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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20222023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number: 001-13718
Logo.jpg
Stagwell Inc.
(Exact name of registrant as specified in its charter)
Delaware 86-1390679
(State or other jurisdiction of
incorporation or organization)
 (IRS Employer Identification No.)
   
One World Trade Center, Floor 65
 
New York,New York10007
(Address of principal executive offices) (Zip Code)
(646) 429-1800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.001 per shareSTGWNASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated FilerAccelerated Filer
Non-accelerated FilerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No  
The number of common shares outstanding as of May 5, 20223, 2023, was 133,151,845129,689,614 shares of Class A Common Stock 3,946 shares of Class B Common Stock, and 164,814,910160,909,058 shares of Class C Common Stock.

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STAGWELL INC.
 
QUARTERLY REPORT ON FORM 10-Q
 
TABLE OF CONTENTS
 
  Page
 PART I. FINANCIAL INFORMATION 
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
   
 PART II. OTHER INFORMATION 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

EXPLANATORY NOTE
On December 21, 2020, MDC Partners Inc. (“MDC”) and Stagwell Media LP (“Stagwell Media”) announced that they had entered into an agreement, providing for the combination of MDC with the operating businesses and subsidiaries of Stagwell Media (the “Stagwell Subject Entities”) (the “Transaction Agreement”). The Stagwell Subject Entities comprised Stagwell Marketing Group LLC (“Stagwell Marketing” or “SMG”) and its direct and indirect subsidiaries.
On August 2, 2021 (the “Closing Date”), we completed the combination of MDC and the Stagwell Subject Entities and a series of steps and related transactions (such combination and transactions, the “Transactions”). In connection with the Transactions, among other things, (i) MDC completed a series of transactions pursuant to which it emerged as a wholly owned subsidiary of Stagwell Inc. (“the Company” or “Stagwell”), converted into a Delaware limited liability company and changed its name to Midas OpCo Holdings LLC (“OpCo”); (ii) Stagwell Media contributed the equity interests of Stagwell Marketing and its direct and indirect subsidiaries to OpCo; and (iii) the Company converted into a Delaware corporation, succeeded MDC as the publicly-traded company and changed its name to Stagwell Inc.
The Transactions were treated as a reverse acquisition for financial reporting purposes, with MDC treated as the legal acquirer and Stagwell Marketing treated as the accounting acquirer. As a result of the Transactions and the change in our business and operations, under applicable accounting principles, the historical financial results of Stagwell Marketing prior to August 2, 2021 are considered our historical financial results. Accordingly, historical information presented in this Form 10-Q for events occurring or periods ending before August 2, 2021 does not reflect the impact of the Transactions or the financial
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results of MDC and may not be comparable with historical information for events occurring or periods ending on or after August 2, 2021.
References in this Quarterly Report on Form 10-Q to “Stagwell,” the “Company,” “we,” “us,” and “our” and the “Company” refer (i) with respect to events occurring or periods ending before August 2, 2021, to Stagwell Marketing and its direct and indirect subsidiaries and (ii) with respect to events occurring or periods ending on or after August 2, 2021, to Stagwell Inc. and, unless the context otherwise requires or otherwise is expressly stated, its direct and indirect subsidiaries.
All dollar amounts are stated in U.S. dollars unless otherwise stated.
Note About Forward-Looking Statements
This document contains forward-looking statements. within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, as amended.. The Company’s representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including statements about the Company’s beliefs and expectations, future financial performance and future prospects, business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “create,” “estimate,” “expect,” “focus,” “forecast,” “foresee,” “future,” “guidance,” “intend,” “look,” “may,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section.
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Forward-looking statements in this document are based on certain key expectations and assumptions made by the Company. Although the management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The material assumptions upon which such forward-looking statements are based include, among others, assumptions with respect to general business, economic and market conditions, the competitive environment, anticipated and unanticipated tax consequences and anticipated and unanticipated costs. These forward-looking statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:
risks associated with international, national and regional unfavorable economic conditions that could affect the Company or its clients;
the effectscontinued impact of the coronavirus pandemic (“COVID-19”), and the impactevolving strains of COVID-19 on the economy and demand for the Company’s services, which may precipitate or exacerbate other risks and uncertainties;
inflation and actions taken by central banks to counter inflation;
the Company’s ability to attract new clients and retain existing clients;
the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
financial failure of the Company’s clients;
the Company’s ability to retain and attract key employees;
the Company’s ability to compete in the markets in which it operates;
the Company’s ability to achieve its cost saving initiatives;
the Company’s implementation of strategic initiatives;
the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration;
the Company’s ability to manage its growth effectively, including the successful completion and integration of acquisitions that complement and expand the Company’s business capabilities;
the Company’s ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products;
an inability to realize expected benefits of the combination of the Company’s business with the business of MDC;
adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on the Company’s determination of value and computations of its attributes may result in increased tax costs;
the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transactions;
the Company’s ability to attract new clients and retain existing clients;
the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
financial failure of the Company’s clients;
the Company’s ability to retain and attract key employees;
the Company’s ability to compete in the markets in which it operates;
the Company’s ability to achieve its cost saving initiatives;
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the Company’s implementation of strategic initiatives;
the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration;
the Company’s ability to manage its growth effectively, including the successful completion and integration of acquisitions which complement and expand the Company’s business capabilities;
the Company’sunremediated material weaknesses in internal control over financial reporting and its ability to establish and maintain an effective system of internal control over financial reporting;
the Company’s ability to protect client data from security incidents or cyberattacks;
economic disruptions resulting from war and other geopolitical tensions (such as the ongoing military conflict between Russia and Ukraine), terrorist activities and natural disasters;
stock price volatility; and
foreign currency fluctuations.
Investors should carefully consider these risk factors, other risk factors described herein,risks and the additional risk factors outlineddescribed in more detail in our 2021Annual Report on Form 10-K for the year ended December 31, 2022 (our “2022 Form 10-K”), filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2022,6, 2023, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings.
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PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands)thousands, except per share amounts)
Three Months Ended March 31, Three Months Ended March 31,
20222021 20232022
RevenueRevenue$642,903 $181,242 Revenue$622,444 $642,903 
Operating ExpensesOperating ExpensesOperating Expenses
Cost of servicesCost of services411,970 111,999 Cost of services413,898 411,970 
Office and general expensesOffice and general expenses144,512 52,278 Office and general expenses158,836 144,512 
Depreciation and amortizationDepreciation and amortization31,204 10,950 Depreciation and amortization33,477 31,204 
Impairment and other lossesImpairment and other losses557 — Impairment and other losses— 557 
588,243 175,227 606,211 588,243 
Operating income54,660 6,015 
Other Income (expenses):
Operating IncomeOperating Income16,233 54,660 
Other income (expenses):Other income (expenses):
Interest expense, netInterest expense, net(18,729)(1,351)Interest expense, net(18,189)(18,729)
Foreign exchange, netForeign exchange, net(306)(677)Foreign exchange, net(670)(306)
Other, netOther, net156 1,285 Other, net220 156 
(18,879)(743)(18,639)(18,879)
Income before income taxes and equity in earnings of non-consolidated affiliates35,781 5,272 
Income (loss) before income taxes and equity in earnings of non-consolidated affiliatesIncome (loss) before income taxes and equity in earnings of non-consolidated affiliates(2,406)35,781 
Income tax expenseIncome tax expense3,189 673 Income tax expense2,384 3,189 
Income before equity in earnings of non-consolidated affiliates32,592 4,599 
Equity in income of non-consolidated affiliates1,030 
Net income33,622 4,603 
Net income attributable to noncontrolling and redeemable noncontrolling interests(20,947)(238)
Income (loss) before equity in earnings of non-consolidated affiliatesIncome (loss) before equity in earnings of non-consolidated affiliates(4,790)32,592 
Equity in income (loss) of non-consolidated affiliatesEquity in income (loss) of non-consolidated affiliates(227)1,030 
Net income (loss)Net income (loss)(5,017)33,622 
Net (income) loss attributable to noncontrolling and redeemable noncontrolling interestsNet (income) loss attributable to noncontrolling and redeemable noncontrolling interests5,460 (20,947)
Net income attributable to Stagwell Inc. common shareholdersNet income attributable to Stagwell Inc. common shareholders$12,675 $4,365 Net income attributable to Stagwell Inc. common shareholders$443 $12,675 
Income (loss) Per Common Share:Income (loss) Per Common Share:
Income Per Common Share:
BasicBasic Basic$0.00 $0.10 
Net income attributable to Stagwell Inc. common shareholders$0.10 N/A
DilutedDiluted Diluted$(0.01)$0.10 
Net income attributable to Stagwell Inc. common shareholders$0.10 N/A
Weighted Average Number of Common Shares Outstanding:Weighted Average Number of Common Shares Outstanding:Weighted Average Number of Common Shares Outstanding:
BasicBasic122,285 N/A Basic125,199 122,285 
DilutedDiluted297,484 N/A Diluted289,806 297,484 
See notes to the Unaudited CondensedConsolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands)
 Three Months Ended March 31,
 20232022
COMPREHENSIVE INCOME (LOSS)
Net income (loss)$(5,017)$33,622 
Other comprehensive income (loss)
Foreign currency translation adjustment4,425 (5,347)
Other comprehensive income (loss)4,425 (5,347)
Comprehensive income (loss) for the period(592)28,275 
Comprehensive (income) loss attributable to the noncontrolling and redeemable noncontrolling interests26,723 (20,947)
Comprehensive income attributable to Stagwell Inc. common shareholders$26,131 $7,328 
See notes to the Unaudited Consolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEBALANCE SHEETS
(amounts in thousands)
 Three Months Ended March 31,
 20222021
COMPREHENSIVE INCOME
Net income$33,622 $4,603 
Other comprehensive income
Foreign currency translation adjustment(5,347)137 
Other comprehensive income (loss)(5,347)137 
Comprehensive income for the period28,275 4,740 
Comprehensive income attributable to the noncontrolling and redeemable noncontrolling interests(20,947)(238)
Comprehensive income attributable to Stagwell Inc. common shareholders$7,328 $4,502 
 March 31,
2023
December 31,
2022
 
ASSETS  
Current Assets  
Cash and cash equivalents$138,529 $220,589 
Accounts receivable, net659,068 645,846 
Expenditures billable to clients97,590 93,077 
Other current assets77,930 71,443 
Total Current Assets973,117 1,030,955 
Fixed assets, net94,839 98,878 
Right-of-use lease assets - operating leases260,763 273,567 
Goodwill1,569,532 1,566,956 
Other intangible assets, net888,455 907,529 
Other assets114,227 115,447 
Total Assets$3,900,933 $3,993,332 
LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable$308,759 $357,253 
Accrued media283,578 240,506 
Accruals and other liabilities152,937 248,477 
Advance billings334,933 337,034 
Current portion of lease liabilities - operating leases75,939 76,349 
Current portion of deferred acquisition consideration94,039 90,183 
Total Current Liabilities1,250,185 1,349,802 
Long-term debt1,235,281 1,184,707 
Long-term portion of deferred acquisition consideration71,645 71,140 
Long-term lease liabilities - operating leases278,978 294,049 
Deferred tax liabilities, net43,023 40,109 
Other liabilities70,371 69,780 
Total Liabilities2,949,483 3,009,587 
Redeemable Noncontrolling Interests32,517 39,111 
Commitments, Contingencies and Guarantees (Note 9)
Shareholders' Equity
Common shares - Class A & B130 132 
Common shares - Class C
Paid-in capital469,891 491,899 
Retained earnings30,324 29,445 
Accumulated other comprehensive loss(13,253)(38,941)
Stagwell Inc. Shareholders' Equity487,094 482,537 
Noncontrolling interests431,839 462,097 
Total Shareholders' Equity918,933 944,634 
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity$3,900,933 $3,993,332 
See notes to the Unaudited Condensed Consolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
CONDENSEDUNAUDITED CONSOLIDATED BALANCE SHEETSSTATEMENTS OF CASH FLOWS
(amounts in thousands)
 March 31, 2022December 31, 2021
 (Unaudited)
ASSETS  
Current Assets  
Cash and cash equivalents$135,153 $184,009 
Accounts receivable, net767,147 696,937 
Expenditures billable to clients51,069 63,065 
Other current assets69,009 61,830 
Total Current Assets1,022,378 1,005,841 
Fixed assets, net118,542 118,603 
Right-of-use lease assets - operating leases311,028 311,654 
Goodwill1,651,475 1,652,723 
Other intangible assets, net914,829 937,695 
Other assets33,581 29,064 
Total Assets$4,051,833 $4,055,580 
LIABILITIES, RNCI, AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable$248,619 $271,769 
Accrued media284,735 237,794 
Accruals and other liabilities224,945 272,533 
Advance billings344,125 361,885 
Current portion of lease liabilities - operating leases70,356 72,255 
Current portion of deferred acquisition consideration75,619 77,946 
Total Current Liabilities1,248,399 1,294,182 
Long-term debt1,222,041 1,191,601 
Long-term portion of deferred acquisition consideration148,649 144,423 
Long-term lease liabilities - operating leases339,168 342,730 
Deferred tax liabilities, net78,401 103,093 
Other liabilities73,097 57,147 
Total Liabilities3,109,755 3,133,176 
Redeemable Noncontrolling Interests44,233 43,364 
Commitments, Contingencies and Guarantees (Note 10)00
Shareholders' Equity:
Common shares - Class A & B135 118 
Common shares - Class C
Paid-in capital373,300 382,893 
Retained earnings6,668 (6,982)
Accumulated other comprehensive loss(10,625)(5,278)
Stagwell Inc. Shareholders' Equity369,480 370,753 
Noncontrolling interests528,365 508,287 
Total Shareholders' Equity897,845 879,040 
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity$4,051,833 $4,055,580 

 Three Months Ended March 31,
20232022
Cash flows from operating activities:
Net income (loss)$(5,017)$33,622 
Adjustments to reconcile net income to cash used in operating activities:
Stock-based compensation12,004 8,021 
Depreciation and amortization33,477 31,204 
Impairment and other losses— 557 
Deferred income taxes3,809 (1,350)
Adjustment to deferred acquisition consideration4,088 1,897 
Other, net(1,550)(2,647)
Changes in working capital:
Accounts receivable(12,425)(70,039)
Expenditures billable to clients(4,173)11,996 
Other assets(5,986)(6,100)
Accounts payable(51,670)(32,386)
Accrued expenses and other liabilities(54,684)(5,592)
Advance billings(2,986)(17,760)
Net cash used in operating activities(85,113)(48,577)
Cash flows from investing activities:
Capital expenditures(3,435)(4,760)
Acquisitions, net of cash acquired(220)(935)
Capitalized software(6,735)(1,778)
Other(425)(816)
Net cash used in investing activities(10,815)(8,289)
Cash flows from financing activities:
Repayment of borrowings under revolving credit facility(426,500)(209,500)
Proceeds from borrowings under revolving credit facility476,500 239,000 
Shares acquired and cancelled(8,263)(14,926)
Distributions to noncontrolling interests(10,948)(6,464)
Payment of deferred consideration— (1,581)
Repurchase of Common Stock(17,866)— 
Net cash provided by financing activities12,923 6,529 
Effect of exchange rate changes on cash and cash equivalents945 1,481 
Net decrease in cash and cash equivalents(82,060)(48,856)
Cash and cash equivalents at beginning of period220,589 184,009 
Cash and cash equivalents at end of period$138,529 $135,153 
Supplemental Cash Flow Information:
Cash income taxes paid$15,107 $6,623 
Cash interest paid33,459 30,798 
Non-cash investing and financing activities:
Establishment of a deferred tax asset related to the exchange— 24,500 
Establishment of Tax Receivables Agreement liability— 20,846 
See notes to the Unaudited Condensed Consolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)


 Three Months Ended March 31,
20222021
Cash flows from operating activities:
Net income$33,622 $4,603 
Adjustments to reconcile net income to cash (used in) provided by operating activities:
Stock-based compensation8,021 — 
Depreciation and amortization31,204 10,950 
Impairment and other losses557 — 
Provision for bad debt expense879 255 
Deferred income taxes(1,350)(181)
Adjustment to deferred acquisition consideration1,897 3,918 
Transaction costs contributed by Stagwell Media LP— 3,188 
Other(3,526)(436)
Changes in working capital:
Accounts receivable(70,039)59,536 
Expenditures billable to clients11,996 (5,387)
Other assets(6,100)(1,134)
Accounts payable(32,386)(69,133)
Accruals and other liabilities(5,592)(1,411)
Advance billings(17,760)1,003 
Net cash (used in) provided by operating activities(48,577)5,771 
Cash flows from investing activities:
Capital expenditures(6,538)(3,311)
Acquisitions, net of cash acquired(935)— 
Other(816)— 
Net cash used in investing activities(8,289)(3,311)
Cash flows from financing activities:
Repayment of borrowings under revolving credit facility(209,500)(25,248)
Proceeds from borrowings under revolving credit facility239,000 10,000 
Shares acquired and cancelled(14,926)— 
Distributions to noncontrolling interests and other(6,464)— 
Payment of deferred consideration(1,581)— 
Distributions— (25,894)
Net cash provided by (used in) financing activities6,529 (41,142)
Effect of exchange rate changes on cash and cash equivalents1,481 
Net decrease in cash and cash equivalents(48,856)(38,673)
Cash and cash equivalents at beginning of period184,009 92,457 
Cash and cash equivalents at end of period$135,153 $53,784 
Supplemental disclosures:
Cash income taxes paid$6,623 $2,361 
Cash interest paid30,798 928 
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued)
(amounts in thousands)

 Three Months Ended March 31,
20222021
Non-cash investing and financing activities:
Establishment of tax receivable agreement –
Tax receivables agreement liability20,846 — 
Tax receivables deferred tax liability24,500 — 
Non-cash contributions— 10,268 
Non-cash distributions to Stagwell Media LP— (13,000)
Non-cash payment of deferred acquisition consideration— (7,080)

See notes to the Unaudited Condensed Consolidated Financial Statements.
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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(amounts in thousands)




Three Months Ended
March 31, 2022
 Common Shares -
Class A & B
Common Shares -
Class C
Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossStagwell Inc. Shareholders' EquityNoncontrolling InterestsShareholders' Equity
 
SharesAmountSharesAmount
Balance at December 31, 2021118,252 $118 179,970 $2 $382,893 $(6,982)$(5,278)$370,753 $508,287 $879,040 
Net income attributable to Stagwell Inc.— — — — — 12,675 — 12,675 18,537 31,212 
Other comprehensive loss— — — — — — (5,347)(5,347)— (5,347)
Distributions to noncontrolling interests— — — — — — — — (705)(705)
Changes in redemption value of RNCI— — — — — 975 — 975 — 975 
Granting of restricted awards1,787 — — (2)— — — — — 
Shares acquired and cancelled(1,998)— — (14,926)— — (14,926)— (14,926)
Stock-based compensation— — — — 6,714 — — 6,714 — 6,714 
Conversion of shares15,155 15 (15,155)— (15)— — — — — 
Other— — — — (1,364)(1,364)2,246 882 
Balance at March 31, 2022133,196 $135 164,815 $2 $373,300 $6,668 $(10,625)$369,480 $528,365 $897,845 


Three Months Ended March 31, 2023
 Common Shares -
Class A & B
Common Shares -
Class C
Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossStagwell Inc. Shareholders' EquityNoncontrolling InterestsShareholders' Equity
SharesAmountSharesAmount
Balance at December 31, 2022131,724 $132 160,909 $2 $491,899 $29,445 $(38,941)$482,537 $462,097 $944,634 
Net income— — — — — 443 — 443 (2,917)(2,474)
Other comprehensive income— — — — — — 25,688 25,688 (21,263)4,425 
Distributions to noncontrolling interests— — — — — — — — (8,025)(8,025)
Changes in redemption value of RNCI— — — — — 1,076 — 1,076 — 1,076 
Restricted awards granted or vested1,838 — — (2)— — — — — 
Shares repurchased and cancelled (withheld for payroll taxes)(1,181)(1)— — (8,262)— — (8,263)— (8,263)
Shares repurchased and cancelled (Approved plan)(2,585)(3)— — (17,863)— — (17,866)— (17,866)
Stock-based compensation— — — — 7,392 — — 7,392 — 7,392 
Change in ownership held by Class C holders— — — — (3,273)— — (3,273)3,273 — 
Other— — — — — (640)— (640)(1,326)(1,966)
Balance at March 31, 2023129,796 $130 160,909 $2 $469,891 $30,324 $(13,253)$487,094 $431,839 $918,933 

See notes to the Unaudited Condensed Consolidated Financial Statements.
Three Months Ended
March 31, 2021
 Members' capitalCommon Shares -
Class A & B
Common Shares -
Class C
Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossStagwell Inc. Shareholders' EquityNoncontrolling InterestsShareholders' Equity
 
SharesAmountSharesAmount
Balance at December 31, 2020$358,756  $  $ $ $ $ $358,756 $39,787 $398,543 
Net income attributable to Stagwell Inc.4,365 — — — — — 0— 4,365 1,153 5,518 
Other comprehensive income137 — — — — — — — 137 — 137 
Contributions10,268 — — — — — — — 10,268 — 10,268 
Distributions(28,004)— — — — — — — (28,004)— (28,004)
Distributions to noncontrolling interests— — — — — — — — — (10,890)(10,890)
Changes in redemption value of RNCI(400)— — — — — — — (400)— (400)
Balance at March 31, 2021$345,122  $  $ $ $ $ $345,122 $30,050 $375,172 

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STAGWELL INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - (continued)
(amounts in thousands)

Three Months Ended March 31, 2022
 Common Shares -
Class A & B
Common Shares -
Class C
Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossStagwell Inc. Shareholders' EquityNoncontrolling InterestsShareholders' Equity
SharesAmountSharesAmount
Balance at December 31, 2021118,252 $118 179,970 $2 $382,893 $(6,982)$(5,278)$370,753 $508,287 $879,040 
Net income attributable to Stagwell Inc.— — — — — 12,675 — 12,675 18,537 31,212 
Other comprehensive loss— — — — — — (5,347)(5,347)— (5,347)
Distributions to noncontrolling interests— — — — — — — — (705)(705)
Changes in redemption value of RNCI— — — — — 975 — 975 — 975 
Granting of restricted awards1,787 — — (2)— — — — — 
Shares acquired and cancelled(1,998)— — — (14,926)— — (14,926)— (14,926)
Stock-based compensation— — — — 6,714 — — 6,714 — 6,714 
Conversion of shares15,155 15 (15,155)— (15)— — — — — 
Other— — — — (1,364)— — (1,364)2,246 882 
Balance at March 31, 2022133,196 $135 164,815 $2 $373,300 $6,668 $(10,625)$369,480 $528,365 $897,845 

See notes to the Unaudited Condensed Consolidated Financial Statements.Statements

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STAGWELL INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, unless otherwise stated)
1. Business and Basis of Presentation
Stagwell Inc. (the “Company”“Company,” “we,” or “Stagwell”), incorporated under the laws of Delaware, conducts its business through its networks and their Brands (“Brands”), which provide marketing and business solutions that realize the potential of combining data and creativity. 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 condensed consolidated financial statements include the accounts of Stagwell and its subsidiaries. Stagwell has prepared the unaudited condensed consolidated interim 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 interim financial information on Form 10-Q. Accordingly, pursuant to these rules, the financial statements have been condensed andfootnotes do not include certain information and disclosures pursuant to these rules.disclosures. 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 consolidated results for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 20212022 (“20212022 Form 10-K”).
On December 21, 2020, MDC Partners Inc. (“MDC”) and Stagwell Media LP (“Stagwell Media”) announced that they had entered into the Transaction Agreement, providing for the combination of MDC with the operating businesses and subsidiaries of Stagwell Media (the “Stagwell Subject Entities”). The Stagwell Subject Entities comprised Stagwell Marketing Group LLC (“Stagwell Marketing” or “SMG”) and its direct and indirect subsidiaries.
On August 2, 2021, we completed the previously announced combination of MDC and the operating businesses and subsidiaries of Stagwell Media and a series related transactions (such combination and transactions, the “Transactions”). The Transactions were treated as a reverse acquisition for financial reporting purposes, with MDC treated as the legal acquirer and Stagwell Marketing treated as the accounting acquirer. The results of MDC are included within the Unaudited Condensed Consolidated Statements of Operations for the period beginning on the date of the acquisition through the end of the respective period presented and the results of SMG are included for the entire period presented. See Note 3 of the Notes included herein for information in connection with the acquisition of MDC.
The Company continues to monitor the worldwide public health threat and government actions to combat COVID-19 and the impact such developments may have on the overall economy, our clients and operations. The impact of the pandemic and the corresponding actions are reflected in our judgments, assumptions and estimates in the preparation of the financial statements. The judgments, assumptions and estimates will be updated and could result in different results in the future depending on the continued impact of the COVID-19 pandemic.
In addition, while not material, the Company continues to monitor the war and other geopolitical tensions between Russia and Ukraine and will continue to assess any potential impacts that this conflict may have on the economy, our clients, and our operations.
The accompanying financial statements reflect all adjustments, consisting of normallynormal recurring accruals, which in the opinion of management are necessary for a fair presentation,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 presentation.
We recorded an out-of-period adjustment in the first quarter of 2023 which should have revisedbeen reflected in the presentationprior year financial statements. The impact of Current Liabilitiesthe adjustment is to separately present Accrued media of $237,794 as of December 31, 2021.allocate Accumulated other comprehensive loss to noncontrolling interest shareholders. As a result of the accompanying Condensed Consolidated Balance Sheet has been revised to correct this immaterial classification errorcorrection, Noncontrolling interests and Accumulated other comprehensive loss declined by decreasing the previously reported amount for Accruals and other liabilitiesapproximately $24.0 million, but did not impact Total Shareholders’ Equity as of DecemberMarch 31, 2021 by2023. In addition, the $237,794 of Accrued media. This revision hadadjustment was reflected within other comprehensive for the quarter ended March 31, 2023. There was no effect on our previously reported Total Current Liabilities,impact to net income in the annual or on any other previously reported amounts in our consolidated financial statements forinterim periods within the year ended December 31, 2021.2022. The Company evaluated the impact of the out-of-period adjustment and concluded that this error was not material to the current period or any of its previously issued financial statements.
Recent Developments
In March 2023, the Company’s board of directors (the “Board”) adopted the 2022 Employee Stock Purchase Plan (the “ESPP”), which will be submitted for approval at the Company’s annual meeting of shareholders in June 2023. If the ESPP is approved, a total of 3.0 million shares of Class A common stock, par value $.001 per share (the “Class A Common Stock”) will be reserved for sale under the ESPP to eligible employees as defined in the plan. Under the ESPP, eligible employees can elect to withhold up to 15% of their earnings, up 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.
On May 4, 2023, the Company amended its Credit Agreement (as defined in Note 7 of the Notes included herein). Among other things, the amendment increased the limit of borrowing from $500.0 million to $640.0 million. All other substantive terms of the credit agreement remain unchanged.

On May 9, 2023, the Company agreed to repurchase approximately 23.3 million shares from AlpInvest Partners at a share price of $6.43, for an aggregate total value of approximately $150.0 million. Stagwell Media LP, a shareholder in Stagwell Inc. and AlpInvest are engaged in advanced negotiations to redeem AlpInvest’s remaining interests in Stagwell Media LP., subject to final documentation. Upon completion of these transactions, AlpInvest Partners will no longer be an investor in Stagwell Inc.

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Table
2. Acquisitions
2022 Acquisitions
Acquisition of Contents
Recent DevelopmentsBrand New Galaxy
On April 19, 2022, the Company acquired Brand New Galaxy (“BNG”), a leading provider of scaled commerce and marketplace solutions, for approximately $20,000, subject to post-closing adjustments,$20.9 million of cash consideration, as well as contingent consideration up to a maximum value of $50,000.$50.0 million. The contingent consideration is due upon meeting certain future earnings targets through 2024, with approximately 67% payable in cash and 33% payable in shares of Class A Common Stock. BNG will be included within the Media Network segment. The purchase price allocation has not yet been completed. The Company will provide the purchase price allocation and pro forma operating results of the combined company in its Form 10-Q for the period of June 30, 2022.
2. New Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board, (“FASB”) issued ASU 2020-04, and in January 2021 subsequently issued ASU 2021-01, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 is effective upon issuance, through December 31, 2022. The Company is evaluating the impact of the adoption of this guidance on the Company’s financial statements and disclosures.
3. Acquisitions
2021 Acquisitions
Acquisition of MDC
On December 21, 2020, MDC and Stagwell Media announced that they had entered into the Transaction Agreement, providing for the combination of MDC with the operating businesses and subsidiaries of the Stagwell Subject Entities. The Stagwell Subject Entities comprised Stagwell Marketing and its direct and indirect subsidiaries.
On August 2, 2021 (the “Closing Date”), we completed the combination of MDC and the Stagwell Subject Entities and a series of steps and related transactions (such combination and transactions, the “Transactions”). In connection with the Transactions, among other things, (i) MDC completed a series of transactions pursuant to which it emerged as a wholly owned subsidiary of the Company, converted into a Delaware limited liability company and changed its name to Midas OpCo Holdings LLC, which subsequently changed its name to Stagwell Global LLC (“OpCo”); (ii) Stagwell Media contributed the equity interests of Stagwell Marketing and its direct and indirect subsidiaries to OpCo; and (iii) the Company converted into a Delaware corporation, succeeded MDC as the publicly-traded company and changed its name to Stagwell Inc.
In respect of the Transactions, the acquired assets and assumed liabilities, together with acquired processes and employees, represent a business as defined in the FASB’s Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). The Transactions were accounted for as a reverse acquisition using the acquisition method of accounting, pursuant to ASC Topic 805-10, Business Combinations, with MDC treated as the legal acquirer and SMG treated as the accounting acquirer. In identifying SMG as the acquiring entity for accounting purposes, MDC and SMG took into account a number of factors, including the relative voting rights and the corporate governance structure of the Company. SMG is considered the accounting acquirer since Stagwell Media controls the board of directors of the Company following the Transactions and received an indirect ownership interest in the Company’s only operating subsidiary, OpCo, of 69.55% ownership of OpCo’s common units. However, no single factor was the sole determinant in the overall conclusion that Stagwell is the acquirer for accounting purposes; rather all factors were considered in arriving at such conclusion. Under the acquisition method of accounting, the assets and liabilities of MDC, as the accounting acquiree, were recorded at their respective fair value as of the date the Transactions were completed.
On August 2, 2021, an aggregate of 179,970 shares of the Company’s Class C Common Stock were issued to Stagwell Media in exchange for $1.80 (the “Stagwell New MDC Contribution”). The Class C Common Stock does not participate in the earnings of the Company. Additionally, an aggregate of 179,970 OpCo common units were issued to Stagwell Media in exchange for the equity interests of the Stagwell Subject Entities (the “Stagwell OpCo Contribution”).
The fair value of the purchase consideration is $429,062, consisting of approximately 80,000 shares of the Company’s Class A and B Common Stock and Common Stock equivalents based on a per share price of approximately $5.42, the closing stock price on the date of the combination.
ASC 805 requires the allocation of the purchase price consideration to the fair value of the identified assets acquired and liabilities assumed upon consummation of a business combination. For this purpose, fair value shall be determined in accordance with the fair value concepts defined in ASC 820, “Fair Value Measurements and Disclosures,” (“ASC 820”). Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements can be highly subjective and can involve a high degree of estimation.
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Table of Contents
The total purchase price to acquire MDC has been allocated to the assets acquired and assumed liabilities of BNG based upon preliminary estimated fair values, with any excess purchase price allocated to goodwill. The fair value of the acquired assets and assumed liabilities as of the date of acquisition are based on preliminary estimates assisted, in part, by a third-party valuation expert. The estimates are subject to change upon the finalization of appraisals and other valuation analyses, which are expected to be completed no later than one year from the date of acquisition. Although the completion of the valuation activities may result in asset and liability fair values that are different from the preliminary estimates included herein, it is not expected that those differences would alter the understanding of the impact of this transaction on the consolidated financial position and results of operations of the Company.
The preliminary purchase price allocation is as follows:
Amount
(dollars in thousands)
Cash and cash equivalents$130,1532,766 
Accounts receivable413,83910,147 
Other current assets41,736671 
Fixed assets80,0471,587 
Right-of-use lease assets - operating leases253,629 
IntangibleIdentifiable intangible assets810,90012,740 
Other assets18,4181,583 
Accounts payable(171,019)(4,771)
Accruals and other liabilities(307,699)(6,880)
Advance billings(211,403)
Current portion of lease liabilities(48,517)
Current portion of deferred acquisition consideration(53,054)
Long-term debt(901,736)
Revolving credit facility(109,954)
Long-term portion of deferred acquisition consideration(8,056)
Long-term portion of lease liabilities(289,128)(1,159)
Other liabilities(132,394)
Redeemable noncontrolling interests(25,990)
Preferred shares(209,980)
Noncontrolling interests(151,090)(3,642)
Net liabilitiesassets assumed(871,298)13,042 
Goodwill1,300,36024,643 
Purchase price consideration$429,06237,685 
The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributedattributable to the assembled workforce of MDC.BNG. Goodwill of $1,059,388, $174,710 and $66,262$24.6 million was assigned to the Integrated Agencies Network, the Media Network and the CommunicationsBrand Performance Network reportable segments, respectively.segment. The majority of the goodwill is non-deductible for income tax purposes. Goodwill has been updated from the previously reported amount of $1,299,374 to reflect a change in certain assets and liabilities. There has been no change that impacts the Consolidated Statement of Operations.
Intangible assets consist of trade names, customer relationships and customer relationships.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 thirteenapproximately ten years. The following table presents the details of identifiable intangible assets acquired.acquired:
Estimated Fair ValueEstimated Useful Life in Years
Trade Names$98,000 10
Customer Relationships712,900 6-15
Total Acquired Intangible Assets$810,900 

13
Estimated Fair ValueEstimated Useful Life in Years
(dollars in thousands)
Customer relationships$6,150 10
Trade names5,500 10
Developed technology1,090 7
Total acquired intangible assets$12,740 

Table of Contents
The purchase price accounting is not yet final as the Company may still make adjustments due to changes in working capital.
Pro Forma Financial Information (unaudited)
The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if it occurred as of January 1, 2021. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time.

11

Three Months Ended March 31, 20212022
(dollars in thousands)
Revenue$488,827650,628 
Net Incomeincome14,10432,876 
Revenue and net income attributable to BNG, included within the three months ended March 31, 2023 Unaudited Consolidated Statements of Operations was $6.6 million and $1.0 million, respectively.

Acquisition of Goodstuff Holdings LimitedTMA Direct, Inc.
On DecemberMay 31, 2021,2022, the Company acquired GoodStuff Holdings Limitedapproximately 87% of TMA Direct, Inc. (“Goodstuff”TMA Direct”) for approximately £21,000 (approximately $28,053)$17.2 million of cash consideration as well as contingent considerationand approximately $0.5 million of deferred acquisition payments. The Company was also granted an option to purchase the remaining 13% minority interest in TMA Direct for up to a maximum of £22,000. The cash consideration included an initial payment of £8,000, an excess working capital payment of approximately £9,000 and approximately £4,000 of deferred payments. $13.3 million.
The contingent consideration is tied to employees’ service and will be recognized as deferred acquisition consideration expense through 2026. Therefore, only the cash consideration has been allocated to the assets acquired and assumed liabilities of GoodstuffTMA Direct based upon preliminary estimated fair values, with any excess purchase price allocated to goodwill. The preliminary purchase price allocation is as follows:
Amount
Cash and cash equivalents$(dollars in thousands)30,985 
Accounts receivable28,685$582 
Other current assets3,207669 
FixedIdentifiable intangible assets237 
Right-of-use lease assets - operating leases2,060 
Intangible assets14,974 
Other assets5513,200 
Accounts payable(6,344)
Accruals and other liabilities(27,353)
Advance billings(15,956)
Current portion of lease liabilities(857)
Income taxes payable(967)
Long-term portion of lease liabilities(3,744)(379)
Other liabilities(1,204)(270)
Noncontrolling interests(2,667)
Net assets assumed23,77811,135 
Goodwill4,2756,569 
Purchase price consideration$28,05317,704 
The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributedattributable to the assembled workforce of Goodstuff.TMA Direct. Goodwill of $4,275$6.6 million was assigned to the Media Network.Communications Network reportable segment. The majority of the goodwill is non-deductibledeductible 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 ten years. The following table presents the details of identifiable intangible assets acquired.acquired:

Estimated Fair ValueEstimated Useful Life in Years
Trade Names$1,349 15
Customer Relationships13,625 10
Total Acquired Intangible Assets$14,974 
Fair ValueEstimated Useful Life in Years
(dollars in thousands)
Customer relationships$11,400 10
Trade names1,800 10
Total acquired intangible assets$13,200 

Pro Forma Financial Information
The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if it occurred as of January 1, 2021. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time.

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Three Months Ended March 31, 2022
(dollars in thousands)
Revenue$644,909 
Net income34,341 
Revenue and net loss attributable to TMA Direct, included within the three months ended March 31, 2023 Unaudited Consolidated Statements of ContentsOperations was $2.6 million and less than $0.1 million, respectively.
Acquisition of Maru Group Limited Ltd.
On October 3, 2022, the Company acquired Maru Group Limited Ltd. (“Maru”) for approximately £23.0 million (approximately $25.8 million) in cash consideration.
The consideration has been allocated to the assets acquired and assumed liabilities of Maru based upon preliminary estimated fair values, with any excess purchase price allocated to goodwill. The preliminary purchase price allocation is as follows:
Amount
(dollars in thousands)
Cash and cash equivalents$1,033 
Accounts receivable7,374 
Other current assets899 
Fixed assets157 
Identifiable intangible assets14,300 
Other assets1,920 
Accounts payable(4,087)
Accruals and other liabilities(9,154)
Advance billings(6,462)
Other liabilities(3,591)
Net assets assumed2,389 
Goodwill23,404 
Purchase price consideration$25,793
The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of Maru and the expected growth related to new customer relationships and geographic expansion. Goodwill of $23.4 million was assigned to the All Other reportable segment. The goodwill is partially 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 approximately eight years. The following table presents the details of identifiable intangible assets acquired:

Estimated Fair ValueEstimated Useful Life in Years
(dollars in thousands)
Customer relationships$4,900 10
Trade names4,000 10
Developed technology5,400 2-7
Total acquired intangible assets$14,300 

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Pro Forma Financial Information (unaudited)
The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if it occurred as of January 1, 2021. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time.

Three Months Ended March 31, 20212022
(dollars in thousands)
Revenue$185,428653,375 
Net Income5,11128,110 
2021Revenue and net loss attributable to Maru, included within the three months ended March 31, 2023 Unaudited Consolidated Statements of Operations was $8.9 million and $2.2 million, respectively.
Acquisition of Wolfgang, LLC.
On October 3, 2022, the Company acquired the remaining 80% interest that it did not already own in Wolfgang, LLC., (“Wolfgang”) for approximately $3.8 million in cash consideration and 175 thousand shares of Class A Common Stock with a fair value of $1.2 million, subject to post-closing adjustments.
The consideration has been allocated to the assets acquired and assumed liabilities of Wolfgang based upon preliminary estimated fair values, with any excess purchase price allocated to goodwill. The preliminary purchase price allocation is as follows:
Amount
(dollars in thousands)
Cash and cash equivalents$1,606 
Accounts receivable1,180 
Other current assets100 
Identifiable intangible assets1,055 
Other assets46 
Current liabilities(278)
Net assets assumed3,709 
Goodwill2,451 
Purchase price consideration including fair value of previously owned interest$6,160
The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of Wolfgang. Goodwill of $2.5 million was assigned to the Integrated Agencies Network reportable segment. The majority of the goodwill is deductible for income tax purposes.
Intangible assets consist of 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 five years. The following table presents the details of identifiable intangible assets acquired:

Estimated Fair ValueEstimated Useful Life in Years
(dollars in thousands)
Customer relationships$1,055 5
Total acquired intangible assets$1,055 

14

Pro Forma Financial Information
The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if it occurred as of January 1, 2021. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time.

Three Months Ended March 31, 2022
(dollars in thousands)
Revenue$647,309 
Net income34,482 
Revenue and net income attributable to Wolfgang, included within the three months ended March 31, 2023 Unaudited Consolidated Statements of Operations was $1.1 million and $0.2 million, respectively.
Acquisition of Epicenter Experience LLC.
On October 3, 2022, the Company acquired the assets of Epicenter Experience LLC., (“Epicenter”) for approximately $9.9 million in cash consideration, subject to post-closing adjustments, as well as contingent consideration up to a maximum value of $5.0 million. The contingent consideration is subject to meeting certain future earnings targets through 2024 and can be paid up to 25% in shares of Class A Common Stock.
The consideration has been allocated to the assets acquired and assumed liabilities of Epicenter based upon preliminary estimated fair values. The preliminary purchase price allocation is as follows:
Amount
(dollars in thousands)
Accounts receivable$901 
Other current assets45 
Identifiable intangible assets7,300 
Accounts payable(148)
Other current liabilities(650)
Net assets assumed7,448 
Goodwill4,416 
Purchase price consideration$11,864
The excess of purchase consideration over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to the assembled workforce of Epicenter. Goodwill of $4.4 million was assigned to the All Other reportable segment. The majority of the goodwill is deductible for income tax purposes.
The intangible asset acquired was 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 five years. The following table presents the details of identifiable intangible assets acquired:

Estimated Fair ValueEstimated Useful Life in Years
(dollars in thousands)
Developed technology$7,300 5
Total acquired intangible assets$7,300 

15

Pro Forma Financial Information
The unaudited pro forma information for the periods set forth below gives effect to the acquisition as if it occurred as of January 1, 2021. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time.

Three Months Ended March 31, 2022
(dollars in thousands)
Revenue$643,885 
Net income33,483 
Revenue and net income attributable to Epicenter, included within the three months ended March 31, 2023 Unaudited Consolidated Statements of Operations was $1.1 million and $0.6 million, respectively.
Other Acquisitions
On July 12, 2022, the Company acquired PEP Group Holdings B.V., an omnichannel content creation and adaption production company for approximately $0.5 million in cash consideration, subject to post-closing adjustments, as well as contingent consideration up to a maximum value of €2.6 million. The contingent consideration is subject to meeting certain future earnings targets through 2025.
On July 15, 2022, the Company acquired Apollo Program II Inc., a real-time artificial intelligence-powered software-as-a-service platform, for approximately $2.3 million in cash consideration, subject to post-closing adjustments, as well as guaranteed deferred payments of $1.0 million and $1.5 million on or prior to July 1, 2023 and July 1, 2024, respectively.
2022 Purchases of Noncontrolling Interests
On OctoberApril 1, 2021, the Company entered into an agreement to purchase the approximate 27% remaining interest of Targeted Victory it did not already own, stipulating the purchase of 13.3% on October 1, 2021 and the remaining 13.3% on July 31, 2023, with the option for the seller to delay the second purchase until July 31, 2025. The purchase price of $73,898, was comprised of a contingent deferred acquisition payment and redeemable noncontrolling interest with estimated present values at the acquisition date of $46,618 and $27,280, respectively. The contingent deferred payment and redeemable noncontrolling interest were based on the financial results of the underlying business through 2025. In addition, at the option of the Company, up to 50% of the total purchase price can be paid in shares of Class A Common Stock and in no event may the purchase price exceed $135,000.
On December 1, 2021,2022, the Company acquired the approximate 27% remaining interest of Concentricin Hello Design, LLC (“Hello Design”) that it did not already own for an aggregate purchase price of $8,058,$4.6 million, comprised of a closing cash payment of $1,581$3.6 million and a contingent deferred acquisition payments with an estimated present value at the acquisition datepayment of $6,477.$1.0 million. The contingent deferred payments werepayment was based on the financial results of the underlying business through the end of 2022 with finalthe payment due in 2023.
On December 31, 2021, the Company acquired the approximate 49% remaining interest of Instrument it did not already own for an aggregate purchase price of $157,072, comprised of a closing payment of $37,500 in cash and $37,500 in shares of Class A Common Stock and deferred acquisition payments with an estimated present value at the acquisition date of $82,072. The deferred payments are not contingent and will be paid in 2023 and 2024.
4.3. 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 (print, digital, social media, television broadcast), public relations services including strategy, editorial, crisis support or issues management, media training, influencer engagement and events management. We also provide media 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 agency 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 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 are not significantly integrated or interdependent, and that do not significantly modify or customize each other, are considered separate performance obligations. Typically, we consider media planning, media buying, creative (or strategy), production and experiential marketing services to be separate performance obligations if included in the same contract as each of these services can be provided on a stand-alone basis, and do not significantly modify or customize each other. Public relations services and application/website design and development are typically each considered one performance obligation as there is a significant integration of these services into a combined output.
Certain of the Company’s contracts consist of a single performance obligation. In these instances, the Company does not consider the underlying activities as separate or distinct performance obligations because its services are highly interrelated, and
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the integration of the various components is essential to the overall promise to the Company’s customer. In certain of the Company’s client contracts, the performance obligation is a stand-ready obligation because the Company provides a constant level of similar services over the term of the contract.
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 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 on an ongoing basis over the life of the contract, where the scope of these arrangements includes an undefined number of broad activities and there are no significant gaps in performing the services, the Company recognizes revenue ratably using a time-based measure. In addition, for client contracts where the Company is providing 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 governmental 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 performance obligation 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 agencies under a production services agreement is to facilitate a client’s purchasing of production capabilities from a third-party production company in accordance with the client’s strategy and guidelines. The obligation of Stagwell’s agencies under media buying services is to negotiate and purchase advertising media from a third-party media vendor on behalf of a client to execute its media plan. 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.                                    
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 agencyBrand 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. Additionally, the Company maintains separate, independent operating companies to enable it to effectively manage potential conflicts of interest by representing competing clients across the Stagwell network.
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The following table presents revenue disaggregated by our principal capabilities for the three months ended March 31, 20222023 and 2021:2022:
Three Months Ended March 31,Three Months Ended March 31,
Principal CapabilitiesPrincipal CapabilitiesReportable Segment20222021Principal CapabilitiesReportable Segment20232022
(dollars in thousands)
Digital TransformationDigital TransformationAll Segments$210,809 $63,354 Digital TransformationAll segments$190,319 $210,809 
Creativity and CommunicationsCreativity and CommunicationsIntegrated Agencies Network, Communications Network, Other279,242 23,265 Creativity and CommunicationsAll segments261,354 279,242 
Performance Media and DataPerformance Media and DataMedia Network, Other99,776 62,716 Performance Media and DataBrand Performance Network, All Other109,488 99,776 
Consumer Insights and StrategyConsumer Insights and StrategyIntegrated Agencies Network, Other53,076 31,907 Consumer Insights and StrategyIntegrated Agencies Network, All Other61,283 53,076 
$642,903 $181,242 $622,444 $642,903 
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Stagwell has historically largely focused where the Company was founded in North America, the largest market for its services in the world. The Company has expanded its global footprint to support clients looking for help to grow their businesses in newinternational markets. Stagwell’s Brands are located in the United States and United Kingdom, and more than 3032 other countries around the world. In the past,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 three months ended March 31, 20222023 and 2021:2022:
Three Months Ended March 31,Three Months Ended March 31,
Geographical LocationGeographical LocationReportable Segment20222021Geographical LocationReportable Segment20232022
(dollars in thousands)
United StatesUnited StatesAll$537,231 $166,747 United StatesAll$507,092 $537,231 
United KingdomUnited KingdomAll39,813 4,705 United KingdomAll41,271 39,813 
OtherOtherAll65,859 9,790 OtherAll74,081 65,859 
$642,903 $181,242 $622,444 $642,903 

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. Unbilled service fees were $161,912$170.8 million and $116,558$116.4 million at March 31, 20222023 and December 31, 2021,2022, respectively, and are included as a component of Accounts receivable, net on the Unaudited Condensed Consolidated Balance Sheets. Outside vendor costs incurred on behalf of clients which have yet to be invoiced were $51,069$97.6 million and $63,065$93.1 million at March 31, 20222023 and December 31, 2021,2022, respectively, and are included on the Unaudited Condensed Consolidated Balance Sheets as Expenditures billable to clients. Such amounts are invoiced to clients at various times over the course of providing services.
Contract liabilities consistrepresent advanced billings to customers for fees and reimbursements of fees received fromthird-party costs, whether we act as principal or billed to clients in excess of fees recognized.agent. Such fees and reimbursements of third-party costs are classified as Advance billings presented on the Company’s Unaudited Condensed Consolidated Balance Sheets. In arrangements in which we are acting as an agent, the recognition related to the contract liability is presented on a net basis within the Unaudited Condensed Consolidated Statements of Operations. Advance billings at March 31, 20222023 and December 31, 20212022 were $344,125$334.9 million and $361,885,$337.0 million, respectively. The decrease in the Advance billings balance of $17,760$2.1 million for the three months ended March 31, 20222023 was primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by $221,094$234.0 million of revenues recognized that were included in the Advance billings balances as of December 31, 20212022 and reductions due to the incurrence of third-party costs.costs, partially offset by cash payments received or due in advance of satisfying our performance obligations.
Changes in the contract asset and liability balances during the three months ended March 31, 20222023 were not materially impacted by write offs, impairment losses or any other factors.
Unsatisfied Performance Obligations
The majority of our contracts are for periods of one year or less. For those contracts with a term of more than one year, we had approximately $28,241$90.8 million of unsatisfied performance obligations as of March 31, 20222023 of which we expect to recognize approximately 67% in the remaining quarters of 2022, 30%61% in 2023, 33% in 2024 and 3%6% in 2024.2025.
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5. Earnings4. Income (Loss) Per Share
The following table sets forth the computations of basic and diluted income (loss) per common share:
Three Months Ended March 31, 2022
Earnings Per Share - Basic
Numerator:
Net income$33,622 
Net income attributable to Class C shareholders(17,721)
Net income attributable to other equity interest holders(3,226)
Net income attributable to noncontrolling interests(20,947)
Net income attributable to Stagwell Inc. common shareholders$       12,675 
Denominator:
Basic - Weighted Average number of common shares outstanding122,285 
Earnings Per Share - Basic$       0.10
Earnings Per Share - Diluted
Numerator:
Net income attributable to Stagwell Inc. common shareholders$       12,675 
Net income attributable to Class C shareholders17,721 
$30,396 
Denominator:
Basic - Weighted Average number of common shares outstanding122,285 
Dilutive shares:
Stock appreciation rights2,041 
Restricted share and restricted unit awards2,786 
Class C shares170,372 
Diluted - Weighted average number of common shares outstanding297,484 
Earnings Per Share - Diluted$       0.10
The combination of MDC and SMG was completed on August 2, 2021, which was treated as a reverse acquisition for financial reporting purposes. SMG was treated as the accounting acquirer and MDC was the accounting acquiree. Therefore, under applicable accounting principles, the historical financial results of SMG prior to August 2, 2021 are considered our historical financial results. Accordingly, historical information presented in this Form 10-Q for events occurring or periods ending before August 2, 2021 does not reflect the impact of the Transactions or the financial results of MDC and may not be comparable with historical information for events occurring or periods ending on or after August 2, 2021.
SMG’s equity structure, prior to the combination with MDC, was a non-unitized single member limited liability company, resulting in all components of equity attributable to the member being reported within Members' Capital. Given that SMG was a non-unitized single member limited liability company, net income (loss) prior to the combination is not applicable for purposes of calculating earnings per share. Therefore, the earnings per share calculation in the table above includes only the three months ended March 31, 20222023 and does not include the corresponding prior year period.2022:
 Three Months Ended March 31,
20232022
Income Per Share - Basic(amounts in thousands, except per share amounts)
Numerator: 
Net income (loss)$(5,017)$33,622 
Net (income) loss attributable to Class C shareholders3,165 (17,721)
Net (income) loss attributable to other equity interest holders2,295 (3,226)
Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests5,460 (20,947)
Net income attributable to Stagwell Inc. common shareholders$       443 $       12,675 
Denominator:
Weighted Average number of common shares outstanding125,199 122,285 
Income Per Share - Basic$       0.00 $       0.10 
Income (Loss) Per Share - Diluted
Numerator:
Net income attributable to Stagwell Inc. common shareholders$       443 $       12,675 
Net income (loss) attributable to Class C shareholders(3,165)17,721 
$(2,722)$30,396 
Denominator:
Basic - Weighted Average number of common shares outstanding125,199 122,285 
Stock appreciation right awards1,929 2,041 
Restricted share and restricted unit awards1,769 2,786 
Class A Shares128,897 127,112 
Class C shares160,909 170,372 
Dilutive - Weighted average number of common shares outstanding289,806 297,484 
Income (Loss) Per Share - Diluted$       (0.01)$       0.10 
Restricted stock awards of 1,0050.7 million and 1.0 million as of March 31, 2023 and 2022, arerespectively, were excluded from the computation of diluted income (loss)loss per common share because the performance contingencycontingencies necessary for vesting hadwere not been met as of the reporting date.
6.5. Deferred Acquisition Consideration
Deferred acquisition consideration on the balance sheetUnaudited 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.
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Contingent deferred acquisition consideration is recorded at the acquisition date fair value and adjusted at each reporting period through operating income.within Office and general expenses on the Unaudited Consolidated Statements of Operations.
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The following table presents changes in contingent deferred acquisition consideration, which is measured at fair value on a recurring basis using significant unobservable inputs, and a reconciliation to the amounts reported on the balance sheetsUnaudited Consolidated Balance Sheets as of March 31, 20222023 and December 31, 2021:2022:
March 31,December 31,
20222021
Beginning balance of contingent payments$222,369 $17,847 
Payments(1,581)(12,431)
Adjustment to deferred acquisition consideration (1)
2,522 18,721 
Additions (2)
1,097 198,937 
Other(139)(705)
Ending balance of contingent payments$224,268 $222,369 
March 31,
2023
December 31,
2022
(dollars in thousands)
Beginning balance$161,323 $222,369 
Payments— (73,963)
Adjustments to deferred acquisition consideration (1)
4,088 (12,779)
Additions— 26,594 
Currency translation adjustment and other273 (898)
Ending balance (2)
$165,684 $161,323 
(1) Adjustment to deferred acquisition consideration contains fair value changes from the Company’s initial estimates of deferred acquisition payments. Adjustment to

(2) The contingent and fixed deferred acquisition consideration obligation was $71.8 million and $93.9 million as of March 31, 2023 and $68.9 million and $92.4 million as of December 31, 2022. In addition, $51.5 million of the deferred acquisition consideration is recorded within Office and general expenses onexpected to be settled in the Unaudited Condensed Consolidated StatementsCompany’s shares of Operations.
(2) In 2021, approximately $61,000 of additions represent deferred acquisition consideration acquired in connection with the acquisition of MDC. Approximately $136,000 of additions represent deferred acquisition consideration acquired in connection with the purchases of noncontrolling interests. See Note 3 of the Notes included herein for additional information related to the purchases of Concentric, Targeted Victory, and Instrument.Class A Common Stock.
7.6. Leases
The Company leases office space in North America, Europe, Asia, South America, Africa, and Australia. This space is 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 20222023 through 2034. The Company’s finance leases are immaterial.
The Company’s leasing policies are established in accordance with ASC 842, and accordingly, the Company recognizes on the balance sheet at the time of lease commencement a right-of-use lease asset and a lease liability, initially measured at the present value of the lease payments. 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 are comprised 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 Unaudited Condensed 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 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 leases are classified as operating leases and expire between years 20222023 through 2032. Sublease income is recognized over the lease term on a straight-line basis. Currently, the Company subleases office space in North America Europe and Australia.
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Europe.
As of March 31, 2022,2023, the Company has entered into 4two operating leases for which the commencement date has not yet occurred primarily because of the premises are in the process of being prepared for occupancy by the landlord. Accordingly, these 4two leases represent an obligation of the Company that is not reflected within the Unaudited Condensed Consolidated Balance Sheets as of March 31, 2022.2023. The aggregate future liability related to these leases is approximately $3,478.$5.1 million.
The discount rate used for leases accounted for under ASC 842 is the Company’s collateralized credit adjusted borrowing rate.
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The following table presents lease costs and other quantitative information for the three months ended March 31, 20222023 and 2021:2022:
Three Months Ended March 31, Three Months Ended March 31,
20222021 20232022
Lease Cost:Lease Cost:Lease Cost:(dollars in thousands)
Operating lease costOperating lease cost$14,016$5,505Operating lease cost$19,578$14,016
Variable lease costVariable lease cost5,1601,053Variable lease cost4,5615,160
Sublease rental incomeSublease rental income(3,276)(959)Sublease rental income(3,052)(3,276)
Total lease costTotal lease cost$15,900$5,599Total lease cost$21,087$15,900
Additional information:Additional information:Additional information:
Cash paid for amounts included in the measurement of lease liabilities for operating leasesCash paid for amounts included in the measurement of lease liabilities for operating leasesCash paid for amounts included in the measurement of lease liabilities for operating leases
Operating cash flowsOperating cash flows$22,781$5,601Operating cash flows$22,347$22,781
Right-of-use lease assets obtained in exchange for operating lease liabilities and other non-cash adjustmentsRight-of-use lease assets obtained in exchange for operating lease liabilities and other non-cash adjustments$14,162$Right-of-use lease assets obtained in exchange for operating lease liabilities and other non-cash adjustments$2,135$14,162
Weighted average remaining lease term (in years) - Operating leases6.94.3
Weighted average discount rate - Operating leases4.2 %4.0 %
As of March 31, 2023, the weighted average remaining lease term (in years) and weighted average discount rate were 6.3 and 4.6%, respectively.
Operating lease expense is included in officeOffice and general expenses in the Unaudited Condensed Consolidated Statements of Operations. The Company’s lease expense for leases with a term of 12 months or less is immaterial.
The following table presents minimum future rental payments under the Company’s leases atas of March 31, 20222023 and their reconciliation to the corresponding lease liabilities:
 Maturity Analysis
Remaining 2022$63,181 
202386,071 
202473,027 
202557,131 
202643,289 
2027 and thereafter157,507 
Total480,206 
Less: Present value discount(70,682)
Lease liability$409,524 

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 Maturity Analysis
(dollars in thousands)
Remaining 2023$68,803 
202478,098 
202560,457 
202645,148 
202740,652 
Thereafter120,424 
Total413,582 
Less: Present value discount(58,665)
Lease liability$354,917 

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8.7. Debt
As of March 31, 20222023 and December 31, 2021,2022, the Company’s indebtedness was comprised as follows:
March 31,December 31,March 31,
2023
December 31,
2022
20222021(dollars in thousands)
Revolving credit facility$140,000 $110,165 
Credit AgreementCredit Agreement$150,000 $100,000 
5.625% Notes5.625% Notes1,100,000 1,100,000 5.625% Notes1,100,000 1,100,000 
Debt issuance costsDebt issuance costs(17,959)(18,564)Debt issuance costs(14,719)(15,293)
Total long-term debtTotal long-term debt$1,222,041 $1,191,601 Total long-term debt$1,235,281 $1,184,707 
Interest expense related to long-term debt included in Interest expense, net on the Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 was $18.3 million and 2021 was $18,261 and $1,624,$18.3 million, respectively.
The amortization of debt issuance costs included in Interest expense, net on the Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 was $0.6 million and 2021 was $605 and $139,$0.6 million, respectively.
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Revolving Credit Agreement
On November 18, 2019, theThe Company entered intois party to a debtcredit agreement (“JPM Syndicated Facility”) with a syndicate of banks led by JPMorgan Chase Bank, N.A (“JPM”). The JPM Syndicated Facility consistedconsisting of a five-year revolving credit facility of $265,000 (“JPM Revolver”) with the right to be increased by an additional $150,000. On March 18, 2020, the Company increased the commitments on the JPM Revolver by $60,000 to $325,000.
On August 2, 2021, in connection with the closing of the acquisition of MDC, the Company entered into an amended and restated credit agreement (the “Combined Credit Agreement”) with a syndicate of banks led by JPM to increase commitments on the existing JPM Revolver. The Combined Credit Agreement consists of a $500,000$500.0 million senior secured revolving credit facility with a five-year maturity.maturity (the “Credit Agreement”) as of March 31, 2023. See Note 1 of the Notes included herein for additional information related to the amendment to the Credit Agreement.
The Combined 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 of $50,000 for loans denominated in pounds sterling or euros. It also includes an accordion feature under which the Company may request, subject to lender approval and certain conditions, to increase the amount of the commitments to an aggregate amount not to exceed $650,000.$650.0 million.
Borrowings under the Combined Credit Agreement bear interest at a rate equal to, at the Company’s option, (i) the greatest of (a) the prime rate of interest announced from time to time by JPM, (b) the federal funds effective rate from time to time plus 0.50% and (c) the LIBOR rate plus 1%, in each case, plus the applicable margin (calculated based on the Company’s total leverage ratio) at that time or (ii) the LIBOR rate plus the applicable margin (calculated based on the Company’s total leverage ratio) at that time. The Company is also required to pay an unused revolver feepursuant to the lenders under the Combined Credit Agreement in respect of the unused commitments thereunder ranging from 0.15% to 0.30% of unused commitments depending on the total leverage ratio, as well as customary letter of credit fees.
As of April 27, 2022, the Company amended its Combined Credit Agreement. Among other things, this amendment replaces any previous reference to LIBOR with SOFR. The borrowings 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 SOFR rateSecured Overnight Financing Rate, plus ) and ii) 1% in each case, plus the applicable margin (calculated basebased on the Company’s total leverage ratio)Total Leverage Ratio, as defined in the Credit Agreement) at that time. Additionally, the Combined Credit Agreement was amended to remove certain pre-commencement notice provisions for certain acquisitions under $50,000 in the aggregate, increased the amount permitted for certain investments allowed under the Combined Credit Agreement, and subject to certain conditions, explicitly allows for the repurchase of Stagwell Inc. stock in an amount not to exceed $100,000 in any fiscal year. All other substantive terms of the Combined Credit Agreement remain unchanged.
Advances under the Combined Credit Agreement may be prepaid in whole or in part from time to time without penalty or premium. The Combined Credit Agreement commitment may be reduced by the Company from time to time. Principal amounts outstanding under the Combined Credit Agreement are due and payable in full at maturity within five years of the date of the Combined Credit Agreement.
If an event of default occurs under the Combined Credit Agreement or any future secured indebtedness, the holders of such secured indebtedness will have a prior right to our assets securing such indebtedness, to the exclusion of the holders of the 5.625% Notes (as defined below), even if we are in default with respect to the 5.625% Notes. In that event, our assets securing such indebtedness would first be used to repay in full all indebtedness and other obligations secured by them (including all amounts outstanding under the Combined Credit Agreement), resulting in all or a portion of our assets being unavailable to satisfy the claims of the holders of the 5.625% Notes and other unsecured indebtedness.
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The Combined Credit Agreement contains a number of financial and nonfinancial covenants and is guaranteed by substantially all of our present and future subsidiaries, subject to customary exceptions.
The Company was in compliance with all covenants atas of March 31, 2022.2023.
A portion of the Combined Credit Agreement in an amount not to exceed $50,000$50.0 million is available for the issuance of standby letters of credit. AtAs of March 31, 20222023 and December 31, 2021,2022, the Company had issued undrawn outstanding letters of credit of $24,943$24.6 million and $24,332,$25.3 million, respectively.
Senior Notes
In August 2021, theThe Company issued $1,100,000had $1.1 billion aggregate principal amount of 5.625% senior notes (“5.625% Notes”). A portion outstanding as of the proceeds from the issuance of the 5.625% Notes was used to redeem $870,300 aggregate principal amount of the outstanding 7.50% Senior Notes due 2024 (the “Existing Notes”) for a price of $904,200. This price is equal to 101.625% of the outstanding principal amount of the Existing Notes being redeemed, plus, accrued, and unpaid interest on the principal amount of such Existing Notes. The Company did not recognize a gain or loss on redemption.
March 31, 2023. The 5.625% Notes are due August 15, 2029 and bear interest of 5.625% to be paid on February 15 and August 15 of each year, commencing on February 15, 2022.
The 5.625% Notes are guaranteed on a senior unsecured basis by substantially all of the Company’s subsidiaries. The 5.625% Notes rank (i) equally in right of payment with all of the Company’s or any guarantor’s existing and future unsubordinated indebtedness, (ii) senior in right of payment to the Company’s or any guarantor’s existing and future subordinated indebtedness, (iii) effectively subordinated to any of the Company’s or any guarantor’s existing and future secured indebtedness to the extent of the collateral securing such indebtedness, including the Combined Credit Agreement, and (iv) structurally subordinated to all existing and future liabilities of the Company’s subsidiaries that are not guarantors.
Our obligations under the 5.625% Notes are unsecured and are effectively junior to our secured indebtedness to the extent of the value of the collateral securing such secured indebtedness. Borrowings under the Combined Credit Agreement are secured by substantially all of the assets of the Company, and any existing and future subsidiary guarantors, including all of the capital stock of each restricted subsidiary.
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. Prior to August 15, 2024, the Company may, at its option, redeem some or all of the 5.625% Notes at a price equal to 100% of the principal amount of the 5.625% Notes plus a “make whole” premium and accrued and unpaid interest. The Company may also redeem, at its option, prior to August 15, 2024, up to 40% of the 5.625% Notes with the net proceeds from one or more equity offerings at a redemption price of 105.625% of the principal amount thereof.
If the Company experiences certain kinds of changes of control (as defined in the indenture), holders of the 5.625% Notes may require the Company to repurchase any 5.625% Notes held by them at a price equal to 101% of the principal amount of the 5.625% Notes plus accrued and unpaid interest. In addition, if the Company sells assets under certain circumstances, it must offer to repurchase the 5.625% Notes at a price equal to 100% of the principal amount of the 5.625% Notes plus accrued and unpaid interest.
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
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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 important limitations and exceptions. The 5.625% Notes are also subject to customary events of default, including cross-payment default and cross-acceleration provisions. The Company was in compliance with all covenants at March 31, 2022.
Interest Rate Swap
The Company had an interest rate swap that matured in April 2022 to convert $9,375 of variable rate debt to a fixed rate of 2.7%. The fair value of the swap was $10 and $77 as of March 31, 2022 and December 31, 2021, respectively, and is included in Accruals and other liabilities on the Unaudited Condensed Consolidated Balance Sheets. The swap closed at the fair value recorded as of March 31, 2022.
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9.8. Noncontrolling and Redeemable Noncontrolling Interests
Noncontrolling Interests
When acquiring less than 100% ownership of an entity, the Company may enter into agreements that give the Company an option to purchase, or require the Company to purchase, the incremental ownership interests under certain circumstances. Where the option to purchase the incremental ownership is within the Company’s control, the amounts are recorded as noncontrollingNoncontrolling interests within Shareholder’s Equity in the equity section of the Company’s Unaudited Condensed Consolidated Balance Sheets. Where the incremental purchase may be required of the Company, the amounts are recorded as redeemableRedeemable noncontrolling interests in mezzanine equity in the Unaudited Consolidated Balance Sheets at their estimated acquisition date redemption value and adjusted at each reporting period for changes to their estimated redemption value through Retained earnings (but not less than their initial redemption value), except for foreign currency translation adjustments.
There were no changes to the Company's ownership interests in our less than 100% owned subsidiaries during the three months ended March 31, 2022 and 2021.

The following table presents net income (loss) attributable to noncontrolling interests between holders of Class C sharescommon stock, par value $0.00001 per share (the “Class C Common Stock”) and other equity interest holders for the three months ended March 31, 20222023 and 2021:2022:
Three Months Ended March 31,
20222021
Net income attributable of Class C shareholders$17,721 $— 
Net income attributable of other equity interest holders816 1,153 
Net income attributable to noncontrolling interests$18,537 $1,153 
Three Months Ended March 31,
20232022
(dollars in thousands)
Net income (loss) attributable to Class C shareholders$(3,165)$17,721 
Net income attributable to other equity interest holders248 816 
Net income (loss) attributable to noncontrolling interests$(2,917)$18,537 
The following table presents noncontrolling interests between holders of Class C sharesCommon Stock and other equity interest holders as of March 31, 20222023 and December 31, 2021:2022:
March 31,December 31,March 31,
2023
December 31,
2022
20222021(dollars in thousands)
Noncontrolling interest of Class C shareholdersNoncontrolling interest of Class C shareholders$495,395 $475,373 Noncontrolling interest of Class C shareholders$401,427 $428,406 
Noncontrolling interest of other equity interest holdersNoncontrolling interest of other equity interest holders32,970 32,914 Noncontrolling interest of other equity interest holders30,412 33,691 
NCI attributable to noncontrolling interests$528,365 $508,287 
Total noncontrolling interestsTotal noncontrolling interests$431,839 $462,097 
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Redeemable Noncontrolling Interests
The following table presents changes in redeemable noncontrolling interests:
March 31,December 31,
20222021
Beginning Balance$43,364 $604 
Redemptions— (15,231)
Acquisitions (1)
— 53,270 
Changes in redemption value(975)3,834 
Net income (loss) attributable to redeemable noncontrolling interests1,649 (412)
Other195 1,299 
Ending Balance$44,233 $43,364 
(1) As of December 31, 2021, approximately $26,000 represents redeemable noncontrolling interests acquired in connection with the acquisition of MDC. Approximately $27,000 represents redeemable noncontrolling interests acquired in connection with the purchase of the noncontrolling interest of Targeted Victory. See Note 3 of the Notes included herein for additional information related to the purchase of Targeted Victory.
March 31,
2023
December 31,
2022
(dollars in thousands)
Beginning balance$39,111 $43,364 
Redemptions(2,923)(4,222)
Changes in redemption value(1,076)(8,711)
Net income (loss) attributable to redeemable noncontrolling interests(2,543)8,135 
Other(52)545 
Ending balance$32,517 $39,111 
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
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date would result in obligations of the Company to fund the related amounts during 20222023 to 2025.2027. It is not determinable, at this time, if or when the owners of these rights will exercise all or a portion of these rights.
The redeemable noncontrolling interest of $44,233$32.5 million as of March 31, 2022,2023, consists of $42,011,$28.7 million, assuming that the subsidiaries perform over the relevant periods at their current profit levels, and $2,222$3.8 million upon termination of such owner’s employment with the applicable subsidiary or death.
These adjustments will not impact the calculation of earnings (loss) per share if the redemption values are less than the estimated fair values. There is no related impact on the Company’s income per share calculations.
Comprehensive Loss Attributable to Noncontrolling and Redeemable Noncontrolling Interests
10.For the three months ended March 31, 2023, comprehensive loss attributable to the noncontrolling and redeemable noncontrolling interests was $26.7 million, which consists of $5.5 million of net loss and $21.3 million of other comprehensive loss.
9. Commitments, Contingencies, and Guarantees
Legal Proceedings. The Company’s operating entities are involved in legal proceedings of various types. While any litigation contains an element of uncertainty, the Company has no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on the financial condition or results of operations of the Company.
Deferred Acquisition Consideration and Options to Purchase. See Notes 6 and 9 of the Notes included herein for information regarding potential payments associated with deferred acquisition consideration and the acquisition of noncontrolling shareholders’ ownership interest in subsidiaries.
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 unaudited 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. At March 31, 2022,2023, the Company had $24,943$24.6 million of undrawn letters of credit.credit outstanding.
The Company entered into 4two operating leases for which the commencement date has not yet occurred as of March 31, 2022.2023. See Note 76 of the Notes included herein for additional information.
In the ordinary course of business, the Company may enter 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. As of March 31, 2022,2023, the Company estimates its future minimum commitments under these non-cancellable agreements to be: $9,397, $7,403, $2,139, $1,407, $1,207,$6.4 million, $5.8 million, $5.4 million, $3.9 million, $3.2 million and $92$7.8 million for the remainder of 2022, 2023, 2024, 2025, 2026, 2027, and 2027,thereafter, respectively.
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11.



10. Share Capital
On March 23, 2022,1, 2023, the boardBoard authorized an extension and a $125.0 million increase in the size of directors authorized athe Company’s stock repurchase program (the “Repurchase Program”) to an aggregate of $250.0 million, with any previous purchases under which we may repurchase upthe Repurchase Program continuing to $125,000 of shares of our outstanding Class A common stock.count against that limit. The Repurchase Program, as amended, will expire on March 23, 2025.1, 2026.
Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices, (includingincluding through trading plans that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act),Act of 1934, in privately negotiated transactions, or through other means. The timing and number of shares repurchased under the Repurchase Program will depend on a variety of factors, including the performance of our stock price, general market and economic conditions, regulatory requirements, the availability of funds, and other considerations we deem relevant. The Repurchase Program may be suspended, modified or discontinued at any time without prior notice. Our board of directors will review the Repurchase Program periodically and may authorize adjustments of its terms.
During the three months ended March 31, 2023, there were 2.6 million shares of Class A Common Stock repurchased under the Repurchase Program at an aggregate value, excluding fees, of $17.9 million. These were purchased at an average price of $6.91 per share. The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $180.4 million as of March 31, 2023.
On May 9, 2023, the Company agreed to repurchase approximately 23.3 million shares from AlpInvest Partners at a share price of $6.43, for an aggregate total value of approximately $150.0 million. See Note 1 of the Notes included herein for additional information regarding the repurchase.
The authorized and outstanding share capital of the Company is below.below:
Class A Common Stock (“Class A Shares”)
There are 1,000,0001.0 billion shares of Class A Common Stock authorized. Thereauthorized, of which 129.8 million shares were 133,192 Class A Shares issued and outstanding as of March 31, 2022. The2023. Each share of Class A Shares are an unlimited number of subordinate voting shares, carrying 1Common Stock carries one vote each, with a par value of $0.001 entitledand entitles its holder to dividends equal to or greater than each share of Class B Shares, and convertible at the option of the holder into one Class B Share for each Class A Share after the occurrence of certain events related to an offer to purchase all Class B shares.
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Common Stock, as defined belowTable of Contents.
Class B Common Stock (“Class B Shares”)
There are 55.0 thousand shares of Class B common stock, par value $0.001 per share (the “Class B Common Stock authorized. ThereStock”) authorized, of which 2.3 thousand shares were 4 of Class B Shares issued and outstanding as of March 31, 2022. The2023. Each share of Class B Shares are an unlimited number of voting shares, carrying 20Common Stock carries twenty votes each, with a par value of $0.001, convertible at any time at the option of the holder into one Class A share for each Class B share.
Class C Common Stock (“Class C Shares”)
There are 250,000 shares of Class C Common Stock authorized. There were 164,815 Class C Shares issued and outstanding as of March 31, 2022. The Class C shares do not participate in the earnings of the Company and have a par value of $.00001. In 2021, an aggregate of 179,970 OpCo common units were issued to Stagwell Media in exchange for the equity interests of the Stagwell Subject Entities. Each Class C Share, together with the related OpCo common unit, is convertible at any time at the option of the holder into one share of Class A Share. In February 2022, holdersCommon Stock.
Class C Common Stock
There are 250.0 million shares of Class C Common Stock authorized, of which 160.9 million shares were issued and outstanding as of March 31, 2023. 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") (each such paired share of Class C Common Stock and common unit of OpCo, Units (thea “Paired Units”Unit”) exchanged 15,155. Each holder of Paired Units may, at its option, exchange such Paired Units for the same number of shares of Class A Common Stock. Approximately 5,000Stock on a one-to-one basis (i.e., one Paired Unit for one share of Class A Common Stock).
There were no Paired Units exchanged into an equal number of Class A Shares triggered an employee tax withholding obligation of $14,900. The Company repurchased approximately 2,000 ofduring the 5,000 Class A Shares issued to the employees to satisfy their employee tax withholding obligation.three months ended March 31, 2023.
12.11. 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.
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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 atas of March 31, 20222023 and December 31, 2021:2022:
 March 31, 2022December 31, 2021
 Carrying
Amount
Fair ValueCarrying
Amount
Fair Value
5.625% Notes1,100,000 1,042,250 1,100,000 1,120,900 
 March 31, 2023December 31, 2022
 Carrying
Amount
Fair ValueCarrying
Amount
Fair Value
(dollars in thousands)
5.625% Notes$1,100,000 $962,500 $1,100,000 $902,000 
Our long-term debt includes fixed rate debt. 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
The following table presents certain information for our financial instruments that are measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021:
 March 31, 2022December 31, 2021
 Carrying
Amount
Fair ValueCarrying
Amount
Fair Value
Interest Rate Swap$10 $10 $77 $77 
The interest rate swap is classified as Level 3 within the fair value hierarchy.
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'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 March 31, 2022,2023, the discount rate used to measure these liabilities ranged from 3.5% to 7.2%was 5.2%.
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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 Unaudited Condensed Consolidated Balance Sheets are subject to material uncertainty.
See Note 65 of the Notes included herein for additional information regarding contingent deferred acquisition consideration.
AtAs of March 31, 20222023 and December 31, 2021,2022, the carrying amount of the Company’s financial instruments, including cash, cash equivalents, accounts receivable and accounts payable, approximated fair value because of their short-term maturity.
Non-financial Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
Certain non-financial assets are measured at fair value on a nonrecurring basis, primarily goodwill, intangible assets (Level 3 fair value measurement)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.
The Company did not recognize an impairment of goodwill, inintangible assets or right-of-use lease assets for the three months ended March 31, 2022 and 2021. The Company2023.
12. Supplemental Information
Stock Based Awards
Stock-based compensation recognized impairments for right-of-use lease assets and intangible assets (Level 3 fair value measurement) inawards authorized under the Company’s employee stock incentive plans during the three months ended March 31, 2022. The Company did not recognize an impairment for right-of-use lease assets2023 and intangible assets2022 was $7.4 million and $7.2 million, respectively. This increase was included as a component of stock-based compensation in three months ended March 31, 2021.
13. Supplemental Information
Subsidiary AwardsOffice and general expenses and Cost of services within the Unaudited Consolidated Statements of Operations.
Certain of the Company’s subsidiaries grant awards to their employees providing them with an equity interest in the respective subsidiary (the “profits interests awards”). The awards generally provide the employee the right, but not the obligation, to sell itstheir profits interest in the subsidiary to the Company based on a performance-based formula and, in certain cases, payreceive a profit share distribution. The profits interests awards are settled in cash and the corresponding liability at fair value was $37,358$24.9 million and $21.0 million at March 31, 2023 and December 31, 2022, (Level 3 fair value model),respectively, and is included as a component of Accruals and other liabilities and Other liabilities on the Unaudited Condensed Consolidated Balance Sheets.
Stock-based Compensation    
Total stock-based compensation recognized for these awards was $4.6 million and $0.7 million for the three months ended March 31, 2023 and 2022, respectively. This was $8,021. Inincluded as a component of stock-based compensation in Cost of services within the three months ended March 31, 2022,Unaudited Consolidated Statements of Operations.
Transfer of Accounts Receivable
The Company transfers certain of its trade receivable assets to third parties under agreements to sell certain of its accounts receivables. Per the terms of these agreements, the Company granted approximately 3,800 share based awards. Stock-based compensation expense recognized for these grantssurrenders control over its trade receivables upon transfer.
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The trade receivables transferred to the third parties were $82.0 million and $7.5 million for the three months ended March 31, 2023 and 2022, respectively. The amount collected and due to the third parties under these arrangements was approximately $1,594.$2.4 million as of March 31, 2023 and $5.7 million as of December 31, 2022. Fees for these arrangements were recorded in Office and general expenses in the Unaudited Consolidated Statements of Operations and totaled $1.3 million and less than $0.1 million for the three months ended March 31, 2023 and 2022, respectively.
Current Expected Credit Losses
The Company adopted ASC 326, Current Expected Credit Losses, on January 1, 2023, which requires the measurement and recognition of expected credit losses using a current expected credit loss model. The allowance for credit losses on expected future uncollectible accounts receivable is estimated considering forecasts of future economic conditions in addition to information about past events and current conditions. The adoption resulted in an increase in the allowance for accounts receivables and a decrease to opening Retained Earnings of $2.1 million, of which $1.2 million was subsequently allocated to noncontrolling interests. These amounts are presented within the “Other” line on the Statement of Shareholders’ Equity.
14.13. Income Taxes
Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in interim periods.
The Company had an income tax expense for the three months ended March 31, 20222023 of $3,189$2.4 million (on a pre-tax loss of $2.4 million resulting in an effective tax rate of (99.1)%) compared to income tax expense of $3.2 million (on pre-tax income of $35,781$35.8 million resulting in an effective tax rate of 8.9%) compared to income tax expense of $673 (on pre-tax income of $5,272 resulting in an effective tax rate of 12.8%) for the three months ended March 31, 2021.2022.
The difference in the effective tax rate of (99.1)% in the three months ended March 31, 2023, as compared to 8.9% in the three months ended March 31, 2022, as comparedis due to 12.8%the pre-tax loss, an increase in valuation allowance, and an increase in uncertain tax positions in 2023.
It is reasonably possible that over the threenext twelve months ended March 31, 2021 was primarily relatedthe amount of unrecognized tax benefits may decrease by up to additional deductions for share$2.6 million based compensation vesting in 2022.on expected settlements.
Tax Receivables Agreement
In connection with the closing of the Transactions, we entered into the Tax ReceivablesReceivable Agreement (“TRA”) with OpCo and Stagwell Media, pursuant to which we are, the Company is required to make cash payments to Stagwell Media LP (“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 11)10) for shares of our 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 forTRA liability is an estimate and actual amounts payable under the TRA in accordance with ASC 450—Contingencies. We will evaluatecould differ from this estimate.
In the likelihood that we will realizefirst quarter of 2022, the benefit represented by the deferred tax assetCompany had its first exchange of Paired Units for shares of Class A Common Stock 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 therecorded its initial 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 changesFurther exchanges were made in any of our estimates after this date will be includedsubsequent quarters in net income or loss. Similarly, the effect of subsequent changes2022. No exchanges were made in the enacted tax rates will be included in net income or loss.
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Tablefirst quarter of Contents
In2023. As of March 31, 2022,2023, the Company has recorded a TRA liability of $20,846$28.7 million and a reduction in the netan associated deferred tax liabilityasset of $24,525 on its consolidated balance sheet in connection with the projected obligations under the TRA.$33.8 million.
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15.


14. 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. Below are theThe following table presents significant related party transactions that are significant in nature:
In 2018, the Company entered into a continuous arrangement to provide technological services to a client founded by the Company’s Chief Executive Officer. During the three months ended March 31, 2022 and 2021, the Company recognized $9 and $15, respectively, in revenue related to this transaction. As of March 31, 2022 and December 31, 2021, $175 and $137, respectively, was due from the client.
In 2018, a Brand entered into a continuous arrangement withwhere a third party in whichreceives services from the third party is providing data management services to the Brand. Company:
Total Transaction ValueRevenueDue From
Related Party
Three Months Ended March 31,March 31,
2023
December 31,
2022
Services20232022
(dollars in thousands)
Marketing and advertising services (1)
Continuous (7)
$694 $— $1,043 $1,029 
Marketing and advertising services (2)
$3,576 and Continuous (7)
378 564 5,939 4,831 
Marketing and website development services (3)
$5,884 and
Continuous (7)
778 2,468 — 488 
Polling services (4)
$1,12389 48 — 280 
Polling services (5)
$68339 — 158 — 
Polling services (6)
$3,450— 164 — — 
Total$1,978 $3,244 $7,140 $6,628 
(1) A family member of onethe Company’s board of the Brand’s partnersdirectors holds an executive leadership position or is on the board of directors of the client.
(2) Brands’ partners and executives either hold a key leadership position in this entity. Underor are on the arrangement,board of directors of the Brand is expected to payclient.
(3) Client has a significant interest in the affiliate based upon the success of their services with no minimum or maximum spend. During the three months ended March 31, 2022 and 2021, the Company incurred $305 and $304, respectively, in expenses related to this transaction. As of March 31, 2022 and December 31, 2021, $617 and $569, respectively, was due to the vendor.Company.
In 2018, a Brand entered into a continuous arrangement to provide marketing services to a client in which a(4) A family member of onethe Company’s Chief Executive Officer holds a key leadership position in the client.
(5) A family member of the Brand’s partnersCompany’s President holds an executivea key leadership position. During the three months ended March 31, 2022 and 2021, the Company recognized $186 and $24, respectively,position in revenue related to this transaction. As of March 31, 2022 and December 31, 2021, $273 and $88, respectively, was due from the client.
(6) Founder of the client has significant interest in the Company.
(7) Certain of the contractual arrangements within these transactions were entered into for an indefinite term and are invoiced as services are provided, while others have a fixed definitive contract value.

In 2019, a Brand of the Company, entered into a loan agreement with a third party who holds a minority interest in the Brand. The loan receivable of $1,797$3.1 million and $3,784$3.6 million due from the third party is included within Other current assets in the Company’s Unaudited Condensed Consolidated Balance Sheets as of March 31, 20222023 and December 31, 2021,2022, respectively. The Company recognized $43$0.1 million and $50 of interest income within interest expense, net on its Unaudited Condensed Consolidated Statements of Operations$0.1 million for the three months ended March 31, 2023 and 2022, and 2021, respectively.
respectively, of interest income within Interest expense, net on its Unaudited Consolidated Statements of Operations. In addition, in 2021, the Company entered into an arrangement to provide polling services to a client in which a family member of the Company’s Chief Executive Officer holds a key leadership position. Under the arrangement, the Company will receive from the client approximately $350 which is expected to be fully recognized in 2022. During the three months ended March 31, 2022 and 2021, the Company recognized revenue of $70 and $15, respectively, related to this arrangement. As of March 31, 2022 and December 31, 2021, $70 and $70 was due from the client, respectively.
In 2021 and 2022, certain of our Brands entered into arrangements to provide marketing and website development services to a client that has a significant interest in the Company. Under the arrangement, the Brands are expected to receive from the Stagwell affiliate approximately $6,152 which will be fully recognized in 2022. During the three months ended March 31, 2022 and 2021, the Company recognized $1,393, and $0, respectively, in revenue related to this transaction. As of March 31, 2022 and December 31, 2021, $1,563 and $502, respectively, was due from the client.
In 2021, a Brand entered into an arrangement to obtain sales and management services from an affiliate for which the CEO of the Brand is a shareholder of the affiliate.same third party. Under the arrangement, the Brand has incurred $89$0.2 million and $49$0.1 million of related party expense for the three months ended March 31, 20222023 and 2021,2022, respectively. As of March 31, 20222023 and December 31, 2021, $4462022, $0.8 million and $442,$1.4 million, respectively, was due to the relatedthird party.
On a continuous basis, certain of our Brands enter into arrangements to provide typical marketing and advertising services for clients that certain of the Brands’ partners and executives either hold key leadership positions in or are on the Board of Directors of. During the three months ended March 31, 2022 and 2021, the Company recognized revenue of $2,328 and $2124, respectively, related to this transaction. As of March 31, 2022 and December 31, 2021, $4,907 and $4,577, respectively, was due from the client.
In 2022, the Company entered into an arrangementmade loans to provide polling services tothree employees of a client for which the founder of the client has a significant interestsubsidiary each in the Company. Underamount of approximately $0.9 million, together with interest on the arrangement, the Company will receiveunpaid principal balance at a fixed interest rate equal to 3.5% per annum, compounding quarterly. The cash from the client approximately $3,200 which is expectedloan was used by the employees to be fully recognized aspurchase the noncontrolling interest of September 2022. During the three months ended March 31, 2022 and 2021, the Company recognized revenue of $242 and $0 related to this arrangement, respectively. As of March 31, 2022, $0 was due from the client.
During the three months ended March 31, 2021, Stagwell Media made additional noncash investments13.3% in the Company of $10,300. In March 2021, the Company made a noncash distribution to Stagwell Media of $13,000 for the transfer of the ownership of the Finn Partners Preferred shares. Additionally, the Company made cash distributions to Stagwell Media of $15,000 for the three months ended March 31, 2021.
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16.15. Segment Information
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
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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.
The CODM uses Adjusted EBITDA (defined below) 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 include restructuring costs, acquisition-related expenses, and non-recurring items.
The Company made changes to its internal management and reporting structure in the first quarter of 2023, resulting in an update to our reportable segments (Networks). The change in reportable segments was that Mono, previously in the Integrated Agencies Network, is now within Allison & Partners in the Communications Network, and Storyline (a Brand specializing in research and survey generation), previously in the Communications Network, is now within Constellation in the Integrated Agencies Network. Periods presented prior to the first quarter of 2023 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.
The Company has 3three reportable segments as follows: “Integrated Agencies Network,” “Media“Brand Performance Network” and the “Communications Network.” In addition, the Company combines and discloses operating segments that do not meet the aggregation criteria as “All Other.” The Company also reports corporate expenses, as further detailed below, as “Corporate.” All segments follow the same basis of presentation and accounting policies as those described throughout the Notes to the Unaudited Condensed Consolidated Financial Statements included herein.
The Integrated Agencies Network includes four integratedfive operating segments: the Anomaly Alliance, Constellation, the Doner Partner Network, Code and Theory, Network, and the Doner Partner Network. TheseNational Research Group. The operating networks are organized for go-to-market and collaboration incentive purposes and to facilitate integrated and flexible offerings for our clients. Each integrated network consists of agencies thatsegments offer an array of complementary services spanning our core capabilities of Digital Transformation, Performance Media & Data, Consumer Insights & Strategy, and Creativity & Communications. The AgenciesBrands included in the operating segments that comprise the Integrated Agencies Network reportable segment are as follows: Anomaly Alliance (Anomaly, Concentric Hunter, Mono, YML and Scout agencies), the Code & Theory Network (Code and Theory, Forsman & Bodenfors, National Research Group, Observatory, Hello Design and Colle McVoy agencies)(Brands)), Constellation (72andSunny, Crispin Porter Bogusky,Colle McVoy, Hunter, Instrument, Redscout, Team Enterprises, Storyline, and Harris and Redscout agencies) andInsights), the Doner Partner Network (Doner, KWT Global, Bruce Mau Design, Vitro, Harris X, Northstar, Veritas, and Yamamoto agencies).(Brands)), Code and Theory (Code and Theory and Y Media Labs) and National Research Group.
These integrated network 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.
TheMedia Brand Performance Network reportable segment(“BPN”) is comprised of a single operating segment, our specialist network branded the Stagwell Media Network (“SMN”). SMN serves assegment. BPN includes a unified media and data management structure with omni-channelomnichannel media placement, creative media consulting, influencer and business-to-business marketing capabilities. Our AgenciesBrands in this segment aim to provide scaled creative performance through developing and executing sophisticated omnichannel campaign strategies leveraging significant amounts of consumer data. SMN’s Agencies combineBPN’s Brands provide media buyingsolutions such as audience analysis, media planning, and planningbuying 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 agenciesBrands Assembly, Brand New Galaxy, Crispin Porter Bogusky, Forsman & Bodenfors, Goodstuff, MMI Agency, digital creative & transformation consultancy GALE,Gale, B2B specialist Multiview, Observatory, Vitro, CX specialists Kenna, and travel media experts Ink.
The Communications Network reportable segment is comprised of a single operating segment, our specialist network that provides advocacy, strategic corporate communications, investor relations, public relations, online fundraising and other services to both corporations and political and advocacy organizations and consists of our Allison & Partners, SKDK, (including Sloane & Company), and Targeted Victory Agencies.brands.
All Other consists of the Company’s digital innovation group Reputation Defender (which was sold in September 2021) and Stagwell Marketing Cloud, including Maru and Epicenter, and products such as PRophet.PRophet and ARound.
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
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corporate office. Additional expenses managed by the corporate office that are directly related to the operating segments are allocated to the appropriate reportable segment and the All Other category.
Three Months Ended March 31,
20222021
Revenue:(Dollars in Thousands)
Integrated Agencies Network$378,372 $69,898 
Media Network169,886 62,773 
Communications Network91,535 42,708 
All Other3,110 5,863 
Total Revenue$642,903 $181,242 
Adjusted EBITDA:
Integrated Agencies Network$71,473 $13,500 
Media Network29,164 4,688 
Communications Network15,937 7,974 
All Other(124)(1,611)
Corporate(15,038)(709)
Total Adjusted EBITDA$101,412 $23,842 
Depreciation and amortization$(31,204)$(10,950)
Impairment and other losses(557)— 
Stock-based compensation(8,021)— 
Deferred acquisition consideration(1,897)(3,936)
Other items, net(5,073)(2,941)
Total Operating Income$54,660 $6,015 
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Three Months Ended March 31,Three Months Ended March 31,
2022202120232022
(dollars in thousands)
Revenue:Revenue:
Integrated Agencies NetworkIntegrated Agencies Network$329,792 $348,751 
Brand Performance NetworkBrand Performance Network213,340 197,787 
Communications NetworkCommunications Network66,460 93,255 
All OtherAll Other12,852 3,110 
Total RevenueTotal Revenue$622,444 $642,903 
Adjusted EBITDA:Adjusted EBITDA:
Integrated Agencies NetworkIntegrated Agencies Network$59,385 $68,888 
Brand Performance NetworkBrand Performance Network23,421 31,248 
Communications NetworkCommunications Network4,013 16,438 
All OtherAll Other(3,805)(124)
CorporateCorporate(10,792)(15,038)
Total Adjusted EBITDATotal Adjusted EBITDA$72,222 $101,412 
Depreciation and amortizationDepreciation and amortization$(33,477)$(31,204)
Impairment and other lossesImpairment and other losses— (557)
Stock-based compensationStock-based compensation(12,004)(8,021)
Deferred acquisition considerationDeferred acquisition consideration(4,088)(1,897)
Other items, netOther items, net(6,420)(5,073)
Total Operating IncomeTotal Operating Income$16,233 $54,660 
(Dollars in Thousands)
Other Income (expenses):Other Income (expenses):Other Income (expenses):
Interest expense, netInterest expense, net$(18,729)$(1,351)Interest expense, net$(18,189)$(18,729)
Foreign exchange, netForeign exchange, net(306)(677)Foreign exchange, net(670)(306)
Other, netOther, net156 1,285 Other, net220 156 
Income before income taxes and equity in earnings of non-consolidated affiliates35,781 5,272 
Income (loss) before income taxes and equity in earnings of non-consolidated affiliatesIncome (loss) before income taxes and equity in earnings of non-consolidated affiliates(2,406)35,781 
Income tax expenseIncome tax expense3,189 673 Income tax expense2,384 3,189 
Income before equity in earnings of non-consolidated affiliates32,592 4,599 
Equity in income of non-consolidated affiliates1,030 
Net income33,622 4,603 
Net income attributable to noncontrolling and redeemable noncontrolling interests(20,947)(238)
Income (loss) before equity in earnings of non-consolidated affiliatesIncome (loss) before equity in earnings of non-consolidated affiliates(4,790)32,592 
Equity in income (loss) of non-consolidated affiliatesEquity in income (loss) of non-consolidated affiliates(227)1,030 
Net income (loss)Net income (loss)(5,017)33,622 
Net (income) loss attributable to noncontrolling and redeemable noncontrolling interestsNet (income) loss attributable to noncontrolling and redeemable noncontrolling interests5,460 (20,947)
Net income attributable to Stagwell Inc. common shareholdersNet income attributable to Stagwell Inc. common shareholders$12,675 $4,365 Net income attributable to Stagwell Inc. common shareholders$443 $12,675 
Depreciation and amortization:
Integrated Agencies Network$20,211 $2,666 
Media Network6,865 5,195 
Communications Network2,540 1,582 
All Other501 1,022 
Corporate1,087 485 
Total$31,204 $10,950 
Stock-based compensation:
Integrated Agencies Network$5,547 $— 
Media Network786 — 
Communications Network(243)— 
All Other— 
Corporate1,923 — 
Total$8,021 $— 


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 43 of the Notes included herein for a summary of the Company’s revenue by geographic region for the three months ended March 31, 20222023 and 2021.2022.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis areis based on and should be read in conjunction with our unaudited condensed consolidated financial statements and the notes related thereto included elsewhere in Part 1, Item 1 of this Form 10-Q. The following discussion and analysis contains forward-looking statements and should be read in conjunction with the disclosures and information contained and referenced under the captions “Cautionary Statement Concerning“Note about Forward-Looking Statements” in this Form 10-Q and “Forward-Looking Statements” and “Risk Factors” in thisour 2022 Form 10-Q.10-K. The following discussion and analysis also includes a discussion of certain non-GAAP financial measures. A description of the non-GAAP financial measures discussed in this section and reconciliations to the comparable GAAP financial measures are below.
In this section, the terms “Stagwell,” “we,” “us,” “our” and the “Company” refer (i) with respect to events occurring or periods ending before August 2, 2021, to Stagwell Marketing Group LLC and its direct and indirect subsidiaries and (ii) with respect to events occurring or periods ending on or after August 2, 2021, to Stagwell Inc. and its direct and indirect subsidiaries.
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References to a “fiscal year” mean the Company’s year commencing on January 1 of that year and ending December 31 of that year (e.g., fiscal 20222023 means the period beginning January 1, 2022,2023, and ending December 31, 2022)2023).

Executive Summary

Business Combination
On December 21, 2020, MDC and Stagwell Media LP announced that they had entered into the Transaction Agreement, providing for the combination of MDC with the “Stagwell Subject Entities”. The Stagwell Subject Entities comprised Stagwell Marketing and its direct and indirect subsidiaries.
On August 2, 2021 (the “Closing Date”), we completed the Transactions. In connection with the Transactions, among other things, (i) MDC completed a series of transactions pursuant to which it emerged as a wholly owned subsidiary of the Company, converted into a OpCo; (ii) Stagwell Media contributed the equity interests of Stagwell Marketing and its direct and indirect subsidiaries to OpCo; and (iii) the Company converted into a Delaware corporation, succeeded MDC as the publicly-traded company and changed its name to Stagwell Inc.
The Transactions were treated as a reverse acquisition for financial reporting purposes, with MDC treated as the legal acquirer and Stagwell Marketing treated as the accounting acquirer. As a result of the Transactions and the change in our business and operations, under applicable accounting principles, the historical financial results of Stagwell Marketing prior to August 2, 2021 are considered our historical financial results. Accordingly, historical information presented in this Form 10-Q for events occurring or periods ending before August 2, 2021 does not reflect the impact of the Transactions and may not be comparable with historical information for events occurring or periods ending on or after August 2, 2021, which do not include the financial results of MDC. See Note 3 of the Unaudited Condensed Consolidated Financial Statements included herein for additional information regarding the Transactions.
Overview
Stagwell conducts its business through its networks, 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. Stagwell’s differentiation lies in its creative roots and proven entrepreneurial leaders, which together with innovations in technology and data, bring transformational marketing, activation, communications and strategic consulting services to clients. Stagwell leverages its range of services in an integrated manner, offering strategic, creative and innovative solutions that are technologically forward and media-agnostic. The Company’s workstrategy is designedintended to challenge the industry status quo, realize outsized returns on investment, and drive transformative growth and business performance for its clients and stakeholders.
Stagwell manages its business by monitoring several financial and non-financial performance indicators. The key indicators that we focus on are revenue, operating expenses, capital expenditures and the non-GAAP financial measures described below. Revenue growth is analyzed by reviewing a mix of measurements, including (i) growth by major geographic location, (ii) growth from existing clients and the addition of new clients, (iii) growth by principal capability, (iv) growth from currency changes, and (v) growth from acquisitions. In addition to monitoring the foregoing financial indicators, the Company assesses and monitors several non-financial performance indicators relating to the business performance of our networks. These indicators may include a network’s recent new client win/loss record; the depth and scope of a pipeline of potential new client account activity; the overall quality of the services provided to clients; and the relative strength of the network’s next generation team that is in place as part of a potential succession plan to succeed the current senior executive team.
While a recovery fromRecent Developments
In March 2023, the COVID-19 pandemic appears toCompany’s board of directors (the “Board”) adopted the 2022 Employee Stock Purchase Plan (the “ESPP”), which will be underway, we expect economic conditions will continue to be volatile as long as COVID-19 remains a public health threat. We will continue to monitorsubmitted for approval at the worldwide public health threat, government actions to combat COVID-19 and the impact or potential impact that such developments may have on the overall economy, our clients and our operations.Company’s annual meeting of shareholders in June 2023. If the impactESPP is approved, a total of 3 million shares of Class A common stock, par value $.001 per share (the “Class A Common Stock”) will be reserved for sale under the pandemic continuesESPP to go beyond expectations, we believe we are well positioned through the actions implemented at the onset of the pandemic to successfully work through the effects of COVID-19 on our business. The impact of the pandemic and the corresponding actions are reflected in our judgments, assumptions and estimateseligible employees as defined in the preparation of our financial statements. The judgments, assumptions and estimates will be updated and could result in different results inplan. Under the future depending on the severity, duration, and continued impact of the COVID-19 pandemic.
In addition, while not material, the Company continuesESPP, eligible employees can elect to monitor the war and other geopolitical tensions between Russia and Ukraine and will continue to assess any potential impacts that this conflict may have on the economy, our clients, and our operations.
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Recent Developments
On April 19, 2022, the Company acquired Brand New Galaxy (“BNG”), a leading provider of scaled commerce and marketplace solutions, for approximately $20 million, subject to post-closing adjustments, as well as contingent considerationwithhold up to a maximum value15% of $50 million. The contingent consideration is due upon meetingtheir earnings, up to certain future earnings targets through 2024, with approximately 67% payable in cash and 33% payable inmaximums, to purchase shares of Class A Common Stock. BNG will be included within the Media Network segment.Stock on certain plan-defined dates. The purchase price allocation has not yet been completed. The Company will provide the purchase price allocation and pro forma operating resultsfor each offering period is 92.5% of the combined companyfair 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.
On May 4, 2023, the Company amended its Form 10-QCredit Agreement (as defined in Note 7 of the Notes included herein). Among other things, the amendment increased the limit of borrowing from $500.0 million to $640.0 million. All other substantive terms of the credit agreement remain unchanged.

On May 9, 2023, the Company agreed to repurchase approximately 23.3 million shares from AlpInvest Partners at a share price of $6.43, for the periodan aggregate total value of June 30, 2022.approximately $150.0 million. Stagwell Media LP, a shareholder in Stagwell Inc. and AlpInvest are engaged in advanced negotiations to redeem AlpInvest’s remaining interests in Stagwell Media LP., subject to final documentation. Upon completion of these transactions, AlpInvest Partners will no longer be an investor in Stagwell Inc.

Significant Factors Affecting our Business and Results of Operations
The most significant factors affecting our business and results of operations include national, regional, and local economic conditions, our clients’ profitability, mergers and acquisitions of our clients, changes in top management of our clients and our ability to retain and attract key employees. New business wins and client losses occur due to a variety of factors. The two most significant factors are (i) our clients’ desire to change marketing communication firms, and (ii) the digital and data-driven
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products that our brandsBrands offer. A client may choose to change marketing communication firms for several reasons, such as a change in leadership where new management wants to retain an agencya Brand that it may have previously worked with. In addition, if the client is merged or acquired by another company, the marketing communication firm is often changed. Clients also change firms as a result of the firm’s failure to meet marketing performance targets or other expectations in client service delivery.
Seasonality
Historically, we typically generate the highest quarterly revenue during the fourth quarter in each year. In addition, client concentration increases during election years due to the cyclical nature of our advocacy Brands. The highest volumes of retail related consumer marketing increase with the back-to-school season through the end of the holiday season.
Non-GAAP Financial Measures
The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). In addition, the Company has included non-GAAP financial measures and ratios, which management uses to operate the business, which it believes provide useful supplemental information to both management and readers of this report in making period-to-period comparisons in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by GAAP and should not be construed as an alternative to other titled measures determined in accordance with GAAP. The non-GAAP financial measures included are “organic revenue growth or decline”decline,” “Adjusted EBITDA,” and “Adjusted EBITDA.Diluted EPS.
“Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the brandsBrands that the Company has held throughout each of the comparable periods presented, and (b) “Net acquisitions (divestitures).” Net acquisitions (divestitures) consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or the same prior year period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year.
Adjusted EBITDA is defined as Net income (loss) attributable to Stagwell Inc. common shareholders excluding non-operating income or expense to achieve operating income (loss), plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items.
Adjusted Diluted EPS is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income (loss) attributable to Class C shareholders, excluding the impact of amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items, based on total consolidated amounts, then allocated to Stagwell Inc. common shareholders and Class C shareholders, based on their respective income allocation percentage using a normalized effective income tax rate divided by (ii) (a) the weighted average number of common shares outstanding plus (b) the weighted average number of shares of Class C common Stock outstanding. Other items includes restructuring costs, acquisition-related expenses, and non-recurring items. The following discussion focuses on the operating performancediluted weighted average shares outstanding include shares of the Company for the three months ended March 31, 2022 and 2021 and the financial conditionClass C Common Stock as if converted to shares of the Company as of March 31, 2022. This analysis should be read in conjunction with the interim Unaudited Condensed Consolidated Financial Statements presented in this interim report and the annual Audited Consolidated Financial Statements and Management’s Discussion and Analysis presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).Class A Common Stock to calculate Adjusted Diluted EPS.
All amounts are in dollars unless otherwise stated. Amounts reported in millions herein are computed based on the amounts in thousands. As a result, the sum of the components, and related calculations, reported in millions may not equal the total amounts due to rounding.
The percentage changes included in the tables hereinin Item 2 herein that are not considered meaningful are presented as “NM.”
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Segments
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.
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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.
The Company made changes to its internal management and reporting structure in the first quarter of 2023, resulting in an update to our reportable segments (Networks). The change in reportable segments was that Mono, previously in the Integrated Agencies Network, is now within Allison & Partners in the Communications Network, and Storyline (a Brand specializing in research and survey generation), previously in the Communications Network, is now within Constellation in the Integrated Agencies Network. Periods presented prior to the first quarter of 2023 have been recast to reflect the reclassification of certain reporting units (Brands) between operating segments.
The Company has three reportable segments as follows: “Integrated Agencies Network,” “Media“Brand Performance Network” and the “Communications Network.” In addition, the Company combines and discloses operating segments that do not meet the aggregation criteria as “All Other.” The Company also reports corporate expenses, as further detailed below, as “Corporate.” All segments follow the same basis of presentation and accounting policies as those described throughout the Notes to the Unaudited Condensed Consolidated Financial Statements included herein and Note 2 of the Company’s audited consolidated financial statementsAudited Consolidated Financial Statements included in the 20212022 Form 10-K.
In addition, Stagwell reports its corporate office expenses incurred in connection with the strategic resources provided to the networks, as well as certain other centrally managed expenses that are not fully allocated to the operating segments as Corporate. Corporate provides client and business development support to the networks as well as certain strategic resources, including accounting, administrative, financial, real estate, human resource and legal functions.
The following discussion focuses on the operating performance of the Company for the three months ended March 31, 20222023 and 20212022 and the financial condition of the Company as of March 31, 2022.2023.
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Results of Operations:
Three Months Ended March 31,
20232022
(dollars in thousands)
Revenue:
Integrated Agencies Network$329,792 $348,751 
Brand Performance Network213,340 197,787 
Communications Network66,460 93,255 
All Other12,852 3,110 
Total Revenue$622,444 $642,903 
Operating Income$16,233 $54,660 
Other Income (Expenses):
Interest expense, net(18,189)(18,729)
Foreign exchange, net(670)(306)
Other, net220 156 
Income (loss) before income taxes and equity in earnings of non-consolidated affiliates(2,406)35,781 
Income tax expense2,384 3,189 
Income (loss) before equity in earnings of non-consolidated affiliates(4,790)32,592 
Equity in income (loss) of non-consolidated affiliates(227)1,030 
Net income (loss)(5,017)33,622 
Net (income) loss attributable to noncontrolling and redeemable noncontrolling interests5,460 (20,947)
Net income attributable to Stagwell Inc. common shareholders$443 $12,675 
Reconciliation to Adjusted EBITDA:
Net income attributable to Stagwell Inc. common shareholders$443 $12,675 
Non-operating items (1)
15,790 41,985 
Operating income16,233 54,660 
Depreciation and amortization33,477 31,204 
Impairment and other losses— 557 
Stock-based compensation12,004 8,021 
Deferred acquisition consideration4,088 1,897 
Other items, net6,420 5,073 
Adjusted EBITDA$72,222 $101,412 
(1) Non-operating items includes items within the Statements of Operations, below Operating Income, and above Net income attributable to Stagwell Inc. common shareholders.
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Results of Operations:
Three Months Ended March 31,
20222021
(Dollars in Thousands)
Revenue
Integrated Agencies Network$378,372 $69,898 
Media Network169,886 62,773 
Communications Network91,535 42,708 
All Other3,110 5,863 
Total Revenue$642,903 $181,242 
Operating Income$54,660 $6,015 
Other Income (Expenses)
Interest expense, net$(18,729)$(1,351)
Foreign exchange, net(306)(677)
Other, net156 1,285 
Income before income taxes and equity in earnings of non-consolidated affiliates35,781 5,272 
Income tax expense3,189 673 
Income before equity in earnings of non-consolidated affiliates32,592 4,599 
Equity in income of non-consolidated affiliates1,030 
Net income33,622 4,603 
Net income attributable to noncontrolling and redeemable noncontrolling interests(20,947)(238)
Net income attributable to Stagwell Inc. common shareholders$12,675 $4,365 
Reconciliation to Adjusted EBITDA
Net income attributable to Stagwell Inc. common shareholders$12,675 $4,365 
Non-operating items41,985 1,650 
Operating income54,660 6,015 
Depreciation and amortization31,204 10,950 
Impairment and other losses557 — 
Stock-based compensation8,021 — 
Deferred acquisition consideration1,897 3,936 
Total other items, net5,073 2,941 
Adjusted EBITDA$101,412 $23,842 

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THREE MONTHS ENDED MARCH 31, 20222023 COMPARED TO THREE MONTHS ENDED MARCH 31, 20212022
Consolidated Results of Operations
The components of operating results for the three months ended March 31, 20222023 compared to the three months ended March 31, 20212022 were as follows:
Three Months Ended March 31,
20222021Change
(Dollars in Thousands)
$%
Revenue:$642,903 $181,242 $461,661 NM
Operating Expenses:
Cost of services sold411,970 111,999 299,971 NM
Office and general expenses144,512 52,278 92,234 NM
Depreciation and amortization31,204 10,950 20,254 NM
Impairment and other losses$557 $— $557 100.0 %
$588,243 $175,227 $413,016 NM
Operating income$54,660 $6,015 $48,645 NM
Three Months Ended March 31,
20232022Change
(dollars in thousands)
$%
Revenue$622,444 $642,903 $(20,459)(3.2)%
Operating Expenses
Cost of services413,898 411,970 1,928 0.5 %
Office and general expenses158,836 144,512 14,324 9.9 %
Depreciation and amortization33,477 31,204 2,273 7.3 %
Impairment and other losses— 557 (557)(100.0)%
$606,211 $588,243 $17,968 3.1 %
Operating Income$16,233 $54,660 $(38,427)(70.3)%
Three Months Ended March 31,Three Months Ended March 31,
20222021Change20232022Change
(Dollars in Thousands)(dollars in thousands)
$%$%
Net RevenueNet Revenue$526,637 $158,074 $368,563 NMNet Revenue$521,662 $526,637 $(4,975)(0.9)%
Billable costsBillable costs116,266 23,168 93,098 NMBillable costs100,782 116,266 (15,484)(13.3)%
RevenueRevenue642,903181,242$461,661 NMRevenue622,444642,903(20,459)(3.2)%
Billable costsBillable costs116,266 23,168 93,098 NMBillable costs100,782 116,266 (15,484)(13.3)%
Staff costsStaff costs340,638 97,910 242,728 NMStaff costs349,677 340,638 9,039 2.7 %
Administrative costsAdministrative costs56,294 20,054 36,240 NMAdministrative costs68,176 56,294 11,882 21.1 %
Unbillable and other costs, netUnbillable and other costs, net28,293 16,268 12,025 73.9 %Unbillable and other costs, net31,587 28,293 3,294 11.6 %
Adjusted EBITDAAdjusted EBITDA101,412 23,842 77,570 NMAdjusted EBITDA72,222 101,412 (29,190)(28.8)%
Stock-based compensationStock-based compensation8,021 — 8,021 100.0 %Stock-based compensation12,004 8,021 3,983 49.7 %
Depreciation and amortizationDepreciation and amortization31,204 10,950 20,254 NMDepreciation and amortization33,477 31,204 2,273 7.3 %
Deferred acquisition considerationDeferred acquisition consideration1,897 3,936 (2,039)(51.8)%Deferred acquisition consideration4,088 1,897 2,191 NM
Impairment and other lossesImpairment and other losses557 — 557 100.0 %Impairment and other losses— 557 (557)(100.0)%
Other items, netOther items, net5,073 2,941 2,132 72.5 %Other items, net6,420 5,073 1,347 26.6 %
Operating Income (1)
Operating Income (1)
$54,660 $6,015 $48,645 NM
Operating Income (1)
$16,233 $54,660 $(38,427)(70.3)%
(1) See the Results of Operations section above for a reconciliation of Operating Income to Net Income attributable to Stagwell Inc. common shareholders.
(1) See the Results of Operations section above for a reconciliation of Operating Income to Net Income attributable to Stagwell Inc. common shareholders.
(1) See the Results of Operations section above for a reconciliation of Operating Income to Net Income attributable to Stagwell Inc. common shareholders.
Revenue
Revenue for the three months ended March 31, 20222023 was $642.9$622.4 million compared to $181.2$642.9 million for the three months ended March 31, 2021, an increase2022, a decrease of $461.7$20.5 million.
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Net Revenue
The components of the fluctuations in net revenue for the three months ended March 31, 20222023 compared to the three months ended March 31, 20212022 were as follows:
Net Revenue - Components of ChangeChangeNet Revenue - Components of ChangeChange
Three Months Ended March 31, 2021Foreign CurrencyNet Acquisitions (Divestitures)OrganicTotal ChangeThree Months Ended March 31, 2022OrganicTotalThree Months Ended March 31, 2022Foreign CurrencyNet Acquisitions (Divestitures)OrganicTotal ChangeThree Months Ended March 31, 2023OrganicTotal
(Dollars in Thousands)(dollars in thousands)
Integrated Agencies NetworkIntegrated Agencies Network$68,063 $3,240 $218,363 $42,994 $264,597 $332,660 63.2 %NMIntegrated Agencies Network$303,666$(2,793)$2,465$(10,434)$(10,762)$292,904(3.4)%(3.5)%
Media Network55,661 (156)37,509 35,401 72,754 128,415 63.6 %NM
Brand Performance NetworkBrand Performance Network155,482(4,118)5,9115,6597,452162,9343.6%4.8%
Communications NetworkCommunications Network28,487 201 19,044 14,720 33,965 62,452 51.7 %NMCommunications Network64,379(281)1,069(12,195)(11,407)52,972(18.9)%(17.7)%
All OtherAll Other5,863 (11)(5,256)2,514 (2,753)3,110 42.9 %(47.0)%All Other3,110(157)9,0388619,74212,85227.7%NM
$158,074 $3,274 $269,660 $95,629 $368,563 $526,637 60.5 %NM$526,637$(7,349)$18,483$(16,109)$(4,975)$521,662(3.1)%(0.9)%
Component % changeComponent % change2.1%NM60.5%NMComponent % change(1.4)%3.5%(3.1)%(0.9)%

For the three months ended March 31, 2022,2023, organic net revenue increased $95.6decreased $16.1 million, or 60.5%(3.1)%. The decrease in organic revenue growth was across all segments, primarily attributable to increaseda decline in spending by existing clients, and businessdriven partially by lower advocacy services as compared to higher spending in the first quarter of 2022 associated with new clients.the 2022 elections. The increase in net acquisitionacquisitions (divestitures) was primarily driven by the inclusionacquisitions of MDC in results subsequent to the acquisition.BNG and Maru.
The geographic mix in net revenues for the three months ended March 31, 2023 and 2022 and 2021 iswas as follows:
Three Months Ended March 31,Three Months Ended March 31,
20222021 20232022
(Dollars in Thousands)(dollars in thousands)
United StatesUnited States$429,532 $137,510 United States$416,581 $429,532 
United KingdomUnited Kingdom38,285 12,547 United Kingdom40,628 38,285 
OtherOther58,820 8,017 Other64,453 58,820 
TotalTotal$526,637 $158,074 Total$521,662 $526,637 
Operating Income
Operating incomeIncome for the three months ended March 31, 2023 was $16.2 million compared to $54.7 million for the three months ended March 31, 2022, representing a decrease of $38.4 million. The decrease in Operating Income was $54.7primarily attributable to a decrease in Revenue and an increase in Cost of services, Office and general expenses, and Depreciation and amortization.
The increase in Cost of services was primarily attributable to an increase in compensation expense, including stock-based compensation, in part due to an increase in headcount, partially offset by lower billable costs associated with providing services.
Stock-based compensation expense increased approximately $4.0 million, compared to $6.0 million forprimarily driven by an increase in the value of profits interests awards during the three months ended March 31, 2021, representing an increase of $48.6 million.2023.
The three months ended March 31, 2022 was impactedOffice and general expenses increased primarily by an increase in revenue andattributable to lower occupancy expenses due to the inclusion of MDC in results subsequent to the acquisition and costs associated with an increase in services provided. Stock-based compensation expense increased, driven by awards issued to employees in the first quarter of 2022 connected with a benefit associated with the initiative to consolidate real estate in New York City as well as an increase in deferred acquisition consideration expense.
Deferred acquisition consideration increased approximately $2.2 million, primarily attributable to the change in fair value associated with the awards and new deferred acquisition consideration acquired in association with certain acquisitions occurring in 2022.
Depreciation and amortization was higher dueexpense increased approximately $2.3 million, primarily attributable to the recognition of amortizabledepreciable fixed assets and intangible assets in connection with the inclusion of MDCacquisitions occurring in results subsequent to the acquisition.2022.
35




Other, net
Other, net for the three months ended March 31, 20222023 was income of $0.2 million compared to income of $1.3$0.2 million for the three months ended March 31, 2021.2022.
Foreign Exchange, Transaction Gain (Loss)Net
The foreign exchange loss for the three months ended March 31, 20222023 was $0.3$0.7 million compared to a loss of $0.7$0.3 million for the three months ended March 31, 2021.2022.
Interest Expense, Net
Interest expense, net for the three months ended March 31, 20222023 was $18.7$18.2 million compared to $1.4$18.7 million for the three months ended March 31, 2021, representing an increase of $17.4 million, primarily driven by a higher level of debt in connection with the inclusion of MDC in results subsequent to the acquisition.
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2022.
Income Tax Expense (Benefit)
The Company had an income tax expense for the three months ended March 31, 20222023 of $2.4 million (on a pre-tax loss of $2.4 million resulting in an effective tax rate of (99.1)%) compared to income tax expense of $3.2 million (on a pre-tax income of $35.8 million resulting in an effective tax rate of 8.9%) compared to income tax expense of $0.7 million (on pre-tax income of $5.3 million resulting in an effective tax rate of 12.8%) for the three months ended March 31, 2021.2022.
The difference in the effective tax rate of (99.1)% in the three months ended March 31, 2023 as compared to 8.9% in the three months ended March 31, 2022 as compared to 12.8% in the three months ended March 31, 2021 was primarily relateddue to additional deductions for share based compensation vestingthe pre-tax loss, an increase in 2022.valuation allowance, and an increase in uncertain tax positions in 2023.
Noncontrolling and Redeemable Noncontrolling Interests
The effect of noncontrolling and redeemable noncontrolling interests for the three months ended March 31, 20222023 was $20.9a loss of $5.5 million compared to $0.2income of $20.9 million for the three months ended March 31, 2021.2022. The $5.5 million loss was primarily attributable to noncontrolling interest losses associated with holders of Class C Common Stock.
Net Income (Loss) Attributable to Stagwell Inc. Common Shareholders
As a result of the foregoing, net income attributable to Stagwell Inc. common shareholders for the three months ended March 31, 20222023 was $12.7$0.4 million compared to net income attributable to Stagwell Inc. common shareholders of $4.4$12.7 million for the three months ended March 31, 2021.2022.
36



Earnings Per Share
Diluted EPS and Adjusted Diluted EPS for the three months ended March 31, 2023 was as follows:
GAAP
Adjustments(1)
Non-GAAP
(dollars in thousands, except per share amounts)
Net income attributable to Stagwell Inc. common shareholders$443 $18,623 $19,066 
Net income (loss) attributable to Class C shareholders(3,165)23,104 19,939 
Net income (loss) attributable to Stagwell Inc. and Class C and adjusted net income$(2,722)$41,727 $39,005 
Weighted average number of common shares outstanding128,897 128,897 
Weighted average number of common Class C shares outstanding160,909 160,909 
Weighted average number of shares outstanding289,806 289,806 
Diluted EPS and Adjusted Diluted EPS$(0.01)$0.13 
Adjustments to Net Income(1)
Pre-TaxTaxNet
Amortization$26,732 $(5,346)$21,386 
Stock-based compensation12,004 (2,401)9,603 
Deferred acquisition consideration4,088 (818)3,270 
Other items, net6,420 (1,283)5,137 
Tax adjustments— 2,331 2,331 
$49,244 $(7,517)$41,727 
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
Diluted EPS and Adjusted Diluted EPS for the three months ended March 31, 2022 was as follows:
GAAP
Adjustments(1)
Non-GAAP
(dollars in thousands, except per share amounts)
Net income attributable to Stagwell Inc. common shareholders$12,675 $15,865 $28,540 
Net income attributable to Class C shareholders17,721 20,100 37,821 
Net income attributable to Stagwell Inc. and Class C and adjusted net income$30,396 $35,965 $66,361 
Weighted average number of common shares outstanding297,484 297,484 
Diluted EPS and Adjusted Diluted EPS$0.10 $0.22 
Adjustments to Net Income(1)
Pre-TaxTaxNet
Amortization$24,904 $(4,981)$19,923 
Impairment and other losses557 (111)446 
Stock-based compensation8,021 (1,604)6,417 
Deferred acquisition consideration1,897 (379)1,518 
Other items, net5,073 (985)4,088 
Tax adjustments— 3,573 3,573 
$40,452 $(4,487)$35,965 
(1) Adjusted Diluted EPS is defined within the Non-GAAP Financial Measures section of the Executive Summary.
37



Adjusted EBITDA
Adjusted EBITDA for the three months ended March 31, 20222023 was $101.4$72.2 million, compared to $23.8$101.4 million for the three months ended March 31, 2021,2022, representing an increasea decrease of $77.6$29.2 million, primarily driven by the increase in revenue, partially offset by higher operating expenses and the impact of the inclusion of MDC in results subsequent to the acquisition.lower Operating Income as discussed above.
Integrated Agencies Network
The components of operating results for the three months ended March 31, 20222023 compared to the three months ended March 31, 20212022 were as follows:
Three Months Ended March 31,
20222021Change
(Dollars in Thousands)
$%
Revenue$378,372 $69,898 $308,474 NM
Operating expenses
Cost of services sold244,904 41,883 203,021 NM
Office and general expenses67,155 18,717 48,438 NM
Depreciation and amortization20,211 2,666 17,545 NM
Impairment and other losses279 — 279 100.0 %
$332,549 $63,266 $269,283 NM
Operating income$45,823 $6,632 $39,191 NM
Three Months Ended March 31,
20232022Change
(dollars in thousands)
$%
Revenue$329,792 $348,751 $(18,959)(5.4)%
Operating Expenses
Cost of services220,197 226,118 (5,921)(2.6)%
Office and general expenses67,424 58,257 9,167 15.7 %
Depreciation and amortization18,643 18,860 (217)(1.2)%
$306,264 $303,235 $3,029 1.0 %
Operating Income$23,528 $45,516 $(21,988)(48.3)%

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Three Months Ended March 31,Three Months Ended March 31,


20222021Change

20232022Change
(Dollars in Thousands)(dollars in thousands)
$%$%
Net RevenueNet Revenue$332,660 $68,063 $264,597 NMNet Revenue$292,904 $303,666 $(10,762)(3.5)%
Billable costsBillable costs45,712 1,835 43,877 NMBillable costs36,888 45,085 (8,197)(18.2)%
RevenueRevenue378,372 69,898 308,474 NMRevenue329,792 348,751 (18,959)(5.4)%
Billable costsBillable costs45,712 1,835 43,877 NMBillable costs36,888 45,085 (8,197)(18.2)%
Staff costsStaff costs213,467 35,851 177,616 NMStaff costs187,693 192,096 (4,403)(2.3)%
Administrative costsAdministrative costs30,293 6,230 24,063 NMAdministrative costs29,166 25,609 3,557 13.9 %
Unbillable and other costs, netUnbillable and other costs, net17,427 12,482 4,945 39.6 %Unbillable and other costs, net16,660 17,073 (413)(2.4)%
Adjusted EBITDAAdjusted EBITDA71,473 13,500 57,973 NMAdjusted EBITDA59,385 68,888 (9,503)(13.8)%
Stock-based compensationStock-based compensation5,547 — 5,547 100.0 %Stock-based compensation8,198 5,073 3,125 61.6 %
Depreciation and amortizationDepreciation and amortization20,211 2,666 17,545 NMDepreciation and amortization18,643 18,860 (217)(1.2)%
Deferred acquisition considerationDeferred acquisition consideration(1,325)3,936 (5,261)NMDeferred acquisition consideration5,991 (1,325)7,316 NM
Impairment279 — 279 100.0 %
Other items, netOther items, net938 266 672 NMOther items, net3,025 764 2,261 NM
Operating IncomeOperating Income$45,823 $6,632 $39,191 NMOperating Income$23,528 $45,516 $(21,988)(48.3)%
Revenue
Revenue for the three months ended March 31, 20222023 was $378.4$329.8 million compared to $69.9$348.8 million for the three months ended March 31, 2021, an increase2022, a decrease of $308.5$19.0 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended March 31, 20222023 compared to the three months ended March 31, 20212022 were as follows:
Net Revenue - Components of ChangeChange
Three Months Ended March 31, 2021Foreign CurrencyNet Acquisitions (Divestitures)OrganicTotal ChangeThree Months Ended March 31, 2022OrganicTotal
(Dollars in Thousands)
Integrated Agencies Network$68,063 $3,240 $218,363 $42,994 $264,597 $332,660 63.2 %NM
Component % change4.8%NM63.2%NM
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Net Revenue - Components of ChangeChange
Three Months Ended March 31, 2022Foreign CurrencyNet Acquisitions (Divestitures)OrganicTotal ChangeThree Months Ended March 31, 2023OrganicTotal
(dollars in thousands)
Integrated Agencies Network$303,666$(2,793)$2,465$(10,434)$(10,762)$292,904(3.4)%(3.5)%
Component % change(0.9)%0.8%(3.4)%(3.5)%
The increasedecline in organic net revenue was primarily attributable to increaseddecreased spending by existing and new clients primarily driven by creative, digital transformationclients in the technology sector who withheld spending in the first quarter of 2023.
Operating Income
Operating Income for the three months ended March 31, 2023 was $23.5 million compared to $45.5 million for the three months ended March 31, 2022, representing a decrease of $22.0 million. The decrease in Operating Income was primarily attributable to a decrease in Revenue and consumer insights services. TheCost of services, and an increase in net acquisition (divestitures) was driven by the inclusion of MDC in results subsequent to the acquisition.Office and general expenses.
The decrease in Cost of services was primarily attributable to an increase in expenses was drivencompensation expense, including stock-based compensation, in part due to an increase in headcount, partially offset by the impact of the inclusion of MDC in results subsequent to the acquisition andlower billable costs associated with an increase in services provided. providing services.
Stock-based compensation expense increased driven by awards issuedapproximately $3.1 million, primarily attributable to employeesan increase in connectionthe value of profits interests awards.
Office and general expenses increased primarily attributable to an increase in deferred acquisition consideration expense and an increase in severance expense.
Deferred acquisition consideration increased approximately $7.3 million, primarily attributable to an increase in fair value associated with certain of the merger, as well as retention awards issued to employees. Depreciationinstruments and amortization grew due toa Brand that had a significant reduction in fair value in the recognitionfirst quarter of amortizable intangible assets2022 for which the final payment was made in connection with the inclusion of MDC in results subsequent to the acquisition.Q2 2022.
Operating incomeIncome and Adjusted EBITDA were higherlower, driven by an increasethe decrease in revenues, partially offset byrevenue and higher expenses as detailed above.
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MediaBrand Performance Network
The components of operating results for the three months ended March 31, 20222023 compared to the three months ended March 31, 20212022 were as follows:
Three Months Ended March 31,Three Months Ended March 31,
20222021Change20232022Change
(Dollars in Thousands)(dollars in thousands)
$%$%
RevenueRevenue$169,886 $62,773 $107,113 NMRevenue$213,340 $197,787 $15,553 7.9 %
Operating expenses
Cost of services sold105,412 39,242 66,170 NM
Operating ExpensesOperating Expenses
Cost of servicesCost of services139,249 123,400 15,849 12.8 %
Office and general expensesOffice and general expenses39,115 19,080 20,035 NMOffice and general expenses52,140 47,592 4,548 9.6 %
Depreciation and amortizationDepreciation and amortization6,865 5,195 1,670 32.1 %Depreciation and amortization8,244 8,196 48 0.6 %
Impairment and other lossesImpairment and other losses278 — 278 100.0 %Impairment and other losses— 557 (557)(100.0)%
$151,670 $63,517 $88,153 NM$199,633 $179,745 $19,888 11.1 %
Operating income (loss)$18,216 $(744)$18,960 NM
Operating IncomeOperating Income$13,707 $18,042 $(4,335)(24.0)%
39



Three Months Ended March 31,Three Months Ended March 31,


20222021Change

20232022Change
(Dollars in Thousands)(dollars in thousands)
$%$%
Net RevenueNet Revenue$128,415 $55,661 $72,754 NMNet Revenue$162,934 $155,482 $7,452 4.8 %
Billable costsBillable costs41,471 7,112 34,359 NMBillable costs50,406 42,305 8,101 19.1 %
RevenueRevenue169,886 62,773 107,113 NMRevenue213,340 197,787 15,553 7.9 %
Billable costsBillable costs41,471 7,112 34,359 NMBillable costs50,406 42,305 8,101 19.1 %
Staff costsStaff costs75,856 37,423 38,433 NMStaff costs104,596 96,024 8,572 8.9 %
Administrative costsAdministrative costs12,580 8,496 4,084 48.1 %Administrative costs23,082 17,040 6,042 35.5 %
Unbillable and other costs, netUnbillable and other costs, net10,815 5,054 5,761 NMUnbillable and other costs, net11,835 11,170 665 6.0 %
Adjusted EBITDAAdjusted EBITDA29,164 4,688 24,476 NMAdjusted EBITDA23,421 31,248 (7,827)(25.0)%
Stock-based compensationStock-based compensation786 — 786 100.0 %Stock-based compensation657 1,260 (603)(47.9)%
Depreciation and amortizationDepreciation and amortization6,865 5,195 1,670 32.1 %Depreciation and amortization8,244 8,196 48 0.6 %
Deferred acquisition considerationDeferred acquisition consideration2,132 — 2,132 100.0 %Deferred acquisition consideration(1,179)2,132 (3,311)NM
Impairment278 — 278 100.0 %
Impairment and other lossesImpairment and other losses— 557 (557)(100.0)%
Other items, netOther items, net887 237 650 NMOther items, net1,992 1,061 931 87.7 %
Operating Income (Loss)$18,216 $(744)$18,960 NM
Operating IncomeOperating Income$13,707 $18,042 $(4,335)(24.0)%
Revenue
Revenue for the three months ended March 31, 20222023 was $169.9$213.3 million compared to $62.8$197.8 million for the three months ended March 31, 2021,2022, an increase of $107.1$15.6 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 were as follows:
Net Revenue - Components of ChangeChange
Three Months Ended March 31, 2022Foreign CurrencyNet Acquisitions (Divestitures)OrganicTotal ChangeThree Months Ended March 31, 2023OrganicTotal
(dollars in thousands)
Brand Performance Network$155,482$(4,118)$5,911$5,659$7,452$162,9343.6%4.8%
Component % change(2.6)%3.8%3.6%4.8%
The increase in organic net revenue was primarily attributable to new clients and increased spending by existing clients. The increase in net acquisitions (divestitures) was primarily driven by the acquisition of BNG.
Operating Income
Operating Income for the three months ended March 31, 2023 was $13.7 million compared to $18.0 million for the three months ended March 31, 2022, representing a decrease of $4.3 million. The decrease in Operating Income was primarily attributable to an increase in Revenue, more than offset by an increase in Costs of services and Office and general expenses.
The increase in Cost of services was primarily attributable to higher billable and staff costs associated with providing services as well as due to the acquisition of BNG.
Office and general expenses increased primarily attributable to lower occupancy expenses in the first quarter of 2022 connected with a benefit associated with the initiative to consolidate real estate in New York City, higher staff costs due to an increase in headcount, and a decrease in deferred acquisition expense.
Deferred acquisition consideration decreased approximately $3.3 million primarily attributable to the reduction in fair value in the first quarter of 2023 associated with a certain Brand that was acquired in the second quarter of 2022.
39
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Table

Operating Income and Adjusted EBITDA were lower driven by higher expenses as detailed above, partially offset by higher revenue.
Communications Network
The components of Contentsoperating results for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 were as follows:
Three Months Ended March 31,
20232022Change
(dollars in thousands)
$%
Revenue$66,460 $93,255 $(26,795)(28.7)%
Operating Expenses
Cost of services46,881 60,829 (13,948)(22.9)%
Office and general expenses17,217 16,907 310 1.8 %
Depreciation and amortization2,713 2,560 153 6.0 %
$66,811 $80,296 $(13,485)(16.8)%
Operating Income (Loss)$(351)$12,959 $(13,310)NM

Three Months Ended March 31,

20232022Change
(dollars in thousands)
$%
Net Revenue$52,972 $64,379 $(11,407)(17.7)%
Billable costs13,488 28,876 (15,388)(53.3)%
Revenue66,460 93,255 (26,795)(28.7)%
Billable costs13,488 28,876 (15,388)(53.3)%
Staff costs40,077 40,826 (749)(1.8)%
Administrative costs8,756 7,068 1,688 23.9 %
Unbillable and other costs, net126 47 79 NM
Adjusted EBITDA4,013 16,438 (12,425)(75.6)%
Stock-based compensation507 (243)750 NM
Depreciation and amortization2,713 2,560 153 6.0 %
Deferred acquisition consideration539 1,090 (551)(50.6)%
Other items, net605 72 533 NM
Operating Income (Loss)$(351)$12,959 $(13,310)NM
Revenue
Revenue for the three months ended March 31, 2023 was $66.5 million compared to $93.3 million for the three months ended March 31, 2022, a decrease of $26.8 million.
41



Net Revenue
The components of the fluctuations in net revenue for the three months ended March 31, 20222023 compared to the three months ended March 31, 20212022 were as follows:
Net Revenue - Components of ChangeChangeNet Revenue - Components of ChangeChange
Three Months Ended March 31, 2021Foreign CurrencyNet Acquisitions (Divestitures)OrganicTotal ChangeThree Months Ended March 31, 2022OrganicTotalThree Months Ended March 31, 2022Foreign CurrencyNet Acquisitions (Divestitures)OrganicTotal ChangeThree Months Ended March 31, 2023OrganicTotal
(Dollars in Thousands)(dollars in thousands)
Media Network$55,661 $(156)$37,509 $35,401 $72,754 $128,415 63.6 %NM
Communications NetworkCommunications Network$64,379$(281)$1,069$(12,195)$(11,407)$52,972(18.9)%(17.7)%
Component % changeComponent % change(0.3)%67.4%63.6%NMComponent % change(0.4)%1.7%(18.9)%(17.7)%
The increasedecline in organic net revenue was attributable to decreased spending, primarily due to lower advocacy services as compared to higher spending in the first quarter of 2022 associated with the 2022 elections.
Operating Income (Loss)
Operating Loss for the three months ended March 31, 2023 was $0.4 million compared to Operating Income of $13.0 million for the three months ended March 31, 2022, representing a decrease of $13.3 million. The decrease in Operating Income was primarily attributable to new clientsa decrease in Revenue and increased spending by existing clients, primarily driven by the seasonal businessa less than offsetting decrease in Costs of a new client and the recovery of the travel industry. The increase in net acquisition (divestitures) was driven by the inclusion of MDC in results subsequent to the acquisition and Goodstuff Holdings Limited.services.
The increasedecrease in expensesCost of services was driven by the impact of the inclusion of MDCprimarily attributable to a decrease in results subsequent to the acquisition andbillable costs associated with an increase in services provided. Stock-based compensation expense increased, driven by awards issued to employees in connection with the merger, as well as retention awards issued to employees. Deferred acquisition consideration expense increased due to the assumption of additional liabilities in connection with the inclusion of MDC in results subsequent to the acquisition. Depreciation and amortization expense increased due to the recognition of amortizable intangible assets in connection with the inclusion of MDC in results subsequent to the acquisition.providing services.
Operating incomeLoss and the decrease in Adjusted EBITDA were driven by an increase in revenues,lower revenue partially offset by higherlower expenses as detailed above.
Communications NetworkAll Other
The components of operating results for the three months ended March 31, 20222023 compared to the three months ended March 31, 20212022 were as follows:
Three Months Ended March 31,Three Months Ended March 31,
20222021Change20232022Change
(Dollars in Thousands)(dollars in thousands)
$%$%
RevenueRevenue$91,535 $42,708 $48,827 NMRevenue$12,852 $3,110 $9,742 NM
Operating expenses
Cost of services sold60,031 28,444 31,587 NM
Operating ExpensesOperating Expenses
Cost of servicesCost of services7,680 1,623 6,057 NM
Office and general expensesOffice and general expenses16,486 6,290 10,196 NMOffice and general expenses7,746 1,619 6,127 NM
Depreciation and amortizationDepreciation and amortization2,540 1,582 958 60.6 %Depreciation and amortization1,948 501 1,447 NM
$79,057 $36,316 $42,741 NM$17,374 $3,743 $13,631 NM
Operating income$12,478 $6,392 $6,086 95.2 %
Operating LossOperating Loss$(4,522)$(633)$(3,889)NM
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Three Months Ended March 31,Three Months Ended March 31,


20222021Change20232022Change
(Dollars in Thousands)(dollars in thousands)
$%$%
Net RevenueNet Revenue$62,452 $28,487 $33,965 NMNet Revenue$12,852 $3,110 $9,742 NM
Billable costs29,083 14,221 14,862 NM
RevenueRevenue91,535 42,708 48,827 NMRevenue12,852 3,110 9,742 NM
Billable costs29,083 14,221 14,862 NM
Staff costsStaff costs39,623 18,442 21,181 NMStaff costs10,487 2,536 7,951 NM
Administrative costsAdministrative costs6,844 2,161 4,683 NMAdministrative costs3,195 695 2,500 NM
Unbillable and other costs, netUnbillable and other costs, net48 (90)138 NMUnbillable and other costs, net2,975 2,972 NM
Adjusted EBITDAAdjusted EBITDA15,937 7,974 7,963 99.9 %Adjusted EBITDA(3,805)(124)(3,681)NM
Stock-based compensationStock-based compensation(243)— (243)(100.0)%Stock-based compensation32 24 NM
Depreciation and amortizationDepreciation and amortization2,540 1,582 958 60.6 %Depreciation and amortization1,948 501 1,447 NM
Deferred acquisition considerationDeferred acquisition consideration1,090 — 1,090 100.0 %Deferred acquisition consideration(1,263)— (1,263)(100.0)%
Other items, net72 — 72 100.0 %
Operating Income$12,478 $6,392 $6,086 95.2 %
Operating LossOperating Loss$(4,522)$(633)$(3,889)NM
Revenue
Revenue for the three months ended March 31, 20222023 was $91.5$12.9 million compared to $42.7$3.1 million for the three months ended March 31, 2021,2022, an increase of $48.8$9.7 million.
Net Revenue
The components of the fluctuations in net revenue for the three months ended March 31, 20222023 compared to the three months ended March 31, 20212022 were as follows:
Net Revenue - Components of ChangeChangeNet Revenue - Components of ChangeChange
Three Months Ended March 31, 2021Foreign CurrencyNet Acquisitions (Divestitures)OrganicTotal ChangeThree Months Ended March 31, 2022OrganicTotalThree Months Ended March 31, 2022Foreign CurrencyNet Acquisitions (Divestitures)OrganicTotal ChangeThree Months Ended March 31, 2023OrganicTotal
(Dollars in Thousands)(dollars in thousands)
Communications Network$28,487 $201 $19,044 $14,720 $33,965 $62,452 51.7 %NM
All OtherAll Other$3,110$(157)$9,038$861$9,742$12,85227.7%NM
Component % changeComponent % change0.7%66.9%51.7%NMComponent % change(5.0)%NM27.7%NM
Organic net revenue remained relatively flat. The increase in net acquisitions (divestitures) was primarily driven by an $8.9 million increase in revenue from the acquisition of Maru.
Operating Loss
Operating Loss for the three months ended March 31, 2023 was $4.5 million compared to $0.6 million for the three months ended March 31, 2022, representing an increase of $3.9 million. The increase in Operating Loss was primarily attributable to an increase in Revenue, more than offset by an increase in Cost of services and Office and general expenses.
The increase in organic net revenueCost of services was primarily attributable to increased spending by existinghigher staff costs associated with providing services and new clients, primarily driven by higher public relations and advocacy services. The increase in net acquisition (divestitures) was driven by the inclusion of MDC in results subsequent to the acquisition.
The increase in expenses was driven by the impact from the inclusion of MDC in results subsequentdue to the acquisition of Maru.
Office and costs associated withgeneral expenses increased primarily attributable to an increase in services provided. Deferred acquisition considerationcompensation expense increased due to the assumption of additional liabilities in connectionprimarily associated with the inclusionacquisition of MDC in results subsequent to the acquisition. Depreciation and amortization grew due to the recognition of amortizable intangible assets in connection with the inclusion of MDC in results subsequent to the acquisition.Maru.
Operating incomeLoss and the decrease in Adjusted EBITDA were driven by an increase in revenues, partiallyhigher revenue, more than offset by higher expenses as detailed above.
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All Other
The components of operating results for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 were as follows:
Three Months Ended March 31,
20222021Change
(Dollars in Thousands)
$%
Revenue$3,110 $5,863 $(2,753)(47.0)%
Operating expenses
Cost of services sold1,623 2,430 (807)(33.2)%
Office and general expenses1,619 5,044 (3,425)(67.9)%
Depreciation and amortization501 1,022 (521)(51.0)%
$3,743 $8,496 $(4,753)(55.9)%
Operating loss$(633)$(2,633)$2,000 (76.0)%

Three Months Ended March 31,
20222021Change
(Dollars in Thousands)
$%
Net Revenue$3,110 $5,863 $(2,753)(47.0)%
Billable costs— — — — %
Revenue3,110 5,863 (2,753)(47.0)%
Billable costs— — — — %
Staff costs2,536 5,023 (2,487)(49.5)%
Administrative costs695 3,773 (3,078)(81.6)%
Unbillable and other costs, net(1,322)1,325 NM
Adjusted EBITDA(124)(1,611)1,487 (92.3)%
Stock-based compensation— 100.0 %
Depreciation and amortization501 1,022 (521)(51.0)%
Operating Loss$(633)$(2,633)$2,000 (76.0)%
Revenue
Revenue for the three months ended March 31, 2022 was $3.1 million compared to $5.9 million for the three months ended March 31, 2021, a decrease of $2.8 million.
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Net Revenue
The components of the fluctuations in net revenue for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 were as follows:
Net Revenue - Components of ChangeChange
Three Months Ended March 31, 2021Foreign CurrencyNet Acquisitions (Divestitures)OrganicTotal ChangeThree Months Ended March 31, 2022OrganicTotal
(Dollars in Thousands)
All Other$5,863 $(11)$(5,256)$2,514 $(2,753)$3,110 42.9 %(47.0)%
Component % change(0.2)%(89.6)%42.9%(47.0)%
The increase in organic net revenue was attributable to services at the central innovations group.
The decrease related to net acquisitions (divestitures) was attributable to the sale of Reputation Defender in the third quarter of 2021.
Increase in operating income and Adjusted EBITDA were driven by decrease in revenues, more than offset by lower expenses driven by the sale of Reputation Defender.
Corporate
The components of operating results for the three months ended March 31, 20222023 compared to the three months ended March 31, 20212022 were as follows:
Three Months Ended March 31,

20222021Change
(Dollars in Thousands)
$%
Three Months Ended March 31,

20232022Change
(dollars in thousands)
$%
Staff costsStaff costs$9,156 $1,171 $7,985 NMStaff costs$6,824 $9,156 $(2,332)(25.5)%
Administrative costsAdministrative costs5,882 (606)6,488 NMAdministrative costs3,977 5,882 (1,905)(32.4)%
Unbillable and other costs, netUnbillable and other costs, net— 144 (144)(100.0)%Unbillable and other costs, net(9)— (9)(100.0)%
Adjusted EBITDAAdjusted EBITDA(15,038)(709)(14,329)NMAdjusted EBITDA(10,792)(15,038)4,246 (28.2)%
Stock-based compensationStock-based compensation1,923 — 1,923 100.0 %Stock-based compensation2,610 1,923 687 35.7 %
Depreciation and amortizationDepreciation and amortization1,087 485 602 NMDepreciation and amortization1,929 1,087 842 77.5 %
Other items, netOther items, net3,176 2,438 738 30.3 %Other items, net798 3,176 (2,378)(74.9)%
Operating Income$(21,224)$(3,632)$(17,592)NM
Operating LossOperating Loss$(16,129)$(21,224)$5,095 (24.0)%
Operating expenses increasedLoss for the three months ended March 31, 2023 was $16.1 million compared to $21.2 million for the three months ended March 31, 2022, representing a decrease of $5.1 million. The decrease in the Operating Loss was primarily in connection with the inclusion of MDC in results subsequentattributable to the acquisition, includinglower staff costs, professional fees, associated with the transaction.and merger related costs incurred in 2022.
Liquidity and Capital Resources:
The following table provides summary information about the Company’s liquidity position:
March 31, 2022March 31, 2021
(Dollars in Thousands)
Net cash (used in) provided by operating activities$(48,577)$5,771 
Net cash used in investing activities$(8,289)$(3,311)
Net cash provided by (used in) financing activities$6,529 $(41,142)
We continue to monitor the worldwide public health threat, government actions to combat COVID-19 and the impact such developments may have on our liquidity. If the impact of the pandemic is beyond our expectation, we believe we are well positioned through the actions implemented at the beginning of the pandemic to successfully work through the effects of COVID-19 for the foreseeable future. We will also continue to monitor any potential impact that the military conflict between Russia and Ukraine has on our liquidity but do not expect material adverse impacts.
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Three Months Ended March 31,
20232022
(dollars in thousands)
Net cash used in operating activities$(85,113)$(48,577)
Net cash used in investing activities(10,815)(8,289)
Net cash provided by financing activities12,923 6,529 
The Company had cash and cash equivalents of $135.2$138.5 million and $184.0$220.6 million as of March 31, 20222023 and December 31, 2021,2022, respectively. The Company expects to maintain sufficient cash and/or available borrowings to fund operations for the next twelve months.months and subsequent periods. The Company has historically been able to maintainmaintained and expandexpanded its business using cash generated from operating activities, funds available under its revolving credit agreement, and other initiatives, such as obtaining additional debt and equity financing. AtOn March 31, 2022,2023, the Company had $140.0$150.0 million of borrowings outstanding, $24.9$24.6 million of outstanding and undrawn letters of credit resulting in $335.1$325.4 million available under its $500.0 million revolving credit agreement.Credit Agreement (as defined and discussed in Note 7 of the Notes to the Unaudited Consolidated Financial Statements included herein).
The Company transfers certain of its trade receivable assets to third parties under agreements to sell certain of its accounts receivables. Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer.
The trade receivables transferred to the third parties were $82.0 million and $7.5 million for the three months ended March 31, 2023 and 2022, respectively. The amount collected and due to the third parties under these arrangements was $2.4 million as of March 31, 2023 and $5.7 million as of December 31, 2022. Fees for these arrangements were recorded in Office and general expenses in the Unaudited Consolidated Statements of Operations and totaled $1.3 million and less than $0.1 million for the three months ended March 31, 2023 and 2022, respectively.
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On March 1, 2023, the Board authorized an extension and a $125.0 million increase in the size of our stock repurchase program (the “Repurchase Program”) to an aggregate of $250.0 million, with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program, as amended, will expire on March 1, 2026. During the three months ended March 31, 2023, there were 2.6 million shares of Class A Common Stock repurchased under the Repurchase Program at an aggregate value, excluding fees, of $17.9 million. These were purchased at an average price of $6.91 per share. The remaining value of shares of Class A Common Stock permitted to be repurchased under the Repurchase Program was $180.4 million as of March 31, 2023. The Board will review the Repurchase Program periodically and may authorize adjustments of its terms. The Repurchase Program may be suspended, modified or discontinued at any time without prior notice.
On May 9, 2023, the Company agreed to repurchase approximately 23.3 million shares from AlpInvest Partners at a share price of $6.43, for an aggregate total value of approximately $150.0 million. See Note 1 of the Notes included herein for additional information regarding the repurchase.
The Company’s obligations extending beyond twelve months primarily consist of deferred acquisition consideration payments, purchases of noncontrolling interests, subsidiary awards, capital expenditures, scheduled lease obligation payments, and interest payments on borrowings under the Company’s 5.625% Notes.Notes and Credit Agreement. The Company may alsoexpects to make estimated cash payments in the future to satisfy obligations under the Tax Receivables Agreement (“TRA”) (see Note 1413 of the Notes to the Financial Statementsincluded herein for additional details). The amount and timing of payments are contingent on the Company achieving certain 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(each as defined in Note 11)10 of the Notes included herein) for shares of our Class A Common Stock or cash, as applicable, and (ii) certain other tax benefits related to usthe Company making payments under the TRA. Based on the current outlook, the Company believes future cash flows from operations, together with the Company’s existing cash balance and availability of funds under the Company’s revolving credit agreement,Credit Agreement, will be sufficient to meet the Company’s anticipated cash needs for the next twelve months.months and subsequent periods. The Company’s ability to make scheduled deferred acquisition consideration payments, to make principal and interest payments, to refinance indebtedness or to fund planned capital expenditures or other obligations will depend on future performance, which is subject to general economic conditions, the competitive environment and other factors, including those described in this Form 10-Q and in the Company’s other SEC filings.
On March 23, 2022, the board of directors authorized a stock repurchase program (the “Repurchase Program”) under which we may repurchase up to $125,000 of shares of our outstanding Class A common stock. The Repurchase Program will expire on March 23, 2025.
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 Exchange Act), in privately negotiated transactions, or through other means. The timing and number of shares repurchased under the Repurchase Program will depend on a variety of factors, including the performance of our stock price, general market and economic conditions, regulatory requirements, the availability of funds, and other considerations we deem relevant. The Repurchase Program may be suspended, modified or discontinued at any time without prior notice. Our board of directors will review the Repurchase Program periodically and may authorize adjustments of its terms.
Cash Flows
Operating Activities
Cash flows used in operating activities for the three months ended March 31, 2023, were $85.1 million, primarily driven by unfavorable working capital requirements, including the timing of media supplier payments, partially offset by earnings.
Cash flows used in operating activities for the three months ended March 31, 2022, were $48.6 million, primarily driven by earnings, more than offset by unfavorable working capital requirements, including the timing of media supplier payments.
Investing Activities
Cash flows provided by operatingused in investing activities were $10.8 million for the three months ended March 31, 2021 were $5.8 million,2023, primarily driven by earnings, partially offset by unfavorable working$3.4 million in capital requirements.
Investing Activitiesexpenditures and $6.7 million in capitalized software costs.
Cash flows used in investing activities were $8.3 million and $3.3 million for the three months ended March 31, 2022, and 2021, respectively, primarily driven by $4.8 million in capital expenditures.expenditures and $1.8 million in capital capitalized software costs.
Financing Activities
During the three months ended March 31, 2023, cash flows provided by financing activities were $12.9 million, primarily driven by $50.0 million in net borrowings under the Company’s revolving credit agreement, partially offset by total stock repurchases of $26.2 million and distributions to noncontrolling interests of $10.9 million.
During the three months ended March 31, 2022, cash flows provided by financing activities were $6.5 million, primarily driven by $29.5 million in net borrowings under the Company’s previous revolving credit agreement, partially offset by total stock repurchases of $14.9 million in connection with shares withheld to satisfy employee tax withholding obligations associated with employee stock awards vesting.
During the three months ended March 31, 2021, cash flows used in financing activities was $41.1 million, driven by $15.2 million in net payments under the revolving credit agreement and distributions to noncontrolling interests of $25.9 million to Stagwell Media.$6.5 million.
Total Debt
Debt, net of debt issuance costs, as of March 31, 20222023, was $1,222.0$1,235.3 million as compared to $1,191.6$1,184.7 million outstanding at December 31, 2021.2022. See Note 87 to the Unaudited Condensed Consolidated Financial Statements included herein for information regarding the Company’s 5.625% Notes, and the Credit Agreement, which provides for a $500.0 million senior secured revolving credit agreement (the “Credit Agreement”).facility with a five-year maturity. See Note 1 of the Notes included herein for additional information related to the amendment to the Credit Agreement.
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The Company is currently in compliance with all of the terms and conditions of the Credit Agreement, and management believes, based on its current financial projections, that the Company will be in compliance with its covenants over the next twelve months.
If the Company loses all or a substantial portion of its lines of credit under the Credit Agreement, or if the Company uses the maximum available amount under the agreement, it will be required to seek other sources of liquidity. If the Company were unable to find these sources of liquidity, for example through an equity offering or access to the capital markets, the Company’s ability to fund its working capital needs and any contingent obligations with respect to acquisitions and redeemable noncontrolling interests would be adversely affected.
As of April 27, 2022, the Company amended the Credit Agreement. Among other things, this amendment replaces any previous reference to LIBOR with SOFR. The borrowings 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 SOFR rate plus 1% in each case, plus the applicable margin (calculated based on the Company’s total leverage ratio) at that time. Additionally, the Credit Agreement was amended to remove certain pre-commencement notice provisions for certain acquisitions under $50,000 in the aggregate, increased the amount permitted for certain investments allowed under the Credit Agreement, and subject to certain conditions, and explicitly allows for the repurchase of Stagwell Inc. stock in an amount not to exceed $100,000 in any fiscal year. All other substantive terms of the Credit Agreement remain unchanged.
Pursuant to the Credit Agreement, the Company must comply with its total leverage ratio covenant, as such term is specificallymaintain a Total Leverage Ratio (as defined in the agreement.Credit Agreement) below a threshold established in the Credit Agreement. For the period ended March 31, 2022,2023, the Company’s calculation of each of these covenants,this ratio, and the specific requirementsmaximum permitted under the revolving credit agreement,Credit Agreement, respectively, were calculated based on the trailing twelve months as follows:
March 31, 20222023
Total Leverage Ratio3.10 2.79
Maximum per covenant4.50 4.25
These ratios and measures are not based on GAAP and are not presented as alternative measures of operating performance or liquidity. Some of these ratios and measures include, among other things, pro forma adjustments for acquisitions, one-time charges, and other items, as defined in the Credit Agreement. They are presented here to demonstrate compliance with the covenants in the Credit Agreement, as non-compliance with such covenants could have a material adverse effect on the Company.
Material Cash Requirements
The Company’s AgenciesBrands enter into contractual commitments with media providers and agreements with production companies on behalf of its clients at levels that exceed the revenue from services. Some of our agenciesBrands purchase media for clients and act as an agent for a disclosed principal. These commitments are included in Accounts payable and Accruals and other liabilitiesAccrued media when the media services are delivered by the media providers. Stagwell takes precautions against default on payment for these services including the procurement of credit insurance and has historically had a very low incidence of default. Stagwell is still exposed to the risk of significant uncollectible receivables from our clients. The risk of a material loss could significantly increase in periods of severe economic downturn.
Deferred acquisition consideration on the balance sheet consists of deferred obligations related to contingent and fixed purchase price payments. See Note 65 of the Notes included herein for additional information regarding contingent deferred acquisition consideration. As of March 31, 2023, approximately $51.5 million of the deferred acquisition consideration is expected to be settled in shares of Class A Common Stock.
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 incremental purchase may be required of the Company, the amounts are recorded as redeemable noncontrolling interests in mezzanine equity. See Note 98 of the Notes included herein for additional information regarding noncontrolling interests and redeemable noncontrolling interests.
Certain of the Company’s subsidiaries grant awards to their employees providing them with an equity interest in the respective subsidiary (the “profits interests awards”). The awards generally provide the employee the right, but not the obligation, to sell its interest in the subsidiary to the Company based on a performance-based formula and, in certain cases, receive a profit share distribution.
The Company intends to finance the cash portion of these contingent payment obligations using available cash from operations, borrowings under the revolving Credit Agreement (or any refinancings thereof), and, if necessary, through the incurrence of additional debt and/or issuance of additional equity. The ultimate amount payable in the future relating to these transactions will vary because it is dependent on the future results of operations of the subject businesses and the timing of when these rights are exercised.
Critical Accounting PoliciesEstimates
See the Company’s 20212022 Form 10-K for information regarding the Company’s critical accounting policies.estimates.
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Website Access to Company Reports and Information
Stagwell Inc. is the successor SEC registrant to MDC Partners Inc. Stagwell Inc.’s Internet website address is www.stagwellglobal.com. The Company’s Annual Reports on Form 10-K, quarterly reportsQuarterly Reports on Form 10-Q and current reportsCurrent Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to the Exchange Act, will be made available free of charge through the Company’s website as soon as reasonably practical after those reports are electronically filed with, or furnished to, the SEC. From timeThe Company announces material information to time,the public through a variety of means, including filings with the SEC, press releases, public conference calls, and its website. The Company uses these channels, as well as social media, including its Twitter account (@stagwell) and its LinkedIn page (https://www.linkedin.com/company/stagwell/), to communicate with investors and the public about the Company, uses its website as a channel of distribution of material company information, including webcasts of earnings callsproducts and services, and other investor eventsmatters. Therefore, investors, the media, and notifications of news or announcements regarding its financial performance, including SEC filings, investor events, press releases and earnings releases. Theothers interested in the Company are encouraged to review the information foundthe Company makes public in these locations, as such information could be deemed to be material information. Information on or otherwise accessiblethat can be accessed through the Company’s websitewebsites or these social media channels is not incorporated into, and does not form a part of this Form 10-Q.10-Q, and the inclusion of the Company’s website addresses and social media channels are inactive textual references only.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, the Company is exposed to market risk related to interest rates, foreign currencies and impairment risk.
Debt Instruments: At March 31, 2022,2023, the Company’s debt obligations consisted of amounts outstanding under its Credit Agreement and the 5.625% Notes. The 5.625% Notes bear a fixed 5.625% interest rate. The revolving credit agreement bears interest at variable rates based upon the U.S. bank prime rate, U.S. base rate, LIBOR or its replacement SOFR, EURIBOR, and SONIA depending on the duration of the borrowing product. The Company’s ability to obtain the required bank syndication commitments depends in part on conditions in the bank market at the time of syndication.
As ofOn April 27,28, 2022, the Company amended itsthe Credit Agreement. This amendment replaces any previous referencereplaced references to LIBOR with references to SOFR. With regard to our variable rate debt, a 10% increase or decrease in interest rates would not be material tochange our annual interest expense or cash flows.by $1.1 million.
Foreign Exchange: While the Company primarily conducts business in markets that use the U.S. dollar, the Canadian dollar, the Euro and the British Pound, its non-U.S. operations transact business in numerous different currencies. The Company’s results of operations are subject to risk from the translation to the U.S. dollar of the revenue and expenses of its non-U.S. operations. The effects of currency exchange rate fluctuations on the translation of the Company’s results of operations are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 2 of the Company’s 2021Audited Consolidated Financial Statements included in the 2022 Form 10-K. For the most part, revenues and expenses incurred related to the non-U.S. operations are denominated in their functional currency. This reduces the impact that fluctuations in exchange rates will have on profit margins. Translation of intercompany debt, which is not intended to be repaid, is included in cumulative translation adjustments. Translation of current intercompany balances are included in net income (loss). The Company generally does not enter into foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange rates.
Impairment Risk: AtFor the three months ended March 31, 2022,2023, the Company did not haverecognize any impairment of goodwill. The Company reviewsrelated to goodwill, for impairment annually as of October 1st of each yearright-of-use leases or more frequently if indicators of potential impairment exist.intangible assets. See the CriticalSignificant Accounting Policies and Estimates section in the “Notes to Consolidated Financial Statements” of the Company’s 20212022 Form 10-K for information related to impairment testing for Goodwill, Right-of-use lease assets and long lived assets and the risk of potential impairment charges in future periods. See the Critical Accounting Estimates section in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information related to the risk of potential impairment charges in future periods.

Item 4.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to ensureprovide reasonable assurance that information required to be includeddisclosed in our SEC reports that we file or submit under the Securities Exchange Act of 1934, as amended (“Exchange Act”), is recorded, processed, summarized and reported within the applicable time periods specified by the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”), who is our principal executive officer, and Chief Financial Officer (“CFO”), who is our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives. However, our disclosure controls and procedures are designed to provide reasonable assurances of achieving our control objectives.

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We conducted an evaluation, under the supervision and with the participation of our management, including our CEO, CFO and management Disclosure Committee, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act.
Based on that evaluation, and in light of the material weaknesses identified in our internal control over financial reporting as disclosed in our Form 10-K for the fiscal year ended December 31, 2021,2022, our CEO and CFO concluded that, as of March 31, 2022,2023, our disclosure controls and procedures were not effective at a reasonable assurance level.effective.
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Changes in Internal Control Over Financial ReportingMaterial Weakness Remediation Plan and Status
The Company identifiedmade progress with the remediation of these material weaknesses in itsand continued to execute on the previously communicated remediation activities through March 31, 2023:
Continued to emphasize at the executive management level, the importance of internal controlscontrol over financial reporting, as well as the integrity of December 31, 2021 as described in its 2021 Form 10-K. We are continuingour financial statements throughout the Company.
Hired a Senior Vice President of Sarbanes-Oxley Act (“SOX”) reporting directly to formulate ourthe CFO with the appropriate level of knowledge and experience to lead the development and execution of the remediation plan.
Established a SOX Steering Committee, that monitors and advises with respect to the remediation plan and progress.
Enhanced communications with the Audit Committee of the Board of Directors for increased oversight. The Company also continues to enhanceformally report quarterly to the Audit Committee regarding progress against the remediation plan.
Designed and improve our internalimplemented controls over financial reporting, whichthe risk assessment process that includes detailed qualitative and quantitative factors to identify and assess risks and implement or modify controls in response to those risks.
Assessed the hiringcurrent state of third-party consultants to assist in the design and implementation of new control activities, enhancing existing control activities and assessing the size and structure of our staff. The remediation plan is expected to continue through the end of 2022 with the goal of having the system of internal control, including information technology systems and controls, designedat the consolidated and brand levels. The results of this assessment allowed management to enhance existing business processes and control activities and assess the adequacy of its resources.
Implemented new controls across our information technology environment including general controls related to access, change management and segregation of duties.
Redesigned and strengthened control activities over reconciliations including enhanced review and approval controls.
Improved monitoring of internal control over financial reporting by designing and enhancing management review controls.
Formalized internal control policies and procedures and conducted multiple in-depth training with control owners throughout the Company.

The Company has also continued to roll out its finance transformation initiative, which involves a phased deployment of new enterprise resource planning and human resource information systems and a shared service platform.
During the three-months ended March 31, 2023, management continued to evaluate our internal control processes and remediate gaps in operation as of December 31, 2022. However, the material weaknesses will not be considered remediated as of December 31, 2022 as the systemdesign of internal controls in line with the previously disclosed remediation plan and timeline. The measures that we are taking are subject to continued testing, ongoing senior management review, as well as audit committee oversight. We will needconsider the above material weaknesses to be fully remediated once the applicable controls operate for a sufficient period of time and be subject toour management has concluded, through testing, by management in 2023 in order to conclude the system of internalthat these controls isare operating effectively. The Company will provide an update onWe may also conclude that additional measures may be required to remediate the progressmaterial weaknesses in our internal control over financial reporting, which may necessitate further internal control changes.

Change in Internal Control Over Financial Reporting
Other than the changes discussed above in connection with our implementation of itsthe remediation plan, throughoutthere were no other changes in our internal control over financial reporting (as such term is defined in Rules 13a–15(f) and 15d–15(f) under the fiscal year.Exchange Act) that occurred during our most recent quarter, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
In the ordinary course of business, we are involved in various legal proceedings. We do not currently expect that these proceedings will have a material adverse effect on our results of operations, cash flows or financial position.

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Item 1A.    Risk Factors
There have been no material changes to the risk factors in Part I, Item 1A “Risk Factors” of our 20212022 Form 10-K. These risks could materially and adversely affect our business, results of operations, financial condition, cash flows, projected results and future prospects. These risks are not exclusive and additional risks to which we are subject include the factors listed under “Note About Forward-Looking Statements” and the risks described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
In the three months ended March 31, 2022,2023, the Company issued 32,407granted 3,556 shares of Class A Common Stock in transactions exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. TheseAct. The shares were granted to employeesan employee as inducement for employment. The Company received no cash proceeds and no commissions were paid to any person in connection with the issuance of these shares.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
ForOn March 1, 2023, the three months ended March 31, 2022, the Company made no open market purchases of its Class A, B, or C shares. Pursuant to its Combined Credit AgreementBoard authorized an extension and the indenture governing the 5.625% Notes, the Company is currently limited as to the dollar value of shares it may repurchasea $125.0 million increase in the open market.
For the three months ended March 31, 2022, the Company’s employees surrendered shares of Class A Common Stock in connection with the required tax withholding resulting from the conversion of Class C Common Stock to Class A Common Stock. The Company paid these withholding taxes on behalfsize of the related employees. These shares of Class A Common Stock were subsequently retired and no longer remain outstandingRepurchase Program. Under the Repurchase Program, as of March 31, 2022.
On March 23, 2022, the board of directors authorized a stock repurchase program (the “Repurchase Program”) under whichamended, we may repurchase up to $125,000,000an aggregate of $250.0 million outstanding shares of our outstanding Class A common stock.Common Stock, with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program will expire on March 23, 2025.1, 2026. Under the Repurchase Program, share repurchases may be made at our discretion from time to time in open market transactions at prevailing market prices (including through trading plans that may be adopted in accordance with Rule 10b5-1 of the Exchange Act), 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
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deem relevant. The Repurchase Program may be suspended, modified or discontinued at any time without prior notice. Our board of directorsThe Board will review the Repurchase Program periodically and may authorize adjustments of its terms. Pursuant to its Credit Agreement (as defined and discussed in Note 7 of the Notes included herein) and the indenture governing the 5.625% Notes, the Company is currently limited as to the dollar value of shares it may repurchase in the open market.
The following table details thoseour monthly shares withheldrepurchased during the first quarter of 2022:2023 and the approximate dollar value of shares that may yet be purchased pursuant to the Repurchase Program:
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced ProgramAppropriate Dollar Value of Shares That May Yet Be Purchased Under the Program
1/1/2022 - 1/31/2022— $— — — 
2/1/2022 - 2/28/20221,998,143 5.42 — — 
3/1/2022 - 3/31/2022— — — — 
Total1,998,143 $5.42   
Period
Total Number of Shares Purchased (1)
Average Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced ProgramApproximate Dollar Value of Shares That May Yet Be Purchased Under the Program
1/1/2023 - 1/31/20231,544,375 $6.56 1,156,022 $65,458,469 
2/1/2023 - 2/28/20231,365,091 $7.06 1,066,967 $57,987,710 
3/1/2023 - 3/31/2023856,812 $9.09 361,802 $180,391,911 
Total3,766,278 $7.57 2,584,791 $180,391,911 

(1) Includes 1,181,487 shares repurchased to settle employee tax withholding obligations related to the vesting of restricted stock awards and restricted stock units.

Item 3.    Defaults Upon Senior Securities
None.

Item 4. Mine Safety Disclosures
Not applicable.

Item 5.    Other Information
NoneOn May 4, 2023, certain subsidiaries of Stagwell Inc., entered into Amendment No. 4 to the Amended and Restated Credit Agreement (the “Amendment”), by and among Stagwell Marketing Group LLC, Stagwell Global LLC and Maxxcom LLC
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(together, the “Borrowers”), the other Loan Parties, Lenders and Issuing Banks (each as defined therein) party thereto and JPMorgan ChaseBank, N.A., as Administrative Agent thereunder. The Amendment amends that certain Amended and Restated Credit Agreement, dated as of August 2, 2021, as heretofore amended or modified from time to time and as further amended by the Amendment (the “Credit Agreement”), by and among the Borrowers, the other Loan Parties, Lenders and Issuing Banks party thereto, and the Administrative Agent.
The Amendment amends the Credit Agreement, effective as of May 4, 2023, to, among other things, (i) provide additional revolving commitments under the Credit Agreement in an aggregate principal amount of $140.0 million; (ii) permit restricted payments for share repurchases or redemptions from certain stockholders of the Company in an aggregate principal amount of up to $150.0 million, subject to certain limitations; (iii) permit certain investments and financings with respect to Borrowers’ business related to a suite of software-as-a-service and data-as-a-service technology solutions for in-house marketers and exclude, in some instances, such businesses from having the obligation to provide a guaranty and security; and (iv) make any other changes or modifications as agreed with the lenders.
The foregoing summary of the Amendment does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Credit Agreement, as amended, which is attached hereto as Exhibit 10.3 and incorporated herein by reference.

Item 6.    Exhibits
The exhibits required by this item are listed on the Exhibit Index.
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EXHIBIT INDEX
 
Exhibit No.Description
Second Amended and Restated Certificate of Incorporation of Stagwell Inc., as amended(incorporated by reference to Exhibit 3.1 to the Company’s Form 10-K filed on March 17, 2022).
amended. *
Amended and Restated Bylaws of Stagwell Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed on August 2, 2021).
Second Amended and Restated Limited Liability Company Agreement of Stagwell Global LLC dated as of March 23, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on March 28, 2022).
10.2
Second Amended and Restated Employment Agreement Amendment, dated as of March 11, 2022, by and between the Company and Mark Penn (incorporated by reference to Exhibit 10.10 to the Company’s Form 10-K filed on March 17, 2022).
10.3
Amended and Restated Stock Appreciation Rights Agreement by and between the Company and Mark Penn, dated as of March 11, 20221, 2023 (incorporated by reference to Exhibit 10.10.210.9.3 to the Company’s Form 10-K filed on March 17, 2022)6, 2023).
Stock Repurchase Agreement, dated May 9, 2023, between Stagwell Inc. and the entities listed on Schedule I thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on May 9, 2023).
Amended and Restated Credit Agreement, dated as of August 2, 2021, as amended, among Stagwell Marketing Group LLC, Stagwell Global LLC, Maxxcom LLC, the other Borrowers and Loan Parties party thereto, the Lenders and other parties party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent. *
Certification by Chief Executive Officer pursuant to Rules 13a - 14(a) and 15d - 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.*
Certification by Chief Financial Officer pursuant to Rules 13a - 14(a) and 15d - 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.*
Certification by Chief Executive Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
Certification by Chief Financial Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101Interactive Data File, for the period ended March 31, 2022.2023. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.*
104Cover Page Interactive Data File. The cover page XBRL tags are embedded within the inline XBRL document and are included in Exhibit 101.*
* Filed herewith.
** Furnished herewith
† Indicates management contract or compensatory plan.
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
STAGWELL INC.
 
/s/ Mark Penn
Mark Penn
Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
May 10, 20229, 2023
/s/ Frank Lanuto
Frank Lanuto
Chief Financial Officer (Principal Financial Officer)
May 10, 20229, 2023
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