Executive Summary

Q3 2025 was resilient but mixed: revenue grew 8% YoY to $365.4M, slightly above consensus, while adjusted EPS of $0.31 was essentially in line; margins contracted on timing, pricing, and mix headwinds . Revenue beat: $365.4M vs $363.7M estimate*; EPS in line: $0.31 vs $0.312 estimate* (rounding) (S&P Global) .
Key headwinds were temporary: an IAS procedural accounting change (≈$7M revenue, ≈$5M EBIT timing shift) and a QBE commission reset ahead of reciprocal (BRIE) migration; ex these, organic growth would have been 9–10% in Q3 .
Management guided Q4 revenue to $345–$355M, adj. EBITDA $68–$73M, and adj. EPS $0.28–$0.32; 2026 framework: revenue $1.66–$1.70B, high-single-digit organic growth, adj. EBITDA $380–$400M, adj. EPS $1.95–$2.10 .
Capital catalysts: planned authorization of up to $200M buyback once net leverage is comfortably <4x; Term Loan B repriced (-50 bps spread; ≈$5M annual interest savings) . The 3B/30 “Catalyst” transformation targets cumulative $50M savings by 2028 (run-rate $40M) with ~$40M cumulative charges; savings begin modestly in 2026 .

What Went Well and What Went Wrong

What Went Well
- Revenue and cash: Total revenue +8% YoY to $365.4M; adjusted free cash flow +26% YoY to $41.8M on working capital normalization .
- Segment strength and embedded momentum: UCTS organic growth +16% (multifamily +16%; commercial umbrella +15%); embedded mortgage/real estate platform added 3 new partners (10 live) with conversions 3.5x non-digital channels .
- Strategic and balance sheet actions: Net leverage ~4.1x (tracking <4x by YE); share repurchases to be added after <4x; Term Loan B repriced (-50 bps) . CEO: “Our pipeline…well into 2026…positioning us as the leading embedded personal lines distribution platform” .
What Went Wrong
- Margin pressure: Adjusted EBITDA flat YoY at $72.5M and margin fell ~170 bps to 19.8% (21.5% LY) on mix, timing and rate/exposure headwinds .
- IAS and MIS softness: IAS organic was flat; MIS slightly negative, with Medicare attrition and the QBE commission reset dragging results .
- Macro-pricing headwinds: Renewal premium change (RPC) -5.7% (floor going forward), reflecting client caution and coastal property pricing; EB headwinds (~800 bps) and P&C (~280 bps) within IAS .

Financial Results

Overall performance and trend

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$413.405	$378.811	$365.389
GAAP Diluted EPS	$0.20	$(0.05)	$(0.27)
Adjusted Diluted EPS	$0.65	$0.42	$0.31
Adjusted EBITDA ($M)	$113.795	$85.512	$72.520
Adjusted EBITDA Margin	27.5%	22.6%	19.8%
Net Income Margin	6%	(1)%	(8)%

Vs consensus

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Estimate ($M)*	$417.577	$375.020	$363.699
Revenue Actual ($M)	$413.405	$378.811	$365.389
Primary EPS Estimate ($)*	$0.648	$0.416	$0.312
Primary EPS Actual ($)	$0.65	$0.42	$0.31

Q3: Revenue beat by ~0.5% (actual $365.389M vs $363.699M estimate*), EPS essentially in line (actual $0.31 vs $0.312 estimate*) .
Q2: Both revenue and EPS beat modestly vs estimates* .
Q1: EPS beat and revenue slight miss vs estimates* .
Note: *Values retrieved from S&P Global.

Selected KPIs

KPI	Q3 2025	Comment
Organic Revenue Growth	5%	Would have been 9–10% adjusting for timing/QBE effects .
Adjusted Free Cash Flow ($M)	$41.8	+26% YoY on working capital normalization .
Net Cash from Operations ($M)	$41.0
Net Leverage	~4.1x	On track to ≤4x by YE .
Sales Velocity (IAS)	20% (YTD 19%)	Top-decile vs industry .

Segment snapshot (organic growth YoY, Q3)

Segment	Organic Growth
Insurance Advisory Solutions (IAS)	~0% (flat)
Underwriting Capacity & Technology Solutions (UCTS)	16%
Mainstreet Insurance Solutions (MIS)	-2% (slightly negative)

Non-GAAP notes: Adjusted EBITDA and EPS exclude share-based comp, amortization, change in contingent consideration, transaction/integration, severance, transformation costs, and other non-recurring items; see reconciliations in the 8-K -.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q4 2025	n/a	$345–$355	New
Adjusted EBITDA ($M)	Q4 2025	n/a	$68–$73	New
Adjusted Diluted EPS ($)	Q4 2025	n/a	$0.28–$0.32	New
Revenue ($B)	FY 2026	n/a	$1.66–$1.70	Initial framework
Organic Revenue Growth	FY 2026	n/a	High single digits	Initial framework; back-half acceleration
Adjusted EBITDA ($M)	FY 2026	n/a	$380–$400	Initial framework
Adjusted Diluted EPS ($)	FY 2026	n/a	$1.95–$2.10	Initial framework
Share Repurchase Authorization	Post <4x leverage	n/a	Up to $200M	To be authorized when leverage comfortably <4x
Term Loan B Spread	Effective Sept. 2025	n/a	-50 bps (SOFR+250)	≈$5M annual interest savings
3B/30 “Catalyst” Transformation	2025–2028	n/a	~$40M cumulative charges; ~$50M cumulative savings; run-rate $40M by 2028; 2026 savings $3–$5M; 2027 $10–$15M	New program details

Earnings Call Themes & Trends

Topic	Q1 2025	Q2 2025	Q3 2025	Trend
Organic Growth & Margins	OG 10%; adj. EBITDA margin 27.5%	OG 11%; adj. EBITDA margin 22.6%	OG 5% (ex-items 9–10%); adj. EBITDA margin 19.8%	Growth steady ex-temporary items; margins compressed near-term
IAS pricing/exposure (RPC)	—	—	RPC -5.7% (floor); EB ~-800 bps; P&C ~-280 bps	Headwind easing into 2026
Embedded distribution/technology	—	—	10 partners live; conversions 3.5x non-digital; pipeline well into 2026 -	Accelerating
QBE→Reciprocal (BRIE)	—	—	Commission step-down through 4/30/26; AIF fees accrue over time; tailwind from 2H26; AIF via equity method (EBITDA, not revenue)	Transition on track
Capital allocation	—	—	Target buyback up to $200M once <4x; debt repriced (-50 bps)	Improved flexibility
AI/automation (3B/30 Catalyst)	—	—	$40M charges/$50M savings through 2028; run-rate $40M; 2026 save $3–$5M	Efficiency investment underway

Management Commentary

“Adjusting for [timing in IAS and QBE commission reset], total commissions and fees organic revenue growth in Q3 would have been 10%, and total overall organic revenue growth would have been 9%.”
“Our embedded mortgage and real estate business…now at 10 channel partners…we bind a home insurance policy…three and a half times [the] non-digital channels.”
“We anticipate a cumulative transformation charge of approximately $40 million by the end of 2028…projected run rate annualized savings of $40 million by the end of 2028.”
“Once our net leverage is comfortably under 4 times, our board intends to authorize a share buyback plan of up to $200 million…Term Loan B [repriced]…approximately $5 million of annual interest expense savings.”
“For the fourth quarter, we expect revenue of $345–$355 million…Adjusted EBITDA between $68–$73 million and adjusted diluted EPS of $0.28–$0.32…[and] 2026 revenue $1.66–$1.7 billion…Adjusted EBITDA $380–$400 million…EPS $1.95–$2.10.”

Q&A Highlights

IAS dynamics and timing: The IAS procedural accounting change was ≈$7M revenue and ≈$5M EBIT headwind in Q3, with timing reversing next year; RPC -5.7% is likely a floor with improvement into 2026 .
UCTS competition and strategy: Strength is product- and distribution-led; renters product is embedded via property management ERPs, distinct from traditional renters distribution .
Reciprocal migration economics: Commission step-down headwind annualizes by 4/30/26; AIF fees (5% of premium) recognized ratably as policies renew into BRIE; tailwind expected from 2H26; AIF accounted for via equity method (benefits EBITDA, not revenue) .
Capital allocation: Buybacks will be opportunistic after leverage <4x; management prioritizes reinvestment and selective M&A first .
3B/30 savings: Savings guidance is net of reinvestment; emphasis on workforce transformation .

Estimates Context

Q3 2025 results vs S&P Global consensus: Revenue $365.389M vs $363.699M estimate* (beat); Primary EPS $0.31 vs $0.312 estimate* (in line) .
Trajectory: Q2 beat on revenue and EPS; Q1 had an EPS beat and slight revenue miss vs consensus* .
Implications: Given Q4 guidance (mid-single-digit organic; EPS $0.28–$0.32), estimate revisions may be limited near term; 2026 framework (EPS $1.95–$2.10) suggests upward bias to outer-year free cash flow as RPC headwinds ease and BRIE tailwinds emerge .
Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

Near-term setup: Q4 guide brackets consensus-like outcomes; stock catalysts include formal buyback authorization upon leverage <4x and continued FCF inflection from working capital normalization and interest savings .
Margins likely troughing: Mix/timing and RPC headwinds pressured Q3 margins; management sees RPC improving from Q3’s “floor” into 2026; IAS timing reverses in 2026, aiding margins and EBITDA .
Structural growth vectors: UCTS remains strong; embedded distribution is scaling with superior digital conversion (3.5x) and a robust 2026 implementation backlog -.
Reciprocal transition: Commission reset headwinds roll off by 4/30/26; AIF fees ramp thereafter (EBITDA, not revenue), positioning a 2H26 inflection—track state rollout cadence (TX began July 1; CA next) .
Efficiency program: 3B/30 “Catalyst” underpins medium-term operating leverage (net savings beginning 2026; run-rate by 2028), supporting the path to sustained margin expansion .
Capital allocation discipline: Repricing and swaps lower interest expense; buybacks add a third capital deployment lever, but only after <4x leverage threshold is achieved .
Watchlist: Q4 execution vs guide; IAS sales velocity conversion to revenue as timing reverses; BRIE migration/renewal rates; embedded partner adds; RPC trajectory in property and EB; cadence of transformation charges and savings - -.

Appendix: Additional Data

YoY context for Q3 2025 (from press release)

Revenue +8% YoY to $365.4M; adjusted EBITDA ~$72.5M, flat YoY; adjusted EBITDA margin 19.8% vs 21.5% LY; adjusted diluted EPS $0.31, down 6% YoY .
Cash and cash equivalents $89.7M; revolver availability $524M at 9/30/25 .
YTD 2025: Revenue $1.158B (+9%); organic +9%; adjusted EBITDA $271.8M (+9%); adjusted FCF $76.3M (-11%) .

Non-GAAP adjustments and definitions

Adjusted EBITDA/EBITDA margin, adjusted net income, adjusted diluted EPS, organic revenue/organic growth, pro forma measures, and adjusted free cash flow per reconciliations and definitions -.

Baldwin Insurance Group, Inc. (BWIN)·Q3 2025 Earnings Summary