Advantage Solutions(ADV) - 2025 Q2 - Quarterly Results

Executive Summary](index=1&type=section&id=Executive%20Summary) This section provides a high-level overview of Advantage Solutions' Q2 2025 consolidated financial performance, key strategic initiatives, and CEO commentary Q2'25 Consolidated Financial Highlights Advantage Solutions reported stable revenues for Q2 2025 compared to the prior year, with a significant reduction in net loss. However, Adjusted EBITDA saw a slight decline. The company noted strong sequential improvement driven by resolving staffing shortfalls and continued strategic investments. Q2'25 Consolidated Financial Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 (thousands) | Three Months Ended June 30, 2024 (thousands) | Change ($) (thousands) | Change (%) | | :----------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Total Revenues | $873,707 | $873,357 | $350 | 0.0% | | Total Net Loss | $(30,440) | $(113,016) | $82,576 | (73.1%) | | Total Adjusted EBITDA | $86,412 | $89,898 | $(3,486) | (3.9%) | | Adjusted EBITDA Margin | 9.9% | 10.3% | | | | Six Months Ended June 30, | | | | | | Total Revenues | $1,695,499 | $1,734,769 | $(39,270) | (2.3%) | | Total Net Loss | $(86,570) | $(163,149) | $76,579 | NMF | | Total Adjusted EBITDA | $144,593 | $160,539 | $(15,946) | (9.9%) | | Adjusted EBITDA Margin | 8.5% | 9.3% | | | - Strong sequential improvement was driven by solid progress in resolving the staffing shortfall from the first quarter, coupled with continued strategic IT and capability investments[6] - The company maintains a strong balance sheet with ample liquidity, supported by $103 million in cash and an incremental $23 million received on July 31 related to a deferred purchase price installment for Jun Group[6] CEO Commentary & Strategic Initiatives CEO Dave Peacock expressed satisfaction with the progress of transformation initiatives aimed at enhancing client sales and optimizing ROI. He highlighted the resolution of first-quarter staffing shortfalls, leading to improved sequential performance, and reaffirmed the 2025 guidance with expectations for stronger financial performance and cash generation in the second half of the year. - Advancing transformation initiatives to accelerate AI enablement and improved business insights[1] - Largely resolved the staffing shortfall from the first quarter, resulting in increased execution for improved sequential performance in the second quarter[5] - Reaffirming 2025 guidance with the expectation of delivering stronger performance and cash generation in the second half of the year, considering current market conditions and operational execution plans[1][5] Segment Performance Overview](index=2&type=section&id=Segment%20Performance%20Overview) This section details the financial performance of the Branded Services, Experiential Services, and Retailer Services segments, highlighting revenue and Adjusted EBITDA trends. Branded Services The Branded Services segment experienced declines in revenue and Adjusted EBITDA for both the three and six months ended June 30, 2025, primarily due to market headwinds and client investment reductions. Despite this, operating loss significantly improved year-over-year. Branded Services Segment Financial Performance (in thousands) | Metric | Q2 2025 (thousands) | Q2 2024 (thousands) | YoY Change (%) | YTD 2025 (thousands) | YTD 2024 (thousands) | YTD Change (%) | | :----------------- | :----------- | :----------- | :------------- | :------------ | :------------ | :------------- | | Revenues | 295,221 | 322,340 | (8.4%) | 585,062 | 651,394 | (10.2%) | | Operating (Loss) Income | (10,540) | (107,280) | 90.2% | (25,862) | (129,398) | NMF | | Adjusted EBITDA | 34,042 | 42,856 | (20.6%) | 61,987 | 77,191 | (19.7%) | - Market headwinds and client investment reductions negatively impacted brokerage and omni-commerce marketing services[8] - Expect improved H2'25 performance from previous new business wins, leveraging new capabilities, and streamlined operations[8] Experiential Services Experiential Services demonstrated strong growth in Q2 2025, with increased revenues, operating income, and Adjusted EBITDA. This performance was attributed to improved staffing levels and solid execution of a greater number of events. Experiential Services Segment Financial Performance (in thousands) | Metric | Q2 2025 (thousands) | Q2 2024 (thousands) | YoY Change (%) | YTD 2025 (thousands) | YTD 2024 (thousands) | YTD Change (%) | | :----------------- | :----------- | :----------- | :------------- | :------------ | :------------ | :------------- | | Revenues | 347,706 | 319,508 | 8.8% | 661,726 | 626,859 | 5.6% | | Operating (Loss) Income | 10,859 | 6,453 | 68.3% | 7,355 | 2,811 | 161.7% | | Adjusted EBITDA | 25,886 | 22,611 | 14.5% | 37,955 | 39,304 | (3.4%) | - Improved staffing levels and solid execution of a greater number of events led to year-over-year growth[8] - Events per day grew 1% (up 5% excluding a client loss) compared to the prior year, with an execution rate of approximately 93%[8] - Demand signals remain favorable in the upcoming peak seasonal period[8] Retailer Services Retailer Services showed stable revenue performance in Q2 2025, with slight declines, but achieved growth in operating income and Adjusted EBITDA. This was driven by staffing recovery and increased project activity, including some pull-forward from Q3'25. Retailer Services Segment Financial Performance (in thousands) | Metric | Q2 2025 (thousands) | Q2 2024 (thousands) | YoY Change (%) | YTD 2025 (thousands) | YTD 2024 (thousands) | YTD Change (%) | | :----------------- | :----------- | :----------- | :------------- | :------------ | :------------ | :------------- | | Revenues | 230,780 | 231,509 | (0.3%) | 448,711 | 456,516 | (1.7%) | | Operating (Loss) Income | 9,692 | 9,568 | 1.3% | 13,897 | 5,378 | 158.4% | | Adjusted EBITDA | 26,484 | 24,431 | 8.4% | 44,651 | 44,044 | 1.4% | - Staffing recovery and increased project activity, including a pull forward from Q3'25, led to growth versus the prior year[8] - Financial results were affected by a client loss in H2'24 that will be largely lapped in Q3'25[8] - Customer demand remains favorable for merchandising services[8] Financial Position and Outlook](index=3&type=section&id=Financial%20Position%20and%20Outlook) This section outlines the company's cash flow and balance sheet highlights, along with the reaffirmed fiscal year 2025 financial guidance. Cash Flow and Balance Sheet Highlights Advantage Solutions reported an Adjusted Unlevered Free Cash Flow of $57 million for the period ended June 30, 2025, representing 66% of Adjusted EBITDA. The company maintains a strong balance sheet with $103 million in cash and a net leverage ratio of 4.6x. Cash Flow and Balance Sheet Highlights (in millions) | Metric | Period Ended June 30, 2025 (millions) | | :---------------------------------- | :------------------------------------ | | Adjusted Unlevered Free Cash Flow | $57 | | % of Adjusted EBITDA | 66% | | Capex | ~$2 | | Gross Debt | ~$1,694 | | Cash and Cash Equivalents | ~$103 | | Net Leverage Ratio (1) | 4.6x | - Maintaining a strong balance sheet with ample liquidity supported by $103 million in cash and an incremental $23 million received on July 31 related to the first of two deferred purchase price installments for Jun Group[6] Fiscal Year 2025 Outlook The company reaffirmed its fiscal year 2025 outlook, expecting revenues and Adjusted EBITDA to be down low single digits to flat. Adjusted Unlevered Free Cash Flow conversion is projected to be greater than 50% of Adjusted EBITDA, with a revised Capex guidance of $50 to $60 million. Fiscal Year 2025 Outlook (in millions) | Metric | Fiscal Year 2025 Outlook (millions) | | :---------------------------------- | :------------------------------------ | | Revenues | Down Low Single Digits to Flat | | Adjusted EBITDA | Down Low Single Digits to Flat | | Adjusted Unlevered Free Cash Flow (1) Conversion | >50% of Adjusted EBITDA | | Net Interest Expense | $140 to $150 | | Capex | $50 to $60 (prior guidance was $65 to $75) | - 2025 revenue outlook excludes pass-through costs. 2025 guidance compares to 2024 on a continuing operations basis[14] Company Information & Disclosures](index=3&type=section&id=Company%20Information%20%26%20Disclosures) This section provides an overview of Advantage Solutions, includes cautionary statements regarding forward-looking information, and lists investor relations contacts. About Advantage Solutions Advantage Solutions is a leading omnichannel retail solutions agency in North America, leveraging data and technology to help CPG brands and retailers drive demand and get products to consumers. The company offers services such as in-store and online experiences, assortment optimization, and e-commerce acceleration. - Advantage Solutions is the leading omnichannel retail solutions agency in North America, positioned at the intersection of consumer-packaged goods (CPG) brands and retailers[19] - Leverages data- and technology-powered services, unparalleled insights, expertise, and scale to help brands and retailers generate demand and get products to consumers[19] - Services include creating in-store and online experiences, optimizing assortment and merchandising, and accelerating e-commerce and digital capabilities[19] Forward-Looking Statements This section serves as a cautionary note regarding forward-looking statements in the press release, emphasizing that such statements are based on current expectations and assumptions, but are subject to inherent risks and uncertainties that could cause actual results to differ materially. The company disclaims any obligation to update these statements. - Forward-looking statements relate to future events or Advantage's future financial or operating performance and are identified by words like "may", "should", "expect", "intend", "will", etc[21] - These statements are based on current expectations and assumptions but are inherently uncertain and subject to risks that could cause actual results to differ materially[21][22] - Readers are cautioned not to place undue reliance on forward-looking statements, and Advantage assumes no obligation to update or revise them, except as required by law[22] Investor Relations This section provides details for the Q2 2025 earnings conference call, including date, time, dial-in information, and webcast availability. It also lists contact information for investor and media inquiries. Q2 2025 Earnings Conference Call Details | Conference Call Detail | Information | | :--------------------- | :------------------------------------ | | Date/Time | August 7, 2025, 8:30 am EDT | | Dial-in (US) | 800-715-9871 | | Dial-in (International)| +1-646-307-1963 | | Conference ID | 5720569 | | Webcast | ADV 2Q 2025 Earnings Webcast | | Replay (US) | 800-770-2030 | | Replay (International) | +1-609-800-9909 | | Playback ID | 5720569 | - Investor Contact: Ruben Mella, CFA (investorrelations@youradv.com)[16] - Media Contact: Jeff Levine (press@youradv.com)[16] Non-GAAP Financial Measures](index=5&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and explains the purpose of various non-GAAP financial measures used by the company, including Adjusted EBITDA and Adjusted Unlevered Free Cash Flow. Definitions of Non-GAAP Measures This section clarifies that certain financial measures presented, such as Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Unlevered Free Cash Flow, and Net Debt, are non-GAAP. It provides detailed definitions for each, outlining the specific adjustments made to GAAP measures, and explains their purpose in providing useful information to management and investors for evaluating operating results and trends. - Non-GAAP measures are not substitutes for or superior to GAAP measures and should not be considered in isolation[25] - Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations, and Adjusted EBITDA by Segment are supplemental non-GAAP measures of operating performance, adjusting net (loss) income for items like interest, taxes, depreciation, amortization, impairment, and various non-recurring expenses[27][28] - Adjusted Unlevered Free Cash Flow represents net cash from operating activities less capital expenditures, further adjusted for cash payments for interest, taxes, acquisition/divestiture expenses, restructuring, reorganization, and other items[30] - Net Debt represents total debt less cash and cash equivalents and debt issuance costs, providing insight into the company's capital structure and credit quality[33] Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated statements of operations, balance sheet, and cash flows for the reported periods. Condensed Consolidated Statements of Operations The Condensed Consolidated Statements of Operations detail Advantage Solutions' financial performance for the three and six months ended June 30, 2025 and 2024. It shows a significant reduction in net loss from continuing operations year-over-year, despite relatively stable revenues, driven by lower operating expenses and the absence of goodwill impairment in 2025. Condensed Consolidated Statements of Operations (in thousands) | (in thousands, except share and per share data) | Three Months Ended June 30, 2025 (thousands) | Three Months Ended June 30, 2024 (thousands) | Six Months Ended June 30, 2025 (thousands) | Six Months Ended June 30, 2024 (thousands) | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $873,707 | $873,357 | $1,695,499 | $1,734,769 | | Total operating expenses | 863,696 | 964,616 | 1,700,109 | 1,855,978 | | Operating income (loss) from continuing operations | 10,011 | (91,259) | (4,610) | (121,209) | | Net loss from continuing operations | (30,440) | (113,016) | (86,570) | (163,149) | | Net loss | (30,440) | (100,835) | (86,570) | (103,950) | | Basic loss per common share from continuing operations | $(0.09) | $(0.35) | $(0.27) | $(0.51) | - Impairment of goodwill and indefinite-lived asset was $0 in Q2 2025, compared to $99,670 thousand in Q2 2024, contributing significantly to the improved operating income[35] Condensed Consolidated Balance Sheet The Condensed Consolidated Balance Sheet presents the company's financial position as of June 30, 2025, compared to December 31, 2024. It shows a decrease in cash and cash equivalents, a rise in accounts receivable, and a slight reduction in total assets and total liabilities, while stockholders' equity also decreased. Condensed Consolidated Balance Sheet (in thousands) | (in thousands) | June 30, 2025 (thousands) | December 31, 2024 (thousands) | | :---------------------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $102,869 | $205,233 | | Accounts receivable, net | 673,258 | 603,069 | | Total current assets | 926,709 | 910,738 | | Total assets | 3,028,790 | 3,106,517 | | Total current liabilities | 473,358 | 460,062 | | Long-term debt, net of current portion | 1,663,700 | 1,686,690 | | Total liabilities | 2,345,216 | 2,357,782 | | Total stockholders' equity | 683,574 | 748,735 | Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows for the six months ended June 30, 2025, show a shift from cash provided by operating activities in 2024 to cash used in 2025. Investing activities continued to use cash, while financing activities also resulted in a net cash outflow, leading to an overall net decrease in cash, cash equivalents, and restricted cash. Consolidated Statements of Cash Flows (in thousands) | (in thousands) | Six Months Ended June 30, 2025 (thousands) | Six Months Ended June 30, 2024 (thousands) | | :---------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(47,728) | $44,055 | | Net cash (used in) provided by investing activities | $(20,677) | $110,867 | | Net cash used in financing activities | $(28,368) | $(114,533) | | Net change in cash, cash equivalents and restricted cash | $(100,548) | $37,810 | | Cash, cash equivalents and restricted cash, end of period | $120,203 | $169,370 | - The significant change in net cash from investing activities is largely due to proceeds from divestitures of $146,828 thousand in 2024, with no comparable proceeds in 2025[40] Reconciliation of Non-GAAP Measures](index=9&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section provides detailed reconciliations of GAAP net loss and operating income to various non-GAAP measures, including Adjusted EBITDA and Adjusted Unlevered Free Cash Flow. Reconciliation of Net Loss to Adjusted EBITDA (Continuing Operations) This section provides a detailed reconciliation of Net Loss from Continuing Operations to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024. Key adjustments include interest expense, taxes, depreciation and amortization, and the absence of goodwill impairment in 2025, which significantly improved the adjusted metric. Reconciliation of Net Loss to Adjusted EBITDA (Continuing Operations) (in thousands) | (in thousands) | Q2 2025 (thousands) | Q2 2024 (thousands) | YTD 2025 (thousands) | YTD 2024 (thousands) | | :---------------------------------------------- | :------ | :------ | :------- | :------- | | Net loss from continuing operations | $(30,440) | $(113,016) | $(86,570) | $(163,149) | | Add: Interest expense, net | 35,814 | 39,754 | 70,174 | 75,515 | | Add: Provision for (benefit from) income taxes | 4,621 | (17,311) | 11,760 | (33,176) | | Add: Depreciation and amortization | 50,698 | 51,317 | 101,059 | 101,065 | | Add: Impairment of goodwill | — | 99,670 | — | 99,670 | | Add: Stock-based compensation expense | 6,584 | 7,528 | 13,069 | 16,082 | | Add: Reorganization expenses | 16,434 | 20,291 | 28,674 | 55,343 | | Adjusted EBITDA from Continuing Operations | $86,412 | $89,898 | $144,593 | $160,539 | Reconciliation of Adjusted EBITDA (Discontinued Operations) This section reconciles Net Income from Discontinued Operations to Adjusted EBITDA for the three and six months ended June 30, 2024. Key adjustments include the gain on divestitures, which significantly impacted the reported net income, and other non-recurring expenses. Reconciliation of Adjusted EBITDA (Discontinued Operations) (in thousands) | (in thousands) | Q2 2024 (thousands) | YTD 2024 (thousands) | | :---------------------------------------------- | :------ | :------- | | Net income from discontinued operations, net of tax | $12,181 | $59,199 | | Add: Interest expense, net | 16 | 48 | | Add: Provision for income taxes | (2,377) | 11,860 | | Add: Depreciation and amortization | 1,883 | 4,491 | | Less: Gain on divestitures | (13,179) | (70,195) | | Add: Reorganization expenses | 5,211 | 7,285 | | Adjusted EBITDA from Discontinued Operations | $7,938 | $16,057 | Reconciliation of Operating Income (Loss) to Adjusted EBITDA by Segment This section provides a detailed reconciliation of Operating Income (Loss) to Adjusted EBITDA for each of the Branded Services, Experiential Services, and Retailer Services segments for the three and six months ended June 30, 2025 and 2024. Adjustments primarily include depreciation and amortization, stock-based compensation, and reorganization expenses. Reconciliation of Operating Income (Loss) to Adjusted EBITDA by Segment (in thousands) Branded Services Segment | (in thousands) | Q2 2025 (thousands) | Q2 2024 (thousands) | YTD 2025 (thousands) | YTD 2024 (thousands) | | :---------------------------------------------- | :------ | :------ | :------- | :------- | | Operating loss | $(10,540) | $(107,280) | $(25,862) | $(129,398) | | Add: Depreciation and amortization | 31,561 | 32,327 | 63,023 | 64,314 | | Add: Impairment of goodwill | — | 99,670 | — | 99,670 | | Add: Reorganization expenses | 7,741 | 9,248 | 13,196 | 22,904 | | Branded Services segment Adjusted EBITDA | $34,042 | $42,856 | $61,987 | $77,191 | Experiential Services Segment | (in thousands) | Q2 2025 (thousands) | Q2 2024 (thousands) | YTD 2025 (thousands) | YTD 2024 (thousands) | | :---------------------------------------------- | :------ | :------ | :------- | :------- | | Operating income | $10,859 | $6,453 | $7,355 | $2,811 | | Add: Depreciation and amortization | 10,684 | 11,015 | 21,221 | 20,935 | | Add: Reorganization expenses | 2,548 | 3,472 | 6,129 | 11,724 | | Experiential Services segment Adjusted EBITDA | $25,886 | $22,611 | $37,955 | $39,304 | Retailer Services Segment | (in thousands) | Q2 2025 (thousands) | Q2 2024 (thousands) | YTD 2025 (thousands) | YTD 2024 (thousands) | | :---------------------------------------------- | :------ | :------ | :------- | :------- | | Operating income | $9,692 | $9,568 | $13,897 | $5,378 | | Add: Depreciation and amortization | 8,453 | 7,975 | 16,815 | 15,816 | | Add: Reorganization expenses | 6,145 | 7,571 | 9,349 | 20,715 | | Retailer Services segment Adjusted EBITDA | $26,484 | $24,431 | $44,651 | $44,044 | Net Debt and Adjusted Unlevered Free Cash Flow Reconciliation This section provides a reconciliation of total debt to Net Debt and calculates the Net Debt / LTM Adjusted EBITDA ratio as of June 30, 2025. It also reconciles net cash used in operating activities to Adjusted Unlevered Free Cash Flow for the three months ended June 30, 2025, showing a conversion rate of 65.8%. Net Debt and Adjusted Unlevered Free Cash Flow Reconciliation (in thousands) Net Debt Calculation | (amounts in thousands) | June 30, 2025 (thousands) | | :---------------------------------------------- | :------------ | | Current portion of long-term debt | $13,250 | | Long-term debt, net of current portion | 1,681,207 | | Less: Debt issuance costs | 17,507 | | Total debt | 1,676,950 | | Less: Cash and cash equivalents | 102,869 | | Total Net Debt | $1,574,081 | | LTM Adjusted EBITDA from Continuing and Discontinued Operations | $342,370 | | Net Debt / LTM Adjusted EBITDA ratio | 4.6x | Adjusted Unlevered Free Cash Flow Reconciliation | (amounts in thousands) | Three Months Ended June 30, 2025 (thousands) | | :---------------------------------------------- | :------------------------------- | | Net cash used in operating activities from continuing and discontinued operations | $(8,102) | | Less: Purchase of property and equipment | (2,115) | | Add: Cash payments for interest | 43,764 | | Add: Cash payments for income taxes | 9,942 | | Add: Cash paid for reorganization expenses | 8,120 | | Adjusted Unlevered Free Cash Flow | $56,835 | | Adjusted Unlevered Free Cash Flow as a percentage of Adjusted EBITDA | 65.8% | LTM Adjusted EBITDA Reconciliation & Non-GAAP Footnotes This section provides the reconciliation of net loss to LTM Adjusted EBITDA from continuing and discontinued operations for the twelve months ended June 30, 2025. It also includes detailed footnotes explaining the various adjustments made to non-GAAP measures, such as stock-based compensation, acquisition/divestiture expenses, restructuring, and reorganization costs. LTM Adjusted EBITDA Reconciliation (in thousands) | (in thousands) | Twelve Months Ended June 30, 2025 (thousands) | | :---------------------------------------------- | :-------------------------------- | | Net loss | $(307,390) | | Add: Interest expense, net | 141,451 | | Add: Provision for income taxes | 11,607 | | Add: Depreciation and amortization | 204,751 | | Add: Impairment of goodwill and indefinite-lived asset | 175,500 | | Less: Gain on divestitures | (24,904) | | Add: Stock-based compensation expense | 26,430 | | Add: Reorganization expenses | 64,381 | | LTM Adjusted EBITDA from Continuing and Discontinued Operations | $342,370 | - Adjustments to non-GAAP measures include non-cash compensation, equity-based compensation, fair value adjustments for contingent consideration, acquisition and divestiture related expenses, restructuring expenses, reorganization expenses, litigation expenses, COVID-19 benefits, and costs associated with the Take 5 Matter[50][51][52][53][54]