0001193125-26-219544
SEC filingRevenue grew 15.7% YoY to $240.7M, but net income fell 64.9% due to $41.1M non-cash equity compensation from IPO-related grants.
Revenue for Q1 2026 reached $240.7 million, a 15.7% increase from $208.1 million in Q1 2025, driven by client growth, higher volume, and service line expansion across all segments. Cost of services surged 41.0% to $166.4 million, primarily due to $41.2 million in non-cash equity-based compensation from IPO-related grants, pushing cost of services as a percentage of revenue from 56.7% to 69.1%. Sales, general and administrative expenses rose 35.8% to $48.0 million, also impacted by equity-based compensation. Consequently, operating income plummeted 54.3% to $24.1 million, and operating margin contracted from 25.3% to 10.1%. Net income fell 64.9% to $17.7 million, with net income margin dropping from 24.3% to 7.4%. However, on an adjusted basis excluding non-cash charges, Adjusted EBITDA increased 26.5% to $72.3 million, and Adjusted EBITDA margin improved to 30.0% from 27.5%, indicating strong underlying operational performance.
Revenue composition remained stable across service lines: Private Client Services accounted for 51.2% (up from 50.1%), Business Tax Services 33.5% (down from 34.4%), Alternative Investment Funds 10.4% (down from 10.7%), and Valuation Services 4.9% (up from 4.8%). Geographically, the East region grew its share to 42.1% (from 39.8%), while the West region declined to 41.5% (from 43.2%) and Central to 16.4% (from 17.0%). Client engagements increased 2% to 18,970, and total employees rose to 2,271 from 2,209, with managing directors growing to 323 from 312. Attrition increased to 15.7% from 14.2%.
Management highlighted recent acquisitions in Ireland, New Zealand, Nigeria, and Uruguay, with additional acquisitions in Switzerland and Canada expected to close in Q3 2026, signaling continued geographic expansion. The company expects interest expense to decrease as principal on CA Notes and HO Note is paid down. No specific financial guidance was provided, but the company believes existing cash ($206.8 million), cash flows, and IPO proceeds are sufficient for working capital and strategic investments. The Tax Receivable Agreement may create future cash obligations. Focus remains on scaling the global platform and investing in technology and talent.
As of March 31, 2026, Andersen held $206.8M in cash and cash equivalents, down from $250.3M at year-end 2025, primarily due to distributions and debt repayments. Marketable securities (U.S. Treasury held-to-maturity) totaled $5.1M. Total debt comprised $336.5M in related-party notes (Capital Account Notes and Holdover Note), a decrease of $13.6M from $350.1M at December 31, 2025, driven by scheduled principal payments. The Company also maintains a $20M revolving line of credit with no outstanding borrowings as of quarter end.
Andersen has $19.1M in purchase commitments, consisting of $13.9M for software licenses and cloud hosting services through 2031, and $5.2M for a training center agreement through 2030. Operating lease liabilities totaled $112.1M ($7.2M current, $104.9M noncurrent). No other material contractual obligations were disclosed.
Andersen did not execute any share buybacks or declare dividends during the quarter. Capital expenditures were $3.9M (1.6% of revenue), primarily for leasehold improvements and computer equipment. Debt repayment of $13.6M reduced leverage. No new financing activities were noted beyond scheduled payments.
The Company operates as a single reportable segment providing tax, valuation, financial advisory, and consulting services. Revenue disaggregation shows 51% from Private Client Services, 33% from Business Tax Services, 10% from Alternative Investment Funds, and 5% from Valuation Services. Geographically, East region contributed 42% of revenue, West 41%, and Central 16%. All services are provided within the United States.