Advantage Solutions Inc.

1. Organization and Significant Accounting Policies

Advantage Solutions Inc. (the “Company”) is a provider of outsourced solutions to consumer packaged goods (“CPG”) brands and retailers. The Company’s Class A common stock is listed on the Nasdaq Global Select Market under the symbol “ADV.”

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Pursuant to these rules and regulations, the Company has condensed its consolidated financial statements and omitted certain information and disclosures the Company normally includes in the annual consolidated financial statements as required by accounting principles generally accepted in the United States (“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 September 30, 2026 and for the three and nine months ended September 30, 2026 and 2025, 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 and the related footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 3, 2026. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period.

As previously disclosed in our 2025 Form 10-K, the Company identified an immaterial misstatement in the classification of certain proceeds related to the Jun Group divestiture that were presented as cash inflows from financing activities in the previously issued Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2025. The Company determined that these proceeds in the amount of $22.5 million should have been presented as cash inflows from investing activities, which has been corrected in the accompanying Condensed Consolidated Statement of Cash Flows for thenine months ended September 30, 2025.

Reverse Stock Split

On March 26, 2026, the Company effected a 1-for-25 reverse stock split of its Class A common stock. In connection with the reverse stock split, the Company amended its certificate of incorporation to reduce the number of authorized shares of Class A common stock and preferred stock by dividing the previously authorized share amounts by the reverse stock split ratio and applying a 1.5x multiplier. No fractional shares were issued in connection with the reverse stock split, and stockholders who otherwise would have been entitled to a fractional share received cash in lieu thereof. All share and per share amounts presented in these unaudited condensed consolidated financial statements, including shares underlying stock-based compensation equity awards, have been retroactively adjusted for all periods presented to give effect to the reverse stock split. The reverse stock split did not affect the per share par value of the Company’s Class A common stock.

Retirement of Treasury Shares

During the nine months ended September 30, 2026, the Company retired 566,408 treasury shares that had been previously purchased under the share repurchase program that the Company first announced in 2021. The Company did not retire any shares during the three months ended September 30, 2026.

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 CPG brands at retailer headquarters, in-store and online. Branded merchandising services relate to merchandising in-store and online for CPG brands. 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:

Deferred revenues represent cash payments that are received in advance of the Company’s satisfaction of the applicable performance 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 and nine months ended September 30, 2026 that were included in Deferred revenues as of December 31, 2025 were$3.4 million and $21.8 million, respectively. Revenues recognized during the three and nine months ended September 30, 2025 included in Deferred revenues as of December 31, 2024 was $4.3 million and $20.1 million, respectively.

Impairment on Capitalized Software Development Costs

During the three and nine months ended September 30, 2026, the Company paused the development of a new human capital management (“HCM”) system while it evaluates the scope, design and timing of the project. As a result of the pause, the Company determined that it was no longer probable that the project would be completed as originally designed and recorded an impairment of $8.1 million, included in Impairment of Long-Lived Assets within the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, to write off previously capitalized development costs associated with the arrangement.

Accounting Standards Recently Issued but Not Yet Adopted by the Company

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): 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 annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted on a prospective or retrospective basis. The Company is currently evaluating the impact of ASU 2024-03 on the consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which modernizes the accounting for internal-use software costs to reflect incremental and iterative development methods. The amendments remove prescriptive development stages and require capitalization of software costs once management has authorized and committed to funding the project and it is probable the project will be completed and the software will be used as intended. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted and application on a prospective, modified retrospective, or retrospective basis. The Company is currently evaluating the impact of ASU 2025-06 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. Divestiture

Investments in European Joint Venture

During the first quarter of 2026, the Company executed a series of agreements related to its investments in a European joint venture, which was accounted for under the equity method and in which the Company held an ownership interest as of December 31, 2025. Under the terms of these agreements, the Company sold its interest in a portion of the European joint venture business for total consideration of £20.0 million (approximately $28.0 million), comprised of £10.0 million ($13.4 million) received in cash at closing and £10.0 million of deferred consideration to be paid 12 months after completion of the sale. The deferred consideration is reflected in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheet as of September 30, 2026. The Company retained a minority interest of 49.6% in the remaining portion of its ownership interest in the European joint venture.

For the three and nine months ended September 30, 2025, the Company presented its proportionate share of earnings from the European joint venture within Operating income, as reflected in Income from investments in European joint venture, because the results of that investment were considered integral to the Company’s operations at that time. Following completion of the restructuring noted above, the Company reassessed the nature of its retained equity‑method investment and concluded that the results of the remaining European joint venture investment are no longer integral to the Company’s core operating activities. Accordingly, for the three and nine months ended September 30, 2026, the Company presents its proportionate share from the European joint venture within Other expenses (income), as reflected in Income from unconsolidated investments within the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

2024 Divestitures

During the first quarter of 2026, the Company received the remaining installment of approximately $27.5 million related to the July 31, 2024 sale of the Jun Group business.

3. Goodwill and Intangible Assets

The carrying amount of goodwill as of September 30, 2026 and December 31, 2025 was $438.9 million. Accumulated impairment losses related to goodwill were $2.3 billion as of September 30, 2026 and December 31, 2025.

Amortization of intangible assets was$42.3 million and$42.9 million for the three months ended September 30, 2026 and 2025, respectively. Amortization of intangible assets was$126.9 million and$128.8 million for the nine months ended September 30, 2026 and 2025, respectively.

The following tables set forth information for the Company's intangible assets:

As of September 30, 2026, estimated future amortization expense of the Company’s finite-lived intangible assets is as follows:

4. Debt

Long-term debt consisted of the following:

Refinancing

On March 11, 2026, Advantage Sales & Marketing Inc., an indirect wholly owned subsidiary of the Company (the “Borrower”), completed a refinancing transaction designed to extend maturities, enhance liquidity, and simplify its capital structure. The transaction was executed through a series of interrelated financing actions, including (i) an exchange offer and consent solicitation with respect to the Borrower’s outstanding senior secured notes, (ii) a refinancing and amendment of the Borrower’s term loan facility, and (iii) amendments to the Borrower’s asset‑based revolving credit facility.

As part of the refinancing, holders of approximately 99% of the Borrower's outstanding 6.50% senior secured notes due 2028 (the “2028 Notes”) with outstanding principal balance of $561.4 million accepted the offer to exchange their 2028 Notes for new 9.0% senior secured notes due 2030 (the “2030 Notes”) and $43.9 million in cash consideration, along with a related consent solicitation to amend the indenture governing the 2028 Notes, was completed. In connection with the exchange and consent solicitation, substantially all of the covenants, events of default, guarantees, and the collateral securing the 2028 Notes were eliminated or released, and 99% of the 2028 Notes were effectively replaced by the 2030 Notes with extended maturities and revised terms, which are further described below.

Concurrently with the notes exchange, the Borrower refinanced its existing term loan facility by (i) entering into a new senior secured first lien term loan facility at an extended maturity (the “2030 Term Loan Facility”) in an aggregate principal amount of $1.035 billion and (ii) making a cash prepayment of $80.9 million on the prior term loan balance, and amended its existing senior secured asset-based revolving credit facility (the “2030 ABL”).

The 2030 Notes

The 2030 Notes bear interest at 9.0% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2026, and mature on November 15, 2030, and include a payment-in-kind fee that was recorded as a debt discount. The debt discount is being amortized to interest expense over the term of the debt using the effective interest method.

The Borrower’s obligations under the 2030 Notes are guaranteed by Karman Intermediate Corp. and each of the Borrower’s direct and indirect wholly owned material U.S. subsidiaries and Canadian subsidiaries (the “Guarantors”), and are secured by a lien on substantially all of the Borrower’s and Guarantors’ assets (subject to certain permitted exceptions). The 2030 Notes have a first‑priority lien on the fixed asset collateral (equal in priority with the liens securing the 2030 Term Loan Facility) and a second‑priority lien on the current asset collateral (equal in priority with the liens securing the 2030 Term Loan Facility and second in priority to the liens securing the 2030 ABL), in each case, subject to other permitted liens.

The 2030 Notes may be redeemed, in whole at any time or in part from time to time, at 100% of the principal amount thereof, plus accrued and unpaid interest. Holders of the 2030 Notes have the right to require the Borrower to repurchase their notes upon the occurrence of certain changes of control, subject to specified exceptions, at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest. If the Borrower or any of its restricted subsidiaries sells assets, under certain circumstances the Borrower must offer to use the net proceeds to purchase the 2030 Notes at 100% ofthe principal amount thereof, plus accrued and unpaid interest. If the Borrower generates excess cash flow, the Borrower mustuse 75% of such excess cash flow, subject to reduction as set forth in the applicable indenture, to make an offer to repurchase the 2030 Notes together with other applicable parity lien indebtedness at 100% of the principal amount thereof, plus accrued and unpaid interest.

The 2030 Term Loan Facility

Borrowings under the Borrower’s 2030 Term Loan Facility amortize in equal quarterly installments in an amount equal to 2.50% per annum of the principal amount. Borrowings will bear interest at a floating rate, which can be either adjusted CME Group Benchmark Administration Limited Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin or, at the Borrower’s option, a base rate plus an applicable margin. The applicable margin for the 2030 Term Loan Facility is 6.00%, with respect to SOFR borrowings, and is 5.00% with respect to base rate borrowings. The Borrower may voluntarily prepay loans or reduce commitments under this facility, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty. The Borrower will be required to prepay its 2030 Term Loan Facility with 100% of the net cash proceeds of certain asset sales subject to certain reinvestment rights,100% of the net cash proceeds of certain debt issuances and 75% of excess cash flow (such percentage subject to reduction based on the achievement of specific first lien net leverage ratios).

The Borrower’s obligations under the 2030 Term Loan Facility are guaranteed by the Guarantors, and are secured by a lien on substantially all of the Borrower’s and the Guarantors’ assets (subject to certain permitted exceptions). The 2030 Term Loan Facility has a first‑priority lien on the fixed asset collateral (equal in priority with the liens securing the 2030 Notes) and a second‑priority lien on the current asset collateral (second in priority to the liens securing the 2030 ABL), in each case, subject to other permitted liens. The 2030 Term Loan Facility matures in April 2030, subject to potential extensions in accordance with its terms. The 2030 Term Loan Facility includes a payment-in-kind fee that was recorded as debt discount and is being amortized to interest expense over the term of the 2030 Term Loan Facility using the effective interest method.

The Company uses derivative instruments to manage its exposure to changes in SOFR on the 2030 Term Loan Facility. As of September 30, 2026, interest rate collars with a total notional amount of $500.0 million limited one-month Term SOFR on that portion of the borrowings to a range of 2.49%–2.89% (floors) to 4.50%–5.00% (caps). In October 2026, the Company entered into a $50.0 million interest rate swap that effectively fixes the rate on that portion of the borrowings through October 15, 2029. Including the swap, approximately $550.0 million, or 54%, of the $1,015.2 million outstanding under the 2030 Term Loan Facility is subject to either a fixed rate or a collared SOFR rate. See Note 5—Fair Value of Financial Instruments and Note 13—Subsequent Events.

The 2030 Asset-based Revolving Credit Facility

The Borrower’s 2030 ABL provides for revolving loans and letters of credit in the aggregate amount of up to $500.0 million, subject to borrowing base capacity. Letters of credit are limited to the lesser of (i) $150.0 million and (ii) the aggregate unused amount of commitments then in effect under the revolving credit facility. Loans under the revolving credit facility may be denominated in either U.S. dollars or Canadian dollars. The 2030 ABL matures on January 30, 2030, subject to a customary springing maturity tied to the maturity of the 2030 Term Loan Facility and the 2030 Notes.

Borrowings under the 2030 ABL bear interest at variable rates based on SOFR or a base rate, plus applicable margins, at the Borrower’s option. The applicable margins for the 2030 ABL are 1.75%,2.00% or 2.25%, with respect to SOFR borrowings and 0.75%,1.00% or 1.25%, with respect to base rate borrowings, in each case depending on average excess availability under the revolving credit facility.

The Borrower’s obligations under the 2030 ABL are guaranteed by the Guarantors and are secured by liens on substantially all assets of the Borrower and of the Guarantors, subject to certain permitted exceptions. These obligations have a first‑priority lien on current asset collateral and a second‑priority lien on fixed asset collateral, which is junior to the liens securing the 2030 Notes and the 2030 Term Loan Facility discussed above, in each case subject to permitted liens.

As of September 30, 2026, the Borrower had the ability to borrow up to $395.7 million under the 2030 ABL after giving effect to borrowing base limitations and outstanding letters of credit. As of December 31, 2025, the Borrower had the ability to borrow up to $438.0 million under the previous revolving credit facility after giving effect to borrowing base limitations and outstanding letters of credit.

Debt Covenants

The 2030 Notes, the 2030 ABL and the 2030 Term Loan Facility each contain customary affirmative and negative covenants applicable to the Borrower and the Guarantors, and the Borrower’s subsidiaries. Collectively, these covenants restrict the ability of such parties to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock, or make other restricted payments; (iii) prepay, redeem, repurchase or modify the terms of certain junior or other indebtedness; (iv) issue certain preferred stock or similar equity securities; (v) make loans, advances, acquisitions or other investments; (vi) sell or otherwise dispose of or transfer assets; (vii) incur liens or other security interests on assets; (viii) enter into transactions with affiliates; (ix) enter into agreements restricting the ability of subsidiaries to pay dividends; (x) change the Borrower’s line of business; and (xi) merge or consolidate with, or sell all or substantially all of their assets to, another entity.

Substantially all of the foregoing covenants under the 2030 Notes will be suspended, and the guarantees provided by the Guarantors released, if the Borrower maintains certain investment grade ratings for the 2030 Notes, subject to customary exceptions.

The 2030 ABL additionally requires the Borrower to maintain a fixed charge coverage ratio (as defined in the related credit agreement) of not less than 1.00 to 1.00 as of the end of each fiscal quarter during any period in which excess availability is less than the greater of (a) $25 million and (b)10% of the lesser of the borrowing base and the maximum borrowing capacity. The fixed charge coverage ratio will continue to be tested at the end of each fiscal quarter until excess availability exceeds the foregoing threshold.

The agreements governing the 2030 Notes, the 2030 Term Loan Facility and the 2030 ABL contain additional affirmative and negative covenants, including related definitions, thresholds, limitations and exceptions, that vary between the facilities. The 2028 Notes, 2030 Notes, and the 2030 Term Loan Facility rank pari passu in right of payment, subject to the applicable intercreditor arrangements and collateral priorities. As of September 30, 2026, the Borrower was in compliance with all applicable covenants.

The Borrower determined that all components of the Refinancing were considered to be modifications. Fees paid to creditors in connection with the Refinancing, including payment-in-kind fees associated with the 2030 Notes and the 2030 Term Loan Facility, were recorded as adjustments to the carrying amounts of the related debt instruments and are being amortized as interest expense over the remaining terms of the modified arrangements. Third-party fees of $21.0 million associated with the 2030 Notes and the 2030 Term Loan Facility were expensed as incurred and recognized in Other expense in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income in thenine months ended September 30, 2026. Deferred financing costs of $13.9 million associated with the revolving credit facility were capitalized and are included in Prepaid expenses and other current assets and Other assets in the Condensed Consolidated Balance Sheets and are being amortized over the term of the revolving credit facility. The Borrower recognized $1.2 million of expense in Interest expense in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, related to the write-off of unamortized debt issuance costs associated with the portion of debt principal repaid in connection with the Refinancing in thenine months ended September 30, 2026. The remaining unamortized fees and discount associated with the modified debt instruments, including amounts associated with the Borrower’s prior debt arrangements that continue to be attributed to the modified instruments, are being amortized as interest expense over the remaining terms of the modified arrangements.

Debt Maturities

Future minimum principal payments on long-term debt as of September 30, 2026 are as follows:

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.

Interest Rate Collar Agreements

The Company has interest rate collar contracts with an aggregate notional value of principal of$500.0 million as of September 30, 2026, from various financial institutions to manage the Company’s exposure to interest rate movements on variable rate credit facilities. Two interest rate collar contracts, each with a notional value of $200 million, mature on April 5, 2027 and 2028 providing a 2.54% and 2.49% floor, respectively, and both providing a 5.00% cap based on one-month term SOFR. In the second quarter of 2026, the Company entered into an additional interest rate collar with a $100.0 million notional amount that matures on April 8, 2029, providing a 2.89% floor and a 4.50% cap based on one‑month term SOFR. No premium was paid at inception.

As of September 30, 2026, the fair value of the Company’s outstanding interest rate collars of$1.8 million was included in “Other assets” in the Condensed Consolidated Balance Sheets. As of December 31, 2025 the fair value of the Company’s outstanding interest rate collars of$0.5 million was included in “Other long-term liabilities” in the Condensed Consolidated Balance Sheets. Changes in fair value of the Company's outstanding interest rate collars are recognized as a component of “Interest expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

These interest rate collars have not been designated as hedging instruments for accounting purposes; accordingly, changes in fair value are recognized immediately in earnings. During the three months ended September 30, 2026 and 2025, the Company recorded a gain of$1.4 million and $0.5 million, respectively, within“Interest expense, net,” related to changes in the fair value of its derivative instruments. During the nine months ended September 30, 2026 and 2025, the Company recorded a gain of$2.3 million and a loss of $1.5 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:

The fair value of debt reported in the table above is based on adjusted price quotations on the debt instruments in an active market.

6. Related Party Transactions

Unconsolidated Affiliates

During the three months ended September 30, 2026 and 2025, the Company recognized revenues of an immaterial amount from its investments in unconsolidated affiliates. During the nine months ended September 30, 2026 and 2025, the Company recognized revenues of $3.4 million and $3.7 million, respectively, from its investments in unconsolidated affiliates. Accounts receivable from transactions with unconsolidated affiliates were $0.4 million and $0.4 million as of September 30, 2026 and December 31, 2025, respectively.

Share Repurchases

During the nine months ended September 30, 2026, the Company repurchased approximately 47,000 shares of its common stock at a price of $37.73 per share, or $1.8 million in the aggregate, from entities affiliated with three members of the Company's Board of Directors. No amounts were due to or from these related parties as of September 30, 2026. There wereno repurchases of common stock from related parties during thethree months ended September 30, 2026 and 2025 or during the nine months ended September 30, 2025.

Other related party transactions

Certain current and former members of the Company’s Board of Directors and an officer of the Company currently serve or previously served as directors or officers of, or are affiliated with investment funds that hold interests in, certain clients. For the periods during which these entities were related parties, the Company recognized revenues from these clients of $4.4 million and $12.0 million during thethree and nine months ended September 30, 2026, respectively, and $1.2 million and $5.9 million duringthe three and nine months ended September 30, 2025, respectively. Accounts receivable from these clients were $2.0 million and $0.7 million as of September 30, 2026 and December 31, 2025, respectively.

7. Income Taxes

The Company had an effective tax rate of 20.2% and (32.1)% for thethree and nine months ended September 30, 2026, compared to an effective tax rate of (287.0)% and 5.0%, respectively, for the corresponding periods in 2025.

The effective tax rate for the three and nine months ended September 30, 2026 differed from the statutory rate primarily due to an increase in the valuation allowance recorded against the deferred tax asset related to interest expense limitation carryforward, partially offset by an income tax benefit related to the foreign currency loss on historical branch repatriations and remeasurement of deferred tax liability resulting from changes in applicable state tax rates.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, introducing significant amendments to the U.S. federal tax code. As a result of this legislation, the Company recorded a discrete income tax benefit of $2.7 million during the three months ended September 30, 2025, related to the remeasurement of the deferred tax asset on interest expense carryforwards and the corresponding adjustment to the valuation allowance. The effective tax rate for the three and nine months ended September 30, 2025 differed from the U.S. federal statutory rate primarily due to the change of a valuation allowance on disallowed interest expense carryforwards. The change in the valuation allowance reflects the impact of newly enacted tax legislation.

8. Segments

The Company’s reportable segments, consisting of Branded Services, Experiential Services, and Retailer Services, have separate financial information and 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 reportable segment. The CODM is not provided asset information by reportable segment.

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

(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 as well as the expense for impairment of long-lived assets. 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. Restructuring

In the first quarter of 2026, the Company initiated restructuring activities to align operating costs with revenue, reduce corporate costs, and transition certain back-office functions to a third-party operating model. Expenses incurred by segment for thethree and nine months ended September 30, 2026, consisting primarily of employee termination costs, contract termination fees, and workforce transition costs, including employee rebadging to a third-party service provider, are summarized below.

For the three and nine months ended September 30, 2026, $(0.5) million and $2.5 million, respectively, of these restructuring charges were recorded within Cost of revenues, with the remainder recorded within Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. As of September 30, 2026, an accrued restructuring liability of $3.0 millionwas outstanding.

Subsequent to September 30, 2026, the Company announced an expansion of its restructuring program to include a reduction in force, primarily in the Branded Services segment, and the exit of certain underutilized leases and other operating contracts. The Company expects to incur additional costs of approxima tely $7.0 million to $10.0 million through early 2027, primarily for employee severance, lease termination and other workforce transition activities, including technology and professional services. As the restructuring program was approved after September 30, 2026, no amounts have been recognized in the accompanying condensed consolidated financial statements.

10. Commitments and Contingencies

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 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. 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.

11. Stock-Based Compensation

The Company has granted under the Company’s 2020 Incentive Award Plan, as amended (the “Plan”), nonqualified stock options, restricted stock units (“RSUs”), and performance restricted stock units (“PSUs”). Stock-based compensation expense is recognized based on the fair value at the grant date over the requisite service period. The Company recognized stock-based compensation expense as follows:

Performance Restricted Stock Units

PSUs granted in fiscal years 2026, 2025 and 2024 cliff-vest after three years at a rate ranging from 0% to 200% of target subject to achievement of certain financial performance criteria over three years based on measurements of the Company’s Adjusted EBITDA margin and cash earnings, both terms as defined in the award agreement, and the recipient's continued service to the Company. Financial performance is measured at the conclusion of each fiscal year of the vesting period by the Human Capital Committee (“HCC”). The number of PSUs that ultimately vest is further modified based on the Company’s total shareholder return (“TSR”) relative to a defined peer group over the same performance period(which adjustment imposes a floor or a cap on the total number of PSUs that are eligible to vest based on the Company’s relative total shareholder return ranking). Following completion of the performance period and determination of achievement levels, the HCC approves the final number of PSUs vested and settled in shares of the Company’s Class A common stock. During the first quarter of 2026, the HCC determined the achievement percentage for the fiscal year 2025 performance period to be zero for PSUs granted in fiscal year 2025 and 2024.

PSUs granted in fiscal year 2023 vest over athree year period at a rate ranging from 0% to 150% subject to achievement of certain financial performance criteria based on the Company’s revenues and Adjusted EBITDA targets, both terms as defined in the award agreement, over the 2023 fiscal year, and the recipient’s continued service to the Company. During the first quarter of 2026, the HCC determined the achievement percentage for these PSUs for the three year performance period ending December 31, 2025 was 117.5%.

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 following table presents the number of PSUs that would potentially be issued upon achievement of performance criteria at threshold, target and maximum. The maximum potential expense below assumes the maximum and threshold achievement level for periods not yet approved by the HCC. Recognition of expense associated with performance-based stock is not permitted until achievement of the performance targets are probable of occurring.

The following table summarizes the PSU activity for thenine months ended September 30, 2026:

(1) Adjusted for final 2023 performance achievement as approved by the HCC at 117.5%.

(2) PSU award activity for each year used in the three year average achievement is presented at target until three year average achievement is approved by the HCC, at which point the awards are adjusted as outstanding awards, subject to additional performance requirements, TSR 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 thenine months ended September 30, 2026, the following activities involving RSUs occurred under the Plan:

As of September 30, 2026, the total remaining unrecognized compensation cost related to RSUs amounted to$28.3 million, which is expected to be amortized over the weighted-average remaining requisite service periods of 2.3 years.

Stock Options

During thenine months ended September 30, 2026, the following activities involving nonqualified stock options occurred under the Plan:

The fair value of the employee stock options was estimated using the following weighted average assumptions using a Black-Scholes option valuation model:

As of September 30, 2026, the Company had approximately$4.4 million of total unrecognized compensation expense related to stock options, which the Company expects to recognize over a weighted-average period of approximately 3.0 years. The cash received for the exercise of options in the three and nine months ended September 30, 2026 was immaterial. There wereno options exercised during the three and nine months ended September 30,2025.

12. 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, 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.

On March 26, 2026, the Company effected a 1-for-25 reverse stock split of its Class A common stock. The weighted average common shares and net loss reflect the Reverse Stock Split for all periods presented on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

The following is a reconciliation of basic and diluted (loss) earnings per common share:

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 0.6 million and 0.4 million weighted-average shares were outstanding for the three and nine months ended September 30, 2026, 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 0.4 million weighted-average shares were outstanding for the nine months ended September 30, 2025, but were not included in the computation of diluted loss per common share because the net loss position of the Company made them antidilutive.

13. Subsequent Events

Subsequent to September 30, 2026, the Company announced a strategic realignment initiative. Additional information regarding the initiative is included in Note 9, Restructuring.

On October 15, 2026, the Company entered into a pay-fixed, receive-floating interest rate swap with a notional amount of $50.0 million that matures on October 15, 2029. Under the swap, the Company pays a fixed rate of 4.729% and receives one-month Term SOFR. This effectively fixes the interest rate on $50.0 million of borrowings under the 2030 Term Loan Facility at an all-in rate of approximately 10.73% (4.729% plus the 6.00% applicable margin).