Stagwell Lifts 2026 Profit Outlook After Record Quarter, With Software Revenue Up 108%
The marketing network raised its adjusted EBITDA and EPS forecasts as digital transformation grew 23% and operating cash flow jumped.
Stagwell, the marketing and communications network, raised its 2026 forecasts for adjusted EBITDA and adjusted earnings per share on Thursday after third-quarter revenue rose 10% to $816 million. Net revenue, which strips out pass-through costs, rose 8% to $664 million, the company said.
The new guidance
Stagwell now expects full-year adjusted EBITDA of $490 million to $540 million and adjusted EPS of $1.07 to $1.21. It reiterated its outlook for net revenue growth of 8% to 12% and free cash flow conversion of 50% to 60%, according to the earnings release.
In the quarter, adjusted EBITDA climbed 25% to $145 million and adjusted EPS rose 42% to $0.34, from $0.24. Reported net income attributable to common shareholders fell to $18 million from $25 million a year earlier, or $0.07 per share against $0.09. For the first nine months, the company posted a net loss of $3 million, against income of $16 million a year earlier.
Cash flow improved sharply: net cash from operating activities for the first nine months was $152 million, against $31 million a year earlier. Net leverage stands at 2.7x, which CFO Ryan Greene said is a 0.7x improvement from a year ago and the lowest ever for a third quarter.
Software and digital lead the mix
Stagwell sells creative, research, digital, media, public relations and advocacy services, plus software and data tools for marketers. The quarter shows the pivot: Digital Transformation net revenue grew 23% organically to $119 million, and The Marketing Cloud, its software unit, grew 108% organically to $56 million. Marketing Services net revenue fell 9%, to $218 million.
Enterprise technology products contracted to date reached $59 million, more than double the initial 2026 goal. Net new business was $168 million in the quarter and $586 million over the last twelve months, including the largest multi-agency deal in company history, with ServiceNow.
"This is the biggest quarter in Stagwell's history," said Mark Penn, Chairman and CEO. He said software products and the Digital Transformation segment are driving the business "as we pivot from primarily marketing services to AI-powered marketing transformation."
Costs, buybacks and the call
The company has actioned $78 million of the $80 million to $100 million in cost savings it announced in April 2025, according to its earnings presentation. It has $326 million available to repurchase shares under its current plan.
Management hosts a video webcast at 8:30 a.m. ET Thursday to discuss the results.
Penn said in the presentation that Stagwell's current valuation does not reflect its high-growth, high-margin business mix.
Sources
- 8-K Filing — Stagwell Inc (STGW) — SEC EDGAR
- Exhibit stgw2026930pr.htm — Stagwell Inc 8-K exhibit — SEC EDGAR
- Exhibit a3q26earningspresentatio.htm — Stagwell Inc 8-K exhibit — SEC EDGAR
- Stagwell (STGW) unifies the employee experience across global network of 70+ agencies on the ServiceNow AI Platform – Company Announcement - FT.com — Financial Times
