Company: STGW
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0000876883-25-000034
Chunk: 183

Company: Stagwell Inc
Filing Date: 2025-11-06
Form: 10-Q
Item: Item 8
Chunk 183
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 Operating Income was primarily attributable to an increase in Net revenue of $34.3 million and a decrease in Office and general expenses, partially offset by an increase in Cost of services excluding Billable costs, and Depreciation and amortization.

Cost of services increased by $13.9 million. Excluding the decline in Billable costs of $2.6 million, Cost of services increased $16.5 million, primarily attributable to higher staff costs due to the inclusion of costs from acquired entities.

The decrease in Office and general expenses of $10.0 million was primarily attributable to a decrease in deferred acquisition consideration expense, partially offset by an increase in staff costs due to the inclusion of costs from acquired entities and increase in technology related expenses.

Stock-based compensation decreased by $4.3 million, primarily due to an increase in the fair value of profit interest awards  in the third quarter of 2024, partially offset by an increase in the fair value and number of awards expensed compared to last year.

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Deferred acquisition consideration decreased by $13.9 million, primarily attributable to a reduction in the fair value of the deferred acquisition consideration liability associated with certain Brands. 

Depreciation and amortization increased by $8.2 million, primarily attributable to the Company’s acquisition of businesses.

Interest Expense, Net

Interest expense, net for the three months ended September 30, 2025 was $25.2 million, compared to $23.8 million for the three months ended September 30, 2024, an increase of $1.4 million, primarily attributable to higher levels of debt outstanding under the Credit Agreement (as defined and discussed in Note 8 of the Notes to the Unaudited Consolidated Financial Statements included herein), partially offset by a lower average interest rate.

Foreign Exchange, Net

The foreign exchange loss for the three months ended September 30, 2025 was $0.4 million, compared to a gain of $1.3 million for the three months ended September 30, 2024, primarily attributable to the movement in the British Pound and Euro.

Income Tax Expense

The Company had an income tax expense for the three months ended September 30, 2025 of $9.6 million (on a pre-tax income of $33.3 million resulting in an effective tax rate of 28.7%) compared to income tax expense of $5.7 million (on pre-tax income of $19.6 million resulting in an effective tax rate of 29.