What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-12 · 197 added, 116 removed, 423 unchanged (43% of the section changed)

3 unchanged sentences

(in thousands, except share data)

March 31, 2025

June 30, 2025

December 31, 2024

23 unchanged sentences

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

325,164,802 and 320,773,096 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

Additional paid in capital

3 unchanged sentences

Treasury stock, at cost;

12,894,517 and 12,400,075 shares as of March 31, 2025 and December 31, 2024, respectively

12,894,517 and 12,400,075 shares as of June 30, 2025 and December 31, 2024, respectively

Total stockholders' equity

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except share and per share data)

1 unchanged sentence

Selling, general, and administrative expenses

Impairment of goodwill and indefinite-lived asset

Depreciation and amortization

1 unchanged sentence

Total operating expenses

Operating loss from continuing operations

Operating income (loss) from continuing operations

Other expenses:

16 unchanged sentences

Comprehensive Income (Loss):

Net loss attributable to stockholders of Advantage Solutions Inc.

Other comprehensive income (loss), net of tax:

8 unchanged sentences

(in thousands, except share data)

Balance at January 1, 2025

Balance at April 1, 2025

Comprehensive loss

2 unchanged sentences

Interest on loans to Karman Topco L.P.

Payments for taxes related to net share settlement under 2020 Incentive Award Plan

Shares issued under 2020 Incentive Award Plan

Stock-based compensation expense

Balance at June 30, 2025

Solutions Inc.

Treasury Stock

Comprehensive

Stockholders'

Noncontrolling

Stockholders'

(in thousands, except share data)

Balance at April 1, 2024

Comprehensive (loss) income

Net (loss) income

Foreign currency translation adjustments

Total comprehensive loss

Interest on loans to Karman Topco L.P.

Purchase of treasury stock

Equity-based compensation of Karman Topco L.P.

Payments for taxes related to net share settlement under 2020 Incentive Award Plan

Shares issued under 2020 Incentive Award Plan

Sale of a business

Stock-based compensation expense

Balance at June 30, 2024

See Notes to the Condensed Consolidated Financial Statements.

ADVANTAGE SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Treasury Stock

Comprehensive

Stockholders'

(in thousands, except share data)

Income (Loss)

Balance at January 1, 2025

Comprehensive (loss) income

Net (loss) income

Foreign currency translation adjustments

Total comprehensive (loss) income

Interest on loans to Karman Topco L.P.

Purchase of treasury stock

Equity-based compensation of Karman Topco L.P.

Shares issued under 2020 Employee Stock Purchase Plan

2 unchanged sentences

Stock-based compensation expense

Balance at March 31, 2025

Balance at June 30, 2025

Solutions Inc.

5 unchanged sentences

(in thousands, except share data)

Income (Loss)

Balance at January 1, 2024

2 unchanged sentences

Foreign currency translation adjustments

Total comprehensive loss

Total comprehensive (loss) income

Interest on loans to Karman Topco L.P.

4 unchanged sentences

Shares issued under 2020 Incentive Award Plan

Sale of a business

Stock-based compensation expense

Balance at March 31, 2024

Balance at June 30, 2024

See Notes to the Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

3 unchanged sentences

Non-cash interest income

Deferred financing fees related to repricing of long-term debt

Amortization of deferred financing fees

Impairment of goodwill

Depreciation and amortization

4 unchanged sentences

Stock-based compensation

(Income) loss from equity method investments

Income from equity method investments

Distribution received from equity method investments

Gain on repurchases of Senior Secured Notes and Term Loan Facility debt

Loss on disposal of property and equipment

Changes in operating assets and liabilities, net of effects from divestitures:

5 unchanged sentences

Other accrued expenses and other liabilities

Net cash used in operating activities

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

4 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Borrowings under lines of credit

Payments on lines of credit

Principal payments on long-term debt

Repurchases of Senior Secured Notes and Term Loan Facility debt

Debt issuance costs

Proceeds from issuance of common stock

20 unchanged sentences

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.

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 June 30, 2025 and for the three and six months ended June 30, 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.

Operating results for the three and six months ended June 30, 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”).

The Company's revised operating and reportable segments consist of Branded Services, Experiential Services, and Retailer Services.

As a result of this reorganization, the Company 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.

12 unchanged sentences

Brokerage services revenues are primarily outsourced sales and services for branded consumer goods manufacturers at retailer headquarters, in-store and online.

merchandising services relate to merchandising in-store and online for branded consumer goods manufacturers.

Branded 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.

6 unchanged sentences

Disaggregated revenues were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

15 unchanged sentences

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.

Revenues recognized during the three and six months ended June 30, 2025 that were included in Deferred revenues as of December 31, 2024 were $5.1 million and $15.8 million, respectively.

Revenues recognized during the three and six months ended June 30, 2024 included in Deferred revenues as of December 31, 2023 were $ 3.5 million and $ 16.8 million, respectively.

Accounting Standards Recently Issued but Not Yet Adopted by the Company

5 unchanged sentences

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

January 2025, the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in 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”).

6 unchanged sentences

2024 Divestitures

On January 31, 2024, the Company sold a collection of foodservice businesses.

As discussed in Note 1 - Organization and Significant Accounting Policies , as a result of a reorganization effectuated on January 1, 2024, the Company initiated a Divestiture Plan of certain non-core businesses for disposition.

On January 31, 2024, and as part of this plan, 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.

1 unchanged sentence

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.

During the three months ended June 30, 2024, the Company sold two agencies in the Branded Services segment, one agency in the Experiential Services segment and one agency in the Retailer Services segment for $ 65.2 million including estimated working capital adjustments.

As a result, the Company recorded a gain from these divestitures of $ 13.2 million and $ 70.2 million, respectively, as a component of “Net income (loss) from discontinued operations, net of tax” in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Proceeds from the sales were classified as cash provided by investing activities from continuing operations in the Condensed Consolidated Statements of Cash Flows.

Also in accordance with the Divestiture Plan, 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.

1 unchanged sentence

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.

On July 31, 2025, the Company received approximately $ 22.5 million in cash for the first installment.

As of June 30, 2025, both the first and second installment amounts of approximately $50.0 million, in aggregate, is reflected in “Prepaid expenses and other current assets” in the Condensed Consolidated Balance Sheets.

The following table presents the summarized statements of operations of discontinued operations.

1 unchanged sentence

Three Months Ended

March 31, 2024

June 30, 2024

Six Months Ended

June 30, 2024

Cost of revenues (exclusive of depreciation and amortization shown separately below)

14 unchanged sentences

(in thousands)

Three Months Ended

March 31, 2024

Six Months Ended

June 30, 2024

Net cash provided by operating activities from discontinued operations

4 unchanged sentences

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 carrying amount of goodwill as of June 30, 2025 and December 31, 2024 was $ 477.0 million.

Accumulated impairment losses related to goodwill were $ 2.3 billion of June 30, 2025 and December 31, 2024.

During the three months ended June 30, 2024, the Company determined a triggering event occurred and an impairment assessment was warranted for the Branded Agencies reporting unit goodwill due to the pending sale of one of the businesses that comprised a substantial portion of the assets, liabilities and prospective cash flows of the Branded Agencies reporting unit.

As a result of the impairment test performed, the Company recognized a non-cash goodwill impairment charge of $ 99.7 million related to the Company's Branded Agencies reporting unit goodwill during the three months ended June 30, 2024, which has been reflected in “Impairment of goodwill” in the Condensed Consolidated Statements of Comprehensive (Loss) Income.

As a result of this charge, an immaterial amount of goodwill remains in this reporting unit.

The following tables set forth information for intangible assets:

March 31, 2025

June 30, 2025

(amounts in thousands)

15 unchanged sentences

Total other intangible assets

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:

Amortization of intangible assets was $ 42.9 million an d $ 44.2 million for the three months ended June 30, 2025 and 2024, respectively, and $ 85.8 million and $ 88.5 million for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, estimated future amortization expense of the Company’s finite-lived intangible assets are as follows:

(in thousands)

2 unchanged sentences

(in thousands)

March 31, 2025

June 30, 2025

December 31, 2024

Term Loan Facility

Senior Secured Notes

Term Loan Facility due 2027

6.5 % Senior Secured Notes due 2028

Total long-term debt

2 unchanged sentences

Long-term debt, net of current portion

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).

In April 2024, the Company amended its secured first lien term loan credit facility (as amended from time to time (the “Term Loan Facility” ) to 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.

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 .

Interest on the 6.5 % Senior Secured Notes due 2028 (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 June 30, 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

payments of $ 3.3 million during the three months ended March 31, 2025 and 2024, respectively.

The Company made the minimum quarterly principal payments of $ 3.3 million and $ 6.6 million during the three and six months ended June 30, 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”).

The Company voluntarily repurchased an aggregate of $ 20.0 million principal amount of the Notes during the first quarter of 2025 and recognized a gain on the repurchase of $ 1.8 million.

The Company did no t make any voluntary repurchases during the three months ended June 30, 2025.

The Company voluntarily repurchased an aggregate of $ 26.5 million and $ 77.5 million principal amount of the Notes during the three and six months ended June 30, 2024, respectively, and recognized a gain on the repurchase of $ 2.4 million and $ 5.1 million for the three and six months ended June 30, 2024, respectively.

Gains on the repurchase of the Notes were recognized as a component of “Interest expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive Loss for all periods presented.

As of June 30, 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.

9 unchanged sentences

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

June 30, 2025

(in thousands)

8 unchanged sentences

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 Company had interest rate collar contracts with an aggregate notional value of principal of $ 700.0 million as of June 30, 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 June 30, 2025, the fair value of the Company’s outstanding interest collars of $ 1.2 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

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.

Changes in fair value of the Company's outstanding interest rate caps and 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 June 30, 2025 and 2024, the Company recorded a loss of $ 0.4 million and a gain of $ 1.2 million, respectively, within “ Interest expense , net, ” related to changes in the fair value of its derivative instruments.

During the six months ended June 30, 2025 and 2024, the Company recorded a loss of $ 2.0 million and a gain of $ 5.4 million, respectively, within “ Interest expense , net", related to changes in the fair value of its derivative instruments.

Long-term Debt

2 unchanged sentences

Carrying Value

Balance at March 31, 2025

Balance at June 30, 2025

Term Loan Facility

Senior Secured Notes

Total long-term debt

3 unchanged sentences

Term Loan Facility

Senior Secured Notes

Total long-term debt

1 unchanged sentence

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.

The Company recognized $ 1.2 million of revenues from such client during each of the three months ended June 30, 2025 and 2024.

The Company recognized $ 2.5 million of revenues from such client during each of the six months ended June 30, 2025 and 2024.

Accounts receivable from this client were $ 0.7 million and $ 0.4 million as of June 30, 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.

The Company recognized $ 2.3 million of revenues from such client during the three months ended June 30, 2024 .

The Company recognized $ 2.2 million and $ 3.9 million of revenues from such client during the six months ended June 30, 2025 and 2024, respectively.

Accounts receivable from this client was $ 0.2 million as of December 31, 2024.

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.

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.

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.

During the three months ended June 30, 2025 and 2024, the Company recognized revenues of an immaterial amount and $ 4.8 million, respectively, from its investment in unconsolidated affiliates.

During the six months ended June 30, 2025 and 2024 , the Company recognized revenues of $ 2.6 million and $ 11.3 million, respectively, from its

investment in unconsolidated affiliates.

Accounts receivable from transactions with unconsolidated affiliates were $ 1.1 million and $ 0.9 million as of June 30, 2025 and December 31, 2024 , respectively.

The Company’s effective tax rate was ( 17.9 %) and 13.3 % for the three months ended June 30, 2025 and 2024 , respectively.

The Company’s effective tax rate was ( 15.7 %) and 16.9 % for the six months ended June 30, 2025 and 2024, respectively.

The effective tax rate for the three and six months ended June 30, 2025 differs from the statutory rate due to the additional tax expense associated with a valuation allowance on disallowed interest expense carryforwards, non-deductible stock based compensation and tax expense associated with withholding tax on earnings in Canada that the Company repatriated during the second quarter.

The effective tax rate for the three and six months ended June 30, 2024 differs from the statutory rate due to the impact of an impairment of goodwill that is non-deductible for tax purposes.

On July 4, 2025, H.R.

1 – One Big Beautiful Bill Act (“OBBB”) was signed into law, which includes significant changes to the U.S.

federal tax code.

The Company is currently evaluating the impact of the OBBB on the condensed consolidated financial statements and the Company's estimated annual effective tax rate for fiscal year 2025.

Pursuant to Accounting Standards Codification 740:

Income Taxes , the impact of enacted tax legislation should be recognized in the period of enactment and, as such, the financial statement impact of OBBB, if any, will be recognized during the three months ended September 30, 2025.

The Company’s reportable segments, consisting of Branded Services, Experiential Services, and Retailer Services, are the segments of the Company for which separate financial information are evaluated regularly by the Company’s Chief Operating Decision Maker (“CODM” ), a position currently held by the Company's Chief Executive Officer , in deciding how to allocate resources and in assessing performance.

The CODM utilizes segment operating income to assess the performance and allocate resources to each segment.

The CODM is not provided asset information by reportable segment.

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

The tables below summarize revenues, significant expenses and operating income by reportable segment:

Three Months Ended June 30, 2025

(in thousands)

10 unchanged sentences

Total segment operating (loss) income from continuing operations

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

(in thousands)

6 unchanged sentences

Other segment items 2

Impairment of goodwill and indefinite-lived asset

Depreciation and amortization

Income from equity method investments

Total segment operating expenses from continuing operations

Total segment operating (loss) income from continuing operations

Six Months Ended June 30, 2025

(in thousands)

Branded Services

Experiential Services

Retailer Services

Total Company

Compensation and benefits

Reimbursable expenses 1

Other segment items 2

Depreciation and amortization

Income from equity method investments

Total segment operating expenses from continuing operations

Total segment operating (loss) income from continuing operations

Six Months Ended June 30, 2024

(in thousands)

Branded Services

Experiential Services

Retailer Services

Total Company

Compensation and benefits

Reimbursable expenses 1

Other segment items 2

Impairment of goodwill and indefinite-lived asset

Depreciation and amortization

Loss from equity method investments

Total segment operating expenses from continuing operations

Total segment operating loss from continuing operations

(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.

Total segment operating (loss) income from continuing operations

(1) Reimbursable expenses are costs incurred in the delivery of services to the Company's clients that the client has agreed to reimburse, including media, sample, retailer fees and other marketing and production costs.

(2) 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 and indirect general and administrative expenses such as professional fees.

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.

1 unchanged sentence

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.

Some of these legal matters purport or may be determined to be class and/or representative actions under the California Labor Code and Private Attorneys General Act, 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”).

9 unchanged sentences

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.

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 .

If the 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 June 30, 2025 and December 31, 2024 .

Stock-Based Compensation

2 unchanged sentences

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.

Three Months Ended March 31,

The Company recognized stock-based compensation expense as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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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.

PSUs granted in fiscal year 2025 and 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 average Adjusted EBITDA margin and cash earnings relative to specified targets will be measured over the fiscal years in which the award was granted and the two subsequent fiscal years thereafter, and an average 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.

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 % (as defined in the award agreement) of the Target number of PSUs specified in the table below.

PSUs are subject to the recipient's continued service to the Company.

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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:

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 six months ended June 30, 2025:

Performance Share Units

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PSU performance adjustment (1)

Outstanding at March 31, 2025 (2)

Outstanding at June 30, 2025 (2)

(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.

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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:

During the six months ended June 30, 2025, the following activities involving RSUs occurred under the Plan:

Number of RSUs

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Outstanding at January 1, 2025

Outstanding at March 31, 2025

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 .

Outstanding at June 30, 2025

As of June 30, 2025, the total remaining unrecognized compensation cost related to RSUs amounted to $ 28.2 million, which is expected to be amortized over the weighted-average remaining requisite service periods of 2.4 years .

Stock Options

During the three months ended March 31, 2025, the following activities involving stock options occurred under the Plan:

During the six months ended June 30, 2025, the following activities involving stock options occurred under the Plan:

Stock Options

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Aggregate Intrinsic Value

(in thousands)

Outstanding at January 1, 2025

Cancelled/Expired

Outstanding at March 31, 2025

Exercisable at March 31, 2025

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.

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.

Outstanding at June 30, 2025

Exercisable at June 30, 2025

As of June 30, 2025, the Company had approximately $ 7.8 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 2.4 years .

There were no options exercised during the three and six months ended June 30, 2025 and 2024 .

Earnings Per Share

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The following is a reconciliation of basic and diluted net earnings per common share:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except share and earnings per share data)

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Diluted earnings per common share from discontinued operations

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.

The Company had 18,578,321 warrants to purchase Class A common stock at $ 11.50 per share outstanding at June 30, 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 and six months ended June 30, 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.

Stock-based awards of 7.2 million and 8.4 million weighted-average shares were outstanding for the three and six months ended June 30, 2025 , respectively, 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 15.6 million and 17.9 million weighted-average shares were outstanding for the three and six months ended June 30, 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements