REG - Public Policy Hldg - 2025 Q3 Results
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RNS Number : 3281H Public Policy Holding Company, Inc. 13 November 2025
Public Policy Holding Company, Inc.
("PPHC", the "Group" or the "Company")
2025 Q3 Results
PPHC, a leading global strategic communications provider offering a
comprehensive range of advisory services in the areas of government relations,
corporate communications and public affairs, announces that it has filed
financial information related to its unaudited results for the three and nine
months ended 30 September 2025 with the U.S. Securities and Exchange
Commission ("SEC") as part of an amendment to its Form S-1 Registration
Statement.
The financial information filed with the SEC is consistent with the Company's
2025 Q3 Trading Update released on 22 October 2025 and provides additional
supporting detail, which is included below.
Enquiries
Public Policy Holding Company, Inc. +1 (202) 688 0020
Stewart Hall, CEO
Roel Smits, CFO
Stifel (Nominated Adviser & Joint Broker) +44 (0) 20 7710 7600
Fred Walsh, Brough Ransom, Ben Good
Canaccord Genuity (Joint Broker) +44 (0) 20 7523 8000
Simon Bridges, Andrew Potts
Burson Buchanan (Media Enquiries) +44 (0) 20 7466 5000
pphc@buchanan.uk.com (mailto:pphc@buchanan.uk.com)
Chris Lane, Toto Berger, Jesse McNab
Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
September 30, 2025 December 31, 2024
(Unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $ 11,145 $ 14,536
Contract receivables, net 25,124 18,285
Notes receivable - related parties, current portion 350 863
Income taxes receivable 882 3,185
Prepaid post-combination compensation, current portion 6,039 6,070
Prepaid expenses and other current assets 5,672 2,726
Total current assets 49,211 45,665
Property and equipment at cost, less accumulated depreciation 856 751
Notes receivable - related parties, long term 1,550 1,050
Operating lease right of use asset 17,103 18,428
Goodwill 66,690 64,308
Other intangible assets, net of accumulated amortization 41,641 32,144
Deferred income tax asset 22,506 11,038
Prepaid post-combination compensation, long term 4,751 888
Other long-term assets 276 189
TOTAL ASSETS $ 204,584 $ 174,460
LIABILITIES AND EQUITY:
Current liabilities:
Accounts payable and accrued expenses 21,912 20,044
Amounts owed to related parties 1,017 556
Deferred revenue 4,931 3,150
Operating lease liability, current portion 5,500 4,827
Contingent consideration, current portion 8,272 2,093
Other liability, current portion 602 1,135
Notes payable, current portion, net 8,177 6,031
Total current liabilities 50,411 37,836
Notes payable, long term, net 41,462 26,014
Contingent consideration, long term 9,777 8,803
Other liability, long term 7,013 3,745
Operating lease liability, long term 14,408 16,808
Total liabilities $ 123,072 $ 93,206
Stockholders' equity:
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 25,134,706 23 23
and 24,017,597 shares issued and outstanding as of September 30, 2025, and
December 31, 2024, respectively
Additional paid-in capital 226,929 197,489
Accumulated deficit (146,621) (115,721)
Accumulated other comprehensive income (loss) 1,181 (536)
Total stockholders' equity 81,513 81,254
TOTAL LIABILITIES AND EQUITY $ 204,584 $ 174,460
The accompanying notes to the condensed consolidated financial statements are
an integral part of these statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Amounts in thousands, except share and per share data)
(Unaudited)
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Revenue $ 48,787 $ 39,415 $ 136,686 $ 110,549
Operating expenses:
Salaries and other personnel costs 41,940 33,537 114,605 92,421
Office and other direct costs 1,918 1,492 5,204 4,227
Cost of services 43,858 35,029 119,808 96,647
Salaries, general and administrative 6,882 8,412 23,908 21,088
Mergers and acquisitions expense 130 97 406 1,655
Depreciation and amortization expense 1,551 1,189 4,319 3,047
Change in fair value of contingent consideration 2,270 (498) 4,946 1,766
Total operating expenses 54,691 44,230 153,387 124,202
Loss from operations (5,904) (4,815) (16,701) (13,654)
Gain on bargain purchase - - - 2,464
Interest income 27 42 89 140
Interest expense (981) (751) (2,481) (1,348)
Other expense (7) - (30) -
Net loss before income taxes (6,866) (5,524) (19,124) (12,399)
Income tax expense (574) (1,187) (4,662) (4,894)
Net loss $ (7,440) $ (6,711) $ (23,786) $ (17,292)
Net loss per share attributable to common stockholders, basic and diluted $ (0.45) $ (0.67) $ (1.51) $ (1.89)
Basic and diluted 17,403,040 13,654,190 17,165,104 13,126,771
Net loss $ (7,440) $ (6,711) $ (23,786) $ (17,292)
Foreign currency translation gain (loss) (524) 1,265 1,717 1,003
Total comprehensive loss $ (7,965) $ (5,446) $ (22,069) $ (16,290)
The accompanying notes to the condensed consolidated financial statements are
an integral part of these statements
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Amounts in thousands, except share and per share data)
(Unaudited)
Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity
Shares Amount
(Revised)
Balance at December 31, 2024 24,017,597 $ 23 $ 197,489 $ (115,721) $ (536) $ 81,254
Long term incentive program charges - - 1,179 - - 1,179
Vesting of stock issued from Multistate acquisition - - 1 (1) - -
Repayment of note receivable by Alpine Group (63,356) - (532) - - (532)
Post-combination compensation charge-shares - - 605 - - 605
Share-based accounting charge - - 7,444 - - 7,444
Foreign currency translation gain - - - - 721 721
Net loss - - - (10,615) - (10,615)
Balance at March 31, 2025 23,954,241 23 206,185 (126,337) 186 80,056
Long term incentive program charges - - 1,148 - - 1,148
Issuance of unvested legally outstanding shares 719,547 - - - - -
Forfeiture of unvested restricted stock (2,630) - - - - -
Dividends - - - (5,765) - (5,765)
Vesting of restricted stock awards - - 1 (1) - -
Vesting of restricted stock units 100,333 - - (1) - -
Issuance of common stock for acquisition 134,915 - 1,190 - - 1,190
Post-combination compensation charge-shares - - 893 - - 893
Issuance of common stock for settlement of other liability - - 342 - - 342
Share-based accounting charge - - 7,394 - - 7,394
Foreign currency translation gain - - - - 1,520 1,520
Net loss - - - (5,730) - (5,730)
Balance at June 30, 2025 24,906,406 23 217,153 (137,834) 1,706 81,048
Long term incentive program charges - - 1,626 - - 1,626
Dividends - - - (1,347) - (1,347)
Vesting of restricted stock units 185,471 - - - - -
Issuance of common stock for acquisition 42,829 - 94 - - 95
Post-combination compensation charge-shares - - 662 - - 662
Share-based accounting charge - - 7,394 - - 7,394
Foreign currency translation loss - - - - (524) (524)
Net loss - - - (7,440) - (7,440)
Balance at September 30, 2025 25,134,706 $ 23 $ 226,929 $ (146,621) $ 1,181 $ 81,513
The accompanying notes to the condensed consolidated financial statements are
an integral part of these statements
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Amounts in thousands, except share and per share data)
(Unaudited)
Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive (Loss) Total Stockholders' Equity
Shares Amount
(Revised)
Balance at December 31, 2023 23,054,393 $ 22 $ 156,972 $ (74,925) $ - $ 82,069
Long term incentive program charges - - 597 - - 597
Issuance of unvested legally outstanding shares 34,019 - - - - -
Vesting of stock issued from Multistate acquisition - - 1 (1) - -
Post-combination compensation charge-shares - - 424 - - 424
Share-based accounting charge - - 7,597 - - 7,597
Net loss - - - (5,416) - (5,416)
Balance at March 31, 2024 23,088,412 22 165,591 (80,342) - 85,271
Long term incentive program charges - - 690 - - 690
Issuance of unvested legally outstanding shares 499,701 - - - - -
Dividends - - - (11,202) - (11,202)
Vesting of restricted stock units 98,336 - - - - -
Issuance of common stock for acquisition 179,528 - 1,443 - - 1,443
Post-combination compensation charge-shares - - 1,178 - - 1,178
Common stock issued to Multistate as settlement of contingent consideration 88,287 - 691 - - 691
Share-based accounting charge - - 7,597 - - 7,597
Foreign currency translation loss - - - - (262) (262)
Net loss - - - (5,166) - (5,166)
Balance at June 30, 2024 23,954,264 23 177,190 (96,710) (262) 80,240
Long term incentive program charges - - 1,378 - - 1,378
Vesting of restricted stock units 20,000 - - - - -
Post-combination compensation charge-shares - - (15) - - (15)
Share-based accounting charge - - 8,659 - - 8,659
Foreign currency translation gain - - - - 1,265 1,265
Net loss - - - (6,711) - (6,711)
Balance at September 30, 2024 23,974,264 $ 23 $ 187,211 $ (103,421) $ 1,003 $ 84,816
The accompanying notes to the condensed consolidated financial statements are
an integral part of these statements
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Nine months ended September 30,
2025 2024
Cash Flows from Operating Activities:
Net loss $ (23,786) $ (17,292)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation 146 80
Amortization expense - intangibles 4,486 4,451
Amortization of right of use assets 3,397 3,020
Amortization of prepaid post-combination compensation 6,474 3,886
Accretion of other liability 4,069 2,118
Amortization of debt discount 164 128
Provision for deferred income taxes (1,609) (241)
Share-based accounting charge 22,232 23,853
Stock-based compensation 4,623 2,962
Post-combination compensation charge-shares 2,160 1,078
Change in fair value of contingent consideration 4,950 1,814
Gain on bargain purchase - (2,464)
Credit losses on accounts receivable 2,349 656
(Increase) decrease in:
Accounts receivable (8,321) (4,640)
Prepaid post-combination expense (10,306) (4,498)
Prepaid expenses and other assets (1,097) 2,187
Increase (decrease) in:
Accounts payable and accrued expenses 342 (6,324)
Income taxes payable and receivable 2,326 (3,873)
Deferred revenue 1,765 2,450
Contingent considerations (3) -
Operating lease liability (3,797) (3,055)
Other liabilities (996) -
Transactions with members and related parties 461 1,593
Net Cash Provided by Operating Activities 10,030 7,889
Cash Flows from Investing Activities:
Purchases of property and equipment (222) (29)
Proceeds issued for notes receivable - related parties (500) -
Cash paid for acquisitions (20,991) (20,200)
Net Cash Used in Investing Activities (21,713) (20,229)
Cash Flows from Financing Activities:
Proceeds from notes payable 24,000 25,000
Payment of debt issuance costs (115) (806)
Payment of deferred equity offering costs (1,472) -
Principal payment of note payable (6,455) (2,355)
Payment of contingent considerations (726) (1,018)
Dividends paid (7,112) (11,202)
Net Cash Provided by Financing Activities 8,120 9,619
Effect of foreign exchange rate changes on cash and cash equivalents 172 35
Net Decrease in Cash and Cash Equivalents (3,391) (2,686)
Cash and Cash Equivalents as of Beginning of Period 14,536 15,396
Cash and Cash Equivalents at the End of Period $ 11,145 $ 12,710
The accompanying notes to the condensed consolidated financial statements are
an integral part of these statements
Nine months ended September 30,
2025 2024
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,304 $ 519
Cash paid for income taxes 8,060 4,403
Common stock received for repayment of note receivable with Alpine Group 532 -
Right of use assets obtained with lease liabilities 2,071 1,021
Contingent consideration issued for acquisitions 2,871 3,781
Common stock issued for acquisitions 1,281 1,443
Stock issued for settlement of other liability 342 -
Accrued deferred equity offering costs 298 -
Stock issued for settlement of contingent consideration - 691
The accompanying notes to the condensed consolidated financial statements are
an integral part of these statements
PUBLIC POLICY HOLDING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
(Unaudited)
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Public Policy Holding Company, Inc. ("PPHC-Inc.") was incorporated on February
4, 2021. From PPHC-Inc.'s incorporation until December 10, 2021 (the
"Conversion Date"), all of the issued and outstanding shares of stock of
PPHC-Inc. were owned by Public Policy Holding Company, LLC ("PPHC-LLC"), which
(i) was organized as a Delaware limited liability company on July 1, 2014, and
(ii) owned certain wholly-owned operating subsidiaries, all organized as
Delaware limited liability companies (the "Subsidiaries," and collectively
with PPHC-Inc., the "Company"). On the Conversion Date, PPHC-LLC contributed
and assigned substantially all of its assets and liabilities (including all of
the Subsidiaries, but excluding certain specified assets and liabilities) to
PPHC-Inc. in exchange for the issuance by PPHC-Inc. of 20,000,000 shares (the
"Contribution Shares") of Common Stock, par value $0.001 per share ("Common
Stock") of PPHC-Inc. Pursuant to a formula approved by the Executive Board and
General Board of PPHC-LLC (the "Waterfall"), PPHC-LLC then liquidated and
distributed the Contribution Shares to each of PPHC-LLC's owners who (other
than The Alpine Group, Inc.), in turn, distributed such shares to their
respective owners in accordance with the Waterfall (collectively, the "Company
Conversion").
The Company provides consulting services in the areas of Government Relations
Consulting, Corporate Communications & Public Affairs Consulting and
Compliance and Insights Services, primarily in the US. With the acquisition of
Pagefield Communications Limited ("Pagefield") and TrailRunner International
("TrailRunner"), the Company has expanded its capabilities to the United
Kingdom and parts of Asia. As of September 30, 2025, the Company conducts its
business through 12 individual member companies.
The unaudited interim condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC") for interim financial reporting. These condensed
consolidated financial statements are unaudited and, in the opinion of
management, include all adjustments (consisting only of normal recurring
adjustments and accruals) necessary for a fair statement of the results for
the periods presented in accordance with accounting principles generally
accepted in the United States of America ("GAAP"). The year-end condensed
consolidated balance sheet data was derived from our audited consolidated
financial statements but does not include all disclosures required by GAAP.
Operating results for the nine months ended September 30, 2025 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2025. Certain information and footnote disclosures
normally included in the annual consolidated financial statements prepared in
accordance with GAAP have been omitted in accordance with the SEC's rules and
regulations for interim reporting. Our financial position, results of
operations and cash flows are presented in United States Dollars ("USD" or "US
Dollars").
Reverse Stock Split
On September 29, 2025 , the Company's Board of Directors approved an amendment
to the Company's amended and restated certificate of incorporation to effect a
reverse stock split of the Company's Common Stock, including all unvested
Common Stock, at a ratio of one share for every five shares (the "Reverse
Stock Split"). The Reverse Stock Split was effective on October 2, 2025. The
authorized number of shares, and par value per share, of Common Stock are not
affected by the Reverse Stock Split. Under the terms of the Reverse Stock
Split, the number of shares awarded, issuable upon exercise of options awarded
or issued or issuable pursuant to other equity awards under the Company's
existing omnibus incentive plan, and the exercise price of such options, have
been adjusted on a pro rata basis. For all periods presented, all references
to shares, options to purchase common stock, share amounts, per share amount,
and related information contained in the consolidated financial statements
have been retrospectively adjusted to reflect the Reverse Stock Split.
Use of Estimates
The preparation of consolidated financial statements in accordance with GAAP
requires the Company's management to make estimates and assumptions relating
to the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements, and the reported amounts of revenue and expenses during the
reporting periods. Significant items subject to such estimates and assumptions
include, but not limited to, the allowance for credit losses, useful lives of
intangible assets, recoverability of the carrying amounts of intangible
assets, shared-based compensation, business acquisitions, valuation of
contingent considerations, post-combination liabilities and income tax
provision. These estimates are often based on complex judgments and
assumptions that management believes to be reasonable but are inherently
uncertain and unpredictable. Actual results could differ from these estimates.
Certain monetary amounts, percentages and other figures included elsewhere in
this report have been subject to rounding adjustments. Accordingly, figures
shown as totals in certain tables or charts may not be the arithmetic
aggregation of the figures that precede them, and figures expressed as
percentages in the text may not total 100% or, as applicable, when aggregated
may not be the arithmetic aggregation of the percentages that precede them.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared by PPHC-Inc. in accordance with GAAP and applicable rules and
regulations of the Securities and Exchange Commission (the "SEC") regarding
interim financial reporting. Certain information and note disclosures normally
included in annual financial statements prepared in accordance with GAAP have
been condensed or omitted pursuant to those rules and regulations.
The accompanying unaudited consolidated financial statements reflect all
normal recurring adjustments necessary to present fairly the financial
position, results of operations, and cash flows for the interim periods ended
September 30, 2025 and 2024, but are not necessarily indicative of the
results of operations to be anticipated for any future interim periods or for
the full year ending December 31, 2025.
The consolidated balance sheet as of December 31, 2024 included herein was
derived from the audited financial statements as of that date.
The consolidated financial statements include the financial statements of the
Company and its subsidiaries. All significant transactions among the Company
and its subsidiaries have been eliminated upon consolidation.
Significant Accounting Policies
The Company's significant accounting policies are disclosed in the
consolidated financial statements for the year ended December 31, 2024. There
were no material changes or developments during the reporting period to the
Company's significant accounting policies with the exception of the following
development:
Deferred Offering Costs: Costs directly attributable to the Company's offering
of its equity securities are deferred as prepaid expenses and other current
assets. These costs primarily represent specific incremental legal,
accounting, investment banking and consulting costs directly related to the
Company's efforts to raise capital through a public sale of its Common Stock.
Future costs will be deferred until the completion of the offering, at which
time deferred costs will be reclassified to additional paid-in capital as a
reduction of the offering proceeds. At September 30, 2025, the Company had
$2.1 million of deferred offering costs, included within prepaid expenses and
other current assets in the accompanying condensed consolidated balance sheet.
At December 31, 2024, the balance of deferred offering costs was not
material.
NOTE 2. CORRECTION OF ERROR IN PREVIOUSLY ISSUED FINANCIAL STATEMENTS
During 2025, the Company determined that previously filed interim and annual
financial statements had an immaterial error in its earnings per share
calculation resulting from the inclusion of certain unvested Pre-UK IPO shares
in the basic earnings per share calculation and the Company was also not
appropriately applying the two-class method to calculate Basic and Diluted
earnings per share in accordance with ASC 260, Earnings Per Share. As a
result, earnings per share calculations have been revised for the year ended
December 31, 2024. The application of the two-class method results in an
adjustment to the numerator (net loss attributable to common stockholders) for
dividends paid to unvested participating stockholders.
The Company assessed the materiality of this revision and concluded that this
error correction in its Consolidated Statements of Operations and
Comprehensive Loss, Consolidated Statements of Stockholders' Equity and Note 1
- Organization and Significant Accounting Policies (Basic and diluted earnings
(loss) per share) is not material to any previously presented financial
statements based upon overall considerations of both quantitative and
qualitative factors. In concluding this error was immaterial, the Company
considered factors such as the capital structure of the Company, the impact to
key performance metrics presented to external investors, executive
remuneration and the pervasiveness of the error within the financial
statements, amongst others. These immaterial corrections had no impact on the
Consolidated Balance Sheet or Consolidated Statements of Cash Flows and did
not result in a change in operating losses or net loss in the Statement of
Operations.
The impact of these corrections for the year ended December 31, 2024 is as
follows:
As previously reported Adjustment As revised
For the year ended December 31, 2024
Net loss per share - basic and diluted:
Net loss per share - basic and diluted $ (1.07) $ (1.27) $ (2.34)
Net loss attributable to common stockholders (23,957) (7,396) (31,353)
Shares used to compute basic and diluted net loss per share 22,365 (8,956) 13,409
The assessment also resulted in the revision of the number of outstanding
shares presented in the Statement Stockholders' Equity. The previously
reported share count in the Statement of Stockholders' Equity included legally
outstanding shares that were fully vested as well as Retained Pre-UK IPO
Shares (Note 11). The Company has revised this share count to present all
legally issued shares regardless of vesting conditions.
The impact of these corrections for the year ended December 31, 2024 is as
follows:
As previously reported Adjustment As revised
Balance as of December 31, 2023 21,908,445 1,145,948 23,054,393
Issuance of unvested legally outstanding shares - 537,054 537,054
Vesting of stock issued from Multistate acquisition 187,315 (187,315) -
Vesting of stock issued from KP Public Affairs acquisition 98,498 (98,498) -
Vesting of stock issued from Engage acquisition 64,974 (64,974) -
Vesting of stock issued to consultant 12,694 (12,694) -
Vesting of restricted stock units - 158,337 158,337
Vesting of restricted units and restricted stock awards 260,716 (260,716) -
Common stock issued to Multistate as settlement of contingent consideration 88,287 - 88,287
Issuance of common stock for acquisition 179,528 - 179,528
Balance as of December 31, 2024 22,800,457 1,217,142 24,017,599
NOTE 3. NEW ACCOUNTING PRONOUNCEMENTS
Accounting Standards Not Yet Adopted
During December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):
Improvements to Income Tax Disclosures, which expands annual disclosures in an
entity's income tax rate reconciliation table and requires annual disclosures
regarding cash taxes paid both in the United States (federal, state and local)
and foreign jurisdictions. The amendments in this ASU are effective for annual
periods beginning after December 15, 2024, although early adoptions is
permitted. The Company is evaluating the potential impact of this guidance on
its consolidated financial statement disclosures.
During June 2024, the FASB issued ASU 2024-01, Compensation - Stock
Compensation (Topic 718), which provides guidance on the scope application of
profits interest and similar awards. This guidance is effective for public
business entities for annual reporting periods beginning after December 15,
2024, and interim reporting periods beginning after December 15, 2025. The
Company is evaluating the potential impact of this guidance on its
consolidated financial statement disclosures.
During November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting
Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):
Disaggregation of Income Statement Expenses. The guidance requires public
companies to disclose, in the notes to financial statements, specified
information about certain costs and expenses at each interim and annual
reporting period. This guidance is effective for public business entities for
annual reporting periods beginning after December 15, 2026, and interim
reporting periods beginning after December 15, 2027. The Company expects to
adopt this guidance in its fiscal year beginning January 1, 2027. The Company
is evaluating the potential impact of this guidance on its consolidated
financial statement disclosures.
NOTE 4. BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
The Company computes earnings (loss) per share in accordance with ASC 260,
Earnings per Share, which requires presentation of both basic and diluted
earnings per share on the face of the consolidated statements of operations
and other comprehensive loss. Basic earnings (loss) per share is computed by
dividing net income (loss) available to common shareholders by the weighted
average number of outstanding shares during the period. Diluted earnings
(loss) per share gives effect to all dilutive potential common shares
outstanding during the period. Due to their anti-dilutive effect, the
calculation of diluted net loss per share for the nine months ended September
30, 2025 and the year ended December 31, 2024 does not include the common
stock equivalent shares and nonvested shares. The Company's weighted-average
shares utilized for its calculation of earnings (loss) per share includes only
the common shares outstanding.
The following table includes the outstanding number of shares and potentially
dilutive stock options and Restricted Stock Units ("RSU's") as of
September 30, 2025 and December 31, 2024, respectively:
September 30, 2025 December 31, 2024
Common shares outstanding 17,523,582 16,883,845
Nonvested shares outstanding 7,611,124 7,133,752
Legally outstanding shares 25,134,706 24,017,597
Stock options and RSUs outstanding ((1)) 1,751,207 1,546,039
Total fully diluted shares 26,885,913 25,563,636
((1)) The holders of Restricted Stock Units and Stock Options are not entitled
to dividends or to vote
The following tables includes the weighted average shares outstanding and
potentially dilutive stock options and RSUs for three and nine months ended
September 30, 2025 and 2024, respectively:
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Common shares, weighted average 17,403,040 13,654,190 17,165,104 13,126,771
Nonvested shares, weighted average 7,596,227 10,319,856 7,360,491 10,388,236
Legally outstanding shares, weighted average 24,999,267 23,974,046 24,525,595 23,515,007
Stock options and RSUs outstanding, weighted average 1,887,072 1,579,926 1,666,209 1,236,210
Total securities on a fully diluted basis, weighted average 26,886,339 25,553,972 26,191,804 24,751,217
The following table shows the computation of basic and diluted loss per share
for the three and nine months ended September 30, 2025 and 2024,
respectively:
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Numerator
Net losses $ (7,440) $ (6,711) $ (23,786) $ (17,292)
Less unvested common stock dividends under the two - class method (410) (2,506) (2,161) (7,527)
Net loss attributable to common stockholders (7,850) (9,216) (25,948) (24,819)
Denominator
Weighted-average basic shares outstanding 17,403,040 13,654,190 17,165,104 13,126,771
Basic and diluted loss per share $ (0.45) $ (0.67) $ (1.51) $ (1.89)
NOTE 5. REVENUE
The Company generates most of its revenue by providing consulting services
through fixed-fee arrangements related to Government Relations Consulting,
Corporate Communications & Public Affairs Consulting and Compliance and
Insights Services. The Company's general practice is to establish a contract
with a client with a fixed monthly payment at the beginning of each month for
the month's service to be performed.
Most of the consulting service contracts are based on one of the following
types of contract arrangements:
• Fixed-fee arrangements, ("Retainer" and "Subscription Services")
require the client to pay a fixed fee in exchange for a predetermined set of
professional services. Retainer contracts generally comprise of a single
stand-ready performance obligation for consulting services. The Company
recognizes Retainer revenue over time by measuring the progress toward
complete satisfaction of the performance obligation. Subscription Services
generally comprise of a single performance obligation recognized over-time.
• Project revenue that includes additional services such as 1)
advertisement placement and management; 2) video production; 3) website
development; and 4) research services, in which third-party companies may be
engaged to achieve specific business objectives. These services are either in
a separate contract or within the fixed-fee consulting contract, in which the
Company usually receives a markup on the cost incurred by the Company.
Generally, these contracts are less than 12 months in length. The Company
utilizes an output method to measure progress toward complete satisfaction of
the performance obligation, recognizing revenue based on the services
delivered to the customer to date as a proportion of the total services
promised in the contract. This approach reflects the transfer of control to
the customer, as the customer receives and consumes the benefits of each
service as it is performed. Any out-of-pocket administrative expenses incurred
are billed at cost.
In determining the method and amount of revenue to recognize, the Company must
make judgments and estimates. Specifically, complex arrangements with
nonstandard terms and conditions may require management's judgment in
interpreting the contract to determine the appropriate accounting, including
whether the promised services specified in an arrangement are distinct
performance obligations and should be accounted for separately, and how to
allocate the transaction price, including any variable consideration, to the
separate performance obligations. When a contract contains multiple
performance obligations, the Company allocates the transaction price to each
performance obligation based on its estimate of the stand-alone selling price.
Other judgments include determining whether performance obligations are
satisfied over-time or at a point-in-time and the selection of the method to
measure progress towards completion.
Certain services provided by the Company include the utilization of a
third-party in the delivery of those services. These services are primarily
related to the production of an advertising campaign, procurement of media,
and procurement of research services. The Company has determined that it acts
as an agent and is solely arranging for the third-parties to provide services
to the customer. Specifically, the Company does not control the specified
services before transferring those services to the customer, it is not
primarily responsible for the performance of the third-party services, nor can
the Company redirect those services to fulfill any other contracts. The
Company does not have any discretion in establishing the third-party pricing
in its contracts with customers. For these performance obligations for which
the Company acts as an agent, the Company records revenue as the net amount of
the gross billings, less amounts remitted to the third-party.
The following table provides disaggregated revenue by revenue type:
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Government Relations Consulting revenue $ 27,478 $ 26,286 $ 80,943 $ 76,615
Corporate Communications & Public Affairs Consulting revenue 18,022 10,501 46,178 26,038
Compliance and Insights Services revenue 3,287 2,628 9,565 7,895
Total revenue $ 48,787 $ 39,415 $ 136,686 $ 110,549
Revenue by geographic region:
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
United States $ 46,338 $ 37,597 $ 130,340 $ 108,170
International 2,449 1,818 6,346 2,379
Revenue by geographic market $ 48,787 $ 39,415 $ 136,686 $ 110,549
NOTE 6. CONTRACT BALANCES AND ALLOWANCE FOR EXPECTED CREDIT LOSSES
The following table provides information about receivables, contract assets
and contract liabilities from contracts with customers as of:
September 30, 2025 December 31, 2024
Accounts receivable $ 26,792 $ 19,162
Unbilled receivables 838 225
Allowance for expected credit losses (2,506) (1,102)
Total contract receivables, net 25,124 18,285
Contract Liabilities / (Deferred revenue) $ (4,931) $ (3,150)
Contract liabilities relate to advance consideration received from customers
under the terms of the Company's contracts primarily related to retainer fees
and reimbursements of third-party expenses, both of which are generally
recognized shortly after billing. Deferred revenue of $4.9 million and $3.1
million from September 30, 2025 and December 31, 2024 is expected to be
recognized as revenue within one year of the respective balance sheet date.
The following table summarized information about the activity in the allowance
for expected credit losses as follows:
Balance at December 31, 2023 $ 794
Provision for expected credit losses 1,024
(Write-off)/Recoveries (716)
Balance at December 31, 2024 $ 1,102
Provision for expected credit losses 2,349
(Write-off)/Recoveries (945)
Balance at September 30, 2025 $ 2,506
NOTE 7. GOODWILL AND INTANGIBLE ASSETS
Goodwill
Goodwill is an indefinite lived asset with balances as follows:
Balance at December 31, 2023 $ 47,910
Acquired goodwill 16,779
Foreign currency translation (381)
Balance at December 31, 2024 $ 64,308
Acquired goodwill 1,170
Foreign currency translation 1,212
Balance at September 30, 2025 $ 66,690
We monitor our reporting units for indicators of impairment throughout the
year to determine if a change in facts or circumstances warrants a
re-evaluation of our goodwill. There were no goodwill impairment charges
recorded in the nine months ended September 30, 2025 and for the year ended
December 31, 2024, and there were no goodwill impairment charges.
Intangible assets
The Company's intangible assets consist of customer relationships, including
the related customer contracts, developed technology and noncompete agreements
acquired through acquisitions, which are definite lived assets and are
amortized over their estimated useful lives. In addition, intangible assets
consist of trade names, which are indefinite lived assets and evaluated for
impairment on an annual basis or more frequently as needed.
The following presents the Company's gross and net amounts of intangible
assets, other than goodwill, as reported on the Consolidated Balance Sheets as
of September 30, 2025 and December 31, 2024:
September 30, 2025
Weighted Average Useful Life (in Years) Gross Book Value Accumulated Amortization Net Book Value
Customer relationships 7.5 $ 43,310 $ (19,134) $ 24,176
Developed technology 7.0 3,938 (1,453) 2,485
Noncompete agreements 4.5 3,327 (1,141) 2,186
Total definite lived assets 50,575 (21,729) 28,846
Trade names 12,795 12,795
Total intangible assets $ 63,370 $ (21,729) $ 41,641
December 31, 2024
Weighted Average Useful Life (in Years) Gross Book Value Accumulated Amortization Net Book Value
Customer relationships 7.2 $ 33,556 $ (15,277) $ 18,279
Developed technology 7.0 3,938 (1,031) 2,907
Noncompete agreements 3.9 2,070 (767) 1,303
Total definite lived assets 39,564 (17,076) 22,488
Trade names 9,655 - 9,655
Total intangible assets 49,219 $ (17,076) $ 32,144
Amortization expense for customer relationship, noncompete agreement and
developed technology assets approximated $1.6 million and $4.6 million and
$1.3 million and $3.4 million for the three and nine months ended
September 30, 2025 and 2024, respectively.
NOTE 8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following as of:
September 30, 2025 December 31, 2024
Accounts payable $ 5,715 $ 4,753
Bonus payable 10,354 9,927
Other accrued expenses 5,843 5,364
Total $ 21,912 $ 20,044
NOTE 9. LEASES
The Company leases office space and equipment under non-cancelable operating
leases. The following table presents lease costs and other quantitative
information:
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Operating lease cost (cost resulting from lease payments) $ 1,422 $ 1,333 $ 4,230 $ 3,904
Variable lease cost (cost excluded from lease payments) 165 108 386 343
Sublease income (103) (87) (279) (257)
Net lease cost $ 1,485 $ 1,354 $ 4,337 $ 3,990
Cash paid for amounts included in the measurement of lease liabilities $ 1,559 $ 1,413 $ 4,630 $ 3,938
Weighted average lease term - operating leases 3.9 years 4.7 years 3.9 years 4.7 years
Weighted average discount rate - operating leases 5.4% 5.2% 5.4% 5.2%
Future payments of operating leases as of September 30, 2025 are listed in
the table below:
Year Amount
2025 (Excluding the Nine months ended September 30, 2025 $ 1,573
2026 6,297
2027 5,354
2028 4,650
2029 2,799
Thereafter 1,436
Total future minimum lease payments 22,108
Amount representing interest (2,200)
Present value of net future minimum lease payments $ 19,909
NOTE 10. NOTES PAYABLE
The Company has several term loans outstanding with a financial institution
("Term Loans"). The 2023 Facility 2 loan matures on March 31, 2029 with
monthly principal payments of $0.2 million plus interest. The 2024 Term Loan A
and 2024 Term Loan B (collectively the "2024 Term Loans") require monthly
principal payments of $0.3 million plus interest until their maturity date of
April 30, 2028. The 2025 Term Loan C requires monthly principal payments of
$0.2 million per month plus interest through March 1, 2026, increasing to $0.3
million per month plus interest through the maturity date of March 31, 2029.
The interest rate for all of these loans is the Secured Overnight Financing
Rate ("SOFR") plus 2.60% per annum.
The Company's total debt consists of the following as of:
Original Loan Amount September 30, 2025 December 31, 2024
2023 Facility 2 $ 14,000 $ 5,250 $ 7,875
2024 Term Loan A 6,000 5,175 5,850
2024 Term Loan B 19,000 16,388 18,525
2025 Term Loan C 24,000 23,004 -
Other debt - 133 154
Less: unamortized debt issuance costs 748 310 359
Total debt, net of unamortized issuance costs $ 62,252 49,639 32,045
Less: current portion (8,177) (6,031)
Total debt, long-term $ 41,462 $ 26,014
As of September 30, 2025, the future principal maturities of the Terms Loans
are as follows:
2023 Facility 2 2024 Term Loan A 2024 Term Loan B 2025 Term Loan C Total
2025 $ 525 $ 225 $ 713 $ 598 $ 2,060
2026 2,100 900 2,850 3,298 9,148
2027 2,100 900 2,850 3,600 9,450
2028 525 3,150 9,975 3,600 17,250
2029 - - - 11,909 11,909
Total $ 5,250 $ 5,175 $ 16,388 $ 23,004 $ 49,817
Total approximate interest expense incurred for the Term Loans was as follows:
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Cash interest on term loans $ 910 $ 696 $ 2,288 $ 1,201
Cash interest on other debt 2 6 16 20
Debt discount amortization 69 49 177 128
Total interest expense $ 981 $ 751 $ 2,481 $ 1,348
The Credit Agreement and Amended Credit Agreements for the Term Loans contain
certain non-financial and financial covenants that the Company is required to
comply with and submit a compliance certificate to the bank on a quarterly
basis. The financial covenants include a total leverage ratio and fixed
coverage ratio. The Company was in compliance with all covenants as of
September 30, 2025 and December 31, 2024.
NOTE 11. SHARE-BASED ACCOUNTING CHARGE
On December 16, 2021, PPHC-Inc. completed its initial public offering ("UK
IPO") and its shares began trading on the AIM market of the London Stock
Exchange. During 2021, all ultimate owners of PPHC-LLC, referred to as Company
Executives, entered into Executive Employment Agreements. These executives
sold some of their shares during the UK IPO (referred to as Liquidated Pre-UK
IPO Shares) but retained the majority of their shares ("Retained Pre-UK IPO
Shares"). The retained shares vest in equal installments over five years,
provided the executive remains continuously employed. If an executive's
employment terminates, except in cases of death, disability, termination
without cause, or for good reason, the unvested shares will be forfeited. In
cases of death, disability, termination without cause, or for good reason, all
unvested shares will vest immediately. Additionally, the agreements include
clawback provisions, allowing the company to reclaim cash from the sale of
Liquidated Pre-UK IPO Shares and vested Retained Pre-UK IPO Shares under
certain conditions.
As a result of the vesting conditions for the Retained Pre-UK IPO Shares, the
Company recorded share-based accounting charges of $7.4 million and $22.2
million and $8.7 million and $23.9 million for the three and nine months ended
September 30, 2025 and 2024, respectively.
As of September 30, 2025, there were 14,223,476 Retained Pre-UK IPO Shares
held by current employees and subject to vesting requirements, and 11,054,003
of these shares were fully vested. These shares were issued in 2021 and the
weighted-average grant date fair value of these shares was $9.10 as of the
grant date. For the Retained Pre-UK IPO shares, the grant-date fair value is
based upon the market price of the Company's common stock on the date of the
grant. As of September 30, 2025, the unrecognized compensation cost from
these restricted shares was approximately $35.6 million, which is expected to
be recognized over a weighted-average period of 1.2 years.
The share-based accounting charge relating to the Retained Pre-UK IPO Shares
is recorded to costs of services and general and administrative expense in the
consolidated statement of operations. The table below represents the total
expense relating to Retained Pre-UK IPO Shares recognized in the consolidated
statements of operations and comprehensive loss for the three and nine months
ended September 30, 2025 and 2024:
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Cost of services $ 6,654 $ 6,107 $ 20,011 $ 19,425
General and administrative expense 740 2,552 2,221 4,428
Total expense relating to Retained Pre-UK IPO Shares $ 7,394 $ 8,659 $ 22,232 $ 23,853
NOTE 12. POST-COMBINATION COMPENSATION CHARGE
The Company has acquired various companies from 2022 to 2025 for a combination
of cash, shares of Company Common Stock and future contingent payments
("Acquisition Payments"). A portion of the Acquisition Payments are subject to
vesting and/or claw back provisions that are directly linked to the continuing
employment of certain individuals of the acquired companies ("Post-Combination
Payments"). As a result, the Post-Combination Payments are being recognized as
a charge for post-combination compensation over the period of the applicable
vesting requirement or the period over which the claw back rights linked to
employment lapse.
The post-combination compensation charge recorded by the Company was
approximately $4.0 million and $12.7 million and $3.6 million and $8.7 million
for the three and nine months ended September 30, 2025 and 2024,
respectively. The post-combination compensation charge is recorded in cost of
services in the consolidated statements of operations and comprehensive loss.
This amount consists of the following components:
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Additions to other liability $ 1,030 $ 1,403 $ 4,089 $ 3,600
Vesting of common stock 677 (15) 2,175 1,308
Amortization of prepaid post-combination compensation 2,256 2,232 6,475 3,832
Total $ 3,963 $ 3,619 $ 12,739 $ 8,740
As of September 30, 2025, the unrecognized post-combination compensation
charge was approximately $46.9 million, which is expected to be recognized
over a weighted-average period of 2.1. The actual amount of Post-Combination
Payments is subject to significant estimates and could change materially in
the future.
NOTE 13. RELATED PARTY TRANSACTIONS
As of September 30, 2025, the amounts owed to related parties of
approximately $1.0 million consists primarily of a working capital loan of
approximately $0.7 million from the sellers of TrailRunner to the Company,
which will be repaid in 2025.
As of September 30, 2024, the amounts owed to related parties of
approximately $0.5 million include the amount related to a working capital
loan and adjustments associated with the MultiState acquisition. During the
year ended December 31, 2024, the working capital loan and adjustments with
MultiState were settled.
During December 2021, the Company entered into a term note agreement ("2021
Note") with The Alpine Group, Inc. ("Alpine Inc"). The 2021 Note provided
Alpine Inc with the ability to request a one-time borrowing of up to
$0.8 million from the Company at any time prior to December 31, 2022. The
purpose of the 2021 Note was to provide Alpine Inc with funds to cover certain
federal and state income taxes to be owed by Alpine Inc in connection with the
sale of shares of the Company's common stock in the UK IPO. During April 2022,
the Company advanced $0.5 million to Alpine Inc in accordance with the terms
of the 2021 Note. The interest rate on the 2021 Note is equal to the Prime
Rate as published in the Wall Street Journal. The 2021 Note balance as of June
30, 2024 was $0.5 million. The 2021 Note was classified as a current asset as
of June 30, 2024. The amount of accrued interest and interest revenue from
the 2021 Note is not material. The 2021 Note requires an annual payment of
accrued and unpaid interest on the last business day of December each year and
through the maturity date of January 16, 2025. During February 2025, the 2021
Note plus accrued interest totaling approximately $0.5 million was repaid
through the transfer of 63,356 shares of PPHC-Inc common stock from Alpine Inc
to the Company, which shares have been retired.
During November 2023, the Company entered into term note agreements ("2023
Notes") with certain employees of the Alpine Group Partners, LLC totaling $1.8
million. The interest rate on the 2023 Notes is 7.5% and was reduced to 4.45%.
The notes are payable in annual installments of $0.4 million plus all accrued
and unpaid interest beginning on November 1, 2024 with a maturity date of
November 1, 2028 or the effective date of the termination of employment of the
respective employee borrower for any reason, if earlier than the maturity
date. As of September 30, 2025 and 2024, the 2023 Notes were recorded in
notes receivable - related parties with $0.4 million and $0.4 million
classified as a current asset and $1.1 million and $1.4 million, respectively,
classified as a non-current asset. The amount of accrued interest and interest
revenue from the 2023 Notes is not material.
On August 1, 2025, the Company issued a loan to employees in the amount of
$0.5 million. The interest rate on the loan is 4.06%. The employee loan has a
maturity date of August 1, 2030. As of September 30, 2025, the employee loan
was recorded in notes receivable - related parties, long term.
NOTE 14. OMNIBUS INCENTIVE PLAN
As of September 30, 2025, the total amount of shares authorized by the Board
of Directors under the Omnibus Plan was 3,770,206 with a total of 638,956
available for issuance.
The total long-term incentive program expense, net of forfeitures, is detailed
in the following table:
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Options 45 121 239 385
RSUs 639 719 1,703 1,257
RSAs 942 538 2,011 830
SARs 346 222 670 491
Total 1,972 1,599 4,623 2,962
The table below represents the total expense relating to the long-term
incentive program recognized in the consolidated statements of operations and
comprehensive loss as follows:
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Cost of services $ 1,638 $ 1,155 $ 3,831 $ 1,870
General and administrative expense 334 444 792 1,092
Total $ 1,972 $ 1,599 $ 4,623 $ 2,962
As of September 30, 2025, total unrecognized compensation expense and the
applicable weighted-average period for that expense to be recognized is as
follows:
Unrecognized compensation Weighted average period
Options $ 249 0.5 years
RSUs 8,319 1.0 years
RSAs 2,802 1.0 year
Total $ 11,370
Options
The following summarizes the stock option activity for the nine months ended
September 30, 2025 and 2024:
Number of Shares Weighted Average Exercise Price- (USD)((1)) Weighted Average Exercise Price-(GBP) Weighted Average Contractual Term (in years)
Outstanding as of December 31, 2024 676,709 $ 11.55 £8.60 7.8
Granted 62,588 11.25 8.35 10.0
Exercised - - -
Cancelled/Forfeited (27,397) 10.15 7.55 -
Outstanding as of September 30, 2025 711,900 11.60 8.65 7.3
Exercisable as of September 30, 2025 433,392 11.65 8.65 6.5
Vested and expected to vest as of September 30, 2025 711,900 $ 11.60 £8.65 7.3
Number of Shares Weighted Average Exercise Price- (USD)((1)) Weighted Average Exercise Price-(GBP) Weighted Average Contractual Term (in years)
Outstanding as of December 31, 2023 617,812 $ 11.05 £8.70 8.9
Granted 69,000 10.90 8.15 -
Exercised - - - -
Cancelled/Forfeited (36,103) 10.95 8.20 -
Outstanding as of September 30, 2024 650,709 11.55 8.65 8.1
Exercisable as of September 30, 2024 - - - -
Vested and expected to vest as of September 30, 2024 650,709 $ 11.55 £8.65 8.1
((1) ) The applicable exercise prices have been adjusted based on the
applicable exchange rate of GBP to USD at the end of each period presented.
( )
Restricted Stock Units ("RSUs")
Activity in the Company's non-vested RSUs was as follows for the nine months
ended September 30, 2025 and 2024, respectively:
Number of RSUs Weighted Average Grant Date Fair Value
Nonvested as of December 31, 2024 869,330 $ 7.00
Granted 498,532 8.75
Vested (285,804) 7.60
Cancelled/Forfeited (35,600) 5.45
Nonvested as of September 30, 2025 1,046,458 $ 7.70
Nonvested as of December 31, 2023 445,000 7.05
Granted 586,000 7.05
Vested (118,336) 7.60
Cancelled/Forfeited - -
Nonvested as of September 30, 2024 912,664 $ 7.00
Restricted Stock Awards ("RSAs")
Activity in the Company's non-vested RSAs was as follows:
Number of RSAs Weighted Average Grant Date Fair Value
Nonvested as of December 31, 2024 479,491 $ 6.15
Granted 195,588 9.45
Vested (134,177) 7.15
Cancelled/Forfeited (61,005) 5.65
Nonvested as of September 30, 2025 479,897 $ 5.45
Nonvested as of December 31, 2023 437,789 5.95
Granted 140,748 7.15
Vested - -
Cancelled/Forfeited - -
Nonvested as of September 30, 2024 578,537 $ 6.25
Stock Appreciation Rights ("SARs")
SARs are not issued shares or committed shares to be issued and therefore do
not count against the total number of shares that can be issued under the
Omnibus Plan. Upon exercise of a SAR, the Company shall pay the grantee in
cash an amount equal to the excess of the fair market value of a share of
stock on the effective date of exercise in excess of the exercise price of the
SAR. This cash settlement feature requires the SARs to be classified as a
liability and remeasured at each reporting period. The SARs vest over a
three-year period with one-third vesting each year after the grant date. The
fair value of each SAR granted is estimated using a Black-Scholes
option-pricing model and the fair value is adjusted at each reporting period.
As of September 30, 2025 and 2024, the total liability recorded was $1.3
million and $0.6 million, respectively.
The fair value of the SARs was calculated as follows as of:
September 30, 2025 December 31, 2024
Estimated dividend yield 4.0% 4.0%
Expected stock price volatility 40.0% 45.0%
Risk-free interest rate 3.6% 4.4% to 4.5%
Expected life of instrument (in years) 2.1 to 3.5 years 2.9 to 3.9 years
Weighted-average fair value per share $ 4.64 $ 2.55
Activity in the Company's SARs was as follows for the period ended
September 30, 2025 and year ended December 31, 2024:
Number of Shares Weighted Average Exercise Price
Outstanding as of December 31, 2023 352,000 $ 8.50
Granted - -
Exercised - -
Cancelled/Forfeited (11,000) 8.35
Outstanding as of December 31, 2024 341,000 $ 8.05
Granted - -
Exercised - -
Cancelled/Forfeited (30,000) 8.95
Outstanding as of September 30, 2025 311,000 8.95
Exercisable as of September 30, 2025 311,000 8.95
Vested and expected to vest as of September 30, 2025 207,337 $ 8.90
The amount of the future expense for all SARs issued will depend upon the
value of the Company's common stock and other factors at each future reporting
date.
NOTE 15. INCOME TAXES
For interim periods, the Company recognizes an income tax expense (benefit)
based on an estimated annual effective tax rate ("EAETR"), calculated on a
worldwide consolidated basis, expected for the entire year. The interim annual
estimated effective tax rate is based on the statutory tax rates then in
effect, as adjusted for estimated changes in estimated permanent differences
and excludes certain discrete items whose tax effect, when material, are
recognized in the interim period in which they occur. These changes in
permanent differences and discrete items result in variances to the effective
tax rate from period to period. The Company's estimated annual effective tax
rate changes throughout the year as on-going estimates of Pre-Tax Income, and
changes in permanent differences are revised, as discrete items occur, as well
as due to the impact of additional business combinations.
For the three and nine months ended September 30, 2025, the Company
recognized an income tax (benefit) expense of approximately $0.6 million and
$4.7 million. The Company's effective tax rate was (24.2)% after discrete
items for the nine months ended September 30, 2025.
For the three and nine months ended September 30, 2024, the Company
recognized an income tax expense of approximately $1.2 million and $4.9
million. The Company's effective tax rate was (32.9)% after discrete items for
the nine months ended September 30, 2024.
The effective tax rates for the periods differed from the federal statutory
rate of 21% primarily due to state taxes, GAAP compensation incurred that is
not deductible for tax purposes, as well as other items related to prior
periods' business combinations that generate permanent book/tax differences.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law
in the US, which contains a broad range of tax reform provisions affecting
businesses. The Company has evaluated the full effects of these legislative
changes, and the impact is not material.
NOTE 16. FAIR VALUE MEASUREMENT
The following table presents a summary of the Company's liabilities that are
measured at fair value on a recurring basis by their respective fair value
hierarchy level as of September 30, 2025:
Level 1 Level 2 Level 3
Other liabilities $ - $ - $ 7,651
Contingent consideration - - 18,049
Total liabilities $ - $ - $ 25,700
The following table presents a summary of the Company's liabilities that are
measured at fair value on a recurring basis by their respective fair value
hierarchy level as of December 31, 2024:
Level 1 Level 2 Level 3
Other liabilities $ - $ - $ 4,880
Contingent consideration - - 10,896
Total liabilities $ - $ - $ 15,776
The carrying values of cash, contract receivables, and accounts payable and
accrued expenses at September 30, 2025 and December 31, 2024 approximated
their fair value due to the short maturity of these instruments.
Financial Instruments that are Measured at Fair Value on a Recurring Basis
Contingent Consideration
The fair value of contingent consideration from the Company's acquisitions
were measured using Level 3 inputs.
The following table summarized the change in fair value, as determined by
Level 3 inputs, for the contingent consideration using the unobservable Level
3 inputs for the nine months ended September 30, 2025 as follows:
Balance at December 31, 2024 $ 10,896
Fair value at issuance 3,165
Payout of contingent consideration (729)
Change in fair value 4,956
Effect of currency translation adjustment 54
Purchase price adjustment (294)
Balance at September 30, 2025 $ 18,049
The following table summarized the change in fair value, as determined by
Level 3 inputs, for the contingent consideration using the unobservable Level
3 inputs for the nine months ended September 30, 2024 as follows:
Balance at December 31, 2023 $ 6,920
Fair value at issuance 3,755
Cash and stock payout of contingent consideration (1,709)
Change in fair value 1,784
Effect of currency translation adjustment 128
Balance at September 30, 2024 $ 10,878
The estimated fair value of contingent consideration is calculated by Monte
Carlo simulations utilize estimates including; expected volatility of future
operating results, discount rates applicable to future results, and expected
growth rates.
Other Liabilities
The fair value of other liabilities, comprising of post-combination
compensation obligations of the Company, relates to various acquisitions. The
estimated fair value of other liabilities is calculated by Monte Carlo
simulations utilize estimates including; expected volatility of future
operating results, discount rates applicable to future results, and expected
growth rates.
The following table summarized the change in fair value, as determined by
Level 3 inputs, for the other liabilities using the Level 3 inputs for the
nine months ended September 30, 2025 as follows:
Balance at December 31, 2024 $ 4,880
Fair value at issuance 667
Accretion of liability 1,942
Payout of post combination compensation (1,338)
Change in fair value 1,503
Effect of currency translation adjustment (3)
Balance at September 30, 2025 $ 7,651
The following table summarized the change in fair value, as determined by
Level 3 inputs, for the other liabilities using the Level 3 inputs for the
nine months ended September 30, 2024 as follows:
Balance at December 31, 2023 $ 2,120
Fair value at issuance -
Accretion of liability 2,260
Payout of post combination compensation (707)
Change in fair value 574
Balance at September 30, 2024 $ 4,247
The Monte Carlo assumptions and inputs (which are Level 3 inputs) are as
follows for the nine months ended September 30, 2025 and 2024 are as follows:
September 30, 2025
Significant Input Weighted Average Input Input Range
Discount rate for credit risk and time value 4.5% 4.3% to 4.9%
Discount rate for future profit after tax 15.0% 11.0% to 20.4%
Expected volatility of future annual profit after tax 32.5% 30.0% to 37.0%
Forecasted growth rate 13.6% (23.5)% to 62.5%
September 30, 2024
Significant Input Weighted Average Input Input Range
Discount rate for credit risk and time value 4.7% 4.4% to 5.4%
Discount rate for future profit after tax 15.1% 11.0% to 20.8%
Expected volatility of future annual profit after tax 32.6% 31.0% to 36.0%
Forecasted growth rate 11.1% 4.9% to 52.1%
Financial Instruments that are not Measured at Fair Value on a Recurring Basis
The Notes Payable of the Company are subject to a variable interest rate and
as such, the carrying amount closely approximates the fair value of this
instrument.
Non-financial Assets and Liabilities that are Measured at Fair Value on a
Nonrecurring Basis
Certain non-financial assets are measured at fair value on a nonrecurring
basis, primarily goodwill, intangible assets (Level 3 fair value measurements)
and right-of-use lease assets (Level 2 fair value measurement). Accordingly,
these assets are not measured and adjusted to fair value on an ongoing basis
but are subject to periodic evaluations for potential impairment.
NOTE 17. ACQUISITION
TrailRunner
On January 24, 2025, the Company entered into a binding agreement
("TrailRunner Agreement") to acquire TrailRunner International LLC and its
wholly-owned subsidiaries (collectively, the "TrailRunner Seller" or
"TrailRunner"), a Texas-based global communications advisory firm. At the
closing of the transaction, the Company agreed to pay the TrailRunner Seller
cash in the amount of approximately $28.2 million and issue 593,228 shares of
the Company's common stock to the TrailRunner Seller at an aggregate fair
value of approximately 5.2 million.
In addition, there are additional contingent payments that the TrailRunner
Seller can earn in the future depending on certain operating results that are
achieved. The total additional amount of consideration that the Company could
be required to pay to the TrailRunner Seller is $37.0 million. Although the
Company remitted the funds to the TrailRunner Seller on March 31 2025, the
effective date of the transaction was April 1, 2025.
Reasons for the acquisition
The Company acquired TrailRunner to expand the Company's ability to provide a
distinct suite of corporate communication capabilities and enhance its global
footprint. TrailRunner has eight office locations across the United States,
United Kingdom, Middle East, and Asia.
Accounting for the acquisition
The acquisition of TrailRunner was accounted for as a business combination and
reflects the application of acquisition accounting in accordance with ASC 805,
Business Combinations ("ASC 805"). The acquired assets, including identifiable
intangible assets and liabilities assumed, have been recorded at their
estimated fair values.
Purchase consideration
The Company determined that certain consideration provided to TrailRunner does
not qualify as purchase consideration in accordance with the guidance of ASC
805. The Company determined that the purchase consideration consists of the
amount of cash and share payments owed to TrailRunner that are not subject to
a vesting or claw back provision that is directly linked to the continued
employment of the TrailRunner Seller. The total preliminary purchase
consideration consisted of the following amounts:
Cash paid $ 18,607
Common stock issued 1,190
Contingent consideration 2,189
Total $ 21,986
The contingent consideration allocated as purchase consideration consists of
the amount of the estimated fair value of the projected future payments that
are not subject to vesting or claw back provisions tied to continued
employment.
Preliminary purchase price allocation
The purchase price allocation is preliminary and subject to change during its
measurement period. The Company has not yet completed its evaluation and
determination of certain assets acquired and liabilities assumed, primarily
(i) the final valuation of intangible assets, and (ii) the final assessment
and valuation of certain other assets acquired and liabilities assumed which
could also impact goodwill during the measurement period. Although not
expected to be significant, such adjustments may result in changes in the
valuation of assets and liabilities acquired.
The preliminary allocation of the purchase consideration resulted in the
following amounts being allocated to the assets acquired and liabilities
assumed as of the purchase date of April 1, 2025, based on their respective
estimated fair values is summarized below:
Cash acquired $ 85
Accounts receivable 758
Other current assets 172
Property and equipment 27
Right of use asset 2,067
Customer relationships 7,796
Tradename 2,760
Noncompete agreements 786
Deferred tax asset 8,804
Goodwill 1,170
Accounts payable and accrued expenses (372)
Operating lease liability (2,067)
Total preliminary purchase price $ 21,986
The preliminary fair value of the identified definite-lived intangible assets
was as follows:
Definite-lived Weighted-average useful life
intangible assets (in years) Amount
Customer relationship 7.0 $ 7,796
Noncompete agreements 5.0 $ 786
The preliminary fair value of customer relationships was determined using the
income approach, which requires management to estimate a number of factors for
each reporting unit, including projected future operating results and discount
rates. The fair value of the trade names was determined using the relief from
royalty method. The fair value of noncompete agreements was determined using
an income approach method, which requires management to estimate a number of
factors related to the expected future cash flows of TrailRunner and the
potential impact and probability of competition, assuming such noncompete
agreements were not in place.
The preliminary fair value of the contingent consideration was performed using
Monte Carlo simulations to estimate the achievement and amount of certain
future operating results. The Monte Carlo simulations utilize estimates
including; expected volatility of future operating results, discount rates
applicable to future results, and expected growth rates. The table below
provides the significant inputs to the calculation of the contingent
consideration as of the acquisition date:
Significant unobservable input Range
Discount rate for credit risk and time value 5.0% to 5.3%
Discount rate applicable to future annual EBITDA 14.2% to 15.7%
Expected volatility of future annual EBITDA 31.0% to 33.0%
Forecasted growth rate 3.0% to 13.6%
Pine Cove
On July 11, 2025, the Company entered into an Asset Purchase Agreement ("APA")
with Pine Cove Capital, LLC, a strategic advisory and government relations
business serving clients in technology, energy, digital health, and financial
services. The transaction was structured as an asset purchase, with Purchaser
acquiring substantially all operating assets of Seller, including tangible
assets, intellectual property, client contracts, and goodwill, while assuming
certain specified liabilities. At the closing of the transaction, the Company
agreed to pay the Pine Cove Seller cash in the amount of approximately $2.6
million and issue 42,829 shares of the Company's common stock to the Pine Cove
Seller at an aggregate fair value of approximately $0.5 million.
In addition, there are additional contingent payments that the Pine Cove
Seller can earn in the future depending on certain operating results that are
achieved. The total additional amount of consideration that the Company could
be required to pay to the Pine Cove Seller is $10.0 million. The transaction
closed effective August 1, 2025 (the "Closing Date" or "Acquisition Date").
Reasons for the acquisition
The Company acquired Pine Cove to continue the Company's expansion into
certain key US state capitals, complementing the Company's federal
capabilities with best-in-class local market expertise. Texas, as one of the
largest state economies and most consequential for public policy activities,
has long been a stated priority for local government relations expansion.
Accounting for the acquisition
The acquisition of Pine Cove was accounted for as a business combination and
reflects the application of acquisition accounting in accordance with ASC 805,
Business Combinations ("ASC 805"). The acquired assets, including identifiable
intangible assets and liabilities assumed, have been recorded at their
estimated fair values.
Purchase consideration
The Company determined that certain consideration provided to Pine Cove does
not qualify as purchase consideration in accordance with the guidance of ASC
805. The Company determined that the purchase consideration consists of the
amount of cash and share payments owed to Pine Cove that are not subject to a
vesting or claw back provision that is directly linked to the continued
employment of the Pine Cove Seller. The total preliminary purchase
consideration consisted of the following amounts:
Cash paid $ 2,550
Common stock issued 95
Contingent consideration 682
Total $ 3,327
The contingent consideration allocated as purchase consideration consists of
the amount of the estimated fair value of the projected future payments that
are not subject to vesting or claw back provisions tied to continued
employment.
Preliminary purchase price allocation
The purchase price allocation is preliminary and subject to change during its
measurement period. The Company has not yet completed its evaluation and
determination of certain assets acquired and liabilities assumed, primarily
the final valuation of intangible assets. Although not expected to be
significant, such adjustments may result in changes in the valuation of assets
and liabilities acquired.
The preliminary allocation of the purchase consideration resulted in the
following amounts being allocated to the assets acquired and liabilities
assumed as of the purchase date of August 1, 2025, based on their respective
estimated fair values is summarized below:
Customer relationships $ 1,584
Tradename 268
Noncompete agreements 402
Deferred tax asset 1,073
Total preliminary purchase price $ 3,327
The preliminary fair value of the identified definite-lived intangible assets
was as follows:
Definite-lived Weighted-average useful life
intangible assets (in years) Amount
Customer relationship 7.0 $ 1,584
Noncompete agreements 5.0 $ 402
The preliminary fair value of customer relationships was determined using the
income approach, which requires management to estimate a number of factors for
each reporting unit, including projected future operating results and discount
rates. The fair value of the trade names was determined using the relief from
royalty method. The fair value of noncompete agreements was determined using
an income approach method, which requires management to estimate a number of
factors related to the expected future cash flows of Pine Cove and the
potential impact and probability of competition, assuming such noncompete
agreements were not in place.
The preliminary fair value of the contingent consideration was performed using
Monte Carlo simulations to estimate the achievement and amount of certain
future operating results. The Monte Carlo simulations utilize estimates
including; expected volatility of future operating results, discount rates
applicable to future results, and expected growth rates.
The table below provides the significant inputs to the calculation of the
contingent consideration as of the acquisition date:
Significant unobservable input Range
Discount rate for credit risk and time value 4.5% to 4.6%
Discount rate for future profit after tax 15.5% to 16.3%
Expected volatility of future annual profit after tax 30.0% to 31.0%
Forecasted growth rate -% to 40.5%
NOTE 18. SEGMENT REPORTING
The Company determined that its business is conducted across three reportable
segments as of September 30, 2025 as follows: Government Relations
Consulting, Corporate Communications & Public Affairs Consulting and
Compliance and Insights Services.
• Government Relations Consulting services (which is also commonly
referred to as "lobbying") include advocacy, strategic guidance, political
intelligence and issue monitoring at the US federal and state levels and in
the United Kingdom through our offices in London;
• Corporate Communications & Public Affairs Consulting
services include crisis communications, financial communications and investor
relations, litigation support, community relations, social and digital media,
public opinion research, branding and messaging, and relationship marketing,
across the United States and internationally through our offices in London,
Shanghai, Abu Dhabi, and Dubai; and
• Compliance and Insights Services include lobbying compliance
services and legislative tracking.
The Chief Operating Decision Maker ("CODM"), being its Chief Executive
Officer, is not regularly provided assets on a segment basis since it is not
used to allocate resources and assess performance for each of the segments;
therefore, total segment assets have not been disclosed. In addition, for the
three and nine months ended September 30, 2025 and 2024, revenues in each of
the three segments were primarily attributable the United States operations as
there were no other countries from which the Company derived segment revenues
that exceeded 10% of that segment.
The following tables present segment information by revenues, significant
expenses consisting of staff costs and non-staff costs and Adjusted Pre-Bonus
EBITDA by segment, and a reconciliation to the consolidated net loss before
income taxes for each of the three and nine months ended September 30, 2025
and 2024.
For the three and nine months ended September 30, 2024, the segment
information has been recast to conform to the 2025 segment information.
Three months ended September 30, 2025
Government Relations Consulting Corporate Communications Compliance and Insights Services Total
& Public Affairs Consulting
Revenue $ 27,478 $ 18,022 $ 3,287 $ 48,787
Costs and expenses:
Staff costs $ 12,573 $ 10,417 $ 1,261 $ 24,251
Non-staff costs $ 3,372 $ 2,128 $ 240 $ 5,741
Segment Adjusted Pre-Bonus EBITDA $ 11,533 $ 5,476 $ 1,786 $ 18,795
Reconciliation to net loss before income taxes:
Unallocated bonuses (4,293)
Unallocated corporate level expenses (3,115)
Depreciation (53)
Share-based accounting charge (7,394)
Post-combination compensation charges (3,963)
Long term incentive program charges (1,972)
Change in contingent consideration (2,270)
Amortization of intangibles (1,639)
Loss from operations (5,904)
Gain on bargain purchase -
Interest, net (955)
Other expense (7)
Net loss before income taxes (6,866)
Income tax expense 574
Net loss after income taxes $ (7,440)
Three months ended September 30, 2024
Government Relations Consulting Corporate Communications Compliance and Insights Services Total
& Public Affairs Consulting
Revenue $ 26,286 $ 10,501 $ 2,628 $ 39,415
Costs and expenses:
Staff costs 11,837 6,317 1,241 19,395
Non-staff costs 2,240 1,148 201 3,589
Segment Adjusted Pre-Bonus EBITDA $ 12,209 $ 3,036 $ 1,186 16,431
Reconciliation to net loss before income taxes:
Unallocated bonuses (3,679)
Unallocated corporate level expenses (2,858)
Depreciation (37)
Share-based accounting charge (8,659)
Post-combination compensation charges (3,619)
Long term incentive program charges (1,599)
Change in contingent consideration 498
Amortization of intangibles (1,293)
Loss from operations (4,815)
Gain on bargain purchase -
Interest, net (709)
Net loss before income taxes (5,524)
Income tax expense 1,187
Net loss after income taxes $ (6,711)
Nine months ended September 30, 2025
Government Relations Consulting Corporate Communications Compliance and Insights Services Total
& Public Affairs Consulting
Revenue $ 80,943 $ 46,178 $ 9,565 $ 136,686
Costs and expenses:
Staff costs 37,471 27,145 3,847 68,463
Non-staff costs 7,697 6,314 527 14,538
Segment Adjusted Pre-Bonus EBITDA $ 35,775 $ 12,719 $ 5,191 53,685
Reconciliation to net loss before income taxes:
Unallocated bonuses (11,176)
Unallocated corporate level expenses (9,930)
Depreciation (146)
Share-based accounting charge (22,232)
Post-combination compensation charges (12,739)
Long term incentive program charges (4,623)
Change in contingent consideration (4,946)
Amortization of intangibles (4,595)
Loss from operations (16,701)
Interest, net (2,393)
Other expense (30)
Net loss before income taxes (19,124)
Income tax expense 4,662
Net loss after income taxes $ (23,786)
Nine months ended September 30, 2024
Government Relations Consulting Corporate Communications Compliance and Insights Services Total
& Public Affairs Consulting
Revenue $ 76,615 $ 26,038 $ 7,895 $ 110,549
Costs and expenses:
Staff costs 35,108 17,258 3,640 56,007
Non-staff costs 6,091 3,823 513 10,426
Segment Adjusted Pre-Bonus EBITDA $ 35,416 $ 4,957 $ 3,742 44,115
Reconciliation to net loss before income taxes:
Unallocated bonuses (7,072)
Unallocated corporate level expenses (9,908)
Depreciation (99)
Share-based accounting charge (23,853)
Post-combination compensation charges (8,740)
Long term incentive program charges (2,962)
Change in contingent consideration (1,766)
Amortization of intangibles (3,369)
Loss from operations (13,654)
Gain on bargain purchase 2,464
Interest, net (1,209)
Net loss before income taxes (12,399)
Income tax expense 4,894
Net loss after income taxes $ (17,292)
NOTE 19. SUBSEQUENT EVENTS
On October 28, 2025, we issued 43,337 shares of Common Stock (all of which was
issued upon the vesting of previously issued RSUs) to our executive officers
and other Company employees pursuant to the Omnibus Incentive Plan for
services to the Company and in reliance on the exemption provided in Rule 701
under the Securities Act.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act"), about our expectations, beliefs, or intentions regarding our
business, financial condition, results of operations, strategies, the outcome
of litigation, or prospects. Forward-looking statements are those that do not
relate strictly to historical or current matters, but instead relate to
anticipated or expected events, activities, trends, or results as of the date
they are made. These forward-looking statements can be identified by the use
of terminology such as "anticipate," "believe," "estimate," "expect,"
"intend," "project," "will," or the negative thereof or other variations
thereon or comparable terminology. Because forward-looking statements relate
to matters that have not yet occurred, these statements are inherently subject
to risks and uncertainties that could cause our actual results to differ
materially from any future results expressed or implied by the forward-looking
statements. Many factors could cause our actual activities or results to
differ materially from the activities and results anticipated in
forward-looking statements , including, without limitation, those discussed in
Item I. Description of Business in our registration statement on Form S-1
filed with the Securities and Exchange Commission (the "SEC"), as amended on
October 21, 2025 (the "Form S-1A"), those contained in this report, and such
other factors contained in our other filings we make with the SEC. We do not
undertake any obligation to update forward-looking statements, except as
required by law.
These forward-looking statements are only predictions and reflect our views as
of the date they are made with respect to future events and financial
performance. The following discussion should be read in conjunction with the
Form S-1A and the consolidated financial statements and related notes included
in this report.
Overview
Public Policy Holding Company, Inc. ("we," "us," "our," "PPHC," or the
"Company") through our wholly-owned subsidiaries, operate a portfolio of firms
that offer global strategic communications services, including government
relations, public affairs and public relations. Engaged by over 1,300 clients,
including companies, trade associations and non-governmental organizations, we
are active in all major sectors of the economy, including healthcare and
pharmaceuticals, financial services, energy, technology, telecoms and
transportation. Our services help clients to enhance and defend their
reputations, advance policy goals, manage regulatory risk and engage with
federal and state-level policy makers, stakeholders, media and the public in
multiple jurisdictions and with diverse and complementary capabilities.
Since our inception in 2014, we have acquired and integrated numerous
businesses specializing in key facets of strategic communications, including
government relations, public affairs, research, crisis management, investor
relations and creative communications delivery. Under the PPHC holding
company, the Company now operates as 12 member companies in the United States
("US") and the United Kingdom ("UK"), with expanding reach into Europe and
parts of Asia and the Middle East. These 12 member companies include
Crossroads Strategies, LLC ("Crossroads"), Forbes Tate Partners LLC ("Forbes
Tate"), Blue Engine Message & Media, LLC (doing business as Seven Letter)
("Seven Letter"), O'Neill & Partners, LLC (doing business as O'Neill &
Associates) ("O'Neill"), Alpine Group Partners, LLC ("Alpine"), KP Public
Affairs LLC ("KP"), MultiState Associates, LLC ("MultiState"), Concordant LLC
("Concordant"), Lucas Public Affairs, LLC ("Lucas"), Pagefield Communications
Limited ("Pagefield"), TrailRunner International, LLC ("TrailRunner"), and
Pine Cove Strategies LLC ("Pine Cove").
We operate in large, growing markets that we believe provide us significant
opportunity for continued growth. We estimate our total addressable market
("TAM") in 2024 was in excess of $20.0 billion, comprising $4.4 billion of
disclosed federal lobbying expenditure in 2024, $2.2 billion of disclosed
United States state-based lobbying expenditure, an estimated $5.6 billion
global public affairs spend, and an estimated $8.4 billion global corporate
communications spend. The latter, which covers corporate, crisis, and
financial communications, became part of our offering with the 2025
acquisition of TrailRunner. We believe this segment may be larger than $8.4
billion, though it is difficult to quantify given that industry metrics often
combine it with broader public relations categories-such as marketing
communications-that PPHC does not provide.
We have built a scalable platform which also creates cross-selling and
referral opportunities. We provide our companies with a scalable platform for
growth, providing uniform and efficient financial infrastructure, legal
services, human resources, compliance and administration at the parent company
level. We also incentivize cross-company selling, talent referrals and
effective conflict management remedies across our client portfolio.
We have grown our geographical reach and practice capabilities to provide
clients a full range of services through multiple member companies. Our
evolution to date is the result of a careful and methodical strategy to build
a unique service platform to simplify and more effectively address global
client challenges and opportunities in an increasingly fragmented and
accelerated policy and communications landscape. This growth strategy is
predicated on adding both geographic reach for clients and a complete set of
asset capabilities to bring the client the ability to synthesize and simplify
the best in class practices to address policy and reputational issues.
Leveraging deep policy and issue expertise derived from our original core
government relations member companies, first established in 2014, we now work
with clients to provide the full-spectrum of strategic communications,
including government affairs, public affairs, issues and crisis
communications, financial communications and corporate and institutional
reputation management needs.
Building on the globalization of public policy and reputation challenges, our
founders and many of our senior managers operate in Washington, DC, and have
past careers and/or close professional ties to the US executive branch,
Congress and regulatory authorities over a period of more than 30 years. Other
leaders operate principally at the state or regional level, drawing on decades
of experience, deep community ties and relationships with key stakeholders in
key markets, including Sacramento, California, Dallas-Fort Worth, Texas and
New York, New York. With the acquisition of Pagefield in June 2024 and
TrailRunner in April 2025, we have expanded our operations to London,
Shanghai, Abu Dhabi and Dubai, giving us truly global reach. We continue to
look for opportunities to broaden the geographic scope of our services both
domestically and abroad.
Adding complementary practice capabilities to augment geographic coverage, our
business comprises three reporting segments-Government Relations Consulting,
Corporate Communications & Public Affairs Consulting and Compliance and
Insights Services-corresponding to the different types of strategic
communications services our member companies provide to our clients:
• Government Relations Consulting services include advocacy,
strategic guidance, political intelligence and issue monitoring at the United
States federal and state levels and internationally through our offices in
London, Shanghai, Abu Dhabi and Dubai;
• Corporate Communications & Public Affairs Consulting
services include crisis communications, community relations, social and
digital media, public opinion research, branding and messaging, relationship
marketing and litigation support; and
• Compliance and Insights Services include lobbying compliance
services and legislative tracking.
As of September 30, 2025, we had approximately 1,300 active client
relationships, which were highly diversified with the top 10 PPHC clients
representing 9.2% of revenue for the first nine months in 2025 versus 8.7% at
the end of FY 2024 and 10.8% for FY 2023. We did not have a single client
representing more than 2.0% of overall revenues. Our client portfolio includes
clients in the healthcare and pharmaceuticals, defense and aerospace,
agriculture, financial services, energy, technology, telecom and
transportation sectors. We also have a track record of high client retention,
with an average annual renewal rate of approximately 78.3% and an average
revenue retention of 84.4% between 2020 to 2024.
From January 1, 2018 to December 31, 2024, we achieved revenue growth of
28.1% CAGR, with organic revenue growth of 15.6% CAGR over the same period.
Executive Highlights
Third Quarter Financial Results
• Q3 2025 revenue increased by 23.8% over the prior period to
$48.8 million, with organic growth contributing 4.5% and the balance driven by
three acquisitions made in 2024 and 2025.
• For the three months ended September 30, 2025, GAAP Net losses
increased from $(6.7) million in 2024, to $(7.4) million in 2025, the increase
is due to a $2.8 million increase in the change in fair value of contingent
consideration primarily driven by our acquisitions activity; this was offset
by a decrease of $1.3 million in share based accounting charges which
primarily relates to the one time acceleration of expense in the three months
ended September 30, 2024, relating to the retirement of an executive.
• Adjusted EBITDA of $11.5 million, up 15.2% over the prior
period, achieved at a 23.6% margin.
• Adjusted Net Income of $9.8 million was up 23.1% with an
increase in finance costs offset by a more favorable effective tax rate.
• Adjusted fully diluted EPS of $0.36 was up $0.05 or 17.0%, with
fully diluted share count increasing by 5.2%.
• PPHC's cash generation remains robust with net cash flows
provided by operating activities increasing by $1.8 million to $9.6 million
while Adjusted Free Cash Flow increased to $9.5 million (Q3 2024: $6.5
million), allowing for continued progress against stated strategic goals via
organic investment and earnings accretive M&A.
· Net Debt of $38.5 million (September 30, 2024: $20.2 million)
reflects a prudent leverage ratio in Management's view.
Nine Months Ended September 30, 2025 Financial Results
• Revenue increased by 23.6% to $136.7 million, with organic
growth contributing 6.5% and the balance driven by three acquisitions made in
2024 and 2025.
• For the nine months ending September 30, GAAP Net losses
increased from $(17.3) million in 2024 to $(23.8) million in 2025, driven by a
$4.0 million increase in post-combination compensation charges primarily
stemming from the recent acquisitions of Lucas, Pagefield, TrailRunner and
Pine Cove, and by a $3.1 million increase in the change in fair value of
contingent consideration.
• Adjusted EBITDA at record level of $33.0 million, up 14.5% over
the prior period, achieved at a 24.1% margin.
• Adjusted Net Income of $25.3 million was up 21.1% over the prior
period with an increase in finance costs offset by a more favorable effective
tax rate.
• Adjusted fully diluted EPS of $0.97 was up $0.12 or 14.4%, with
fully diluted share count increasing by 5.8%.
• PPHC's cash generation remains robust with net cash flows
provided by operating activities increasing by $2.1 million to $10.0 million
while Adjusted Free Cash Flow increased to $21.1 million as compared to $12.4
million in 2024, reflecting strong cash conversion helped by diligent working
capital management.
($ in millions except share and per share amounts)
Three months ended September 30, Nine months ended September 30,
2025 2024 $ Change % Change 2025 2024 $ Change % Change
Revenue $ 48.8 $ 39.4 $ 9.4 23.8% 136.7 $ 110.5 $ 26.2 23.6%
Net Loss $ (7.4) $ (6.7) $ (0.7) 10.4% $ (23.8) $ (17.3) $ (6.5) 37.6%
Adjusted EBITDA $ 11.5 $ 10.0 $ 1.5 15.2% $ 33.0 $ 28.8 $ 4.2 14.5%
Adjusted EBITDA margin 23.6% 25.3% (1.8)pts 24.1% 26.0% (1.9)pts
Adjusted Net Income $ 9.8 $ 8.0 $ 1.8 23.1% $ 25.3 $ 20.9 $ 4.4 21.1%
Basic and diluted loss per share $ (0.45) $ (0.67) 0.22 32.8% $ (1.51) $ (1.89) 0.38 20.1%
Adjusted EPS fully diluted $ 0.36 $ 0.31 0.05 17.0% $ 0.97 $ 0.85 $ 0.12 14.4%
Dividend paid, per share $ 0.054 $ - $ 0.054 -% $ 0.283 $ 0.467 $ (0.18) (39.4)%
Cash and cash equivalents at end of period $ 11.1 $ 12.7 $ (1.6) (12.3)%
Net Debt at period-end $ (38.5) $ (20.2) $ (18.3) 90.6%
Refer to the Non-GAAP Financial Measures section below for our definition of
the non-GAAP measures.
Recent Developments
We announced the acquisition of the business of Texas-based Pine Cove Capital,
LLC, subsequently renamed Pine Cove Strategies ("Pine Cove") a premier
Texas-based strategic consulting firm (the "Acquisition"), for an initial
consideration of $3.0 million and a total potential consideration of $13.0
million. The acquisition was completed during August 2025. The Acquisition is
in line with the Company's growth strategy to expand into certain key United
States state capitals, complementing the Company's federal capabilities with
best-in-class local market expertise. Texas, as one of the largest state
economies and most consequential for public policy activities, has long been
one of the Company's stated priorities for local government relations
expansion. Austin, the capital of Texas, is a critical nexus of business,
politics, and regulatory affairs. Together with the April 2025 acquisition of
TrailRunner International, this Acquisition enhances the Company's ability to
deliver top-tier strategic communications and government relations services
across Texas, supporting clients at greater scale both locally and nationally.
Pine Cove will become PPHC's third state government relations operation,
alongside KP Public Affairs (California) and O'Neill and Associates
(Massachusetts). Combined with MultiState's 50-state reach, this further
strengthens PPHC's leadership in the fragmented state government relations
market. The business assets of Pine Cove Capital, LLC were acquired through a
newly formed wholly owned subsidiary, Pine Cove Strategies, LLC, which
retained its brand and operates independently.
Comparison of the three and nine months ended September 30, 2025 and
September 30, 2024
Results of Operations
Revenue
We generate substantially all of our revenue by providing consulting services
related to Government Relations Consulting, Corporate Communications &
Public Affairs Consulting and Compliance and Insights Services, primarily
through fixed-fee arrangements whereby the client pays a fixed monthly
retainer or subscription amount in exchange for a predetermined set of
professional services. The Company recognizes retainer revenue over time by
measuring the progress toward complete satisfaction of the performance
obligation. We also generate a smaller portion of our revenue from
project-specific revenues which was 9.8%, 9.0%, 10.1%, and 6.4% of total
revenue in the three and nine months ending September 30, 2025 and 2024,
respectively.
The components of fluctuations in revenue by reportable segment for the three
and nine months ended September 30, 2024, were as follows:
($ in millions)
(unaudited)
Three months ended September 30,
2025 2024
Revenue from acquisitions Organic revenue Total revenue Total revenue Organic Revenue Growth((1)) Total Growth
Government Relations Consulting $ 0.5 $ 27.0 $ 27.5 $ 26.3 2.8% 4.5%
Corporate Communications & Public Affairs Consulting 7.1 10.9 18.0 10.5 3.9% 71.6%
Compliance and Insights Services - 3.3 3.3 2.6 25.1% 25.1%
Total $ 7.6 $ 41.2 $ 48.8 $ 39.4 4.5% 23.8%
($ in millions)
(unaudited)
Nine months ended September 30,
2025 2024
Revenue from acquisitions Organic revenue Total revenue Total revenue Organic Revenue Growth((1)) Total Growth
Government Relations Consulting $ 1.5 $ 79.4 $ 80.9 $ 76.6 3.7% 5.6%
Corporate Communications & Public Affairs Consulting 17.4 28.7 46.2 26.0 10.3% 77.3%
Compliance and Insights Services - 9.6 9.6 7.9 21.1% 21.1%
Total $ 19.0 $ 117.7 $ 136.7 $ 110.5 6.5% 23.6%
(1) Refer to the Non-GAAP Financial Measures section below for the
Company's definition of Organic Revenue Growth.
Our total revenue increased 23.8%, to $48.8 million in the three months ended
September 30, 2025 compared to $39.4 million in the three months ended
September 30, 2024, with Organic Revenue Growth contributing 4.5% of
growth.
Our total revenue increased 23.6%, to $136.7 million for the nine months ended
September 30, 2025 compared to $110.5 million for the nine months ended
September 30, 2024, with Organic Revenue Growth contributing 6.5% of
growth.
These increases demonstrate the stability of the Company's core business
operations, the dedication of our management teams across our operating
companies, and the critical importance of our work to our clients, with the
remainder of growth driven by the successful integration of Lucas Public
Affairs, Pagefield Communications (acquisitions completed in Q2 2024) which
are now meaningfully contributing to the Company's financial performance,
TrailRunner International (completed in Q2 2025), and Pine Cove Strategies
(completed in Q3 2025).
Organic growth of 4.5% and 6.5% for the three and nine months ended September
30, 2025 was the outcome of strong continued organic growth in Government
Relations at 2.8% and 3.7%, Corporate Communications & Public Affairs at
3.9% and 10.3% and Compliance and Insights Services at 25.1% and 21.1%.
During the three and nine months ended September 30, 2025, 56.3% and 59.2% of
the Company's revenues stemmed from Government Relations as compared to the
same periods in 2024 of 66.7% and 69.3%, 36.9% and 33.8% came from Corporate
Communications & Public Affairs as compared to the same periods in 2024 of
26.6% and 23.6%, and 6.7% and 7.0% from Compliance and Insights Services as
compared to the same periods in 2024 of 6.7% and 7.1%.
Our Government Relations Consulting segment's revenue increased by 4.5% to
$27.5 million in the three months ended September 30, 2025, compared to $26.3
million in the three months ended September 30, 2024. Our Government
Relations Consulting segment's revenue increased by 5.6%, to $80.9 million in
the nine months ended September 30, 2025, compared to $76.6 million in the
nine months ended September 30, 2024. These increases reflect Organic Revenue
Growth of 2.8% and 3.7%, for the three and nine months ended September 30,
2025 in tandem with the acquisitions of Pagefield (completed in 2024 Q2) and
Pine Cove Strategies (completed in 2025 Q3).
Our Corporate Communications & Public Affairs Consulting segment's revenue
increased by 71.6%, to $18.0 million in the three months ended September 30,
2025, compared to $10.5 million in the three months ended September 30, 2024.
Our Corporate Communications & Public Affairs Consulting segment's revenue
increased by 77.3%, to $46.2 million in the nine months ended September 30,
2025, compared to $26.0 million in the nine months ended September 30, 2024.
These increases reflect Organic Revenue Growth of 3.9% and 10.3% for the three
and nine months ended September 30, 2025, reflecting a strong rebound from a
slower first six months in 2024, in tandem with the acquisitions of Pagefield
, Lucas Public Affairs (both completed in 2024 Q2) and Trailrunner
International (completed in 2025 Q2).
Our Compliance and Insight Services segment's revenue grew, by 25.1%, to $3.3
million in the three months ended September 30, 2025, compared to $2.6
million in the three months September 30, 2024. Our Compliance and Insight
Services segment's revenue grew, by 21.1%, to $9.6 million in the nine months
ended September 30, 2025, compared to $7.9 million in the nine months ended
September 30, 2024. All 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.
In the three and nine months ended September 30, 2025, we generated $2.4
million and $6.3 million, or 5.0% and 4.6% of our total revenue, outside of
the US, as compared to $1.8 million and $2.4 million, or 4.6% and 2.2% for the
three and nine months ended September 30, 2024. The Company's revenue
realized outside the US was 5.0% and 4.6% for the three and nine months ended
September 30, 2025.
Cost of Services
The table below presents the components of cost of services:
($ in millions)
Three months ended September 30, Nine months ended September 30,
2025 2024 $ Change % Change 2025 2024 $ Change % Change
Salaries and other personnel costs
Personnel cost $ 29.7 $ 22.7 $ 7.0 31.0% $ 78.0 $ 62.4 $ 15.6 25.1%
Long-term incentive program charges 1.6 1.2 0.5 41.8% 3.8 1.9 2.0 104.9%
Share-based accounting charge 6.7 6.1 0.5 8.9% 20.0 19.4 0.6 3.0%
Post-combination compensation charge 4.0 3.6 0.3 9.5% 12.7 8.7 4.0 45.8%
Total personnel costs 41.9 33.5 8.4 25.1% 114.6 92.4 22.2 24.0%
Office and other direct costs
Amortization developed software 0.1 0.1 - -% 0.4 0.4 - -%
Occupancy expense 1.8 1.4 0.4 31.5% 4.8 3.8 1.0 25.7%
Total office and other direct costs 1.9 1.5 0.4 28.5% 5.2 4.2 1.0 23.1%
Cost of services $ 43.9 $ 35.0 $ 8.8 25.2% $ 119.8 $ 96.6 $ 23.2 24.0%
Salaries and other personnel cost represents our largest component of cost of
services. Its principal components include employee salaries, share-based
accounting charges, long term incentive program charges, post-combination
compensation expense, benefits and bonuses of employees from operations that
deliver services to our clients. Salaries and other personnel cost increased
by 25.1% or $8.4 million, in the three months ended September 30, 2025, to
$41.9 million, compared to $33.5 million for the three months ended
September 30, 2024. In the nine months ended September 30, 2025, salaries
and other personnel costs increased by 24.0% to $114.6 million compared to
$92.4 million for the nine months ended September 30, 2024, of the $22.2
million increase, $11.1 million was driven by the acquisition of TrailRunner
in April 2025. Additionally, employee bonus amounts were $5.4 million and
$10.1 million for the three and nine months ended September 30, 2025 compared
to $3.4 million and $6.4 million for the three and nine months ended September
30, 2024. These amounts represent annual bonus payments paid as compensation
for services to senior executives and employees based on the Company's
performance, the relative performance of the member company and the
individual. The remaining increases were driven by targeted hiring in tandem
with revenue growth across all three segments.
Office and other direct costs represent our other component of cost of
services. Its principal component includes operating lease expense for
premises leased by the Company's member companies. Office and other direct
costs increased by 31.5% and 25.7% in the three and nine months ended,
September 30, 2025 to $1.8 million and $4.8 million, respectively compared to
$1.4 million and $3.8 million for the three and nine months ended
September 30, 2024, respectively reflecting the addition of new office spaces
associated with the acquisitions of Lucas, Pagefield and TrailRunner.
Salaries, general and administrative expenses
The table below presents the components of general and administrative
expenses:
($ in millions)
Three months ended September 30, Nine months ended September 30,
2025 2024 $ Change % Change 2025 2024 $ Change % Change
Personnel cost $ 0.8 $ 1.9 $ (1.1) (57.2)% $ 6.7 $ 5.4 $ 1.3 23.9%
General and administrative expenses 4.9 3.1 1.8 57.3% 13.9 9.8 4.1 42.3%
Occupancy expense 0.1 0.1 - (22.6)% 0.3 0.4 (0.1) (24.7)%
Long term incentive program charges 0.3 0.7 (0.4) (57.6)% 0.8 1.1 (0.3) (27.5)%
Share-based accounting charge 0.7 2.6 (1.8) (71.0)% 2.2 4.4 (2.2) (49.8)%
Salaries, general and administrative $ 6.9 $ 8.4 $ (1.5) (18.2)% $ 23.9 $ 21.1 $ 2.8 13.4%
General and administrative expenses' principal components comprise general and
administrative expenses, employee salaries, share-based accounting charges,
long term incentive program charges, post-combination compensation expense,
benefits and bonuses of employees employed in the Company's corporate
function. General and administrative expenses decreased by 18.2% and increased
13.4% in the three and nine months ended September 30, 2025, to $6.9 million
and $23.9 million, compared to $8.4 million and $21.1 million for the three
and nine months ended September 30, 2024, reflecting investments in the
Company's holding company, an increase in costs of advisors and auditors, and
additional costs associated with the acquisitions of Lucas, Pagefield and
TrailRunner. Additionally, the share-based accounting charge decreased by $1.8
million and $2.2 million in the three and nine months ended September 30,
2025 due the accelerated vesting of retained 2021 Pre-UK IPO shares for a
single executive upon retirement from the corporate function of the Company
during the three months ended September 30, 2024.
Mergers and acquisitions expense
The principal components of mergers and acquisitions expense include legal,
accounting and other advisory expenses, as well as transaction taxes (UK stamp
duty) and debt origination costs. Mergers and acquisitions expense decreased
by 33.5% and 75.4% in the three and nine months ended September 30, 2025, to
$0.1 million and $0.4 million, compared to $0.1 million and $1.7 million in
the three and nine months ended September 30, 2024, reflecting the reduction
in costs from the relatively high 2024 costs associated with the acquisitions
of Lucas and Pagefield, the latter representing the Company's first non-US
acquisition.
Depreciation and amortization expense
The table below presents the components of depreciation and amortization
expense:
($ in millions)
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Charged to cost of services $ 0.1 $ 0.1 $ 0.4 $ 0.4
Charged to depreciation and amortization expense 1.6 1.2 4.3 3.0
Total depreciation and amortization expense $ 1.7 $ 1.3 $ 4.7 $ 3.5
The principal components of depreciation and amortization expense include the
amortization of intangible assets relating to customer relationships and
non-compete contracts. Depreciation and amortization expense increased by
27.2% and 36.7% in the three and nine months ended September 30, 2025, to
$1.7 million and $4.7 million respectively, compared to $1.3 million and $3.5
million in the three and nine months ended September 30, 2024, reflecting
additional costs associated with the acquisitions of Lucas, Pagefield and
TrailRunner.
Change in fair value of contingent consideration
Change in fair value of contingent consideration represents changes in the
obligations relating to historical acquisitions. The contingent consideration
liability is settled through a combination of cash and shares of our Common
Stock based on each respective purchase agreement, and the amount ultimately
paid is dependent on the achievement of certain operating results. Change in
fair value of contingent consideration increased by 556.0% and 180.1% in the
three and nine months ended September 30, 2025, to $2.3 million and $4.9
million, respectively, compared to $(0.5) million and $1.8 million in the
three and nine months ended September 30, 2024, reflecting a combination of
changes in the outlook of companies under earnout, additional contingent
consideration associated with the acquisitions of Lucas, Pagefield and
TrailRunner, and the payout of contingent consideration to KP.
Gain on bargain purchase
Gain on bargain purchase comprises 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. Gain on
bargain purchase decreased to zero for both the three and nine months ended
September 30, 2025, compared to zero and $2.5 million in the three and nine
months ended September 30, 2024, reflecting the 2024 acquisition of Lucas.
Interest income
Interest income represents the interest income accrued principally on interest
bearing accounts and financial instruments. Interest income decreased by 35.7%
and 36.4% in the three and nine months ended September 30, 2025, to zero and
$0.1 million, respectively, compared to zero and $0.1 million in the three and
nine months ended September 30, 2024, in each case reflecting the interest on
loans made to certain Alpine employees.
Interest expense
Interest expense represents the interest expense incurred under our Term Loans
(as defined below), comprising cash interest amounts and debt discount
amortization amounts. For a description of the Term Loans see "-Liquidity and
Capital Resources-Financial Obligations," below and Note 10 - Notes Payable to
our consolidated financial statements. Interest expense increased by 30.8% and
84.0% in the three and nine months ended September 30, 2025, respectively, to
$1.0 million and $2.5 million, respectively, compared to $0.8 million and $1.3
million in the three and nine months ended September 30, 2024, respectively,
reflecting interest on increased principal amounts, associated with the new
Loans in 2025.
Non-GAAP Financial Measures
Our management uses a variety of financial and operating metrics to analyze
our performance. These metrics are significant factors in assessing our
operating results and profitability. These financial and operating metrics
include Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA Incl. M&A
expense, Adjusted net income, Adjusted diluted EPS, Organic Revenue Growth,
Adjusted Free Cash Flow, Principal Cash Sources and Principal Cash Uses which
are financial measures not recognized under US GAAP. These non-GAAP financial
measures are used by management to measure our operating performance, but may
not be directly comparable to similar measures, such as EBITDA or Adjusted
EBITDA, relied on or reported by other companies, including other companies in
our industry. We believe excluding items that neither relate to the ordinary
course of business nor reflect our underlying business operating performance,
such as equity-based compensation, the amortization of acquired intangible
assets, acquisition-related post-combination compensation and contingent
consideration, gains on bargain purchase price, interest and tax enables
meaningful period-to-period comparisons of our operating performance. We also
use these non-GAAP financial measures when publicly providing our business
outlook, for internal management purposes, and as a basis for evaluating
potential acquisitions and dispositions.
We believe that the exclusion of equity-based compensation expense such as
stock options, restricted stock awards, restricted stock units and
equity-based compensation related to retained Pre-UK IPO shares granted in
relation to our listing on the London Stock Exchange, is appropriate because
it eliminates the impact of non-cash expenses for equity-based compensation
costs that are based upon valuation methodologies and assumptions that can
vary significantly over time due to factors that are (i) unrelated to our core
operating performance, and (ii) can be outside of our control. Although we
exclude equity-based compensation expenses from our non-GAAP measures, equity
compensation has been, and will continue to be, an important part of our
future compensation strategy and a significant component of our future
expenses that may increase in future periods. Additionally, we believe the
exclusion of compensation expense related to share appreciation rights, which
are cash settled, is unrelated to our core operating performance in addition
to the fact that share appreciation rights are no longer part of the Company's
compensation plans going forward.
We define Adjusted EBITDA, which is a non-GAAP financial measure, as
consolidated net loss before depreciation, interest income, interest expense,
income tax expense, long-term incentive program charges, share-based
accounting charges, post-combination compensation charges, change in fair
value of contingent consideration, gain on bargain purchase price net of
deferred taxes, amortization of intangible assets, and merger and acquisition
expenses. We define Adjusted EBITDA margin, which is a non-GAAP financial
measure, as Adjusted EBITDA as a percentage of total revenue. We believe that
these non-GAAP financial measures, when considered together with our GAAP
financial results and GAAP financial measures, provide management and
investors with a more complete understanding of our operating results,
including underlying trends. While our Adjusted EBITDA and Adjusted EBITDA
margin may not be directly comparable to the EBITDA or other measures used by
others, we believe it helps provide a clearer picture of the underlying
performance of the business by removing certain expenses tied to specific
historical acquisitions, including post-combination compensation charges, as
well as non-cash charges such as depreciation and amortization of intangibles.
We use Adjusted Net Income for the purpose of calculating Adjusted Earnings
per Diluted Share ("Adjusted diluted EPS"). Management uses Adjusted diluted
EPS diluted to assess total group operating performance on a consistent basis.
We define Adjusted Net Income as net income excluding the impact of long-term
incentive program charges, share-based accounting charges, post-combination
compensation charges, change in fair value of contingent consideration, gain
on bargain purchase price net of deferred taxes and amortization of intangible
assets. We believe that these non-GAAP financial measures, when considered
together with our GAAP financial results and GAAP financial measures, provide
management and investors with a clearer picture of our underlying business
operating results.
We define Adjusted Free Cash Flow, which is a non-GAAP financial measure, as
net cash provided by operating activities less cash payments for purchases of
property and equipment and less acquisition related payouts classified in
operating cash flows specifically changes in prepaid post combination
payments, changes in other liability (liability classified earnout
obligations) and changes in contingent consideration. We believe this non-GAAP
financial measure, when considered together with our GAAP financial results,
provides management and investors with useful supplemental information on the
Company's ability to generate cash for ongoing business operations and capital
deployment.
Principal Cash Sources and Principal Cash Uses are Non-GAAP liquidity
measures. Principal Cash Sources is defined as net cash provided by operating
activities excluding changes in items related to acquisition payments.
Principal Cash Uses comprise of capital expenditure, changes in amounts owed
to/from related parties, dividends paid and acquisition payments to sellers.
This presentation reflects the metrics used by us to assess our sources and
uses of cash and was derived from our consolidated statement of cash flows. We
believe that this presentation is meaningful to understand the primary sources
and uses of our cash flow and the effect on our cash and cash equivalents.
Non-GAAP liquidity measures should not be considered in isolation from, or as
a substitute for, financial information presented in compliance with US. GAAP.
Non-GAAP liquidity measures as reported by us may not be comparable to
similarly titled amounts reported by other companies. Additional information
regarding our cash flows can be found in our consolidated statement of cash
flows in the consolidated financial statements.
We define Net Cash (Debt) as total unrestricted cash and cash equivalents less
the total principal amount of debt outstanding. The total principal amount of
debt outstanding is comprised of the long-term debt and current maturities of
long-term debt as presented in our consolidated balance sheets adding back any
debt issuance costs. We believe that the presentation of Net Cash (Debt)
provides useful information to investors because our management reviews Net
Cash (Debt) as part of our oversight of overall liquidity, financial
flexibility and leverage.
We define Organic Revenue Growth as the year-over-year revenue growth
excluding revenues from acquired businesses for the first twelve months
following the date of acquisition. For purposes of this calculation, the
revenue of an acquired business is classified as acquired revenue and excluded
from Organic Revenue Growth until the thirteenth month following the
acquisition date. Beginning in the thirteenth month, the revenue from that
acquisition is included in the Organic Revenue Growth comparison against the
corresponding prior-year period. This approach ensures comparability by
aligning revenue bases year-over-year and isolating the performance of our
ongoing operations. We believe that Organic Revenue Growth is a useful
supplemental metric for investors and management, as it provides a clearer
view of underlying revenue trends excluding the impact of acquisition-related
growth.
Executive Highlights
The table below presents the revenue, its growth, and other financial
performance measures over the period 2018-2024. Results for the period
2018-2022 provides supplemental financial information prior to the Company's
initial registration with the SEC:
($ in millions)
2018 2019 2020 2021 2022 2023 2024 YTD 2025 CAGR
2018-2024
Revenue $ 33.8 $ 55.5 $ 77.4 $ 99.3 $ 108.8 $ 135.0 $ 149.6 $ 136.7 28.1%
Revenue growth (year over year) 28.0% 64.2% 39.5% 28.3% 9.6% 24.1% 10.8% 23.6%
Organic Revenue Growth 25.3% 32.5% 8.3% 24.4% 6.7% 2.0% 2.7% 6.5%
Net loss (15.0) (14.2) (24.0) (23.8)
Adjusted EBITDA 31.5 35.4 38.6 33.0
Net loss margin (13.8)% (10.6)% (16.0)% (17.4)%
Adjusted EBITDA margin 29.0% 26.2% 25.8% 24.1%
Top 10 clients as % of total revenue 25.9% 17.9% 12.3% 14.7% 11.0% 10.8% 8.7% 9.2%
The table below sets out the non-GAAP financial measures used by our
management together, in each case, with the nearest comparable measure under
GAAP.
($ in millions except per share amounts)
Three months ended September 30,
2025 2024 $ Change % Change
Revenue $ 48.8 $ 39.4 $ 9.4 23.8%
Net loss $ (7.4) $ (6.7) $ (0.7) (10.9)%
Net loss margin (15.3%) (17.0%) 1.8pts
Adjusted EBITDA $ 11.5 $ 10.0 $ 1.5 15.2%
Adjusted EBITDA margin 23.6% 25.3% (1.8)pts
Adjusted Net Income $ 9.8 $ 8.0 $ 1.8 23.1%
Net loss per share, basic and diluted $ (0.45) $ (0.67) $ 0.22 33.2%
Adjusted EPS, diluted $ 0.36 $ 0.31 $ 0.05 17.0%
Dividend per share $ 0.05 $ - $ 0.05
Net cash provided by operating activities $ 9.6 $ 7.7 $ 1.8 23.7%
Adjusted Free Cash Flow $ 9.5 $ 6.5 $ 2.9 44.7%
Cash and cash equivalents at end of period $ 11.1 $ 12.7 $ (1.6)
Net Debt at period-end $ (38.5) $ (20.2) $ (18.3)
($ in millions except per share amounts)
As reported for the nine months ended September 30,
2025 2024 $ Change % Change
Revenue $ 136.7 $ 110.5 $ 26.1 23.6%
Net loss $ (23.8) $ (17.3) $ (6.5) (37.6)%
Net loss margin (17.4%) (15.6%) (1.8)pts
Adjusted EBITDA $ 33.0 $ 28.8 $ 4.2 14.5%
Adjusted EBITDA margin 24.1% 26.0% (1.9)pts
Adjusted Net Income $ 25.3 $ 20.9 $ 4.4 21.1%
Net loss per share, basic and diluted $ (1.51) $ (1.89) $ 0.38 20.0%
Adjusted EPS, diluted $ 0.97 $ 0.85 $ 0.12 14.4%
Dividend per share $ 0.28 $ 0.47 $ (0.18)
Net cash provided by operating activities $ 10.0 $ 7.9 $ 2.1 27.1%
Adjusted Free Cash Flow $ 21.1 $ 12.4 $ 8.8 70.8%
Cash and cash equivalents at end of period $ 11.1 $ 12.7 $ (1.6)
Net Debt at end of period $ (38.5) $ (20.2) $ (18.3)
The table below sets forth a reconciliation of Adjusted EBITDA and Adjusted
EBITDA margin to net loss and net loss margin.
($ in millions)
Three months ended September 30, Nine months ended September 30,
2025 2024 $ Change % Change 2025 2024 $ Change % Change
Net loss $ (7.4) $ (6.7) $ 0.7 9.8% $ (23.8) $ (17.3) $ 6.5 27.3%
Net loss margin (15.3)% (17.0)% 1.8pts (17.4)% (15.6)% (1.8)pts
Adjustments:
Interest income - - - (55.6)% (0.1) (0.1) 0.1 (57.3)%
Interest expense 1.0 0.8 0.2 23.5% 2.5 1.3 1.1 45.7%
Income tax expense 0.6 1.2 (0.6) (106.6)% 4.7 4.9 (0.2) (5.0)%
Depreciation and amortization 1.7 1.3 0.4 21.4% 4.7 3.5 1.3 26.8%
EBITDA (4.2) (3.5) (0.7) (17.4)% (12.0) (7.7) (4.3) (35.6)%
Long-term incentive program charges 2.0 1.6 0.4 18.9% 4.6 3.0 1.7 35.9%
Share-based accounting charge 7.4 8.7 (1.3) (17.1)% 22.2 23.9 (1.6) (7.3)%
Post-combination compensation charge 4.0 3.6 0.3 8.7% 12.7 8.7 4.0 31.4%
Change in fair value of contingent consideration 2.3 (0.5) 2.8 121.9% 4.9 1.8 3.2 64.3%
Gain on bargain purchase, net of deferred taxes - - - -% - (2.5) 2.5 -%
Adjusted EBITDA incl. M&A expenses $ 11.4 $ 9.9 $ 1.5 13.1% $ 32.5 $ 27.1 $ 5.4 16.6%
M&A Expenses 0.1 0.1 - 25.1% 0.4 1.7 (1.2) (307.3)%
Adjusted EBITDA 11.5 10.0 1.5 13.2% 33.0 28.8 4.2 12.6%
Adjusted EBITDA Margin 23.6% 25.3% (1.8)pts 24.1% 26.0% (1.9)pts
Depreciation and Amortization includes non-cash amortization charges relating
to the amortization of acquired customer relationships, developed technology,
and non-compete agreements. Depreciation and amortization expense for the
three and nine months ended September 30, 2025 of $1.7 million and $4.7
million, respectively, compared to $1.3 million and $3.5 million for the three
and nine months ended September 30, 2024, respectively. This increase was
primarily driven by non-cash amortization charges of $4.6 million in 2025,
compared to $3.4 million in 2024, related to acquired intangible assets
including customer relationships, developed technology, and non-compete
agreements.
Long-term incentive program charges relate to the Omnibus Incentive Plan under
which options, stock appreciation rights, restricted stock units and
restricted stock awards have been granted. The amortization of the fair value
of share-based awards is recorded as an expense in the statement of operations
with a portion recorded to salaries and other personnel costs within cost of
services and a portion recorded to general and administrative costs.
Share-based accounting charges relate to the Pre-UK IPO shares retained by the
Company Executives at the time of the London Stock Exchange IPO in 2021,
governed by their new Executive Employment Agreements entered into in 2021.
Under these new Employment Agreements, the retained shares were made subject
to a new vesting arrangement, and will vest in equal installments over five
years, provided the executive remains employed. The Company records a
share-based accounting charge for each vesting period, with the final charge
to be recorded in the year ending December 31, 2026. The expense is recorded
to cost of services or general and administrative expense depending on the
role of the executive. These charges are distinct from normal personnel costs
because these charges are uniquely tied to the vesting agreements at the time
of the 2021 IPO, and do not represent a cash outflow of the Company.
Post-combination expense arises from certain acquisitions that have been
completed since the London IPO in 2021. In order to protect the interests of
the Company, to a certain extent the cash and shares paid and payable as part
of these transactions are made subject to vesting schedules that require
continued employment. The addition of these provisions to purchase price paid
and payable for an acquired business creates a post-combination compensation
charge in accordance with accounting guidance under GAAP (Accounting Standards
Codification 805-10-55-25). These charges are distinct from normal personnel
costs because (i) these payments are directly tied to the acquisition of the
respective company and prescribed within such purchase agreements (ii) these
payments are incremental to the market rate compensation packages afforded to
the same recipients (iii) the post-combination compensation is limited in time
to the earnout period agreed at the point of acquisition of a company, and
will no longer be an expense after the expiration of that earnout.
Change in fair value of contingent consideration arises from the remeasurement
of contingent consideration relating to the business acquisitions of the
Company. We exclude these costs, or gains, from calculating non-GAAP measures
because (i) they are based upon valuation methodologies and assumptions that
vary over time and are outside of our control and thus are unrelated to our
core operating performance.
Gain on bargain purchase, net of deferred taxes as a non-cash gain, have been
excluded from the calculation of non-GAAP measures.
M&A costs are comprised of costs incurred around the time of a
transaction, such as legal and professional fees, debt origination costs, and
transaction-related taxes, directly incurred as a result of acquisitions. The
exclusion of merger and acquisition-related costs provides investors with a
clearer understanding of our core operating performance, as these costs are
unrelated to our efforts to serve our clients and can vary significantly from
period-to-period depending on the timing, size, and complexity of
transactions, which can distort comparability of financial results over time.
EPS and Adjusted EPS diluted for the three and nine months ended
September 30, 2025 and 2024, were as follows:
($ in millions, except per share amounts)
Three months ended September 30,
2025 2024
GAAP Adjustments((1)) Non-GAAP GAAP Adjustments((1)) Non-GAAP
Net loss and Adjusted Net Income $ (7.4) $ 17.2 $ 9.8 $ (6.7) $ 14.7 $ 8.0
Adjustments to Net Income
Amortization of intangible assets 1.6 1.3
Share-based accounting charge 7.4 8.7
Post-combination compensation charge 4.0 3.6
Change in fair value of contingent consideration 2.3 (0.5)
Long-term incentive program expense 2.0 1.6
Gain on bargain purchase price - -
$ 17.2 $ 14.7
Weighted average number of shares outstanding
- Common Shares 17,403,040 13,654,190
- Fully Diluted 26,886,339 25,553,972
Earnings per share (EPS, $), based on
- Common Shares (0.45) (0.67)
- Fully Diluted (Adjusted EPS, diluted) 0.36 0.31
($ in millions, except per share amounts)
Nine months ended September 30,
2025 2024
GAAP Adjustments((1)) Non-GAAP GAAP Adjustments Non-GAAP
Net loss and Adjusted Net Income $ (23.8) $ 49.1 $ 25.3 $ (17.3) $ 38.2 $ 20.9
Adjustments to Net Income
Amortization of intangible assets 4.6 3.4
Share-based accounting charge 22.2 23.9
Post-combination compensation charge 12.7 8.7
Change in fair value of contingent consideration 4.9 1.8
Long-term incentive program expense 4.6 3.0
Gain on bargain purchase price - (2.5)
$ 49.1 $ 38.2
Weighted average number of shares outstanding
- Common Shares 17,165,104 13,126,771
- Fully Diluted 26,191,804 24,751,217
Earnings per share (EPS, $), based on
- Common Shares (1.51) $ (1.89)
- Fully Diluted (Adjusted EPS, diluted) $ 0.97 0.85
(1) Table may not sum due to immaterial rounding differences
The table below sets forth a reconciliation of net cash provided by operating
activities to Adjusted Free Cash Flow.
($ in millions)
Nine months ended September 30,
2025 2024 $ Change % Change
Net cash provided by operating activities $ 10.0 $ 7.9 $ 2.1 27.1%
Prepaid post-combination expense 10.3 4.5 5.8 129.1%
Change in other liability 1.0 - 1.0 -%
Capex (0.2) - 0.2 673.1%
Adjusted Free Cash Flow $ 21.1 $ 12.4 $8.8 70.8%
The table below sets forth a reconciliation of cash and cash equivalents at
period-end to net debt at period-end.
($ in millions)
September 30, 2025 December 31, 2024 $ Change % Change
Cash and cash equivalents as of end of period $ 11.1 $ 14.5 $ (3.4) (23.3)%
Notes payable, long-term, net (41.5) (26.0) 15.4 59.4%
Notes payable, current portion, net (8.2) (6.0) 2.1 35.6%
Net debt at period-end $ (38.5) $ (17.5) $ 21.0 119.9%
Segment Results of Operations
As discussed in Note 16 - Segment Reporting, we have three reportable segments
as of September 30, 2025, Government Relations Consulting, Corporate
Communications & Public Affairs Consulting and Compliance and Insights
Services. The results of operations of our segments are as follows((1)):
($ in millions)
Three months ended September 30, Nine months ended September 30,
2025 2024 $ Change % Change 2025 2024 Change % Change
Government Relations Consulting
Revenue $ 27.5 $ 26.3 $ 1.2 4.5% $ 80.9 $ 76.6 $ 4.3 5.6%
Staff costs 12.6 11.8 0.7 6.2% 37.5 35.1 2.4 6.7%
Non-staff costs 3.4 2.2 1.1 50.6% 7.7 6.1 1.6 26.4%
Segment Adjusted Pre-Bonus EBITDA 11.5 12.2 (0.7) (5.5)% 35.8 35.4 0.4 1.0%
Corporate Communications
& Public Affairs Consulting
Revenue 18.0 10.5 7.5 71.6% 46.2 26.0 20.1 77.3%
Staff costs 10.4 6.3 4.1 64.9% 27.1 17.3 9.9 57.3%
Non-staff costs 2.1 1.1 1.0 85.5% 6.3 3.8 2.5 65.2%
Segment Adjusted Pre-Bonus EBITDA 5.5 3.0 2.4 80.4% 12.7 5.0 7.8 156.6%
Compliance and Insights Services
Revenue 3.3 2.6 0.7 25.1% 9.6 7.9 1.7 21.1%
Staff costs 1.3 1.2 - 1.6% 3.8 3.6 0.2 5.7%
Non-staff costs 0.2 0.2 - 19.4% 0.5 0.5 - 2.7%
Segment Adjusted Pre-Bonus EBITDA 1.8 1.2 0.6 50.6% 5.2 3.7 1.4 38.7%
Unallocated bonus expense (4.3) (3.7) (0.6) 16.7% (11.2) (7.1) (4.1) 58.0%
Unallocated corporate costs (3.1) (2.9) (0.3) 9.2% (10.0) (9.9) (0.1) 0.5%
Adjusted EBITDA incl. M&A expense $ 11.4 $ 9.9 $ 1.5 15.0% $ 32.5 $ 27.1 $ 5.4 20.0%
Adjusted EBITDA incl. M&A expense margin 23.3% 25.1% (1.8)pts 23.8% 24.5% (0.7)pts
M&A Expenses 0.1 0.1 - 33.5% 0.4 1.7 (1.2) (75.4)%
Adjusted EBITDA 11.5 10.0 $ 1.5 15.2% 33.0 28.8 $ 4.2 14.5%
Adjusted EBITDA Margin 23.6% 25.3% (1.8)pts 24.1% 26.0% (1.9)pts
(1) Table may not sum due to immaterial rounding differences.
The personnel costs for the three and nine months ended September 30, 2025
for the Government Relations Consulting segment increased by $0.7 million and
$2.4 million respectively, of which $0.1 million and $1.7 million were the
result of the acquisitions of Pagefield and Pine Cove, while $0.6 million and
$0.7 million arose from increases in line with revenue. Furthermore, for the
three and nine months ended September 30, 2025, the personnel costs for the
Corporate Communications & Public Affairs Consulting segment increased
$4.1 million and $9.9 million respectively, which primarily reflects the
acquisition of Lucas, Pagefield and TrailRunner. Additionally, for the three
and nine months ended September 30, 2025, post-combination compensation
expense increased by $0.3 million and $4.0 million, primarily relating to the
acquisitions of Lucas, Pagefield, TrailRunner and Pine Cove.
Government Relations Consulting Segment Adjusted Pre-Bonus EBITDA decreased by
$0.7 million and increased by $0.4 million, or (5.5)% and 1.0% for the three
and nine months ended September 30, 2025, respectively, with expense
increases, from acquisitions of Pagefield (2024 Q2), Pine Cove (2025 Q1) and
trade receivable provisions offsetting the associated revenue increases.
Corporate Communications & Public Affair Consulting Segment Adjusted
Pre-Bonus EBITDA increased by $2.4 million and $7.8 million, or 80.4% and
156.6% for the three and nine months ended September 30, 2025, respectively,
as a consequence of continued strong organic growth reflecting a rebound from
the slower first six months in 2024, in tandem with the acquisitions of
Pagefield, Lucas Public Affairs (both 2024 Q2) and TrailRunner International
(2025 Q2).
Compliance and Insights Services Segment Adjusted Pre-Bonus EBITDA increased
by $0.6 million and $1.4 million, or 50.6% and 38.7% for the three and nine
months ended September 30, 2025, respectively reflecting the strong pricing
of subscription contracts in this area, in combination with the increased use
of technology in servicing our clients.
Factors Affecting Our Results of Operations
Ongoing changes in policy, regulatory and political activity are driving
demand for our services.
The size of the market for government relations services has steadily grown
over the past decade. Federal level lobbying increased at a CAGR of over 3.0%
between 2014 and 2024. In general, changes in power - and the associated
change in agendas - drive a need for clients to interact with government and
voter constituencies on policy matters. In recent years this market growth was
driven by historic levels of stimulus and infrastructure spending from the
federal government during and immediately after the COVID years, increased
focus on state and city lobbying, and active legislative agendas at all
government levels. Also following the outcome of the 2025 United States
elections, we have observed material new business activity in the United
States driven by evolving United States tariff policies, tax policies,
antitrust initiatives and an expected move toward deregulation of certain
industries. These factors are applicable to all three segments of the
Company.
The market for public affairs is complementary to that for government
relations, and is believed to be larger. While the long-term growth trends for
all of these markets are believed to be similar, in the short term. Public
affairs is more susceptible to the swings of economic environment and timing
of elections.
Since our inception, we have grown our business substantially through
strategic acquisitions of other firms in our industry and expect to make
additional acquisitions in the future.
Since our founding in 2014, we have acquired multiple businesses, which
currently operate as 12 semi-autonomous companies. Following each successive
acquisition, each new company has been integrated into our corporate structure
and its financial position, cash flows and operating results subsequently
consolidated in to the Company's accounts and annual financial statements. Our
revenue has grown significantly over the period since 2014 in part as a result
of such consolidation as well organic growth. In the years ending
December 31, 2023 and 2024, we acquired three businesses (MultiState, Lucas
and Pagefield); in April 2025, we also completed the acquisition of
TrailRunner and in August 2025, we completed the acquisition of Pine Cove. We
continue to actively seek to expand our portfolio of member companies
internationally with strategically and financially attractive opportunities
while adding complementary specializations. We believe that we can
substantially grow our revenue in the coming years through a combination of
such acquisitions and organic growth. Our ability to grow our revenues through
further M&A activity, and to and achieve our desired EBITDA margins, will
depend on a number of factors, including the availability of acquisition
targets and our ability to negotiate favorable pricing and terms, factors
which may in turn be impacted by market conditions, interest rates and the
demand for services in our industry.
Limited Exposure to Shifts in Political Power
Since inception, our strategy has been to minimize reliance on the political
orientation of the parties that control executive or legislative government
bodies. To that end, each of our member companies operates with clients from
across the political spectrum irrespective of their party affiliation. In
addition, we do not engage in work for political campaigns. This approach is
intended to ensure stability in our client base and mitigate the potential
impact of changes in political leadership on our business operations.
Relatively low cyclicality of demand for lobbying services helps mitigate
greater cyclicality in the public affairs and strategic communications market.
The level and variability of demand for lobbying services varies by industry,
and the demand for lobbying services can be impacted by political developments
such as proposed legislation affecting a particular industry or group. For
example, in a given year, proposed soda taxes may result in increased lobbying
spend by the beverage industry or legislation affecting federal health care
spending or reimbursements could boost lobbying spend by the healthcare and
pharmaceutical industries. Overall, however, lobbying spend appears to be less
correlated to the to the economic cycle, and has shown a relatively modest
decline during recent recessions-for example, there was only a ~2% decline in
active lobbyist positions during the 2008 recession.
By contrast, corporate allocations to public affairs are more exposed to
cyclicality, for example through project-based fees, than government affairs.
During an economic downturn, clients may be more likely to defer big public
affairs projects and trim media spend. Increased public affairs spending in
recent years has been driven by several key trends, including more advanced
digital engagement capabilities and channels and heightened consumer and brand
activism, but there can be no assurance that such trends will continue. We
believe that our core lobbying relationships provide a strong foothold giving
us access to client decision makers, and we have seen less cyclical
variability in our related public relations revenues than our competitors that
do not have integrated lobbying offerings.
There has been recent discussion in the financial press about a heightened
risk of recession in the US or other global markets over the next 12 months.
While, as noted, we would expect any resulting impact on the demand for our
services to be felt primarily in our Corporate Communications & Public
Affairs Consulting segment, and to be mitigated by the strength of our client
relationships, a prolonged or severe downturn in the United States or global
economy could negatively impact demand for lobbying and public affairs
services and thus our revenues and results of operations.
Digital disruption and AI are likely to continue to affect the needs of our
Strategic Communications and Public Affairs clients and the way we do
business.
Work in our Government Relations Consulting segment has faced limited digital
disruption to its core business model or service offering. Firms still largely
operate in a traditional way based on relationships and face-to face
interactions (physically or virtually). Digital content, communication and
channels have, however, been a significant disruptor to the public relations
industry as well as the strategic communications sector and have significantly
changed the way that communications and advocacy are delivered. Data analytics
knowledge and tools have become increasingly valuable and are more often than
not required hiring criteria for all agency partners.
Liquidity and Capital Resources
Our primary sources of liquidity have been cash flows from operations and bank
borrowings, and our principal uses of cash flows from operations include
investment in strategic acquisitions and distributions to our shareholders.
Our ability to fund future acquisitions, capital expenditures and working
capital, and to make scheduled payments of principal, or to pay the interest
on, or to refinance, our indebtedness, will depend on our future performance
and our ability to generate cash, which, to a certain extent, is subject to
general economic, financial, competitive, legislative, legal, regulatory and
other factors that are beyond our control. We believe that our cash flows from
operating activities and bank borrowings will be sufficient to fund our
anticipated acquisitions, capital expenditure, working capital requirements
and debt service requirements as they become due.
Historical cash flows
The following table((1)) summarizes our cash flows, as reported in our
accompanying consolidated financial statements:
($ in millions)
Nine months ended September 30,
2025 2024 $ Change % Change
Net cash provided by operating activities $ 10.0 $ 7.9 $ 2.1 27.1%
Net cash used in investing activities (21.7) (20.2) (1.5) 7.3%
Net cash provided by financing activities 8.1 9.6 (1.5) (15.6)%
Effect of exchange rate changes on cash and cash equivalents 0.2 - 0.1 390.3%
Net decrease in cash and cash equivalents (3.4) (2.7) (0.7) 26.3%
Cash and cash equivalents as of beginning of year 14.5 15.4 (0.9) (5.6)%
Cash and cash equivalents as of end of year $ 11.1 $ 12.7 $ (1.6) (12.3)%
(1) Table may not sum due to immaterial rounding.
Cash flows generated from operating activities
Net cash provided by operating activities was $10.0 million for the nine
months ended September 30, 2025, compared to $7.9 million for the nine
months ended September 30, 2024. This increase of $2.1 million, or 27.1%, was
primarily due to the growth in our business operations, additional income
associated with the acquisitions of Lucas, Pagefield, TrailRunner and Pine
Cove, and favorable movements in working capital. In absolute terms, the cash
provided by operating activities tends to be lowest in the first three months
of the year due to payment of bonuses.
Cash flows used in investing activities
Cash flows used in investing activities was $21.7 million for the nine months
ended September 30, 2025, compared to $20.2 million for the nine months ended
September 30, 2024. This decrease of $1.5 million, or 7.3% was primarily due
to an increase in the amount of cash paid for acquisitions (net of cash
acquired), reflecting the acquisition of TrailRunner and Pine Cove in 2025 and
the acquisitions of Lucas and Pagefield in 2024.
Cash flows used in financing activities
Cash flows provided by financing activities was $8.1 million for the nine
months ended September 30, 2024, compared to $9.6 million used in financing
activities for the nine months ended September 30, 2024. In each year, these
financing cash flow results stemmed from the acquisition of new Bank
Facilities for acquisitions ($24.0 million in 2025 and $25.0 million in 2024),
offset by repayment on bank facilities and payment of dividends.
The following tables summarizes the components of changes in cash and cash
equivalents:
(Amount in millions)
Nine months ended September 30,
2025 2024 $ Change % Change
Net cash provided by Operating Activities - as reported $ 10.0 $ 7.9 $ 2.1 $ -
Add back: items related to Acquisitions
Other liability 1.0 - 1.0 -%
Contingent consideration - - - -%
Prepaid post-combination expense 10.3 4.5 5.8 129%
Principal cash sources 21.3 12.4 8.9 72%
Capital Expenditures (0.2) - (0.2) 673%
Dividends Paid (7.1) (11.2) 4.1 (37)%
Proceeds issued for notes receivable - related parties (0.5) - (0.5) -%
Items related to acquisitions:
Cash paid for acquisitions, net of cash acquired (21.0) (20.2) (0.8) 4%
Payment of contingent consideration (0.7) (1.0) 0.3 (29)%
Other liability (1.0) - (1.0) -%
Contingent consideration - - - -%
Prepaid post-combination expense (10.3) (4.5) (5.8) 129%
Total items related to acquisitions (33.0) (25.7) (7.3) 28%
Principal cash uses (40.9) (36.9) (3.9) 11%
Principal cash uses in excess of principal cash sources (19.5) (24.6) 5.0 (21)%
Effect of Foreign exchange rate changes on cash and cash equivalents 0.2 - 0.1 390%
Net Financing activities
Proceeds from notes payable 24.0 25.0 (1.0) (4)%
Payment of debt issuance costs (0.1) (0.8) 0.7 (86)%
Principal payment of notes payable (6.5) (2.4) (4.1) 174%
Payment of deferred equity offering costs (1.5) - (1.5) -%
Change in Cash and cash equivalents - as reported $ (3.4) $ (2.7) $ (0.7) 26%
Future Capital Requirements
We are actively seeking to expand our portfolio of member companies
internationally with strategically and financially attractive opportunities
while adding complementary specializations. We expect to fund the purchase
price for such acquisitions with net cash from operating activities and a
combination of new stock issuance and debt financing.
Our capital expenditures principally include investments in office build-outs
and small equipment, and have not historically been material to the Company.
Contractual Commitments and Contingencies
Contractual obligations
Our principal contractual obligations consist of our obligations in respect of
financial indebtedness that is owed under our credit facilities. In addition,
we have obligations under leases, trade and other payables, capital
commitments and other contractual commitments.
($ in millions)
Payments due by
Contractual obligations 2025 2026 2027 2028 Thereafter Total
Long-term debt (excluding interest) $ 2.1 $ 9.1 $ 9.5 $ 17.3 $ 11.9 $ 49.8
Operating lease obligations 1.6 6.3 5.4 4.6 4.2 22.1
Total $ 3.6 $ 15.4 $ 14.8 $ 21.9 $ 16.1 $ 71.9
Contingent Obligations
Earnout obligations
As part of the typical structure our acquisition of new member companies, we
are committed to making certain earnout payments. These earnout payments are
based on a profit-driven formula and only materialize if the acquired company
realizes profit growth after the date of completion. Payments are typically
made in a mix of cash and shares. In turn, each of these components of earnout
payments may be subject to further vesting requirements and employment
conditions, which keeps the recipients financially committed to business.
In relation to these earnout payments, as of September 30, 2025, we have
recorded liabilities of $25.7 million on our balance sheet, spread across the
line items Contingent Consideration and Other Liabilities. This number
reflects both the estimated foreseen nominal payments, and also discount
factors and fair value estimates. In nominal terms, over the period 2025-2030,
based on expected performance of each of the acquired companies, we anticipate
having to make earnout payments of $82.3 million, of which $47.4 million would
be payable in cash, and the remainder in shares. The maximum earnout liability
over that same period, which would only be reached if each acquisition meets
very aggressive profit growth targets, would be $142.5 million, of which $84.3
million would be payable in cash, and the remainder in shares. Generally, in
order for an acquisition to reach maximum earnout payments, it would need to
grow its profit by 25-30% annually over the earnout period.
The following tables summarizes nominal earnout expectations:
($ in millions)
Remainder of 2025 2026 2027 2028 2029 2030 Total
Expected earnout payments in Cash $ 1.1 $ 10.9 $ 7.1 $ 22.8 $ 1.6 $ 3.9 $ 47.4
Expected earnout payments in PPHC stock $ - $ 4.6 $ 2.8 $ 22.8 $ 1.0 $ 3.9 $ 35.0
Expected earnout payments - total $ 1.1 $ 15.5 $ 9.9 $ 45.5 $ 2.6 $ 7.7 $ 82.3
Maximum earnout payments in Cash $ 1.5 $ 16.5 $ 15.4 $ 22.8 $ 18.1 $ 10.0 $ 84.3
Maximum earnout payments in PPHC stock $ - $ 7.5 $ 6.9 $ 22.8 $ 11.1 $ 10.0 $ 58.3
Maximum earnout payments - total $ 1.5 $ 24.0 $ 22.4 $ 45.5 $ 29.1 $ 20.0 $ 142.5
We expect that our contingent obligations may evolve over time in response to
current business and market conditions, with the result that future amounts
due may differ considerably from the expected amounts payable set out in the
table above.
Off-Balance Sheet Arrangements
During the nine months ended September 30, 2025 and 2024, the Company did not
engage in any other off-balance sheet commitments, contingencies or
arrangements as set forth in Item 303(b) of Regulation S-K.
Critical Accounting Estimates
Business Acquisitions and Valuation of Contingent Consideration and
Post-Combination Liabilities
The Company accounts for business acquisitions using the acquisition method.
Under ASC 805 Business Combinations, a business combination occurs when an
entity obtains control of a "business." The Company determines whether or not
the gross assets acquired meet the definition of a business. If they meet this
criteria, the Company accounts for the transaction as a business acquisition.
If they do not meet this criteria the transaction is accounted for as an asset
acquisition. The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets acquired. Any
goodwill that arises is tested annually for impairment. Any gain on a bargain
purchase is recognized in profit or loss immediately. Transaction costs are
expensed as incurred, except if related to the issuance of debt or equity
securities.
Contingent consideration is measured at fair value at the date of acquisition
and is based on expected cash flow of the acquisition target discounted over
time using an observable market discount rate. The Company generally utilizes
outside valuation experts to determine the amount of contingent consideration.
We estimate and record the acquisition date fair value of contingent
consideration as part of purchase price consideration for business
acquisitions. Additionally, each reporting period, we estimate changes in the
fair value of contingent consideration and recognizes any change in fair value
in our consolidated statements of operations and other comprehensive loss. The
fair value of the contingent consideration is generally measured using Monte
Carlo simulations to estimate the achievement and amount of certain future
operating results. The Monte Carlo simulations utilize subjective assumptions
and estimates including; expected volatility of future operating results,
discount rates applicable to future results, and expected growth rates. Future
revisions to these assumptions could materially change the estimate of the
fair value of contingent consideration and, therefore, materially affect our
future financial results. The contingent consideration liability is to be
settled through a combination of cash and shares of Common Stock based on each
respective purchase agreement and the amount ultimately paid is dependent on
the achievement of certain future operating results. During the years ended
December 31, 2024 and 2023, the Company recorded a loss from the change of
fair value of contingent consideration of $1.9 million and $1.7 million,
respectively, which are included in operating expenses on the accompanying
consolidated statement of operations. During the three and nine months ended
September 30, 2025 and 2024, the Company recorded a loss (gain) from the
change of fair value of contingent consideration of $2.3 million, $4.9
million, $(0.5) million and $1.8 million, respectively, which are included in
operating expenses on the unaudited condensed consolidated statement of
operations.
Furthermore, the contractual purchase price of business acquisitions may
include future payments to the seller that are not accounted for under ASC 805
Business Combinations due the existence of contractual vesting periods or
claw-backs. Such future payments are generally recorded as liabilities of the
Company. When a component of the contractual purchase price of an acquired
business is determined not to be consideration transferred in exchange for the
business, and should therefore be accounted for as a separate transaction
(such as compensation costs), the Company may, on occasion, recognize a gain
on bargain purchase price because the accounting purchase price is not
inclusive of such a separate component of the contractual purchase price when
being compared to the fair value of the identifiable net assets of the
acquired business which, in some cases, may result in the fair value of the
identifiable net assets being in excess of the fair value of the purchase
price consideration.
The Company records post-combination business expense over the vesting or
claw-back period applicable for these future payments on a straight-line basis
with the amount accrued recorded as other liability. The future earnout
payments that have vesting or claw-back rights tied to employment will reduce
the amount of the other liability when paid. The fair value of other
liabilities is measured using the same Monte Carlo simulation with the same
assumptions and inputs as outlined above for contingent consideration
liabilities. The fair value of post-combination compensation obligations is
remeasured at each reporting date, any changes in fair value are reflected as
a cumulative catch up to post-combination compensation expense in the period
in which the remeasurement occurred.
Goodwill and Indefinite-lived Intangible Assets
Goodwill represents the excess of the purchase price in a business combination
over the fair value of the net tangible and intangible assets acquired and the
indefinite-lived intangible assets which consists of trademarks. In accordance
with ASC 350, Intangibles - Goodwill and Other, goodwill and indefinite-lived
intangible assets are not amortized but tested for impairment annually and
whenever events or changes in circumstances indicate that the carrying value
of an asset may not be recoverable. We test our goodwill and indefinite-lived
intangible assets for impairment annually as of the end of the fourth quarter
using the qualitative assessment. The process of evaluating the potential
impairment is highly subjective and requires the application of significant
judgment. We first assess whether there are qualitative factors which would
indicate that it is more likely than not that the fair value of a reporting
unit is less than its carrying value. We consider events and circumstances
such as, but not limited to, macroeconomic conditions, industry and market
conditions, our overall financial performance, and other relevant
entity-specific events. If the qualitative assessment indicates that the fair
value of the reporting unit is less than its carrying amount, a quantitative
assessment is performed. Based on the results of our qualitative assessment,
there was no goodwill or indefinite-lived intangible asset impairment for the
years ended December 31, 2024 and 2023.
Other Intangible Assets
Our definite-lived intangible assets consist of customer relationships,
developed technology and non-compete agreements that have been acquired
through various acquisitions. The Company generally utilizes third-party
specialists to determine the fair value of acquired intangible assets. The
valuation of these assets involves significant judgment and the use of
valuation techniques such as the multi-period excess earnings method and the
with-and-without method. These models require management to make assumptions
about future revenue growth, customer attrition, operating margins,
contributory asset charges, and discount rates. Changes in these assumptions
could materially affect the fair value assigned to the intangible assets and
the related amortization expense.
We amortize these assets over their estimated useful lives. Long-lived assets
subject to amortization are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to estimated undiscounted future
cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge is
recognized for an amount by which the carrying amount of the asset exceeds the
fair value of the asset. We have not recorded any impairment charges related
to long-lived assets for the years ended December 31, 2024 and 2023.
Long-term incentive program charges
The fair value of awards issued under the Company's long-term incentive
program are estimated using a Black-Scholes option-pricing model on the grant
date which requires subjective inputs. The inputs of the option-pricing model
include the fair market value of our Common Stock based on the closing price
as reported on the date of the grant on the AIM, estimated dividend yield,
expected stock price volatility and risk-free interest rate. The amortization
of the fair value of share-based awards is recorded as an expense in the
statement of operations either within salaries and other personnel costs
within cost of services or to general and administrative costs.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks from interest rates, which could affect our
operating results, financial position and cash flows. We manage this risk
through our regular operating activities.
Interest Rate Risk
We are exposed to interest rate risk on borrowings under our Bank Credit
Facilities. The interest rate under the 2023 Facilities is the Secured
Overnight Financing Rate ("SOFR") as administered by the Federal Reserve Bank
of New York, plus 2.25% per annum. The interest rate under the 2024 Facilities
is SOFR plus 2.60% per annum, and the interest rate under the 2025 Term Loan
is SOFR plus 2.60% per annum. Interest is payable monthly. A 100 basis-point
increase in Bank Credit Facilities debt balances outstanding as of September
30, 2025 would increase our annual interest expense by $0.5 million.
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. END QRTFFSESEEISELF
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