Given the consistent strong growth in Experiential Services (20% for three quarters), how durable is this outsized strength going forward?

Management believes the strength in Experiential Services is very durable, driven by strong client demand, the growth of emerging brands, and innovation. Retailers increasingly recognize the importance of in-store sampling and experiential marketing. They also noted ongoing investments in the business to sustain this growth rate and maintain high execution quality, which was 95% in Q2. “I think it's very durable. Like I mentioned, that the demand signals are very strong from our clients, but also -- and think of it too, from a macro standpoint. I mean the growth of emerging brands in the industry and the growth of innovation and new products, even from more established or larger brands, is not slowing down.”

CPG merchandising projects were called a bright spot and potential leading indicator for Branded Services. Is this due to client spend rotation or a mix shift within the segment?

Management explained that the increase in CPG merchandising project work is driven by persistent in-stock challenges at retail, leading clients to seek solutions. Project work now accounts for approximately 25% of total work in this area, up from 15% in the prior year, with a more than 20% year-over-year lift. They are also piloting alert-based deployment to improve efficiency in addressing issues like out-of-stocks. “Now they're close to a little under 25%. And so we saw a pretty nice lift in project work of a little over 20% year-over-year, which is telling us that sort of unplanned need and/or opportunity to either get more the display space on the floor or remediate out of stocks.”

Experiential Services is the fastest-growing but lowest-margin segment. What factors will help close this margin gap?

Management stated that the current business mix, with Branded Services declining and Experiential Services growing, naturally weighs on the overall margin profile. They are reinvesting in Experiential to sustain its growth. They anticipate margin equalization as Branded Services stabilizes and Retailer Services improves in the second half, which should lead to margin stability and potential growth next year. “Overall, when you have this, call it, mix modeling that's occurring this year, with Branded Services down and Experiential up, you're going to have that kind of weight on the margin profile of the business.”

ADV

Advantage Solutions (ADV) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Communication Services· Aug 5, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Full-year 2026 Revenue	Reiterated high materiality	FY26	High
Full-year 2026 Adjusted EBITDA	Reiterated high materiality	FY26	High
Full-year 2026 Adjusted Unlevered Free Cash Flow	$250 million to $275 million high materiality	FY26	High
Full-year 2026 Net Free Cash Flow Conversion	25% medium materiality	FY26	High
Full-year 2026 Interest Expense	Slightly lower low materiality	FY26	High
Full-year 2026 Capital Expenditures	Slightly lower low materiality	FY26	High
Second Half 2026 Adjusted EBITDA	Approximately 53% of full year total medium materiality	H2 FY26	Medium
Q4 2026 Adjusted EBITDA	Higher than Q3 2026 Adjusted EBITDA low materiality	Q4 · FY26	Medium
Branded Services Recovery Timeline	Modest improvement medium materiality	H2 FY26	Medium
Experiential Services Momentum	Continued momentum high materiality	H2 FY26	High
Retailer Services Performance	Sequential improvement medium materiality	H2 FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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 million	19%	—	$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 million	3%	—	$20 million adjusted EBITDA

Risks & headwinds

Branded Services recovery taking longer than expected Ongoing

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 costs Q2 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 implementation Q2 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 margins Q2 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 behavior Ongoing

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

Branded Services Stabilization

H2 FY26

Current Revenue down 13% YoY; modest improvement expected in H2 FY26

Target Evidence 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.

Find out whether ADV delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.