Stagwell: 3 Key Takeaways for Long-Term Investors

On its third quarter of 2026 earnings call, held on Oct. 29, 2026, Stagwell (NASDAQ:STGW) raised its full-year guidance for adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, to a range of $490 million to $540 million. The shift toward software and artificial intelligence, or AI, transformation services is expanding operating margins and driving record net new business. For investors evaluating the business, the key question is how well management converts traditional agency relationships into software sales. Three things management said stand out.

1. Digital Transformation Segment Delivers Accelerated Organic Growth

Digital transformation work is leading revenue expansion as corporate clients retool their customer operations. Tracking two-year stack performance, which sums organic growth rates over two consecutive years, confirms that demand is persistent rather than one-time.

Digital Transformation grew 23% organically, driving our 2-year stack to 30%, our ninth consecutive quarter of 2-year stack improvement.
-- Mark Penn, Chairman and Chief Executive Officer

2. Federal Government Contracts Open a New Revenue Stream

Landing major public sector assignments expands the business into non-cyclical federal agency work. Subcontracting assignments establish a presence that can anchor broader government consulting contracts over time.

Stagwell will serve as the prime subcontractor to CACI for work with the U.S. Central Command. The total size of the win is $1.5 billion over 5 years.
-- Mark Penn, Chairman and Chief Executive Officer

3. Marketing Cloud Software Sales Double Segment Net Revenue

Software sales deliver higher profit margins than legacy marketing services. High-margin software products carry an adjusted EBITDA margin of 44.3% in the segment, boosting total profitability.

The Marketing Cloud increased organic net revenue 108% to $56 million, driven primarily by the growth in software sales associated with the machines and increased demand for research products.
-- Ryan Greene, Chief Financial Officer

Looking Ahead

Demand for enterprise technology tools is accelerating across the customer base, and management is raising forward targets to match. The business relies on expanding tech partnerships while maintaining pricing discipline in traditional agency services.

Today, I'm doubling our initial 2027 enterprise tech bookings goal to $150 million.
-- Mark Penn, Chairman and Chief Executive Officer

Over the long term, value creation rests on converting standard corporate accounts into recurring software clients.

We can continue to grow and succeed in Marketing Services, but really make the company into the tech-first marketing transformation company.
-- Mark Penn, Chairman and Chief Executive Officer

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