Advantage Solutions’ Earnings Call Contradictions: Efficiency Timeline and Experiential Growth Drivers Diverge

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $757 million, up 3% year over year and 4% excluding divestitures

Guidance:

• Reiterating full year 2026 revenue and adjusted EBITDA guidance ranges.
• Full-year adjusted unlevered free cash flow guidance of $250 million, representing a conversion rate of 25%.
• Expect gradual improvement in branded services revenue and profitability in the second half of 2026.
• Expect sequential improvement in retailer services performance in the second half, with project-related earnings volatility moderating.
• Experiential services expected to deliver continued momentum and growth in the second half.
• Interest expense and capital expenditures guidance updated to be slightly lower than previously forecasted.

Business Commentary:

Experiential Services Growth:

• Experiential services generated $296 million in revenue and $34 million in adjusted EBITDA, up 19% and 32% year-over-year, respectively.
• The growth was driven by strong demand for product demonstrations, with event volumes increasing 18%, and supported by new client acquisition and improved execution.

Branded Services Challenges and Recovery:

• Branded services reported $224 million in revenue and $22 million in adjusted EBITDA, down 30% year-over-year, with a 15% decline excluding divestitures.
• The segment faced challenges such as client insourcing, softer CPG spending, and client losses, but showed optimism with growth in CPG merchandising projects and stabilization efforts expected to improve gradually.

Retailer Services Volatility:

• Retailer services revenue was $237 million, up 3% year-over-year, but adjusted EBITDA declined by 25%.
• Performance was impacted by project timing, a difficult comparison with an unusually strong prior year, and higher execution costs on new projects, with expectations for improvement in the second half.

Cash Flow and Working Capital:

• The company reported $19 million in adjusted unlevered free cash flow, representing 25% of adjusted EBITDA for the quarter.
• Cash flow was affected by an increase in DSO due to the SAP implementation and customer payment timing but is expected to improve with working capital discipline.

AI and Productivity Initiatives:

• The company is integrating AI across operations, with initiatives like an event manager compliance tool and photo verification aiming to increase efficiency and execution rates.
• These efforts are part of a broader strategy to enhance service levels, improve resource deployment, and support sustainable growth in experiential services.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed confidence in experiential services momentum and strength in demand. They noted 'continued strength in experiential services' and are 'encouraged by the strength of our experiential services demand.' They also see 'optimism' for gradual branded services recovery and expect 'modest improvement' and 'sequential improvement' in key segments.

Q&A:

• Question from Greg Parrish (Morgan Stanley): In your view, what's the catalyst for gradual recovery in branded services in the second half? Does that really get this business stabilized?
  Response: Management sees parts of branded services demonstrating growth, a more balanced client base after recent losses, and top clients growing, which provides optimism for stabilization over time, though quarterly cycles will persist.

• Question from Greg Parrish (Morgan Stanley): Beyond the current strength, how durable is the experiential services growth?
  Response: Management views the demand as very durable, driven by macro trends like emerging brand growth and innovation, strong client demand signals, and internal execution improvements, including AI-enabled efficiencies.

• Question from Luke Morrison (Canaccord): Can you help understand the underlying mix in CPG merchandising projects being a bright spot?
  Response: The increase in project work (~20% year-over-year) is due to client needs to address out-of-stocks and improve in-store execution, with a shift towards more alert-based, efficient deployment of a dedicated labor force.

• Question from Luke Morrison (Canaccord): As branded services revenue is down and experiential is up, what closes the margin gap and drives overall margin stability?
  Response: Margin pressure is temporary as investments are made to sustain experiential growth. Over time, gradual branded services recovery, retailer services growth, and stabilization of business mix will lead to margin equalization and eventual margin growth.

Contradiction Point 1

Timing of Efficiency Benefits from Technology Implementation

Contradiction on when major efficiency gains will materialize from the enterprise tech rollout.

Luke Morrison (Canaccord) - Luke Morrison (Canaccord)

2026Q2: The heavy lifting... will be mostly complete by year-end 2026. The majority of efficiency benefits are expected in 2027. - Christopher Growe(COO) and David Peacock(CEO)

How will you address margin pressure from the product mix shift toward the fastest-growing, low-margin experiential services segment? - Lucas Morison (Canaccord Genuity Corp.)

2026Q1: The heavy lifting of the enterprise technology transformation will be mostly complete by year-end 2026. The majority of efficiency benefits are expected in 2027. - Christopher Growe(COO) and David Peacock(CEO)

Contradiction Point 2

Drivers of Experiential Services Growth

Contradiction on whether growth is driven by lapping prior challenges or by strong new demand drivers.

Greg Parrish (Morgan Stanley) - Greg Parrish (Morgan Stanley)

2026Q2: Growth is considered very durable, driven by strong demand signals... and macro trends... - Dave Peacock(CEO)

Is the strong growth in experiential services (20%+) durable beyond the current demand surge? - Gregory Parrish (Morgan Stanley)

2026Q1: Growth was significantly helped by lapping hiring challenges from Q1 2025, improved labor readiness... - David Peacock(CEO)

Contradiction Point 3

Outlook for Branded Services Recovery

Contradiction on the catalysts and timeline for Branded Services stabilization.

Greg Parrish (Morgan Stanley) - Greg Parrish (Morgan Stanley)

2026Q2: Recovery is expected to be gradual due to recent client losses and market challenges... providing optimism for stabilization over time. - Dave Peacock(CEO)

What is the catalyst for the gradual recovery in branded services in the second half and will it lead to stabilization by 2027? - Gregory Parrish (Morgan Stanley)

2025Q4: The catalysts include: 1) Lapping previous client losses due to pricing pressures; 2) New leadership and refocused execution on consistent service; 3) Some clients shifting back from in-sourcing; and 4) A robust new business pipeline... - Dave Peacock(CEO)

Contradiction Point 4

Nature and Drivers of Branded Services Losses

Inconsistent attribution of client losses between quarters.

Greg Parrish from Morgan Stanley asks for an overview of the earnings results and future guidance? - Greg Parrish (Morgan Stanley)

2026Q2: Recovery is expected to be gradual due to recent client losses and market challenges. - Dave Peacock(CEO)

What is the catalyst for the second-half recovery in branded services and will it lead to stabilization by 2027? - Gregory Parrish (Morgan Stanley)

2025Q3: Losses are attributed to a mix of in-sourcing by clients and competition, though the predominant loss driver is in-sourcing. - David Peacock(CEO)

Contradiction Point 5

Sustainability and Margin Profile of Experiential Services Growth

Contradiction on growth durability and its margin impact between quarters.

Greg Parrish (Morgan Stanley) - Greg Parrish (Morgan Stanley)

2026Q2: The growth is considered very durable... Internally, the team is competing at a high level... AI is being used as an enabler to improve efficiency... The company is making deliberate investments to sustain this growth rate... 95% execution rate in Q2. - Dave Peacock(CEO) and Chris Groey(CFO)

How sustainable is the 20%+ growth in experiential services beyond the current demand surge? - Gregory Parrish (Morgan Stanley)

2025Q3: In experiential, the 7% growth in events per day with 91% execution indicates unmet demand. The business is now in underlying growth, not a COVID recovery. Growth is sustained by factors like industry innovation and retailer sampling efforts. Strong pricing helps offset labor inflation, leading to high incremental margins. - Christopher Growe(CFO) and David Peacock(CEO)