Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
ADVANTAGE SOLUTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share data)
March 31, 2025
December 31, 2024
ASSETS
Current assets
Cash and cash equivalents
$
121,149
$
205,233
Restricted cash
15,719
15,518
Accounts receivable, net of allowance for expected credit losses of $ 14,146 and $ 13,047 , respectively
641,711
603,069
Prepaid expenses and other current assets
100,414
86,918
Total current assets
878,993
910,738
Property and equipment, net
98,569
97,763
Goodwill
477,021
477,021
Other intangible assets, net
1,289,666
1,332,578
Investments in unconsolidated affiliates
234,284
226,510
Other assets
34,820
61,907
Total assets
$
3,013,353
$
3,106,517
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt
$
13,250
$
13,250
Accounts payable
180,584
158,485
Accrued compensation and benefits
87,403
129,486
Other accrued expenses
134,042
134,677
Deferred revenues
26,646
24,164
Total current liabilities
441,925
460,062
Long-term debt, net of current portion
1,665,280
1,686,690
Deferred income tax liabilities
147,340
146,889
Other long-term liabilities
63,233
64,141
Total liabilities
2,317,778
2,357,782
Commitments and contingencies (Note 9)
Equity attributable to stockholders of Advantage Solutions Inc.
Common stock, $ 0.0001 par value, 3,290,000,000 shares authorized; 323,265,272 and 320,773,096 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively
32
32
Additional paid in capital
3,469,419
3,466,221
Accumulated deficit
( 2,697,742
)
( 2,641,612
)
Loans to Karman Topco L.P.
( 7,190
)
( 7,029
)
Accumulated other comprehensive loss
( 15,059
)
( 15,861
)
Treasury stock, at cost; 12,894,517 and 12,400,075 shares as of March 31, 2025 and December 31, 2024, respectively
( 53,885
)
( 53,016
)
Total stockholders' equity
695,575
748,735
Total liabilities and stockholders' equity
$
3,013,353
$
3,106,517
See Notes to the Condensed Consolidated Financial Statements.
3
ADVANTAGE SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
Three Months Ended March 31,
(in thousands, except share and per share data)
2025
2024
Revenues
$
821,792
$
861,412
Cost of revenues (exclusive of depreciation and amortization shown separately below)
722,754
751,844
Selling, general, and administrative expenses
64,865
89,081
Depreciation and amortization
50,361
49,748
(Income) loss from equity method investments
( 1,567
)
689
Total operating expenses
836,413
891,362
Operating loss from continuing operations
( 14,621
)
( 29,950
)
Other expenses:
Change in fair value of warrant liabilities
10
287
Interest expense, net
34,360
35,761
Total other expenses, net
34,370
36,048
Loss from continuing operations before provision for (benefit from) income taxes
( 48,991
)
( 65,998
)
Provision for (benefit from) income taxes from continuing operations
7,139
( 15,865
)
Net loss from continuing operations
( 56,130
)
( 50,133
)
Net income from discontinued operations, net of tax
—
47,018
Net loss
$
( 56,130
)
$
( 3,115
)
Less: net income from discontinued operations attributable to noncontrolling interest, net of tax
—
2,192
Net loss attributable to stockholders of Advantage Solutions Inc.
$
( 56,130
)
$
( 5,307
)
Net loss per common share:
Basic loss per common share from continuing operations attributable to stockholders of Advantage Solutions Inc.
$
( 0.17
)
$
( 0.16
)
Basic earnings per common share from discontinued operations attributable to stockholders of Advantage Solutions Inc.
$
—
$
0.14
Diluted net loss per share:
Diluted loss per common share from continuing operations attributable to stockholders of Advantage Solutions Inc.
$
( 0.17
)
$
( 0.16
)
Diluted earnings per common share from discontinued operations attributable to stockholders of Advantage Solutions Inc.
$
—
$
0.14
Weighted-average number of common shares:
Basic
321,683,440
321,458,155
Diluted
321,683,440
321,458,155
Comprehensive Income (Loss):
Net loss attributable to stockholders of Advantage Solutions Inc.
$
( 56,130
)
$
( 5,307
)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
802
( 2,717
)
Total comprehensive loss attributable to stockholders of Advantage Solutions Inc.
$
( 55,328
)
$
( 8,024
)
See Notes to the Condensed Consolidated Financial Statements.
4
ADVANTAGE SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
Accumulated
Additional
Other
Total
Common Stock
Treasury Stock
Paid-in
Accumulated
Loans to
Comprehensive
Stockholders'
(in thousands, except share data)
Shares
Amount
Shares
Amount
Capital
Deficit
Topco
Loss
Equity
Balance at January 1, 2025
320,773,096
$
32
12,400,075
$
( 53,016
)
$
3,466,221
$
( 2,641,612
)
$
( 7,029
)
$
( 15,861
)
$
748,735
Comprehensive loss
Net loss
—
—
—
—
—
( 56,130
)
—
—
( 56,130
)
Foreign currency translation adjustments
—
—
—
—
—
—
—
802
802
Total comprehensive loss
( 55,328
)
Interest on loans to Karman Topco L.P.
—
—
—
—
—
—
( 161
)
—
( 161
)
Purchase of treasury stock
( 494,442
)
—
494,442
( 869
)
—
—
—
—
( 869
)
Equity-based compensation of Karman Topco L.P.
—
—
—
—
( 1,524
)
—
—
—
( 1,524
)
Shares issued under 2020 Employee Stock Purchase Plan
377,989
—
—
—
993
—
—
—
993
Payments for taxes related to net share settlement under 2020 Incentive Award Plan
—
—
—
—
( 2,396
)
—
—
—
( 2,396
)
Shares issued under 2020 Incentive Award Plan
2,608,629
—
—
—
—
—
—
—
—
Stock-based compensation expense
—
—
—
—
6,125
—
—
—
6,125
Balance at March 31, 2025
323,265,272
$
32
12,894,517
$
( 53,885
)
$
3,469,419
$
( 2,697,742
)
$
( 7,190
)
$
( 15,059
)
$
695,575
Accumulated
Advantage
Additional
Other
Solutions Inc.
Total
Common Stock
Treasury Stock
Paid-in
Accumulated
Loans to
Comprehensive
Stockholders'
Noncontrolling
Stockholders'
(in thousands, except share data)
Shares
Amount
Shares
Amount
Capital
Deficit
Topco
Loss
Equity
Interest
Equity
Balance at January 1, 2024
322,235,261
$
32
3,600,075
$
( 18,949
)
$
3,449,261
$
( 2,314,650
)
$
( 6,387
)
$
( 3,945
)
$
1,105,362
$
( 1,285
)
$
1,104,077
Comprehensive (loss) income
Net (loss) income
—
—
—
—
—
( 5,307
)
—
—
( 5,307
)
2,192
( 3,115
)
Foreign currency translation adjustments
—
—
—
—
—
—
—
( 2,717
)
( 2,717
)
( 1
)
( 2,718
)
Total comprehensive loss
( 8,024
)
2,191
( 5,833
)
Interest on loans to Karman Topco L.P.
—
—
—
—
—
—
( 149
)
—
( 149
)
—
( 149
)
Purchase of treasury stock
( 3,000,000
)
—
3,000,000
( 11,689
)
—
—
—
—
( 11,689
)
—
( 11,689
)
Equity-based compensation of Karman Topco L.P.
—
—
—
—
390
—
—
—
390
—
390
Shares issued under 2020 Employee Stock Purchase Plan
581,954
—
—
—
1,167
—
—
—
1,167
—
1,167
Payments for taxes related to net share settlement under 2020 Incentive Award Plan
—
—
—
—
( 9,688
)
—
—
—
( 9,688
)
—
( 9,688
)
Shares issued under 2020 Incentive Award Plan
4,076,928
—
—
—
—
—
—
—
—
—
—
Stock-based compensation expense
—
—
—
—
5,908
—
—
—
5,908
—
5,908
Balance at March 31, 2024
323,894,143
$
32
6,600,075
$
( 30,638
)
$
3,447,038
$
( 2,319,957
)
$
( 6,536
)
$
( 6,662
)
$
1,083,277
$
906
$
1,084,183
See Notes to the Condensed Consolidated Financial Statements.
5
ADVANTAGE SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
(in thousands)
2025
2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations
$
( 56,130
)
$
( 50,133
)
Adjustments to reconcile net loss to net cash used in operating activities
Non-cash interest income
( 2,694
)
( 4,165
)
Amortization of deferred financing fees
1,748
1,800
Depreciation and amortization
50,361
49,748
Change in fair value of warrant liability
10
287
Fair value adjustments related to contingent consideration
—
778
Deferred income taxes
449
( 423
)
Equity-based compensation of Karman Topco L.P.
( 1,524
)
390
Stock-based compensation
6,486
8,555
(Income) loss from equity method investments
( 1,567
)
689
Distribution received from equity method investments
—
1,282
Gain on repurchases of Senior Secured Notes and Term Loan Facility debt
( 1,624
)
( 2,669
)
Loss on disposal of property and equipment
—
469
Changes in operating assets and liabilities, net of effects from divestitures:
Accounts receivable, net
( 38,200
)
23,776
Prepaid expenses and other assets
16,742
28,845
Accounts payable
22,236
10,465
Accrued compensation and benefits
( 41,928
)
( 71,830
)
Deferred revenues
2,521
( 3,938
)
Other accrued expenses and other liabilities
3,487
( 3,302
)
Net cash used in operating activities
( 39,627
)
( 9,376
)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments in unconsolidated affiliates
( 3,328
)
( 2,500
)
Purchase of property and equipment
( 15,104
)
( 15,414
)
Proceeds from divestitures, net of cash
—
87,370
Net cash (used in) provided by investing activities
( 18,432
)
69,456
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt
( 3,313
)
( 3,318
)
Repurchases of Senior Secured Notes and Term Loan Facility debt
( 18,243
)
( 47,899
)
Proceeds from issuance of common stock
993
1,167
Payments for taxes related to net share settlement under 2020 Incentive Award Plan
( 707
)
( 3,292
)
Contingent consideration payments
—
( 1,851
)
Purchase of treasury stock
( 869
)
( 11,689
)
Net cash used in financing activities
( 22,139
)
( 66,882
)
Net effect of foreign currency changes on cash, cash equivalents and restricted cash
( 3,685
)
( 2,136
)
Net change in cash, cash equivalents and restricted cash
( 83,883
)
( 8,938
)
Cash, cash equivalents and restricted cash, beginning of period
220,751
137,202
Cash, cash equivalents and restricted cash, end of period
$
136,868
$
128,264
SUPPLEMENTAL CASH FLOW INFORMATION
Purchases of property and equipment recorded in accounts payable and accrued expenses
$
516
$
5,238
See Notes to the Condensed Consolidated Financial Statements.
6
ADVANTAGE SOLUTIONS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Organization and Significant Accounting Policies
Advantage Solutions Inc. (the “Company”) is a provider of outsourced solutions to consumer goods companies and retailers. The Company’s Class A common stock is listed on the Nasdaq Global Select Market under the symbol “ADV” and warrants to purchase the Class A common stock at an exercise price of $ 11.50 per share are listed on the Nasdaq Global Select Market under the symbol “ADVWW”.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. The unaudited condensed consolidated financial statements do not include all of the information required by accounting principles generally accepted in the United States (“GAAP”). The Condensed Consolidated Balance Sheet at December 31, 2024 was derived from the audited Consolidated Balance Sheet at that date and does not include all the disclosures required by GAAP. In the opinion of management, all adjustments which are of a normal recurring nature and necessary for a fair statement of the results as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 have been reflected in the condensed consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2024 and the related footnotes thereto. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period.
As of January 1, 2024, the Company reorganized its portfolio of businesses into a new, simplified structure that more closely aligns its business capabilities with economic buyers. As a result of this reorganization, the Company revised its reportable segments and identified non-core businesses for disposition (“Divestiture plan”). In the first quarter of fiscal year 2024, the Company determined its Divestiture plan met the criteria for discontinued operations as it represented a strategic shift that had a major effect on the Company’s operations and financial results. As such, the results of businesses meeting the criteria to be classified as held for sale or disposed of in accordance with the Company’s Divestiture plan were reclassified to discontinued operations. Refer to Note 2— Discontinued Operations for additional information on the Company’s discontinued operations.
Certain prior period balances related to the Company's discontinued operations have been reclassified to conform to the current presentation in the condensed consolidated financial statements and accompanying notes. The notes to the condensed consolidated financial statements are presented on a continuing operations basis unless otherwise noted. Refer to Note 2— Discontinued Operations for additional information on the Company’s discontinued operations.
Revenue Recognition
The Company recognizes revenue when control of promised goods or services is transferred to the client in an amount that reflects the consideration that the Company expects to be entitled to in exchange for such goods or services. Substantially all of the Company’s contracts with clients involve the transfer of a service to the client, which represents a performance obligation that is satisfied over time because the client simultaneously receives and consumes the benefits of the services provided. In most cases, the contracts provide for a performance obligation that is comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). For these contracts, the Company allocates the ratable portion of the consideration based on the services provided in each period of service to such period.
Revenues related to the Branded Services segment are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing headquarter relationship management, execution of merchandising strategies and omni-commerce marketing services.
Revenues within the Branded Services segment are further disaggregated between brokerage services, branded merchandising services and omni-commerce marketing services. Brokerage services revenues are primarily outsourced sales and services for branded consumer goods manufacturers at retailer headquarters, in-store and online. Branded
7
merchandising services relate to merchandising in-store and online for branded consumer goods manufacturers. Omni-commerce marketing services primarily relate to digital and field marketing services.
Experiential Services segment revenues are primarily recognized in the form of fee-for-service and cost-plus fees for providing in-store, digital sampling and demonstrations, where the Company manages highly customized, large-scale sampling programs for leading brands and retailers.
Retailer Services segment revenues are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing consulting services related to private brand development, the execution of merchandising strategies and marketing strategies within retailer locations, including retail media networks and analyzing shopper behavior.
Revenues within the Retailer Services segment are further disaggregated between advisory services, retailer merchandising services and agency services to retailers. Advisory services primarily consist of consulting services related to private brand development. Retailer merchandising services primarily relate to the execution of merchandising strategies. Agency services primarily consist of providing marketing strategies within retail locations.
Disaggregated revenues were as follows:
Three Months Ended March 31,
(in thousands)
2025
2024
Branded Services
Brokerage services
$
90,033
$
127,032
Branded merchandising services
114,744
105,147
Omni-commerce marketing services
85,064
96,875
Total Branded Services revenue
$
289,841
$
329,054
Experiential Services
Experiential services
$
314,020
$
307,351
Total Experiential Services revenue
$
314,020
$
307,351
Retailer Services
Retail merchandising services
$
171,068
$
171,587
Advisory services
33,597
38,712
Agency services
13,266
14,708
Total Retailer Services revenue
$
217,931
$
225,007
Total revenues
$
821,792
$
861,412
Contract liabilities represent deferred revenues, which are cash payments that are received in advance of the Company’s satisfaction of the applicable obligation and are included in Deferred revenues in the Condensed Consolidated Balance Sheets. Deferred revenues are recognized as revenues when the related services are performed for the client. Revenues recognized during the three months ended March 31, 2025 that were included in Deferred revenues as of December 31, 2024 were $ 10.7 million. Revenues recognized during the three months ended March 31, 2024 included in Deferred revenues as of December 31, 2023 were $ 12.5 million.
Accounting Standards Recently Issued but Not Yet Adopted by the Company
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires entities to expand their existing income tax disclosures, specifically related to the rate reconciliation and income taxes paid. The standard is effective for the Company's annual report for fiscal year 2025. The new standard is expected to be applied prospectively, but retrospective application is permitted. The Company is currently evaluating the impact of ASU 2023-09 on the consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in
8
January 2025, the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03, as clarified by ASU 2025-01, is effective for the Company beginning in fiscal year 2026 and interim periods within fiscal year 2027, with early adoption permitted. The new standard is expected to be applied prospectively, but retrospective application is permitted. The Company is currently evaluating the impact of ASU 2024-03 on the consolidated financial statements and related disclosures.
Other new accounting pronouncements recently issued or newly effective were not applicable to the Company, did not have a material impact on the condensed consolidated financial statements or are not expected to have a material impact on the condensed consolidated financial statements.
2. Discontinued Operations
2024 Divestitures
On January 31, 2024, the Company sold a collection of foodservice businesses. As part of the sale, the foodservice businesses were combined with an entity owned by the buyer, with the Company receiving approximately $ 91.0 million, subject to working capital adjustments and an ongoing 7.5 % interest in the combined business. The ongoing ownership interest represents a continuing involvement which the Company has determined represents an equity method investment. Upon the close of the transaction, the retained 7.5 % interest was recognized at fair value of $ 8.4 million, valued using unobservable inputs (i.e., Level 3 inputs), primarily discounted cash flows.
The investment is reported in “Investments in unconsolidated affiliates” on the Condensed Consolidated Balance Sheets and equity income (loss) reported in “(Income) loss from equity method investments” on the Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2025 and 2024. Transactions between the Company and the combined foodservice entity are considered to be related-party transactions subsequent to the divesture.
As of June 30, 2024, certain assets and liabilities of the Jun Group business were classified as held for sale. On July 31, 2024, the Company completed the sale of the Jun Group business in exchange for proceeds of approximately $185.0 million less any adjustments. The Company received approximately $130.0 million in cash upon completion of the sale. As part of the purchase agreement, the buyer has agreed to remit the remaining consideration to the Company in two additional installments of $22.5 million ($27.5 million less $5.0 million estimated adjustments) and $27.5 million, 12 and 18 months, respectively, after the completion of the sale.
9
The following table presents the summarized statements of operations of discontinued operations.
(in thousands)
Three Months Ended
March 31, 2024
Revenues
$
44,634
Cost of revenues (exclusive of depreciation and amortization shown separately below)
35,219
Selling, general, and administrative expenses
2,536
Gain on divestitures
( 57,016
)
Depreciation and amortization
2,608
Total operating expenses
( 16,653
)
Operating income from discontinued operations
61,287
Other expenses:
Interest expense
32
Total other expenses
32
Income before income taxes from discontinued operations
61,255
Provision for income taxes from discontinued operations
14,237
Net income from discontinued operations, net of tax
47,018
Less: net income from discontinued operations attributable to noncontrolling interest, net of tax
2,192
Net income from discontinued operations attributable to stockholders of Advantage Solutions Inc.
$
44,826
The following table provides a summary of the cash flows from discontinued operations:
(in thousands)
Three Months Ended
March 31, 2024
Net cash provided by operating activities from discontinued operations
$
1,542
Net cash used in investing activities from discontinued operations
( 1,751
)
Net cash used in financing activities from discontinued operations
( 73
)
Net effect of foreign currency changes on cash from discontinued operations
( 310
)
Net change in cash, cash equivalents and restricted cash from discontinued operations
$
( 592
)
3. Goodwill and Intangible Assets
The carrying amount of goodwill as of March 31, 2025 and December 31, 2024 was $ 477.0 million. Accumulated impairment losses related to goodwill were $ 2.3 billion of March 31, 2025 and December 31, 2024.
The following tables set forth information for intangible assets:
March 31, 2025
(amounts in thousands)
Weighted Average Useful Life
Gross
Carrying
Value
Accumulated
Amortization
Accumulated
Impairment Charges
Net Carrying
Value
Finite-lived intangible assets:
Client relationships
14 years
$
2,256,220
$
1,600,086
$
—
$
656,134
Trade names
10 years
88,600
64,568
—
24,032
Total finite-lived intangible assets
2,344,820
1,664,654
—
680,166
Indefinite-lived intangible assets:
Trade name
1,480,000
—
870,500
609,500
Total other intangible assets
$
3,824,820
$
1,664,654
$
870,500
$
1,289,666
10
December 31, 2024
(amounts in thousands)
Weighted Average Useful Life
Gross
Carrying
Value
Accumulated
Amortization
Accumulated
Impairment Charges
Net Carrying
Value
Finite-lived intangible assets:
Client relationships
14 years
$
2,256,382
$
1,559,551
$
—
$
696,831
Trade names
10 years
88,600
62,353
—
26,247
Total finite-lived intangible assets
2,344,982
1,621,904
—
723,078
Indefinite-lived intangible assets:
Trade name
1,480,000
—
870,500
609,500
Total other intangible assets
$
3,824,982
$
1,621,904
$
870,500
$
1,332,578
Amortization of intangible assets was $ 42.9 million an d $ 44.3 million for the three months ended March 31, 2025 and 2024, respectively.
As of March 31, 2025, estimated future amortization expense of the Company’s finite-lived intangible assets are as follows:
(in thousands)
Remainder of 2025
$
128,707
2026
169,131
2027
167,500
2028
133,069
2029
76,636
Thereafter
5,123
Total amortization expense
$
680,166
4. Debt
(in thousands)
March 31, 2025
December 31, 2024
Term Loan Facility
$
1,102,683
$
1,105,995
Senior Secured Notes
595,087
615,087
Total long-term debt
1,697,770
1,721,082
Less: current portion
13,250
13,250
Less: debt issuance costs
19,240
21,142
Long-term debt, net of current portion
$
1,665,280
$
1,686,690
As of March 31, 2025, the Company had $ 1.1 billion of debt outstanding under a secured first lien term loan credit facility in an aggregate principal amount of $ 1.1 billion (as may be amended from time to time (the “Term Loan Facility”) and $ 595.1 million of debt outstanding 6.5 % Senior Secured Notes due 2028 (the “Notes”) with maturity dates of October 28, 2027 and November 15, 2028 , respectively. In April 2024 (the “Third Lien Amendment Effective Date” ), the Company amended the Term Loan Facility to (i) reduce the applicable interest rate margin (a) from 4.50 % to 4.25 % for SOFR loans or (b) from 3.50 % to 3.25 % for base rate loans; and (ii) reset the period for six months following the Third Lien Amendment Effective Date in which a 1.00 % prepayment premium shall apply to any prepayment of the term loans in connection with a Repricing Event (as defined in the amended First Lien Credit Agreement). The Term Loan Facility bears interest at a floating rate of Term SOFR plus an applicable margin of 4.25 % per annum, subject to an additional spread adjustment on SOFR ranging from 0.11 % to 0.26 %. Interest on the Notes is payable semi-annually in arrears at a rate of 6.50 % per annum.
The Company was in compliance with all of its affirmative and negative covenants under the Term Loan Facility and Notes as of March 31, 2025 . In addition, the Company is required to repay the principal under the Term Loan Facility in the greater amount of its excess cash flow, as such term is defined in the agreement governing the Term Loan Facility, or $ 13.3 million, per annum, in quarterly payments. The Company made the minimum quarterly principal
11
payments of $ 3.3 million during the three months ended March 31, 2025 and 2024, respectively. No payments under the excess cash flow calculation were required in such periods.
The Company voluntarily repurchased an aggregate of $ 20.0 million principal amount of the Notes during the three months ended March 31, 2025. The Company recognized a gain on the repurchase of the Notes of $ 1.8 million for the three months ended March 31, 2025 , as a component of “Interest expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company voluntarily repurchased an aggregate of $ 51.0 million principal amount of the Notes during the three months ended March 31, 2024. The Company recognized a gain on the repurchase of the Notes of $ 2.7 million for the three months ended March 31, 2024, as a component of “Interest expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
As of March 31, 2025, the Company had no borrowings under its senior secured asset-based revolving credit facility in an aggregate principal amount of up to $ 500.0 million, subject to borrowing base capacity (as may be amended from time to time, the “Revolving Credit Facility”). All borrowings under the Revolving Credit Facility are subject to the satisfaction of certain customary conditions. Borrowings under the Revolving Credit Facility bear interest at a floating rate, which at the option of the Company may be either (i) a base rate or Canadian Prime Rate plus an applicable margin of 0.75 %, 1.00 %, or 1.25 % per annum or (ii) Term SOFR or Alternative Currency Spread plus an applicable margin of 1.75 %, 2.00 % or 2.25 % per annum. The Company is required to pay a commitment fee ranging from 0.250 % to 0.375 % per annum in respect of the average daily unused commitments under the Revolving Credit Facility.
5. Fair Value of Financial Instruments
The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The following table sets forth the Company’s financial assets and liabilities measured on a recurring basis at fair value, categorized by input level within the fair value hierarchy.
March 31, 2025
(in thousands)
Fair Value
Level 1
Level 2
Level 3
Liabilities measured at fair value
Derivative financial instruments
$
774
$
—
$
774
$
—
Total liabilities measured at fair value
$
774
$
—
$
774
$
—
December 31, 2024
(in thousands)
Fair Value
Level 1
Level 2
Level 3
Assets measured at fair value
Derivative financial instruments
$
796
$
—
$
796
$
—
Total assets measured at fair value
$
796
$
—
$
796
$
—
Interest Rate Cap Agreements
The Company had interest rate collar contracts with an aggregate notional value of principal of $ 700.0 million as of March 31, 2025, from various financial institutions to manage the Company’s exposure to interest rate movements on variable rate credit facilities. The interest rate collar contracts will mature on April 5, 2026, 2027 and 2028.
As of March 31, 2025, the fair value of the Company’s outstanding interest collars of $ 0.8 million was included in “Other long-term liabilities” in the Condensed Consolidated Balance Sheets. As of December 31, 2024 the fair value of the Company’s outstanding interest rate caps and collars of $ 0.8 million was included in “Other assets” in the Condensed Consolidated Balance Sheets. Changes in fair value of the Company's outstanding interest rate caps and
12
collars are recognized as a component of “Interest expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
During the three months ended March 31, 2025 and 2024, the Company recorded a loss of $ 1.6 million and a gain of $ 4.2 million, respectively, within “ Interest expense , net, ” related to changes in the fair value of its derivative instruments.
Long-term Debt
The following tables set forth the carrying values and fair values of the Company’s financial liabilities measured on a recurring basis, categorized by input level within the fair value hierarchy:
(in thousands)
Carrying Value
Fair Value
(Level 2)
Balance at March 31, 2025
Term Loan Facility
$
1,102,683
$
1,136,282
Senior Secured Notes
595,087
596,680
Total long-term debt
$
1,697,770
$
1,732,962
(in thousands)
Carrying Value
Fair Value
(Level 2)
Balance at December 31, 2024
Term Loan Facility
$
1,105,995
$
1,153,346
Senior Secured Notes
615,087
612,533
Total long-term debt
$
1,721,082
$
1,765,879
6. Related Party Transactions
An officer of the Company serves as a member of the board of directors of a client of the Company. The Company recognized $1.3 million revenues from such client during the three months ended March 31, 2025 and 2024. Accounts receivable from this client were $0.7 million and $0.4 million as of March 31, 2025 and December 31, 2024, respectively.
Prior to April 1, 2025, a member of the board of directors of the Company served as an officer of a client of the Company. The Company recognized $2.2 million and $ 1.6 million of revenues from such client during the three months ended March 31, 2025 and 2024, respectively. Accounts receivable from this client were $0.5 million and $ 0.2 million as of March 31, 2025 and December 31, 2024, respectively.
Unconsolidated Affiliates
During the three months ended March 31, 2025 and 2024 , the Company recognized revenues of $ 2.6 million and $ 6.5 million, respectively, from its investment in unconsolidated affiliates. Accounts receivable from transactions with unconsolidated affiliates were $1.9 million and $0.9 million as of March 31, 2025 and December 31, 2024 , respectively.
7. Income Taxes
The Company’s effective tax rates were ( 14.6 )% and 24.0 % for the three months ended March 31, 2025 and 2024 , respectively. The effective tax rate is calculated upon the forecasted pretax loss for the year, by jurisdiction, and adjusted for estimated permanent tax adjustments. The fluctuation in the Company’s effective tax rate was primarily related to an additional valuation allowance established on interest expense limitation carryforward for the three months ended March 31, 2025.
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8. Segments
The Company’s reportable segments consist of Branded Services, Experiential Services, and Retailer Services. The reportable segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by the Company's Chief operating decision maker ( “CODM” ) in deciding how to allocate resources and in assessing performance. Through the Company's Branded Services segment, the Company offers capabilities in brokerage, branded merchandising and omni-commerce marketing services to consumer goods manufacturers. Through the Company's Experiential Services segment, the Company expands the reach of consumer brands and retailer products to convert shoppers into buyers through sampling and product demonstration programs executed in-store and online. Through the Company's Retailer Services segment, the Company provides retailers with end-to-end advisory, retailer merchandising, and agency expertise to drive sales. The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; therefore, no additional information is produced or included herein.
Discontinued operations are not included in the applicable reportable segments. Refer to Note 2— Discontinued Operations.
Segment operating income is the measure utilized by the CODM to assess performance and allocate resources. When evaluating the Company’s financial performance, the CODM regularly reviews revenues, compensation and benefits, reimbursable expenses and other segment items. Compensation costs are key metrics reviewed by the CODM when allocating resources and assessing performance as the Company depends significantly on human capital to deliver services to its clients. Reimbursable expenses are also reviewed regularly by the CODM as revenues included in the CODM packages are net of these expenses.
Revenues and significant expenses by segment are as follows:
Three Months Ended March 31, 2025
(in thousands)
Branded Services
Experiential Services
Retailer Services
Total Company
Revenues
$
289,841
$
314,020
$
217,931
$
821,792
Less:
Compensation and benefits
160,845
155,823
144,748
461,416
Reimbursable expenses
32,959
93,250
—
126,209
Other segment items 1
81,464
57,914
60,616
199,994
Depreciation and amortization
31,462
10,537
8,362
50,361
Income from equity method investments
( 1,567
)
—
—
( 1,567
)
Total segment operating expenses from continuing operations
305,163
317,524
213,726
836,413
Total segment operating (loss) income from continuing operations
$
(15,322
)
$
(3,504
)
$
4,205
$
(14,621
)
14
Three Months Ended March 31, 2024
(in thousands)
Branded Services
Experiential Services
Retailer Services
Total Company
Revenues
$
329,054
$
307,351
$
225,007
$
861,412
Less:
Compensation and benefits
197,213
169,701
155,507
522,421
Reimbursable expenses
46,629
81,797
—
128,426
Other segment items 1
74,654
49,575
65,849
190,078
Depreciation and amortization
31,987
9,920
7,841
49,748
Loss from equity method investments
689
—
—
689
Total segment operating expenses from continuing operations
351,172
310,993
229,197
891,362
Total segment operating loss from continuing operations
$
( 22,118
)
$
( 3,642
)
$
( 4,190
)
$
( 29,950
)
(1) The “other segment items” category primarily consists of costs incurred in the execution of service obligations, including supplies, technology, and other direct expenses such as travel. These costs align with the segment-level information regularly provided to the CODM and represent the difference between revenue and the significant expense categories above in determining segment profitability.
9. Commitments and Contingencies
Litigation
The Company is involved in various legal matters that arise in the ordinary course of its business. Some of these legal matters purport or may be determined to be class and/or representative actions, or seek substantial damages, or penalties. The Company has accrued amounts in connection with certain legal matters, including with respect to certain of the matters described below. There can be no assurance, however, that these accruals will be sufficient to cover such matters or other legal matters or that such matters or other legal matters will not materially or adversely affect the Company’s financial position, liquidity, or results of operations.
The Company is involved in various litigation, including purported class or representative actions with respect to matters arising under the California Labor Code and Private Attorneys General Act.
The Company has also been involved in various litigation matters and arbitrations with respect to commercial matters arising with clients, vendors and third-party sellers of business.
In April 2018, the Company acquired the business of Take 5 Media Group (“Take 5”). As a result of an investigation into that business in 2019 that identified certain misconduct, the Company terminated all operations of Take 5 in July 2019 and offered refunds to clients of collected revenues attributable to the period after the Company’s acquisition. The Company refers to the foregoing as the “Take 5 Matter.” The Company voluntarily disclosed to the United States Attorney’s Office and the Federal Bureau of Investigation certain misconduct occurring at Take 5. The Company intends to cooperate in this and any other governmental investigations that may arise in connection with the Take 5 Matter. In October 2022, an arbitrator made a final award in favor of the Company. The Company is actively pursuing the collection of this award. The Company is currently unable to estimate if or when it will be able to collect any amounts associated with this arbitration. The Take 5 Matter may result in additional litigation against the Company, including lawsuits from clients, or governmental investigations, which may expose the Company to potential liability in excess of the amounts being offered by the Company as refunds to Take 5 clients. The Company is currently unable to determine the amount of any potential liability, costs or expenses (above the amounts previously offered as refunds) that may result from any lawsuits or investigations associated with the Take 5 Matter or determine whether any such issues will have any future material adverse effect on the Company’s financial position, liquidity, or results of operations. Although the Company has insurance covering certain liabilities, the Company cannot be certain that the insurance will be sufficient to cover any potential liability or expenses associated with the Take 5 Matter.
In the ordinary course of business, the Company is required to provide financial commitments in the form of surety bonds to third parties as a guarantee of its performance on and its compliance with certain obligations. If the
15
Company were to fail to perform or comply with these obligations, any draws upon surety bonds issued on its behalf would then trigger the Company's payment obligation to the surety bond issuer. The Company has outstanding surety bonds issued for its benefits of $ 15.0 million as of March 31, 2025 and December 31, 2024 .
10. Stock-Based Compensation
The Company has issued nonqualified stock options, restricted stock units (“RSUs”), and performance restricted stock units (“PSUs”) under the Advantage Solutions Inc. 2020 Incentive Award Plan, as amended and restated (the “Plan”). The Company’s restricted stock units and performance restricted stock units, as described below, are expensed based on the fair value at the grant date. The Company recognized stock-based compensation expense and equity-based compensation expense associated with the Common Series C Units of Karman Topco L.P. as follows:
Three Months Ended March 31,
(in thousands)
2025
2024
Restricted stock-based unit awards
3,646
4,253
Other share-based awards
2,840
4,302
Total stock-based compensation before tax
6,486
8,555
Tax benefit
( 1,010
)
( 1,274
)
Total stock-based compensation expense included in net loss
$
5,476
$
7,281
Performance Restricted Stock Units
PSUs granted in fiscal year 2024 are subject to achievement of certain performance conditions based on measurements of the Company’s Adjusted EBITDA margin and cash earnings. The Company’s Adjusted EBITDA margin and cash earnings relative to specified targets will be measured over the fiscal years in which the award was granted, and an annual achievement percentage will be determined. In addition, the earned PSUs are subject to further adjustment depending on the Company’s performance against a specified peer group for total stockholder return during the three-year performance period. This adjustment can either put a floor or a cap on the calculation of the final PSUs value. Subject to certain termination events, these PSUs are scheduled to cliff-vest on the third-year anniversary of the date of grant and may vest from 0 % to 200 % of the Target number of PSUs specified in the table below.
PSUs are subject to the recipient's continued service to the Company. PSUs granted in fiscal years 2023 and 2022 are subject to achievement of certain performance conditions based on the Company’s revenues and Adjusted EBITDA targets in the respective measurement period and the recipient’s continued service to the Company. The measurement period is based on the twelve months of the respective fiscal year. The PSUs are scheduled to vest over a three-year period from the date of grant and may vest from 0% to 150% of the number of shares set forth in the table below. The number of PSUs earned shall be adjusted to be proportional to the partial performance between the Threshold, Target and Maximum as defined in the award agreements. Details for each aforementioned defined term for each grant have been provided in the table below.
The fair value of PSU grants was equal to the closing price of the Company's stock on the date of the applicable grant. The maximum potential expense if the Maximum were met for these awards has been provided in the table below. Recognition of expense associated with performance-based stock is not permitted until achievement of the performance targets are probable of occurring.
Measurement Period
Number of
Shares
Threshold
Number of
Shares
Target
Number of
Shares
Maximum
Weighted Average Grant Date Fair Value Per Share
Maximum Remaining Unrecognized Compensation Expense
Weighted-average remaining requisite service periods
2024
163,448
1,307,580
1,677,625
$
4.33
$
7,749,895
2.1 years
2023
4,460,549
4,460,549
6,690,824
$
2.12
$
4,589,322
1.2 years
2022
40,107
40,107
40,107
$
4.35
$
13,666
0.3 years
16
During the first quarter of fiscal year 2025, the Human Capital Committee determined the annual achievement percentage for PSUs granted in fiscal year 2024 to be 128.3 %. The value of these PSU awards remain subject to additional performance requirements (i.e. the annual achievement percentages for fiscal years 2025 and 2026 and the Company’s performance against a specified peer group for total stockholder return during the three-year performance period) and service-based vesting conditions.
The following table summarizes the PSU activity for the three months ended March 31, 2025:
Performance Share Units
Weighted Average Grant
Date Fair Value
Outstanding at January 1, 2025
6,770,840
$
2.56
Granted
—
Distributed
( 909,211
)
$
2.38
Forfeited
( 341,814
)
$
2.17
PSU performance adjustment (1)
288,421
$
4.33
Outstanding at March 31, 2025 (2)
5,808,236
$
2.63
(1) The number of PSUs outstanding was adjusted during the first quarter of fiscal year 2025, to reflect the 128.3 % achievement level approved by the Human Capital Committee for fiscal year 2024.
(2) PSU award activity is presented at target until the period in which the Human Capital Committee approves the achievement percentages, at which point the awards are adjusted accordingly, subject to additional performance requirements and service-based vesting conditions.
Restricted Stock Units
RSUs are subject to the recipient’s continued service to the Company. RSUs are generally scheduled to vest over three years and are subject to the provisions of the agreement under the Plan.
During the three months ended March 31, 2025, the following activities involving RSUs occurred under the Plan:
Number of RSUs
Weighted Average Grant
Date Fair Value
Outstanding at January 1, 2025
11,817,446
$
3.28
Granted
—
Distributed
( 2,979,089
)
$
2.96
Forfeited
( 512,890
)
$
3.28
Outstanding at March 31, 2025
8,325,467
$
3.39
As of March 31, 2025, the total remaining unrecognized compensation cost related to RSUs amounted to $ 10.4 million, which is expected to be amortized over the weighted-average remaining requisite service periods of 1.8 years .
Stock Options
During the three months ended March 31, 2025, the following activities involving stock options occurred under the Plan:
17
Stock Options
Weighted Average Exercise Price
Weighted Average Remaining Contractual Life
Aggregate Intrinsic Value
Outstanding at January 1, 2025
20,433,018
$
5.75
Granted
—
Forfeited
—
Cancelled/Expired
—
Outstanding at March 31, 2025
20,433,018
$
5.75
7.2 years
$
—
Exercisable at March 31, 2025
5,564,999
$
3.14
7.8 years
$
—
As of March 31, 2025, the Company had approximately $ 5.1 million of total unrecognized compensation expense related to stock options, net of forfeitures, which the Company expects to recognize over a weighted-average period of approximately 2.2 years . There were no options exercised during the three months ended March 31, 2025 and 2024.
In April 2025, the Company granted 19.4 million RSUs, 4.0 million PSUs and 7.2 million of stock options. PSUs granted in fiscal years 2025 are subject to achievement of certain performance conditions based on measurements of the Company’s Adjusted EBITDA margin and cash earnings. The Company’s Adjusted EBITDA margin and cash earnings relative to specified targets will be measured over the fiscal years in which the award was granted, and an annual achievement percentage will be determined. In addition, the earned PSUs are subject to further adjustment depending on the Company’s performance against a specified peer group for total stockholder return during the three-year performance period. This adjustment can either put a floor or a cap on the calculation of the final PSUs value. Subject to certain termination events, these PSUs are scheduled to cliff-vest on the third-year anniversary of the date of grant and may vest from 0 % to 200 % of the “target” number of PSUs specified in the table above.
11. Earnings Per Share
The Company calculates earnings per share using a dual presentation of basic and diluted earnings per share. Basic earnings per share is calculated by dividing net income attributable to stockholders of the Company by the weighted-average shares of common stock outstanding without the consideration for potential dilutive shares of common stock. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of performance stock units, restricted stock units, public and private placement warrants, the employee stock purchase plan and stock options. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding and the potential dilutive shares of common stock for the period determined using the treasury stock method. During periods of net loss, diluted loss per share is equal to basic loss per share because the antidilutive effect of potential common shares is disregarded.
18
The following is a reconciliation of basic and diluted net earnings per common share:
Three Months Ended March 31,
(in thousands, except share and earnings per share data)
2025
2024
Basic earnings per share computation:
Numerator:
Net loss from continuing operations attributable to stockholders of Advantage Solutions Inc.
$
( 56,130
)
$
( 50,133
)
Net income from discontinued operations, net of tax
—
47,018
Less: net income from discontinued operations attributable to noncontrolling interest, net of tax
—
2,192
Net income from discontinued operations attributable to stockholders of Advantage Solutions Inc.
$
—
$
44,826
Denominator:
Weighted average common shares - basic
321,683,440
321,458,155
Basic loss per common share from continuing operations attributable to stockholders of Advantage Solutions Inc.
$
( 0.17
)
$
( 0.16
)
Basic earnings per common share from discontinued operations attributable to stockholders of Advantage Solutions Inc.
$
—
$
0.14
Diluted earnings per share computation:
Numerator:
Net loss from continuing operations attributable to stockholders of Advantage Solutions Inc.
$
( 56,130
)
$
( 50,133
)
Net income from discontinued operations, net of tax
—
47,018
Less: net income from discontinued operations attributable to noncontrolling interest, net of tax
—
2,192
Net income from discontinued operations attributable to stockholders of Advantage Solutions Inc.
$
—
$
44,826
Denominator:
Weighted average common shares - diluted
321,683,440
321,458,155
Diluted loss per common share from continuing operations
$
( 0.17
)
$
( 0.16
)
Diluted earnings per common share from discontinued operations
$
—
$
0.14
The Company had 18,578,321 warrants to purchase Class A common stock at $ 11.50 per share outstanding at March 31, 2025 and 2024, which have been excluded from the calculation of diluted earnings per common share, as the weighted average market price of the common stock during the three months ended March 31, 2025 and 2024 did not exceed the exercise price of the warrants.
In accordance with the treasury stock method the weighted average shares outstanding assuming dilution include the incremental effect of stock-based awards, except when such effect would be antidilutive. Stock-based awards of 9.6 million weighted-average shares were outstanding for the three months ended March 31, 2025 , but were not included in the computation of diluted (loss) earnings per common share because the net loss position of the Company made them antidilutive. Stock-based awards of 20.2 million weighted-average shares were outstanding for the three months ended March 31, 2024 , but were not included in the computation of diluted loss per common share because the net loss position of the Company made them antidilutive.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.