What Public Policy (PPHC) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue rose 13.2% to $55.2 million, with organic growth accelerating to 5.1%; adjusted EBITDA increased 11.1% to $12.8 million, while its margin edged down to 23.2%.
• Organic growth in government relations (7.5%) and compliance and insight services helped offset a roughly 1% decline in corporate communications and public affairs. Adjusted EPS fell to $0.33 from $0.36, mainly because the average diluted share count increased about 18% following the January IPO.
• Public Policy reaffirmed 2026 revenue guidance of $213 million to $216 million and adjusted EBITDA guidance of $48.5 million to $50.5 million. Four acquisitions added about $33 million in annualized net revenue, and the company announced a new $105 million credit facility.

Public Policy NASDAQ: PPHC reported higher third-quarter revenue and adjusted earnings as demand for government relations services grew, and reaffirmed its full-year outlook following a series of acquisitions.

Revenue increased 13.2% to $55.2 million, including organic growth of 5.1%, up from 3.9% in the second quarter. Adjusted earnings before interest, taxes, depreciation and amortization rose 11.1% to $12.8 million, although the adjusted EBITDA margin narrowed to 23.2% from 23.6% a year earlier.

CEO Stewart Hall said an unpredictable policymaking and communications environment had increased client demand. He also said political change following the recent elections could create opportunities for the company, regardless of the partisan outcome.

“Clients pay us to understand a dynamic new political and reputational landscape quickly and position them to act within it,” Hall said.

Government Relations Growth Offsets Softer Communications Demand

Government relations, which accounts for approximately 58% of revenue, grew organically by 7.5% in the third quarter and 6.7% over the first nine months. CFO Roel Smits said growth was spread across state and federal work, with the company also seeing strength in London through its Pagefield business.

Chief Strategy Officer Thomas Gensemer said clients were highly engaged on healthcare, energy and technology issues. He also pointed to demand related to artificial intelligence, including work involving new companies in Washington and issues extending to state and local governments.

By contrast, corporate communications and public affairs revenue declined organically by approximately 1% for the first nine months. Smits attributed the softer performance partly to a strong comparison with 2025 and a traditionally slower pace ahead of an election. Compliance and insight services, approximately 7% of the business, grew at a mid-teens rate over the period.

For the first nine months, total revenue rose 15.2% to $157.5 million, while adjusted EBITDA increased 9.9% to $36.2 million. The adjusted EBITDA margin declined to 23% from 24.1% a year earlier.

Smits said the margin decline reflected higher holding-company expenses rather than weaker aggregate margins at the operating businesses. Non-allocated corporate costs rose by $3.9 million to $13 million, primarily because of expenses associated with the company’s first year as a U.S. public company and the build-out of its central platform.

Adjusted EPS Falls as Share Count Rises

Adjusted diluted earnings per share were $0.33 for the quarter, down from $0.36 a year earlier. For the first nine months, adjusted EPS fell to $0.92 from $0.97, even as adjusted net income rose 12.8% to $28.6 million.

Smits attributed the per-share decline primarily to an approximately 18% increase in the average fully diluted share count following the company’s Nasdaq initial public offering in January 2026. He said the capital raised helped fund most of the year’s acquisitions without adding debt.

On a GAAP basis, Public Policy reported a quarterly net loss of $0.01 per share, compared with a loss of $0.45 a year earlier. Smits said the improvement was mostly due to a non-cash bargain purchase gain on acquisitions, which he described as an accounting outcome rather than an economic gain.

Adjusted free cash flow for the first nine months was $14.6 million, down from $21 million a year earlier. Smits said working-capital needs, particularly receivables, were the main reason for the decline. He said receivables had improved at the end of the third quarter and into the fourth quarter, when the company expects strong cash generation.

Outlook and Acquisition Plans

Public Policy reaffirmed its 2026 guidance for revenue of $213 million to $216 million and adjusted EBITDA of $48.5 million to $50.5 million, with an adjusted EBITDA margin of 22.5% to 23.5%. Smits said the forecast was not raised following the recent Reevemark acquisition because its expected profit contribution for the final two months of 2026 was relatively small.

Hall said four acquisitions completed in 2026 have added approximately $33 million in annualized net revenue, based on figures disclosed when the deals were announced. Reevemark adds crisis, litigation and financial communications capabilities, while The Advocacy Partners expanded the company’s state lobbying presence in Florida.

Gensemer said the acquisition pipeline included dozens of opportunities, with a focus on geographic gaps, integration and cross-selling. He identified Brussels, the Middle East and parts of Asia as areas of interest. Smits also cited New York State as a potential acquisition market.

The company announced a new five-year, $105 million senior secured credit facility with Bank of America. Hall said Public Policy intends to increase it to $150 million through a syndication expected in January 2027; the facility also includes an uncommitted option for up to another $50 million.

About Public Policy (NASDAQ:PPHC)

Public Policy Holding Company, Inc NASDAQ: PPHC is a government relations and public affairs company that provides strategic advisory services to organizations seeking to understand and influence public policy. Through its portfolio of specialized firms, the company works with corporations, trade associations, nonprofit organizations and other institutions on legislative, regulatory and reputational matters.

Its services include federal and state-level lobbying, public affairs strategy, strategic communications, grassroots and coalition campaigns, issue advocacy, public opinion research and stakeholder engagement.

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