Stagwell reported a net revenue gain of 3.6% for the first quarter to $584 million. Organic growth was 1.6%.  

The company’s total revenue for the period including acquisitions was up 8% to $704 million, but missed the consensus analysts’ estimate of $717.5 million. That was based on expected higher revenue related to AI products. 

Investors sent the firm’s stock down 9% in Thursday morning trading after Stagwell issued its results. 

The company said it posted record net new business for Q1 of $141 million (revenue), with a net new business total over the last 12 months of $486 million. 

Stagwell reiterated guidance for 2026 of total net revenue growth of 8% to 12%. Adjusted pre-tax earnings are expected to be in the $475 million-to-$525 million range. It did not provide an organic growth outlook, but quarter by quarter sequential growth is expected throughout the year. 

Stagwell CEO Mark Penn told analysts and investors on an earnings call Thursday that results in the second half will be bolstered by midterm election dollars, a government contract services operation that is now fully ramped up and winning business and several major wins that are in the final stages of contract negotiations. The unit is bidding for contracts issued by the US Postal Service and the U.S. Navy. 

The firm posted a net loss of $13 million, with adjusted pre-tax earnings of $90 million, up 9%.  

In Q1, the firm’s biggest revenue growth driver was its digital transformation division which was up 9% (5.6% organically) and is expected to grow by double digits in the second half of the year, Penn said.  

Media and commerce posted an organic decline of 0.7% while total net revenue was up 2.6%. Penn said last year’s loss of its H&R Block business hadn’t been fully replaced but that he expects media to improve in the second half of the year given recent wins (particularly at Gale) and an active pipeline. 

Penn said that so far this year Stagwell has not been significantly impacted by ongoing macroeconomic and geopolitical turmoil, except in the war-torn Middle East, which accounts for a low single digit percentage of the firm’s business.  

Overall, he said, “clients are not pulling back or altering plans” due to oil prices or other economic concerns.  

The company has instituted what it calls a “client accountability” program, where every client now has an account executive directly responsible for its business. Goals include reducing client churn (particularly among smaller clients) and improving organic growth. Over time, Penn said the program could boost organic growth by 2 or 3 percentage points. 

"Stagwell continues to be on a path for a great 2026, bolstered by record new wins, its first government contracts, and its pivot to delivering agentic applications for the marketing industry," said Penn. "On a two-year stack, our Digital Transformation segment is accelerating to 22% organic net revenue growth as we apply AI to drive industry-leading results for our clients." 

He also reported three new clients for the firm’s agentic marketing platform The Machine, including Con Edison, a division of Microsoft and an undisclosed global spirits company. The firm is betting big on the platform: “Every company will need an agentic marketing system,” he said. 

Pictured above: CFO Ryan Greene, Penn and Chief Brand & Communications Officer Lena Petersen on a Thursday earnings call with analysts.