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Segment Information
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Segment Information
16. 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 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.
Due to changes in the Company’s internal management and reporting structure in the second quarter of 2022, reportable segment results for periods presented prior to the second quarter of 2022 have been recast to reflect the reclassification of certain reporting units (brands) between operating segments. The changes in reportable segments were that the Forsman & Bodenfors, Observatory, Crispin Porter Bogusky, Bruce Mau and Vitro brands, previously within the Integrated Agencies Network, are now within the Brand Performance Network.
The Company has three reportable segments as follows: “Integrated Agencies Network,” “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 five operating segments: the Anomaly Alliance, Constellation, the Doner Partner Network, Code and Theory, and National Research Group. The operating segments offer an array of complementary services spanning our core capabilities of Digital Transformation, Performance Media & Data, Consumer Insights & Strategy, and Creativity & Communications. The brands 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 (brands), Constellation (72andSunny, Colle McVoy, Instrument, Redscout, Hello Design, Team Enterprises, and Harris Insights), the Doner Partner Network (Doner, KWT Global, Harris X, Veritas, Doner North, Northstar, which is currently sunsetting, and Yamamoto (brands)), Code and Theory and National Research Group.
These operating segments share similar characteristics related to (i) the nature of their services; (ii) the type of clients and the methods used to provide services; and (iii) the extent to which they may be impacted by global economic and geopolitical risks. In addition, these operating segments may occasionally compete with each other for new business or have business move between them.
•The Brand Performance Network (“BPN”), previously referred to as the “Media Network” reportable segment, is comprised of a single operating segment. BPN includes a unified media and data management structure with omnichannel media placement, creative media consulting, influencer and business-to-business marketing capabilities.
Our Brands in this segment aim to provide scaled creative performance through developing and executing sophisticated omnichannel campaign strategies leveraging significant amounts of consumer data. BPN’s Brands combine media buying and planning across a range of digital and traditional platforms (out-of-home, paid search, social media, lead generation, programmatic, television, broadcast, among others) and includes multichannel brands Assembly, Brand New Galaxy, Crispin Porter Bogusky, Forsman & Bodenfors, Bruce Mau Design, Goodstuff, MMI Agency, digital creative & transformation consultancy 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 brands.
•All Other consists of the Company’s digital innovation group and Stagwell Marketing Cloud products such as PRophet and Reputation Defender (which was sold in September 2021).
•Corporate consists of corporate office expenses incurred in connection with the strategic resources provided to the operating segments, as well as certain other centrally managed expenses that are not fully allocated to the operating segments. These office and general expenses include (i) salaries and related expenses for corporate office employees, including employees dedicated to supporting the operating segments, (ii) occupancy expenses relating to properties occupied by all corporate office employees, (iii) other office and general expenses including professional fees for the financial statement audits and other public company costs, and (iv) certain other professional fees managed by the corporate office. 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 September 30,		Nine Months
Ended September 30,
2022202120222021
Revenue:(Dollars in Thousands)
Integrated Agencies Network$367,122 $269,071 $1,095,761 $419,659 
Brand Performance Network171,463 122,826 563,546 257,109 
Communications Network121,770 67,348 311,075 157,794 
All Other3,436 7,389 9,225 22,874 
Total Revenue$663,791 $466,634 $1,979,607 $857,436 
Adjusted EBITDA:
Integrated Agencies Network$76,224 $66,063 $215,920 $100,264 
Brand Performance Network24,312 17,664 89,259 30,485 
Communications Network25,462 10,312 58,630 28,302 
All Other(363)419 (972)(1,316)
Corporate(10,543)(6,940)(35,014)(7,656)
Total Adjusted EBITDA$115,092 $87,518 $327,823 $150,079 
Depreciation and amortization$(32,207)$(24,790)$(95,642)$(46,122)
Impairment and other losses(25,211)(14,926)(28,034)(14,926)
Stock-based compensation(12,258)(53,465)(33,410)(53,465)
Deferred acquisition consideration29,789 (3,422)14,420 (9,456)
Other items, net(5,152)(10,549)(12,112)(15,298)
Total Operating Income (Loss)
$70,053 $(19,634)$173,045 $10,812 
Three Months
Ended September 30,		Nine Months
Ended September 30,
2022202120222021
(Dollars in Thousands)
Other Income (expenses):
Interest expense, net$(19,672)$(11,912)$(56,552)$(15,197)
Foreign exchange, net(3,927)(893)(4,163)(1,955)
Other, net147 45,621 182 46,806 
Income before income taxes and equity in earnings of non-consolidated affiliates46,601 13,182 112,512 40,466 
Income tax expense11,540 5,183 20,150 9,205 
Income before equity in earnings of non-consolidated affiliates35,061 7,999 92,362 31,261 
Equity in income (loss) of non-consolidated affiliates213 (76)1,053 (75)
Net income35,274 7,923 93,415 31,186 
Net income attributable to noncontrolling and redeemable noncontrolling interests(24,665)(9,994)(59,668)(10,987)
Net income (loss) attributable to Stagwell Inc. common shareholders$10,609 $(2,071)$33,747 $20,199 
Depreciation and amortization:
Integrated Agencies Network$18,316 $13,494 $55,206 $18,787 
Brand Performance Network8,205 7,499 25,044 18,070 
Communications Network2,654 2,110 7,718 5,087 
All Other1,206 493 2,457 2,013 
Corporate1,826 1,194 5,217 2,165 
Total$32,207 $24,790 $95,642 $46,122 
Stock-based compensation
Integrated Agencies Network$5,308 $32,431 $15,044 $32,431 
Brand Performance Network2,923 2,620 9,152 2,620 
Communications Network671 15,384 1,077 15,384 
All Other7 16 15 16 
Corporate3,349 3,014 8,122 3,014 
Total$12,258 $53,465 $33,410 $53,465 
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 4 of the Notes included herein for a summary of the Company’s revenue by geographic region for the three and nine months ended September 30, 2022 and 2021.