Public Policy Holding Company, Inc.

The table below presents the detailed components of our consolidated income statement:

Revenue

Refer to Note 2 - Revenue in this Form 10-Q for our revenue recognition policy.

The components of fluctuations in revenue by reportable segment for the three and six months ended June 30, 2026 and 2025 were as follows:

(1) Refer to the Non-GAAP Financial Measures section below for the Company’s definition of Organic Revenue Growth.

Our total revenue increased 7.3%, to $52.1 million for the three months ended June 30, 2026 compared to $48.6 million for the three months June 30, 2025, with Organic Revenue Growth contributing 3.9% of growth.

Our total revenue increased 16.3%, to $102.3 million for the six months ended June 30, 2026 compared to $87.9 million for the six months ended June 30, 2025, with Organic Revenue Growth contributing 4.4% of growth.

This performance was supported by increased client demand, particularly within our Compliance and Insights Services segment and Government Relations Consulting segment as well as sustained demand for Corporate Communications & Public Affairs Consulting. These increases demonstrate the stability of the Company’s core business operations, the dedication of our management teams across our member companies, and the critical importance of our work to our clients, with the balance of growth driven by the successful integrations of our acquisitions of TrailRunner (completed April 1, 2025) and Pine Cove (completed July 11, 2025).

Organic growth of 4.4% for the six months ended June 30, 2026 was primarily attributable to the strong organic growth in Compliance and Insights Services at 12.8%, as a result of high renewal rates, price increases, and new client wins, all together reflective of a unique and high value-added offering together with strong organic growth in our Government Relations segment at 6.3%.

During the three months ended June 30, 2026, 58.2% of the Group’s revenues stemmed from Government Relations as compared to the same period in 2025 of 56.2% , 34.8% came from Corporate Communications & Public Affairs as compared to the same period in 2025 of 37.3%, and 6.9% from Compliance and Insights Services as compared to the same period in 2025 of 6.5%.

During the six months ended June 30, 2026, 57.4% of the Company’s revenues were attributable to our Government Relations segment as compared to 60.8% during the six months ended June 30, 2025. That decrease was a result of the TrailRunner acquisition (completed April 1, 2025) which also led to an increase in our Corporate Communications & Public Affairs segment, which increased to 35.7% during the six months ended June 30, 2026 compared to 32.0% in the prior year; 6.9% of our total revenues were from our Compliance and Insights Services segment, a decrease as compared to the previous year's 7.1%.

Our Government Relations Consulting segment’s revenue increased by 11.2%, to $30.4 million for the three months ended June 30, 2026, compared to $27.3 million as reported for the three months ended June 30, 2025. This increase reflects Organic Revenue Growth of 7.4% in tandem with the acquisition of Pine Cove (completed July 11, 2025) and the acquisition of WPI (completed April 1, 2026).

Our Government Relations Consulting segment’s revenue increased by 9.8%, to $58.7 million for the six months ended June 30, 2026, compared to $53.5 million as reported for the six months ended June 30, 2025. This increase reflects Organic Revenue Growth of 6.3% in tandem with the acquisition of Pine Cove (completed July 11, 2025) and the acquisition of WPI (completed April 1, 2026).

Our Corporate Communications & Public Affairs Consulting segment’s revenue increased by 0.1% to $18.2 million for the three months ended June 30, 2026, with negative organic growth of 3.2%, being offset by the impact of the acquisition of WPI (completed April 1, 2026). This segment is impacted by a post-election slowdown as the first half of 2025 carried an exceptional flow of post-election project work. The segment margin of 23.5% reflects that lower project volume.

Our Corporate Communications & Public Affairs Consulting segment’s revenue increased by 29.5% to $36.5 million for the six months ended June 30, 2026, compared to $28.2 million for the six months ended June 30, 2025 with negative organic growth of 0.9%, being offset by the impact of the acquisitions of TrailRunner (completed April 1, 2025) and WPI (completed April 1, 2026).

Our Compliance and Insight Services segment’s revenue grew by 14.8% and 12.8% to $3.6 million and $7.1 million for the three and six months ended June 30, 2026, compared to $3.1 million and $6.3 million for the three and six months ended June 30, 2025, respectively. 100% of this growth was organic, driven by increasing demand for specialized services, including compliance, grant writing, and research-driven policy insights, and characterized by high renewal rates, favorable pricing and new clients wins, all together reflective of a unique and high value-added offering.

The Group's revenue realized outside of the U.S. was $4.0 million and $6.8 million, or 7.7% and 6.6%, for the three and six months ended June 30, 2026, respectively, as compared to $2.3 million and $3.9 million, or 4.7% and 4.4%, for the three and six months ended June 30, 2025, respectively, being a result of our growing international presence resulting from our Pagefield, WPI, and TrailRunner acquisitions.

Cost of Services

The table below presents the components of cost of services:

Salaries and other personnel costs represent our largest component of cost of services. Its principal components include employee salaries and benefits, share-based accounting charges, long term incentive program charges, post-combination compensation expense, and employee bonuses from operations that deliver services to our clients.

For the three months ended June 30, 2026, salaries and other personnel costs remained relatively flat at approximately $38.8 million. For the six months ended June 30, 2026, salaries and other personnel costs increased by 7.3% to $78.0 million compared to $72.7 million for the six months ended June 30, 2025. The overall increase of $5.3 million is driven by staff costs increasing in the amount of $7.4 million, of which $5.8 million is due to the acquisitions of TrailRunner (completed April 1, 2025) and Pine Cove (completed July 11, 2025) with the remainder being driven by our 2026 acquisitions. Bonus expenses increased by $1.0 million, with bonus expenses representing provisions for annual payments paid to senior executives and employees which are awarded based on the Company’s performance, the relative performance of their respective member company and for the individual meeting specific performance goals companywide. The increase is primarily attributable to the acquisitions completed in 2025 and 2026 along with the Company performance improving as compared to the previous year. These increases were partially offset by our non-cash post-combination compensation expense which decreased by $1.7 million and a $1.2 million decrease in our non-cash long term incentive program charges.

Office and other direct costs also represent a component of cost of services. Its principal component includes operating lease expenses for office space leased by the Company’s members and holding companies. Office and other direct costs increased by 10.8% and 14.6% in the three and six months ended June 30, 2026, respectively, to $2.0 million and $3.8 million, respectively, compared to $1.8 million and $3.3 million for the six months ended June 30, 2025, respectively. This increase was primarily a result of additional office spaces associated with the acquisitions of TrailRunner (completed April 1, 2025) and Pine Cove (completed July 11, 2025).

Salaries, general and administrative expenses

The table below presents the components of general and administrative expenses:

Salaries, general and administrative expenses comprise of general and administrative expenses, employee salaries, share-based accounting charges, long term incentive program charges, post-combination compensation expense, U.S. and UK public company and related costs, advisory costs, benefits and bonuses of employees employed in our corporate function.

Salaries, general and administrative expenses increased 26.6% in the three months ended June 30, 2026, to $12.1 million, compared to $9.5 million for the three months ended June 30, 2025. The increase of $2.5 million is primarily attributable to an increase of $1.3 million in audit, consulting, and legal fees incurred primarily related to additional work performed in support of the Company's public listing activities. Additionally, non-cash charges associated with the Company's long-term incentive program increased by $0.6 million, driven by the issuances in 2026, software license and information technology consulting expense increased by $0.3 million, and annual bonus expense increased by $0.1 million.

Salaries, general and administrative expenses increased 25.5% in the six months ended June 30, 2026, to $21.4 million, compared to $17.0 million for the six months ended June 30, 2025. Of the $4.3 million increase, $1.4 million relates to audit, consulting, and legal fees incurred primarily related to additional work performed in support of the Company's public listing activities. $1.1 million of additional operating expenses related to the newly acquired companies in 2025 and 2026. Additionally, there was a $0.6 million increase in software license and IT consultant expense to expand the Company's technology footprint to support business growth and acquired entities, non-cash long term incentive program charges increased by $0.5 million, and a $0.4 million increase in bad debt expense.

Mergers and acquisitions expense

The principal components of mergers and acquisitions expense include legal, audit and other advisory expenses, transaction taxes, and debt origination costs. Mergers and acquisitions expense increased by 883.1% in the three months ended June 30, 2026, to $0.8 million, compared to $0.1 million in the three months ended June 30, 2025. In the six months ended June 30, 2026, Mergers and acquisitions expense increased by 281.4% to $1.1 million, compared to $0.3 million in the six months ended June 30, 2025.

Depreciation and amortization expense

The table below presents the components of depreciation and amortization expense:

The principal components of depreciation and amortization expense include the amortization of intangible assets related to customer relationships, developed technology, and non-compete contracts.

Depreciation and amortization expense decreased by 6.4% in the three months ended June 30, 2026, to $1.6 million, compared to $1.7 million in the three months ended June 30, 2025. In the six months ended June 30, 2026, depreciation and amortization expense increased by 6.7% to $3.3 million, compared to $3.0 million in the six months ended June 30, 2025 reflecting additional costs associated with the acquisitions of TrailRunner (completed April 1, 2025) and Pine Cove (completed July 11, 2025) along with the acquisitions completed in 2026.

Change in fair value of contingent consideration

Contingent consideration represents a liability that is settled through a combination of cash and shares of our common stock based on the respective purchase agreement. The amount ultimately paid is dependent on the achievement of certain operating results.

Change in fair value of contingent consideration represents changes in obligations relating to historical acquisitions, to the extent those obligations are not subject to vesting or claw-back provisions.

Change in fair value of contingent consideration decreased by 47.3% and increased by 168.8% in the three and six months ended June 30, 2026, to $0.9 million and $7.2 million, respectively, compared to $1.7 million and $2.7 million in the three and six months ended June 30, 2025, respectively. This increase is primarily the result of a non-cash remeasurement of the acquisition-related earn-out liabilities that were revised based on updated performance forecasts and valuation assumptions that occurred in 2025 Q4.

Gain on bargain purchase

Gain on bargain purchase comprises of the difference between the fair value of the net identifiable assets acquired and the purchase price paid, where the purchase price is lower than the fair value of the acquired assets. A significant part of the purchase price of our acquisitions is tied to continued employment, this part has been accounted for as post-combination compensation in the Company's Consolidated Statements of Operations. As a consequence, for certain acquisitions, the remaining book purchase price is lower than the tax purchase price. The reason for the bargain purchase gain is tied directly to the tax purchase price significantly exceeding the book purchase price and is not a reflection of a true bargain purchase of the actual intangible and tangible assets of these acquisitions.

There was a $0.8 million and $0.9 million gain on bargain purchase for the three and six months ended June 30, 2026, respectively, resulting from the Company's acquisitions in 2026 compared to none recognized in the three and six months ended June 30, 2025.

Interest income

Interest income represents the interest income accrued on interest bearing accounts and financial instruments.

Interest income increased to $0.3 million in the three and six months ended June 30, 2026 as compared to less than $0.1 million and $0.1 million three and six months ended June 30, 2025, respectively. The increase in interest income is driven by the Company's increased cash balance in interest bearing accounts as a result of the Company's 2026 U.S. IPO.

Interest expense

Interest expense represents the interest expense incurred under our Bank Credit Facilities as defined in Note 6. Notes Payable. Interest expense includes cash interest and debt discount amortization amounts.

Interest expense decreased by 16.1% and 1.8% in the three and six months ended June 30, 2026, to $0.7 million and $1.5 million, respectively, compared to $0.9 million and $1.5 million in the three and six months ended June 30, 2025, respectively, reflecting interest on increased principal amounts that are associated with new Bank Credit Facilities with financial institutions that were obtained in 2025.

Segment Results of Operations

As discussed in Note 7. Segment Reporting, we have three reportable segments as of June 30, 2026, Government Relations Consulting, Corporate Communications & Public Affairs Consulting and Compliance and Insights Services. The results of operations of our segments are as follows(1):

(1)Table may not sum due to immaterial rounding differences.

The staff costs for the three months ended June 30, 2026 for the Government Relations Consulting segment increased by $0.8 million, primarily a result of the acquisitions of Pine Cove (completed July 11, 2025) and the acquisition of WPI (completed April 1, 2026). Furthermore, for the three months ended June 30, 2026, the staff costs for the Corporate Communications & Public Affairs Consulting segment increased $0.5 million, primarily a result of the WPI acquisition.

The staff costs for the six months ended June 30, 2026 for the Government Relations Consulting segment increased by $1.1 million, primarily a result of the acquisitions of Pine Cove (completed July 11, 2025). Furthermore, for the six months ended June 30, 2026, the staff costs for the Corporate Communications & Public Affairs Consulting segment increased $5.1 million, which reflects the acquisitions of TrailRunner (completed April 1, 2025) and WPI (completed April 1, 2026).

Government Relations Consulting segment Adjusted Pre-Bonus EBITDA increased by $1.8 million, or 13.9% for the three months ended June 30, 2026, driven by $3.1 million higher revenue for the segment, offset by increases of $1.1 million of staff costs and $0.5 million of non-staff costs a result of increased business and the acquisition of WPI (completed April 1, 2026).

Government Relations Consulting segment Adjusted Pre-Bonus EBITDA increased by $3.2 million, or 13.1% for the six months ended June 30, 2026, driven by $5.3 million higher revenue for the segment, offset by increases of $1.1 million of staff costs and $0.9 million of non-staff costs a result of increased business and the acquisition of WPI (completed April 1, 2026).

Corporate Communications & Public Affair Consulting segment Adjusted Pre-Bonus EBITDA decreased by $0.7 million, or 14.8% for the three months ended June 30, 2026, as a consequence of the post-election slowdown as the first half of 2025 carried an exceptional flow of post-election project work. The segment margin of 23.5% reflects that lower project volume.

Corporate Communications & Public Affair Consulting segment Adjusted Pre-Bonus EBITDA increased by $1.8 million, or 25.1% for the six months ended June 30, 2026, reflecting the acquisitions of TrailRunner (completed April 1, 2025) and WPI (completed April 1, 2026) offsetting the post-election slowdown discussed earlier.

Compliance and Insights Services segment Adjusted Pre-Bonus EBITDA increased by $0.1 million and $0.2 million, or 4.7% and 4.5% for the three and six months ended June 30, 2026, respectively, reflecting strong organic growth and strong pricing of subscription contracts in this area, in combination with the increased use of technology in servicing our clients.