Advantage Solutions (NASDAQ:ADV) executives emphasized balance sheet actions, improving execution in Experiential Services, and continued macro-related pressure in parts of the portfolio as they reviewed fourth quarter and full-year 2025 results and outlined expectations for 2026.
Debt refinancing, divestitures, and liquidity
CEO Dave Peacock said the company is moving toward a debt refinancing “later this month,” noting it received over 99% acceptance from its lender group on a new debt package that would extend maturities to 2030. Management framed the planned refinancing as a way to provide operating flexibility, enhance liquidity, and support a long-term leverage target of 3.5x or less. Peacock added the refinancing plan includes an approximately $90 million debt paydown.
Growe detailed the divestiture activity and proceeds:
- Sale of a minority interest in Acxion Foodservice in September for approximately $20 million
- Sale of SmallTalk in December for approximately $20 million
- Divestiture of part of the company’s stake in Advantage Smollan in January for $27 million
- Receipt of the final $27.5 million cash payment in early 2026 related to the Jun Group sale
Growe said the company did not repurchase debt or shares during the quarter. Net leverage ended the quarter at about 4.4x Adjusted EBITDA, in line with the third quarter but above the company’s stated long-term target.
In response to an analyst question about the refinancing’s higher interest cost, management said borrowing rates would increase by roughly 150 basis points. Growe indicated the company expects about $10 million of incremental interest expense in 2026, with full annualization in 2027, while noting that lower SOFR partially offsets the impact because the term loan is priced at SOFR plus 600 basis points.
Fourth quarter performance: growth in Experiential offsets pressure elsewhere
Peacock reported fourth quarter net revenues of $785 million, up about 3% year-over-year, citing an improving trajectory in Experiential Services. He said Branded Services continued to face cyclical headwinds, while Retailer Services experienced slowing spend and some revenue timing shifts. The company posted fourth quarter Adjusted EBITDA of $88 million, which management said reflected ongoing mix shifts toward more labor-intensive, lower-margin businesses.
Growe provided segment details for the fourth quarter:
- Branded Services: revenue of approximately $259 million and Adjusted EBITDA of $39 million, down 9% and 29% year-over-year, respectively.
- Experiential Services: revenue of approximately $280 million and Adjusted EBITDA of $28 million, up 19% and 115% year-over-year, respectively.
- Retailer Services: revenue of $246 million and Adjusted EBITDA of $20 million, up 1% and down 22% year-over-year, respectively.
Within Experiential Services, Growe said results reflected higher event volume (up 15% in the quarter) and faster, more responsive hiring, with execution rates exceeding 93%. He added that EBITDA margin was “once again in the double digits,” with incremental margin in the quarter reaching over 30% despite elevated labor-related costs, including workers’ compensation and medical benefits.
In Retailer Services, management attributed weaker profitability to delayed projects that caused costs to be incurred ahead of revenue recognition, pressure in advisory and agency work due to channel mix, and higher workers’ compensation and medical benefit costs. Growe said a portion of project activity shifted out of the quarter and into early 2026, while related labor onboarding and training costs were already incurred in 2025.
Full-year 2025 results by segment
For the full year 2025, Growe said:
- Branded Services: $1.0 billion in revenue and $143 million in Adjusted EBITDA, down 9% and 21% year-over-year, respectively.
- Experiential Services: $1.0 billion in revenue and $101 million in Adjusted EBITDA, up 8% and 34% year-over-year, respectively.
- Retailer Services: $944 million in revenue and $87 million in Adjusted EBITDA, down 2% and 12% year-over-year, respectively.
Branded Services performance reflected what Growe described as sustained softness in CPG spending, along with challenges in sales brokerage and omnicommerce marketing. Management also reiterated that client insourcing remained a headwind, though it characterized the trend as cyclical and said it is focused on converting an expanded new business pipeline.
Peacock discussed broader operating conditions, pointing to cautious and value-seeking consumers, promotion-driven purchasing at lower price points among lower-end consumers, and shifting preferences among higher-end consumers. He said these dynamics have contributed to lower commission revenue in certain managed sales arrangements, pressure on CPG and retailer spending for merchandising projects and store work, and a pullback in traditional marketing as retailers demand more investment in retail media networks.
Cash flow and working capital improvements
Management emphasized cash generation as a highlight of 2025. Peacock said the company generated $174 million in unlevered free cash flow in the second half of 2025, compared with $50 million in the first half, and cited the company’s SAP implementation as one reason for improved performance. He also said net free cash flow of $74 million in the second half exceeded the company’s target of 30% of Adjusted EBITDA, excluding payroll timing.
Growe said days sales outstanding improved to approximately 57 days in the fourth quarter, the “lowest level” in the company’s history, reflecting collection efforts and normalization after earlier system-related disruptions. Capital expenditures were about $24 million in the fourth quarter and $53 million for full-year 2025, which management attributed to elevated IT transformation spending.
2026 outlook: cautious optimism amid mix and macro pressures
Looking ahead, Peacock said the company is entering 2026 with “cautious optimism” as it shifts from heavy investment toward enhanced execution. Management expects 2026 to be the final year of elevated IT spending.
For 2026, excluding divestitures, the company expects revenue to be flat to up low single digits, driven by continued momentum in Experiential Services, a more stable trajectory in Retailer Services, and a move toward stabilization in Branded Services over the course of the year. Adjusted EBITDA is expected to be flat to down mid-single digits, excluding divestitures, which management attributed to macro uncertainty and mix shifts toward labor-intensive, lower-margin services, while some higher-margin businesses remain challenged.
On cash flow, management guided to unlevered free cash flow of approximately $250 million to $275 million and net free cash flow conversion of at least 25% of Adjusted EBITDA, excluding incremental costs related to a potential debt refinancing. Growe said CapEx is expected to be approximately $50 million to $60 million in 2026, consistent with 2025, and noted the company expects the second half of 2026 to represent roughly 60% of Adjusted EBITDA.
In Q&A, Peacock and Growe also pointed to elevated benefits-related labor costs tied to higher claims as a factor affecting results, saying the company brought in a new benefits advisor and is evaluating options to bring costs in line. They also discussed efforts to improve productivity through a centralized labor model, technology modernization including SAP and Oracle systems, a planned Workday implementation, and early-stage AI use cases such as AI-enabled staffing and scheduling.
About Advantage Solutions (NASDAQ:ADV)
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.
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