ADV 10-K & 10-Q changes, risk factors and insider trading

Investing in our securities involves risks. Before you make a decision regarding our securities, in addition to the risks and uncertainties discussed above under “Forward-Looking Statements,” you should carefully consider the specific risks set forth herein. If any of these risks actually occur, it may materially harm our business, financial condition, liquidity and results of operations. As a result, the market price of our securities could decline, and you could lose all or part of your investment. Additionally, the risks and uncertainties described in this Annual Report are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may become material and adversely affect our business. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.

consumer goodsCPG manufacturers and retailers reviewing and changing their sales, retail, marketing and technology programs and relationships;

limitations, restrictions and business decisions involving our joint ventures and minority investments;

Additionally, many of our salaried teammates are paid at rates that could be impacted by changes to minimum pay levels for exempt roles. Certain state or municipal jurisdictions in which we operate have recently increased their minimum wage by a significant amount, and other jurisdictions are considering or plan to implement similar actions, which may increase our labor costs. Any increases at the federal, state or municipal level to the minimum pay rate required to remain exempt from overtime pay may adversely affect our business, financial condition or results of operations.

A limited number of national retailers account for a large percentage of sales for our consumer goods manufacturerCPG clients. We expect that a significant portion of these clients’ sales will continue to be made through a relatively small number of retailers and that this percentage is anticipated to increase if the growth of these large retailers continues. As a result, changes in the strategies of large retailers, including a reduction in the number of brands that these retailers carry or an increase in shelf space that they dedicate to private label products, could materially reduce the value of our services to these clients or these clients’ use of our services and, in turn, our revenues and profitability. Many retailers have critically analyzed the number and variety of brands they sell, and have reduced or discontinued the sale of certain of our clients’ product lines at their stores, and more retailers may continue to do so. If this continues to occur and these clients are unable to improve distribution for their products at other retailers, our business or results of operations could be adversely affected.

Consolidation in the consumer goodsCPG and retail industries we serve could reduce aggregate demand for our services in the future and could adversely affect our business or our results of operations. When companies consolidate, the services they previously purchased separately are often purchased by the combined entity, leading to the termination of relationships with certain service providers or demands for reduced fees and commissions. The combined company may also choose to insource certain functions that were historically outsourced, resulting in the termination of existing relationships with third-party service providers. While we attempt to mitigate the impact of any consolidation by maintaining existing or winning new service arrangements with the combined companies, there can be no assurance as to the degree to which we will be able to do so as consolidation continues in the industries we serve, and our business, financial condition or results of operations may be adversely affected.

Consumer goodsCPG manufacturers and retailers may periodically review and change their sales, retail, marketing and technology programs and relationships to our detriment.

The consumer goodsCPG manufacturers and retailers to whom we provide our business solutions operate in highly competitive and rapidly changing environments. From time to time these parties may put their sales, retail, marketing and technology programs and relationships up for competitive review. We have occasionally lost accounts with significant clients as a result of these reviews in the past, and our clients are typically able to reduce or cancel current or future spending on our services on short notice for any reason. We believe that key competitive considerations for retaining existing and winning new accounts include our ability to develop solutions that meet the needs of these manufacturers and retailers in this environment, the quality and effectiveness of our services and our ability to operate efficiently. To the extent that we are not able to develop these solutions, maintain the quality and effectiveness of our services or operate efficiently, we may not be able to retain key clients, and our business, financial condition or results of operations may be adversely affected.

Historically, substantially all of our salesBranded Services segment revenues were generated by sales and services that ultimately occurred in traditional retail stores. The retail industry is evolving, as demonstrated by the number of retailers that offer both traditional retail stores and e-commerce platforms or exclusively e-commerce platforms. Consumers are increasingly using electronic devices to comparison shop, determine product availability and complete purchases online, or arrange for store pickup or home delivery of products, trends that have accelerated as a result of the COVID-19 pandemic, and which may continue thereafter. If consumers continue to purchase more products online, further reduce their in-store visits or e-commerce continues to displace brick-and-mortar retail sales, there may be a decrease in the demand for certain of our services. Omni-channel retailing is rapidly evolving and we believe we will need to keep pace with the changing consumer expectations and new developments by our competitors.

The demand for our services is dependent on the ability of retailers and consumer goodsCPG manufacturers to offer and deliver products directly or indirectly to consumers. We provide services involving a wide variety of brands that are sourced from domestic and international suppliers. Any material interruption in the supply chains serving consumer goodsCPG manufacturers, retailers or ourselves, whether due to interruptions in service by our third-party logistic service providers, trade restrictions (such as increased tariffs, taxes or quotas, embargoes, customs or other governmental restrictions), pandemics, social or labor unrest, labor shortages, natural disasters, or political disputes and military conflicts that cause a material disruption in supply chains or a significant increase in supply costs could adversely affect our business and our profitability.

High-quality education, training and customer service are important for successful marketing and salesservices and for the renewal of existing customersclients and for the pursuit of newpotential customers.clients. Providing this education, training and service requires that our personnelteammates who manage our online training resource or provide customer service have specific inbound experience domain knowledge and expertise, making it more difficult for us to hire qualified personnelteammates and to scale up our support operations. If we do not help our customers use multiple applications and provide effective ongoing service,service to our clients, our ability to sell additional functionality and services to, or to retain, existing customersclients may suffer and our reputation with existing or potential customersclients may be harmed.

We continually assess the strategic fit of our existing businesses and may divest, spin-off, split-off or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the desired return on investment. Since January 2023, we have divested nine businesses, and also decreased our ownership interest in our European joint venture. Such transactions pose risks and challenges that could negatively impact our business and financial statements. For example, whenWhen we decide to sell or otherwise dispose of a business or assets, we may be unable to do so on satisfactory terms within our anticipated timeframe or at all, and even after reaching a definitive agreement to sell or dispose a business the sale is typically subject to satisfaction of pre-closing conditions which may not become satisfied. For example, during the second quarter of fiscal year 2024, we recognized a goodwill impairment charge of $99.7 million 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. In addition, divestitures or other dispositions could decrease our Adjusted EBITDA or have other adverse financial, tax and accounting impacts and distract management, and disputes can arise with buyers. The resolution of any such disputes could adversely affect for our business, financial condition or results of operations.

Our ability to acquire new clients and to retain existing clients, whether by expansion of our own operations or through an acquired business may in some cases be limited by the other parties’ perceptions of, or policies concerning, perceived competitive conflicts arising from our other relationships. Some of our contracts expressly restrict our ability to represent competitors of the counterparty. These perceived competitive conflicts may also become more challenging to avoid or manage as a result of continued consolidation in the consumer goodsCPG and retail industries and our own acquisitions. If we are unable to avoid or manage business conflicts among competing manufacturers and retailers, we may be unable to acquire new clients or be forced to terminate existing client relationships, and in either case, our business and results of operations may be adversely affected.

Limitations, restrictions and businessBusiness decisions involving our joint ventures and minority investments may adversely affect our growth and results of operations.

We have made substantial investments in joint ventures and minority investments and may use these and other similar methods to expand our service offerings and geographical coverage in the future. These arrangements typically involve other business services companies as partners that may be competitors of ours in certain markets. Joint venture agreements may place limitations or restrictions on our services. For example, as part of our joint venture with, and investments in Smollan, we were restricted under certain circumstances from making direct acquisitions and otherwise expanding many of our service offerings into markets outside of North America. The limitations and restrictions tied to our joint venture and minority investments limit our potential business opportunities and reduce the economic opportunity for certain prospective international investments and operations.

We may choose to pay cash, incur debt or issue equity securities to pay for any such acquisition. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations. The sale of equity to finance any such acquisition could result in dilution to our stockholders.

Currently, none of our teammates in the United States are represented by a union. However, our teammates have the right under the National Labor Relations Act to choose union representation. If all or a significant number of our teammates become unionized and the terms of any collective bargaining agreement were significantly different from our current compensation arrangements, it could increase our costs and adversely impact our profitability. Moreover, if a significant number of our teammates participate in labor unions, it could put us at increased risk of labor strikes and disruption of our operations or adversely affect our growth and results of operations. InWe Decemberhave 2019,faced, a union which commonly represents employeesand in the supermarket industry filed a petition with the National Labor Relations Board to represent approximately 120 of our teammates who worked in and around Boston. An election was held, and based on certified results of the election we prevailed in this election. Notwithstanding this successful election, wefuture could face future union organization efforts or elections, which could lead to additional costs, distract management or otherwise harm our business.

Under accounting guidelines, we must assess, at least annually, whether the value of goodwill and other indefinite-lived intangible assets has been impaired. For example,Moreover, during the year ended December 31, 2024, we recognized goodwill impairment charges of $233.2 million due to the pending sale of one of the businesses that comprised a substantial portion of the Branded Agencies reporting unit and a loss of clients and a reduction in the scope of client services as our clients in the Branded Services reporting unit implemented internal cost reduction initiatives. Refer to Note 3—Goodwill and Intangible Assets to our consolidated financial statements for the year ended December 31, 2024. During the fourth quarter of December 31, 2024, we recognized an intangible asset impairment charge of $42.0 million as a result of the triggering event for the Branded Services reporting unit.

Failures in, data breaches of, orSecurity incidents involving,involving our technology or infrastructure could damage our business, reputation and brand and substantially harm our business and results of operations.

We use complex software inFurther, our technology infrastructure,infrastructure is complex and requires substantial support and maintenance, which we seek to continually update and improve. ReplacingHowever, replacing such software and infrastructure is often time-consuming and expensive and can also be intrusive to daily business operations. Further, we may not always be successful in executing these upgrades and improvements, which may result in a failure of our systems.IT Systems. We may also experience periodic system interruptions from time to time. Any slowdown or failure of our underlying technology infrastructure could harm our business and reputation, which could materially adversely affect our results of operations. Our disaster recovery plan or those of our third-party providers may be inadequate, and our business interruption insurance may not be sufficient to compensate us for the losses that could occur.

Failure to comply with federal, state, and foreign laws and regulations relating to privacy, data protection,privacy and consumer protection, or the expansion of current or the enactment of new laws or regulations relating to privacy, data protection and consumer protection, could adversely affect our business and our financial condition.

A variety of federal, state, and foreign laws and regulations govern the collection, use, retention, sharing, and security of personal information. The information, security, and privacy requirements imposed by such governmental laws and regulations relating to privacy, data protection,privacy and consumerdata protection are increasingly demanding, quickly evolving, and may be subject to differing interpretations. TheseFurther, given their patchwork status, these requirements mayoften notcannot be harmonized,harmonized and may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another, or may conflict with other rules or our practices.another. As a result, our practices may not have complied or may not comply in the future with all such laws, regulations, requirements, and obligations. Our actual or perceived failure to comply with such laws and regulations could result in fines, investigations, enforcement actions, penalties, sanctions, claims for damages by affected individuals, and damage to our reputation, among other negative consequences, any of which could have a material adverse effect on its financial performance.

WeAs such, we are subject to the California Consumer Protection Act of 2018, which became effective in 2020, as well as its amendment, the California Privacy Rights Act of 2020 (the “CPRA”) and accompanying regulations, the California Consumer Privacy Act Regulations (collectively, the “CCPA”). The CCPA regulates the collection, use, and processing of personal information relating to California residents, which includes our teammates.employees. It grants certain privacy rights to California residents, including the right to access, correct, and delete personal information relating to such individuals under certain circumstances. Compliance with the new obligations imposed by the CCPA depends in part on how its requirements are interpreted and applied by the California attorney general, courts, and the new California Privacy Protection Agency. AllegedIn 2026, violations of the CCPA may result in substantial civil penalties or statutory damages when applied at scale, of approximately $3,000$2,700 per violation or approximately $8,000 per intentional violation of any CCPA requirement, which may be applied on a per-person or per-record basis. The CCPA also establishes a private right of action if certain personal information of individuals is subject to an unauthorized access and exfiltration, theft, or disclosurebreached as a result of a business’s violation of the duty to implement and maintain reasonable security procedures and practices,practices. whichThis violation authorizes statutory damages of approximately $100 to $800 per person per incident even if there is no actual harm or damage to plaintiffs. This private right of action may increase the likelihood of, and risks associated with, general data breach litigation. Further, the CPRA includes additional and strengthened privacy rights for California residents, new requirements regarding sensitive data and data sharing for digital advertising, and tripled damages for violations involving children’s data.

By the end of 2025,2026, laws similar to CCPA are expected to be in effect in at least 18 states, and this number may increase.increase as 14 additional states have active legislation under consideration. Like the CCPA, these laws regulate the collection, use and processing of personal information relating to residents of the respective states, and grants certain privacy rights to those residents, some of which may include individuals as with the CCPA.residents.

Although we make reasonable efforts to comply with all applicable laws and regulations and have invested and continue to invest human and technologytechnological resources into data privacy compliance efforts, there can be no assurance that we will not be subject to regulatory action, including fines, in the event of an incident or other claim. Data protection laws and requirements may also be enacted, interpreted or applied in a manner that creates inconsistent or contradictory requirements on companies that operate across jurisdictions. We, or our third-party service providers, could be adversely affected if legislation or regulations are expanded or interpreted to require changes in our or our third-party service providers’to business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our or our third-party service providers’ business, results of operations, or financial condition. For example, we may find it necessary to establish alternative systems to maintain personal data in the EEA, which may involve substantial expense and may cause us to divert resources from other aspects of our business, all of which may adversely affect our results from operations.practices. Further, any inability to adequately address privacy concerns in connection with our solutions, or comply with applicable privacy or data protection laws, regulationsregulations, and policies, could result in additional cost and liability to us, and adversely affect our ability to offer our solutions. GDPR, CCPA, and other similarPrivacy laws and regulations, as well as any associated inquiries or investigations or any other government actions, may be costly to comply with, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to remedies that may harm our business, including fines, or demands or orders that we modify or cease existing business practices.practices, Ourincluding systemsdata may not be able to satisfy these changing requirementsdeletion and manufacturer,algorithmic retailer, and teammate expectations, or may require significant additional investment or time in order to do so.disgorgement.

Civil litigation, including class actions, remains another source of potential liability under privacy laws. For example, cases filed under Illinois’ Biometric Information Privacy Act have resulted in large settlement amounts and damages awards against other companies due to the presence of statutory damages under that law. As another example,Relatedly, website owners and operators sawhave seen a wave of putative class actionsactions, individual civil actions, single and mass arbitration demands, and demand letters filed against them in 2022recent years, under the California Invasion of Privacy Act and similar federal and state surveillance and wiretapping laws, with claims centering on websites’companies’ deployment of web- and app-based tracking technologies (including cookies, pixels, scripts, and software development kits), session monitoring, keylogging,key logging, chatbots, and other tracking and monitoring technologies. TheThese legal claims, based on the reemergence of old laws retrofitted for a modern society, create novel issues of law and fact that may require extended litigation to resolve, as inconsistency among court rulingsrulings, regarding these legal claims rendersrendering the likelihood and dollar amount of potential liability and/or settlement value difficult to accurately quantify.

AIn sum, a data breach or any failure, or perceived failure, by usfailure to comply with any federal, state, or foreignapplicable privacy or consumer protection-related laws, regulations, or other principles or orders to which we may be subject, or other legal obligations relating to privacy or consumer protection could adversely affect our reputation, brand, and business, and may result in fines, enforcement actions, sanctions, claims (including claims for damages by affected individuals), investigations, proceedings, or actions against us by governmental entities or others,others. or other penalties or liabilities or require us to change our operations and/or cease using certain data sets, among other negative consequences, any of whichThis could have a material adverse effect on our business.business as we spend time tending to these issues and/or are forced to change our operations. Moreover, the proliferation of supply chain-based cyber-attacks and vendor security incidents increases these potential risks and costs even in cases where the attack did not target us, occur on our systems,IT Systems, or result from any action or inaction by us. Depending on the nature of the information compromised, we may also have obligations to notify users, law enforcement, regulators, business partners or payment companies about the incident and provide some form of remedy, such as refunds or identity theft monitoring services, for the individuals affected by the incident.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included in Item 8 “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.Report. This section of this FormAnnual 10-KReport generally discusses 20242025 and 20232024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2024 items and year-to-year comparisons between 2024 and 2023. Discussions of 2023 items and year-to-year comparisons between 2023 and 2022 are not included in this FormAnnual 10-K,Report, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 20232024 filed with the SEC on March 1,7, 2024.2025.

We are a leading omni-commerce business solutions provider to consumer goodsCPG manufacturers and retailers. We have a strong platform of essential, business critical services like headquarter sales, retail merchandising, in-store samplingsampling, digital commerce and privateshopper brand development.marketing. We generate demand for brands and retailers of all sizes, helping get the right products on the shelfshelf, —whether physical or digital—digital, and into the hands of consumers in every way they shop. We use a scaled platform to innovate as a trusted partner with our clients, solving problems to increase their efficiency and effectiveness across a broad range of channels.

Through our Branded Services segment, which generated approximately 36.6%32.9% and 45.1%36.6% of our revenues in the years ended December 31, 20242025 and 2023,2024, respectively, we provide services to branded consumer goodsCPG manufacturers through three main categories: brokerage, branded merchandising and omni-commerce marketing services. Brokerage services is primarily an outsourced sales and services agency for branded consumer goodsCPG manufacturers at retailer headquarters, in-store and online. Additionally, we lead with insights to execute branded merchandising strategies for branded consumer goodsCPG manufacturers related to merchandising in-store and online to drive product sales. Our omni-commerce marketing services primarily relate to digital and field marketing services, including shopper marketing, targeted advertising, interactive design and development, inventory management, application development and content management solutions.

Executive Summary

There are a number of factors, in addition to certain prior period balances related to our reportable segments and discontinued operations that have been reclassified to conform to the current presentation,factors that affect the performance of our business and the comparability of our results from period to period including:

DepreciationAmortization andof Amortization.Intangible Assets. As a result of the acquisition of our business by Topco on July 25, 2014 (the “2014 Topco Acquisition”), we acquired significant intangible assets, the value of which is amortized, on a straight-line basis, over 15 years from the date of the 2014 Topco Acquisition, unless determined to be indefinite-lived. The amortization of such intangible assets recorded in our consolidated financial statements has a significant impact on our operating (loss) income and net loss. Our historical acquisitions have increased, and any future acquisitions likely willwould increase, our intangible assets. We do not believe the amortization expense associated with the intangible assets created from our purchase accounting adjustments reflect a material economic cost to our business. Unlike depreciation expense which has an economic cost reflected by the fact that we must re-invest in property and equipment to maintain the asset base delivering our results of operations, we do not have any capital re-investment requirements associated with the acquired intangible assets, such as client relationships and trade names, that comprise the majority of the finite-lived intangible assets that create our amortization expense.

Impairment of Goodwill and Indefinite-Lived Asset. We recognized goodwill and intangible asset impairment charges of $36.6 million and $167.1 million, respectively during the year ended December 31, 2025. We recognized goodwill and intangible asset impairment charges of $233.2 million and $42.0 million, respectively, during the year ended December 31, 2024. We recognized an intangible asset impairment charge of $43.5 million related to our indefinite-lived trade name during the year ended December 31, 2023. We recognized goodwill impairment charges of $1,367.5 million for the year ended December 31, 2022. We recognized an intangible asset impairment charge of $205.0 million related to our indefinite-lived trade name during the year ended December 31, 2022. The impairment charges have been reflected in “Impairment of goodwill and indefinite-lived asset” in our Consolidated Statements of Operations and Comprehensive Loss.

Seasonality. Our quarterlybusiness resultsis are seasonal in nature,seasonal, with the fourth fiscal quarter typically generating a higher proportion of our revenues thandue otherto fiscal quarters, as a result of higherincreased consumer spending. We generally record slightly lower revenuesRevenues in the first fiscal quarter ofare eachgenerally year,lower, as our clients begin to roll out new programs forreflecting the year,timing of client program launches and seasonal consumer spendingpurchasing generallypatterns. is lessVariability in the first fiscal quarter than other quarters. The timing of our clients’client marketing expenses,initiatives, associatedincluding withpromotional marketing campaigns andspending, new product launches,introductions, and merchandising resets, can also resultaffect incomparability fluctuationsbetween from one quarter to another.periods.

Revenues related to the Branded Services segment revenues 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.

Selling, general and administrative expenses consist primarily of salaries, payroll taxes and benefits for corporate and shared-service personnel. Other overhead costs include information technology, professional services fees, including accounting and legal services, and other general corporate expenses. We also incur expenses operating asAs a public company, includingwe incur additional expenses necessary to complyassociated with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligationsobligations, pursuantincluding costs related to the rules and regulationsrequirements of thea SEC,publicly astraded wellcompany. asThese highercosts expenses for general andinclude director and officer insurance, investor relations,relations activities, audit and external reporting costs, and other governance‑related professional services. Additionally, included in selling,Selling, general and administrative expenses arealso costsreflects expenses associated with the changes in fair value of the contingent consideration of acquisitions and other costs related to our internal reorganization activities,and transformation initiatives, including ourseverance, restructuringprofessional plan, acquisition and divestiture transactions. These transaction-related costs are comprised of feesservices related to changeprocess ofredesign, equitysystem ownership,implementation professional fees, due diligencesupport, and integrationother ornon‑recurring divestitureitems activities.tied to organizational changes.

Income tax expense and our effective tax rates can be affected by many factors, including state apportionment factors, our acquisitionacquisitions and divestiture strategy,divestitures, tax incentives and credits available to us, changes in judgment regarding our ability to realize our deferred tax assets, changes in our worldwide mix of pre-tax losses or earnings, changes in existing tax laws and our assessment of uncertain tax positions.

Our principal sources of liquidity areinclude cash flows from operations, borrowingsavailability under theour Revolving Credit FacilityFacility, (asand, definedwhen below),applicable, divestituresproceeds andfrom other debt.divestitures. Our principalprimary uses of cash are operating expenses, working capital requirements, investmentsinterest inpayments on our technologyindebtedness, platforms,and acquisitions,scheduled repaymentor opportunistic repayments of debt and share repurchases.debt.

Beginning in the first quarter of fiscal year 2023, we engaged third-party professional service consultants to assist in identifying and implementing operational efficiencies and cost-saving strategies. These efforts focused on internal process optimization and workforce alignment to our cost structure with current business needs. During the year ended December 31, 2024,2025, we incurred $88.8$62.9 million in reorganization expenses related to various internal reorganization activities, including professional fees, lease exit costs, severance, and nonrecurring compensation costs, compared to $56.1$88.8 million during the year ended December 31, 2023.2024. These amounts were recognized in “Selling, general, and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Loss. The reorganization plan was designed to simplify the organization that supports the new segments after the divestitures and related transitions.

DuringIn the third quarter of fiscal year 2024, we offeredinitiated restructuring actions as part of our broader reorganization. These actions included offering a Voluntary Early Retirement Program (“VERP”) to certain eligible U.S.-based employees.employees, Duringresulting thein year$0.6 endedmillion December 31, 2024, we recordedand $9.9 million of settlement charges and special termination benefits recognized in “Selling, general,general and administrative expenses” induring the Consolidatedyears Statementsended ofDecember Operations31, 2025 and Comprehensive2024, Loss.respectively.

In connection with our reorganization initiatives, in September 2024, we announcedalso launched a cost ‑savings program to improve operational performance and align our cost structures consistentstructure with current revenue levelslevels. associatedThis withprogram business changes, which includesincluded special termination benefits associated with a reduction-in-forcereduction‑in‑force (“2024 RIF”) and other optimization initiatives. During the yearyears ended December 31, 2025 and 2024, we recorded $20.1$0.4 million and $20.1 million, respectively, of related settlement charges and special termination benefits in “Selling, general,general and administrative expensesexpenses.” in the Consolidated Statements of Operations and Comprehensive Loss.

We are a leading omni-commerce business solutions provider to consumerCPG goods manufacturersbrands and retailers. We have a strong platform of essential, business critical services like headquarter sales, retail merchandising, in-store sampling, digital commerce, and shopper marketing. We generate demand for brands and retailers of all sizes, helping get the right products on the shelf, whether physical or digital, and into the hands of consumers in every way they shop. We use a scaled platform to innovate as a trusted partner with our clients, solving problems to increase their efficiency and effectiveness across a broad range of channels.

We report financial results for the following three reportable segments. Through our Branded Services segment, which generated approximately 29.6%28.0% and 35.3%34.5% of our revenues in the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, we provide services to brandedCPG consumer goods manufacturersbrands through three main categories: brokerage, branded merchandising and omni-commerce marketing services. Through our Experiential Services segment, which generated approximately 44.3%45.6% and 38.2%39.0% of our revenues in the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, we help brands and retailers reach consumers and convert shoppers into buyers through in-store and online sampling and demonstrations. Through our Retailer Services segment, which generated approximately 26.1%26.4% and 26.5% of our revenues in the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, we provide end-to-end advisory, retailer merchandising and agency services to retailers.

Year-over-year comparisons are affected by divestitures completed after the firstsecond quarter of 2025. The divested businesses contributed approximately $5$4.9 million and $9.8 million of revenues and $3$2.9 million and $5.6 million of adjustedAdjusted EBITDA to our firstthree quarterand six months ending June 30, 2025 results, respectively, which are not reflected in the firstsame quarterperiods of 2026.

Adjusted Net (Loss) Income and Adjusted EBITDA are financial measures that are not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted Net (Loss) Income and Adjusted EBITDA and reconciliations of Net loss to Adjusted Net (Loss) Income and Adjusted EBITDA, see “Non-GAAP Financial Measures.”

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

The following table sets forth items derived from the Company’s consolidated statements of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 in dollars and as a percentage of total revenues.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

Branded Services segment revenues decreased $32.8$59.2 million for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The decrease includes a $2.1$27.0 million reduction in revenues from reimbursable expenses. Excluding the impact of reimbursable expenses, the declineremaining decrease of $32.2 million was primarily attributable to lower volumes, client losses experienced in 2025 and reductions in scope of services, including the carryover effect of losses that occurred during 2025, which exceededmore than offset new business wins. These trends reflect continued macroeconomic uncertainty, as clients continue to manage their brand support spending with heightened scrutiny during the period.

Experiential Services segment revenues increased $71.5$68.6 million during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The increase includes $22.1$21.5 million of additional revenues from reimbursable expenses. Excluding the impact of reimbursable expenses, the remaining increase of $47.1 million was primarily driven by higher event volume on improved demand and higher average pricing, reflecting continued recovery and growth in client activation activity.

Retailer Services segment revenues increased $9.2$6.4 million during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The increase was2025 driven primarily by a higher product volumes due, in part, to the timingvolume of certainretail holidaysmerchandising duringproject the first quarter of 2026 relative to the prior‑year period.engagements.

Cost of revenues as a percentage of revenues for the three months ended MarchJune 31,30, 2026 was 87.6%,88.1%, as compared to 87.9%85.5% for the three months ended MarchJune 31,30, 2025. The decreaseincrease as a percentage of revenues was driven primarily by higher direct labor costs and transformation-related expenses, partially offset by lower reimbursable expenses, lower fixed labor costs resulting from restructuring actions implemented in prior periods, as well as reduced discretionary bonus and professional services expenses. These favorable impacts were partially offset by higher variable labor andlower employee benefitsbenefit costsexpenses.

Selling, general, and administrative expenses as a percentage of revenues for the three months ended MarchJune 31,30, 2026 was 6.1%,5.7%, compared to 7.9% for the three months ended MarchJune 31,30, 2025. The decrease as a percentage of revenuerevenues was primarily driven by lower compensationtransformation-related costsexpenses, and lower stock-based compensation expense.costs.

Depreciation and amortization expense was $51.6$51.3 million for the three months ended MarchJune 31,30, 2026 compared to $50.4$50.7 million for the three months ended MarchJune 31,30, 2025. The net increase was primarily due to a $1.8$1.2 million increase in depreciation expense as a result of an increase in softwareIT-related amortization on increased investment in software, primarily due to the implementation of our new global enterprise resource planning system,investments, partially offset by a $0.6 million decrease in intangible asset amortization expense.expense driven by prior period impairment charges.

In the Branded Services segment, the increase in operating loss during the three months ended MarchJune 31,30, 20262026, as compared to the same period in the prior year was primarily due to lower revenues, as discussed above, partially offset by lower operatingcost of revenues of $37.6 million, lower selling, general and administrative expenses of $12 million. Cost of revenues decreased on lower reimbursable expenses of $27.0 million, lower compensation costs, primarily due toincluding lower stock-baseddirect compensationlabor, expense,fixed labor and benefit costs, partially offset by higher reorganization and transformation-related expenses and IT-related expenses. Selling, general and administrative expenses decreased on lower restructuringtransformation-related expenses. Also impacting year-over-year comparison is the recognition of equity earnings in our European joint venture of $2.6 million in operating income during the three months ended June 30, 2025, and reorganization expense, and a decreasezero in expectedthe creditcurrent loss expense.period.

In the RetailerExperiential Services segment, the increase in operating income during the three months ended MarchJune 31,30, 20262026, as compared to the same period in the prior year was primarily due to thehigher increase in revenuesrevenues, as discussed above, aspartially welloffset asby lowerhigher restructuringcost of revenues of $60.3 million. Cost of revenues increased on higher compensation expenses, including higher direct labor and reorganizationbenefit costscosts, and lowerhigher stock-basedreimbursable compensationexpenses. expense.Selling, general and administrative expenses were effectively unchanged.

Interest expense, net increased by $0.4$4.1 million, or 1.3%, to $34.8$40.0 million for the three months ended MarchJune 31,30, 2026, from $34.4$35.8 million for the three months ended MarchJune 31,30, 2025. The increase was driven primarily by a higher interestaverage ratesborrowing associatedrate withduring the second quarter of 2026 as compared to the same period in the prior year, partially offset by a lower average debt balance outstanding, both of which are significantly driven by the refinancing completedof duringour outstanding debt in the first quarter of 2026, partially offset by lower average principal balances resulting from principal payments made in connection with the refinancing.2026. Additional information regarding the debt refinancing is included in “Liquidity and Capital Resources—Credit FacilitiesFacilities.”

The CompanyWe recognized provision for income taxes of $23.3$21.8 million and $7.1$4.6 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The year‑over‑year change primarily reflects an increase in the valuation allowance recorded against deferred tax asset related to interest expense limitation carryforwards during the 2026 period.

We manage and assess our performance through various means including the use of the financial measures of Adjusted Net Loss,(Loss) Income, Adjusted EBITDA and Adjusted EBITDA by Segment. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure is provided below.elsewhere in this document. These financial measures are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”). These non-GAAP financial measures are derived from our consolidated and segment financial information but exclude or adjust for certain items that are included in the most directly comparable GAAP measures. We believe these non-GAAP (“Non-GAAP”) financial measures provide investors with additional insight into our operating performance, underlying business trends, and period-over-period comparability. However, these measures are not in accordance with GAAP, and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.

We present Adjusted Net (Loss) Income, Adjusted EBITDA and Adjusted EBITDA by Segment because they are key operating measures used by us to assess our financial performance. These measures adjust for items that we believe do not reflect the ongoing operating performance of our business, such as certain non-cash items, unusual or infrequent items or items that change from period to period without any material relevance to our operating performance. We evaluate these measures in conjunction with our results according to GAAP because we believe they provide a more complete understanding of factors and trends affecting our business than GAAP measures alone. Furthermore, the agreements governing our indebtedness contain covenants and other tests based on measures substantially similar to Adjusted EBITDA. Neither Adjusted Net (Loss) Income, Adjusted EBITDA nor Adjusted EBITDA by Segment should be considered as an alternative for Net (loss) income or operating income (loss), our most directly comparable measures presented on a GAAP basis.