Our first quarter was solid and ahead of our internal expectations, reflecting strong growth in Experiential Services, improvement in Retailer Services, and continued headwinds affecting Branded Services. Adjusted EBITDA of $68 million was up over 16% and up 22% on a pro forma basis, excluding divestitures, driven by strong incremental margins in Experiential Services and improved profitability in Retailer Services. Our results reflect continued progress on the growth and productivity initiatives outlined last quarter, especially our centralized labor model, which is driving improved retail execution and profitability. We recently launched the last phase of our SAP implementation, and we continue to advance the rollout of our human capital management system.

We generated $74 million in adjusted unlevered free cash flow and ended the quarter with $144 million in cash after a meaningful debt paydown in March. While we remain focused on cash generation and productivity, we have increased our efforts to drive growth across our platform. In experiential and retailer services, we are using AI tools integrated with legacy systems as well as process redesign to increase our hiring speed to better meet in-store labor needs. We're collaborating to leverage proprietary data and an alert-based model to more effectively deploy retail reps to the highest yielding in-store opportunities.

While growth is our focus, we continue to pursue several productivity initiatives. First, our centralized labor model is improving service quality and supporting long-term margin expansion, particularly in Experiential Services. We also see an opportunity to extend some of these capabilities into our Retailer Services segment as we execute product resets and store remodel work in approximately 80% of the U.S. Finally, as a scaled outsource labor provider, we are well-positioned to support clients as they seek greater efficiency and return on their investment at retail.

What went well
  • Total revenue rose 4% to $723 million (up 4.7% pro forma excluding divestitures) and adjusted EBITDA rose over 16% to $68 million (up 22% pro forma), ahead of internal expectations.
  • Experiential Services delivered very strong results, with revenue up 22% to $270 million and adjusted EBITDA up 116% to $26 million on more than 19% event growth, improved execution rates, and a meaningful reduction in cost per hire.
  • Retailer Services returned to growth, with revenue up 4% to $227 million and adjusted EBITDA up 14% to $21 million on new business wins, pricing, ramping key client programs, and project timing.
  • Strong cash flow of $74 million adjusted unlevered free cash flow at a 110% conversion rate funded roughly $130 million of debt paydown in the quarter, and net leverage improved to 4.2x from 4.4x.
  • Completed the extension of debt maturities to 2030 with a largely fixed and hedged rate structure, improving liquidity and financial flexibility.
What went wrong
  • Branded Services declined, with revenue down 12% to $226 million (-10% pro forma) and adjusted EBITDA down 25% to $21 million (-17% pro forma) on a challenging macro environment, select client losses, and an unfavorable mix shift.
  • Ongoing consumer softness persisted, with value-focused lower and middle-income shoppers, healthier-shifting higher-income consumers, rising gas prices, and the lowest consumer sentiment since tracking began in 1952 weighing on demand.
  • DSO increased slightly and was expected to remain elevated through mid-year due to the final phase of the SAP implementation and other systems upgrades.
  • A portion of the quarter's outperformance reflected timing-related benefits, particularly in Retailer Services, that management expected to normalize over the balance of the year.
  • Cash fell to $144 million from year-end as cash was deployed to reduce debt, and adjusted EBITDA was still guided flat to down mid-single digits for the year given an unfavorable margin mix.

More on Advantage Solutions Inc.

Reported 2026-05-06 · figures from the Advantage Solutions Inc. Q1 2026 earnings call.

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