Executive Summary

Q2 delivered broad-based growth ex-Advocacy and strong cash improvement: Net revenue rose 8% YoY to $598M (ex-Advocacy +10% to $560M), adjusted EBITDA increased 8% to $93M (16% margin in PR; 15.5% in slide deck), and adjusted EPS rose 21% YoY to $0.17 .
Management reiterated all FY25 targets (∼8% net revenue growth; $410–$460M adj. EBITDA; >45% FCF conversion; $0.75–$0.88 adj. EPS), citing accelerating H2 growth from new wins, digital transformation momentum, and cost actions .
Cash flow and leverage inflected: YTD cash from operations reached $55M vs. $(68)M) last year (+$122M), and net leverage improved to 3.18x; Q2 buybacks totaled ~9.6M shares for ~$48M at ~$4.95/share .
Key catalysts: ex-Advocacy momentum (+10% NR), Digital Transformation strength (tech +20%, healthcare +36%), and AI/product rollouts (The Machine, content supply chain, Marketing Cloud platform) expected to drive H2 margin and growth; advocacy mix and TMC investment remain profit headwinds near term .

What Went Well and What Went Wrong

What Went Well
- ex-Advocacy growth and margin mix: Net revenue ex-Advocacy +10% to $560M; ex-Advocacy adj. EBITDA +23% to $80M, with underlying second-quarter margin at ~18.5% excluding $18M cloud investments .
- Digital Transformation and Marketing Cloud traction: Digital Transformation net revenue grew 12% ex-Advocacy; Marketing Cloud net revenue +28% YoY with Harris Quest up >180% (100% organic) after product enhancements .
- New business and client concentration uplift: Net new business of $117M (LTM $451M), Top 25 client net revenue up 26% YoY to >$175M; “pipeline is robust and growing” .
- Management quote: “We expect to achieve our full-year guidance… as growth accelerates, margins expand, leverage declines, and cash flows continue to strengthen” .
What Went Wrong
- Advocacy remains a drag: Advocacy net revenue fell 14% YoY to $38M, and Advocacy adj. EBITDA declined 38% YoY to $13M; overall organic net revenue grew just 0.6% (U.S. −0.2%; U.K. −7.7%) .
- TMC profitability headwinds: The Marketing Cloud segment posted negative margin (−7.5%) and a steep adj. EBITDA decline (−79.6% YoY) given stepped-up investments .
- Media growth modest and subscale vs peers: Performance Media & Data net revenue +1% with adj. EBITDA down 15.9%; management leaning on technology (ID Graph, Content Supply Chain, The Machine) to improve competitiveness rather than scale .
- Analyst concern: H2 acceleration relies on conversion of pipeline and seasonal spend; management pointed to historical H1 churn/H2 ramp and current pipeline health .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($M)	$671.168	$651.740	$706.818
Net Revenue ($M)	$554.392	$564.187	$598.129
Net Revenue ex-Advocacy ($M)	$510	$535	$560
Adjusted EBITDA ($M)	$86.103	$80.582	$92.855
Adjusted EBITDA Margin % (on net revenue)	15.5%	14.3%	15.5% (PR rounds to 16%)
GAAP Diluted EPS	$(0.03)	$(0.04)	$(0.02)
Adjusted Diluted EPS	$0.14	$0.12	$0.17

Note: PR cites Q2 margin at 16% vs. 15.5% in slide deck due to rounding .

Segment (Network) Net Revenue

Segment	Q2 2024 ($M)	Q2 2025 ($M)
Integrated Agencies Network	$321.870	$344.888
Brand Performance Network	$157.108	$154.868
Communications Network	$72.393	$74.342
All Other	$3.021	$24.031

KPIs and Balance Sheet/Cash

KPI	Q1 2025	Q2 2025
Net New Business ($M)	$130; LTM $446	$117; LTM $451
Net Leverage Ratio	3.3x	3.18x
Available Liquidity ($M)	$388 (Commitment $640; Drawn $375; Cash $138)	$539 (Commitment $750; Drawn $377; Cash $181)
YTD Cash from Operations ($M)	N/A	$54.738 vs $(67.618) prior YTD
Share Repurchases (Q2)	N/A	~9.6M shares for ~$48M at ~$4.95

Guidance Changes

Metric	Period	Previous Guidance (Q1 2025)	Current Guidance (Q2 2025)	Change
Total Net Revenue Growth	FY 2025	~8%	~8%	Maintained
Adjusted EBITDA	FY 2025	$410M–$460M	$410M–$460M	Maintained
Free Cash Flow Conversion	FY 2025	>45%	>45%	Maintained
Adjusted EPS	FY 2025	$0.75–$0.88	$0.75–$0.88	Maintained

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
AI/Technology initiatives	Launched ContextLens; deepened Adobe collaboration on The Machine; SMC growth	Rolled out ID Graph v1 (130M unique emails); AI feature launches; strong SMC growth	The Machine + content supply chain rolling out; fully deploy by early 2026; ~$20M quarterly OpEx; targeted ~15% cost reduction	Accelerating build and deployment
Cash flow/working capital	FY24 CFO driven comp ratio record; strong EBITDA	—	First-ever positive Q2 CFO; +$122M YTD improvement from back-office tech, collections, vendor terms; sustainable	Improving
New business/pipeline	Q4 net new $102M; LTM $382M	Record $130M; LTM $446M	$117M; LTM $451M; pipeline “robust”	Sustained >$100M/qtr momentum
Media offering	—	—	Tech-led upgrade (ID Graph, Machine, content supply chain), target competitiveness vs majors; 75–80% online media mix	Building scale via tech
Government	—	—	First wins; multi-year stability; aiming 10–15% of mix longer term	Emerging growth vector
Regional trends (organic)	4Q: US +12.3%; UK −12.6%; Other +10.2%	1Q: US +1.4%; UK −2.3%; Other +43.6%	2Q: US −0.2%; UK −7.7%; Other +10.1%	Mixed; “Other” strong

Management Commentary

Strategic messages (prepared remarks)
- “We expect to achieve our full-year guidance on all metrics as growth accelerates, margins expand, leverage declines, and cash flows continue to strengthen” .
- Digital Transformation “booming” and AI a tailwind; The Machine and content supply chain to drive ~15% cost reductions when fully deployed by early 2026 .
- ex-Advocacy EBITDA +23% YoY; excluding $18M cloud investment, Q2 margin would have been ~18.5% (300 bps YoY improvement) .
Important quotes
- Mark Penn: “Our top 25 [clients]… generated over $175 million in net revenue… an increase of 26% year-on-year… We are just the right size to adapt to the coming revolution of AI” .
- Frank Lanuto: “We delivered $93 million in adjusted EBITDA… Excluding our cloud investment of $18 million… margin would have been approximately 18.5%” .
- Ryan Greene: “Year to date, we have already executed $20 million in annualized savings, with $7 million flowing through to adjusted EBITDA” .

Q&A Highlights

H2 acceleration confidence: Pattern of H1 churn/H2 ramp; organic growth running ~3 points ahead of last year; new wins ramping into back half .
Cash flow durability: Back-office tech stack, collections, and vendor term renegotiations underpin sustainable cash conversion; targeting >45% FCF conversion .
Media strategy: Focus on technological efficiency (Machine, content supply chain, ID Graph) vs. scale as key competitive lever; some global clients already spending $300–$400M .
Government contracts: Multi-year, larger-size awards add stability; margins “about the same” net of paperwork; pipeline in finals for 3–4 deals .
M&A and spin options: Integration focus in 2H; Marketing Cloud spin “a ways off” until revenue scales roughly 2x with more “hits” (e.g., Harris Quest) .

Estimates Context

Wall Street consensus (S&P Global) for Q2 2025 revenue, EPS, and EBITDA was unavailable in our feed at the time of this analysis; therefore, we cannot characterize beats/misses versus consensus.*
Contextual performance vs trend/guidance: ex-Advocacy net revenue +10% and underlying margin improvement excluding cloud spend support reiterated FY25 outlook; advocacy weakness and TMC investment weighed on reported organic and margins .

*Values retrieved from S&P Global.

Key Takeaways for Investors

Mix improving where it matters: ex-Advocacy +10% with ex-Advocacy EBITDA +23% and underlying margin expansion excluding cloud investments; expect benefits to accelerate as cost-savings initiatives flow through in H2 .
AI/product cycle is an earnings lever: The Machine and content supply chain are moving from pilot to rollout with targeted ~15% cost reductions by early 2026; watch for incremental margin in 2H25/2026 .
Digital Transformation momentum likely persists: Tech (+20%) and healthcare (+36%) client growth drove DT strength; Harris Quest performance validates product roadmap .
Cash/Leverage inflection improves flexibility: YTD CFO +$122M and net leverage at 3.18x create room for opportunistic buybacks/M&A while pursuing guidance .
Near-term watch items: Advocacy softness, TMC profitability (−7.5% margin) and modest Performance Media growth; proof points will be H2 conversion of the >$100M/qtr new business cadence and media tech upgrades .
Tactical setup: With reiterated guidance and H2 seasonal/contract ramp, execution on cost saves and large-client onboarding are key stock catalysts; updates on government contract pipeline could add a new revenue stream .

Appendix: Additional Operating Details

Geographic organic growth (2Q25): U.S. −0.2%, U.K. −7.7%, Other +10.1%; 1H25 organic ex-Advocacy +2.6% .
Segment commentary: Digital Transformation +12% ex-Advocacy; Marketing Cloud +38% ex-Advocacy; Creativity & Communications +8%; Performance Media & Data +1% with investment in tech stack .
Liquidity: $539M available (Revolver commitment $750M, drawn $377M; cash $181M) .
Capital allocation: ~9.6M shares repurchased at ~$4.95/share in Q2; $160M authorization remaining at quarter-end .

All sources: Q2 2025 8-K press release and investor deck ; Q2 2025 earnings call transcript ; Q1 2025 8-K press release & deck ; Q4 2024 8-K press release & deck ; Q2 ancillary press releases on Unreasonable Studios and The Marketing Cloud .

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