Summary of Advantage Solutions Q3 2025 Earnings Call

1Key Financial Results and Metrics

Revenues: $781 million, down 2.6% year-over-year.

Adjusted EBITDA: $99.6 million, a decline of 1.4% year-over-year, but improved sequentially from Q2.

Adjusted Unlevered Free Cash Flow: $98 million, nearly 100% of EBITDA.

Cash Position: Ended the quarter with over $200 million in cash, bolstered by the sale of a 7.5% stake in Acxion Foodservice.

Net Leverage Ratio: 4.4x adjusted EBITDA, improved from the previous quarter.

2Strategic Updates and Business Highlights

Segment Performance:

Branded Services: Revenues of $258 million, down 9%; EBITDA of $42 million, down 15%. Facing challenges from market conditions and in-sourcing trends.

Experiential Services: Revenues of $274 million, up 8%; EBITDA of $35 million, up 52%. Strong demand for events, with a 7% increase in demo event volume.

Retailer Services: Revenues of $249 million, down 6%; EBITDA of $23 million, down 22%. Results affected by project timing and channel shifts.

Technology Initiatives: Advancements in IT transformation, including the rollout of a new ERP system and the development of an AI-enabled decision engine (Pulse) to enhance operational efficiency.

Partnerships: Expanded collaboration with Instacart to improve retail execution and address out-of-stock issues.

3Forward Guidance and Outlook

Revenue Guidance: Reiterated expectation of flat to low single-digit decline for the year.

EBITDA Guidance: Adjusted to reflect the Acxion divestiture and challenging macro conditions, now expecting a mid-single-digit decline.

Cash Flow: Anticipated to remain strong, with expectations of unlevered free cash flow exceeding 50% of EBITDA.

4Bad News, Challenges, or Points of Concern

Market Conditions: Ongoing inflationary pressures and cautious consumer spending are impacting demand, particularly among lower-income consumers.

Branded Services Segment: Continued headwinds from in-sourcing and competitive pressures, leading to reduced commission-based revenues.

Retailer Services: Experiencing a negative impact from project timing and a shift towards club and mass stores.

Consumer Behavior: Mixed signals from clients regarding consumer spending, with higher-income shoppers remaining resilient while lower-income consumers are more selective.

5Notable Q&A Insights

EBITDA Outlook: Management indicated that the EBITDA decline is influenced by both the divestiture and the macro environment, with expectations for stabilization in 2026.

Segment Performance: Experiential services are expected to continue as a growth driver, while branded services may see gradual improvement due to a strong pipeline of new business opportunities.

In-sourcing Trends: Management acknowledged in-sourcing as a significant factor in revenue losses, but expressed optimism about future stabilization and improvements in branded services.

Consumer Insights: Management noted a cautious optimism for 2026, suggesting that some macroeconomic pressures may ease, allowing for improved consumer spending patterns. Overall, Advantage Solutions is navigating a challenging macro environment with a focus on operational efficiency and strategic partnerships, while facing headwinds in certain segments. The company remains optimistic about future growth driven by its experiential services and ongoing technology enhancements.