Stagwell (STGW) Q1 2026 Earnings Transcript

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DATE

Thursday, April 30, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Mark Penn
• Chief Financial Officer — Ryan Greene
• Chief Brand and Communications Officer — Lena Petersen

TAKEAWAYS

• Revenue -- $704 million, up 8%, with growth across all five segments.
• Net Revenue -- $585 million, rising 4%, and representing the strongest fiscal first-quarter organic net revenue growth in at least four years.
• Digital Transformation Segment Net Revenue -- $96.5 million, up 9%, driven by integrated technology solutions and measurable ROI demand; two-year organic net revenue stack exceeds 22% growth.
• Marketing Cloud Revenue -- $26.5 million, up 5.3%, fueled by AI-enabled platforms and research products; BERA up 28%, Harris Quest up 19%.
• Media and Commerce Net Revenue -- $149.5 million, rising 2.3%, as new business momentum and client expansions accelerated recovery.
• Marketing Services Net Revenue -- $217.6 million, increasing 1.1%, with centralized production group's net revenue nearly doubling.
• Communications Net Revenue -- $96.8 million, up 6.4%, primarily due to new corporate assignments and diversified client mix.
• Adjusted EBITDA -- $89.7 million, growing 9% with a 15.3% margin, an expansion of 75 basis points.
• Earnings Per Share (EPS) -- $0.17, a 31% increase, partly reflecting aggressive share repurchases totaling 7.3 million shares at $6.16 average price.
• Net New Business -- $141 million, a record quarter, $80 million ahead of prior year, with four additional major assignments near finalization.
• First Major Government Contract -- Nearly $60 million over five years signed, expanding pipeline by hundreds of millions of dollars.
• Enterprise Tech Products -- $12 million in booked sales toward a $25 million initial sales target, with a growing pipeline and 50% of first-year quota achieved early.
• Labor Cost Ratio -- 63.9%, down 110 basis points, reflecting improved efficiency and cost control.
• Free Cash Flow Target -- On track for $250 million-$300 million in free cash flow, with fiscal first-quarter cash flow from operations up $34 million, and free cash flow up $18 million.
• Net Leverage -- Down to 3.11x, a 0.17-turn improvement, with the revolver balance reduced by $25 million to $350 million.
• Cost Savings Actions -- $54 million of savings realized since April 2025, firmly on track for $80 million-$100 million in total by 2027.
• Share Count -- About 246 million shares outstanding, down 19 million since last April, and 50 million since August 2021.
• Guidance Reiterated -- Net revenue growth of 8%-12%, adjusted EBITDA of $475 million-$525 million, free cash flow conversion of 50%-60%, and adjusted EPS of $0.98-$1.12.
• Client Churn Reduction -- Decreased by over 10%, with a goal to cut by 25%, expected to add 2-3 points of organic growth if successful.
• Top 100 Clients -- Grew by 15% in size, driven by new business team expansion and accountability program.

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RISKS

• Mark Penn said, "Well, look, I think the only direct impact on us is Mid East tourism is not exactly the flourishing at the moment. We expect, though, when this is over, it will bounce back quickly and that a lot of these clients will then -- they will be like post pandemic, but that is -- but really only about 3% of our business is out there, but it is -- but that is some impact on us."
• International efforts outside the U.K. were "muted by a strengthening dollar, and slowdowns in the Middle East tourism and technology," cited as temporary by management.
• One Marketing Cloud product launch in the Middle East was pushed to Q2 due to "regional conflicts."

SUMMARY

Stagwell (NASDAQ:STGW) delivered record net new business and significant revenue and EBITDA growth, underpinned by strong Digital Transformation segment expansion and continued investment in AI-driven products. The company signed a major $60 million multi-year government contract, established momentum in Enterprise Tech bookings, and demonstrated disciplined cost reductions resulting in higher free cash flow, margin expansion, and lower net leverage. Leadership reiterated full-year guidance and expressed confidence in further growth, citing a robust pipeline, increasing advocacy and political spending, and lower client churn. Strategic progress in government contracts and large enterprise client wins reinforced management's forecast for accelerated revenue and earnings in the second half, underlined by operational improvements and technology adoption.

• Stagwell is scaling its government business, confirmed by Mark Penn's statement about an imminent formal announcement and multiple large contracts nearing closure.
• The company doubled its new business team and implemented an AI-driven client accountability system, aimed at further reducing churn and increasing large-scale wins.
• Ryan Greene highlighted that share buybacks have directly contributed to increased adjusted EPS, enhancing capital allocation impact.
• Segment margin expansion has been supported by increased AI and technology investments, specifically through partnerships like Palantir (NYSE:PLTR) and joint initiatives with Adobe (NASDAQ:ADBE).
• There was no evidence cited in the call of customers broadly altering spending in response to macroeconomic risks outside the disclosed Middle East impact.

INDUSTRY GLOSSARY

• Agentic Marketing Operating System (MOOS): An integrated platform designed to unify and automate a company's entire marketing technology stack and data flows.
• Stagwell Agentic Targeting system (SATs): A proprietary platform leveraging client and Stagwell data, in partnership with Palantir, to identify, target, and assess audiences for marketing campaigns.
• Marketing Cloud: Stagwell's collection of AI-enabled communication and research platforms tracking consumer sentiment and supporting marketing initiatives in real time.

Full Conference Call Transcript

Mark Penn: Thank you, Lena. This is a pivotal moment in the Stagwell story as we continue to achieve our vision of extending in services from global full service to platform self-service AI applications. We're hitting major milestones on both ends of that vision while keeping costs under control and increasing our earnings per share. Together, these developments should produce an incredible 2026. First, our net new business is hitting records, and we are now regularly achieving large-scale wins. The first quarter was a record, and our wins are about $80 million ahead of wins last year at this time.

We're closing in on 4 new major assignments under final negotiations and we just signed our first 5-year nearly $60 million government contract this week. Second, our new enterprise tech products and sales organization are on track towards hitting the first sales goal of $25 million with $12 million booked, and we are just getting our sales operation in place. Demand for the new products is strong with a growing pipeline. Our Digital Transformation segment continues to lead the way in growth.

Third, this quarter is in line with expectations, as indicated on the last call, and we are building towards a record-breaking second half of the year with the combination of new business and the kickoff of an advocacy super cycle. We reiterate guidance and express even further confidence given this quarter's organic net revenue growth is actually the strongest in Q1 in at least 4 years. We expect growth to accelerate to double digits by Q3 and Q4. Revenue grew 8% to $704 million and net revenue grew 4% to $585 million. We saw growth across all 5 of our segments in the first quarter, led by a 9% jump in Digital Transformation.

Digging into the Digital Transformation results, the 2-year organic net revenue stack for the segment tells a particularly impressive story with growth of more than 22% in Q1. This continues an improving trend in this metric that we have seen for the last 8 quarters. Given the strong start to the year, we expect the Digital Transformation segment to accelerate to mid-teens growth in the second half. AI and our understanding of how to apply it is a huge tailwind for us.

Past weakness in Communications has reversed and the segment grew more than 6%, principally on the backs of new corporate assignments as the political season was not yet underway, but will be in full swing in the last 2 quarters. All advocacy work is now within the single Communications segment, and the companies are diversifying their work for more nonprofits, universities and localized retail marketing. By region, the U.S. led the way this quarter with over 8% organic revenue growth with over 3% organic net revenue growth and double-digit growth in adjusted EBITDA. International efforts outside the U.K. were muted by a strengthening dollar and slowdowns in the Middle East tourism and technology, which we expect to be temporary.

Adjusted EBITDA grew 9% year-over-year to $90 million, representing a margin of 15.3%, an improvement of 75 basis points versus last year. This reflects prudent cost controls across the business. Our first quarter labor ratio declined to 63.9%, even as we invested in our go-to-market engine. We are reinvesting these efficiencies in growth to take advantage of the AI opportunities. In the first quarter, we bought back approximately 7.3 million shares. Our shares outstanding at the end of the quarter was down to about 246 million shares, down by about 19 million shares since last April and down about 50 million shares since August 2021. As a result, EPS for the quarter was $0.17, 31% higher than a year ago.

Continued improvements in cash management means cash flow from operations improved by $34 million versus the first quarter of last year. This puts us on target to hit $250 million to $300 million in free cash flow with almost no deferred acquisition payments. Acquisitions have been dialed back as we are investing heavily in buybacks and in new technology, as I previously outlined last month. As I also predicted on the last call, we saw a surge in wins to start the year with record-breaking first quarter net new business coming in at $141 million, putting our last 12 months at $486 million.

Our winning streak is continuing into this quarter as well with several important wins to be announced shortly. As I mentioned earlier, our government contract effort is also picking up steam and having success. This is adding hundreds of millions of dollars to our pipeline, and we have multiple large pitches coming up. When it makes sense, we are partnering with established players like Deloitte and Palantir on massive contracts. We continue to focus on driving organic growth through larger assignments, previously the domain of our 3 major competitors and reducing the high churn rate among our smaller customers.

We have taken 2 major steps to execute that strategy, and we expect it to pay off in 2026 and in raising 2027 estimates. First, we have doubled the size of the new business team, announcing significant new hires, including Nicole Souza as Chief Growth Officer for North America, who brings with her 25 years of experience, most recently at Publicis. Second, to reduce client churn, we've instituted a client accountability program so that every client, no matter what its size has a person responsible for it. We're receiving frequent reports fed into an AI engine that monitors and reports on client needs and trends.

We have seen our top 100 clients grow by 15% in size, and we've decreased client churn across the business by more than 10% versus 1Q 2025 as we roll out these programs. As to our emerging Enterprise Services and Software business, we are innovating with the products and driving early sales.

In addition to the over $100 million of Marketing Cloud revenue, we are building an additional stream of software and service revenue housed in the Digital Transformation segment based on 3 key products: The Machine, an agentic marketing operating system, which brings together a company's entire marketing stack; SATs, the Stagwell Agentic Targeting system that brings together a secure mix of client and our proprietary data with the power of Palantir's targeting; and Stagwell Search+, a new set of tools for managing search in the world of AI answers. We announced the addition of Michael Twidell to lead our Enterprise AI Solutions team and organize our sales and go-to-market efforts. He is quickly building a team.

We are building the most cutting-edge comprehensive agentic marketing system available today. We believe every company will need an agentic marketing operations operating system, or MOOS, as I like to call it, to unite their ever-burgeoning volume of enterprise applications and data. Since officially launching the machine, we have 3 active engagements that are part of the initial $12 million booked, including Con Edison, a well-known electric utility, a division at Microsoft and a soon-to-be announced global spirits brand. We also currently have 9 active opportunities with 2 deep into scoping, the rest spanning industries from public sector to financial services. SATs will be sold both with the machine and individually.

It's also in testing with multiple client engagements, including a Fortune 500 client and a global lifestyle accessories brand. Working together with Palantir, we are adding key features that take users from audience identification through to media placement and assessment on an agentic basis. Stagwell Search+, our tool to help brands optimize in AI search and beyond was described by senior Google leaders as "genuinely differentiating," and we are now working regionally with Google industry heads to support client adoption. We're partnering with key leaders, including The Trade Desk, AppLovin and Adobe.

Last week, we announced a joint initiative with Adobe called the Creative Intelligence System, which creates agentic personas to surface insights specifically for marketers in the financial sector who use Adobe as their system of record. This is a major pivot to the sales of AI application services and software, and we are now on the verge of bringing it all together, going to market with significant sales and installations this year and the ability to hockey stick it in 2027. Stagwell is on the verge of expanded growth that will carry through '26 into '27 and '28.

Leg 1 of that growth is from the political super cycle, which will ramp starting in midyear and then with the presidential race starting the day after the midterms. Expenditures and political efforts have expanded fourfold since 2008, and we believe it can double again. Leg 2 is the unique combination of services and software we are now offering, which is at the sweet spot of what clients need to adopt AI and shift new models of marketing. And leg 3 is our expanded wins of new clients at scale, displacing long-term holdco relationships.

We are coming into the CPG and health care spaces with superior talent offerings against hollowed out creative shops, and we are moving to disrupt their long-standing government contract relationships. While aged legacy companies are seeing shrinkage, we continue to grow year after year and have an unlimited growth runway ahead of us. We will continue to diversify the business into new high-touch areas as the business of marketing changes and into AI-based services and software that is a must-have for marketing today. We're growing our top and bottom lines. We're expanding our margins. We're delivering strong free cash flow.

We continue to be significantly undervalued no matter how you look at the metrics for a healthy growing company like us at the forefront of its field. How many companies with this profile do you know are trading at 6x free cash flow. That's why we will continue to be aggressive with our buyback. We have hundreds of millions of dollars in our buyback runway. We will use it. With that, I'd like to hand it over to Ryan, who will walk you through some of the financials in more detail.

Ryan Greene: Thank you. Good morning, and thank you for joining us. Today, I will share additional information about our first quarter's financial performance and how we are tracking towards our full year goals. Before beginning, I want to reiterate what we discussed on the fourth quarter call. Our first quarter is where we lay the foundation for growth throughout the year. And we go through a cycle of departing clients leaving January 1 and new clients coming on typically from April to June. Results in the quarter were firmly in line with our expectations across all metrics. We expect to deliver accelerating sequential growth in the second quarter and throughout the year. Starting with the top line.

Revenue increased 8% year-over-year to $704 million, and net revenue increased 3.6% to $585 million. All 5 segments delivered revenue and net revenue growth during the quarter. Growth was led by Digital Transformation segment with net revenue rising 9% year-over-year to $96.5 million, driven by increasing demand for integrated technology solutions paired with services that deliver measurable ROI in a changing market. The Marketing Cloud grew 5.3% to $26.5 million, driven by demand for our AI-enabled communication technology platforms and research offerings that help clients track sentiment in real time, gain faster insight and more actionable insights into customer behaviors. Some of the other divisions are now selling Marketing Cloud products and retaining the revenue there.

One product in the Middle East was pushed to Q2 due to regional conflicts, while BERA, our brand modeling product, grew 28% year-over-year and the Harris Quest family of products grew 19%. The new enterprise software products are not accounted for in the Marketing Cloud, but are in the Digital Transformation segment. Media and Commerce continued its rebound, delivering 2.3% net revenue growth to $149.5 million. Performance was driven by improving new business momentum and expanding relationships as clients increasingly lean into the segment's integrated media, creative and loyalty capabilities. Continued investment in media technology and AI-enabled platforms, combined with disciplined cost management supports stronger operating leverage across the segment.

Marketing Services maintained its momentum despite elevated prior year comparables, growing 1.1% to $217.6 million. Performance was led by our creative and research agencies and our centralized production group nearly doubled net revenue as we continue to bring more production in-house. And finally, Communications grew 6.4% year-over-year to $96.8 million, largely driven by new corporate assignments as our communication firms deliver their product lines to undertake more localized marketing for retailers and other outlets. We expect election-related revenues to ramp up in the second quarter and to continue to grow each quarter thereafter. As we grew to our top line, we continue to take steps to manage our costs.

Payroll as a percent of net revenue declined by 110 basis points year-over-year to 63.9%, while G&A as a percent of net revenue declined by approximately 50 basis points to 19.6%. In the first quarter, we expanded the rollout of tech deployment through our businesses in anticipation of actions, actioning the balance of the cost savings we announced last year. The total action savings since April last year amount to $54 million, firmly on track to achieve the $80 million to $100 million that we previously outlined with these savings flowing through the P&L during 2026 and fully reflected in 2027.

These improvements were partially offset by purposeful actions to strengthen our go-to-market expertise through expanding our new business team, which we aim to double in 2026 and Marketing Cloud sales force. Additionally, we increased our investment in our AI and technology capabilities. This includes OpEx investments into our tech products, including the machine and our Palantir partnership as well as bringing in further experts to strengthen our technical expertise in AI and data. Adjusted EBITDA in the first quarter was $89.7 million, representing a margin of 15.3%. This reflects year-over-year growth of 9% and margin expansion of 75 basis points.

This improvement in adjusted EBITDA, together with the impact of share repurchases I will discuss shortly, drove adjusted EPS of $0.17, a 31% increase versus the first quarter last year. Cash management continues to be a core focus for Stagwell, and we delivered further progress early in the year. Cash flow from operations improved by $34 million versus first quarter last year, driven primarily by stronger working capital execution. That improvement translated into an $18 million year-over-year increase in free cash flow within the quarter, keeping us firmly on track to achieve our full year free cash flow conversion target of 50% to 60% of adjusted EBITDA.

These improvements in cash flow reduced our revolver balance at quarter end to $350 million, a $25 million or approximately 7% reduction versus the first quarter of 2025. Lower net debt and year-over-year growth in adjusted EBITDA drove a 0.17 turn improvement in our net leverage, bringing leverage down to 3.11x. Our continued progress on leverage and cash has been reflected in recent ratings actions with Moody's reaffirming our B1 rating and revising our outlook to positive in late March. We remain on track to exit 2026 with net leverage in the mid-2s, reflecting the combination of our growing adjusted EBITDA, disciplined cost allocation and improving free cash flow generation. Turning to capital allocation.

We repurchased approximately 7.3 million shares during the quarter at an average price of $6.16 representing approximately $45 million of deployment. We continue to invest in our technology platforms, including the machine, our partnership with Palantir and the Marketing Cloud offerings. Capital expenditures and capitalized software totaled $33 million in the first quarter, and we continue to expect full year investment levels to be consistent with 2025. As Mark noted, the momentum behind these products supports this level of investment, and we expect them to begin driving growth across the segment in the second half of the year. Deferred acquisition consideration totaled approximately $50 million at quarter end, down roughly $43 million versus prior year period.

As previously noted, we expect deferred acquisition consideration to be negligible by year-end. First quarter results, coupled with excellent new business trends that Mark highlighted, give us confidence in our full year guidance of total net revenue growth of 8% to 12%, adjusted EBITDA of $475 million to $525 million and free cash flow conversion of 50% to 60% and adjusted earnings per share of $0.98 to $1.12. Thank you, and I will turn it back over to Lena for questions.

Lena Petersen: [Operator Instructions] Let's start with a question from Steve at Wells Fargo. Digital Transformation continues to track well. Can you talk about the underlying trends here in terms of new customers, expansion with existing customers and also speak to what kinds of projects we're working on in a world with far more AI adoption in marketing services?

Ryan Greene: I think we're finding that there is tremendous demand out there. Now we've come from the stage of what's AI; "Oh my God, what's legal say about AI"; to "I better have AI." And I think that we're seeing with the machine, like lots of pitches, same thing with the SaaS product. You see that we're getting big name customers. We're going first, obviously, to existing customers and offering this. But we just went to the Adobe Summit, and we got over 600 leads, right, and that kind of tremendous interest in the product. So I think the answer to your question is really, people want to put AI into their marketing.

We've got a full suite of agentic tools here. We're going to existing customers first, but we're really out -- we've just organized our sales force. We just went to Adobe Summit, picked up 600 leads. And I think that's how this thing is going really about as well as I could expect. And we've gotten 50% of our first year quota really in the first couple of months.

Lena Petersen: Great. So Steve has one more question, which is, I think last year, you cycled off of a client loss that dragged Media segment down. As we look into 2026, what's your outlook for media? And how should we expect it to trend throughout the year?

Mark Penn: Yes. I mean we're still in the Media burning off from the Q1 H&R Block client that was there. So that kind of is fully out. And so that means our -- we don't have somebody else with a big Q1. So we think that the media stuff comes later in the year. I think right now, we run really strong. If you look, particularly GALE has been out there winning really significant contract after contracts. I think that, that's going to be probably the biggest area of kind of Media growth that we -- that I see coming down the pike.

We, of course, have given now -- we have a new head of the entire division, and he's been reorganizing the media. We're adding the technology. So our media is going to be more holiday pattern. Our political is going to be more holiday -- more or less holiday season pattern as well. And I think I see us growing across the year. And I think you're going to particularly see that pattern, both in the whole company and with media.

Lena Petersen: Okay. We've got a question from Mark at Benchmark. Your guidance implies an acceleration in the second half of the year. Could you discuss how much the second half acceleration is dependent on AI product scaling versus advocacy tailwinds and existing client expansion?

Mark Penn: I think it's not dependent as much on AI scaling as it is on -- number one, we know that a number of large-scale creative contracts are closing. We know that our pipeline for general digital transformation work is really about as strong as we've ever seen that pipeline. And it is also -- and the third element is the political season, which really, again, promises to be another record political season. I think people -- I've never heard of people talking about midterms 6 months out like they were tomorrow. So I think those 3 elements when we started out, say, what gives us increased confidence? Well, we just won the biggest government contract.

We know that we're closing on 3 or 4 other assignments now that are in final contracting and signing stage, which are mixed across Creative and Media. We know the political super cycle is coming, and we already have the clients in the bank.

Lena Petersen: So a question came in asking for you to elaborate on the comments about advocacy agencies and specifically seeing how they're seeing more work from corporate rather than political clients?

Mark Penn: Yes. I think that in the long term here, I ran originally where you recall an advocacy, and we were always diversifying by the end of it, Microsoft was my biggest client. And so I think we're seeing those -- all of those companies now taking more public affairs, more particularly suited to local work around retail establishments in communities. We're seeing those kinds of assignments. We're seeing more nonprofits, universities, hospitals, those kinds of clients that really work well as they begin to really diversify. Remember, we've taken the whole Communications segment now and put it together into a single unit under a single manager.

Lena Petersen: Excellent. So turning to new business. Laura at Needham was asking, could you dig a little deeper into the record net new business quarter? Can you talk about the areas where Stagwell is seeing strength? Or what verticals are driving the improvement in pipeline? And is the mix of your new clients changing? What are the margins on new clients versus historical client base?

Mark Penn: Okay. So I think the -- in terms of new clients, I think digital transformation and creative are the 2 spots where we are seeing really strong flood of new business. I think that we're also -- as you can see, we're getting out there with the new products. But in terms of what I call the regular pitch flow, when I look at that and I look at the wins and the wins are significantly ahead of what we've ever seen, and so I think that's kind of where the new ones. I think in terms of margin for the new clients, I think those margins are at or better than the previous.

I think that as we scale up to bigger clients, we are not finding that we have -- that the margin is going to be reduced on those clients. It's really quite the opposite. We have a lot of smaller, lower-margin clients that are sort of cycling out of the system. And just in terms of the fact that our longevity with larger clients is 5x our longevity with smaller clients, just what you spend on marketing and remarketing and getting those smaller clients, just taking that overhead out gives them a higher margin.

Lena Petersen: So we have a number of questions coming in about the improvements in churn we're seeing in the business. Could you discuss what improvements in churn might look like through the rest of the year? And what impact we might -- that might have on our top line?

Mark Penn: Yes. Look, our goal is to cut the churn by about 25% right? We've seen -- we've seen a change already as we've told kind of everybody to focus on it. We're putting in place the system, what I call the accountability system where every single client, no matter how small, we'll have someone responsible for it, has to report on it. Look, many of these are small projects. We don't count small projects, by the way, under $500,000 in net new business. But -- so we'll separate out the small projects from the clients that should grow, and we're really focused.

But our goal, if we're successful, we could get 2 or 3 points of organic growth out of that system. I think we are trying a dual-track approach, double where we've been successful, obviously, in the net new business, put a real focus on trying to mitigate what's been taking us down, which is small client churn. And those 2 together, I think, are key factors here in improving organic growth over the next -- over this year and permanently.

Lena Petersen: Okay. A question for Ryan. Could you talk about the key drivers of the 30% plus improvement in adjusted EPS this quarter?

Ryan Greene: Yes, sure. So it's really a function of 2 things. We have seen significant growth in our adjusted EBITDA, which has increased our numerator, but we also have been aggressive with our share buyback, purchasing 7.3 million shares in the quarter for about $45 million. And so we lowered the denominator with us realizing the stock has been undervalued. We've got aggressive, and we're seeing the reflect of that in our adjusted EPS growing 31%.

Lena Petersen: Great. I think we have time for one more question from Jeff at B. Riley. He's asking a question about the macro. What are you hearing from your client base regarding if and how they might alter their marketing plans as a result of the Middle East conflict, oil prices or headwinds and the macroeconomic impact that could materialize if the conflict is prolonged? And what assumptions are you making about potential macro impact included in your guidance for 2026?

Mark Penn: Well, look, I think the only direct impact on us is Mid East tourism is not exactly the flourishing at the moment. We expect, though, when this is over, it will bounce back quickly and that a lot of these clients will then -- they will be like post pandemic, but that is -- but really only about 3% of our business is out there, but it is -- but that is some impact on us. We are not right now, as you can see, as the stock market continues, we don't see clients making contingency plans about this. We don't see clients pulling back about this. We don't see clients altering their plans right now.

I think for those in America right now, remember, gasoline prices or oil prices were above $100 a barrel for 3.5 years of the Obama administration, parts of the Biden administration. This is not what we're -- this is not like a pandemic, massive pullback. We're just not seeing that right now. And we're -- remember, people are going to pretty much lock their holiday plans in the next 2 or 3 months. So there's not a lot of time here for change. We're seeing, in fact, tremendous investment in AI, tremendous focus on the fact that every company needs to redo its connection with AI. And we don't see any pullback from that whatsoever.

And that and the political sphere, which is going to be, I think, again, a very strong season, no matter what happens in the Mid East, I think those 2 basic trends, which are the most important for us as a company are really strong and intact for this year.

Lena Petersen: Okay. Our final question is a question from Jason. And what have you learned about the opportunities in the government sector over the past year? And how do you think the opportunity for Stagwell has changed as you've been engaged in these contract discussions?

Mark Penn: Well, I set that out as an initiative that I knew would take time. I think that we've moved a long way in the initiative. As I say, you should see in the next 2 weeks, a formal announcement of the contract I alluded to, which is a real breakthrough. We've picked up 2 or 3 other smaller government-related contracts and assignments. But now we're really ready with the team, the accounting, the structure in order to bid on the largest contracts like the post office and the Navy to bring in good partners to, because these are massive contracts and to really to compete.

And for the first time, I think, for some of these agencies to have a brand-new competitor. And so far, I can say from the ones that we've won or just about to win, that has played out pretty well for us.

Lena Petersen: On that note, that was our last question. Thank you to everyone for joining us. We'll see you next quarter.

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