Company: STGW
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0000876883-25-000017
Chunk: 137

Company: Stagwell Inc
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 2
Chunk 137
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 Other87,318 60,799 Total$564,187 $532,454 

Operating Income

Operating Income for the three months ended March 31, 2025, was $18.3 million, compared to $25.9 million for the three months ended March 31, 2024, representing a decrease of $7.6 million. The decrease in Operating Income was primarily attributable to the increase in Net revenue of $31.7 million, partially offset by higher expenses as detailed below. 

Cost of services decreased by $32.4 million. Excluding the decline in Billable costs of $50.1 million, Cost of services increased $17.6 million, primarily attributable to the inclusion of expenses of acquired entities.

Office and general expenses increased by $16.0 million, primarily attributable to the inclusion of expenses of acquired entities and higher deferred acquisition consideration. 

Deferred acquisition consideration increased by $6.5 million, primarily attributable to an increase in the fair value of certain obligations.

Stock-based compensation decreased by $4.6 million, primarily due to a decrease in the fair value of awards, partially offset by an increase in the number of awards.

Depreciation and amortization increased by $7.2 million, primarily attributable to the Company’s acquisition of businesses.

Interest Expense, Net

Interest expense, net for the three months ended March 31, 2025 was $23.4 million, compared to $21.0 million for the three months ended March 31, 2024, an increase of $2.4 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 gain for the three months ended March 31, 2025, was $1.2 million, compared to a loss of $2.3 million for the three months ended March 31, 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 March 31, 2025 of $1.7 million (on a pre-tax loss of $3.6 million resulting in an effective tax rate of (47.8)%), primarily due to the tax benefit of the small pre-tax loss being more than offset by the current losses subject to valuation allowance and withholding