Advantage Solutions (ADV) Q1 2026 Earnings Transcript

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DATE

Wednesday, May 6, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — David Peacock
• Chief Financial Officer — Christopher Growe

TAKEAWAYS

• Net Revenue -- $723 million, up 4% year over year and up 4.7% on a pro forma basis, excluding divestitures.
• Adjusted EBITDA -- $68 million, up more than 16%, and up 22% on a pro forma basis, excluding divestitures, primarily from Experiential Services and improved Retailer Services profitability.
• Adjusted Unlevered Free Cash Flow -- $74 million, with a conversion rate of 110%.
• Quarter-End Cash Balance -- $144 million, reflecting debt paydown activity during the period.
• Debt Reduction -- $130 million paid down in the quarter, with net leverage ratio at 4.2x adjusted EBITDA, down from 4.4x sequentially.
• Experiential Services Revenue -- $270 million, up 22%; adjusted EBITDA $26 million, up 116% year over year, with events volume growth exceeding 19%, and execution rate improvements versus both prior year and Q4.
• Branded Services Revenue -- $226 million, and adjusted EBITDA $21 million, down 12% and 25% year over year, respectively; declines remain after adjusting for divestitures ($5 million revenue, $3 million EBITDA).
• Retailer Services Revenue -- $227 million, and adjusted EBITDA $21 million, up 4% and 14%, respectively; driven by new business wins, pricing, and improved channel mix.
• Guidance Reiterated -- Full-year outlook maintained for flat to low single-digit revenue growth, adjusted EBITDA flat to down mid-single digits, adjusted unlevered free cash flow $250 million-$275 million, and net free cash flow conversion at 25% of adjusted EBITDA, excluding refinancing costs.
• Productivity Initiatives -- Centralized labor model (CLM), technology investments (SAP, Oracle, Workday), and AI deployment are underway, with initial benefits in workforce speed, cost, and execution across segments.
• DSO Increase Noted -- "DSO increased slightly in the first quarter and is expected to remain elevated over the next few months," with improvement anticipated by year-end as SAP systems come online.
• Segment-Level Hiring -- Experiential segment reported accelerated net hiring and stable retention versus last year, supporting execution capacity and lowering cost per hire.

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RISKS

• Branded Services Pressure -- Segment revenues and EBITDA continue to decline due to "a challenging macro environment, select client losses, and an unfavorable mix shift," with management unable to fully offset these negative impacts.
• Margin Headwinds -- "unfavorable margin mix shift resulting from strong growth in lower-margin business segments," expected to continue throughout the year, impacting adjusted EBITDA performance.
• Macro Uncertainty -- CEO Peacock stated, "We are maintaining a prudent outlook reflecting the continued uncertainty ... Lower and middle-income consumers remain highly focused on value ... Rising gas prices are constraining consumer spending and have contributed to the lowest consumer sentiment since tracking began in 1952."
• Elevated DSO -- DSO is expected to stay elevated through midyear due to systems implementation and will only improve later in the year, delaying some cash flow benefits.

SUMMARY

Advantage Solutions (NASDAQ:ADV) delivered revenue and EBITDA growth above internal targets, led by gains in Experiential and Retailer Services while Branded Services continued to contract. Technology modernization, including SAP and AI integration, began to yield efficiency benefits, particularly in labor allocation and execution speed. First quarter cash generation was robust due to ongoing working capital discipline and lower restructuring expenses, supporting meaningful debt reduction and an improved liquidity profile. Management reaffirmed 2026 full-year guidance, highlighting persistent macroeconomic pressures and segment margin headwinds as ongoing challenges.

• Initial contributions from the Instacart partnership are in the ramp-up stage, with management noting "early days," and an expectation of greater impact in 2027.
• New business pipelines in Retailer Services and Experiential are converting, with additional customer expansion reported in Experiential Services.
• Major system implementations are scheduled to complete by year-end, with most efficiency and cash flow benefits targeted for realization beginning in 2027.
• Expansion into non-grocery and non-food retail verticals is underway, supported by early engagement with new clients outside the company's traditional base.

INDUSTRY GLOSSARY

• CLM (Centralized Labor Model): A workforce deployment approach where labor resources are centrally managed and assigned to optimize productivity and margin across service segments.
• DSO (Days Sales Outstanding): A measure of how quickly a company collects payment after a sale, often used to track working capital efficiency.
• Adjusted Unlevered Free Cash Flow: Cash flow generated by business operations before interest payments and capital structure considerations, adjusted for one-time or non-recurring items.

Full Conference Call Transcript

David Peacock: Thanks, operator. Good morning, and thank you for joining us. I want to first acknowledge our team for a solid start to the year. We have a lot of work ahead of us, but I am grateful for the resilience our people are showing in this uncertain time. Our first quarter was solid and ahead of our internal expectations, reflecting strong growth in Experiential Services, improvement in Retailer Services and continued headwinds affecting Branded Services. In the first quarter, total company net revenues of $723 million were up 4% year-over-year and up 4.7% on a pro forma basis, excluding divestitures.

Adjusted EBITDA of $68 million was up over 16% and up 22% on a pro forma basis, excluding divestitures, driven by strong incremental margins in Experiential Services and improved profitability in Retailer Services. Our results reflect continued progress on the growth and productivity initiatives outlined last quarter, especially our centralized labor model, which is driving improved retail execution and profitability. Our technology investments also continue to enhance our workforce productivity and improve our ability to drive sales for clients. We are still in the early stages of realizing the benefits of these initiatives. We recently launched the last phase of our SAP implementation, and we continue to advance the rollout of our human capital management system.

First quarter cash flow was strong. We generated $74 million in adjusted unlevered free cash flow and ended the quarter with $144 million in cash after a meaningful debt paydown in March. While we remain focused on cash generation and productivity, we have increased our efforts to drive growth across our platform. Technology will enable this push. Faster insights to action using AI built on top of our data lake will enable us to better meet increasing demand for Experiential and other in-store services and drive demand for clients' brands through a better understanding of product level performance.

In Experiential, Retailer Services, we are using AI tools integrated with legacy systems as well as process redesign to increase our hiring speed to better meet in-store labor needs. Our Branded Services team continues to advance our analytic architecture, driving faster action, increasing the likelihood of accelerating brand performance and driving in-store brand merchandisers dynamically. We leveraged partnerships like our alliance with Instacart to help drive better retail pricing and assortment decisions on behalf of clients. We're collaborating to leverage proprietary data and an alert-based model to more effectively deploy retail reps to the highest yielding in-store opportunities. Our retail pilot with Instacart is expanding and initial results have been positive.

We're also expanding into new markets and services and see a meaningful opportunity to expand beyond grocery retail. We are in active discussions with several non-food retailers to perform similar services that we've been doing with grocers and in other food channels for years. While growth is our focus, we continue to pursue several productivity initiatives. First, our centralized labor model is improving service quality and supporting long-term margin expansion, particularly in Experiential Services. We also see an opportunity to extend some of these capabilities into our Retailer Services segment as we execute product resets and store remodel work in approximately 80% of the U.S. grocery channel. Second, we are in the final stages of our enterprise technology transformation.

Our SAP and Oracle platforms have strengthened our data integrity, improved our reporting capability, reduced duplicative systems and are improving our ability to deliver insight-driven services while our Workday implementation will further improve our talent management. The heavy lifting of this transformation will be mostly complete by year-end. Beginning in 2027, we expect to more fully realize the efficiency benefits of these investments. Finally, we are integrating AI across our operations. Today, AI-enabled staffing and scheduling tools are already improving our speed and labor utilization. We're leveraging AI to drive further efficiency across our businesses and expect it to play a large role in improving execution, forecasting and labor productivity.

This includes a use case-based approach to AI tool selection and development and accelerating the fidelity and maturity of our data to ensure accuracy. I am proud of our execution in the quarter, controlling what we can amid ongoing consumer softness. Several enduring trends impacted our business and the consumer sector more broadly. Lower and middle-income consumers remain highly focused on value, while higher income consumers are shifting spending towards healthier options and also beginning to look for savings opportunities. Rising gas prices are constraining consumer spending and have contributed to the lowest consumer sentiment since tracking began in 1952.

We do not expect these dynamics to change in the near term, but we are adapting our business accordingly and helping our manufacturing clients and retailer customers also adjust their strategies. Additionally, our exposure to the fast-turning consumer packaged goods sector provides less volatility in this environment compared to other sectors and our heavier focus on the food category, which represents the majority of Branded Services revenues, provides a degree of built-in resilience as consumption patterns in food tend to be relatively stable or shift more slowly over time. Finally, as a scaled outsourced labor provider, we are well positioned to support clients as they seek greater efficiency and return on their investment at retail.

Hiring remains competitive, but it is consistent with recent quarters, and we are investing in our workforce and training to support the durable demand growth we are seeing. As I stated at the outset of this call, our segment results were mixed. Experiential Services delivered very strong first quarter results. Events grew over 19% and execution rates improved on both an annual and sequential basis. As we build top line momentum, we are focused on increasing profitability by advancing the centralized labor model rollout, enhancing training and safety protocols and driving a favorable mix shift toward higher-margin events. Branded Services continues to navigate a challenging environment, resulting in some client turnover that we will continue to lap through the year.

Our focus is on stabilizing the revenue base with strengthened client retention efforts, executive engagement and targeted growth opportunities with existing clients. We are already seeing progress with several existing clients have shifted retail account coverage to us earlier this year. New business development remains active with a disciplined focus on higher-quality opportunities. While still under pressure, we believe the business will move towards stabilization as the initiatives take hold. Retailer Services delivered a solid quarter of positive revenue and EBITDA growth despite a timing-related benefit in the quarter. We are encouraged by improving activity, pricing and the more moderate impact of channel mix shifts.

Pipeline momentum is strong, and we are converting our pipeline of new customers and new service offerings, which should continue to support growth in this segment. We have seen strong conversion in our retail merchandising business in particular. Finally, we remain focused on revenue and cost alignment and improving execution discipline. Cash generation remains a core strength of our business. Strong cash flow performance continued in the quarter, supported by disciplined working capital management, though the timing of some new system implementations contributed to a slight sequential increase in DSOs. We expect DSOs to be elevated in the near term before improving later in the year.

Our capital spending is on pace with our full year expectation, and we paid down roughly $130 million of debt in the quarter. Overall, enhanced liquidity is supporting our operations and strategic flexibility. While we are pleased with our results, we are maintaining a prudent outlook reflecting the continued uncertainty that I mentioned earlier. We expect strength in Experiential Services and improved growth performance in Retailer Services and progress toward achieving stabilization in Branded Services throughout the year. We are reiterating our full year guidance of flat to low single-digit revenue growth, adjusted EBITDA that is flat to down mid-single digits as our revenue growth is weighted towards lower-margin businesses in our portfolio.

Adjusted unlevered free cash flow of $250 million to $275 million and net free cash flow conversion of 25% of adjusted EBITDA, excluding the incremental costs related to the recent debt refinancing. We are encouraged by our progress and remain focused on executing our strategy and driving long-term profitable growth. I'll now turn it over to Chris for more detail on our financial performance.

Christopher Growe: Thank you, Dave, and welcome to everyone joining us today. I will review our first quarter performance by segment, discuss our cash flow and capital structure and provide additional detail on our outlook. As noted last quarter, we recently divested a small business, an equity stake and a portion of our European joint venture that collectively accounted for approximately $20 million in revenues and over $10 million of EBITDA in 2025. As a result of these divestitures, first quarter net revenues and EBITDA were adjusted down by approximately $5 million and $3 million, respectively. These businesses were all contained within our Branded Services segment, and we will call this out for comparability in our discussion of the quarter.

Starting with Branded Services. In the first quarter, we generated $226 million of revenues and $21 million of adjusted EBITDA, down 12% and 25% year-over-year, respectively. As noted, on a pro forma basis, excluding divestitures, revenue was down 10% and EBITDA was down 17%. This segment remains under pressure due to a challenging macro environment, select client losses and an unfavorable mix shift. While we maintain cost discipline in this segment, we are not able to fully offset these impacts. That said, we are taking targeted actions to improve performance, including expanding our customer footprint, accelerating cross-sell across our existing client base, leaning into newer, higher-value services and converting a solid pipeline of opportunities.

We are also leveraging technology to drive greater efficiency and enhance ROI for our clients. While near-term conditions remain challenging, we believe the business will move toward a more stable baseline as the year progresses. In Experiential Services, we generated $270 million of revenue and $26 million of adjusted EBITDA, up 22% and 116% year-over-year, respectively, driven by higher event volumes, strong execution and an easier comparison to the prior year period. We saw growth from both existing clients and new retail partners launching programs, reflecting continued strong demand.

Operationally, we benefited from improved alignment between demand and labor availability, supporting higher event execution rates and increased volumes as well as price optimization, partially offset by higher variable labor and wage costs. We remain focused on converting strong demand into sustained margin improvement through better labor utilization and mix, supported by our CLM initiatives as well as onboarding and retention improvements. The CLM initiative is already benefiting execution in Experiential Services. Our hiring initiatives accelerated in the first quarter with a significant increase in net hires. Retention remained consistent with the prior year, positioning us well to support strong execution in Q2.

In addition to supporting growth, we're seeing improved efficiencies in our hiring processes, reflected in a meaningful reduction in cost per hire during the first quarter. We continue to hire to support growth, including frontline associates, event managers and shift supervisors. We are investing in our teammates in 2026 to elevate service levels for our customers. As a result, in Experiential Services, we expect strong revenue growth for the year with adjusted EBITDA growth broadly in line with the revenue growth due to these investments. In Retailer Services, we generated $227 million of revenues and $21 million of adjusted EBITDA, up 4% and 14% year-over-year, respectively.

Performance was supported by new business wins, pricing, the continued ramp of key client programs and project timing. We are pleased that the Retailer Services segment returned to adjusted EBITDA growth during the quarter. In the first quarter, we lapped a client loss from the prior year period, while the timing of certain project work also provided a benefit. We also saw a reduced impact from channel mix shift, resulting in a lower drag on growth in the quarter. Additionally, we expect the combination of new projects, new service lines and new clients onboarded during the first quarter to support overall growth in 2026 with year-over-year comparison factors affecting the quarterly cadence.

Our focus remains on execution, staffing alignment and operational discipline to convert pipeline strength into more consistent earnings. We are encouraged by the current pipeline momentum. First quarter shared service costs were lower year-over-year, reflecting reduced labor and professional services spend. We expect shared services costs to be stable in 2026 versus the prior year, even as we continue investing in growth and transformation with operating efficiencies helping to fund those investments. Moving to the balance sheet and liquidity. We ended the quarter with $144 million in cash, down from the fourth quarter as we utilize our strong cash position to reduce debt, but up from $121 million in the prior year period, reflecting disciplined capital management.

As mentioned on our last earnings call, we completed an extension of our debt maturities to 2030 during the first quarter, improving our liquidity profile and overall financial flexibility. We also now have a largely fixed and hedged rate structure. At quarter end, our net leverage ratio was 4.2x adjusted EBITDA, down from 4.4x at the end of the fourth quarter, and we expect to end the year around this level. We are executing against a clear plan to further reduce leverage and achieve our long-term target of 3.5x or below. Turning to cash flow and working capital.

Cash generation remains a core strength of the business, and we continue to prioritize it through disciplined cost management, lower restructuring costs and a focus on working capital improvements. DSO increased slightly in the first quarter and is expected to remain elevated over the next few months, primarily due to the temporary impact of ongoing systems implementations and upgrades, including the final phase of our SAP implementation, which is going live this week. We expect disciplined management of DSO as the year progresses. While it will remain elevated midyear, we expect year-end levels to be below the prior year, supporting strong full year cash flow generation.

Adjusted unlevered free cash flow was $74 million in the quarter with a conversion rate of 110%. Restructuring costs were lower in the first quarter, and we continue to expect full year restructuring costs to be approximately half of the prior year level. Finally, turning to our outlook. We are encouraged by our first quarter results; we are maintaining a prudent outlook in light of ongoing macro uncertainty and unfavorable margin mix shift resulting from strong growth in lower-margin business segments. Additionally, a portion of the outperformance in the quarter reflects timing-related benefits that may normalize over the balance of the year.

As Dave mentioned, we are reiterating our prior 2026 guidance, including flat to low single-digit revenue growth, adjusted EBITDA flat to down mid-single digits, adjusted unlevered free cash flow of $250 million to $275 million and net free cash flow conversion of approximately 25% of adjusted EBITDA, excluding incremental costs related to our debt extension. From a cadence perspective, we now expect the first half to represent in the low 40% range of full year adjusted EBITDA. Key factors influencing our outlook include labor and benefit costs, mix dynamics and our ability to convert pipeline into revenue, particularly within Branded Services. Overall, we remain focused on execution, cost discipline and positioning the business for consistent and sustainable performance.

Thank you for your time. I will now turn it back over to Dave.

David Peacock: Thanks, Chris. The first quarter reflected solid progress against our strategic priorities with strong performance in Experiential Services, improving results in Retailer Services and disciplined execution across the business. Looking ahead, we believe our growth and productivity initiatives, including our centralized labor model, technology transformation and AI investments position us well to navigate the current environment. At the same time, we are building on this momentum while taking the necessary actions to stabilize Branded Services. We remain focused on executing our strategy and generating strong cash flow over time as we position advantage for long-term profitable growth.

Unknown Executive: I want to thank everybody for joining, and we look forward to connecting with this group next quarter.

Operator: Thank you. we'll now begin the Q&A session. [Operator Instructions] And your first question comes from the line of Greg Parrish with Morgan Stanley.

Gregory Parrish: Dave, you mentioned opportunity to expand beyond grocery retail. I think you said you're in active discussions with a few nonfood retailers. Can you give us maybe some flavor there? I mean, what verticals are we talking about? And then, I mean, I guess, what was different about these markets historically? And then why are you able to attack them today? And then I mean, do you think this might be a contributor going into 2027?

David Peacock: Yes. Thanks for the question. So I'd say, one, if you think about our business over the last several years, it evolved, right? I mean we acquired Daymon, which significantly changed our business in 2018, integrated that business and then COVID hit. And that had a lot of impacts on our business from the Experiential business all the kind of drying up and the grocery headquarter business really taking off. And then you have been the reverse of that. So I think we were so focused on managing through a lot of uncertainty and change that we didn't have the time to really focus on these other retailers, number one.

Number two, I think you're seeing what we've now known as a business that was really began and focused on grocery retail to kind of lift our eyes up and see that a lot of the same impacts are affecting other retailers. We've had business with other but we feel there's opportunity to do more. If you think about what they deal with as far as labor shortages and the augmented labor that we provide for episodic tasks in store is one example. And Supply Chain as a Service within our branded segment has an opportunity to help retailers with either slower-moving items or what we kind of call limited time specials, what have you.

So it's very early process, and we're having good dialogue and probably a much higher level of willingness to explore opportunities, but it will take some time because we're cultivating those relationships as we speak.

Christopher Growe: Can I add to that, Greg, that just one consideration here would be that this is actually occurring across each of the segments. So Dave talked about Supply Chain as a Service, which is something we have in our Branded Services segment, but we're seeing this opportunity in Retailer and Experiential as well to move beyond the typical grocery store client and customer that we have across our business.

Gregory Parrish: Yes. Okay. That's very helpful. And then maybe as a follow-up, I just want to dive into Experiential a little bit. You had great growth there for years and maybe slowed a little bit and then now you've just sort of exploded here. Maybe just help us unpack this. I mean is a lot of it -- all that HR system work you did last year? Is it that? A lot of the work that you do is just one big Retailer. So is this -- are you just doing more work in store than you used to? And then we're going at a 20% clip here. So how do we think about the rest of the year in Experiential?

David Peacock: Well, I'd say a couple of things. And let's go back because I think sometimes because we do these quarterly, we forget maybe what happened a year ago. In the first quarter last year, we talked pretty openly that we had some issues on just the hiring side, right, and supplying labor to our business. And that had a little more of a profound impact on the Experiential segment. So we are lapping that, which contributed to the kind of significant lift you saw this quarter. And then obviously, as we're able to supply labor as we were able -- as we did this quarter, you just get better fixed cost coverage that improves your margins.

And I would argue our labor readiness has improved, meaning both the caliber training and just readiness of the labor force that comes in is better because of a lot of the initiatives that our workforce operations team has embarked upon a year ago. So that is built to sustain a pretty robust growth rate for the Experiential segment, our Retailer segment where we've got our SAS division that does resets and remodels and then even within our branded segment where you've got our branded merchandising. It's an important part of our business and one that there's increasing demand for. So I really think it's those things.

It's a lot of initiatives around training, hiring, get -- shortening the time in which people from when they're hired to when they actually start is another thing that we've been focused on. And what that does is leads to higher retention rates because you have to remember when you hire an hourly worker, they really need the job right away typically. And when it gets started right away. So we've been focused on that as well as improving the employee experience.

Christopher Growe: Greg, I'll just add a couple of points on to Dave's perspective there. Dave mentioned the easier comparison, but we had really strong 2-year growth as well in that business. And we've been tracking at, call it, that 30-plus percent incremental margin, and you saw about that same level this quarter. And when you have nearly 20%, call it, 19.5% execution -- I'm sorry, demand growth and then you have execution accelerate sequentially, those are the things that lead to not just the growth overall, but in the strong margin performance as well. I also want to note, though, that we've seen an expansion with -- we've added some new customers there. So it goes beyond just the core business.

We've actually had some new customers come in as well, which I think is just an encouraging sign for the continuation. But we -- just one final comment. We said in the release -- I'm sorry, I think in the script would be that we do expect solid revenue growth there this year. We expect EBITDA to be mostly in line with the revenue growth. So this is an area that we're investing in. We see the opportunity for very strong incremental returns on that investment. So just be aware that as the year goes on, we want to try to invest back here as well to support the growth going forward.

Operator: Your next question comes from the line of Luke Morison with Canaccord.

Lucas Morison: So maybe we can just start on some of the -- just double-clicking on some of the efficiency benefits you're seeing from the SAP and the Oracle and the Workday implementation. It sounds like we're finally at the point where that's starting to really bear fruit and be more fully realized. Maybe you can just speak to sort of like the timing and the cadence of how that's going to flow into the model. I know you said we're going to see most of it in 2027, but maybe just frame like when we can expect to see that and then also just the magnitude of that? Like are we talking tens of basis points of margin uplift?

Are we talking hundreds? Just help us think through that.

Christopher Growe: Yes. I think this is Chris Growe, obviously, and I'll have Dave, I'm sure, follow my comments here. But this is -- so we talk about this transformation phase for the company largely being completed by the end of this year. And just to be sure, and we said this in our script, we are going live with another instance of SAP today. So it will be our last kind of major business going on to SAP. And there's always going to be refinements and work to that going forward. But I want to just give you a perspective that we're not done yet. We still are investing.

There still are some -- a heavy amount of work from our teams to get this over the line, but we've really been in a good place on that. Oracle is in place and then Workday goes in place next year. So I just want to be sure I level set us on kind of where we are today. And I think therefore, we made a comment that '27 is when a lot of the efficiencies occur. The groundwork for all that's happening right now. So meaning that we're not -- there's not just the systems being in place, but all the work to now really harness the value of these systems. There is AI built into these systems.

There's efficiencies that come from having all of our -- I'll call it the better data integrity across our business. We're really utilizing the data lake. I know that's a word you've heard us talk about. But in reality, that's going to lead to significant efficiency and again, integrity in the way we manage the data. I think the key you're going to see here is efficiency across the business and the performance of -- in the value of the margin of the business, no doubt, and I'm not going to quantify that for you, but that should be beneficial, especially in '27. And then we also talked about, for example, DSO.

So like our cash flow benefits coming from this should be quite significant as well. So I think that's the way I would look at it. Again, I can't give you a number necessarily, but look at that to be more of a '27 opportunity, and it goes beyond just the margin performance, but also the cash flow.

David Peacock: Yes. And I'm going to pile on. We're really excited about what Workday can mean to our business. I mean when you've got almost 70,000 folks and 70 million labor hours, I've seen in a smaller setting when I worked at the regional grocer, what Workday can do as far as employee experience, employee engagement and just ease of operation and actually enhancement around training. I mean you can't underemphasize how important training is to delivering a superior both client experience, but customer experience for our clients.

But right now, we're seeing a lot of benefits, as Chris said, with the data lake and cloud migration that we went through that's enabling us to leverage machine learning and AI, and I know that's a buzz term right now, but a little more profoundly in our business. And some of the cases are in our workforce operations where it's helping us streamline the hiring process, and we're working on projects right now that are breaking down the process for that time between when you're hired and when you start with us. And a lot of companies have gone through this. They're in the high-volume labor businesses.

But it's exciting to see because when you think about large language models, this type of volume of data and then the positive impact it can have with employee experience retention, hopefully lowering hiring costs over time. We're seeing some of the seeds of that, but we're excited about where that can go in the future.

Lucas Morison: Yes. Super helpful. And then maybe just a follow-up, double-clicking on Pulse and Instacart. Those continue to be highlighted. They continue to be topics of conversation. Maybe just help us think about like at this point, are you seeing them being cited in new business wins? Are they generating meaningful revenue or value for customers at this stage? Are they still kind of in the investment or ramping phase? Just help us think through that.

David Peacock: Yes, it's more in the ramping phase. We -- our partnership with Instacart, and we'll acknowledge them for a great first quarter we saw today, is early stages, and we've expanded our pilot. The pilot has been successful in what we were trying to accomplish as it relates to a more kind of real-time signal-based processes in our merchandising businesses. And the data efficacy that we get and that transference of data between the 2 companies has been very successful. So we're bullish on what that can mean. And I think we are able to provide value to each other and to the benefit of our clients and customers.

So early days, and we're not sharing details because the pilot, I could say, is so early, but as it expands, and we are finding a lot of client interest and willingness to join us in the journey of testing these new capabilities. But I think you'll see more of the benefits of that in 2027.

Operator: There are no further questions at this time. I will now turn the call back over to Dave Peacock for closing comments.

David Peacock: Thank you. We appreciate everybody joining the call. We look forward to our second quarter call later this summer, and have a good day. Appreciate it.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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