent and record revenue equal to the net amount retained, when the fee or commission is earned.

The role of Stagwell’s Brands under a production services agreement is to facilitate a client’s purchasing of production capabilities from a third-party production company in accordance with the client’s strategy and guidelines.

The obligation of Stagwell’s Brands under media buying services is to negotiate and purchase advertising media from a third-party media vendor on behalf of a client to execute its media plan.

In other arrangements where a third-party supplier, rather than the Company, is primarily responsible for the integration of services into the final deliverables, and thus the Company is solely arranging for the third-party supplier to provide these services to our client, we generally act as agent and record revenue equal to the net amount retained, when the fee or commission is earned.

The role of Stagwell’s Brands under a typical production services agreement is to facilitate a client’s purchasing of production capabilities from a third-party production company in accordance with the client’s strategy and guidelines.

The obligation of Stagwell’s Brands under typical media buying services is to negotiate and purchase advertising media from a third-party media vendor on behalf of a client to execute its media plan.

Typically, we do not obtain control prior to transferring these services to our clients;

therefore, we primarily act as agent for production and media buying services.

In situations where we are primarily responsible for fulfillment or have discretion in pricing, we have concluded that we have obtained control and act as principal.

A small portion of the Company’s contractual arrangements with clients include performance incentive provisions, which allow the Company to earn additional revenues as a result of its performance relative to both quantitative and qualitative goals.

7 unchanged sentences

The Company’s Brands often cooperate with one another through referrals and the sharing of both services and expertise, which enables Stagwell to service clients’ varied marketing needs by crafting custom integrated solutions.

Additionally, the Company maintains separate, independent operating companies to enable it to effectively manage potential conflicts of interest by representing competing clients across the Stagwell network.

The following table presents revenue disaggregated by our principal capabilities for the years ended December 31, 2023, 2022, and 2021.

We reclassified certain brands into the Stagwell Marketing Cloud Group (software-as-a-service and data-as-a-service tools for the in-house marketers) principal capability in the third quarter of 2023.

All prior periods presented have been revised to reflect these changes.

Year Ended December 31,

Principal Capabilities Reportable Segment 2023 2022 2021

(dollars in thousands)

Digital Transformation All segments $ 636,624 $ 773,677 $ 373,657

Creativity and Communications Integrated Agencies Network, Brand Performance Network, Communications Network 1,221,855 561,538 152,499

Creativity and Communications All segments 1,160,178 1,222,289 591,062

Performance Media and Data Brand Performance Network 295,247 279,903 193,476

Consumer Insights and Strategy Integrated Agencies Network 199,260 212,869 162,733

Stagwell Marketing Cloud Group All segments 235,868 199,054 148,435

$ 2,527,177 $ 2,687,792 $ 1,469,363

Stagwell has historically largely focused where the Company was founded in North America, the largest market for its services in the world.

The Company has expanded its global footprint to support clients in international markets.

Stagwell’s Brands are located in the United States and United Kingdom, and more than 28 other countries around the world.

In the past, some clients have responded to weakening economic conditions with reductions to their marketing budgets, which included discretionary components that are easier to reduce in the short term than other operating expenses.

The Company continues to expand its global footprint to support clients in international markets.

Historically, some clients have responded to weakening economic conditions with reductions to their marketing budgets, which included discretionary components that are easier to reduce in the short term than other operating expenses.

The following table presents revenue disaggregated by geography for the years ended December 31, 2023, 2022, and 2021:

1 unchanged sentence

Geographical Location Reportable Segment 2023 2022 2021

(dollars in thousands)

United States All $ 2,048,229 $ 2,218,681 $ 1,219,816

4 unchanged sentences

Contract assets consist of fees and reimbursable outside vendor costs incurred on behalf of clients when providing advertising, marketing and corporate communications services that have not yet been invoiced to clients.

Unbilled service fees were $ 116,381 and $ 116,558 at December 31, 2022 and December 31, 2021, respectively, and are included as a component of Accounts receivable, net on the Consolidated Balance Sheets.

Outside vendor costs incurred on behalf of clients which have yet to be invoiced were $ 93,077 and $ 63,065 at December 31, 2022 and December 31, 2021, respectively, and are included on the Consolidated Balance Sheets as Expenditures billable to clients.

Such amounts are invoiced to clients at various times over the course of providing services.

Unbilled service fees were $ 141.9 million and $ 116.4 million at December 31, 2023 and December 31, 2022, respectively, and are included as a component of Accounts receivable, net on the Consolidated Balance Sheets.

Outside vendor costs incurred on behalf of clients which have yet to be invoiced were $ 114.1 million and $ 93.1 million at December 31, 2023 and December 31, 2022, respectively, and are included on the Consolidated Balance Sheets as Expenditures billable to clients.

Contract liabilities represent advanced billings to customers for fees and reimbursements of third-party costs, whether we act as principal or agent.

1 unchanged sentence

In arrangements in which we are acting as an agent, the recognition related to the contract liability is presented on a net basis within the Consolidated Statements of Operations.

Advance billings at December 31, 2022 and December 31, 2021 were $ 337,034 and $ 361,885 , respectively.

The decrease in Advance billings of $ 24,851 for the year ended December 31, 2022 was primarily driven by $ 345,277 of revenues recognized that were included in the Advance billings balances as of December 31, 2021 and reductions due to the incurrence of third-party costs, partially offset by the acquisition of certain contract liabilities (as detailed below) and cash payments received or due in advance of satisfying our performance obligations.

In 2022, the Company acquired $ 3,195 in contract assets and $ 7,620 in contract liabilities in connection with the acquisitions of BNG, Wolfgang, and Maru.

See Note 4 of the Notes included herein for additional information related to these acquisitions.

Changes in the contract asset and liability balances during the year ended December 31, 2022 were not materially impacted by write offs, impairment losses or any other factors outside of the above acquisitions.

Advance billings at December 31, 2023 and December 31, 2022 were $ 301.7 million and $ 337.0 million, respectively.

The decrease in Advance billings of $ 35.4 million for the year ended December 31, 2023 was primarily driven by $ 320.0 million of revenue recognized that was included in the Advance billings balances as of December 31, 2022, the incurrence of third-party costs, offset by cash payments received or due in advance of satisfying our performance obligations.

Changes in the contract asset and liability balances during the year ended December 31, 2023 were not materially impacted by write offs, impairment losses or any other factors.

Unsatisfied Performance Obligations

The majority of our contracts are for periods of one year or less.

For those contracts with a term of more than one year, we had approximately $ 52,613 of unsatisfied performance obligations as of December 31, 2022 of which we expect to recognize approximately 82 % in 2023, 16 % in 2024 and 2 % in 2025.

Income (Loss) Per Share

The following table sets forth the computations of basic and diluted income per common share for the year ended December 31, 2022:

For those contracts with a term of more than one year, we had $ 97.7 million of unsatisfied performance obligations as of December 31, 2023 of which we expect to recognize approximately 86 % in 2024, 11 % in 2025 and 3 % in 2026.

Earnings (Loss) Per Share

The following tables set forth the computations of basic and diluted income per common share for the year ended December 31, 2023 (amounts in thousands, except per share amounts):

Year Ended December 31,

Income Per Share - Basic

Earnings Per Share - Basic

Net income attributable to Class C shareholders

Net income attributable to other equity interest holders

Net income attributable to noncontrolling and redeemable noncontrolling interests

Net income attributable to Stagwell Inc.

common shareholders

Weighted average number of common shares outstanding 117,259

Earnings Per Share - Basic

Earnings Per Share - Diluted

Net income attributable to Stagwell Inc.

common shareholders

Basic - Weighted Average number of common shares outstanding 117,259

Dilutive shares:

Stock appreciation right awards 421

Restricted share and restricted unit awards 4,485

Employee Stock Purchase Plan shares 5

Dilutive - Weighted average number of common shares outstanding 122,170

Earnings Per Share - Diluted $ 0.00

Anti-dilutive:

Class C Shares 154,972

Class A Shares to settle deferred acquisition obligations 5,127

The following table sets forth the computations of basic and diluted earnings per common share for the year ended December 31, 2022:

Year Ended December 31,

Earnings Per Share - Basic (amounts in thousands, except per share amounts)

Net income $ 50,044

5 unchanged sentences

Weighted Average number of common shares outstanding 124,262

Income Per Share - Basic

Income Per Share - Diluted

Earnings Per Share - Basic $ 0.16

Earnings Per Share - Diluted

Net income attributable to Stagwell Inc.

3 unchanged sentences

Dilutive shares:

Stock appreciation rights 1,896

Stock appreciation right awards 1,896

Restricted share and restricted unit awards 4,467

Class C Shares 165,971

Diluted - Weighted average number of common shares outstanding 296,596

Income Per Share - Diluted

Restricted stock awards of 2,292 as of December 31, 2022 are excluded from the computation of diluted income per common share because the performance contingency necessary for vesting had not been met as of the reporting date.

The following table sets forth the computations of basic and diluted loss per common share for the year ended December 31, 2021:

Dilutive - Weighted average number of common shares outstanding 296,596

Earnings Per Share - Diluted $ 0.12

Restricted stock awards of 2.9 million and 2.3 million as of December 31, 2023 and 2022, respectively, were excluded from the computation of diluted earnings (loss) per common share because the performance contingencies necessary for vesting were not met as of the reporting date.

The following table sets forth the computations of basic and diluted earnings per common share for the year ended December 31, 2021:

Year Ended December 31,

16 unchanged sentences

$ 159,258 $ ( 81,433 ) $ 77,825 $ 158,323 $ ( 59,445 ) $ 98,878

The table above has been revised to reclassify previously reported gross capitalized software and accumulated amortization of $ 29,844 and $ 8,757 , respectively, as of December 31, 2021 that should have been classified within intangible assets rather than fixed assets to more closely align these net assets with the category of assets they represent.

Depreciation expense for the years ended December 31, 2022, 2021, and 2020 was $ 26,510 , $ 15,416 and $ 7,026 , respectively.

Depreciation expense for the years ended December 31, 2023, 2022, and 2021 were $ 29.0 million, $ 26.5 million and $ 15.4 million, respectively.

Goodwill and Intangible Assets

3 unchanged sentences

Acquired goodwill 1,058,411 178,994 66,244 — 1,303,649

Disposition — — — ( 935 ) ( 935 )

Foreign currency translation ( 502 ) ( 1,020 ) — ( 194 ) ( 1,716 )

1 unchanged sentence

Acquired goodwill 3,330 26,176 6,569 29,387 65,462

Disposition — — — ( 935 ) ( 935 )

Impairment ( 49,840 ) ( 49,314 ) — ( 17,560 ) ( 116,714 )

Transfer of goodwill between segments (1)

( 111,065 ) 111,065 — — —

Foreign currency translation ( 11,422 ) ( 13,467 ) ( 753 ) — ( 25,642 )

( 15,682 ) 685 6,124 — ( 8,873 )

Balance at December 31, 2022 $ 968,394 $ 433,758 $ 127,717 $ 37,087 $ 1,566,956

1 unchanged sentence

18,451 2,626 — — 21,077

Impairment ( 49,840 ) ( 49,314 ) — ( 17,560 ) ( 116,714 )

Disposition - ConcentricLife

( 98,779 ) — — — ( 98,779 )

Transfer of goodwill between segments (1)

3 unchanged sentences

Balance at December 31, 2023 $ 881,395 $ 441,660 $ 136,587 $ 39,173 $ 1,498,815

(1) For the year ended December 31, 2022, the Company’s acquisitions resulted in goodwill of $ 65,462 .

See Note 4 of the Notes included herein for information related to the acquisitions.

(2) Due to changes in the Company’s internal management and reporting structure in the second quarter of 2022, reportable segment results for periods presented prior to the second quarter of 2022 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

Specifically, Forsman & Bodenfors, Observatory, Crispin Porter Bogusky, Bruce Mau and Vitro Brands, previously within the Integrated Agencies Network, are now within the Brand Performance Network.

(1) Transfer of goodwill resulting from changes to the Company’s reportable segments (Networks) due to changes in the Company’s internal management and reporting structure.

See Note 20 of the Notes included herein for additional information related to these changes.

(3) Other represents adjustments associated with the finalization of purchase price accounting for acquisitions occurring in 2021.

The Company recognized an impairment and other losses charge of $ 122,179 for the year ended December 31, 2022, primarily related to the impairment of goodwill totaling $ 116,714 .

(2) Represents adjustments associated with the finalization of purchase price accounting for acquisitions.

There was $ 116.7 million of accumulated goodwill impairment charges as of December 31, 2022 and December 31, 2023.

The Company recognized an impairment and other losses charge of $ 122.2 million for the year ended December 31, 2022, primarily related to the impairment of goodwill totaling $ 116.7 million.

The goodwill impairment was to write-down the carrying value in excess of the fair value at eight reporting units, two in the Integrated Agencies Network, five in the Brand Performance Network and one within the All Other category.

The charge was recorded within Impairment and other losses on the Consolidated Statements of Operations.

At each reporting period, the Company assesses whether it is more likely than not that the carrying amount of its reporting units exceed their fair value.

As of October 1, 2022 (the annual impairment test date) and December 31, 2022, the Company performed this assessment and determined that certain reporting units’ carrying values exceeded their fair value.

As of October 1, 2022, the Company performed a quantitative impairment test for all reporting units and as of December 31, 2022, the Company performed a quantitative impairment test for certain reporting units that were determined to be more likely than not impaired.

As a result of these tests, management concluded there to be certain reporting units with a carrying value in excess of their fair value resulting in an impairment of $ 116,714 in 2022.

The difference in carrying value and fair value was primarily due to a combination of changes in fair value measures such as an increase in interest rates and decrease in market multiples of comparable public companies, as well as current financial forecasts below the previous forecast.

In its assessment, the Company uses a combination of the income approach, which incorporates the use of the discounted cash flow method, and the market approach, which incorporates the use of earnings and revenue multiples based on market data.

The Company generally applies an equal weighting to the income and market approaches for the impairment test.

There was $ 116,714 of accumulated goodwill impairment charges as of December 31, 2022.

The gross and net amounts of intangible assets other than goodwill as of December 31, are as follows:

1 unchanged sentence

Customer relationships, gross

$ 870,987 $ 875,160

Accumulated amortization ( 218,808 ) ( 150,655 )

Customer relationships, net

$ 652,179 $ 724,505

Trade names, gross

$ 188,820 $ 197,037

Accumulated amortization ( 74,141 ) ( 53,150 )

Trade names, net

Developed technology and other intangible assets – gross $ 63,565 $ 37,550

$ 114,679 $ 143,887

Capitalized software, gross

$ 70,622 $ 42,234

Accumulated amortization ( 30,928 ) ( 18,591 )

Developed technology and other intangible assets – net $ 39,137 $ 22,600

Total intangible assets $ 1,135,762 $ 1,103,253

Capitalized software, net

$ 39,694 $ 23,643

Developed technology and other, gross

$ 21,583 $ 21,331

Accumulated amortization ( 9,915 ) ( 5,837 )

Developed technology and other, net

$ 11,668 $ 15,494

Total intangible assets, gross

$ 1,152,012 $ 1,135,762

Accumulated amortization ( 333,792 ) ( 228,233 )

Total intangible assets, net

For the year ended December 31, 2022, the Company recognized an impairment charge of $ 1,400 to reduce the carrying values of intangible assets within the Integrated Agencies Network and Brand Performance Network reportable segments primarily in connection with the abandonment of certain trade names as part of the integration of certain entities.

For the year ended December 31, 2021, the Company recognized an impairment charge of $ 16,187 to reduce the carrying values of intangible assets within the Integrated Agencies Network and Brand Performance Network reportable segments in connection with the abandonment of certain trade names as part of the rebranding of certain Brands.

These charges were recorded as Impairment and other losses on the Consolidated Statements of Operations.

The weighted average amortization period for customer relationships is fourteen years , trade names is twelve years , and developed technology and other intangible assets is three years .

In total, the weighted average amortization period is thirteen years .

Amortization expense related to amortizable intangible assets for the years ended December 31, 2022, 2021, and 2020 was $ 103,060 , $ 61,054 , and $ 33,999 , respectively.

$ 818,220 $ 907,529

T he Company recognized an impairment and other losses charge of $ 16.2 million for the year ended December 31, 2021, primarily related to intangible assets.

The impairment was to reduce the carrying values of intangible assets within one reporting unit in the Integrated Agencies Network and two in the Media Network reportable segments in connection with the abandonment of certain trade names as part of the rebranding of certain Brands.

The charge was recorded within Impairment and other losses on the Consolidated Statements of Operations.

The weighted average amortization period for customer relationships is thirteen years , trade names is twelve years , capitalized software is three years , and developed technology and other intangible assets is six years .

In total, the weighted average amortization period is twelve years .

Amortization expense related to amortizable intangible assets for the years ended December 31, 2023, 2022, and 2021 was $ 112.2 million, $ 103.1 million, and $ 61.1 million, respectively.

The estimated amortization expense for the five succeeding years is as follows:

4 unchanged sentences

Deferred acquisition consideration on the Consolidated Balance Sheets consists of deferred obligations related to contingent and fixed purchase price payments, and contingent and fixed retention payments tied to continued employment of specific personnel.

Contingent deferred acquisition consideration is recorded at the acquisition date fair value and adjusted at each reporting period within Office and general expenses on the Consolidated Statements of Operations.

The following table presents changes in contingent deferred acquisition consideration, which is measured at fair value on a recurring basis using significant unobservable inputs, and a reconciliation to the amounts reported on the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021:

Arrangements that are not contingent upon future employment are initially measured at the acquisition date fair value and are remeasured at each reporting period within Office and general expenses on the Consolidated Statements of

Arrangements that are contingent upon future employment are expensed as earned over the respective vesting (employment) period within Office and general expenses on the Consolidated Statements of Operations.

The following table presents changes in deferred acquisition consideration and a reconciliation to the amounts reported on the Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022:

2023 December 31,

(dollars in thousands)

Beginning balance $ 161,323 $ 222,369

Payments ( 73,963 ) ( 12,431 )

( 97,447 ) ( 74,963 )

Adjustments to deferred acquisition consideration (2)

3 unchanged sentences

Currency translation adjustment 680 ( 758 )

Other ( 139 ) ( 705 )

Ending balance (4)

$ 101,058 $ 161,323

(1) Adjustment to deferred acquisition consideration contains fair value changes from the Company’s initial estimates of deferred acquisition payments.

Adjustments to deferred acquisition consideration are recorded within Office and general expenses on the Consolidated Statements of Operations.

(2) In 2021, approximately $ 61,000 of additions represent deferred acquisition consideration acquired in connection with the acquisition of MDC.

Approximately $ 136,000 of additions represent deferred acquisition consideration acquired in connection with the purchases of noncontrolling interests.

See Note 4 of the Notes included herein for additional information related to the purchases of Concentric, Targeted Victory, and Instrument.

In 2022, approximately $ 24,000 of additions represent deferred acquisition consideration acquired in connection with the acquisitions of BNG, Apollo, PEP Group and Epicenter.

See Note 4 of the Notes included herein for additional information related to these acquisitions.

(3) As of December 31, 2022, approximately, $ 51,000 of the deferred acquisition consideration is expected to be settled in the Company’s Class A Common Stock.

(1) Includes deferred acquisition consideration payments settled in shares of Class A Common Stock of $ 32.8 million and $ 1.0 million, respectively, for the period ended December 31, 2023 and December 31, 2022.

(2) Adjustments to deferred acquisition consideration contains fair value changes from the Company’s initial estimates of deferred acquisition payments and accretion of expense as awards are earned over the vesting period.

(3) In 2021, the Company entered into an agreement to purchase the remaining 26.7 % interest in Targeted Victory it did not previously own.

The agreement provided for the purchase of 50 % of the interest on October 1, 2021 (paid in October 2023) and 50 % on July 31, 2023 (payable in October 2025 with a seller’s right to defer until October 2027).

In connection with the purchase, the estimated amount payable in October 2025, was reclassified from redeemable noncontrolling interest to deferred acquisition consideration.

(4) The contingent and fixed deferred acquisition consideration obligation was $ 57.5 million and $ 43.6 million, respectively, as of December 31, 2023 and $ 69.9 million and $ 91.4 million, respectively, as of December 31, 2022.

The deferred acquisition consideration as of December 31, 2023 and December 31, 2022, includes $ 29.3 million and $ 51.6 million, respectively, expected to be settled in shares of Class A Common Stock.

The Company leases office space in North America, Europe, Asia, South America, Africa, and Australia.

2 unchanged sentences

The Company’s finance leases are immaterial.

The Company’s leasing policies are established in accordance with ASC 842, and accordingly, the Company recognizes on the balance sheet at the time of lease commencement a right-of-use lease asset and a lease liability, initially measured at the present value of the lease payments.

The Company’s leasing policies are established in accordance with FASB’s Accounting Standards Codification 842 (“ASC 842”), and accordingly, the Company recognizes on the balance sheet at the time of lease commencement a right-of-use lease asset and a lease liability, initially measured at the present value of the lease payments.

Right-of-use lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

7 unchanged sentences

Lease liabilities are not remeasured as a result of changes in the index or rate, rather changes in these types of payments are recognized in the period in which the obligation for those payments is incurred.

In addition, some of our leases contain variable payments for utilities, insurance, real estate tax, repairs and maintenance, and other variable operating expenses.

addition, some of our leases contain variable payments for utilities, insurance, real estate tax, repairs and maintenance, and other variable operating expenses.

Such amounts are not included in the measurement of the lease liability and are recognized in the period when the facts and circumstances which the variable lease payments are based upon occur.

5 unchanged sentences

Currently, the Company subleases office space in North America and Europe.

As of December 31, 2022, the Company has entered into two operating leases for which the commencement date has not yet occurred primarily because of the premises being prepared for occupancy by the landlord.

Accordingly, these two leases represent an obligation of the Company that is not reflected within the Consolidated Balance Sheets as of December 31, 2022.

The aggregate future liability related to these leases is approximately $ 3,266 .

As of December 31, 2023, the Company entered into three operating leases for which the commencement date has not yet occurred primarily because of the premises being prepared for occupancy by the landlord.

Accordingly, these three leases represent an obligation of the Company that is not reflected within the Consolidated Balance Sheets as of December 31, 2023.

The aggregate future liability related to these leases is $ 5.9 million.

The discount rate used for leases accounted for under ASC 842 is the Company’s collateralized credit adjusted borrowing rate.

2 unchanged sentences

2023 2022 2021

(dollars in thousands)

Operating lease cost $ 76,750 $ 75,190 $ 46,019

6 unchanged sentences

Right-of-use lease assets obtained in exchange for operating lease liabilities and other non-cash adjustments (1)

As of December 31, 2022, the weighted average remaining lease term (in years) and weighted average discount rate were 6.4 and 4.5 %, respectively.

$ 37,259 $ 27,761 $ 373,179

(1) Includes Right-of-use lease assets obtained in exchange for operating lease liabilities related to acquisitions.

As of December 31, 2023, the weighted average remaining lease term (in years) and weighted average discount rate were 6.41 years and 5.5 %, respectively.

Operating lease expense is included in Office and general expenses in the Consolidated Statements of Operations.

The Company’s lease expense for leases with a term of 12 months or less is immaterial.

In the year ended December 31, 2022, the Company recorded a charge of $ 2,582 to reduce the carrying value of three of its right-of-use lease assets and related leasehold improvements.

These right-of-use lease assets related to agencies within the Integrated Agencies Network and the Brand Performance Network.

As a result of subleasing or abandoning the space, the Company evaluated the facts and circumstances related to the use of the assets which indicated that they may not be recoverable.

Using the sublease income to develop expected future cash flows, it was determined that the fair value of the assets were less than their carrying value.

This impairment charge is included in Impairment and other losses within the Consolidated Statements of Operations.

The following table presents minimum future rental payments under the Company’s leases at December 31, 2022 and their reconciliation to the corresponding lease liabilities:

In the year ended December 31, 2023, as a result of subleasing or ceasing use of office spaces, the Company recognized a charge of $ 10.0 million to reduce the carrying value of four of its right-of-use lease assets and related leasehold improvements.

The right-of-use lease assets and related leasehold improvements related to agencies within the Integrated Agencies Network and the Brand Performance Network.

In the year ended December 31, 2022, the Company recognized a charge of $ 2.6 million, to reduce the carrying value of three of its right-of-use lease assets and related leasehold improvements.

The right-of-use lease assets and related leasehold improvements related to agencies within the Integrated Agencies Network and the Brand Performance Network.

The Company evaluated the facts and circumstances related to the use of the assets which indicated that they may not be recoverable.

Using estimated and actual sublease income to develop expected future cash flows, it was determined that the fair

value of the assets were less than their carrying value.

The aforementioned impairment charges are included in Impairment and other losses within the Consolidated Statements of Operations.

The following table presents minimum future rental payments under the Company’s leases as of December 31, 2023 and their reconciliation to the corresponding lease liabilities:

Maturity Analysis

(dollars in thousands)

2024 $ 78,733

5 unchanged sentences

2023 December 31,

Revolving credit facility

(dollars in thousands)

Credit Agreement

$ 59,000 $ 100,000

2 unchanged sentences

Debt issuance costs ( 13,172 ) ( 15,293 )

5.625% Notes, net of debt issuance costs

1,086,828 1,084,707

Total long-term debt $ 1,145,828 $ 1,184,707

Interest expense related to long-term debt included in Interest expense, net on the Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020 was $ 73,788 , $ 29,594 , and $ 5,472 , respectively.

The amortization of debt issuance costs included in Interest expense, net on the Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020 $ 2,358 , $ 2,693 , and $ 831 , respectively.

Interest expense related to long-term debt included in Interest expense, net on the Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021, was $ 88.7 million, $ 73.8 million, and $ 29.6 million, respectively.

The amortization of debt issuance costs included in Interest expense, net on the Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021 was $ 3.2 million, $ 2.4 million, and $ 2.7 million, respectively.

Revolving Credit Agreement

On November 18, 2019, the Company entered into a debt agreement (“JPM Syndicated Facility”) with a syndicate of banks led by JPMorgan Chase Bank, N.A (“JPM”).

The JPM Syndicated Facility consisted of a five-year revolving credit facility of $ 265,000 (“JPM Revolver”) with the right to be increased by an additional $ 150,000 .

On March 18, 2020, the Company increased the commitments on the JPM Revolver by $ 60,000 to $ 325,000 .

On August 2, 2021, in connection with the closing of the acquisition of MDC, the Company entered into an amended and restated credit agreement (as further amended on April 28, 2022 and December 14, 2022, the “Combined Credit Agreement”) with a syndicate of banks led by JPM to increase commitments on the existing JPM Revolver.

The Combined Credit Agreement consists of a $ 500,000 senior secured revolving credit facility with a five-year maturity.

The Combined Credit Agreement contains sub-limits for revolving loans denominated in pounds and euros not to exceed U.S.

dollar equivalent of $ 50,000 in pounds and $ 50,000 in euros and $ 100,000 in the aggregate.

Additionally, the Combined Credit Agreement contains a $ 15,000 sub-limit for letters of credits denominated in pounds or euros.

It also includes an accordion feature under which the Company may request, subject to lender approval and certain conditions, to increase the amount of the commitments to an aggregate amount not to exceed $ 650,000 .

On April 28, 2022, the Company amended the Combined Credit Agreement.

Among other things, this amendment replaced any references to LIBOR with references to SOFR.

Borrowings pursuant to the Combined Credit Agreement, as amended, bear interest at a rate equal to, at the Company’s option, (i) the greatest of (a) the prime rate of interest in effect on such day, (b) the federal funds effective rate plus 0.50 % and (c) SOFR plus 1 % in each case, plus the applicable margin (calculated based on the Company’s Total Leverage Ratio, as defined in the Combined Credit Agreement) at that time.

Additionally, the Combined Credit Agreement was amended to remove certain pre-commencement notice provisions for certain acquisitions under $ 50,000 in the aggregate, increased the amount permitted for certain investments allowed under the Combined Credit Agreement, and, subject to certain conditions, to allow for the repurchase of Stagwell Inc.

stock in an amount not to exceed $ 100,000 in any fiscal year.

All other substantive terms of the Combined Credit Agreement remain unchanged.

Prior to April 28, 2022, borrowings under the Combined Credit Agreement bore interest at a rate equal to, at the Company’s option, (i) the greatest of (a) the prime rate of interest announced from time to time by JPM, (b) the federal funds effective rate from time to time plus 0.50 % and (c) the LIBOR rate plus 1 %, in each case, plus the applicable margin (calculated based on the Company’s total leverage ratio) at that time or (ii) the LIBOR rate plus the applicable margin (calculated based on the Company’s total leverage ratio) at that time.

The Company transfers certain of its trade receivable assets to third parties under sales agreements.

On December 14, 2022, the Company amended its Combined Credit Agreement to allow for the sale of accounts receivable with JPM.

Refer to Note 2 of the Notes included herein for further detail of this agreement.

All other substantive terms of the Combined Credit Agreement remained unchanged.

Advances under the Combined Credit Agreement may be prepaid in whole or in part from time to time without penalty or premium.

The Combined Credit Agreement commitment may be reduced by the Company from time to time.

Principal amounts outstanding under the Combined Credit Agreement are due and payable in full at maturity within five years of the date of the Combined Credit Agreement.

If an event of default occurs under the Combined Credit Agreement or any future secured indebtedness, the holders of such secured indebtedness will have a prior right to our assets securing such indebtedness, to the exclusion of the holders of the

5.625 % Notes (as defined below), even if we are in default with respect to the 5.625 % Notes.

In that event, our assets securing such indebtedness would first be used to repay in full all indebtedness and other obligations secured by them (including all amounts outstanding under the Combined Credit Agreement), resulting in all or a portion of our assets being unavailable to satisfy the claims of the holders of the 5.625 % Notes and other unsecured indebtedness.

The Combined Credit Agreement contains a number of financial and nonfinancial covenants and is guaranteed by substantially all of our present and future subsidiaries, subject to customary exceptions.

The Company was in compliance with all covenants at December 31, 2022.

A portion of the Combined Credit Agreement in an amount not to exceed $ 50,000 is available for the issuance of standby letters of credit.

At December 31, 2022 and December 31, 2021, the Company had issued undrawn outstanding letters of credit of $ 25,305 and $ 24,332 , respectively.

In August 2021, the Company issued $ 1,100,000 aggregate principal amount of 5.625 % senior notes (“ 5.625 % Notes”).

A portion of the proceeds from the issuance of the 5.625 % Notes was used to redeem $ 870,300 aggregate principal amount of the outstanding 7.50 % Senior Notes due 2024 (the “Existing Notes”) for a price of $ 904,200 .

This price is equal to 101.625 % of the outstanding principal amount of the Existing Notes being redeemed, plus, accrued, and unpaid interest on the principal amount of such Existing Notes.

The Company did not recognize a gain or loss on redemption.

The 5.625 % Notes are due August 15, 2029 and bear interest of 5.625 % to be paid on February 15 and August 15 of each year, commencing on February 15, 2022.

The Company is party to a senior secured revolving credit facility with a five-year maturity with a syndicate of banks (the “Credit Agreement”).

On May 4, 2023, the Company amended the Credit Agreement to, among other things, increase the revolving commitments under the Credit Agreement by $ 140.0 million from $ 500.0 million to $ 640.0 million and permit restricted payments for share repurchases or redemptions from certain of its stockholders in an aggregate principal amount of up to $ 150.0 million.

The Credit Agreement contains sub-limits for revolving loans denominated in pounds and euros not to exceed the U.S.

dollar equivalent of $ 50.0 million in pounds and $ 50.0 million in euros and $ 100.0 million in the aggregate.

Additionally, the Credit Agreement contains a $ 15.0 million sub-limit for letters of credit denominated in pounds, euros or saudi riyals and any alternative currency that is agreed among the Borrowers, the applicable Issuing Bank and the Administrative Agent.

Borrowings pursuant to the Credit Agreement bear interest at a rate equal to, at the Company’s option, (i) the greatest of (a) the prime rate of interest in effect on such day, (b) the federal funds effective rate plus 0.50 % and (c) the Secured Overnight Financing Rate (“SOFR”) plus 0.10 %, plus 1 % in each case, plus the applicable margin (calculated based on the Company’s Total Leverage Ratio, as defined in the Credit Agreement) at that time or (ii) the SOFR rate plus 0.10 % plus the applicable margin (calculated based on the borrowers’ total leverage ratio) at that time.

Advances under the Credit Agreement may be prepaid in whole or in part from time to time without penalty or premium.

The Credit Agreement commitment may be reduced by the Company from time to time.

Principal amounts outstanding under the Credit Agreement are due and payable in full at maturity on August 3, 2026.

The Credit Agreement contains a number of financial and nonfinancial covenants and is guaranteed by substantially all of our present and future subsidiaries, subject to customary exceptions.

The Company was in compliance with all covenants as of December 31, 2023.

A portion of the Credit Agreement in an amount not to exceed $ 50.0 million is available for the issuance of standby letters of credit.

As of December 31, 2023 and December 31, 2022, the Company had issued undrawn outstanding letters of credit of $ 16.2 million and $ 25.3 million, respectively.

The Company had $ 1.1 billion aggregate principal amount of 5.625 % senior notes (“ 5.625 % Notes”) outstanding as of December 31, 2023.

The 5.625 % Notes are due August 15, 2029 and bear interest of 5.625 % to be paid on February 15 and August 15 of each year.

The 5.625 % Notes are guaranteed on a senior unsecured basis by substantially all of the Company’s subsidiaries.

The 5.625 % Notes rank (i) equally in right of payment with all of the Company’s or any guarantor’s existing and future unsubordinated indebtedness, (ii) senior in right of payment to the Company’s or any guarantor’s existing and future subordinated indebtedness, (iii) effectively subordinated to any of the Company’s or any guarantor’s existing and future secured indebtedness to the extent of the collateral securing such indebtedness, including the Combined Credit Agreement, and (iv) structurally subordinated to all existing and future liabilities of the Company’s subsidiaries that are not guarantors.

The 5.625 % Notes rank (i) equally in right of payment with all of the Company’s or any guarantor’s existing and future unsubordinated indebtedness, (ii) senior in right of payment to the Company’s or any guarantor’s existing and future subordinated indebtedness, (iii) effectively subordinated to any of the Company’s or any guarantor’s existing and future secured indebtedness to the extent of the collateral securing such indebtedness, including the Credit Agreement, and (iv) structurally subordinated to all existing and future liabilities of the Company’s subsidiaries that are not guarantors.

Our obligations under the 5.625 % Notes are unsecured and are effectively junior to our secured indebtedness to the extent of the value of the collateral securing such secured indebtedness.

Borrowings under the Combined Credit Agreement are secured by substantially all of the assets of the Company, and any existing and future subsidiary guarantors, including all of the capital stock of each restricted subsidiary.

Borrowings under the Credit Agreement are secured by substantially all of the assets of the Company, and any existing and future subsidiary guarantors, including all of the capital stock of each restricted subsidiary.

The Company may, at its option, redeem the 5.625 % Notes in whole at any time or in part from time to time, on and after August 15, 2024 at a redemption price of 102.813 % of the principal amount thereof if redeemed during the twelve-month period beginning on August 15, 2024, at a redemption price of 101.406 % of the principal amount thereof if redeemed during the twelve-month period beginning on August 15, 2025 and at a redemption price of 100 % of the principal amount thereof if redeemed on August 15, 2026 and thereafter.

2 unchanged sentences

If the Company experiences certain kinds of changes of control (as defined in the indenture), holders of the 5.625 % Notes may require the Company to repurchase any 5.625 % Notes held by them at a price equal to 101 % of the principal amount of the 5.625 % Notes plus accrued and unpaid interest.

In addition, if the Company sells assets under certain circumstances, it must offer to repurchase the 5.625 % Notes at a price equal to 100 % of the principal amount of the 5.625 % Notes plus accrued and unpaid interest.

In addition, if the Company sells assets under certain circumstances, it may be required to use the net sale proceeds (as defined in the indenture) to offer to repurchase the 5.625 % Notes at a price equal to 100 % of the principal amount of the 5.625 % Notes plus accrued and unpaid interest, up to the net sale proceeds amount.

The indenture includes covenants that, among other things, restrict the Company’s ability and the ability of its restricted subsidiaries (as defined in the indenture) to incur or guarantee additional indebtedness;

6 unchanged sentences

and consolidate or merge with or into, or sell substantially all of the Company’s assets to, another person.

These covenants are subject to a number of important limitations and exceptions.

These covenants are subject to a number of limitations and exceptions.

The 5.625 % Notes are also subject to customary events of default, including cross-payment default and cross-acceleration provisions.

The Company was in compliance with all covenants at December 31, 2022.

The Company was in compliance with all covenants as of December 31, 2023.

Employee Benefit Plan

4 unchanged sentences

Pension Benefits

2023 2022 2021

Interest cost on benefit obligation $ 1,486 $ 1,104 $ 441

Expected return on plan assets ( 1,218 ) ( 1,659 ) ( 697 )

Net periodic benefit income $ ( 555 ) $ ( 256 )

Amortization of actuarial (gain)

Net periodic benefit (income) loss

$ 201 $ ( 555 ) $ ( 256 )

Settlement (gain)

( 501 ) ( 198 ) —

Total periodic benefit income $ ( 300 ) $ ( 753 ) $ ( 256 )

The above components are included within Other, net on the Consolidated Statements of Operations.

The following weighted average assumptions were used to determine net periodic costs at December 31:

Pension Benefits

Discount rate 2.82 % 2.62 %

Expected return on plan assets 6.50 % 6.50 %

Rate of compensation increase N/A N/A

The above components are included within O ther, net on the Consolidated Statements of Operations.

The weighted average discount rate and expected return on plan assets that were used to determine net periodic costs were 5.47 % and 6.50 %, respectively, as of December 31, 2023, 2.82 % and 6.50 %, respectively, as of December 31, 2022, and 2.62 % and 6.50 %, respectively, as of December 31, 2021.

The expected return on plan assets is a long-term assumption established by considering historical and anticipated returns of the asset classes invested in by the pension plan and the allocation strategy currently in place among those classes.

1 unchanged sentence

Pension Benefits

2023 2022 2021

Current year actuarial (gain) $ ( 405 ) $ ( 4,088 ) $ ( 722 )

Amortization of actuarial gain 67 — —

Total recognized in other comprehensive (income) ( 338 ) ( 4,088 ) ( 722 )

Total recognized in net periodic benefit income and other comprehensive loss $ ( 4,841 ) $ ( 978 )

Total recognized in net periodic benefit (income) and other comprehensive (income) $ ( 638 ) $ ( 4,841 ) $ ( 978 )

The following table summarizes the change in benefit obligation and fair values of plan assets for the years ended December 31,:

Pension Benefits

2023 2022 2021 (1)

Change in benefit obligation:

Benefit obligation, beginning balance $ 28,044 $ 40,005 $ 41,206

$ 40,005 $ 41,206

Interest cost 1,486 1,104 441

Actuarial gains ( 10,930 ) ( 1,091 )

Actuarial (gain) loss 535 ( 10,930 ) ( 1,091 )

Benefits paid ( 3,604 ) ( 2,135 ) ( 551 )

2 unchanged sentences

Fair value of plan assets, beginning balance 19,235 26,355 26,578

Actual gain (loss) on plan assets

2,659 ( 4,985 ) 328

Actual loss on plan assets ( 4,985 ) 328

Employer contributions 4,106 — —

Benefits paid ( 3,604 ) ( 2,135 ) ( 551 )

Fair value of plan assets, ending balance 22,396 19,235 26,355

Funded status $ 8,809 $ 13,650

Unfunded status $ 4,065 $ 8,809 $ 13,650

(1) Benefit obligation assumed in connection with the acquisition of MDC.

6 unchanged sentences

Pension Benefits

2023 2022 2021

Accumulated net actuarial gains $ 5,148 $ 4,810 $ 722

Amount recognized $ 5,148 $ 4,810 $ 722

In 2023, the Company estimates that it will recognize $ 66 in amortization of net actuarial gains from Accumulated other comprehensive loss, net into net periodic cost related to the pension plan.

The following weighted average assumptions were used to determine benefit obligations as of December 31:

Pension Benefits

Discount rate 5.47 % 2.82 %

Rate of compensation increase N/A N/A

As of December 31, 2023 and 2022, the weighted average discount rates used to determine benefit obligations were 5.34 % and 5.47 %, respectively.

The discount rate assumptions at December 31, 2023 and 2022 were determined independently.

1 unchanged sentence

Fair Value of Plan Assets and Investment Strategy

The fair value of the plan assets as of December 31, is as follows:

2022 Level 1 Level 2 Level 3

Asset Category:

Receivables $ 15 $ 15 $ — $ —

Money market fund – Short-term investments 804 804 — —

Mutual funds 18,416 18,416 — —

Total $ 19,235 $ 19,235 $ — $ —

2021 Level 1 Level 2 Level 3

Asset Category:

Money market fund – Short-term investments $ 937 $ 937 $ — $ —

Mutual funds 25,418 25,418 — —

Total $ 26,355 $ 26,355 $ — $ —

As of December 31, 2023 and 2022, the plan assets consisted of receivables, money market fund - short term investments, and mutual funds, which were all Level 1 assets within the fair value hierarchy.

The fair value of the receivables, money market fund - short term investments, and mutual funds were approximately $ 0.1 million, $ 0.8 million, and $ 21.5 million, respectively, as of December 31, 2023 and approximately $ 0.1 million, $ 0.8 million, and $ 18.4 million, respectively, as of December 31, 2022.

See Note 18 of the Notes included herein for additional information regarding the fair value hierarchy.

8 unchanged sentences

The goals of the pension plan investment program are to fully fund the obligation to pay retirement benefits in accordance with the plan documents and to provide returns that, along with appropriate funding from the Company, maintain an asset/liability ratio that is in compliance with all applicable laws and regulations and assures timely payment of retirement benefits.

Equity securities primarily include investments in large-cap and mid-cap companies located in the United States.

Equity securities primarily include investments in companies located in the United States with readily available prices and mid to large-cap companies that are traded in foreign markets.

Debt securities are diversified across different asset types with bonds issued in the United States as well as outside the United States.

2 unchanged sentences

The pension plan contributions are deposited into a trust, and the pension plan benefit payments are made from trust assets.

During 2022 and 2021, the Company did not make any contributions to the pension plan.

The Company estimates that it will make approximately $ 787 in contributions to the pension plan in 2023.

Fluctuations in actual market returns as well as changes in general interest rates will result in changes in the market value of plan assets and may result in increased or decreased retirement benefit costs and contributions in future periods.

The following estimated benefit payments, which reflect expected future service, as appropriate, are expected to be paid in the years ending December 31:

Period Amount

Thereafter 10,022

The Company made contributions to the pension plan totaling $ 4.1 million during 2023 and did not make contributions in 2022 or 2021.

The Company estimates that it will make $ 1.1 million in contributions to the pension plan in 2024.

Fluctuations in

actual market returns as well as changes in general interest rates will result in changes in the market value of plan assets and may result in increased or decreased retirement benefit costs and contributions in future periods.

The estimated benefit payments, which reflect expected future service, as appropriate, are expected to be paid in the amount of $ 1.9 million in 2024, $ 1.8 million in 2025, $ 1.8 million in 2026, $ 1.8 million in 2027, $ 1.8 million in 2028, and $ 9.5 million thereafter.

Noncontrolling and Redeemable Noncontrolling Interests

Noncontrolling Interests

When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances.

Where the option to purchase the incremental ownership is within the Company’s control, the amounts are recorded as Noncontrolling interests within Shareholder’s Equity in the Consolidated Balance Sheets.

Where the option to purchase the incremental ownership is within the Company’s control, the amounts are recorded as Noncontrolling interests within Shareholders’ Equity in the Consolidated Balance Sheets.

Where the incremental purchase may be required of the Company, the amounts are recorded as Redeemable noncontrolling interests in mezzanine equity in the Consolidated Balance Sheets at their estimated acquisition date redemption value and adjusted at each reporting period for changes to their estimated redemption value through Retained earnings (but not less than their initial redemption value), except for foreign currency translation adjustments.

Changes in the Company’s ownership interests in its less than 100% owned subsidiaries during the years ended December 31, 2022, 2021, and 2020 were as follows:

Year Ended December 31,

2022 2021 2020

Net income attributable to Stagwell Inc.

common shareholders $ 27,269 $ 21,036 $ 56,356

Transfers from the noncontrolling interest:

Change in Stagwell Inc.

Paid-in capital for purchase of redeemable noncontrolling interests and noncontrolling interests ( 1,000 ) ( 26,538 ) —

Change in Stagwell Inc.

Paid-in-Capital for conversion of Class C to Class A shares 47,911 — —

Net transfers from noncontrolling interests 46,911 ( 26,538 ) —

Change from net income (loss) attributable to Stagwell Inc.

and transfers to noncontrolling interests $ 74,180 $ ( 5,502 ) $ 56,356

The following table presents net income attributable to noncontrolling interests between holders of Class C Common Stock and other equity interest holders for the years ended December 31, 2022, 2021, and 2020:

The following table presents Net income attributable to noncontrolling and redeemable noncontrolling interests between holders of Class C Common Stock and other equity interest holders for the years ended December 31, 2023, 2022, and 2021:

Year Ended December 31,

2023 2022 2021

(dollars in thousands)

Net income attributable to Class C shareholders

4 unchanged sentences

$ 42,142 $ 21,990 $ 15,296

Net income (loss) attributable to redeemable noncontrolling interests ( 634 ) 8,135 ( 412 )

Net income attributable to noncontrolling and redeemable noncontrolling interests

$ 41,508 $ 30,125 $ 14,884

The following table presents noncontrolling interests between holders of Class C Common Stock and other equity interest holders as of December 31, 2023 and December 31, 2022:

2023 December 31,

(dollars in thousands)

Noncontrolling interest of Class C shareholders $ 436,215 $ 399,316

Noncontrolling interest of other equity interest holders 32,362 30,848

NCI attributable to noncontrolling interests $ 462,097 $ 508,287

The table above has been revised to reclassify approximately $45,422 from previously reported non-controlling interests to additional paid-in capital that should have been recognized as a result of the exchange of Paired Units for shares of the Company’s Class A common stock in February 2022.

Redeemable Noncontrolling Interests

Total noncontrolling interests $ 468,577 $ 430,164

The following table presents changes in redeemable noncontrolling interests:

2023 December 31,

(dollars in thousands)

Beginning balance $ 39,111 $ 43,364

Redemptions (1)

Acquisitions (1)

( 22,172 ) ( 1,400 )

Distributions ( 5,800 ) ( 2,822 )

Changes in redemption value 442 ( 8,711 )

2 unchanged sentences

Ending balance $ 10,792 $ 39,111

(1) In 2021, approximately $ 26,000 represents redeemable noncontrolling interests acquired in connection with the acquisition of MDC.

Approximately $ 27,000 represents redeemable noncontrolling interests acquired in connection with the purchase of the noncontrolling interest of Targeted Victory.

See Note 4 of the Notes included herein for additional information related to the purchase of Targeted Victory.

(1) Redemptions for the year ended December 31, 2023, is associated with redeemable noncontrolling interest of a certain brand we did not previously own.

The amount was reclassified as a deferred acquisition contingent obligation (see Note 9).

The noncontrolling shareholders’ ability to exercise any such option right is subject to the satisfaction of certain conditions, including conditions requiring notice in advance of exercise and specific employment termination conditions.

2 unchanged sentences

It is not determinable, at this time, if or when the owners of these rights will exercise all or a portion of these rights.

The redeemable noncontrolling interest of $ 39,111 as of December 31, 2022, consists of $ 35,206 , assuming that the subsidiaries perform over the relevant periods at their current profit levels, and $ 3,905 upon termination of such owner’s employment with the applicable subsidiary or death.

The redeemable noncontrolling interest of $ 10.8 million as of December 31, 2023, consists of $ 7.3 million, assuming that the subsidiaries meet certain performance metrics, and $ 3.5 million upon termination of such owner’s employment with the applicable subsidiary or death.

These adjustments will not impact the calculation of earnings (loss) per share if the redemption values are less than the estimated fair values.

There is no related impact on the Company’s income per share calculations.

As such, there is no related impact on the Company’s earnings per share calculations for the year ended December 31, 2023 and 2022.

Comprehensive Loss Attributable to Noncontrolling and Redeemable Noncontrolling Interests

For the year ended December 31, 2023, comprehensive income attributable to the noncontrolling and redeemable noncontrolling interests was $ 47.4 million, which consists of $ 41.5 million of net income and $ 5.9 million of other comprehensive income.

For the year ended December 31, 2022, comprehensive income attributable to the noncontrolling and redeemable noncontrolling interests was $ 6.6 million, which consists of $ 30.1 million of net income and $ 23.5 million of other comprehensive loss.

Commitments, Contingencies, and Guarantees

Legal Proceedings.

The Company’s operating entities are involved in legal proceedings of various types.

While any litigation contains an element of uncertainty, the Company has no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on the financial condition or results of operations of the Company.

The Company’s operating entities are involved in legal proceedings and regulatory inquiries of various types.

While any litigation or investigation contains an element of uncertainty, the Company has no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on the financial condition or results of operations of the Company.

Generally, the Company has indemnified the purchasers of certain assets in the event that a third party asserts a claim against the purchaser that relates to a liability retained by the Company.

2 unchanged sentences

The Company continues to monitor the conditions that are subject to guarantees and indemnifications to identify whether it is probable that a loss has occurred and would recognize any such losses under any guarantees or indemnifications in the period when those losses are probable and estimable.

At December 31, 2022, the Company had $ 25,305 of undrawn letters of credit outstanding.

The Company entered into two operating leases for which the commencement date has not yet occurred as of December 31, 2022.

At December 31, 2023, the Company had $ 16.2 million of undrawn letters of credit outstanding.

The Company entered into three operating leases for which the commencement date has not yet occurred as of December 31, 2023.

See Note 10 of the Notes included herein for additional information.

2 unchanged sentences

As of December 31, 2023, the Company estimates its future minimum commitments under these non-cancellable agreements to be:

$ 5,893 , $ 1,804 , $ 1,304 , $ 1,066 , and $ 44 for 2023, 2024, 2025, 2026, and 2027, respectively.

$ 7.3 million, $ 7.0 million, $ 4.2 million, $ 3.0 million, $ 3.1 million and $ 3.8 million for 2024, 2025, 2026, 2027, 2028, and thereafter, respectively.

The Company has also entered into a certain long-term, non-cancellable contract with a certain vendor for cloud services that requires the Company to commit to minimum spending over the contract term.

As of December 31, 2023, the Company estimates its future minimum commitments under this agreement to be:

$ 5.7 million, $ 6.9 million, $ 8.7 million, $ 10.4 million, $ 12.7 million and $ 15.3 million for 2024, 2025, 2026, 2027, 2028, and thereafter, respectively.

Share Capital

On March 23, 2022, the board of directors authorized the Repurchase Program under which we may repurchase up to $ 125,000 of shares of our outstanding Class A Common Stock.

Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices (including through trading plans that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, in privately negotiated transactions, or through other means.

The timing and number of shares repurchased under the Repurchase Program will depend on a variety of factors, including the performance of our stock price, general market and economic conditions, regulatory requirements, the availability of funds, and other considerations we deem relevant.

The Repurchase Program may be suspended, modified or discontinued at any time without prior notice.

Our board of directors will review the Repurchase Program periodically and may authorize adjustments of its terms.

As of December 31, 2022, there were 7,194 shares of Class A Common Stock repurchased under the Repurchase Program at an aggregate value, excluding fees, of $ 51,547 .

These were purchased at an average share price of $ 7.17 per share.

The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $ 73,309 as of December 31, 2022.

On March 1, 2023, the Board authorized an extension and a $ 125,000 increase in the size of the Repurchase Program to an aggregate of $ 250,000 , with any previous purchases under the Repurchase Program continuing to count against that limit.

The Repurchase Program, as amended, will expire on March 1, 2026.

The authorized and outstanding share capital of the Company is below.

Class A Common Stock

There are 1,000,000 shares of Class A Common Stock, authorized, of which 131,720 shares were issued and outstanding as of December 31, 2022.

Each share of Class A Common Stock carries one vote and entitles its holder to dividends equal to or greater than each share of Class B Common Stock.

Class B Common Stock

There are 5 shares of Class B Common Stock authorized, of which 4 shares were issued and outstanding as of December 31, 2022.

Each share of Class B Common Stock carries twenty votes and is convertible at any time at the option of the holder into one share of Class A Common Stock.

There are 1.0 billion shares of Class A Common Stock authorized, of which 118.5 million shares were issued and outstanding as of December 31, 2023.

Each share of Class A Common Stock carries one vote and represents an economic interest in the Company.

Class C Common Stock

There are 250,000 shares of Class C Common Stock authorized, of which 160,909 shares were issued and outstanding as of December 31, 2022.

There are 250.0 million shares of Class C Common Stock authorized, of which 151.6 million shares were issued and outstanding as of December 31, 2023.

Each share of Class C Common Stock carries one vote and does not represent an economic interest in the Company.

1 unchanged sentence

Each holder of Paired Units may, at its option, exchange such Paired Units for shares of Class A Common Stock on a one-to-one basis (i.e., one Paired Unit for one share of Class A Common Stock).

In 2021, an aggregate of 179,970 Paired Units were issued to Stagwell Media in exchange for the equity interests of the Stagwell Subject Entities.

In the year ended December 31, 2022, holders of Paired Units exchanged 19,061 Paired Units for the same number of shares of Class A Common Stock.

Of these 19,061 Paired Units, approximately 5,000 triggered an employee tax withholding obligation of $ 14,900 .

The Company repurchased approximately 2,000 of the 5,000 shares of Class A Common Stock issued to the employees to satisfy its employee tax withholding obligation.

Shares-based Awards

As of December 31, 2022 and 2021, of the total number of shares authorized, 12,858 and 2,839 , respectively, remain available to be issued for future awards.

The following tables summarize share-based activity of awards authorized under our employee stock incentive plans and awards (such as inducement awards) and other share-based commitments that have met the requirements to be issued separate from shareholder-approved stock incentive plans.

The following table summarizes information about performance-based and time-based restricted stock and restricted stock unit awards:

Performance-Based Awards Time-Based Awards

In the year ended December 31, 2023, holders of the Paired Units exchanged 9.3 million Paired Units for the same number of shares of Class A Common Stock.

Class A Common Stock Repurchases

The Company may purchase shares of Class A Common Stock under its stock repurchase program (the “Repurchase Program”) as well as repurchases outside of the Repurchase Program.

On March 1, 2023, the Company’s board of directors (the “Board”) authorized an extension and a $ 125.0 million increase in the size of the Repurchase Program to an aggregate of $ 250.0 million, with any previous purchases under the Repurchase Program continuing to count against that limit.

The Repurchase Program, as amended, will expire on March 1, 2026.

Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices, including through trading plans that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, in privately negotiated transactions, or through other means.

The Repurchase Program may be suspended, modified or discontinued at any time without prior notice.

Our Board will review the Repurchase Program periodically and may authorize adjustments of its terms.

During the year ended December 31, 2023, 9.9 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an aggregate value, excluding fees, of $ 59.5 million.

These shares were repurchased at an average price of $ 6.00 per share.

The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $ 138.6 million as of December 31, 2023.

In addition to the repurchases under the Repurchase Program, on May 23, 2023, the Company repurchased 23.3 million shares of Class A Common Stock from certain affiliates of AlpInvest Partners B.V.

at a price of $ 6.43 per share, for an aggregate total repurchase price of $ 150.0 million.

Employee Stock Purchase Plan

The Company’s 2023 Employee Stock Purchase Plan (the “ESPP”) was approved by stockholders and adopted by the Board in 2023.

A total of 3.0 million shares of Class A Common Stock was reserved for sale under the ESPP to eligible employees as defined in the plan.

Under the ESPP, eligible employees can elect to withhold up to 15 % of their earnings, subject to certain maximums, to purchase shares of Class A Common Stock on certain plan-defined dates.

The purchase price for each offering period is 92.5% of the fair market value of shares of Class A Common Stock at the end of the offering period.

The plan is considered compensatory resulting in the fair value of the discount being expensed over the service period.

The total number of shares authorized that remained available to be issued was 2.9 million as of December 31, 2023.

During the year ended December 31, 2023, there were no material expenses incurred by the Company related to the ESPP and contributions to the ESPP were nominal.

Stock-based Awards

The Company ’ s stock-based awards outstanding consist of restricted stock units, restricted stock and stock appreciation rights (“SAR awards”).

The total number of shares authorized that remained available to be issued for future awards was 6.5 million as of December 31, 2023 and 12.9 million as of December 31, 2022.

For the years ended December 31, 2023, 2022, and 2021, the Company recognized total stock-based compensation expense related to all stock compensation awards of $ 51.2 million, $ 36.7 million, and $ 75.0 million, respectively.

The related income tax benefit for the years ended December 31, 2023, 2022, and 2021 was $ 13.0 million, $ 4.1 million, and $ 5.3 million, respectively.

The following tables summarize stock-based activity of awards authorized under our employee stock incentive plans and awards (such as inducement awards) and other share-based commitments that have met the requirements to be issued separate from shareholder-approved stock incentive plans.

The following table summarizes information about time-based and performance-based restricted stock and restricted stock unit awards:

Time-Based Awards Performance-Based Awards

Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value

Balance at December 31, 2022 6,269 $ 7.07 2,386 $ 7.74

Shares acquired concurrent with acquisition — — 3,326 5.42

Granted 6,595 7.19 1,328 7.24

2 unchanged sentences

Balance at December 31, 2023 7,172 $ 7.23 3,711 $ 7.56

Granted 1,372 7.03 5,075 7.38

Vested — — ( 14,182 ) 5.45

Forfeited ( 34 ) 7.79 ( 323 ) 6.20

Balance at December 31, 2022 2,386 $ 7.74 6,269 $ 7.07

The vesting of the performance-based awards is contingent primarily upon the Company meeting certain cumulative revenue and earnings targets, primarily ranging over two to three years, and continued employment through the vesting date.

The weighted average grant date fair value of time-based awards granted in 2022 and 2021 was $ 7.38 and $ 5.51 , respectively.

The weighted average grant date fair value of performance-based awards granted in 2022 and 2021 was $ 8.68 and $ 7.03 , respectively.

The vesting of the performance-based awards is contingent primarily upon the Company meeting certain cumulative revenue and earnings targets, primarily three years, and continued employment through the vesting date.

The term of the time-based awards is generally three years with vesting generally one to three years.

The vesting period of the time-based and performance-based awards is generally commensurate with the requisite service period.

The total fair value of restricted stock and restricted stock unit awards, which vested during the years ended December 31, 2022 and 2021, was $ 77,332 and $ 1,527 , respectively.

At December 31, 2022, the weighted average remaining contractual life for time-based and performance-based awards was 0.65 and 1.86 years, respectively.

The total fair value of restricted stock and restricted stock unit awards, which vested during the years ended December 31, 2023, 2022, and 2021, was $ 38.4 million, $ 77.3 million, and $ 1.5 million respectively.

At December 31, 2023, the weighted average remaining contractual life for time-based and performance-based awards was 0.67 and 1.33 years, respectively.

At December 31, 2022 and 2021, the unrecognized compensation expense for time-based awards was $ 16,449 and $ 15,376 , respectively, and will be recognized over a weighted average period of 0.65 years and 0.37 years, respectively.

At December 31, 2022 and 2021, the unrecognized compensation expense for performance-based awards was $ 12,781 and $ 8,221 , respectively, and will be recognized over a weighted average period of 1.86 and 2.37 years, respectively.

The following table summarizes information about stock appreciation rights (“SAR”) awards:

At December 31, 2023, the unrecognized compensation expense for time-based awards was $ 21.3 million and will be recognized over a weighted average period of 0.67 years.

At December 31, 2023, the unrecognized compensation expense for performance-based awards was $ 12.3 million and will be recognized over a weighted average period of 1.33 years.

The following table summarizes information about SAR awards:

Shares Weighted Average Grant Date Fair Value Weighted Average Exercise Price

Balance at December 31, 2022 4,845 $ 2.78 $ 4.57

Shares acquired concurrent with acquisition 3,379 2.94 2.95

Granted 225 2.23 6.79

Forfeited — — —

Balance at December 31, 2021 4,893 $ 2.79 $ 4.58

Granted — — —

Forfeited — — —

Exercised ( 1,948 ) 3.02 2.93

Balance at December 31, 2023 3,122 $ 2.59 $ 5.74

The weighted average grant date fair value of SAR awards granted in 2021 was $ 2.39 .

There were no SAR awards granted in 2022.

We use the Black-Scholes option-pricing model to estimate the fair value of SAR awards.

The grant date fair value of the SARs granted in 2021 ranged from $ 2.20 to $ 3.66 .

SARs granted in 2021 vest in 1 to 3 years.

The grant date fair value of the SAR awards granted in 2021 ranged from $ 2.20 to $ 3.66 per share.

The assumptions used to value the SAR awards granted in 2021 were as follows:

expected life ranging from 2.8 to 4 years, risk free interest rate of approximately 1.0 %, expected volatility ranging from 35.5 % to 38.1 %, and dividend yield of 0 %.

The grant date fair value of the SAR awards granted in 2023 ranged from $ 2.10 to $ 2.35 per share.

The assumptions used to value the SARS granted in 2023 were as follows:

expected life ranging from 3 to 4 years, risk free interest rate of approximately 4.6 %, expected volatility ranging from 34.6 % to 36.7 %, and dividend yield of 0 %.

These SAR awards vest in 1 to 3 years.

The vesting period of these awards is generally commensurate with the requisite service period.

The assumptions used to value these awards were as follows:

expected life ranging from 2.8 to 4 years, risk free interest rate of approximately 1.0 %, expected volatility ranging from of 35.5 % to 38.1 %, and dividend yield of 0.0 %.

The term of these awards is 5 years.

2 unchanged sentences

As of December 31, 2023, the assumptions for the Black-Scholes model for these awards were as follows:

expected life ranging from 2 to 3 years, risk free interest rate of approximately 4 %, expected volatility ranging from of 37.0 % to 41.4 %, and dividend yield of 0.0 %.

The remaining term of these awards as of December 31, 2022, is approximately 4 years.

For the years ended December 31, 2022 and 2021, the number of SAR awards that vested were 1,943 and 1,950 , respectively.

As of December 31, 2022 and 2021, 3,845 and 1,950 SAR awards had vested and were exercisable, respectively.

The aggregate intrinsic value of the SAR awards outstanding as of December 31, 2022 and 2021 was $ 11,063 and $ 19,677 respectively.

At December 31, 2022 and 2021, the weighted average remaining contractual life for the SAR awards was 1.45 years and 1.15 years, respectively.

At December 31, 2022 and 2021, the unrecognized compensation expense for these awards was $ 1,175 and $ 4,639 , respectively, to be recognized over a weighted average period of 1.45 and 1.15 years, respectively.

For the years ended December 31, 2022 and 2021, the total recognized in stock-based compensation related to all stock compensation awards was $ 36,663 and $ 75,032 , respectively.

The related income tax benefit for the years ended December 31, 2022 and 2021 was $ 4,106 and $ 5,289 , respectively.

expected life ranging from 0 to 3 years, risk free interest rate of approximately 5 %, expected volatility ranging from 26.7 % to 42.1 %, and dividend yield of 0.0 %.

The remaining term of these awards as of December 31, 2023, ranges from approximately 0.2 years to 4 years.

During the year ended December 31, 2023, certain SAR awards were modified from equity to cash settled.

The SAR awards were fair valued on the date of modification, reclassed from equity to liability and resulted in incremental stock-based compensation expense of $ 4.4 million.

For the year ended December 31, 2023, 0.5 million SAR awards vested.

As of December 31, 2023, 2.4 million SAR awards vested and were exercisable.

The total intrinsic value of SAR awards exercised during the years ended December 31, 2023 and 2022 was $ 8.1 million and $ 0.1 million, respectively.

There were no SAR awards exercised during the year ended December 31, 2021.

As of December 31, 2023, the aggregate intrinsic value of the SAR awards outstanding was $ 5.3 million and the weighted average remaining contractual life for these awards was 1.02 years.

As of December 31, 2023, the aggregate intrinsic value of the SAR awards exercisable was $ 5.3 million and the weighted average remaining contractual life for these awards was 0 years.

The weighted average exercise price of SAR awards exercisable as of December 31, 2023 was $ 5.12 .

At December 31, 2023, the unrecognized compensation expense for these awards was $ 0.4 million, to be recognized over a weighted average period of 1.02 years.

Subsidiary Awards

1 unchanged sentence

The profits interests awards generally provide the employee the right, but not the obligation, to sell its profits interest in the subsidiary to the Company based on a performance-based formula and, in certain cases, receive a profit share distribution.

The profits interests awards are settled in cash and the corresponding liability was $ 20,961 and $ 36,418 at December 31, 2022 and 2021, respectively and is included as a component of Accruals and other liabilities and Other liabilities on the Consolidated Balance Sheets.

The change in the profits interest liabilities for the years ended December 31, 2022 and 2021 was a decrease of $ 4,179 and an increase of $ 536 , respectively and was recorded as stock-based compensation in Office and general expenses within the Statements of Operations.

The profits interests awards are settled in cash and the corresponding liability was $ 20.3 million and $ 21.0 million at December 31, 2023 and 2022, respectively and is included as a component of Accruals and other liabilities and Other liabilities on the Consolidated Balance Sheets.

The change in the profits interest liabilities for the years ended December 31, 2023 and 2022 was an increase of $ 3.9 million and a decrease of $ 4.2 million, respectively and was recorded as stock-based compensation in Cost of Services within the Statements of Operations.

Changes in Accumulated Other Comprehensive Income (Loss)

1 unchanged sentence

Defined Benefit Pension Foreign Currency Translation Total

Balance December 31, 2020 $ — $ — $ —

Other comprehensive loss before reclassifications — ( 6,000 ) ( 6,000 )

Amounts reclassified from accumulated other comprehensive income 722 — 722

Other comprehensive loss 722 ( 6,000 ) ( 5,278 )

Balance December 31, 2021 722 ( 6,000 ) ( 5,278 )

Other comprehensive loss before reclassifications 4,088 (37,751) ( 33,663 )

Other comprehensive loss 4,088 ( 37,751 ) ( 33,663 )

Balance December 31, 2022 $ 4,810 $ ( 43,751 ) $ ( 38,941 )

Balance at December 31, 2021

$ 722 $ ( 6,000 ) $ ( 5,278 )

Other comprehensive income (loss) before reclassifications

4,088 ( 14,288 ) ( 10,200 )

Other comprehensive income (loss)

4,088 ( 14,288 ) ( 10,200 )

Balance at December 31, 2022

4,810 ( 20,288 ) ( 15,478 )

Other comprehensive income before reclassifications

338 2,073 2,411

Other comprehensive income

338 2,073 2,411

Balance at December 31, 2023

$ 5,148 $ ( 18,215 ) $ ( 13,067 )

The components of the Company’s income before income taxes and equity in earnings of non-consolidated affiliates by taxing jurisdiction for the years ended December 31, were:

30 unchanged sentences

Revaluation of TRA step up ( 424 ) ( 5,109 ) —

Return to provision adjustments ( 16,159 ) — —

Gain on sale of business

Prior year adjustments

5,617 ( 17,205 ) —

Goodwill impairments — 14,645 —

10 unchanged sentences

federal taxes of the Company and the corporations owned by the Company and recorded in the Consolidated Statements of Operations and Comprehensive Income.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law.

The CARES Act includes provisions relating to delaying certain payroll tax payments, refundable payroll tax credits, net operating loss carryback periods, modifications to the net interest deduction limitations and technical corrections to the tax depreciation methods for qualified improvement property.

The tax law changes in the CARES Act did not have a material impact on the Company’s income tax provision.

In August 2022, the United States enacted to the Inflation Reduction Act of 2022 (“IRA”), which creates a new book minimum tax of at least 15% of consolidated GAAP pre-tax income for corporations with average book income in excess of $1 billion.

We do not expect an increase in our tax liability from this new book minimum tax in 2023.

Income taxes receivable were $ 15,191 and $ 790 at December 31, 2022 and 2021, respectively, and were included in other current assets on the balance sheet.

Income taxes payable were $ 6,850 and $ 24,643 at December 31, 2022 and 2021, respectively, and were included in accrued and other liabilities on the balance sheet.

Income taxes receivable were $ 21.6 million and $ 5.2 million at December 31, 2023 and 2022, respectively, and were included in other current assets on the balance sheet.

Long-term income taxes receivable were $ 12.5 million at December 31, 2023 and 2022, and were included in other assets on the balance sheet.

Income taxes payable were $ 5.7 million and $ 13.5 million at December 31, 2023 and 2022, respectively, and were included in accrued and other liabilities on the balance sheet.

The tax effects of significant temporary differences representing deferred tax assets and liabilities at December 31, were as follows:

22 unchanged sentences

$ 6,650 $ 27,496 $ ( 102,227 )

The preliminary deferred tax liability for the Company’s residual basis difference in OpCo of $ 102,297 reflected in the table above as of December 31, 2021 was adjusted to zero as of December 31, 2022 to reflect the finalization of the Company’s book and tax basis in OpCo.

This deferred tax liability had a balance of $ 119,470 as of September 30, 2022 that should have been zero.

In addition, a deferred tax liability of $ 16,700 , and the associated reduction to additional paid-in-capital was not recorded when the exchanges of Paired Units for Class A Common Stock occurred in February 2022.

The preliminary deferred tax liability for the Company’s residual basis difference in OpCo of $ 102.3 million reflected in the table above as of December 31, 2021 was adjusted to zero as of December 31, 2022 to reflect the finalization of the Company’s book and tax basis in OpCo.

This deferred tax liability had a balance of $ 119.5 million as of September 30, 2022 that should have been zero.

In addition, a deferred tax liability of $ 16.7 million, and the associated reduction to additional paid-in-capital was not recorded when the exchanges of Paired Units for Class A Common Stock occurred in February 2022.

The correction has been reflected as of December 31, 2022.

7 unchanged sentences

In the first quarter of 2022, the Company had its first exchange of Paired Units for shares of Class A Common Stock and recorded its initial TRA liability.

Further exchanges have been made in the subsequent quarters.

As of December 31, 2022 the

Company has recorded a TRA liability of $ 28,694 and a deferred tax asset, net of amortization of $ 32,890 in connection with the exchanges of the Paired Units and the projected obligations under the TRA.

Further exchanges have been made in the subsequent quarters in 2022 and no further exchanges in 2023.

As of December 31, 2023, and 2022, the Company has recorded a TRA liability of $ 26.9 million and

$ 26.6 million, respectively, and a deferred tax asset, net of amortization of $ 29.0 million and $ 30.6 million, respectively, in connection with the exchanges of the Paired Units and the projected obligations under the TRA.

Stagwell Inc.

itself has net operating loss carryforwards of $ 57,553 relating to U.S.

itself has net operating loss carryforwards of $ 58.1 million relating to U.S.

states which expire years 2026 through 2042.

Stagwell Inc.

also had indefinite net operating loss carryforwards which consist of $ 44,048 relating to U.S.

federal, and $ 140,608 relating to states.

also had indefinite net operating loss carryforwards less than $ 0.1 million relating to states.

Stagwell Inc.

also has foreign tax credit and general business carryovers of $ 7,104 which expire between 2024 and 2031.

also has foreign and state tax credits and general business carryovers of $ 6.4 million which expire between 2024 and 2031.

Stagwell Inc.’s consolidated corporate subsidiaries also have net operating loss carryforwards which expire in years 2031 through 2042.

These definite lived net operating loss carryforwards consist of $ 18,730 relating to U.S.

federal, $ 21,403 relating to states and $ 20,099 relating to non-U.S.

The corporate subsidiaries also have indefinite net operating loss carryforwards which consist of $ 10,555 relating to U.S.

federal, and $ 15,363 relating to non-U.S.

These definite lived net operating loss carryforwards consist of $ 13.8 million relating to U.S.

federal, $ 8.0 million relating to states and $ 32.9 million relating to non-U.S.

The corporate subsidiaries also have indefinite net operating loss carryforwards which consist of $ 17.1 million relating to U.S.

federal, and $ 48.6 million relating to states, and $ 46.3 million relating to non-U.S.

The majority of the consolidated corporate subsidiaries’ U.S.

3 unchanged sentences

A change to these factors could impact the estimated valuation allowance and income tax expense.

The Company maintained a valuation allowance of $ 12,223 as of December 31, 2022 relating to both U.S.

and foreign deferred tax assets, and $ 5,825 as of December 31, 2021 relating to U.S.

The Company maintained a valuation allowance of $ 26.3 million as of December 31, 2023, relating to both U.S.

and foreign deferred tax assets, and $ 14.4 million as of December 31, 2022 relating to U.S.

and foreign deferred tax assets.

2 unchanged sentences

Upon distribution in the future, the Company may incur state and foreign withholding taxes on such income, the amount of which is not practicable to compute.

As of December 31, 2022 and 2021, the Company recorded a liability for unrecognized tax benefits as well as applicable penalties and interest in the amount of $ 2,159 and $ 1,120 , respectively.

As of December 31, 2023 and 2022, the Company recorded a liability for unrecognized tax benefits as well as applicable penalties and interest in the amount of $ 1.8 million and $ 2.2 million, respectively.

It is the Company’s policy to classify interest and penalties arising in connection with unrecognized tax benefits as a component of income tax expense.

As of December 31, 2022 and 2021, accrued penalties and interest included in unrecognized tax benefits were approximately $ 23 and $ 82 , respectively.

As of December 31, 2023 and 2022, accrued penalties and interest included in unrecognized tax benefits were $ 1.8 million and less than $ 0.1 million, respectively.

If these unrecognized tax benefits were to be recognized, it would affect the Company’s effective tax rate.

6 unchanged sentences

Unrecognized tax benefits - Ending Balance $ 9 $ 2,136

It is reasonably possible that the amount of unrecognized tax benefits could decrease by a range of $ 104 to $ 286 in the next twelve months as a result of expiration of certain statute of limitations.

It is reasonably possible that the amount of unrecognized tax benefits could decrease by a range of $ — to less than $ 0.1 million in the next twelve months as a result of expiration of certain statute of limitations.

The Company is subject to taxation and files income tax returns in the U.S.

14 unchanged sentences

Financial Instruments that are not Measured at Fair Value on a Recurring Basis

The following table presents certain information for our financial liability that is not measured at fair value on a recurring basis at December 31:

The following table presents certain information for our financial liability that is not measured at fair value on a recurring basis as of December 31, 2023 and December 31, 2022:

December 31, 2023 December 31, 2022

1 unchanged sentence

Amount Fair Value

(dollars in thousands)

5.625% Notes $ 1,100,000 $ 1,010,658 $ 1,100,000 $ 902,000

6 unchanged sentences

These growth rates are consistent with the Company’s long-term forecasts.

As of December 31, 2022, the discount rate used to measure these liabilities ranged from 5.2 % to 5.4 %.

As of December 31, 2023, the discount rate used to measure these liabilities was 5.1 %.

As these estimates require the use of assumptions about future performance, which are uncertain at the time of estimation, the fair value measurements presented on the Consolidated Balance Sheets are subject to material uncertainty.

See Note 9 of the Notes included herein for additional information regarding contingent deferred acquisition consideration.

At December 31, 2022 and December 31, 2021, the carrying amount of the Company’s financial instruments, including cash, cash equivalents, accounts receivable and accounts payable, approximated fair value because of their short-term maturity.

As of December 31, 2023 and December 31, 2022, the carrying amount of the Company’s financial instruments, including cash, cash equivalents, accounts receivable and accounts payable, approximated fair value because of their short-term maturity.

Non-financial Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

1 unchanged sentence

Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic evaluations for potential impairment.

See Note 10 of the Notes included herein for additional information regarding the impairment of right-of-use lease assets and Note 8 of the Notes included herein for additional information regarding the impairment of goodwill and intangible assets.

See Note 8 of the Notes included herein for additional information on goodwill and intangible assets and Note 10 of the Notes included herein for additional information on right-of-use lease assets.

Related Party Transactions

2 unchanged sentences

The following table presents significant related party transactions where a third party receives services from the Company:

Total Transaction Value Revenues Due From

Total Transaction Value Revenue Due From

Related Party

Year Ended December 31, December 31,

2022 December 31, 2021

Services 2023 2022 2021 2023 2022

Technological and production services (1)

$ 227 $ 91 $ 60 $ 50 $ 42 $ 10

Marketing services (2)

Ongoing arrangement (7)

3,387 243 522 493 88

Polling services (3)

1,481 718 436 — 380 70

Marketing and website development services (4)

6,204 7,185 9,647 — 488 979

(dollars in thousands)

Marketing and advertising services (1)

$ 465 and Continuous (7)

$ 2,576 $ 2,240 $ — $ 1,518 $ 1,047

Marketing and advertising services (2)

Ongoing arrangement (7)

1,418 299 — 1,072 153

Marketing services (8)

$ 3,576 and Continuous (7)

894 7,449 950 4,381 4,831

Marketing services (8)

Ongoing arrangement (7)

Marketing and website development services (3)

Continuous (7)

3,566 7,185 9,440 694 488

1 unchanged sentence

$ 1,903 1,042 379 436 160 280

Total $ 23,076 $ 16,449 $ 572 $ 7,487 $ 5,839

(1) Client was founded by the Company’s Chief Executive Officer.

(2) Family member of one of the Brands’ partners holds an executive leadership position in the client.

(3) Family members of certain of the Company’s executives hold key leadership positions in the client

(4) Client has significant interest in the Company.

(5) Brands’ partners and executives either hold a key leadership position in or are on the board of directors of the client.

(6) Founder of the client has significant interest in the Company.

(7) This arrangement was entered into for an indefinite term and is invoiced as services are provided.

(8) A member of the Company’s board of directors holds an executive leadership position or are in the board of directors of the client.

The following table presents significant related party transactions in which the Company receives services from a third party:

Total Transaction Value Expenses Due to Related Party

Year Ended December 31, December 31,

2022 December 31, 2021

Services 2022 2021 2020

Data management services (1)

Ongoing arrangement (4)

$ 2,138 $ 1,473 $ 8,009 $ 1,295 $ 623

Sales and management services (2)

Ongoing arrangement (4)

2,006 788 — 1,416 442

Marketing services (3)

Polling services (5)

$ 830 350 339 — 39 —

Marketing services (5)

Polling services (6)

$ 4,431 1,046 3,450 — — —

Total $ 9,474 $ 21,042 $ 10,826 $ 6,792 $ 6,646

(1) Family member of one of the Brand’s partners holds an executive leadership position in the third party.

(2) Chief Executive Officer of the Brand is a shareholder of the affiliate providing the services.

(1) A member of the Company’s Board holds an executive leadership position or is on the Board of the client.

(2) Brands’ partners and executives either hold a key leadership position in or are on the Board of the client.

(3) Client has a significant interest in the Company.

(4) A family member of the Company’s Chief Executive Officer holds a key leadership position in the client.

(5) A family member of the Company’s President holds a key leadership position in the client.

(4) This arrangement was entered into for an indefinite term and is invoiced as services are provided.

(5) A member of the Company’s board of directors holds an executive leadership position or are on the board of directors of the client.

In 2019, a Brand of the Company, entered into a loan agreement with a third party who holds a minority interest in the Brand.

The loan receivable of $ 3,611 and $ 3,784 due from the third party is included within Other current assets in the Company’s Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021, respectively.

The Company recognized $ 464 , $ 307 , and $ 249 for the years ended December 31, 2022, 2021, and 2020, respectively, of interest income within Interest expense, net on its Consolidated Statements of Operations.

The Company made loans to three employees of a subsidiary each in the amount of approximately $ 889 , together with interest on the unpaid principal balance at a fixed interest rate equal to 3.5 % per annum, compounding quarterly.

(6) Founder of the client has significant interest in the Company.

(7) Certain of the contractual arrangements within these transactions were entered into for an indefinite term and are invoiced as services are provided, while others have a fixed definitive contract value.

In 2019, a Brand entered into a loan agreement with a related party who holds a minority interest in the Brand.

The loan receivable of $ 0.8 million and $ 3.6 million due from the third party is included within Other current assets in the Company’s Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022, respectively.

The Company recognized $ 0.3 million, $ 0.5 million and $ 0.3 million for the year ended December 31, 2023, 2022, and 2021 respectively, of interest income within Interest expense, net on its Consolidated Statements of Operations.

In addition, in 2021, the Brand entered into an arrangement to obtain sales and management services from the same third party.

Under the arrangement, the Brand has incurred $ 2.4 million, $ 2.0 million and $ 0.8 million of related party expense for the year ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2023 and December 31, 2022, $ 0.6 million and $ 1.4 million, respectively, was due to the third party.

In 2018, a Brand entered into an agreement to provide marketing and advertising services to a related party whose partners hold executive leadership positions in the Brand.

Under the arrangement, the Brand recognized $ 0.8 million, $ 1.0 million, and $ 0.7 million of revenue for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2023 nothing was from the related party, and as of December 31, 2022, $ 0.8 million was due from the related party.

In addition, on behalf of the related party, the Brand serves as an agent to transfer funds from one of the related party ’ s customers to the related party.

The Brand does not receive revenue from this arrangement.

As of December 31, 2023 $ 0.7 million was due to the related party, and nothing was due as of December 31, 2022.

In 2022, the Company made loans to three employees of a subsidiary each in the amount of $ 0.9 million, together with interest on the unpaid principal balance at a fixed interest rate equal to 3.5 % per annum, compounding quarterly.

The cash from the loan was used by the employees to purchase the noncontrolling interest of 13.3% in TMA Direct.

Prior Period Transactions

In October 2020, a Brand entered into an arrangement to provide marketing services to a client in which one of the Brand’s partners holds a key leadership position.

During the years ended December 31, 2021 and 2020, the Company recognized $ 5,146 and $ 4,866 , respectively, in revenue related to this transaction.

As of December 31, 2022 and 2021, there were no balances due from the client related to this arrangement.

This transaction was fully recognized in 2021.

During the years ended December 31, 2021 and 2020, Stagwell Media made additional non-cash investments in the Company of $ 12,400 , and $ 93,900 respectively.

Additionally, during the years ended December 31, 2021 and 2020, the Company made cash investments of $ 1,600 and $ 1,500 , respectively.

In March 2021, the Company made a non-cash distribution to Stagwell Media of $ 13,000 .

Additionally, the Company made cash distributions to Stagwell Media of $ 191,900 and $ 108,500 for the years ended December 31, 2021 and 2020, respectively.

Segment Information

5 unchanged sentences

Other items include restructuring costs, acquisition-related expenses, and non-recurring items.

Due to changes in the Company’s internal management and reporting structure in the second quarter of 2022, reportable segment results for periods presented prior to the second quarter of 2022 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.

The changes in reportable segments were that the Forsman & Bodenfors, Observatory, Crispin Porter Bogusky, Bruce Mau and Vitro Brands, previously within the Integrated Agencies Network, are now within the Brand Performance Network.

The Company made changes to its internal management and reporting structure in the first quarter of 2023, resulting in an update to our reportable segments (Networks).

The change in reportable segments was that Mono, previously in the Integrated Agencies Network, is now within Allison & Partners in the Communications Network, Storyline (a Brand specializing in research and survey generation), previously in the Communications Network, is now within Constellation in the Integrated Agencies Network.

Periods presented prior to the first quarter of 2023 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 as “All Other.” 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.

“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:

2 unchanged sentences

The Brands included in the operating segments that comprise the Integrated Agencies Network reportable segment are as follows:

Anomaly Alliance (Anomaly, Concentric, Hunter, Mono, YML and Scout (Brands), Constellation (72andSunny, Colle McVoy, Instrument,

Redscout, Hello Design, Team Enterprises, and Harris Insights), the Doner Partner Network (Doner, KWT Global, Harris X, Veritas, Doner North, Northstar, which is currently sunsetting, and Yamamoto (Brands)), Code and Theory and National Research Group.

Anomaly Alliance (Anomaly), Constellation (72andSunny, Colle McVoy, Hunter, Instrument, Redscout, Team Enterprises, Harris Insights, Left Field Labs, and Movers and Shakers), the Doner Partner Network (Doner, KWT Global, Harris X, Veritas, Doner North, and Yamamoto (Brands)), Code and Theory, and National Research Group.

ConcentricLife, which was part of Anomaly Alliance was sold on October 31, 2023.

These operating segments share similar characteristics related to (i) the nature of their services;

2 unchanged sentences

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”), previously referred to as the “Media Network” reportable segment, is comprised of a single operating segment.

• 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, Crispin Porter Bogusky, Forsman & Bodenfors, Bruce Mau Design, Goodstuff, MMI Agency, digital creative & transformation consultancy Gale, B2B specialist Multiview, Observatory, Vitro, 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 & Partners SKDK (including Sloane & Company), and Targeted Victory brands.

• All Other consists of the Company’s digital innovation group and Stagwell Marketing Cloud, including Maru and Epicenter, and products such as PRophet, ARound and Reputation Defender (which was sold in September 2021).

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, Crispin Porter Bogusky, Forsman & Bodenfors, Goodstuff, Bruce Mau, digital creative & transformation consultancy Gale, B2B specialist Multiview, CX specialists Kenna, and travel media experts Ink.

• All Other consists of the Company’s digital innovation group and Stagwell Marketing Cloud Group, including Maru and Epicenter, 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.

3 unchanged sentences

2023 2022 2021

(dollars in thousands)

Integrated Agencies Network $ 1,378,109 $ 1,474,970 $ 771,123

17 unchanged sentences

$ 90,527 $ 159,228 $ 44,726

Year Ended December 31,

2022 2021 2020

Other Income (expenses):

1 unchanged sentence

Foreign exchange, net ( 2,960 ) ( 2,606 ) ( 3,332 )

Other, net ( 7,059 ) 50,058 544

Gain on sale of business

94,505 — 43,038

( 359 ) ( 4,975 ) 7,020

Income before income taxes and equity in earnings of non-consolidated affiliates 91,069 75,585 59,558

1 unchanged sentence

Income before equity in earnings of non-consolidated affiliates

Equity in income (loss) of non-consolidated affiliates ( 79 ) ( 240 ) 58

Net income 65,842 35,920 71,461

Net income attributable to noncontrolling and redeemable noncontrolling interests ( 38,573 ) ( 14,884 ) ( 15,105 )

50,512 50,123 36,160

Equity in (loss) of non-consolidated affiliates

( 8,870 ) ( 79 ) ( 240 )

41,642 50,044 35,920

Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests ( 41,508 ) ( 30,125 ) ( 14,884 )

Net income attributable to Stagwell Inc.

common shareholders

Depreciation and amortization:

Integrated Agencies Network $ 74,609 $ 37,646 $ 9,360

Brand Performance Network 33,674 26,031 20,117

Communications Network 10,831 7,553 5,903

All Other 5,234 2,498 3,681

Corporate 6,925 3,775 1,964

Total depreciation and amortization $ 131,273 $ 77,503 $ 41,025

Stock-based compensation:

Integrated Agencies Network $ 13,774 $ 47,190 $ —

Brand Performance Network 5,830 5,251 —

Communications Network 1,797 15,928 —

All Other 41 39 —

Corporate 11,710 6,624 —

Total stock-based compensation $ 33,152 $ 75,032 $ —

The Company recognized a severance charge of approximately $ 10,600 in 2022, the majority of which was at the Brand Performance Network.

$ 134 $ 19,919 $ 21,036

The Company’s long-lived assets (i.e., Right-of-use-lease assets-operating leases and Fixed asset, net) was $ 332.1 million ($ 268.5 million in the United States and $ 63.6 million in all other countries) as of December 31, 2023, and $ 372.4 million ($ 315.8 million in the United States and $ 56.7 million in all other countries) as of December 31, 2022.

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 5 of the Notes included herein for a summary of the Company’s revenue by geographic region for the years ended December 31, 2023, 2022, and 2021.

Revision of 2022 Issued Consolidated Financial Statements

As described in Note 1, in connection with the preparation of the consolidated financial statements for the year ended December 31, 2023, the Company identified errors in the areas of income taxes, noncontrolling interests, and accumulated other comprehensive loss in its previously issued 2022 annual consolidated financial statements.

The Company has revised its financial statements as of and for the year ended December 31, 2022, to reflect the corrections in this Form 10-K.

There were no changes to previously issued cash flows generated from (used by) operating, investing, or financing activities for any of the impacted periods.

Line items impacted in the Consolidated Statements of Shareholders Equity have been reflected below within the Statements of Comprehensive Income (Loss) and Consolidated Balance Sheet below.

Presented below are the effects of the errors to the impacted financial statements as of and for the year ended December 31, 2022.

Consolidated Statements of Operations and

Consolidated Statements of Comprehensive Income (Loss)

Year Ended December 31, 2022

$ ( 7,059 ) $ 2,084 $ ( 4,975 )

Other income (expenses)

( 85,727 ) 2,084 ( 83,643 )

Income before income taxes and equity in earnings of non-consolidated affiliates

73,501 2,084 75,585

Income tax expense

7,580 17,882 25,462

Income before equity in earnings of non-consolidated affiliates

65,921 ( 15,798 ) 50,123

65,842 ( 15,798 ) 50,044

Net (income) attributable to noncontrolling and redeemable noncontrolling interests

( 38,573 ) 8,448 ( 30,125 )

Net income attributable to Stagwell Inc.

common shareholders

$ 27,269 $ ( 7,350 ) $ 19,919

Earnings Per Common Share:

0.22 ( 0.06 ) 0.16

0.17 ( 0.05 ) 0.12

Year Ended December 31, 2022

Other comprehensive (loss) - foreign currency translation adjustment

$ ( 37,751 ) $ ( 22 ) $ ( 37,773 )

Other comprehensive (loss)

( 33,663 ) ( 22 ) ( 33,685 )

Comprehensive income for the period

32,179 ( 15,820 ) 16,359

Comprehensive (income) attributable to the noncontrolling and redeemable noncontrolling interest

( 38,573 ) 31,933 ( 6,640 )

Comprehensive income (loss) attributable to Stagwell Inc.

common shareholders

( 6,394 ) 16,113 9,719

Consolidated Balance Sheet

December 31, 2022

As reported Adjustment As revised

Other current assets

71,443 2,568 74,011

Total current assets

$ 1,030,955 $ 2,568 $ 1,033,523

115,447 691 116,138

$ 3,993,332 $ 3,259 $ 3,996,591

Accruals and other liabilities

248,477 20,394 268,871

Total current liabilities

1,349,802 20,394 1,370,196

Deferred tax liabilities, net

40,109 770 40,879

Other liabilities

69,780 ( 2,085 ) 67,695

Total liabilities

$ 3,009,587 $ 19,079 $ 3,028,666

Retained earnings

29,445 ( 7,350 ) 22,095

Accumulated other comprehensive loss

( 38,941 ) 23,463 ( 15,478 )

Stagwell Inc.

Shareholders' Equity

482,537 16,113 498,650

Noncontrolling interests

462,097 ( 31,933 ) 430,164

Total Shareholders' Equity

944,634 ( 15,820 ) 928,814

Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity

$ 3,993,332 $ 3,259 $ 3,996,591

Quarterly Financial Information (Unaudited)

The following table presents selected unaudited revised financial information for each of the four quarters during the year ended December 31, 2023.

See Note 1 of the Notes included herein for additional information on the revision.

There were no changes to previously issued cash flows generated from (used by) operating, investing, or financing activities for any of the impacted periods.

The quarterly interim consolidated balance sheets were only impacted by the effects of the balance sheet adjustments noted above.

For the three months ended March 31, 2023, we have included the line items that will be impacted by the correction of errors originally adjusted as out-of-period in the 2023 interim financial statements for the Consolidated Statements of Shareholders Equity.

The impact to the Consolidated Statements of Shareholders Equity for the periods ended June 30, 2023 and September 30, 2023 have been reflected below within the Consolidated Statements of Comprehensive Income (Loss).

Consolidated Statements of Operations and

Consolidated Statements of Comprehensive Income (Loss)

$ 622,444 $ 632,265 $ 617,573 $ 654,895

Cost of services

413,898 402,431 384,980 419,865

Income tax expense

236 437 4,324 35,560

Income (loss) before equity in earnings of non-consolidated affiliates

( 2,642 ) ( 4,749 ) 3,121 54,782

Net income (loss)

( 2,869 ) ( 4,965 ) 3,117 46,359

Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests

4,258 1,771 ( 2,464 ) ( 45,073 )

Net income (loss) attributable to Stagwell Inc.

common shareholders

1,389 ( 3,194 ) 653 1,286

Earnings (Loss) Per Common Share

0.01 ( 0.03 ) 0.01 0.01

0.00 ( 0.03 ) 0.00 0.00

Other comprehensive income (loss) - foreign currency translation adjustment

4,447 2,945 ( 13,516 ) 14,120

Other comprehensive income (loss)

4,447 2,945 ( 13,516 ) 14,458

Comprehensive income (loss) for the period

1,578 ( 2,020 ) ( 10,399 ) 60,817

Comprehensive (income) loss attributable to the noncontrolling and redeemable noncontrolling interests

2,036 ( 1,158 ) 5,483 ( 53,792 )

Comprehensive income (loss) attributable to Stagwell Inc.

common shareholders

3,614 ( 3,178 ) ( 4,916 ) 7,025

The impact of the revision on the previously issued unaudited quarterly financial information is as follows:

Three Months Ended March 31, 2023

As reported Adjustment As revised

Income tax expense

$ 2,384 $ ( 2,148 ) $ 236

Loss before equity in earnings of non-consolidated affiliates

( 4,790 ) 2,148 ( 2,642 )

( 5,017 ) 2,148 ( 2,869 )

Net loss attributable to noncontrolling and redeemable noncontrolling interests

5,460 ( 1,202 ) 4,258

Net income attributable to Stagwell Inc.

common shareholders

443 946 1,389

Earnings (Loss) Per Common Share

0.00 0.01 0.01

( 0.01 ) 0.01 0.00

Other comprehensive income - foreign currency translation adjustment

4,425 22 4,447

Other comprehensive income

4,425 22 4,447

Comprehensive income (loss) for the period

( 592 ) 2,170 1,578

Comprehensive loss attributable to the noncontrolling and redeemable noncontrolling interests

26,723 ( 24,687 ) 2,036

Comprehensive income attributable to Stagwell Inc.

common shareholders

26,131 ( 22,517 ) 3,614

Three Months Ended June 30, 2023

As reported Adjustment As revised

Income tax expense

$ 5,717 $ ( 5,280 ) $ 437

Loss before equity in earnings of non-consolidated affiliates

( 10,029 ) 5,280 ( 4,749 )

( 10,245 ) 5,280 ( 4,965 )

Net loss attributable to noncontrolling and redeemable noncontrolling interests

5,552 ( 3,781 ) 1,771

Net loss attributable to Stagwell Inc.

common shareholders

( 4,693 ) 1,499 ( 3,194 )

Loss Per Common Share

( 0.04 ) 0.01 ( 0.03 )

Other comprehensive income - foreign currency translation adjustment

2,938 7 2,945

Other comprehensive income

2,938 7 2,945

Comprehensive loss for the period

( 7,307 ) 5,287 ( 2,020 )

Comprehensive (income) loss attributable to the noncontrolling and redeemable noncontrolling interests

2,623 ( 3,781 ) ( 1,158 )

Comprehensive loss attributable to Stagwell Inc.

common shareholders

( 4,684 ) 1,506 ( 3,178 )

Six Months Ended June 30, 2023

As reported Adjustment As revised

Income tax expense

$ 8,101 $ ( 7,428 ) $ 673

Loss before equity in earnings of non-consolidated affiliates

( 14,819 ) 7,428 ( 7,391 )

( 15,262 ) 7,428 ( 7,834 )

Net loss attributable to noncontrolling and redeemable noncontrolling interests

11,012 ( 4,983 ) 6,029

Net loss attributable to Stagwell Inc.

common shareholders

( 4,250 ) 2,445 ( 1,805 )

Loss Per Common Share

( 0.04 ) 0.03 ( 0.01 )

Other comprehensive income - foreign currency translation adjustment

7,363 29 7,392

Other comprehensive income

7,363 29 7,392

Comprehensive loss for the period

( 7,899 ) 7,457 ( 442 )

Comprehensive loss attributable to the noncontrolling and redeemable noncontrolling interests

29,346 ( 28,468 ) 878

Comprehensive income attributable to Stagwell Inc.

common shareholders

21,447 ( 21,011 ) 436

Nine Months Ended September 30, 2023

As reported Adjustment As revised

Income tax expense

$ 12,425 $ ( 7,428 ) $ 4,997

Loss before equity in earnings of non-consolidated affiliates

( 11,698 ) 7,428 ( 4,270 )

( 12,145 ) 7,428 ( 4,717 )

Net loss attributable to noncontrolling and redeemable noncontrolling interests

8,548 ( 4,983 ) 3,565

Net loss attributable to Stagwell Inc.

common shareholders

( 3,597 ) 2,445 ( 1,152 )

Loss Per Common Share

( 0.03 ) 0.02 ( 0.01 )

Other comprehensive loss - foreign currency translation adjustment

( 6,153 ) 29 ( 6,124 )

Other comprehensive loss

( 6,153 ) 29 ( 6,124 )

Comprehensive loss for the period

( 18,298 ) 7,457 ( 10,841 )

Comprehensive loss attributable to the noncontrolling and redeemable noncontrolling interests

34,829 ( 28,468 ) 6,361

Comprehensive income (loss) attributable to Stagwell Inc.

common shareholders

16,531 ( 21,011 ) ( 4,480 )

Consolidated Statements of Shareholders' Equity

Three Months Ended March 31, 2023

As reported Adjustment As revised

Net income attributable to Stagwell Inc.

common shareholders

$ 443 $ 946 $ 1,389

Net income (loss) attributable to Noncontrolling Interests

( 2,917 ) 1,202 ( 1,715 )

Other comprehensive income

25,688 ( 23,463 ) 2,225

Other comprehensive income (loss) attributable to Noncontrolling Interests

( 21,263 ) 23,485 2,222

Total other comprehensive income

$ 4,425 $ 22 $ 4,447

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data