Revenue

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue

4. Revenue

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 Brand 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.

The following table presents revenue disaggregated by our principal capabilities for the three and nine months ended September 30, 2024 and 2023. We reclassified certain brands into the Stagwell Marketing Cloud Group (software-as-a-service and data-as-a-service tools for in-house marketers) principal capability in the third quarter of 2023. All prior periods presented have been revised to reflect these changes.

		Three Months Ended September 30,				Nine Months Ended September 30,
Principal Capabilities	Reportable Segment	2024		2023		2024		2023
		(dollars in thousands)
Digital Transformation	All segments	$	176,676	$	141,552	$	535,911	$	487,134
Creativity and Communications	All segments	333,843		301,916		942,257		857,088
Performance Media and Data	Integrated Agencies Network and Brand Performance Network	79,508		72,794		234,935		215,743
Consumer Insights and Strategy	Integrated Agencies Network	47,056		44,033		140,542		142,053
Stagwell Marketing Cloud Group	All segments	74,198		57,278		198,863		170,264
		$	711,281	$	617,573	$	2,052,508	$	1,872,282

Stagwell’s Brands are located in the United States, the United Kingdom, and more than 32 other countries around the world. The Company continues to expand its global footprint to support clients in international markets. 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 and nine months ended September 30, 2024 and 2023:

		Three Months Ended September 30,				Nine Months Ended September 30,
Geographical Location	Reportable Segment	2024		2023		2024		2023
		(dollars in thousands)
United States	All	$	584,734	$	500,573	$	1,699,464	$	1,531,606
United Kingdom	All	41,718		40,323		119,994		115,535
Other	All	84,829		76,677		233,050		225,141
		$	711,281	$	617,573	$	2,052,508	$	1,872,282

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. Such amounts are invoiced to clients at various times over the course of providing services. In arrangements in which we are acting as principal, contract assets are included as a component of Accounts receivable on the Unaudited Consolidated Balance Sheet. These assets were $180.8 million and $141.9 million as of September 30, 2024 and December 31, 2023, respectively. In arrangements in which we are acting as agent, contract assets are included on the Unaudited Consolidated Balance Sheet as Expenditures billable to clients. These assets were $137.4 million and $114.1 million as of September 30, 2024 and December 31, 2023, respectively.

Contract liabilities represent advanced billings to customers for fees and reimbursements of third-party costs, whether we act as principal or agent. Such fees and reimbursements of third-party costs are classified as Advance billings on the Company’s Unaudited Consolidated Balance Sheet. 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 Consolidated Statements of Operations. Advance billings at September 30, 2024 and December 31, 2023 were $338.8 million and $301.7 million, respectively. The change in Advance billings of $37.1 million for the nine months ended September 30, 2024 was primarily driven by $275.8 million of revenue recognized that was included in the Advance billings balances as of December 31, 2023, the incurrence of third-party costs, and cash payments received or due in advance of satisfying our performance obligations.

The Company acquired $5.5 million in contact assets and $8.8 million in contact liabilities in connection with the acquisition of Epiphany. See Note 3 of the Notes included herein for additional information related to this acquisition.

Changes in the contract asset and liability balances during the nine months ended September 30, 2024 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 $95.2 million of unsatisfied performance obligations as of September 30, 2024 of which we expect to recognize approximately 34% in 2024, 48% in 2025, 14% in 2026 and 4% in 2027