Advantage (ADV) Q2 Revenue Jumps 10%

Advantage Solutions (ADV 22.39%), a provider of outsourced sales, marketing, and retail solutions to consumer goods companies and retailers, reported results for Q2 2025 on August 7, 2025. The company reduced its GAAP net loss to $30.4 million from $113.0 million in the prior year period. Adjusted EBITDA declined 3.9% year over year (non-GAAP), reflecting continued margin pressure. The overall quarter showed marked operational progress from the challenges faced earlier in the year, and management reaffirmed its outlook for fiscal 2025.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Focus

Advantage Solutions operates as a service provider to consumer packaged goods (CPG) companies and retailers, delivering marketing, sales, and in-store support services. Its network reaches over 4,000 clients across more than 100,000 retail locations, allowing it to scale its services for clients of various sizes and market footprints.

Current business priorities include deepening client relationships, investing in data and technology, and optimizing its large workforce of about 69,000 employees. Key success factors hinge on leveraging technology to enhance service delivery, maintaining a broad retail and manufacturer network, and effectively managing costs and labor productivity. Compliance, brand differentiation, and intellectual property protection also underpin its ability to support leading retail brands.

Quarter Highlights and Segment Performance

GAAP revenue was flat compared to the prior year, but this result outperformed market expectations by a wide margin, as GAAP revenue of $873.7 million exceeded the analyst consensus estimate of $792.5 million by $81.2 million, or 10.2%. After a difficult first quarter, the company improved its operational execution, particularly in staffing and service delivery, which contributed to higher profitability in some business lines. GAAP net loss decreased from $113.0 million to $30.4 million compared to the prior year quarter, marking an $82.6 million improvement. The improvement followed a first quarter impacted by staffing shortages, timing shifts (such as a late Easter holiday), and reduced retailer project volume.

Segment performance was mixed. In Branded Services, which covers outsourced sales, omni-commerce marketing, and brokerage services, GAAP revenue declined 8.4% from a year earlier, falling to $295.2 million. Adjusted EBITDA in this segment dropped 20.6% to $34.0 million. The company cited client investment reductions, market headwinds, and a client exit in the second half of the previous year, with most of the negative impact expected to be fully reflected by the third quarter.

The Experiential Services segment, which includes product demonstration and field marketing events, saw revenue climb 8.8% year over year to $347.7 million, and adjusted EBITDA rose 14.5% to $25.9 million. Higher staffing levels and improved execution rates (the proportion of planned activities actually performed) reached around 93%, supporting a higher event count and more consistent delivery for retail clients. The company noted that events per day grew 1% overall and 5%, excluding a large client loss from the prior year.

Retailer Services, which handles in-store merchandising, resets, and project-based support for retailers, posted GAAP revenue of $230.8 million, broadly flat year over year. Adjusted EBITDA for this segment rose 8.4% to $26.5 million (non-GAAP), supported by recovered staffing and increased project activity, some of which was advanced from the third quarter. GAAP operating income was nearly unchanged compared to last year. Demand remained solid for merchandising and project services, though management expects a difficult third quarter due to timing and comparison effects, with improvement likely by the end of the year.

The broader company continued investing in technology, notably advanced analytics, artificial intelligence applications, and upgraded information systems. These projects are expected to drive future efficiency and cost savings but contributed to increased expenses in the quarter. Adjusted unlevered free cash flow was $56.8 million, equating to 66% of adjusted EBITDA. Balance sheet management included a net leverage ratio of 4.6x and cash of $103 million as of quarter end. Capital expenditures were just $2 million, and capex guidance was lowered to the $50–$60 million range.

The company sustained investments in proprietary data systems and process modernization. GAAP accounts receivable increased to $673.3 million as of June 30, 2025, an enterprise software upgrade that caused some temporary cash flow pressure.

Looking Forward

Management reaffirmed its full-year 2025 guidance, citing expectations for revenue and adjusted EBITDA to come in “down low single digits to flat” compared to the prior year. The second half of the year is expected to be stronger as staffing and execution stabilize, new business wins take effect, and cost-saving initiatives begin to deliver results.

Ongoing transformation programs, including continued information technology upgrades and organizational streamlining, are expected to yield significant OpEx savings and broader business efficiencies over the next two to three years. Investors should monitor the pace of margin recovery in underperforming segments, the realization of cost savings from technology investments, and the company’s ability to reduce its debt over time given current leverage and interest expense levels.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.