Public Policy Q2 Earnings Call Highlights

Public Policy raised its 2026 guidance, now forecasting revenue of $213 million to $216 million and adjusted EBITDA of $48.5 million to $50.5 million, reflecting about 5% organic growth and recent acquisitions. First-half revenue rose 16.3% year over year to $102.3 million, while adjusted EBITDA increased 9.3% to $23.4 million. Government Relations led organic growth with a 6% increase, while Corporate Communications & Public Affairs declined 1% amid a difficult comparison. The company’s balance sheet improved substantially, with net debt falling to $5.2 million from $42.2 million a year earlier, although first-half free cash flow declined because of bonus payments and higher working-capital investment.

Public Policy NASDAQ: PPHC raised its full-year 2026 revenue and adjusted EBITDA outlook after reporting first-half revenue growth, citing organic expansion and contributions from recent acquisitions. For the first six months of 2026, revenue increased 16.3% year over year to $102.3 million, including 4.4% organic growth. Adjusted EBITDA rose 9.3% to $23.4 million, representing a 22.9% margin. Second-quarter revenue was approximately $52.1 million, up 7% from a year earlier, with 3.9% organic growth. Chief Executive Officer Stewart Hall said the company’s first-half performance developed broadly in line with expectations and strengthened as the period progressed. He said the second-quarter adjusted EBITDA margin of 23.5% improved from the first quarter.

Chief Financial Officer Roel Smits said Public Policy now expects full-year revenue of $213 million to $216 million and adjusted EBITDA of $48.5 million to $50.5 million. The outlook implies an adjusted EBITDA margin of 22.5% to 23.5%. The updated outlook assumes approximately 5% organic growth and incorporates the company’s acquisitions of WPI, which closed April 1; Tancredi, which closed July 1; and The Advocacy Partners, a Florida-based firm acquired Aug. 1. Compared with previous guidance, the new range adds roughly $8 million of revenue and $2.5 million of adjusted EBITDA, while raising the projected margin range by 50 basis points, Smits said.

Management said free cash flow is expected to be weighted toward the second half of the year, consistent with the company’s historical pattern. Adjusted free cash flow totaled $4.1 million in the first half, compared with $11.7 million in the prior-year period. Smits attributed the decline to annual staff bonus payments made in the first half and elevated working-capital investment, primarily in accounts receivable.

Public Policy recorded a GAAP net loss of $3.7 million during the second quarter, an improvement of nearly 35% from a year earlier. Hall and Smits pointed to a roughly $30 million annual non-cash share-based compensation charge related to the company’s 2021 London listing as the largest difference between GAAP results and management’s adjusted measures. The charge, associated with a five-year vesting schedule for shares issued to employee owners, is expected to fully amortize at the end of 2026. Management said the expiration should improve reported GAAP profitability beginning in 2027, although non-cash acquisition-related charges will remain.

Second-quarter adjusted EBITDA declined 4.4% year over year, which Smits said reflected a strong year-ago comparison, higher public-company and central-platform costs, and changes in business mix. The company reported that blended segment margin before bonuses was 39.5%, down 50 basis points from the prior year, while holding-company costs rose to 8.2% of revenue from 6%.