Company: STGW
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0000876883-25-000024
Chunk: 9

Company: Stagwell Inc
Filing Date: 2025-07-31
Form: 10-Q
Item: Item 2
Chunk 9
---
.R.S. Group Ltd. (“Leaders”), and UNICEPTA Holding GmbH (“Unicepta”).

The geographic mix in net revenues for the three months ended June 30, 2025 and 2024 is as follows:

Three Months Ended June 30, 20252024(dollars in thousands)United States$464,882 $446,326 United Kingdom36,555 39,033 Other96,692 69,033 Total$598,129 $554,392 

Operating Income

Operating Income for the three months ended June 30, 2025 was $23.2 million, compared to Operating Income of $21.9 million for the three months ended June 30, 2024, representing an increase of $1.3 million. The change in Operating Income was primarily attributable to an increase in Revenue, partially offset by an increase in Cost of services and Office and general expenses.

The increase in Cost of services was primarily attributable to higher staff costs due to the inclusion of costs from acquired entities, and higher stock-based compensation.

The increase in Office and general expenses was primarily attributable to an increase in staff costs and acquisition related expenses, partially offset by a decrease in deferred acquisition consideration expense.

Stock-based compensation increased by $14.1 million, primarily due to an increase in the fair value of profit interest awards and an increase in the number of awards expensed, compared to last year, and a reversal of expense in the second quarter of 2024 associated with stock-based performance awards for which the performance targets were not met.

Deferred acquisition consideration decreased by $10.5 million, primarily attributable to a reduction in the fair value of the deferred acquisition consideration liability associated with certain Brands. 

44

Income Tax Expense

The Company had an income tax expense for the three months ended June 30, 2025 of 2.7 million (on a pre-tax loss of $2.0 million resulting in an effective tax rate of (134.9)%) primarily due to the tax benefit of the small pre-tax loss being more than offset by the current losses subject to valuation allowance, withholding taxes recorded in the period, and a shortfall in deductions for share based compensation expense vested during the period.

The Company had income tax expense for the three months ended June 30, 2024 of $1.2 million (on pre-tax loss of $2.8 million resulting in an effective tax rate of (41.8)%) primarily due to the tax