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Q1 outperformance and cash generation: Total net revenues were $723 million (up 4% YoY; 4.7% pro forma) and adjusted EBITDA was $68 million (up >16% YoY; 22% pro forma), with $74 million of adjusted unlevered free cash flow and $144 million of cash at quarter-end.
Mixed segment performance: Experiential Services drove the beat with revenue of $270 million (+22% YoY) and EBITDA up 116% YoY, while Branded Services lagged (revenue down ~12% and EBITDA down 25% YoY); Retailer Services showed modest growth.
Tech-driven efficiency plan and guidance: management is completing SAP and planning Workday (material efficiency gains expected in 2027), reiterated FY2026 guidance of flat to low-single-digit revenue growth, adjusted EBITDA flat to down mid-single-digits, $250–$275 million of adjusted unlevered free cash flow, and a net leverage target toward 3.5x (currently 4.2x).
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Advantage Solutions (NASDAQ:ADV) reported a first-quarter 2026 performance that management said came in ahead of internal expectations, driven by strong growth in Experiential Services and improved results in Retailer Services, while Branded Services continued to face pressure.
CEO Dave Peacock said total company net revenues were $723 million, up 4% year-over-year and up 4.7% on a pro forma basis excluding divestitures. Adjusted EBITDA was $68 million, up more than 16% year-over-year and up 22% on a pro forma basis excluding divestitures. Peacock attributed the profitability improvement to “strong incremental margins in Experiential Services and improved profitability in Retailer Services.”
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Peacock also highlighted cash flow and liquidity. The company generated $74 million in adjusted unlevered free cash flow in the quarter and ended the period with $144 million in cash “after a meaningful debt paydown in March,” he said. CFO Chris Growe added that adjusted unlevered free cash flow conversion was 110% in the quarter.
Growe said the quarter included the impact of divestitures completed recently, reiterating prior disclosure that Advantage divested “a small business, an equity stake and a portion of our European joint venture” that collectively accounted for approximately $20 million of revenue and over $10 million of EBITDA in 2025. He said the divestitures reduced first-quarter net revenues and EBITDA by about $5 million and $3 million, respectively, and that the divested businesses were contained within Branded Services.
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Branded Services: Growe said Branded Services generated $226 million of revenue and $21 million of adjusted EBITDA, down 12% and 25% year-over-year. On a pro forma basis excluding divestitures, revenue declined 10% and EBITDA declined 17%. He cited a “challenging macro environment, select client losses, and an unfavorable mix shift,” adding that cost discipline “was not able to fully offset these impacts.”
To improve performance, Growe said the company is taking targeted actions including expanding its customer footprint, accelerating cross-sell, leaning into “newer, higher value services,” and converting a pipeline of opportunities, while using technology to improve efficiency and ROI for clients. Both Growe and Peacock said they expect the business to move toward a more stable baseline as the year progresses, though they acknowledged near-term conditions remain challenging.
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Experiential Services: Advantage posted its strongest growth in Experiential Services, where Growe said revenue was $270 million and adjusted EBITDA was $26 million, up 22% and 116% year-over-year, respectively. He attributed the increase to higher event volumes, strong execution, and an easier comparison to the prior-year period.
Peacock said events grew “over 19%” and execution rates improved year-over-year and sequentially. During Q&A, Peacock pointed to labor-related challenges a year earlier that affected the segment and said the company has since improved its labor readiness through initiatives around training, hiring, and shortening the time from hire to start date. He said those efforts help retention because hourly workers “want to get started right away,” and he emphasized a focus on improving the employee experience.
Growe said operational improvements included better alignment between demand and labor availability, which supported higher execution rates and volumes, along with price optimization. Those benefits were partially offset by higher variable labor and wage costs. He said the centralized labor model (CLM) initiative is already helping execution and that hiring accelerated in the quarter with a significant increase in net hires, while retention remained consistent with the prior year. Growe also said cost per hire fell meaningfully in the first quarter.
Retailer Services: Retailer Services generated $227 million of revenue and $21 million of adjusted EBITDA, up 4% and 14% year-over-year, respectively, Growe said. He attributed performance to new business wins, pricing, continued ramp of key client programs, and project timing. He noted the segment “returned to adjusted EBITDA growth during the quarter,” while also flagging that the company lapped a client loss from the prior-year period and that certain project timing provided a benefit.
Peacock said pipeline momentum is strong and that Advantage is converting new customers and new service offerings, highlighting “strong conversion” in the retail merchandising business.
Peacock and Growe repeatedly pointed to Advantage’s ongoing technology modernization and AI initiatives as drivers of productivity and, eventually, efficiency gains. Peacock said the company recently launched the last phase of its SAP implementation and continues to roll out its human capital management system. He said the company’s SAP and Oracle platforms have strengthened data integrity, improved reporting, reduced duplicative systems, and are improving its ability to deliver “insight-driven services,” while Workday is expected to improve talent management.
Growe told analysts the company is “going live with another instance of SAP today,” which he described as the last major business moving onto SAP, though he cautioned there will still be refinements and continued investment. He said Workday will go in place next year and reiterated that much of the efficiency opportunity is expected in 2027.
In response to an analyst question about magnitude, Growe declined to quantify expected margin uplift but said the benefits should include “efficiency across the business” and improved margin performance, as well as potentially significant cash flow benefits, including from improved days sales outstanding (DSO).
Peacock added that Workday could be especially meaningful given the company’s workforce scale, citing “almost 70,000 folks and 70 million labor hours.” He also said the company is leveraging its data lake and cloud migration to use machine learning and AI “more profoundly,” including in workforce operations to streamline hiring and reduce time between hiring and start date.
Peacock said Advantage is using AI and data to drive faster insights to action, including through an alliance with Instacart to help clients with retail pricing and assortment decisions. He said the company is collaborating with Instacart using proprietary data and an “alert-based model” to deploy retail reps to higher-yielding in-store opportunities. Peacock said the retail pilot with Instacart is expanding and that initial results have been positive.
Later, Peacock described the Instacart collaboration as still early stage and “more in the ramping phase.” He said the pilot has been successful in building a “real-time signal-based” process in merchandising and that data transfer between the companies has been successful. However, he said Advantage is not sharing details because the pilot is early, and he suggested more benefits could emerge in 2027.
Peacock also said the company is in active discussions with non-food retailers to perform services similar to what it has long done with grocers. In Q&A, he said the company’s focus over recent years—particularly after acquiring Daymon, integrating it, and navigating COVID-related impacts—limited its ability to pursue other retailers. He added that other retailers face similar challenges, including labor shortages and episodic in-store tasks, and he cited “supply chain as a service” within Branded Services as another potential offering for retailers. He characterized the effort as early and said it will take time to cultivate relationships. Growe added that opportunities to move beyond grocery are being seen “across each of the segments.”
On the balance sheet, Growe said the company ended the quarter with $144 million in cash, down sequentially due to debt reduction, but up from $121 million in the prior-year period. He said the company extended debt maturities to 2030 during the first quarter and now has a “largely fixed and hedged rate structure.” Net leverage was 4.2x adjusted EBITDA at quarter-end, down from 4.4x at the end of the fourth quarter, and Growe said the company expects to end the year around that level while working toward a long-term target of 3.5x or below.
Working capital remained a focus, though Growe said DSO increased slightly in the first quarter and is expected to remain elevated over the next few months due primarily to the temporary impact of ongoing systems implementations and upgrades, including the final SAP phase going live. He said DSO is expected to improve later in the year, with year-end levels below the prior year.
Peacock described the consumer environment as uncertain, citing value-seeking behavior among lower- and middle-income consumers and shifting preferences among higher-income consumers, along with rising gas prices and low consumer sentiment. He said the company does not expect these dynamics to change in the near term, but is adapting and helping clients adjust strategies.
For full-year 2026, management reiterated its outlook. Peacock said the company expects flat to low single-digit revenue growth and adjusted EBITDA that is flat to down mid-single digits, “as our revenue growth is weighted towards lower margin businesses in our portfolio.” He reiterated adjusted unlevered free cash flow guidance of $250 million to $275 million and net free cash flow conversion of 25% of adjusted EBITDA, excluding incremental costs related to the debt refinancing.
Growe also reiterated guidance, while noting that some first-quarter outperformance was timing-related and may normalize, and that the company expects the first half to represent “in the low 40% range” of full-year adjusted EBITDA. Key factors for the outlook, he said, include labor and benefit costs, mix dynamics, and the ability to convert pipeline into revenue, “particularly within Branded Services.”
Advantage Solutions is a leading sales and marketing agency that provides outsourced solutions to consumer packaged goods companies. The firm's offerings include field sales execution, retail merchandising, in-store and shopper marketing, e-commerce activation and data-driven analytics. By deploying dedicated sales teams alongside proprietary technology, Advantage Solutions helps brands optimize shelf placement, ensure compliance with promotional programs and strengthen consumer engagement.
The company's service portfolio spans field sales and marketing, retail execution, brand ambassador programs, digital and experiential promotions, and shopper insights.
The article "Advantage Solutions Q1 Earnings Call Highlights" was originally published by MarketBeat.