Andersen Group Inc.: Form 10-Q for the period ended Mar 31, 2026

Unless the context otherwise required, references in this Quarterly Report on Form 10-Q to "Andersen", "we", "us", and "our" shall mean Andersen Group Inc. and its subsidiaries.

The following discussion is intended to assist in the understanding of our financial position at March 31, 2026 and December 31, 2025, results of operations for the three months ended March 31, 2026 and 2025, and cash flows for the three months ended March 31, 2026 and 2025, and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2025. Some of the information contained in this discussion and analysis or set forth elsewhere, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties and should be read in conjunction with the disclosures and information contained in “Special Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q and in Part I, Item 1A. "Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Overview

We are a leading provider of independent tax, valuation and financial advisory services to individuals, wealthy families, businesses and institutional clients in the United States. From our roots as a tax advisory firm, we have strategically expanded our business to build an integrated platform of service offerings that enables us to solve our clients’ most complex challenges. We have achieved this by delivering market-leading technical expertise combined with practical advice, supported by our unique firm culture, integrated services offerings and our relationship with Andersen Global, a Swiss association of over 300 member and collaborating firms.

Our operating model is powered by a strong firm culture based on shared values, integrated services offerings and investments in our people, which has allowed us to build a differentiated approach to client service.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2025 for further discussion of our business and strategies as well as factors that currently impact our operations.

Recent Developments

Inorganic Growth Opportunities

Andersen’s relationships with over 400 Andersen Global and Andersen Consulting member and collaborating firms provide opportunities for domestic and international expansion through closer partnerships and, future acquisitions and future business combinations. In May 2026, the Company announced it closed the acquisition of tax firms in Ireland and New Zealand, a tax firm and a consulting firm in Nigeria, and a tax firm and a law firm in Uruguay, expanding its presence across key developed and high-growth markets as it continues to scale its global platform. In addition, Andersen signed agreements for the acquisition of a tax firm in Switzerland and a business combination in Canada, both expected to close in the third quarter of 2026, subject to the satisfaction of certain closing conditions.

Executive Summary

Revenue for the three months ended March 31, 2026 was $240.7 million, representing 15.7% year-over-year growth, driven by strong execution and continued demand across our core markets, as compared with $208.1 million of revenue for the three months ended March 31, 2025. Growth in 2026 was supported by client growth, higher volume and service line expansion. There were no large one-time 2026 revenue items, and all of our service lines grew revenues in the three months ended March 31, 2026 as compared with the three months ended March 31, 2025.

Key Financial and Operational Metrics

We monitor the following key financial and business metrics to evaluate our business, measure our performance and make strategic decisions:

Revenue and Components of Revenue

We generate our revenue from providing tax and financial advisory services to our clients. During the three months ended March 31, 2026 and 2025, the substantial majority of our revenue was generated on a time and materials basis and, to a lesser extent, on a fixed fee basis and contingent fee basis. In the future, our revenue and profitability could vary materially depending on changes in the nature of services provided, as well as the stage of performance at which the right to receive fees is finally determined. We provide services in four primary areas:

• Private Client Services. We provide comprehensive tax and financial services for individuals and families, addressing complex client matters such as multigenerational wealth, charitable giving and trust and estate planning.
• Business Tax Services. We offer a broad range of scalable, integrated tax-related consulting and compliance services for businesses, helping organizations with managing their tax planning, compliance and reporting needs.
• Alternative Investment Funds. We deliver comprehensive tax and financial-related services for alternative investment funds, including family offices, funds of funds, hedge funds, private equity funds, venture capital funds and real estate investment trusts.
• Valuation Services. We provide clients with independent valuation expertise that helps clients navigate tax laws and regulations and comply with regulatory requirements.

During the three months ended March 31, 2026, our revenue increased by 15.7% to $240.7 million from $208.1 million during the three months ended March 31, 2025. Revenue consists of professional services revenue and reimbursable expenses, which primarily include travel and out-of-pocket costs that are billable to clients.

Revenue by Service Line

We have built a multidimensional independent advisory firm with the ability to provide differentiated services across tax and financial services to address our clients’ most complex challenges. This is reflected in the revenue contribution of our services lines:

The percentage of revenue by service line has largely remained stable over the past five years.

Revenue by Geographic Region

Since our founding, we have expanded our geographic reach across the United States, serving clients from 27 offices as of March 31, 2026. While our offices are primarily situated in major metropolitan areas, our expansive presence across the United States allows us to adapt to regional market fluctuations and capitalize on localized opportunities. Geographic revenue contribution is derived from the assigned office of each employee working on an engagement. This regional allocation typically aligns with the region in which the client is located, but in some cases, the client may be in a region different from the location of the office or employees.

Revenue by U.S. region was:

Clients

Client groups will often comprise multiple client engagements with different entities or individuals, such as multiple subsidiaries of an entity, multiple principals within a single private equity fund or multiple individuals or trusts within a single wealthy family. Across our client groups, we had over 18,970 client engagements during the three months ended March 31, 2026, representing an increase of approximately 2% from the over 18,600 client engagements we served during the three months ended March 31, 2025.

Our clients are distributed across a substantial number of individuals, wealthy families and trusts and business enterprises within a wide range of industries, including financial services, consumer products, healthcare, hospitality, manufacturing, pharmaceutical and biotech, private equity, real estate, technology and venture capital. By serving a diverse range of clients across a diverse range of industries, we believe we can capitalize on growth opportunities in expanding sectors while offsetting potential slowdowns in others.

People Metrics

Compensation represents the largest portion of our operating expenses. As a result, we monitor our total number of employees and growth in employees:

Our workforce, which excludes temporary staff, consists of predominantly client serving professionals, and grew to 2,271 total employees as of March 31, 2026. During the three months ended March 31, 2026, attrition, excluding involuntary terminations, increased by 1.5% to 15.7% from 14.2% during the three months ended March 31, 2025.

As of March 31, 2026, our workforce had a balanced distribution of tenure, reflecting a blend of experienced professionals and newer talent. Our 2,271 total employees included 323 Managing Directors as of March 31, 2026.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures to supplement our financial measures prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), which include EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin ("Non-GAAP Financial Measures"). We believe that the Non-GAAP Financial Measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance. We also believe that the Non-GAAP Financial Measures can enhance an investor’s understanding of our financial and operating performance from period to period, because they exclude certain items relating to income tax expense, interest, depreciation and amortization, equity-based compensation, and transaction costs which are not necessarily reflective of our ongoing operations and performance. However, the Non-GAAP Financial Measures are presented for supplemental informational purposes only, have limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of the limitations of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin include that they exclude certain tax payments that may reduce cash available to us, do not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future, and do not reflect changes in, or cash requirements for, our working capital needs. Some of the limitations of Adjusted Net Income and Adjusted Net Income Margin include that they exclude the impact of expenses related to transaction activities, certain equity restructuring expenses and certain components of equity-based compensation.

Other companies, including companies in the professional services industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, any of which could reduce the usefulness of our Non-GAAP Financial Measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these Non-GAAP Financial Measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

The following table summarizes the Non-GAAP Financial Measures (along with the most directly comparable GAAP measures) for the periods indicated:

($ in thousands)

(1) These are non-GAAP financial measures. See below for a reconciliation to the most directly comparable GAAP financial measure.

Adjusted Net Income and Adjusted Net Income Margin

We define Adjusted Net Income as net income plus expenses related to transaction activities, including costs related to planned mergers, acquisitions, and business combinations, non-recurring equity restructuring costs and non-cash equity-based compensation expense associated with equity interests that were issued in anticipation of, and in connection with, the IPO. We define Adjusted Net Income Margin as Adjusted Net Income divided by revenue. We believe Adjusted Net Income and Adjusted Net Income Margin enhance an investor’s understanding of our financial and operating performance because they exclude transaction-related costs allowing for greater transparency into what measures we use in operating our business and measuring our performance. In addition, these measures enable comparison of financial trends and results between periods. The following table reflects the reconciliation of net income to Adjusted Net Income and Adjusted Net Income Margin for each of the periods indicated:

($ in thousands)

(1) Transaction costs include certain legal, accounting and consulting costs incurred related to planned mergers, acquisitions, and business combinations during the three months ended March 31, 2026 and certain legal, accounting and consulting costs incurred for public company readiness not eligible for capitalization and related to the planned restructuring during the three months ended March 31, 2025.

(2) Equity-based compensation expense associated with the vesting of Class X Aggregator Units consists of non-cash expenses associated with the vesting of Class X Aggregator Units, which were part of the Reorganization Transactions and described in Note 13, “Equity-based Compensation—Class X Aggregator Units” to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report. We recognized $37.5 million of non-cash equity-based compensation expense associated with Class X Aggregator Units in cost of services and $3.6 million in sales, general and administrative expense during the three months ended March 31, 2026.

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin

We define EBITDA as net income plus income tax expense, interest expense, and depreciation and amortization less interest income. We define Adjusted EBITDA as EBITDA with adjustments to exclude results from expenses related to transaction activities, including costs related to planned mergers, acquisitions, and business combinations and non-cash equity-based compensation expense associated with equity interests that were issued in anticipation of, and in connection with, the IPO. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. The following table is a reconciliation of net income to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for each of the periods indicated:

($ in thousands)

(1) Transaction costs include certain legal, accounting and consulting costs incurred related to planned mergers, acquisitions, and business combinations during the three months ended March 31, 2026 and certain legal, accounting and consulting costs incurred for public company readiness not eligible for capitalization and related to the planned restructuring during the three months ended March 31, 2025.

(2) Equity-based compensation expense associated with the vesting of Class X Aggregator Units consists of non-cash expenses associated with the vesting of Class X Aggregator Units, which were part of the Reorganization Transactions and described in Note 13, “Equity-based Compensation—Class X Aggregator Units” to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report. We recognized $37.5 million of non-cash equity-based compensation expense associated with Class X Aggregator Units in cost of services and $3.6 million in sales, general and administrative expense during the three months March 31, 2026.

Components of Our Results of Operations

Revenue

The substantial majority of our revenue is recognized on a time and materials basis. Each of our professionals is assigned an hourly billing rate based on several factors, such as classification, experience level, location, market conditions, area of expertise, and service line. Time related to the performance of all services is maintained in a time and billing system. However, we may enter into service arrangements that are not based on a time and materials basis, such as fixed price or contingent fee arrangements, although to date such arrangements have not represented a material portion of our revenue. Our engagements may also provide for adjustments, refunds, or discounts under specific circumstances that are reflected in the transaction price.

Operating Expenses

Our operating expenses consist of the following:

Cost of Services

Cost of services primarily consist of direct expenses related to the production of deliverables under client assignments. This includes personnel costs for revenue-generating personnel, such as wages, equity-based compensation, benefits and incentive compensation, and sub-consultant costs, software costs and an allocation of non-personnel costs such as occupancy costs.

Sales, General and Administrative

Sales, general and administrative expenses primarily consist of personnel costs such as wages, equity-based compensation, benefits and incentive compensation related to support and administrative functions, and non-personnel costs such as professional fees, business development, occupancy, advertising, recruiting and training costs.

Equity-Based Compensation

In connection with the IPO and the Reorganization Transactions, we incurred substantial equity-based compensation expense with respect to (1) RSUs and Aggregator LTIP Units that we granted in connection with the IPO, (2) the exchange of the profits interest units granted in 2025 for unvested Class X Aggregator Units as part of the Reorganization Transactions, and (3) the exchange of Management Holdco units for unvested Class X Aggregator Units as part of the Reorganization Transactions. We expect to incur equity-based compensation expense with respect to equity-based awards we intend to grant in the future, including RSUs under our equity incentive plan and Aggregator LTIP Units. Our equity-based compensation is described further in Note 13, “Equity-based Compensation” to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.

Depreciation and Amortization

Depreciation and amortization primarily consist of depreciation and amortization of our property and equipment, software and acquired intangible assets.

Interest Income

Interest income consists of interest earned on cash and cash equivalent balances, investments in held-to-maturity debt securities, and notes receivable from related parties.

Interest Expense

Interest expense consists primarily of interest related to the CA Notes and the HO Note. We expect to incur lower interest expense in the future related to the CA Notes and the HO Note as principal amounts are paid down.

Other Income, Net

Other income, net consists primarily of sublease income and license fee income.

Income Tax Expense

Income tax expense consists primarily of current and deferred income tax.

Net Income Attributable to Noncontrolling Interest

Net income attributable to noncontrolling interest reflects the income earned or loss incurred attributable to the equity interest Aggregator has in our AT Umbrella LLC subsidiary. See Note 1, “Organization and Business Description” and Note 2, "Summary of Significant Accounting Policies" to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for further information. Net income attributable to Andersen Group Inc. represents the income attributable to the shareholders of Andersen Group Inc.

Results of Operations

Comparison of the Three Months Ended March 31, 2026 and 2025

The following table summarizes our consolidated results of operations for the three months ended March 31, 2026 and 2025:

($ in thousands)

38

The following table sets forth our consolidated results of operations expressed as a percentage of revenue:

Revenue

($ in thousands)

Our revenue during the three months ended March 31, 2026 increased by $32.7 million, or 15.7%, to $240.7 million, compared to $208.1 million during the three months ended March 31, 2025. Revenue growth was broad-based across all service lines, driven by client additions, higher volume, and service line expansion during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Our busiest periods typically align with U.S. tax filing deadlines, particularly the months leading up to April 15th for individual and corporate tax filings and the extension deadlines in October. During these peak times, we typically experience a substantial increase in client engagements and workload, which has historically driven an increase in billable hours and revenue in the first and third quarters of the year.

Operating Expenses

($ in thousands)

Cost of services

Our cost of services during the three months ended March 31, 2026 increased by $48.4 million, or 41.0%, to $166.4 million compared to $118.0 million during the three months ended March 31, 2025. The increase in cost of services was primarily attributable to $41.2 million in non-cash equity-based compensation in the first quarter of 2026 resulting from new Class X Umbrella Units, LTIP Units and RSUs granted in connection with the IPO and Reorganization Transactions. Other personnel costs increased by $7.3 million as our headcount scaled to meet higher demand for our services. Cost of services as a percentage of revenue increased period-over-period from 56.7% during the three months ended March 31, 2025 to 69.1% for the three months ended March 31, 2026.

Sales, general and administrative

Our sales, general and administrative expenses during the three months ended March 31, 2026 increased by $12.6 million, or 35.8%, to $48.0 million compared to $35.4 million during the three months ended March 31, 2025. The increase was primarily related to equity-based compensation costs of $4.4 million resulting from grants of equity-based units in connection with the IPO in December 2025, as well as a $2.2 million increase in salaries and related expenses in connection with our increased headcount year-over-year. We also incurred $1.3 million in increased technology expenses as a result of additional software which was implemented to adhere to various regulatory requirements in connection with the IPO. Sales, general and administrative costs as a percentage of revenue increased period-over-period from 17.0% for the three months ended March 31, 2025 to 19.9% for the three months ended March 31, 2026.

Depreciation and amortization

Our depreciation and amortization expenses during the three months ended March 31, 2026 increased by $0.2 million or 8.5%, to $2.3 million compared to $2.1 million during the three months ended March 31, 2025. Depreciation and amortization costs as a percentage of revenue remained relatively consistent period-over-period at 0.9% compared to 1.0%.

Interest Income

($ in thousands)

Interest income during the three months ended March 31, 2026 increased by $0.7 million, or 56.6%, to $1.9 million, compared to $1.2 million during the three months ended March 31, 2025. The increase was primarily driven by increased interest from money market funds.

Interest Expense

($ in thousands)

Interest expense for the three months ended March 31, 2026 was approximately $6.2 million, and was $0.1 million for the three months ended March 31, 2025. The increase was attributable to the CA Notes and HO Note incurred in connection with the IPO and Reorganization Transactions described in Note 1, “Organization and Business Description” to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.

Other Income, Net

($ in thousands)

Other income, net during the three months ended March 31, 2026 decreased by $0.2 million, or 17.6%, to $0.8 million, compared to $1.0 million during the three months ended March 31, 2025.

Income Tax Expense

($ in thousands)

For the three months ended March 31, 2026 and 2025, we recorded an income tax provision of $2.8 million and $4.1 million, respectively on pre-tax income of $20.6 million and $54.7 million respectively. Our effective tax rate for the three months ended March 31, 2026 was 13.7% compared to 7.5%, for the three months ended March 31, 2025. The effective tax rate for the three months ended March 31, 2026 differed from the U.S. statutory rate of 21.0% primarily due to non-controlling interest as Andersen Group Inc. is only subject to income tax on its allocable share of partnership income from AT Umbrella LLC and state and local income taxes. The effective tax rate for the three months ended March 31, 2025 differed from the U.S. statutory rate of 21.0% primarily related to income not subject to entity level tax as we were taxed as a partnership and compensation expense recorded for accounting purposes related to profit interest units that are not deductible for tax purposes and certain state and local entity level taxes.

As of March 31, 2026, our conclusion regarding the realizability of our US deferred tax assets did not change and we continued to conclude that substantially all of its investment in AT Umbrella LLC is not realizable on a more-likely-than-not basis as the investment in AT Umbrella LLC is capital in nature.

Net Income Attributable to Noncontrolling Interest

The net income attributable to the noncontrolling interest of AT Umbrella LLC for the three months ended March 31, 2026 was $17.2 million, which is 88.6% of the earnings of AT Umbrella LLC for the three months ended March 31, 2026.

Liquidity and Capital Resources

Historically, we have generated sufficient cash to fund our operations, capital expenditures and discretionary funding needs through cash generated from our operating activities. As of March 31, 2026, cash and cash equivalents were $206.8 million and investments in treasury securities were $5.1 million.

Our expected liquidity needs may be impacted by discretionary investments, acquisitions and business combinations that we could pursue in the future. However, we could raise additional funds through public or private debt or equity financings in the future to, among other things:

• purchase, redeem or exchange shares;
• pay dividends;
• acquire businesses;
• expand geographically; or
• invest in developing new services.

We believe that our existing cash and cash equivalents, cash flows from operations and the net proceeds from the IPO will be sufficient to meet our current and longer-term working capital, investments and other general corporate funding requirements. Substantially all of our cash is held in the United States where there are no significant regulatory restrictions or material tax effects on the free flow of funds among entities in our corporate structure.

Our working capital management primarily relates to trade accounts receivable, accounts payable, and incentive-based compensation and other assets typically related to activities in the normal course of our business operations. At any specific point in time, working capital is subject to many variables, including seasonality and the timing of cash receipts and payments.

Tax Receivable Agreement

In connection with the Reorganization Transactions, the Company entered into a Tax Receivable Agreement (TRA) with certain pre-IPO owners. Under the TRA, we are required to pay to Aggregator 85% of the cash tax savings, if any, that we realize or are deemed to realize as a result of (i) increases in tax basis of AT Umbrella LLC’s assets resulting from purchases or exchanges of Class X Umbrella Units for our Class A common stock and (ii) certain other tax benefits, including payments made under the TRA. The TRA includes assumptions that may result in payments exceeding actual tax savings.

These payment obligations are expected to be significant and could reduce the amount of cash available for general corporate purposes, negatively impacting our liquidity. In the event of insufficient cash resources, unpaid amounts will accrue interest until paid.

Our obligations under the TRA could have a material adverse effect on our financial condition and may limit our ability to deploy cash for other strategic purposes. We might need to incur debt to finance payments under the TRA to the extent our cash resources are insufficient and there can be no assurance that we will be able to finance our obligations.

We have not yet incurred a liability in connection with the TRA.

Distributions

During the three months ended March 31, 2026, we paid distributions to the Aggregator of $18.1 million related to members' tax obligations, members’ undistributed capital and allocated income prior to the IPO and Reorganization Transactions.

The AT Umbrella LLC Agreement requires cash distributions to the holders of economic interests in AT Umbrella LLC (including holders of Class X Umbrella Units, LTIP Units, the CA Notes and the HO Note) for purposes of funding their (or in the case of Aggregator, its members’) tax obligations in respect of the taxable income of AT Umbrella LLC that is allocated to them. During the three months ended March 31, 2026, AT Umbrella LLC paid distributions to Aggregator of $6.3 million in satisfaction of member tax liabilities.

Promissory Notes

In connection with the Reorganization Transactions, AT Umbrella LLC issued two types of promissory notes to Aggregator representing (1) the HO Note and (2) the CA Notes. The HO Note were issued at an initial principal amount of $162.3 million and accrues interest at 7.63% payable over eight years. The CA Notes were issued at an aggregate initial principal amount of $187.8 million and accrue interest between 6.31% to 7.50% payable over two to seven years. See Note 9, “Long-Term Debt” and Note 19, "Subsequent Events" to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for further information.

Credit Facility

We maintain a $20.0 million revolving line of credit, which we refer to as the Credit Agreement, with JPMorgan Chase Bank, N.A., as successor-in-interest to First Republic Bank. The Credit Agreement is collateralized by substantially all of our assets. In February 2026, we amended the Credit Agreement to extend through June 2026. The extension also modified certain terms relating to covenant requirements.

As of March 31, 2026, the Credit Agreement included a sublimit of $5.0 million for standby letters of credit. Borrowings under the Credit Agreement bear interest at the Prime rate with a floor of 5.0%. As of each March 31, 2026 and December 31, 2025, we had outstanding standby letters of credit of $1.3 million. We had no cash borrowings under the Credit Agreement as of March 31, 2026 or December 31, 2025. Our outstanding letter of credit is subject to a commitment fee of 1.5% per annum.

The Credit Agreement includes certain financial and liquidity covenants, which require us to maintain a net after tax profit of not less than $1.00 each year; prohibit us from having certain indebtedness outstanding, subject to certain exceptions; require us to maintain unencumbered liquid assets (other than the security interest granted to the lender) equal to at least (i) the sum of all outstanding indebtedness under the Credit Agreement (collectively, the Liquidity Indebtedness) and (ii) 1.25 times the aggregate amount of all Liquidity Indebtedness; and prohibit us from loaning money to any person, subject to certain exceptions including loans to employees and to member firms of Andersen Global, so long as each such loan is on arm’s length terms and (i) matures within seven years, and does not have an outstanding principal balance in excess of $1,000,000 individually or $5,000,000 in the aggregate for loans to employees and (ii) matures within eleven years and does not have an outstanding principal balance in excess of $10,000,000 individually or $15,000,000 in the aggregate for loans to any member firm of Andersen Global. During the three months ended March 31, 2026 and 2025, the Company had no uncured events of default with respect to the financial covenants required by the Credit Agreement.

See Note 9, “Long-Term Debt” to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for further information.

Cash Flows for the Three Months Ended March 31, 2026 and 2025

Cash flows from operating, investing and financing activities for the three months ended March 31, 2026 and 2025 were as follows:

($ in thousands)

Operating Activities

Net cash flows used in operating activities were $3.9 million during the three months ended March 31, 2026 compared to net cash flows provided by operating activities of $11.2 million during the three months ended March 31, 2025, a decrease of $15.1 million. The decrease was driven by a decrease in net income during the three months ended March 31, 2026 to $17.7 million compared to $50.6 million during the three months ended March 31, 2025, which was offset by net inflows from non-cash equity based compensation of $45.6 million for the three months ended March 31, 2026. The decrease in net cash flows was also driven by increased outflows from operating assets and liabilities, primarily attributable to an increase in accounts receivable of $91.4 million for the three months ended March 31, 2026 due to revenue growth compared to an increase in accounts receivable of $64.0 million during the three months ended March 31, 2025.

Investing Activities

Net cash flows used in investing activities were $0.4 million during the three months ended March 31, 2026 compared to net cash provided by investing activities of $8.1 million during the three months ended March 31, 2025, a decrease of $8.5 million. The decrease was primarily driven by a decrease in proceeds from held-to-maturity debt securities due to the lower balances carried in these investments during the three months ended March 31, 2026.

Financing Activities

Net cash flows used in financing activities were $39.2 million during the three months ended March 31, 2026 compared to $12.1 million during the three months ended March 31, 2025, an increase of $27.1 million. Distributions increased during the three months ended March 31, 2026 to $24.4 million compared to $11.3 million during the three months ended March 31, 2025 due to an increase in distributions paid to Aggregator after the Reorganization Transactions and distributions paid to Aggregator in satisfaction of member tax liabilities. The increase was also driven by principal payments of $13.6 million on the CA Notes and the HO Note during the three months ended March 31, 2026.

Critical Accounting Estimates

Our critical accounting estimates are disclosed in the Critical Accounting Estimates section in Part II, “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2025. Since December 31, 2025, there have been no material changes to our critical accounting estimates.

Contractual Obligations and Commitments

Operating Leases

Our operating lease commitments include corporate office space. As of March 31, 2026, we had fixed lease payment obligations of $144.2 million, with $6.9 million to be paid during the remainder of 2026 and the remainder thereafter.

Andersen Global Commitments

Management of Andersen Global has established a program to allocate certain global management, business development and other costs to its member firms. We fund these costs on behalf of Andersen Global and allocate a portion to be reimbursed by non-U.S. member firms. Our sales, general and administrative expenses in the unaudited condensed consolidated statements of operations include amounts for our share of cost allocations for Andersen Global with respect to global business development initiatives. As of March 31, 2026 and December 31, 2025, amounts due from member firms related to the program included in prepaid expenses and other current assets were $5.2 million and $4.3 million, respectively, and amounts due to member firms related to the program included in other current liabilities were $0.8 million and $0.6 million, respectively. See Note 15, “Transactions with Related Parties—Andersen Global Commitments” to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for additional details.

Other Commitments

We are party to an agreement to use certain professional services training facilities (the Training Center Agreement) for a limited number of days per year. The minimum future commitment as of March 31, 2026 under the Training Center Agreement is approximately $5.2 million through 2030.

During 2024 and 2025, we signed commitments for software licenses for certain financial accounting systems and cloud hosting services. The contracts require minimum payments of $13.9 million through 2031.

See Note 16, “Commitments and Contingencies” to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for additional details on our commitments.

There have been no material changes during the period covered by this Quarterly Report on Form 10-Q to the information disclosed in the Quantitative and Qualitative Disclosures About Market Risk section in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission on March 27, 2026.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a‑15(e) and 15d‑15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a‑15(b) under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2026.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2026, due to the material weaknesses described in Part II, “Item 9A “Controls and Procedures” in the 2025 Annual Report on Form 10-K, which continue to exist as of March 31, 2026. For additional information on our disclosure controls and procedures, reference the sections titled "Previously Reported Material Weaknesses in Internal Control Over Financial Reporting" and "Efforts to Address Previously Identified Material Weaknesses" in Part II, Item 9A “Controls and Procedures” of the 2025 Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) that occurred during the fiscal quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Emerging Growth Company Status

We are an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended, and therefore are not required to provide an attestation report of our independent registered public accounting firm on internal control over financial reporting pursuant to Section 404(b) of the Sarbanes‑Oxley Act of 2002.

For a discussion of the risk factors affecting the Company, see Risk Factors in Part I, Item 1A of the 2025 Annual Report on Form 10-K.