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    ADV
    Earnings call· Jun 2026(Q2 FY26)

    Advantage Solutions Q2 FY26 earnings call ADV

    Aug 5, 2026 Source

    Executive summary

    Advantage Solutions Inc. Q2 FY26 — Strong Experiential Services Growth Offsets Branded Services Headwinds

    Advantage Solutions reported mixed Q2 FY26 results, characterized by robust demand and strong execution in Experiential Services, which saw significant revenue and EBITDA growth. This performance helped to mitigate persistent challenges in Branded Services and temporary headwinds in Retailer Services. The company is actively pursuing productivity initiatives, integrating AI for efficiency, and prioritizing debt reduction while reiterating its full-year guidance.

    Highlights

    4

    • Net revenues increased 3% year-over-year to $757 million, or 4% excluding divestitures.

    • Experiential Services revenue grew 19% year-over-year, with adjusted EBITDA up 32% year-over-year.

    • Adjusted unlevered free cash flow was $19 million in the quarter, representing a 25% conversion rate.

    • Experiential Services achieved strong execution rates of approximately 95% in the quarter.

    Concerns

    4

    • Adjusted EBITDA declined 12% year-over-year to $76 million, or 9% excluding divestitures.

    • Branded Services revenue declined 13% year-over-year (11% excluding divestitures), with adjusted EBITDA down 36%.

    • Retailer Services adjusted EBITDA was down approximately 25% year-over-year due to project timing and higher costs.

    • Net debt level stood at approximately 4.5x trailing EBITDA at quarter-end.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year 2026 Revenue
    Reiterated
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    Reiterated
    high materiality
    High
    Full-year 2026 Adjusted Unlevered Free Cash Flow
    $250 million to $275 million
    high materiality
    High
    Full-year 2026 Net Free Cash Flow Conversion
    25%
    medium materiality
    High
    Full-year 2026 Interest Expense
    Slightly lower
    low materiality
    High
    Full-year 2026 Capital Expenditures
    Slightly lower
    low materiality
    High
    Second Half 2026 Adjusted EBITDA
    Approximately 53% of full year total
    medium materiality
    Medium
    Q4 2026 Adjusted EBITDA
    Higher than Q3 2026 Adjusted EBITDA
    low materiality
    Medium
    Branded Services Recovery Timeline
    Modest improvement
    medium materiality
    Medium
    Experiential Services Momentum
    Continued momentum
    high materiality
    High
    Retailer Services Performance
    Sequential improvement
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Experiential Services
    Delivered a very strong quarter driven by accelerating demand for product demonstrations, higher event volumes, and strong operational execution. Demand remained healthy across both existing and new customers, with opportunities to further increase event volumes.
    Adjusted EBITDA growth YoY: 32%Event volumes increased: 18%Execution rates: 95%
    		$296 million19%—$34 million adjusted EBITDA
    Branded Services
    Continued to face pressure from ongoing client in-sourcing, softer CPG spending, and client losses. Recovery is taking longer than expected. Encouraging activity was seen in CPG merchandising projects.
    Adjusted EBITDA growth YoY: -36% (-30% excluding divestitures)CPG merchandising projects growth: >20% YoY lift in project workProject work as % of total work: ~25% (up from ~15% in H1 prior year)
    		$224 million-13% (-11% excluding divestitures)—$22 million adjusted EBITDA
    Retailer Services
    Performance was impacted by project timing, a difficult comparison with unusually high project activity in the prior year, and higher costs related to execution issues on a new project. These factors are viewed as unique and temporary, with sequential improvement expected in the second half. Private label business delivered a solid quarter.
    Adjusted EBITDA growth YoY: -25%
    		$237 million3%—$20 million adjusted EBITDA

    Operational metrics

    10
    Divestiture Revenue Headwind
    $5 millionYoY headwind
    Q2 FY26

    Impact from businesses divested.

    Divestiture Adjusted EBITDA Headwind
    $3 millionYoY headwind
    Q2 FY26

    Impact from businesses divested.

    Full Year Divestiture Revenue Headwind
    $20 millionYoY headwind
    FY26

    Expected impact from businesses divested.

    Full Year Divestiture Adjusted EBITDA Headwind
    over $10 millionYoY headwind
    FY26

    Expected impact from businesses divested.

    Adjusted Unlevered Free Cash Flow Conversion
    25%
    Q2 FY26

    Conversion rate of adjusted EBITDA.

    Net Debt to Trailing EBITDA
    4.5x
    Q2 FY26 end

    Leverage ratio.

    Share Repurchases
    $15 million
    Q2 FY26

    Primarily intended to offset dilution from stock grants and exercises.

    Days Sales Outstanding (DSO)
    elevated
    Q2 FY26

    Primarily due to SAP implementation and customer payment timing, expected to improve in H2.

    Health Insurance Cost Trends
    more favorable
    Q2 FY26

    A meaningful pressure point over the last year.

    Second Half Adjusted EBITDA Contribution
    53%
    H2 FY26

    Expected percentage of full year total, given stronger first half performance.

    Industry KPIs

    6
    MetricValueDetails
    Total revenue$757 millionUSD
    Adjusted EBITDA$76 millionUSD
    CAPEX capital programslightly lower
    Cash marketable securities$102 millionUSD
    Ai product feature adoption95%%
    Free cash flow operating cash flow$19 millionUSD

    Risks & headwinds

    5
    Branded Services recovery taking longer than expectedOngoing

    Revenue declined 13% YoY (11% excluding divestitures); Adjusted EBITDA down 36% YoY (30% excluding divestitures)

    Mitigation: Stabilizing revenue base, improving pipeline conversion, client retention, disciplined cost management, demonstrating measurable ROI through data and analytics.

    Retailer Services project timing and higher execution costsQ2 FY26 (temporary)

    Adjusted EBITDA down approximately 25% YoY

    Mitigation: Aligning staffing with demand, improving execution discipline and operating consistency, better matching costs with associated revenue streams; expected sequential improvement in H2.

    Working capital impact from SAP implementationQ2 FY26 (temporary)

    Elevated Days Sales Outstanding (DSO)

    Mitigation: Expected DSOs to improve steadily through the remainder of the year, supporting strong full year cash flow generation.

    Business mix pressure on overall marginsQ2 FY26

    Adjusted EBITDA declined 12% YoY (9% excluding divestitures)

    Mitigation: Focus on stabilizing Branded Services, reducing margin pressure, and continued investments in higher-growth segments like Experiential Services.

    Persistent K-shaped economy and value-seeking consumer behaviorOngoing

    Lower and middle-income households focused on value; greater price competition among large retailers

    Mitigation: Adapting business by emphasizing execution quality, disciplined staffing, and measurable ROI; well-positioned to support clients with flexible capacity and greater efficiency.

    What to watch in Q3 FY26

    5

    Branded Services Stabilization

    H2 FY26
    CurrentRevenue down 13% YoY; modest improvement expected in H2 FY26
    TargetEvidence of stabilization and gradual improvement in revenue decline rate

    Why it matters

    Stabilization of Branded Services is crucial for overall margin improvement and business durability.

    While we are not assuming a near-term inflection, we do expect modest improvement in the second half of 2026.

    Q&A highlights

    4

    What catalysts will drive stabilization and recovery in the Branded Services segment in 2027 and beyond?

    Management indicated that the business is cycling past prior client losses, and their top 25-30 clients are now showing growth, which are signs of stabilization. They noted that in a long-lead contracted business, it takes time to realize these shifts. They also highlighted underlying strength in Retailer Services and continued strong demand in Experiential Services as positive indicators for the overall business.

    “I think if you think about it, Greg, we're coming off a few kind of larger client losses, and there's various reasons for those. But as we move into '27 -- and let's talk about Branded Services first, we're seeing parts of that business demonstrate growth, which is kind of giving us some optimism.”

    asked by Gregory Parrish · answered by David Peacock

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Focus on ROI and Efficiency

    Advantage Solutions is prioritizing programs that demonstrate clear return on investment, support product trial and discovery, and convert demand into purchases. This strategy aligns well with the company's existing capabilities, particularly in Experiential Services, where demand for product demonstrations continues to exceed expectations. The company is adding capacity in areas with strong demand signals and remains confident in its ability to recruit and staff effectively.

    02

    Technology and AI Integration for Operational Excellence

    The company is nearing completion of a significant enterprise technology transformation, with full leverage and benefits expected in 2027 to drive better decision-making and efficiency. Advantage has established a governance structure, including a new Chief AI Officer role, to integrate AI across the organization. AI tools are being deployed to enhance service levels, improve teammate experience, and increase efficiency, with pilots such as event manager compliance and photo verification tools already showing promise.

    03

    Navigating the Macroeconomic Environment and Consumer Trends

    The K-shaped economy and associated consumer behaviors, including value-seeking across income groups, have persisted. Lower and middle-income households are focused on promotions, while higher-income consumers seek healthier options but are also more deliberate about value. Emerging brands are gaining market share, and retailers are increasing price competition. These trends underscore the importance of highly measurable, cost-effective programs that Advantage provides to help clients navigate a volatile operating environment.

    04

    Branded Services Stabilization and Merchandising Project Strength

    Despite ongoing pressures from constrained CPG spending, client in-sourcing, and client losses, Advantage is focused on stabilizing its Branded Services segment. CPG merchandising projects were a relative bright spot, experiencing a significant year-over-year lift in project work, indicating a growing need to address in-stock issues at retail. The company is investing in alert-based execution models and leveraging its experienced workforce to improve efficiency and demonstrate measurable ROI.

    05

    Disciplined Capital Allocation and Debt Reduction

    Cash generation remains a core strength and priority for Advantage Solutions. The company's capital allocation strategy primarily focuses on debt reduction, while also maintaining liquidity and strategic flexibility. In the second quarter, Advantage repurchased approximately $15 million of its shares, primarily to offset dilution from stock grants. The net debt level stood at approximately 4.5x trailing EBITDA at the end of the quarter.

    AI-generated summary of the company’s earnings call. Not investment advice.