Stagwell Inc. (STGW), a provider of marketing and advertising services, understated its income tax expense in 2022. In the three and six months ended June 30, 2023, Stagwell recorded out-of-period adjustments of $5.3 and $7.4 million rather than correcting the prior year’s financial statements.

The $7.4 million adjustment— when applied against FY22’s full year net income— indicates Stagwell understated its income tax expense 98.6% and overstated its annual net income by 11.2%.

The firm’s management does not believe this is material.

It’s the second consecutive quarter Stagwell has reported an out-of-period adjustment.

In the first quarter of 2023, Stagwell made a $24 million adjustment after not appropriately allocating accumulated other comprehensive loss to noncontrolling interest shareholders.

Similarly, Stagwell’s management determined the error was not material and did not revise prior year financial statements.

As of this writing, Stagwell’s stock is up 137.7% over the past year.