Advantage Solutions Inc. (ADV)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report”), including the section titled “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) including statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business, our beliefs and our management’s assumptions. Such words as “expect,” “anticipate,” “outlook,” “could,” “target,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “should,” “may,” “assume” and “continue” as well as variations of such words and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain such terms. These statements are not guarantees of future performance and they involve certain risks, uncertainties and assumptions that are difficult to predict. We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by our forward-looking statements. More information regarding these risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”). Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission (the “SEC”), we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

Business Overview

We are a leading omni-commerce business solutions provider to CPG brands and retailers. We have a strong platform of essential, business critical services like headquarter sales, retail merchandising, in-store sampling, digital commerce, and shopper marketing. We generate demand for brands and retailers of all sizes, helping get the right products on the shelf, whether physical or digital, and into the hands of consumers in every way they shop. We use a scaled platform to innovate as a trusted partner with our clients, solving problems to increase their efficiency and effectiveness across a broad range of channels.

We report financial results for the following three reportable segments. Through our Branded Services segment, which generated approximately 28.0% and 34.5% of our revenues in the six months ended June 30, 2026 and 2025, respectively, we provide services to CPG brands through three main categories: brokerage, branded merchandising and omni-commerce marketing services. Through our Experiential Services segment, which generated approximately 45.6% and 39.0% of our revenues in the six months ended June 30, 2026 and 2025, respectively, we help brands and retailers reach consumers and convert shoppers into buyers through in-store and online sampling and demonstrations. Through our Retailer Services segment, which generated approximately 26.4% and 26.5% of our revenues in the six months ended June 30, 2026 and 2025, respectively, we provide end-to-end advisory, retailer merchandising and agency services to retailers.

Our quarterly results are seasonal in nature, with the fourth fiscal quarter typically generating a higher proportion of our revenues than other fiscal quarters, as a result of higher consumer spending. We generally record slightly lower revenues in the first fiscal quarter of each year, as our clients begin to roll out new programs for the year, and consumer spending generally is less in the first fiscal quarter than other quarters. The timing of our clients’ marketing expenses, associated with marketing campaigns and new product launches, can also result in fluctuations from one quarter to another.

Recent Developments

For the second quarter of 2026, we reported revenues of $889.5 million and a net loss of $62.7 million, compared to revenues of $873.7 million and a net loss of $30.4 million in the same period of the prior year. Our Experiential

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Services segment delivered strong second-quarter performance, supported by continued favorable demand and execution. The Retailer Services segment reported modest revenue growth, although operating income declined, reflecting higher costs associated with upfront investments in a larger project. Branded Services results remained under pressure, reflecting lower volumes, client losses and reduced scope of services as consumer brands and retailers navigate an uncertain macroeconomic environment that continues to weigh on consumer spending. On a consolidated basis, operating income was $1.7 million in the second quarter of 2026, a decline of $8.3 million year-over-year. The decrease reflected declines of $13.5 million in Branded Services and $2.7 million in Retailer Services, partially offset by $7.9 million of operating income growth in Experiential Services.

Our second quarter of 2026 net loss of $62.7 million was negatively impacted by $21.8 million of income tax expense as compared to $4.6 million for the same period in the prior year. The increase in tax expense was attributable to an increase in the valuation allowance against deferred tax assets related to interest expense limitation carryforwards. Restructuring and reorganization charges associated with our transformation strategy were $9.6 million in the second quarter of 2026 as compared to $16.4 million for the same period in the prior year.

Adjusted EBITDA, a non-GAAP financial measure, was $75.8 million in the second quarter of 2026, a decrease of $10.6 million as compared to $86.4 million for the same period in the prior year. An $8.3 million improvement in Experiential Services Adjusted EBITDA was more than offset by declines of $12.3 million in Branded Services and $6.6 million in Retailer Services.

Year-over-year comparisons are affected by divestitures completed after the second quarter of 2025. The divested businesses contributed approximately $4.9 million and $9.8 million of revenues and $2.9 million and $5.6 million of Adjusted EBITDA to our three and six months ending June 30, 2025 results, respectively, which are not reflected in the same periods of 2026.

Debt reduction is one of our primary capital allocation priorities. As such, during the six months ended June 30, 2026, we repaid $137.8 million of long-term debt in connection with scheduled principal repayments and a debt refinancing, compared to $24.9 million in the prior year. Separately, we repurchased 562,263 shares of our common stock for approximately $17.0 million, compared to 19,778 shares for $0.9 million in the prior year.

During the six months ended June 30, 2026, we advanced our transformation strategy through a successful extension of our global instance of SAP, initially implemented in 2025, to support our private brands business, completing our large-scale SAP implementation and shifting internal focus toward optimization. Together, these large-scale transformation projects, along with numerous supporting IT initiatives, have enabled us to sunset a number of disparate systems and allowed our team members to work in a more collaborative and efficient manner. As previously discussed, we are currently implementing a modernized HCM platform that, upon completion, we expect will represent the substantial completion of our IT transformation.

Executive Summary

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Adjusted Net (Loss) Income and Adjusted EBITDA are financial measures that are not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted Net (Loss) Income and Adjusted EBITDA and reconciliations of Net loss to Adjusted Net (Loss) Income and Adjusted EBITDA, see “Non-GAAP Financial Measures.”

(2)
NMF- Not meaningful

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Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

The following table sets forth items derived from the Company’s consolidated statements of operations for the three and six months ended June 30, 2026 and 2025 in dollars and as a percentage of total revenues.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included in Item 8 “Financial Statements and Supplementary Data” in this Annual Report. This section of this Annual Report generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2024 items and year-to-year comparisons between 2024 and 2023 are not included in this Annual Report, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on March 7, 2025.

Executive Overview

We are a leading omni-commerce business solutions provider to CPG manufacturers and retailers. We have a strong platform of essential, business critical services like headquarter sales, retail merchandising, in-store sampling, digital commerce and shopper marketing. We generate demand for brands and retailers of all sizes, helping get the right products on the shelf, whether physical or digital, and into the hands of consumers in every way they shop. We use a scaled platform to innovate as a trusted partner with our clients, solving problems to increase their efficiency and effectiveness across a broad range of channels.

Beginning in fiscal year 2024, we reported our results under three segments, Branded Services, Experiential Services and Retailer Services, reflecting the organizational realignment implemented on January 1, 2024. The prior‑period segment information has been recast to conform to the new structure, and no further changes were made to our reportable segments during fiscal year 2025.

We continued to execute the portfolio simplification strategy initiated in 2024, including the disposition of certain non‑core businesses that met the discontinued operations criteria and the associated reclassification of prior‑period results. Additional details regarding discontinued operations, divestitures and the deconsolidation of our European joint venture are provided in Note 2—Discontinued Operations, Divestitures and Deconsolidation of European Joint Venture.

Through our Branded Services segment, which generated approximately 32.9% and 36.6% of our revenues in the years ended December 31, 2025 and 2024, respectively, we provide services to branded CPG manufacturers through three main categories: brokerage, branded merchandising and omni-commerce marketing services. Brokerage services is primarily an outsourced sales and services agency for branded CPG manufacturers at retailer headquarters, in-store and online. Additionally, we lead with insights to execute branded merchandising strategies for branded CPG manufacturers related to merchandising in-store and online to drive product sales. Our omni-commerce marketing services primarily relate to digital and field marketing services, including shopper marketing, targeted advertising, interactive design and development, inventory management, application development and content management solutions.

Through our Experiential Services segment, which generated approximately 40.5% and 36.3% of our revenues in the years ended December 31, 2025 and 2024, respectively, we help brands and retailers reach consumers and convert shoppers into buyers through in-store and online sampling and demonstrations. We manage highly customized, large-scale sampling programs for leading brands and retailers. We also manage, organize and execute special events for brands and retailers, including large-scale meetings, mobile tours, summits and festivals.

Through our Retailer Services segment, which generated approximately 26.6% and 27.1% of our revenues in the years ended December 31, 2025 and 2024, respectively, we provide end-to-end advisory, retailer merchandising and agency services to retailers. Advisory services primarily consist of consulting services related to private brand development, including coordination related to the sourcing, manufacturing, branding and distribution of private label products to the end retailer. Retailer merchandising services primarily relate to the execution of merchandising strategies, including traditional services such as interior store construction, store resets, category updates and new item implementation. Agency services primarily consist of providing marketing strategies within retail locations, including retail media networks, and analyzing shopper behavior to offer planning, execution and measurement of insight-based, retailer-specific promotions that target retailers’ specific shopper base to drive product sales.

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Executive Summary

(1)
Adjusted Net Income and Adjusted EBITDA from continuing operations are financial measures that are not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted Net Income and Adjusted EBITDA from continuing operations and reconciliations of net loss to Adjusted Net Income and Adjusted EBITDA, see “—Non-GAAP Financial Measures.”

We reported a net loss of $227.7 million during fiscal year 2025, compared to a net loss of $378.4 million in the prior year. The year-over-year improvements reflect strong performance in our Experiential Services segment driven by increased demand and effective execution, lower selling, general and administrative expenses, and significantly lower non‑cash goodwill and intangible asset impairments compared to 2024. Results also benefited from one‑time gains related to divestitures and recoveries associated with the Take 5 Matter. These positive drivers were partially offset by declines in our Branded Services and Retailer Services segments.

Adjusted EBITDA was $331.8 million for the fiscal year 2025 compared to $356.0 million in the prior year. While Experiential Services delivered meaningful growth supported by higher demand and solid operating execution, broader macroeconomic headwinds and softer client activity in our Branded Services and Retailer Services segments more than offset this growth.

Factors Affecting Our Business and Financial Reporting

There are a number of factors that affect the performance of our business and the comparability of our results from period to period including:

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Acquisitions and Divestitures. We have historically grown our business in part through acquisitions, some of which included contingent consideration arrangements based on the future financial performance of the acquired operations. Changes in the estimated fair value of these arrangements, which reflect updated unobservable inputs, are recognized in “Selling, general and administrative expenses” in our Consolidated Statements of Operations and Comprehensive Loss. Although our acquisition activity has declined, we continue to evaluate selective opportunities, as well as potential divestitures, to align our portfolio with our core service offerings. Since January 2023, we have completed the divestitures of ten businesses. Certain divestitures include transition services for a limited period as specified in the related agreements.

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Amortization of Intangible Assets. As a result of the acquisition of our business by Topco on July 25, 2014 (the “2014 Topco Acquisition”), we acquired significant intangible assets, the value of which is amortized, on a straight-line basis, over 15 years from the date of the 2014 Topco Acquisition, unless determined to be indefinite-lived. The amortization of such intangible assets recorded in our consolidated financial statements has a significant impact on our operating (loss) income and net loss. Our historical acquisitions have increased, and any future acquisitions likely would increase, our intangible assets. We do not believe the amortization expense associated with the intangible assets created from our purchase accounting adjustments reflect a material economic cost to our business. Unlike depreciation expense which has an economic cost reflected by the fact that we must re-invest in property and equipment to maintain the asset base delivering our results of operations, we do not have any capital re-investment requirements associated with the acquired intangible assets, such as client relationships and trade names, that comprise the majority of the finite-lived intangible assets that create our amortization expense.

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Impairment of Goodwill and Indefinite-Lived Asset. We recognized goodwill and intangible asset impairment charges of $36.6 million and $167.1 million, respectively during the year ended December 31, 2025. We recognized goodwill and intangible asset impairment charges of $233.2 million and $42.0 million, respectively, during the year ended December 31, 2024. We recognized an intangible asset impairment charge of $43.5 million related to our indefinite-lived

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trade name during the year ended December 31, 2023. The impairment charges have been reflected in “Impairment of goodwill and indefinite-lived asset” in our Consolidated Statements of Operations and Comprehensive Loss.

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Foreign Exchange Fluctuations. We operate in multiple foreign jurisdictions, and our results are subject to fluctuations in foreign currency exchange rates, primarily related to the Canadian dollar. Movements in exchange rates can affect revenues, expenses, and the translation of monetary assets and liabilities. See also “—Quantitative and Qualitative Disclosure of Market Risk—Foreign Currency Risk.”

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Seasonality. Our business is seasonal, with the fourth fiscal quarter typically generating a higher proportion of our revenues due to increased consumer spending. Revenues in the first fiscal quarter are generally lower, reflecting the timing of client program launches and seasonal consumer purchasing patterns. Variability in the timing of client marketing initiatives, including promotional spending, new product introductions, and merchandising resets, can also affect comparability between periods.

How We Assess the Performance of Our Business

Revenues

Branded Services segment revenues are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing headquarter relationship management, execution of merchandising strategies and omni-commerce marketing services.

Experiential Services segment revenues are primarily recognized in the form of fee-for-service and cost-plus fees for providing in-store, digital sampling and demonstrations, where the Company manages highly customized, large-scale sampling programs for leading brands and retailers.

Retailer Services segment revenues are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing consulting services related to private brand development, the execution of merchandis

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