Stagwell Inc 10-K

Item 8. Financial Statements and Supplementary Data STAGWELL INC. INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS Page Financial Statements: Report of Independent Registered Public Accounting Firm (PCAOB ID No. 238 ) 53 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 55 Consolidated Statements of Operations for each of the Three Years in the Period Ended December 31, 2024 56 Consolidated Statements of Comprehensive Income (Loss) for each of the Three Years in the Period Ended December 31, 2024 57 Consolidated Balance Sheets as of December 31, 2024 , and 2023 58 Consolidated Statements of Cash Flows for each of the Three Years in the Period Ended December 31, 2024 59 Consolidated Statements of Shareholders’ Equity for each of the Three Years in the Period Ended December 31, 2024 61 Notes to Audited Consolidated Financial Statements 64 Financial Statement Schedules: Schedule II — Valuation and Qualifying Accounts for each of the Three Years in the Period Ended December 31, 2024 106 52 Table of Contents 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 sheets of Stagwell Inc. and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the years then ended, including the related notes and schedule of valuation and qualifying accounts for the years ended December 31, 2024 and 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. 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 on Internal Control Over Financial Reporting appearing under Item 9A. 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 audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits 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 audits 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 audits 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 audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded UNICEPTA Holding GmbH (“Unicepta”) and Consulum (Cayman) Limited (“Consulum”) from its assessment of internal control over financial reporting as of December 31, 2024 because they were acquired by the Company in purchase business combinations during 2024. We have also excluded Unicepta and Consulum from our audit of internal control over financial reporting. Unicepta and Consulum are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent less than 2% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024. 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. 53 Table of Contents 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 –Certain Reporting Units in the Integrated Agencies Network and Communications Network Segments and the All Other Category As described in Notes 2 and 8 to the consolidated financial statements, the Company’s goodwill balance was $1,554 million as of December 31, 2024, and the goodwill associated with the Integrated Agencies Network segment, the Communications Network segment, and the All Other category was $892 million, $159 million, and $69 million, respectively. Management tests goodwill for impairment, at the reporting unit level, annually as of October 1 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 uses a combination of the income approach (a discounted cash flow method) and the market approach, and applies an equal weighting to the approaches for the impairment test. The income approach requires the exercise of significant judgment, including the amount and timing of expected future cash flows, terminal value and 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 market approach requires the exercise of significant judgment as it relates to the use of earnings multiples based on market data and comparable companies. The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments for certain reporting units in the Integrated Agencies Network and Communications Network segments and the All Other category (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, and discount rates used in the income approach, as well as earnings multiples and comparable companies used in the market approach; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. As previously disclosed by management, material weaknesses existed during the year 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 testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the aforementioned reporting units. These procedures also included (i) testing management’s process for developing the fair value estimate of the aforementioned reporting units; (ii) evaluating the appropriateness of the income and market approaches used by management; (iii) testing the completeness and accuracy of underlying data used in the income and market approaches; and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, EBITDA margin, long-term growth rates, and discount rates used in the income approach, as well as earnings multiples and comparable companies used in the market approach. 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. /s/ PricewaterhouseCoopers LLP New York, NY March 11, 2025 We have served as the Company’s auditor since 2023. 54 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Stagwell Inc. Opinion on the Financial Statements We have audited the accompanying consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for 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”) of Stagwell Inc. and subsidiaries (the “Company”). In our opinion, the financial statements present fairly, in all material respects, the results of the Company’s operations and its cash flows for the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements 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 financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the 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 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 financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Deloitte & Touche LLP New York, NY March 6, 2023 (March 11, 2024 as to the effects of the restatement of the 2022 financial statements to correct errors identified in 2023) We began serving as the Company’s auditor in 2020. In 2023 we became the predecessor auditor. 55 Table of Contents STAGWELL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands, except per share amounts) Year Ended December 31, 2024 2023 2022 Revenue $ 2,841,216 $ 2,527,177 $ 2,687,792 Operating Expenses Cost of services 1,842,978 1,621,174 1,673,576 Office and general expenses 711,803 661,250 601,536 Depreciation and amortization 151,652 142,831 131,273 Impairment and other losses 1,715 11,395 122,179 2,708,148 2,436,650 2,528,564 Operating Income 133,068 90,527 159,228 Other income (expenses): Interest expense, net ( 92,317 ) ( 90,644 ) ( 76,062 ) Foreign exchange, net ( 1,656 ) ( 2,960 ) ( 2,606 ) Gain on sale of business — 94,505 — Other, net ( 1,372 ) ( 359 ) ( 4,975 ) ( 95,345 ) 542 ( 83,643 ) Income before income taxes and equity in earnings of non-consolidated affiliates 37,723 91,069 75,585 Income tax expense 13,182 40,557 25,462 Income before equity in earnings of non-consolidated affiliates 24,541 50,512 50,123 Equity in income (loss) of non-consolidated affiliates 503 ( 8,870 ) ( 79 ) Net income 25,044 41,642 50,044 Net income attributable to noncontrolling and redeemable noncontrolling interests ( 22,785 ) ( 41,508 ) ( 30,125 ) Net income attributable to Stagwell Inc. common shareholders $ 2,259 $ 134 $ 19,919 Earnings Per Common Share: Basic $ 0.02 $ — $ 0.16 Diluted $ 0.02 $ — $ 0.12 Weighted Average Number of Common Shares Outstanding: Basic 110,890 117,259 124,262 Diluted 115,752 122,170 296,596 See Notes to the Audited Consolidated Financial Statements . 56 Table of Contents STAGWELL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (amounts in thousands) Year Ended December 31, 2024 2023 2022 COMPREHENSIVE INCOME (LOSS) Net income $ 25,044 $ 41,642 $ 50,044 Other comprehensive income (loss) - Foreign currency translation adjustment ( 27,699 ) 7,996 ( 37,773 ) Other comprehensive income - Benefit plan adjustment, net of tax 1,424 338 4,088 Comprehensive income (loss) for the period ( 1,231 ) 49,976 16,359 Comprehensive income attributable to the noncontrolling and redeemable noncontrolling interests ( 7,216 ) ( 47,431 ) ( 6,640 ) Comprehensive income (loss) attributable to Stagwell Inc. common shareholders $ ( 8,447 ) $ 2,545 $ 9,719 See Notes to the Audited Consolidated Financial Statements . 57 Table of Contents STAGWELL INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (amounts in thousands) December 31, 2024 December 31, 2023 ASSETS Current Assets Cash and cash equivalents $ 131,339 $ 119,737 Accounts receivable, net 716,415 697,178 Expenditures billable to clients 173,194 114,097 Other current assets 114,200 94,054 Total Current Assets 1,135,148 1,025,066 Fixed assets, net 72,706 77,825 Right-of-use lease assets - operating leases 219,400 254,278 Goodwill 1,554,146 1,498,815 Other intangible assets, net 836,783 818,220 Other assets 90,038 92,843 Total Assets $ 3,908,221 $ 3,767,047 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS (“RNCI”), AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 449,347 $ 414,980 Accrued media 245,883 291,777 Accruals and other liabilities 265,356 233,046 Advance billings 294,609 301,674 Current portion of lease liabilities - operating leases 60,195 65,899 Current portion of deferred acquisition consideration 51,906 66,953 Total Current Liabilities 1,367,296 1,374,329 Long-term debt 1,353,624 1,145,828 Long-term portion of deferred acquisition consideration 50,209 34,105 Long-term lease liabilities - operating leases 245,397 281,307 Deferred tax liabilities, net 47,239 40,509 Other liabilities 59,139 54,905 Total Liabilities 3,122,904 2,930,983 Redeemable Noncontrolling Interests 8,412 10,792 Commitments, Contingencies and Guarantees (Note 14) Shareholders’ Equity Common shares - Class A & B 115 118 Common shares - Class C 2 2 Paid-in capital 343,647 348,494 Retained earnings 11,740 21,148 Accumulated other comprehensive loss ( 23,773 ) ( 13,067 ) Stagwell Inc. Shareholders’ Equity 331,731 356,695 Noncontrolling interests 445,174 468,577 Total Shareholders’ Equity 776,905 825,272 Total Liabilities, Redeemable Noncontrolling Interests and Shareholders’ Equity $ 3,908,221 $ 3,767,047 See Notes to the Audited Consolidated Financial Statements . 58 Table of Contents STAGWELL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income $ 25,044 $ 41,642 $ 50,044 Adjustments to reconcile net income to cash provided by operating activities: Stock-based compensation 52,161 57,179 33,152 Depreciation and amortization 151,652 142,831 131,273 Amortization of right-of-use lease assets and lease liability interest 75,117 76,653 77,368 Impairment and other losses 1,715 11,395 122,179 Deferred income taxes ( 10,686 ) 19,443 ( 18,241 ) Adjustment to deferred acquisition consideration 23,005 13,060 ( 13,405 ) Gain on sale of business — ( 94,505 ) — Other, net 7,622 8,313 ( 22 ) Changes in working capital: Accounts receivable 8,465 ( 58,704 ) 37,780 Expenditures billable to clients ( 54,350 ) ( 21,477 ) ( 32,366 ) Other assets ( 6,200 ) 1,153 ( 1,388 ) Accounts payable 24,438 52,837 108,028 Accrued expenses and other liabilities ( 28,658 ) ( 24,647 ) ( 22,436 ) Advance billings ( 22,651 ) ( 41,137 ) ( 27,062 ) Current portion of lease liabilities - operating leases ( 83,905 ) ( 87,629 ) ( 86,525 ) Deferred acquisition related payments ( 19,910 ) ( 15,400 ) ( 10,793 ) Net cash provided by operating activities 142,859 81,007 347,586 Cash flows from investing activities: Capital expenditures ( 18,912 ) ( 14,238 ) ( 22,663 ) Acquisitions, net of cash acquired ( 103,254 ) ( 23,339 ) ( 74,234 ) Capitalized software ( 35,094 ) ( 28,175 ) ( 12,774 ) Proceeds from sale of business, net — 229,484 — Other ( 5,212 ) ( 7,781 ) ( 6,604 ) Net cash (used in) provided by investing activities ( 162,472 ) 155,951 ( 116,275 ) Cash flows from financing activities: Repayment of borrowings under revolving credit facility ( 1,755,000 ) ( 1,986,500 ) ( 1,266,000 ) Proceeds from borrowings under revolving credit facility 1,960,000 1,945,500 1,255,500 Shares repurchased and cancelled ( 108,249 ) ( 223,835 ) ( 70,269 ) Distributions to noncontrolling interests ( 26,723 ) ( 24,964 ) ( 39,197 ) Payment of deferred consideration ( 29,774 ) ( 49,221 ) ( 63,170 ) Purchase of noncontrolling interest ( 3,316 ) — ( 3,600 ) Debt issuance costs — ( 844 ) — Net cash provided by (used in) financing activities 36,938 ( 339,864 ) ( 186,736 ) Effect of exchange rate changes on cash and cash equivalents ( 5,723 ) 2,054 ( 7,995 ) Net increase (decrease) in cash and cash equivalents 11,602 ( 100,852 ) 36,580 Cash and cash equivalents at beginning of period 119,737 220,589 184,009 Cash and cash equivalents at end of period $ 131,339 $ 119,737 $ 220,589 Supplemental Cash Flow Information: 59 Table of Contents STAGWELL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued) (amounts in thousands) Year Ended December 31, 2024 2023 2022 Cash income taxes paid $ 23,906 $ 45,538 $ 41,235 Cash interest paid 91,050 87,068 70,935 Non-cash investing and financing activities: Acquisitions of business 47,082 8,332 1,178 Acquisitions of noncontrolling interest 27,207 22,172 1,000 Share issuances 341 — — Establishment of a deferred tax asset related to the exchange — — 30,556 Establishment of Tax Receivables Agreement liability — — 26,610 Conversion of Class C to Class A shares — — 47,930 Finalization of Stagwell Inc’s tax basis in Stagwell Global, LLC — — 119,470 Non-cash payment of deferred acquisition consideration 18,208 32,820 989 See Notes to the Audited Consolidated Financial Statements . 60 Table of Contents STAGWELL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (amounts in thousands) Year Ended December 31, 2024 Common Shares - Class A Common Shares - Class C Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Stagwell Inc. Shareholders’ Equity Noncontrolling Interests Shareholders’ Equity Shares Amount Shares Amount Balance at December 31, 2023 118,469 $ 118 151,649 $ 2 $ 348,494 $ 21,148 $ ( 13,067 ) $ 356,695 $ 468,577 $ 825,272 Net income — — — — — 2,259 — 2,259 22,785 25,044 Other comprehensive loss — — — — — — ( 10,706 ) ( 10,706 ) ( 15,569 ) ( 26,275 ) Total other comprehensive income (loss) — — — — — 2,259 ( 10,706 ) ( 8,447 ) 7,216 ( 1,231 ) Distributions to noncontrolling interests (1) — — — — — — — — ( 23,843 ) ( 23,843 ) Purchases of noncontrolling interest — — — — ( 3,069 ) — — ( 3,069 ) ( 10,226 ) ( 13,295 ) Changes in redemption value of RNCI, net of tax — — — — — ( 11,669 ) — ( 11,669 ) — ( 11,669 ) Restricted awards granted or vested 3,856 4 — — 1,109 — — 1,113 — 1,113 Shares repurchased and cancelled ( 17,002 ) ( 17 ) — — ( 108,232 ) — — ( 108,249 ) — ( 108,249 ) Restricted shares forfeited ( 96 ) — — — — — — — — — Stock-based compensation — — — — 45,509 — — 45,509 — 45,509 Change in ownership held by Class C shareholders — — — — ( 5,886 ) — — ( 5,886 ) 6,380 494 Shares issued, acquisitions 9,567 10 — — 65,283 — — 65,293 — 65,293 Other 53 — — — 439 2 — 441 ( 2,930 ) ( 2,489 ) Balance at December 31, 2024 114,847 $ 115 151,649 $ 2 $ 343,647 $ 11,740 $ ( 23,773 ) $ 331,731 $ 445,174 $ 776,905 (1) Distributions to noncontrolling interests include approximately $ 21.6 million to Class C shareholders. See Notes to the Audited Consolidated Financial Statements . 61 Table of Contents STAGWELL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - (continued) (amounts in thousands) Year Ended December 31, 2023 Common Shares - Class A & B Common Shares - Class C Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Stagwell Inc. Shareholders’ Equity Noncontrolling Interests Shareholders’ Equity Shares Amount Shares Amount Balance at December 31, 2022 131,724 $ 132 160,909 $ 2 $ 491,899 $ 22,095 $ ( 15,478 ) $ 498,650 $ 430,164 $ 928,814 Net income — — — — — 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 Shares issued, acquisitions 7,530 8 — — 41,152 — — 41,160 — 41,160 Change in ownership held by Class C shareholders — — — — ( 10,858 ) — — ( 10,858 ) 10,858 — Conversion of Class C to Class A shares 9,260 9 ( 9,260 ) — ( 9 ) — — — — — Other (1) 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 in connection with 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. 62 Table of Contents 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 Comprehensive Loss 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 Other comprehensive loss — — — — — — ( 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 ) Purchases of noncontrolling interests — — — — ( 1,000 ) — — ( 1,000 ) ( 3,600 ) ( 4,600 ) Acquisition of noncontrolling interests — — — — — — — — 2,667 2,667 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 ( 9,725 ) ( 10 ) — — ( 70,269 ) — — ( 70,279 ) — ( 70,279 ) Restricted shares forfeited ( 221 ) — — — — — — — — — 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. — — — — ( 16,294 ) — — ( 16,294 ) 2,301 ( 13,993 ) Other 242 1 — — ( 6,960 ) 447 — ( 6,512 ) ( 8,244 ) ( 14,756 ) Balance at December 31, 2022 131,724 $ 132 160,909 $ 2 $ 491,899 $ 22,095 $ ( 15,478 ) $ 498,650 $ 430,164 $ 928,814 See Notes to the Audited Consolidated Financial Statements. 63 Table of Contents STAGWELL INC. AND SUBSIDIARIES NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. 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 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. The accompanying Audited Consolidated Financial Statements include the accounts of Stagwell and its subsidiaries. Stagwell has prepared the Audited Consolidated Financial Statements included herein in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting financial information on this Annual Report on Form 10-K (this “Form 10-K”). The preparation of financial statements in conformity with GAAP requires us to make judgments, assumptions and estimates about current and future results of operations and cash flows that affect the amounts reported and disclosed. Actual results could differ from these estimates and assumptions. The accompanying financial statements reflect all adjustments, consisting of normal recurring accruals, which in the opinion of management are necessary for a fair statement, 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’s presentation. Recent Developments On January 1, 2025, the Company entered into a stock purchase agreement to acquire ADK Group, an integrated marketing solutions company. The purchase price is dependent on the closing balance sheet but is estimated to be approximately $24 million. The acquisition is expected to close in the second quarter of 2025. On December 23, 2024, the Company entered into a sale purchase agreement to acquire Create Group Holding Limited, a strategic digital communications group in Middle East, for approximately $ 16 million, subject to post-closing adjustments. Under the agreement, the sellers are entitled to contingent consideration up to a maximum value of approximately $ 24 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, par value $0.001 per share (the “ Class A Common Stock ” ) at the Company’s discretion. The acquisition is expected to close in the second quarter of 2025. 2. Significant Accounting Policies The Company’s significant accounting policies are summarized as follows: Principles of Consolidation . 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. Intercompany balances and transactions have been eliminated in consolidation. Use of Estimates . The preparation of the Audited Consolidated Financial Statements in conformity with GAAP requires management to make judgments, estimates and assumptions. 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 require the use of assumptions about future performance, which are uncertain at the time of estimation. As of December 31, 2024, 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. Fair Value . 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. See Note 18 of the Notes included herein for additional information regarding fair value measurements. 64 Table of Contents Concentration of Credit Risk . Credit is granted to qualified clients in the ordinary course of business. Due to the diversified nature of the Company’s client base, the Company does not believe that it is exposed to a concentration of credit ris k. No sales to an individual client accounted for more than 3 % and 4 % for the years ended December 31, 2024, and 2023, respectively. Cash and Cash Equivalents . The Company’s cash equivalents may comprise investments in overnight interest-bearing deposits, money market instruments and other short-term investments with original maturity dates of three months or less at the time of purchase. The Company has a concentration of credit risk in that there are cash deposits in excess of federally insured amounts and international cash balances that may not qualify for foreign government insurance programs. To date, the Company has not experienced any losses on cash and cash equivalents. Allowance for Doubtful Accounts . Trade receivables are stated at invoiced amounts less allowances for doubtful accounts. 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 $ 6.1 million and $ 7.1 million as of December 31, 2024, and December 31, 2023, 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 were $ 435.6 million, $ 393.9 million and $ 176.5 million, during the years ended December 31, 2024, 2023, and 2022, respectively. The trade receivables collected by the Company that were not remitted to the third parties under these arrangements were recorded in Accruals and other liabilities on the Consolidated Balance Sheets and total $ 19.5 million as of December 31, 2024, $ 1.8 million as of December 31, 2023, and $ 5.7 million as of December 31, 2022. Fees for these arrangements were recorded in Office and general expenses in the Consolidated Statements of Operations and totaled $ 5.8 million, $ 5.4 million, and $ 1.8 million for the years ended December 31, 2024, 2023, and 2022, respectively. Expenditures Billable to Clients . Expenditures billable to clients consist principally of outside vendor costs incurred on behalf of clients when providing services, in arrangements in which we are acting as agent, that have not yet been invoiced to clients. Such amounts are invoiced to clients at various times over the course of the period. Fixed Assets . Fixed assets are stated at cost, net of accumulated depreciation. Computer equipment and furniture and fixtures are depreciated on a straight-line basis over periods of three to ten years . Leasehold improvements are depreciated on a straight-line basis over the lesser of the term of the related lease or the estimated useful life of the asset. Repairs and maintenance costs are expensed as incurred. Leases . 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. All right-of-use lease assets are reviewed for impairment. See Note 10 of the Notes included herein for further information on leases. Impairment of Long-lived Assets . A long-lived asset or asset group is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such events occur, the Company compares the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group to the carrying amount of such asset or asset group. If this comparison indicates that there is an impairment, the amount of the impairment is typically calculated using discounted expected future cash flows where observable fair values are not readily determinable. The discount rate applied to these cash flows is based on the Company’s weighted average cost of capital (“WACC”), risk adjusted where appropriate, or another appropriate discount rate. Goodwill . Goodwill (the excess of the acquisition cost over the fair value of the net assets acquired) acquired as a result of a business combination is not amortized but rather tested 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 the annual impairment test, the Company has the option of assessing qualitative factors to determine whether it is more likely than not that the carrying amount of a reporting unit exceeds its fair value or performing a quantitative goodwill impairment test. Qualitative factors considered in the assessment include industry and market considerations, the competitive environment, overall financial performance, changing cost factors such as labor costs, and other factors specific to each reporting unit such as change in management or key personnel. If the Company elects to perform the qualitative assessment and concludes that it is more likely than not that the fair value of the reporting unit is more than its carrying amount, then goodwill is not considered impaired, and the quantitative impairment test is not necessary. For reporting units for which the qualitative assessment concludes that it is more likely than 65 Table of Contents not that the fair value of the reporting unit is less than its carrying amount, the Company will perform the 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. However, if the fair value of the reporting unit is lower than the carrying amount of the net assets assigned to the reporting unit, an impairment charge is recognized equal to the excess of the carrying amount over the fair value. Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. 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 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. The estimates are based on historical data and experience, industry projections, economic conditions, and the Company’s expectations . Definite Lived Intangible Assets . Definite lived intangible assets are subject to amortization over their useful lives. A straight-line amortization method is used over the estimated useful life which is representative of the pattern of how the economic benefits of the specific intangible asset is consumed. Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an intangible asset to estimated undiscounted future cash flows expected to be generated from use of the asset and its eventual disposition. If the total of the undiscounted future cash flows is less than the carrying amount of those assets, a quantitative assessment is performed using an income approach, which incorporates the use of the DCF method. Business Combinations. Business combinations are accounted for using the acquisition method and accordingly, the assets acquired (including identified intangible assets), the liabilities assumed and any noncontrolling interest in the acquired business are recorded at their acquisition date fair values. For each acquisition, the Company undertakes a detailed review to identify other intangible assets, and a valuation is performed for all such identified assets. The Company uses several market participant measurements to determine the estimated value. This approach includes consideration of similar and recent transactions, as well as utilizing discounted expected cash flow methodologies. A substantial portion of the intangible assets value that the Company acquires is the specialized know-how of the workforce, which is treated as part of goodwill and is not required to be valued separately. The majority of the value of the identifiable intangible assets acquired is derived from customer relationships, including the related customer contracts, as well as trademarks. Deferred Acquisition Consideration . 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 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, 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 . 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 noncontrolling shareholders have a right to require the 66 Table of Contents Company to purchase their ownership interest, 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. Control to Control Subsidiary Purchases. Transactions involving the purchase, sale or issuance of interests of a subsidiary where control is maintained are recorded as a reduction in the redeemable noncontrolling interests or noncontrolling interests, as applicable. 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 of Operations. Revenue Recognition . The Company’s revenue is recognized when control of the promised 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. See Note 5 of the Notes included herein for additional information. Cost of Services . Cost of services sold primarily consists of staff costs that are directly attributable to the Company’s client engagements, as well as third-party direct costs of production and delivery of services to its clients. Cost of services sold does not include depreciation, amortization, and other office and general expenses that are not directly attributable to the Company’s client engagements. Deferred Financing Costs . The Company uses the straight-line method, which approximates the effective interest method, to amortize deferred financing costs within Interest expense, net on the Consolidated Statements of Operations. Income Taxes. The Company accounts 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 basis. 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. The Company records associated interest and penalties as a component of income tax expense. The Company records a valuation allowance against deferred income tax assets when management believes it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Management evaluates on a quarterly basis all available positive and negative evidence considering factors such as the reversal of deferred income tax liabilities, taxable income in eligible carryback years, projected future taxable income, the character of the income tax asset, tax planning strategies, changes in tax laws and other factors. The periodic assessment of the net carrying value of the Company’s deferred tax assets under the applicable accounting rules requires significant management judgment. A change to any of these factors could impact the estimated valuation allowance and income tax expense. Stock-Based Compensation . Compensation cost for awards such as restricted stock and restricted stock units is measured at fair value at the date of grant and is expensed over the service period, generally the award’s vesting period. 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 our awards are settled in cash (stock appreciation awards) and are recorded at fair value on the date of grant and remeasured at each reporting period. 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 (loss) over the service period, in this case the award’s vesting period. 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. 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 with 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 . 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 67 Table of Contents 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 . Retirement Costs . Several of the Company’s subsidiaries offer employees access to certain defined contribution retirement programs. 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 $ 19.7 million, $ 20.5 million, and $ 19.0 million for the years ended December 31, 2024, 2023, and 2022, 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. 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, 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”). Foreign Currency . The functional and reporting currency of the Company is the U.S. dollar. Generally, the Company’s subsidiaries use their local currency as their functional currency. Assets and liabilities are translated at the exchange rates in effect at the balance sheet date, and revenues and expenses are translated at the average exchange rates during the periods presented. The resulting translation adjustments are recorded as a component of Accumulated other comprehensive income (loss) in the Shareholders’ equity section of the Consolidated Balance Sheets. Translation of intercompany transactions, which are not intended to be settled, are included within cumulative translation adjustments. When transactions are denominated or settled in currencies other than the entity’s functional currency, foreign currency transaction unrealized and realized gains or losses are recognized. These gains and losses are recognized as incurred in the Consolidated Statements of Operations in Foreign, exchange, net. 3. New Accounting Pronouncements In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220) Disaggregation of Income Statement Expenses (“ASU 2024-03”), to enhance the transparency and decision usefulness of financial information presented in the income statement by requiring disaggregated information about certain income statement expense line items. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is evaluating the impact of these new requirements on its income statement presentation and disclosures. In December 2023, the 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. Interim disclosures are not impacted by this update. The Company is evaluating the impact of these amendments on its annual disclosures. 4. Acquisitions 2024 Acquisitions Acquisition of Unicepta On December 19, 2024, the Company acquired UNICEPTA Holding GmbH (“Unicepta”), a global media monitoring and analytics platform, for 60.1 million Euros (“€”) (approximately $ 62 million), of which € 23.8 million (approximately $ 24 million) was paid in cash, € 25.0 million (approximately $ 26 million) in 3,390,788 shares of the Company’s Class A Common Stock , € 0.7 million in a deferred cash payment (approximately $ 1 million), which was paid in January 2025, and € 10.6 million (approximately $ 11 million) attributable to contingent consideration which is considered part of the purchase price, subject to post-closing adjustments. In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of € 40.0 million (approximately $ 42 million) subject to meeting certain future earnings targets, of which a portion may be settled in shares of Class A Common Stock at the Company’s discretion. 68 Table of Contents The consideration has been allocated to the assets acquired and assumed liabilities of Unicepta based upon fair values. The preliminary purchase price allocation is as follows: Amount (dollars in thousands) Cash and cash equivalents $ 2,215 Accounts receivable, net 8,472 Other current assets 3,913 Right-of-use lease assets 5,914 Fixed assets 445 Identifiable intangible assets 35,312 Accounts payable ( 1,276 ) Accruals and other liabilities ( 2,967 ) Advance billings ( 1,527 ) Current portion of lease liabilities - operating leases ( 1,067 ) Long-term lease liabilities - operating leases ( 5,406 ) Deferred tax liabilities, net ( 11,445 ) Other liabilities ( 3,460 ) Net assets assumed 29,123 Goodwill 33,291 Purchase price consideration $ 62,414 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 Unicepta. Goodwill of $ 33.3 million was assigned to the Stagwell Marketing Cloud Group reported within All Other. The goodwill is not deductible for income tax purposes. Intangible assets consist of trade names, customer relationships, and developed technology. 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 10 years. The following table presents the details of identifiable intangible assets acquired: Estimated Fair Value Estimated Useful Life in Years (dollars in thousands) Customer relationships $ 22,083 12 Trade names 5,417 10 Developed Technology 7,812 5 Total acquired intangible assets $ 35,312 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, 2023. The pro forma financial 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 acquisition been consummated as of that time. Year Ended December 31, 2024 Year Ended December 31, 2023 (dollars in thousands) Revenue $ 2,892,586 $ 2,579,374 Net income $ 5,216 $ 33,939 69 Table of Contents Revenue attributable to Unicepta, included within the Consolidated Statements of Operations for the year ended December 31, 2024, was $ 1.7 million. Net income attributable to Unicepta, included within the Consolidated Statements of Operations for the year ended December 31, 2024, was $ 0.4 million. The purchase price accounting is not yet final as the Company has not yet finalized its valuation processes and therefore may still make adjustments. Acquisition of Consulum On October 1, 2024, the Company acquired Consulum (Cayman) Limited (“Consulum”), a government advisory firm that provides public relations management and media and marketing services, for $ 82.8 million, of which $ 58.3 million was paid in cash, $ 12.9 million in 1,810,274 shares of the Company’s Class A Common Stock, and $ 11.3 million was attributed to contingent consideration which is considered part of the purchase price, subject to post-closing adjustments. In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of $ 90.0 million, partially 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 consideration has been allocated to the assets acquired and assumed liabilities of Consulum based upon fair values. The preliminary purchase price allocation is as follows: Amount (dollars in thousands) Cash and cash equivalents $ 2,151 Accounts receivable, net 26,845 Other current assets 3,094 Right-of-use lease assets 2,173 Fixed assets 2,032 Identifiable intangible assets 57,200 Accounts payable ( 2,078 ) Accruals and other liabilities ( 9,167 ) Advance billings ( 5,425 ) Current portion of lease liabilities - operating leases ( 983 ) Long-term lease liabilities - operating leases ( 1,065 ) Deferred tax liabilities, net ( 8,618 ) Net assets assumed 66,159 Goodwill 16,593 Purchase price consideration $ 82,752 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 Consulum. Goodwill of $ 16.6 million was assigned to the Communications Network reportable segment. The goodwill is not deductible for income tax purposes. Intangible assets consist of trade names and customer relationships. 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 nine years . The following table presents the details of identifiable intangible assets acquired: Estimated Fair Value Estimated Useful Life in Years (dollars in thousands) Customer relationships $ 43,800 7 Trade names 13,400 10 Total acquired intangible assets $ 57,200 70 Table of Contents 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, 2023. The pro forma financial 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 acquisition been consummated as of that time. Year Ended December 31, 2024 Year Ended December 31, 2023 (dollars in thousands) Revenue $ 2,893,599 $ 2,585,024 Net income $ 19,346 $ 49,039 Revenue attributable to Consulum, included within the Consolidated Statements of Operations for the year ended December 31, 2024, was $ 14.7 million. Net loss attributable to Consulum included within the Consolidated Statements of Operations for the year ended December 31, 2024, was $ 1.6 million. The purchase price accounting is not yet final as the Company has not yet finalized its valuation processes and therefore may still make adjustments. Acquisition of Team Epiphany On January 2, 2024, the Company acquired Team Epiphany, LLC (“Epiphany”), a consumer marketing company, for $ 16.7 million, of which $ 11.7 million was paid in cash and $ 5.0 million in 797,916 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 $ 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. The goodwill is deductible for income tax purposes. The consideration has been allocated to the assets acquired and assumed liabilities of Epiphany based upon fair values. The purchase price allocation is as follows: Amount (dollars in thousands) Cash and cash equivalents $ 1,095 Accounts receivable, net 8,283 Expenditures billable to clients 4,823 Other current assets 402 Right-of-use lease assets 2,788 Fixed assets 184 Identifiable intangible assets 4,316 Accounts payable ( 1,086 ) Accruals and other liabilities ( 664 ) Advance billings ( 8,808 ) Current portion of lease liabilities - operating leases ( 516 ) Long-term lease liabilities - operating leases ( 2,600 ) Net assets assumed 8,217 Goodwill 8,452 Purchase price consideration $ 16,669 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 Epiphany. Goodwill of $ 8.5 million was assigned to the Integrated Agencies Network reportable segment. Intangible assets consist of trade names and customer relationships. 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 three years . The following table presents the details of identifiable intangible assets acquired: 71 Table of Contents Estimated Fair Value Estimated Useful Life in Years (dollars in thousands) Customer relationships $ 3,767 3 Trade names 549 3 Total acquired intangible assets $ 4,316 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, 2023. The pro forma revenue and net income (loss) for the year ended December 31, 2024 would not be materially different from the actual revenue and net income (loss) reported. The pro forma financial 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 acquisition been consummated as of that time. Year Ended December 31, 2023 (dollars in thousands) Revenue $ 2,570,380 Net income $ 42,891 Revenue attributable to Epiphany, included within the Consolidated Statements of Operations for the year ended December 31, 2024, was $ 47.4 million. Net income attributable to Epiphany, included within the Consolidated Statements of Operations for the year ended December 31, 2024, was $ 2.0 million. Other 2024 Acquisitions On July 19, 2024, the Company acquired L.D.R.S. Group Ltd. (“Leaders”), for 25.2 million Israeli New Shekels (“ILS”) (approximately $ 7 million), of which 10.9 million ILS (approximately $ 3 million) was paid in cash, 3.5 million ILS (approximately $ 1 million) in 135,010 shares of the Company’s Class A Common stock, and 10.9 million ILS (approximately $ 3 million) was attributed to contingent consideration which is considered part of the purchase price. In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of 24.2 million ILS (approximately $ 7 million), partially 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 Leaders and expected growth related to new customer relationships. Goodwill of $ 4.9 million was assigned to the All Other category. The goodwill is not 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 5, 2024, the Company acquired PROS Agency (“PROS”), for 42.1 million Brazilian reals (“R$”) approximately $ 8.5 million) of which R$ 23.3 million ($ 4.7 million) was paid in cash, R$ 5.3 million ($ 1.1 million) was paid in 182,256 shares of Class A Common Stock, and R$ 13.5 million ($ 2.7 million) was attributed to contingent consideration which is considered part of the purchase price. In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of R$ 72.5 million ($ 14.4 million), partially subject to continued employment, and meeting certain future earnings targets, of which a portion may be settled in shares of the Company’s 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 PROS and expected growth related to new customer relationships. Goodwill of $ 5.4 million was assigned to the Communications Network reportable segment. The goodwill is not fully deductible for income tax purposes. 72 Table of Contents On April 4, 2024, the Company acquired What’s Next Partners (“WNP”), for € 4.3 million (approximately $ 5 million) in cash. In connection with the acquisition, the sellers are entitled to contingent consideration up to a maximum value of € 8.5 million (approximately $ 9 million), partially subject to continued employment and meeting certain future earnings targets, of which a portion may be settled in shares of the Company’s 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 WNP and expected growth related to new customer relationships. Goodwill of $ 5.4 million was assigned to the Integrated Agencies Network reportable segment. The goodwill is not fully deductible for income tax purposes. On March 1, 2024, the Company acquired Sidekick Live Limited (“Sidekick”), for 4.6 million British pounds (“£”) (approximately $ 6 million) of which £ 3.6 million (approximately $ 5 million) was paid in cash, £ 0.1 million (approximately less than $ 0 million) was incurred as a certain payable to sellers, and £ 0.9 million (approximately $ 1 million) in 195,431 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 £ 8.0 million (approximately $ 10 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. The excess of purchase consideration over the fair value of the net assets acquired was mainly recorded as goodwill, which is primarily attributable to the assembled workforce of Sidekick and expected growth related to new customer relationships. Goodwill of $ 2.0 million was assigned to the Communications Network reportable segment. The goodwill is not 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. 2023 Acquisitions On November 1, 2023, the Company acquired Movers and Shakers LLC (“Movers and Shakers”), a digital creative company, for $ 14.7 million, of which $ 10.2 million was paid in cash and $ 4.5 million in 1,006,711 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 $ 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. On October 2, 2023, the Company acquired Left Field Labs LLC (“LFL”), a digital experience design and strategy company, for $ 13.2 million, of which $ 9.4 million was paid in cash and $ 3.8 million in 825,402 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 $ 7.9 million was assigned to the Integrated Agencies Network reportable segment. The goodwill is fully deductible for income tax purposes. 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. 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. 2023 Dispositions On October 31, 2023, the Company sold ConcentricLife (“Concentric”), 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. 73 Table of Contents 2022 Acquisitions The Company acquired the entities below in the year ended December 31, 2022. Pro forma revenue and net income related to these acquisitions are as follows: Brand New Galaxy The pro forma revenue and net income for the year ended December 31, 2022, was $ 2,698.0 million and $ 49.3 million, respectively. TMA Direct, Inc. The pro forma revenue and net income for the year ended December 31, 2022, was $ 2,691.6 million and $ 51.4 million, respectively. Maru Group Limited The pro forma revenue and net income for the year ended December 31, 2022, was $ 2,717.7 million and $ 36.0 million, respectively. Wolfgang, LLC. The pro forma revenue and net income for the year ended December 31, 2022, was $ 2,696.7 million and $ 51.4 million, respectively. Epicenter Experience LLC. The pro forma revenue and net income for the year ended December 31, 2022, was $ 2,691.0 million and $ 49.7 million, respectively. 5. Revenue 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 (digital, social media, television broadcast, and print), public relations services including strategy, editorial, crisis support or issues management, online fundraising, media training, influencer engagement and events management, and subscription-based software-as-a-service and data-as-a service models. 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. The primary source of the Company’s revenue is from Brand arrangements in the form of fees for services performed, commissions, and from performance incentives or bonuses, depending on the terms of the client contract. In all circumstances, revenue is only recognized when collection is reasonably assured. Certain of the Company’s contractual arrangements have more than one performance obligation. 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 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. Based on a client’s requirements within the contract, and how these services are provided, multiple services could represent separate performance obligations or be combined and considered one performance obligation. Contracts that contain services that can be provided on a stand-alone basis, which 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 and media planning and media buying arrangements. Certain of the Company’s contracts consist of a single performance obligation. In these instances, the Company does not consider the underlying activities separate or distinct performance obligations because its services are highly interrelated, and the integration of the various components is essential to the overall promise to the Company’s customer. Typically, these services are public relations, and application/website design and development. In other instances, the Company is engaged to provide marketing services, such online fundraising and brand performance media solutions, that include a variety of distinct activities performed throughout the contract term that are substantially the same and that are satisfied over time, and therefore the Company considers these to be one performance obligation. We typically satisfy our performance obligations over time, as services are performed. Fees for services are typically recognized using input methods (direct labor hours, materials and third-party costs) that correspond with efforts incurred to date 74 Table of Contents in relation to total estimated efforts to complete the contract. To a lesser extent, revenue is recognized using output measures, such as impressions or ongoing reporting. For client contracts when the Company has a stand-ready obligation to perform services, the Company recognizes revenue ratably using a time-based measure. In addition, for client contracts where the Company provides online subscription-based hosted services, it recognizes revenue ratably over the contract term. Point in time recognition primarily relates to certain commission-based contracts, which are recognized upon the placement of advertisements in various media when the Company has no further performance obligation. Revenue is recognized net of sales and other taxes due to be collected and remitted to government authorities. The Company’s contracts typically provide for termination by either party within 30 to 90 days. Although payment terms vary by client, they are typically within 30 to 60 days. In addition, the Company generally has the right to payment for all services provided through the end of the contract or termination date. Within each contract, we identify whether the Company is principal or agent at the service level. In arrangements where the Company has substantive control over the service before transferring it to the client, and is primarily responsible for integrating the services into the final deliverables, we act as principal. In these arrangements, revenue is recorded at the gross amount billed. 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 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. Incentive compensation is primarily estimated using the most likely amount method and is included in revenue up to the amount that is not expected to result in a reversal of a significant amount of cumulative revenue recognized. We recognize revenue related to performance incentives as we satisfy the performance obligation to which the performance incentives are related. Disaggregated Revenue Data The Company provides a broad range of services to a large base of clients across the full spectrum of verticals globally. The primary source of revenue is from Brand arrangements in the form of fees for services performed, commissions, and from performance incentives or bonuses. Certain clients may engage with the Company in various geographic locations, across multiple disciplines, and through multiple Brands. Representation of a client rarely means that Stagwell handles marketing communications for all Brands or product lines of the client in every geographical location. 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. We reclassified certain brands between principal capabilities in 2024. The prior year (2023) amounts presented have been revised to reflect this change. The following table presents revenue disaggregated by our principal capabilities for the years ended December 31,: Principal Capabilities Reportable Segment 2024 2023 2022 (dollars in thousands) Digital Transformation All segments $ 718,371 $ 636,657 $ 773,677 Creativity and Communications All segments 1,328,916 1,167,432 1,222,289 Performance Media and Data Integrated Agencies Network and Brand Performance Network 323,978 295,304 279,903 Consumer Insights and Strategy Integrated Agencies Network 190,133 192,209 212,869 Stagwell Marketing Cloud Group All segments 279,818 235,575 199,054 $ 2,841,216 $ 2,527,177 $ 2,687,792 75 Table of Contents Stagwell’s Brands are located in the United States, the United Kingdom, and 33 other countries around the world. 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,: Geographical Location Reportable Segment 2024 2023 2022 (dollars in thousands) United States All $ 2,336,988 $ 2,058,883 $ 2,218,681 United Kingdom All 165,103 160,954 181,764 Other All 339,125 307,340 287,347 $ 2,841,216 $ 2,527,177 $ 2,687,792 Contract Assets and Liabilities 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. Such amounts are invoiced to clients at various times over the course of providing services. In arrangements in which we are acting as principal, contract assets are included as a component of Accounts receivable on the Consolidated Balance Sheets. These assets were $ 135.9 million and $ 141.9 million as of December 31, 2024, and December 31, 2023, respectively. In arrangements in which we are acting as agent, contract assets are included on the Consolidated Balance Sheets as Expenditures billable to clients. These assets were $ 173.2 million and $ 114.1 million as of December 31, 2024, and December 31, 2023, respectively. Contract liabilities represent advanced billings to customers for fees and reimbursements of third-party costs, whether we act as principal or agent. Such fees and reimbursements of third-party costs are classified as Advance billings on the Company’s Consolidated Balance Sheets. Advance billings at December 31, 2024, and December 31, 2023, were $ 294.6 million and $ 301.7 million, respectively. The change in Advance billings of $ 7.1 million for the year ended December 31, 2024, was primarily driven by $ 290.7 million of revenue recognized that was included in the Advance billings balances as of December 31, 2023, the incurrence of third-party costs, and cash payments received or due in advance of satisfying our performance obligations. In arrangements in which we are acting as an agent, the revenue recognized related to the contract liability is presented on a net basis within the Consolidated Statements of Operations. The Company acquired $ 10.2 million in contract assets and $ 15.7 million in contract liabilities in connection with the acquisition of Epiphany, Consulum, and Unicepta. 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, 2024, 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 $ 118.8 million of unsatisfied performance obligations as of December 31, 2024, of which we expect to recognize approximately 80 % in 2025, 16 % in 2026 and 4 % in 2027, and thereafter . 76 Table of Contents 6. Earnings (Loss) Per Share The following table presents the computations of basic and diluted earnings per common share for the year ended December 31, 2024 (amounts in thousands, except per share amounts): Year Ended December 31, 2024 Earnings Per Share - Basic Numerator: Net income $ 25,044 Net income attributable to Class C shareholders ( 17,144 ) Net income attributable to other equity interest holders ( 5,641 ) Net income attributable to noncontrolling and redeemable noncontrolling interests $ ( 22,785 ) Net income attributable to Stagwell Inc. common shareholders $ 2,259 Denominator: Weighted Average number of common shares outstanding 110,890 Earnings Per Share - Basic $ 0.02 Earnings Per Share - Diluted Numerator: Net income attributable to Stagwell Inc. common shareholders $ 2,259 Denominator: Basic - Weighted Average number of common shares outstanding 110,890 Dilutive shares: Stock appreciation rights 461 Restricted share and restricted unit awards 4,395 Employee Stock Purchase Plan shares 6 Diluted - Weighted average number of common shares outstanding 115,752 Earnings Per Share - Diluted $ 0.02 Anti-dilutive: Class C Shares 151,649 Class A Shares to settle deferred acquisition obligations 6,236 77 Table of Contents The following table presents the computations of basic and diluted earnings per common share for the year ended December 31, 2023 (amounts in thousands, except per share amounts): Year Ended December 31, 2023 Earnings Per Share - Basic Numerator: Net income $ 41,642 Net income attributable to Class C shareholders ( 39,066 ) Net income attributable to other equity interest holders ( 2,442 ) Net income attributable to noncontrolling and redeemable noncontrolling interests ( 41,508 ) Net income attributable to Stagwell Inc. common shareholders $ 134 Denominator: Weighted Average number of common shares outstanding 117,259 Earnings Per Share - Basic $ — Loss Per Share - Diluted Numerator: Net income attributable to Stagwell Inc. common shareholders $ 134 Denominator: Basic - Weighted Average number of common shares outstanding 117,259 Dilutive shares: Stock appreciation rights 421 Restricted share and restricted unit awards 4,485 Employee Stock Purchase Plan shares 5 Diluted - Weighted average number of common shares outstanding 122,170 Earnings Per Share - Diluted $ — Anti-dilutive: Class C Shares 154,972 Class A Shares to settle deferred acquisition obligations 5,127 78 Table of Contents The following table presents the computations of basic and diluted earnings per common share for the year ended December 31, 2022 (amounts in thousands, except per share amounts): Year Ended December 31, 2022 Earnings Per Share - Basic Numerator: Net income $ 50,044 Net income attributable to Class C shareholders ( 16,004 ) Net income attributable to other equity interest holders ( 14,121 ) Net income attributable to noncontrolling and redeemable noncontrolling interests ( 30,125 ) Net income attributable to Stagwell Inc. common shareholders $ 19,919 Denominator: Weighted Average number of common shares outstanding 124,262 Earnings Per Share - Basic $ 0.16 Earnings Per Share - Diluted Numerator: Net income attributable to Stagwell Inc. common shareholders $ 19,919 Net income attributable to Class C shareholders 16,004 $ 35,923 Denominator: Basic - Weighted Average number of common shares outstanding 124,262 Dilutive shares: Stock appreciation rights 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 Earnings Per Share - Diluted $ 0.12 Restricted stock awards of 3.1 million, 2.9 million and 2.3 million as of December 31, 2024, 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. 79 Table of Contents 7. Fixed Assets The following table presents the Company’s fixed assets as reported on the Consolidated Balance Sheets as of December 31,: 2024 2023 Cost Accumulated Depreciation Net Book Value Cost Accumulated Depreciation Net Book Value Computer equipment, furniture and fixtures $ 70,627 $ ( 47,424 ) $ 23,203 $ 60,131 $ ( 36,535 ) $ 23,596 Leasehold improvements 106,380 ( 56,877 ) 49,503 99,127 ( 44,898 ) 54,229 $ 177,007 $ ( 104,301 ) $ 72,706 $ 159,258 $ ( 81,433 ) $ 77,825 Depreciation expense for the years ended December 31, 2024, 2023, and 2022 was $ 29.2 million, $ 29.0 million and $ 26.5 million, respectively. 8. Goodwill and Intangible Assets The following table presents the Company’s goodwill as reported on the Consolidated Balance Sheets as of December 31,: Integrated Agencies Network Brand Performance Network Communications Network All Other Total Balance at December 31, 2021 $ 1,153,073 $ 358,613 $ 115,777 $ 25,260 $ 1,652,723 Acquired goodwill 3,330 26,176 6,569 29,387 65,462 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 ) Other (2) ( 15,682 ) 685 6,124 — ( 8,873 ) Balance at December 31, 2022 $ 968,394 $ 433,758 $ 127,717 $ 37,087 $ 1,566,956 Acquired goodwill 18,451 2,626 — — 21,077 Disposition ( 98,779 ) — — — ( 98,779 ) Transfer of goodwill between segments (1) ( 8,517 ) — 8,517 — — Foreign currency translation 1,846 5,056 353 271 7,526 Other (2) — 220 — 1,815 2,035 Balance at December 31, 2023 $ 881,395 $ 441,660 $ 136,587 $ 39,173 $ 1,498,815 Acquired goodwill 13,845 368 23,520 38,175 75,908 Disposition — — — ( 7,699 ) ( 7,699 ) Transfer of goodwill between segments (1) 4,122 ( 4,122 ) — — — Foreign currency translation ( 6,485 ) ( 4,149 ) ( 784 ) ( 738 ) ( 12,156 ) Other (2) ( 731 ) 9 — — ( 722 ) Balance at December 31, 2024 $ 892,146 $ 433,766 $ 159,323 $ 68,911 $ 1,554,146 (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. (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, 2023, and December 31, 2024. 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, three in the Integrated Agencies Network, four 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. 80 Table of Contents The following presents the Company’s gross and net amounts of intangible assets other than goodwill as reported on the Consolidated Balance Sheets as of December 31,: Intangible Assets 2024 2023 Customer relationships, gross $ 939,227 $ 870,987 Accumulated amortization ( 293,581 ) ( 218,808 ) Customer relationships, net $ 645,646 $ 652,179 Trade names, gross $ 208,549 $ 188,820 Accumulated amortization ( 94,687 ) ( 74,141 ) Trade names, net $ 113,862 $ 114,679 Capitalized software, gross $ 104,017 $ 70,622 Accumulated amortization ( 49,597 ) ( 30,928 ) Capitalized software, net $ 54,420 $ 39,694 Developed technology and other, gross $ 37,890 $ 21,583 Accumulated amortization ( 15,035 ) ( 9,915 ) Developed technology and other, net $ 22,855 $ 11,668 Total intangible assets, gross $ 1,289,683 $ 1,152,012 Accumulated amortization ( 452,900 ) ( 333,792 ) Total intangible assets, net $ 836,783 $ 818,220 The weighted average amortization period for customer relationships is thirteen years , trade names is twelve years , capitalized software is four years , and developed technology and other intangible assets is two years . In total, the weighted average amortization period is thirteen years . Amortization expense related to amortizable intangible assets for the years ended December 31, 2024, 2023, and 2022 was $ 121.6 million, $ 112.2 million, and $ 103.1 million, respectively. The estimated amortization expense for the five succeeding years is as follows: Year Amortization 2025 $ 119,386 2026 117,048 2027 102,092 2028 87,055 2029 75,999 Thereafter 335,203 Total $ 836,783 9. Deferred Acquisition Consideration 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. 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 Operations. Arrangements that are contingent upon future employment are initially measured at the acquisition date fair value, remeasured at each reporting period and are expensed as earned over the respective vesting (employment) period within Office and general expenses on the Consolidated Statements of Operations. 81 Table of Contents 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,: 2024 2023 (dollars in thousands) Beginning balance $ 101,058 $ 161,323 Payments (1) ( 67,895 ) ( 97,447 ) Adjustments to deferred acquisition consideration (2) 23,005 14,303 Additions (3) 46,598 22,172 Currency translation adjustment ( 651 ) 680 Other — 27 Ending balance (4) $ 102,115 $ 101,058 (1) Includes deferred acquisition consideration payments settled in shares of Class A Common Stock of $ 18.2 million and $ 32.8 million, respectively, for the periods ended December 31, 2024, and December 31, 2023. (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) Additions in 2024 of $ 46.6 million include $ 28.1 million related to the Company’s acquisitions (See Note 4 for further information). It also includes $ 17.0 million related to a reclassification from redeemable noncontrolling interest to deferred acquisition consideration in connection with the purchase of the remaining 40 % interest the Company did not previously own in a certain Brand. This amount will be paid in cash in 2025. Additions of $ 22.2 million in 2023 represents a reclassification from redeemable noncontrolling interest to deferred acquisition consideration. Specifically, 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). In connection with the purchase, the estimated amount payable in October 2025, was reclassified from redeemable noncontrolling interest to deferred acquisition consideration in 2023. (4) The contingent and fixed deferred acquisition consideration obligation was $ 102.1 million and $ 0.0 million , respectively, as of December 31, 2024, and $ 57.5 million and $ 43.6 million, respectively, as of December 31, 2023. The deferred acquisition consideration as of December 31, 2024, and December 31, 2023, includes $ 38.4 million and $ 29.3 million, respectively, expected to be settled in shares of Class A Common Stock. 10. Leases The Company leases office space in North America, Europe, Asia, South America, Africa, and Australia. These spaces are primarily used for office and administrative purposes by the Company’s employees in performing professional services. These leases are classified as operating leases and expire between years 2025 through 2034. The Company’s finance leases are immaterial. 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. All right-of-use lease assets are reviewed for impairment. As the Company’s implicit rate in its leases is not readily determinable, in determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the commencement date. Lease payments included in the measurement of the lease liability comprise of non-cancellable lease payments, payments based upon an index or rate, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early. Lease costs are recognized in the Consolidated Statements of Operations over the lease term on a straight-line basis. Leasehold improvements are depreciated on a straight-line basis over the lesser of the term of the related lease or the estimated useful life of the asset. Some of the Company’s leases contain variable lease payments, including payments based upon an index or rate. Variable lease payments based upon an index or rate are initially measured using the index or rate in effect at the lease commencement date and are included within the lease liabilities. 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 82 Table of Contents 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. Some of the Company’s leases include options to extend or renew the leases through 2044. The renewal and extension options are not included in the lease term as the Company is not reasonably certain that it will exercise its option. From time to time, the Company enters into sublease arrangements with unrelated third parties. These subleases are classified as operating leases and expire between years 2025 through 2032. Sublease income is recognized over the lease term on a straight-line basis. Currently, the Company subleases office space in North America and Europe. As of December 31, 2024, the Company had entered into one operating lease for which the commencement date had not yet occurred because the premises is being prepared for occupancy by the landlord. Accordingly, this one lease represents an obligation of the Company that is not reflected within the Consolidated Balance Sheets as of December 31, 2024. The aggregate future liability related to this lease was $ 0.1 million. The discount rate used for leases accounted for under ASC 842 is the Company’s collateralized credit adjusted borrowing rate. The following table presents lease costs and other quantitative information for the years ended December 31,: 2024 2023 2022 Lease Cost: (dollars in thousands) Operating lease cost $ 75,117 $ 76,750 $ 75,190 Variable lease cost 23,782 20,924 18,575 Sublease rental income ( 8,404 ) ( 9,659 ) ( 14,446 ) Total lease cost $ 90,495 $ 88,015 $ 79,319 Additional information: Cash paid for amounts included in the measurement of lease liabilities for operating leases Operating cash flows $ 85,283 $ 88,955 $ 91,300 Right-of-use lease assets obtained in exchange for operating lease liabilities and other non-cash adjustments (1) $ 22,105 $ 37,259 $ 27,761 (1) Includes Right-of-use lease assets obtained in exchange for operating lease liabilities related to acquisitions. As of December 31, 2024, the weighted average remaining lease term was 5.8 years, and the weighted average discount rate was 5.6 %. 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, 2024, the Company ceased using certain office space and as such recognized a charge of $ 1.7 million to reduce the carrying value of two of its right-of-use lease assets and related leasehold improvements. The right-of-use lease assets and related leasehold improvements were related to an agency within the Integrated Agencies Network and to Corporate. In the year ended December 31, 2023, the Company ceased using certain office space and as such recognized a charge of $ 10.0 million to reduce the carrying value of four of its right-of-use assets and related leasehold improvements. The right-of-use lease assets were 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. With regard to the aforementioned impairments, the Company evaluated the facts and circumstances related to the use of the assets which indicated that they may not be recoverable. Using sublease income to develop expected future cash flows, it was determined that the fair value of the assets was less than their carrying value. The impairment charge is included in Impairment and other losses within the Consolidated Statements of Operations. 83 Table of Contents The following table presents minimum future rental payments under the Company’s leases as of December 31, 2024, and their reconciliation to the corresponding lease liabilities: Maturity Analysis (dollars in thousands) 2025 $ 75,646 2026 63,482 2027 55,380 2028 49,550 2029 44,696 Thereafter 72,152 Total 360,906 Less: Present value discount ( 55,314 ) Lease liability $ 305,592 11. Debt The following tables present the Company’s indebtedness as reported on the Consolidated Balance Sheets as of December 31,: 2024 2023 (dollars in thousands) Credit Agreement $ 264,000 $ 59,000 5.625 % Notes 1,100,000 1,100,000 Debt issuance costs ( 10,376 ) ( 13,172 ) 5.625% Notes, net of debt issuance costs 1,089,624 1,086,828 Total long-term debt $ 1,353,624 $ 1,145,828 Interest expense related to long-term debt included in Interest expense, net on the Consolidated Statements of Operations for the years ended December 31, 2024, 2023, and 2022 was $ 91.4 million, $ 88.7 million, and $ 73.8 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, 2024, 2023, and 2022 was $ 2.8 million, $ 3.2 million, and $ 2.4 million, respectively. Revolving Credit Agreement The Company is party to a senior secured revolving credit facility with a five-year maturity with a syndicate of banks (the “Credit Agreement”). The Credit Agreement provides revolving commitments of up to $ 640.0 million and permits 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 non-financial 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, 2024. 84 Table of Contents 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, 2024 and December 31, 2023, the Company had issued undrawn outstanding letters of credit of $ 15.3 million and $ 16.2 million, respectively. Senior Notes The Company had $ 1.1 billion aggregate principal amount of 5.625 % senior notes (“ 5.625 % Notes”) outstanding as of December 31, 2024. The 5.625 % Notes are due August 15, 2029, and bear annual interest of 5.625 % to be paid semiannually 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 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 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. 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 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; pay dividends on or redeem or repurchase the capital stock of the Company; make certain types of investments; create restrictions on the payment of dividends or other amounts from the Company’s restricted subsidiaries; sell assets; enter into transactions with affiliates; create liens; enter into sale and leaseback transactions; 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 limitations and exceptions. The 5.625 % Notes are also subject to certain covenants, customary events of default, including cross-payment default and cross-acceleration provisions. The Company was in compliance with all covenants as of December 31, 2024. 12. Employee Benefit Plan A subsidiary of the Company sponsors a defined benefit pension plan with benefits based on each employee’s years of service and compensation. The benefits under the defined benefit pension plan are frozen. Net Periodic Pension Cost and Pension Benefit Obligation Net periodic pension benefit consists of the following components for the years ended December 31,: 2024 2023 2022 Interest cost on benefit obligation $ 1,362 $ 1,486 $ 1,104 Expected return on plan assets ( 1,429 ) ( 1,218 ) ( 1,659 ) Amortization of actuarial (gain) ( 85 ) ( 67 ) — Net periodic benefit (income) loss $ ( 152 ) $ 201 $ ( 555 ) Settlement (gain) — ( 501 ) ( 198 ) Total periodic benefit income $ ( 152 ) $ ( 300 ) $ ( 753 ) The above components are included within Other, net on the Consolidated Statements of Operations. 85 Table of Contents The weighted average discount rate and expected return on plan assets that were used to determine net periodic costs were 5.34 % and 6.50 %, respectively, as of December 31, 2024, 5.47 % and 6.50 %, respectively, as of December 31, 2023, and 2.82 % and 6.50 %, respectively, as of December 31, 2022. 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. Other changes in plan assets and benefit obligation recognized in Other comprehensive income (loss) consist of the following components for the years ended December 31,: 2024 2023 2022 Current year actuarial (gain) $ ( 1,693 ) $ ( 405 ) $ ( 4,088 ) Amortization of actuarial gain 85 67 — Total recognized in other comprehensive (income) ( 1,608 ) ( 338 ) ( 4,088 ) Total recognized in net periodic benefit (income) and other comprehensive (income) $ ( 1,760 ) $ ( 638 ) $ ( 4,841 ) The following table summarizes the change in benefit obligation and fair values of plan assets for the years ended December 31,: 2024 2023 2022 Change in benefit obligation: Benefit obligation, beginning balance $ 26,461 $ 28,044 $ 40,005 Interest cost 1,362 1,486 1,104 Actuarial (gain) loss ( 734 ) 535 ( 10,930 ) Benefits paid ( 2,317 ) ( 3,604 ) ( 2,135 ) Benefit obligation, ending balance 24,772 26,461 28,044 Change in plan assets: Fair value of plan assets, beginning balance 22,396 19,235 26,355 Actual gain (loss) on plan assets 2,388 2,659 ( 4,985 ) Employer contributions 981 4,106 — Benefits paid ( 2,317 ) ( 3,604 ) ( 2,135 ) Fair value of plan assets, ending balance 23,448 22,396 19,235 Unfunded status $ 1,324 $ 4,065 $ 8,809 Amounts recognized in the Consolidated Balance Sheets at December 31, consist of the following: 2024 2023 Non-current liability $ 1,324 $ 4,065 Net amount recognized $ 1,324 $ 4,065 Amounts recognized in Accumulated other comprehensive loss before income taxes consists of the following components for the years ended December 31,: 2024 2023 2022 Accumulated net actuarial gains $ 6,756 $ 5,148 $ 4,810 Amount recognized $ 6,756 $ 5,148 $ 4,810 As of December 31, 2024, and 2023, the weighted average discount rates used to determine benefit obligations were 5.75 % and 5.34 %, respectively. The discount rate assumptions at December 31, 2024, and 2023 were determined independently. The discount rate was derived from the effective interest rate of a hypothetical portfolio of high-quality bonds, whose cash flows match the expected future benefit payments from the plan as of the measurement date. 86 Table of Contents Fair Value of Plan Assets and Investment Strategy As of December 31, 2024, and 2023, 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, $ 2.0 million, and $ 21.4 million, respectively, as of December 31, 2024, and approximately $ 0.1 million, $ 0.8 million, and $ 21.5 million, respectively, as of December 31, 2023. See Note 18 of the Notes included herein for additional information regarding the fair value hierarchy. The pension plan’s weighted average asset allocation for the years ended December 31, 2024, and 2023 were as follows: Target Allocation Actual Allocation 2024 2024 2023 Asset Category: Equity securities 56.0 % 68.0 % 69.6 % Debt securities 30.0 % 23.6 % 26.6 % Cash/cash equivalents and Short-term investments 14.0 % 8.4 % 3.8 % Total 100.0 % 100.0 % 100.0 % 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 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. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the preceding tables. Cash Flows The pension plan contributions are deposited into a trust, and the pension plan benefit payments are made from trust assets. The Company made contributions to the pension plan totaling $ 1.0 million during 2024, $ 4.1 million during 2023, and did not make contributions in 2022. The Company estimates that it will make $ 1.0 million in contributions to the pension plan in 2025. 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 $ 1.7 million in 2025, $ 1.8 million in 2026, $ 1.7 million in 2027, $ 1.7 million in 2028, $ 1.9 million in 2029, and $ 9.4 million thereafter. 13. Noncontrolling and Redeemable 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 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 87 Table of Contents changes to their estimated redemption value through Retained earnings (but not less than their initial redemption value), except for foreign currency translation adjustments. The following table presents Net income (loss) attributable to noncontrolling and redeemable noncontrolling interests between Class C shareholders and other equity interest holders for the years ended December 31,: 2024 2023 2022 (dollars in thousands) Net income attributable to Class C shareholders $ 17,144 $ 39,066 $ 16,004 Net income attributable to other equity interest holders 2,636 3,076 5,986 Net income attributable to noncontrolling interests $ 19,780 $ 42,142 $ 21,990 Net income (loss) attributable to redeemable noncontrolling interests 3,005 ( 634 ) 8,135 Net income attributable to noncontrolling and redeemable noncontrolling interests $ 22,785 $ 41,508 $ 30,125 The following table presents noncontrolling interests between Class C shareholders and other equity interest holders as of December 31,: 2024 2023 (dollars in thousands) Noncontrolling interest of Class C shareholders $ 423,428 $ 436,215 Noncontrolling interest of other equity interest holders (1) 21,746 32,362 Total noncontrolling interests $ 445,174 $ 468,577 (1) In January 2024, the Company entered into an agreement to purchase the remaining noncontrolling ownership interest in a subsidiary it previously controlled, the consideration for which was a portion of the subsidiary that was transferred to the noncontrolling interest owner. The non-cash purchase resulted in a reduction of the subsidiary noncontrolling interest by approximately $ 10.2 million. The following table presents changes in redeemable noncontrolling interests for the years ended December 31,: 2024 2023 (dollars in thousands) Beginning balance $ 10,792 $ 39,111 Redemptions (1) ( 17,039 ) ( 22,172 ) Additions 1,127 — Distributions ( 2,880 ) ( 5,800 ) Changes in redemption value (2) 13,363 442 Net income (loss) attributable to redeemable noncontrolling interests 3,005 ( 634 ) Currency translation adjustment 44 ( 155 ) Ending balance $ 8,412 $ 10,792 (1) Redemptions for the years ended December 31, 2024, and 2023 is associated with redeemable noncontrolling interest of certain brands we did not previously own. The amount was reclassified as a deferred acquisition contingent obligation (see Note 9). (2) Changes in redemption value are the fair value changes from the acquisition date redemption value based on the options held by the minority interest holders, adjusted through Retained earnings. 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. In addition, these rights cannot be exercised prior to specified staggered exercise dates. The exercise of these rights at their earliest contractual date would result in obligations of the Company to fund the related amounts during 2025 to 2027. It is not determinable, at this time, if or when the owners of these rights will exercise all or a portion of these rights. 88 Table of Contents These adjustments will not impact the calculation of earnings (loss) per share if the redemption values are less than the estimated fair values. As such, there is no related impact on the Company’s earnings (loss) per share calculations for the years ended December 31, 2024, and 2023. Comprehensive Income (Loss) Attributable to Noncontrolling and Redeemable Noncontrolling Interests For the year ended December 31, 2024, comprehensive income attributable to the noncontrolling and redeemable noncontrolling interests was $ 7.2 million, which consists of $ 22.8 million of net income and $ 15.6 million of other comprehensive loss. 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. 14. Commitments, Contingencies, and Guarantees Legal Proceedings. 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 and results of operations of the Company. Guarantees . 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. These types of indemnification guarantees typically extend for a number of years. Historically, the Company has not made any significant indemnification payments under such agreements and no amount has been accrued in the accompanying Audited Consolidated Financial Statements with respect to these indemnification guarantees. 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. Commitments. In the ordinary course of business, the Company enters into certain commitments. The following details the significant commitments of the Company at December 31, 2024: The Company had $ 15.3 million of undrawn letters of credit outstanding. See Note 11 of the Notes included herein for additional information. The Company entered into one operating lease for which the commencement date has not yet occurred. See Note 10 of the Notes included herein for additional information. The Company enters into long-term, non-cancellable contracts with partner associations that include revenue or profit-sharing commitments related to the provision of its services. These contracts may also include provisions that require the partner associations to meet certain performance targets prior to any obligation to the Company. At December 31, 2024, the Company estimates its future minimum commitments under these non-cancellable agreements to be $ 10.5 million, $ 5.5 million, $ 4.0 million, $ 3.2 million, $ 2.9 million and $ 1.0 million for 2025, 2026, 2027, 2028, 2029, and thereafter, respectively. The Company 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. At December 31, 2024, the Company estimates its future minimum commitments under this agreement to be $ 9.7 million, $ 8.7 million, $ 10.4 million, $ 12.7 million and $ 15.3 million for 2025, 2026, 2027, 2028, and 2029, respectively. The Company entered into a certain long-term, non-cancellable contract with a certain vendor for a software license agreement that requires the Company to commit to minimum spending over the contract term. At December 31, 2024, the Company estimates its future minimum commitments under this agreement to be $ 14.1 million, $ 28.5 million and $ 21.8 million for 2025, 2026, and 2027, respectively. 89 Table of Contents 15. Share Capital The authorized and outstanding share capital of the Company is below. Class A Common Stock There are 1.0 billion shares of Class A Common Stock authorized, of which 114.8 million shares were issued and outstanding as of December 31, 2024. Each share of Class A Common Stock carries one vote and represents an economic interest in the Company. Class C Common Stock There are 250.0 million authorized shares of Class C common stock, of which 151.6 million shares were issued and outstanding as of December 31, 2024. Each share of Class C Common Stock carries one vote and does not represent an economic interest in the Company. Each share of Class C Common Stock is paired with a corresponding common unit of Stagwell Global LLC (“OpCo”), the Company’s only operating subsidiary (each such paired share of Class C Common Stock and common unit of OpCo, a “Paired Unit”). 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). Class A Common Stock Repurchases The Company may purchase shares of outstanding Class A Common Stock under its Repurchase Program. On November 6, 2024, the board of directors (the “Board”) authorized an extension and a $ 125.0 million increase in the size of our Repurchase Program. Under the Repurchase Program, as amended, we may repurchase up to an aggregate of $ 375.0 million of shares of our outstanding Class A Common Stock, with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program will expire on November 6, 2027. 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 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 will review the Repurchase Program periodically and may authorize adjustments of its terms. During the year ended December 31, 2024, 14.8 million shares of Class A Common Stock were repurchased pursuant to the Repurchase Program at an average price of $ 6.31 per share, for an aggregate value, excluding fees, of $ 93.5 million. The repurchased shares included 4 million shares of Class A Common Stock repurchased from certain affiliates of The Goldman Sachs Group, Inc. at a price of $ 6.34 per share, for an aggregate purchase price of $ 25.4 million. The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $ 169.9 million as of December 31, 2024. Employee Stock Purchase Plan A total of 3.0 million shares of Class A Common Stock are reserved for sale under the Company’s 2023 Employee Stock Purchase Plan (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 remain available to be issued was 2.7 million as of December 31, 2024. During the years ended December 31, 2024, and 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 outstanding stock-based awards 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 2.3 million as of December 31, 2024. For the years ended December 31, 2024, 2023, and 2022, the Company recognized total stock-based compensation expense related to all stock compensation awards of $ 44.9 million, $ 51.2 million, and $ 36.7 million, respectively. The related income tax benefit for the years ended December 31, 2024, 2023, and 2022 was $ 4.7 million, $ 6.3 million, and $ 4.1 million, respectively. 90 Table of Contents 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 presents 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, 2023 7,172 $ 7.23 3,711 $ 7.56 Granted 4,943 6.22 1,791 5.56 Vested ( 5,133 ) 7.32 ( 887 ) 8.62 Forfeited ( 337 ) 6.92 ( 78 ) 8.79 Balance at December 31, 2024 6,645 $ 6.43 4,537 $ 6.55 The weighted average grant date fair value of time-based awards granted in 2023 and 2022 was $ 7.19 and $ 7.38 per share, respectively. The weighted average grant date fair value of performance-based awards granted in 2023 and 2022 was $ 7.24 and $ 8.68 per share, 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, 2024, 2023, and 2022, was $ 33.3 million, $ 38.4 million, and $ 77.3 million respectively. At December 31, 2024, the weighted average remaining contractual life for time-based and performance-based awards was 0.48 years and 1.28 years, respectively. At December 31, 2024, the unrecognized compensation expense for time-based awards was $ 11.9 million and will be recognized over a weighted average period of 0.48 years. At December 31, 2024, the unrecognized compensation expense for performance-based awards was $ 11.7 million and will be recognized over a weighted average period of 1.28 years. The following table presents information about SAR awards: SAR Awards Shares Weighted Average Grant Date Fair Value Weighted Average Exercise Price Balance at December 31, 2023 3,122 $ 2.59 $ 5.74 Granted — — — Forfeited — — — Exercised ( 500 ) 3.41 2.19 Balance at December 31, 2024 2,622 $ 2.44 $ 6.42 We use the Black-Scholes option-pricing model to estimate the fair value of SAR awards. 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 term of these awards is 5 years. There were no SAR awards granted or forfeited in 2022 and 2024. Certain of the Company’s SAR awards are settled in cash. These awards are liability classified and remeasured at each reporting period. As of December 31, 2024, the assumptions for the Black-Scholes model for these awards were as follows: expected life ranging from 1 to 2.2 years, risk free interest rate of approximately 4 %, expected volatility ranging from 27.9 % to 91 Table of Contents 31.0 %, and dividend yield of 0.0 %. The remaining term of these awards as of December 31, 2024, ranges from approximately 2.0 years to 3.2 years. For the year ended December 31, 2024, 0.6 million SAR awards vested. As of December 31, 2024, 2.5 million SAR awards vested and were exercisable. The total intrinsic value of SAR awards exercised during the years ended December 31, 2024, 2023 and 2022 was $ 2.2 million, $ 8.1 million, and $0.1 million respectively. As of December 31, 2024, the aggregate intrinsic value of the SAR awards outstanding was $ 3.0 million and the weighted average remaining contractual life for these awards was 1.8 years. As of December 31, 2024, the aggregate intrinsic value of the SAR awards exercisable was $ 3.0 million and the weighted average remaining contractual life for these awards was 1.7 years. The weighted average exercise price of SAR awards exercisable as of December 31, 2024, was $ 6.40 . At December 31, 2024, the unrecognized compensation expense for these awards was nominal and will be recognized over a weighted average period of 0.7 years. Subsidiary Awards 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 profits interests awards generally provide the employee with 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 $ 18.5 million and $ 20.3 million at December 31, 2024, and 2023, respectively and is included as a component of Accruals and other liabilities and Other liabilities on the Consolidated Balance Sheets. The change in fair value of these awards resulted in an increase in stock-based compensation for the years ended December 31, 2024, and 2023 of $ 7.1 million and $ 3.9 million, respectively. This was included as a component of stock-based compensation in Cost of Services within the Statements of Operations. 16. Changes in Accumulated Other Comprehensive Income (Loss) The following table presents changes in accumulated other comprehensive income (loss) for the years ended December 31,: Defined Benefit Pension Foreign Currency Translation Total 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 ) Other comprehensive loss before reclassifications ( 2,186 ) ( 8,520 ) ( 10,706 ) Other comprehensive loss ( 2,186 ) ( 8,520 ) ( 10,706 ) Balance at December 31, 2024 $ 2,962 $ ( 26,735 ) $ ( 23,773 ) 17. Income Taxes 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: 2024 2023 2022 Income (Loss): U.S. $ 36,368 $ 66,432 $ 31,681 Non-U.S. 1,355 24,637 43,904 $ 37,723 $ 91,069 $ 75,585 92 Table of Contents The provision (benefit) for income taxes by taxing jurisdiction for the years ended December 31, were: 2024 2023 2022 Current tax provision U.S. federal $ 7,139 $ 4,868 $ 13,229 U.S. state and local 4,359 3,103 8,106 Non-U.S. 12,370 13,143 22,368 23,868 21,114 43,703 Deferred tax provision (benefit): U.S. federal 607 18,168 ( 16,132 ) U.S. state and local 248 7,017 701 Non-U.S. ( 11,541 ) ( 5,742 ) ( 2,810 ) ( 10,686 ) 19,443 ( 18,241 ) Income tax expense $ 13,182 $ 40,557 $ 25,462 A reconciliation of income tax expense (benefit) using the U.S. federal income tax rate compared with actual income tax expense for the years ended December 31, is as follows: 2024 2023 2022 Income before income taxes, equity in non-consolidated affiliates and noncontrolling interest $ 37,723 $ 91,069 $ 75,585 Statutory income tax rate 21.0 % 21.0 % 21.0 % Tax expense using U.S. statutory income tax rate $ 7,922 $ 19,124 $ 15,873 Impact of disregarded entity structure ( 3,384 ) ( 8,520 ) ( 3,355 ) Foreign, net 1,208 ( 3,684 ) 6,930 State taxes, net 3,701 8,422 8,807 Stock compensation 2,244 400 ( 1,342 ) Valuation allowance 5,198 11,791 4,932 Deferred acquisition consideration adjustments ( 2,079 ) 1,299 ( 72 ) Revaluation of TRA step up — ( 424 ) ( 5,109 ) Gain on sale of business — 8,347 — Prior year adjustments ( 3,464 ) 5,617 ( 17,205 ) Goodwill impairments — — 14,645 Other, net 1,836 ( 1,815 ) 1,358 Income tax expense $ 13,182 $ 40,557 $ 25,462 Effective income tax rate 34.9 % 44.5 % 33.7 % The Company is a corporation with an investment in a limited liability company classified as a partnership for U.S. federal income tax purposes, and as such a portion of the consolidated income is not subject to taxes from a U.S. federal income tax perspective. The tax rate of 21.0 % has been used to capture the U.S. federal taxes of the Company and the corporations owned by the Company and recorded in the Consolidated Statements of Operations and Comprehensive Income. 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. The Company’s tax liability has not increased as a result of this new book minimum tax. Income taxes receivable were $ 27.0 million and $ 21.6 million as of December 31, 2024, and 2023, respectively, and were included in Other current assets on the Consolidated Balance Sheets. Long-term income taxes receivable were $ 10.4 million and $ 12.5 million as of December 31, 2024, and 2023, and were included in Other assets on the Consolidated Balance Sheets. Income taxes payable were $ 12.1 million and $ 5.7 million as of December 31, 2024, and 2023, respectively, and were included in Accruals and other liabilities on the Consolidated Balance Sheets. 93 Table of Contents The tax effects of significant temporary differences representing deferred tax assets and liabilities as of December 31, were as follows: 2024 2023 2022 Deferred tax assets: Net operating losses $ 38,482 $ 29,835 $ 44,001 Tax credits 6,719 6,355 7,104 Operating lease liability 44,356 50,657 52,442 Interest deductions 37,384 36,618 30,681 Accruals and other liabilities 1,010 252 2,794 TRA and related step-up, net of amortization 27,335 29,007 30,556 Other 8,128 13,568 10,584 Gross deferred tax asset 163,414 166,292 178,162 Less: valuation allowance ( 30,583 ) ( 26,288 ) ( 14,395 ) Net deferred tax assets $ 132,831 $ 140,004 $ 163,767 Deferred tax liabilities: Right-of-use lease asset - operating leases 33,163 38,261 40,012 Property and equipment, net 5,065 11,553 9,329 Goodwill and intangibles 94,126 83,335 85,990 Residual basis differences — — — Other 790 205 940 Total deferred tax liabilities 133,144 133,354 136,271 Net deferred tax asset (liability) $ ( 313 ) $ 6,650 $ 27,496 Deferred tax assets $ 46,926 $ 47,159 $ 68,375 Deferred tax liabilities ( 47,239 ) ( 40,509 ) ( 40,879 ) $ ( 313 ) $ 6,650 $ 27,496 Tax Receivables Agreement In connection with the closing of the Transaction, we entered into the Tax Receivables Agreement (“TRA”) with OpCo and Stagwell Media, pursuant to which we are required to make cash payments to Stagwell Media equal to 85% of certain U.S. federal, state and local income tax or franchise tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (i) increases in the tax basis of OpCo’s assets resulting from exchanges of Paired Units (defined in Note 15) for shares of Class A Common Stock or cash, as applicable, and (ii) certain other tax benefits related to us making payments under the TRA. The Company accounts for amounts payable under the TRA in accordance with ASC 450-Contingencies. We will evaluate the likelihood that we will realize the benefit represented by the deferred tax asset and, to the extent that we estimate that it is more likely than not that we will not realize the benefit, we will reduce the carrying amount of the deferred tax asset with a valuation allowance and a corresponding reduction to the TRA liability. The amounts to be recorded for both the deferred tax assets and the liability under the TRA will be estimated at the time of any purchase or exchange as a reduction to shareholders’ equity, and the effects of changes in any of our estimates after this date will be included in net income or loss. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income or loss. 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 in 2022 and no further exchanges in 2023 or 2024. As of December 31, 2024, and 2023, the Company has recorded a TRA liability of $ 26.7 million and $ 26.9 million, respectively, and a deferred tax asset, net of amortization of $ 27.3 million and $ 29.0 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 $ 62.1 million relating to U.S. states which expire years 2025 through 2042 and indefinite net operating loss carryforwards of $ 4.5 million relating to U.S. states. Stagwell Inc. also has foreign and state tax credits of $ 6.7 million which expire between 2025 and 2034. Stagwell Inc.’s consolidated corporate subsidiaries also have net operating loss carryforwards which expire in years 2025 through 2044. These definite lived net operating loss carryforwards consist of $ 12.5 million relating to U.S. federal, $ 14.4 94 Table of Contents million relating to states and $ 44.4 million re lating to non-U.S. The corporate subsidiaries also have indefinite net operating loss carryforwards which consist of $ 24.2 million relating to U.S. federal, and $ 2.0 million relating to U.S. states, and $ 69.3 million relating to non-U.S. The majority of the consolidated corporate subsidiaries’ U.S. tax attributes are subject to an annual limitation as a result of historic acquisitions which constituted a change of ownership as defined under Internal Revenue Code 382. The Company records a valuation allowance against deferred income tax assets when management believes it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Management evaluates all positive and negative evidence and considers factors such as the reversal of taxable temporary differences, taxable income in eligible carryback years, future taxable income, and tax planning strategies. A change to these factors could impact the estimated valuation allowance and income tax expense. The Company maintained a valuation allowance of $ 30.6 million as of December 31, 2024, relating to both U.S. and foreign deferred tax assets, and $ 26.3 million as of December 31, 2023 relating to U.S. and foreign deferred tax assets. The Company is permanently reinvested with respect to its foreign earnings in certain jurisdictions, and no deferred taxes have been recorded related to such earnings as the determination of the amount is not practicable. The Company currently does not intend to distribute previously taxed income. 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, 2024, and 2023, the Company recorded a liability for unrecognized tax benefits as well as applicable penalties and interest in the amount of $ 2.1 million and $ 1.8 million, respectively. If these unrecognized tax benefits were to be recognized, it would affect the Company’s effective tax rate. 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, 2024, and 2023, accrued penalties and interest included in unrecognized tax benefits were $ 2.1 million and $ 1.8 million, respectively. A reconciliation of the change in unrecognized tax benefits exclusive of penalties and interest is as follows: 2024 2023 A reconciliation of the change in unrecognized tax benefits is as follows: Unrecognized tax benefit - Beginning Balance $ 9 $ 2,136 Current year positions — 288 Prior period positions — ( 1,840 ) Settlements — ( 289 ) Lapse of statute of limitations — ( 286 ) Unrecognized tax benefits - Ending Balance $ 9 $ 9 It is reasonably possible that the amount of unrecognized tax benefits could decrease by 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. federal jurisdiction and in many state and foreign jurisdictions. The statute of limitations for tax years prior to 2021 are closed for U.S. federal purposes. The statute of limitations for tax years prior to 2014 have also expired in non-U.S. jurisdictions. 18. Fair Value Measurements A fair value measurement assumes a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. The hierarchy for observable and unobservable inputs used to measure fair value into three broad levels are described below: • Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. • Level 2 - Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. • Level 3 - Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. 95 Table of Contents 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 as of December 31,: 2024 2023 Carrying Amount Fair Value Carrying Amount Fair Value (dollars in thousands) 5.625% Notes $ 1,100,000 $ 1,048,311 $ 1,100,000 $ 1,010,658 The fair value of this instrument is based on quoted market prices in markets that are not active. Therefore, this debt is classified as Level 2 within the fair value hierarchy. Financial Instruments Measured at Fair Value on a Recurring Basis Contingent deferred acquisition consideration (Level 3 fair value measurement) is initially recorded at the acquisition date fair value and adjusted at each reporting period. The estimated liability is determined in accordance with models of each business’ future performance, including revenue growth and free cash flows. These models are dependent upon significant assumptions, such as the growth rate of the earnings of the relevant subsidiary during the contractual period and the discount rate. These growth rates are consistent with the Company’s long-term forecasts. As of December 31, 2024, the discount rate used to measure these liabilities ranged from 4.7 % to 7.2 %. 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 uncertainty. See Note 9 of the Notes included herein for additional information regarding contingent deferred acquisition consideration. As of December 31, 2024, and December 31, 2023, 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 Certain non-financial assets are measured at fair value on a nonrecurring basis, primarily goodwill, intangible assets (Level 3 fair value measurements) and right-of-use lease assets (Level 2 fair value measurement). 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 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. 96 Table of Contents 19. Related Party Transactions In the ordinary course of business, the Company enters into transactions with related parties, including its affiliates. The transactions may range in the nature and value of services underlying the arrangements. The following table presents significant related party transactions where a related party receives services from the Company: Revenue Due From Related Party Year Ended December 31, December 31, Services 2024 2023 2022 2024 2023 Marketing and advertising services (1) $ — $ 2,576 $ 2,240 $ — $ 1,518 Marketing and advertising services (2) 3,752 894 7,449 — 4,381 Marketing and website development services (3) 3,034 3,566 7,185 601 694 Polling services (4) 828 1,042 379 192 160 Polling and public relation services (5) 361 350 339 55 39 Polling services (6) — 1,046 3,450 — — Marketing and advertising services (6) 4,917 — — — — Total $ 12,892 $ 9,474 $ 21,042 $ 848 $ 6,792 (1) A member of the Company’s Board was the President of a client. This person retired from his position and is no longer an employee of the client effective January 2, 2024. (2) Brands’ partners and executives either hold a key leadership position in or are on the board of directors of the client. (3) A member of the Company's Board is the managing director of a client. (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. (6) Founder of the client has significant interest in the Company. 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. As of December 31, 2024, and December 31, 2023, $ 2.7 million and $ 2.7 million, respectively, was due from the related parties and included in Other assets on the Consolidated Balance Sheets. 20. Segment Information The Company adopted ASU 2023-07, Segment Reporting (Topic 280) Improvements to Segment Disclosures (“ASU 2023-07”), in the fourth quarter of 2024, which requires enhanced disclosure about significant segment expenses. The Company determines an operating segment if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has discrete financial information, and is (iii) regularly reviewed by the Chief Operating Decision Maker (“CODM”), who is Mark Penn, Chief Executive Officer and Chairman, to make decisions regarding resource allocation for the segment and assess its performance. Once operating segments are identified, the Company performs an analysis to determine if aggregation of operating segments is applicable. This determination is based upon a quantitative analysis of the expected and historic average long-term profitability for each operating segment, together with a qualitative assessment to determine if operating segments have similar operating characteristics. All segments follow the same basis of presentation and accounting policies as those described throughout the Notes included herein. The CODM uses Adjusted EBITDA as a key metric, to evaluate the operating and financial performance of a segment, identify trends affecting the segments, develop projections and make strategic business decisions. Adjusted EBITDA is defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items primarily includes restructuring, certain system implementation and acquisition-related expenses. The Company has three reportable segments as follows: “Integrated Agencies Network”, “Brand Performance Network”, and the “Communications Network”. The composition of these segments are as follows: 97 Table of Contents • The Integrated Agencies Network includes five operating segments: the Anomaly Alliance, Constellation, the Doner Partner Network, Code and Theory Network, and National Research Group. The operating segments offer an array of complementary services spanning our core capabilities of Digital Transformation, Performance Media & Data, Consumer Insights & Strategy, Stagwell Marketing Cloud Group and Creativity & Communications. The Brands included in the operating segments that comprise the Integrated Agencies Network reportable segment includes: Anomaly Alliance (Anomaly, What’s Next Partners), Constellation (72andSunny, Crispin LLC, Colle McVoy, Hunter, Redscout, Team Enterprises, Harris Insights, Movers and Shakers, and Team Epiphany), the Doner Partner Network (Doner, KWT Global, Harris X, Veritas, Doner North, and Yamamoto), Code and Theory Network (Code and Theory, Instrument, Left Field Labs), and National Research Group. These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of clients and the methods used to provide services; and (iii) the extent to which they may be impacted by global economic and geopolitical risks. In addition, these operating segments may occasionally compete with each other for new business or have business move between them. • The Brand Performance Network (“BPN”) comprises 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, CPB International, Stagwell Production, Vitro, Forsman & Bodenfors, Goodstuff, Bruce Mau, digital creative & transformation consultancy Gale, B2B specialist Multiview, CX specialists Kenna, and travel media experts Ink. • The Communications Network reportable segment comprises 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 includes Allison, SKDK, Targeted Victory, and Consulum. The Company combines and discloses operating segments that do not meet the aggregation criteria and includes the elimination of certain intercompany services and revenue, within “All Other.” All Other consists of the Company’s “software as a service” (“SaaS”) and “data as a service” (“DaaS”) technology tools. The Company reports corporate expenses as “Corporate.” Corporate consists of corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, and (iv) certain other professional fees managed by the corporate office. The Company made changes to its internal management and reporting structure in the first quarter of 2024, resulting in a change to its reportable segments (Networks). Specifically, certain agencies previously within the Brand Performance Network are now in the Integrated Agencies Network. The 2023 period has been recast to reflect the reclassification of certain reporting units (Brands) between operating segments. 98 Table of Contents Year Ended December 31, 2024 Integrated Agencies Network Brand Performance Network Communications Network Total (dollars in thousands) Revenue (1) $ 1,535,445 $ 751,884 $ 515,140 $ 2,802,469 Billable costs 262,692 100,654 181,345 544,691 Staff costs 792,041 397,301 177,629 1,366,971 Administrative costs 128,954 93,155 37,057 259,166 Unbillable and other costs * 72,756 65,901 2,235 140,892 Adjusted EBITDA 279,002 94,873 116,874 490,749 Adjusted EBITDA - All Other ( 15,824 ) Adjusted EBITDA - Corporate ( 64,138 ) Total Consolidated Adjusted EBITDA 410,787 Stock-based compensation 52,161 Depreciation and amortization 151,652 Deferred acquisition consideration 22,995 Impairment and other losses 1,715 Other items, net 49,196 Operating Income 133,068 Interest expense, net ( 92,317 ) Foreign exchange, net ( 1,656 ) Other, net ( 1,372 ) ( 95,345 ) Income before income taxes and equity in earnings of non-consolidated affiliates 37,723 Income tax expense 13,182 Income before equity in earnings of non-consolidated affiliates 24,541 Equity in income of non-consolidated affiliates 503 Net income 25,044 Net income attributable to noncontrolling and redeemable noncontrolling interests ( 22,785 ) Net income attributable to Stagwell Inc. common shareholders $ 2,259 (1) Total consolidated revenue of $ 2,841,216 also includes revenue associated with operating segments that do not meet the aggregation criteria and elimination of certain intercompany service and revenue, which amounted to $ 38,747 . *For each reportable segment, Unbillable and other costs includes costs to fulfill customer contract requirements such as research and subscription related costs, audience measurement, data and analytics, and panels and survey costs; and also includes travel related expenses associated with contract fulfillment. 99 Table of Contents Year Ended December 31, 2023 Integrated Agencies Network Brand Performance Network Communications Network Total (dollars in thousands) Revenue (1) $ 1,418,711 $ 728,174 $ 333,707 $ 2,480,592 Billable costs 185,913 100,364 88,446 374,723 Staff costs 768,846 386,803 159,165 1,314,814 Administrative costs 122,618 87,337 33,664 243,619 Unbillable and other costs * 71,776 55,891 613 128,280 Adjusted EBITDA 269,558 97,779 51,819 419,156 Adjusted EBITDA - All Other ( 10,607 ) Adjusted EBITDA - Corporate ( 48,410 ) Total Consolidated Adjusted EBITDA 360,139 Stock-based compensation 57,179 Depreciation and amortization 142,831 Deferred acquisition consideration 13,060 Impairment and other losses 11,395 Other items, net 45,147 Operating Income 90,527 Interest expense, net ( 90,644 ) Foreign exchange, net ( 2,960 ) Gain on sale of business 94,505 Other, net ( 359 ) 542 Income before income taxes and equity in earnings of non-consolidated affiliates 91,069 Income tax expense 40,557 Income before equity in earnings of non-consolidated affiliates 50,512 Equity in loss of non-consolidated affiliates ( 8,870 ) Net income 41,642 Net income attributable to noncontrolling and redeemable noncontrolling interests ( 41,508 ) Net income attributable to Stagwell Inc. common shareholders $ 134 (1) Total consolidated revenue of $ 2,527,177 also includes revenue associated with operating segments that do not meet the aggregation criteria and elimination of certain intercompany service and revenue, which amounted to $ 46,585 . *For each reportable segment, Unbillable and other costs includes costs to fulfill customer contract requirements such as research and subscription related costs, audience measurement, data and analytics, and panels and survey costs; and also includes travel related expenses associated with contract fulfillment. 100 Table of Contents Year Ended December 31, 2022 Integrated Agencies Network Brand Performance Network Communications All Other Corporate Total (dollars in thousands) Revenue $ 1,474,970 $ 757,208 $ 435,652 $ 19,962 $ — $ 2,687,792 Adjusted EBITDA $ 292,293 $ 115,835 $ 87,032 $ ( 931 ) $ ( 43,111 ) $ 451,118 Stock-based compensation 33,152 Depreciation and amortization 131,273 Deferred acquisition consideration ( 13,405 ) Impairment and other losses 122,179 Other items, net 18,691 Operating Income 159,228 Interest expense, net ( 76,062 ) Foreign exchange, net ( 2,606 ) Other, net ( 4,975 ) ( 83,643 ) Income before income taxes and equity in earnings of non-consolidated affiliates 75,585 Income tax expense 25,462 Income before equity in earnings of non-consolidated affiliates 50,123 Equity in loss of non-consolidated affiliates ( 79 ) Net income 50,044 Net income attributable to noncontrolling and redeemable noncontrolling interests ( 30,125 ) Net income attributable to Stagwell Inc. common shareholders $ 19,919 The Company’s long-lived assets (i.e., Right-of-use lease assets-operating leases and Fixed asset, net) was $ 292.1 million ($ 231.9 million in the United States and $ 60.2 million in all other countries) as of December 31, 2024 and $ 332.1 million ($ 268.5 million in the United States and $ 63.6 million in all other countries) as of December 31, 2023. The Company’s CODM does not use segment assets to allocate resources or to assess performance of the segments and therefore, total segment assets have not been disclosed. See Note 5 of the Notes included herein for a summary of the Company’s revenue by geographic region for the years ended December 31, 2024, 2023, and 2022. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures Not Applicable.