Agencies Shift Revenue to Software and AI Services
Marketing firms pursuing software and government technology work should track whether margin gains from these lines continue.
Updated on Nov. 2, 2026 in Advertising
Stagwell raised its full-year 2026 adjusted EBITDA guidance to a range of $490 million to $540 million on its third-quarter earnings call on October 29, 2026. The company also named itself prime subcontractor to CACI on work for U.S. Central Command, a deal worth $1.5 billion over five years that matters to marketing firms bidding on government technology contracts.
Why it matters
Management attributes the higher guidance to a shift toward software and artificial intelligence transformation services, which is expanding operating margins and driving record net new business. For advertising and marketing agencies, the move signals that revenue growth is increasingly coming from software and AI-enabled offerings rather than traditional service fees.
Stagwell's Digital Transformation segment grew 23% organically, and its Marketing Cloud lifted organic net revenue 108% to $56 million, with software products carrying a 44.3% adjusted EBITDA margin. The raised guidance range of $490 million to $540 million and the $1.5 billion CACI subcontract over five years are the headline scale figures.
The players
Stagwell
A marketing and communications holding company whose Digital Transformation and Marketing Cloud segments are shifting revenue toward software and AI services.
CACI
A government technology contractor that serves U.S. defense and intelligence agencies and brought Stagwell in as a subcontractor on this win.
U.S. Central Command
The U.S. military command responsible for operations across the Middle East and Central Asia, and the client agency for the CACI subcontract work.
The details
The guidance increase reflects a move toward software and AI transformation services, which carry higher margins than traditional agency work. Growth in the Marketing Cloud came primarily from software sales tied to machines and rising demand for research products. Stagwell's role as prime subcontractor to CACI places it inside a government technology effort for U.S. Central Command, a client that typically requires long-term, compliance-heavy delivery.
Timeline
October 29, 2026: Stagwell held its third-quarter 2026 earnings call and raised full-year guidance.
2027: Management doubled its enterprise tech bookings goal to $150 million.
Market Landscape
Stagwell's nine straight quarters of two-year stack improvement show a sustained pivot from campaign-based agency fees toward software and AI transformation work. The CACI subcontract places the company in federal technology procurement, a segment where long-term contracts compete with traditional marketing budgets.
Agency leaders should track whether software and AI service lines keep growing faster than traditional fees, since margin gains are now the main reason guidance is rising. Operators evaluating partnerships with large holding companies should review how subcontract work for federal clients is structured and priced, and consult qualified counsel on any government contracting obligations.
The takeaway
The operating insight is that software and AI services are becoming the margin engine for agency holding companies, not a side line. Track the two-year stack and software margin figures in each quarterly filing to see whether the trend holds, and consult a qualified accountant before modeling any revenue from government subcontracts.
Further reading
For context on how agencies are changing their revenue mix, see the broader Advertising coverage.
