BWIN — Q2 2026 Financial Report Analysis
Q2 · Fiscal year 2026 · Published by Pham Hop
Baldwin's Q2 2026 revenue rose 30% to $492.9 million almost entirely from the CAC Group acquisition (organic growth 2%), adjusted EBITDA rose 37% to $116.7 million, and the GAAP net loss widened to $56.0 million ahead of a $32.50-per-share take-private deal.
- Revenue
- $493M
- +30.1% YoY
- Net income
- -$56M
- Diluted EPS
- $-0.42
- Operating margin
- -1.7%
This period vs a year ago
- Same period last year
- This period
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Baldwin's revenue jumped 30% to $492.9 million in the second quarter of 2026, but almost all of that came from buying another broker, not from selling more insurance. The January 1 acquisition of CAC Group and two smaller firms added $106.8 million of commissions and fees; the business Baldwin already owned grew just 2% on an organic basis (organic growth strips out revenue from businesses acquired in the last 12 months, so it measures what the existing operation did on its own). Profit on the company's preferred measure, adjusted EBITDA, rose 37% to $116.7 million, while the GAAP result was a $56.0 million net loss, wider than the $5.1 million loss a year earlier, because the same deal brought heavy amortization, interest and integration costs. Two months after this quarter closed, Baldwin agreed to be taken private for $32.50 a share in cash, which now matters more to shareholders than any single quarter's numbers.
At a glance
- $106.8 million of the $112.5 million rise in commissions and fees came from acquisitions. Strip those out and the legacy business added $5.7 million, all of it from profit-sharing and other revenue; core commissions were down $0.3 million.
- Adjusted EBITDA margin 23.7%, up from 22.6%. On management's own yardstick the company got more profitable per dollar of revenue, but that measure excludes $33.6 million of integration, transformation, severance and "other" costs this quarter, up from $11.5 million a year ago.
- $32.50 per share in the September 14 take-private deal, an 88% premium to the price on June 17, the day before media reported a sale was being explored. Closing is expected in Q1 2027.
The quarter in numbers
Figures are in millions of US dollars except per-share data. "Adjusted" figures are management's own non-GAAP measures (numbers not prepared under standard accounting rules, which leave out costs the company considers non-operating); GAAP figures follow standard US accounting rules.
| Metric | Q2 2026 | Q2 2025 | YoY Change |
|---|---|---|---|
| Total revenue | $492.9 | $378.8 | +30.1% |
| Organic revenue growth | 2% | 11% | -9 pts |
| Operating income (loss) | -$8.3 | $27.9 | swung to a loss |
| Operating margin | -1.7% | 7.4% | -9.1 pts |
| Net income (loss), GAAP | -$56.0 | -$5.1 | loss widened by $50.8 |
| Net loss attributable to Baldwin (Class A holders) | -$39.0 | -$3.2 | loss widened by $35.8 |
| Diluted EPS, GAAP | -$0.42 | -$0.05 | loss widened |
| Adjusted EBITDA | $116.7 | $85.5 | +36.5% |
| Adjusted EBITDA margin | 23.7% | 22.6% | +1.1 pts |
| Adjusted diluted EPS | $0.48 | $0.42 | +14% |
| Operating cash flow | $45.6 | -$16.7 | +$62.3 |
Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization, with further items such as stock-based pay and deal costs also added back. It is the figure brokers are usually valued on, which is why Baldwin leads with it.
Where the growth came from
Baldwin reports three operating groups. All of the large growth was in the one that absorbed CAC Group:
| Operating group | Q2 2026 revenue | Q2 2025 revenue | Change | What drove it (per the 10-Q) |
|---|---|---|---|---|
| Insurance Advisory Solutions (commercial, benefits, private-client brokerage) | $275.3 | $183.3 | +50% | $94.1 million from acquisitions; prices falling in commercial property cut organic growth by 2.4 points |
| Underwriting, Capacity & Technology Solutions (Baldwin's own underwriting agency, reinsurance brokerage, captive) | $160.2 | $147.5 | +9% | $9.8 million of organic growth in the Captive, partly offset by a $4.5 million drop in Capacity Solutions; $5.7 million from acquisitions |
| Mainstreet Insurance Solutions (personal lines via homebuilders, lenders; Medicare) | $75.3 | $66.6 | +13% | $6.4 million from the acquired Hippo homebuilder network; Medicare commissions down $1.8 million |
Two things stand out in the filing's explanations:
- Insurance prices are working against Baldwin. A broker is paid a percentage of the premium, so when insurers cut prices the broker earns less on the same policy. The 10-Q puts the drag from "continued rate softness, notably in commercial property lines" at 240 basis points (2.4 percentage points) of IAS organic growth this quarter, up from 150 basis points for the half-year as a whole. In other words the headwind got worse in Q2, not better.
- New business slowed at the legacy book. "Sales velocity" (new business won as a share of last year's commissions) for legacy Baldwin was 19%, down from 22% a year earlier. Including the new CAC Group producers it was 30%, which is the figure the CEO quoted.
- Medicare remains a problem. The filing says the Medicare business "has been significantly disrupted by government funding rates associated with Medicare Advantage products, which has caused elevated churn."
The CEO's statement cites "normalized organic growth of 8%." That figure is not defined or reconciled in the release or the 10-Q; the reported organic growth rate is 2%.
What the headline numbers hide
The GAAP loss and the adjusted profit are $172.7 million apart this quarter. Getting from a $56.0 million net loss to $116.7 million of adjusted EBITDA, Baldwin adds back:
| Add-back | Q2 2026 | Q2 2025 |
|---|---|---|
| Amortization of acquired intangibles (customer lists, etc.) | $56.0 | $26.0 |
| Interest expense, net | $46.1 | $31.3 |
| Stock-based compensation | $20.7 | $17.0 |
| Acquisition and integration costs | $14.7 | $4.0 |
| Change in value of earnout payments owed to sellers | $12.3 | -$2.0 |
| "Other" (recruiting, professional fees, litigation, bonuses) | $8.6 | $5.7 |
| Transformation costs (automation/AI program) | $6.4 | $0.2 |
| Severance | $3.9 | $1.6 |
| Depreciation, taxes and smaller items | $4.0 | $6.8 |
Some of these are fair to exclude when judging how the business runs: amortization of acquired customer lists is an accounting charge from buying companies, not a cash cost. Others are real. Interest is $46.1 million of cash a quarter and rising. Stock-based pay is part of what employees are paid. And four buckets labeled non-recurring (integration, transformation, severance and "other") total $33.6 million, nearly three times the $11.5 million a year earlier. Counting those four as ordinary costs, adjusted EBITDA would have been about $83.2 million against $74.0 million a year ago, growth of about 12.5% rather than 37%, and the margin would have slipped rather than risen.
Adjusted EPS grew far less than adjusted profit because of new shares. Adjusted net income rose 38% to $68.5 million, but adjusted diluted EPS rose only 14%, because the adjusted share count went from 119.2 million to 141.3 million, largely shares issued to pay for CAC Group. Adjusted net income also assumes a 9.9% tax rate on adjusted profit. Baldwin is an "Up-C" company: insiders own units in an operating partnership (Class B shares) alongside public Class A holders, and adjusted EPS assumes all those units have been swapped into Class A shares; that is why $17.0 million of the GAAP loss sits with "noncontrolling interests" rather than Baldwin's Class A shareholders.
The half-year GAAP figures are shaped by two large tax entries that roughly offset. In Q1 Baldwin recorded a $144.4 million income-tax benefit, mostly from releasing a valuation allowance (a reserve against tax assets it previously doubted it could use; the CAC and Obie deals brought future taxable income that makes those assets usable). The same reasoning made its tax receivable agreement payable: Baldwin booked $130.0 million of expense for a TRA liability that now stands at $144.6 million. A tax receivable agreement obliges the company to hand 85% of certain tax savings to the pre-IPO owners. Separately, the six-month GAAP loss of $57.9 million includes $17.7 million of Q1 transaction closing costs for the deals.
Debt and deferred payments rose sharply. Long-term debt (net of the current portion) went from $1.57 billion at December 31 to $2.15 billion, and the revolving credit line from $107 million to $302 million. Against $184.5 million of cash, that is roughly $2.3 billion of net borrowing. On top of that, earnout liabilities (future payments to sellers of acquired firms if targets are met) rose from $23.3 million to $346.8 million, $120.9 million of it due within a year. Quarterly interest expense of $45.7 million is now 39% of quarterly adjusted EBITDA, and the 10-Q says management expects interest expense to keep growing year over year.
Buybacks were funded alongside heavier borrowing. Baldwin spent $126.8 million repurchasing stock in the first half while drawing a net $195 million on its revolver.
Cash conversion improved from a low base. Operating cash flow was $45.6 million in the quarter and $39.5 million for the half, against cash outflows a year earlier. The filing attributes most of the year-on-year improvement to $78.4 million less in earnout payments that run through operating cash flow, plus the acquired businesses and better working-capital management. Still, the company's own adjusted free cash flow for the half, $46.2 million, is only about 18% of half-year adjusted EBITDA of $254.0 million, largely because of interest.
A small divestiture is coming. Baldwin committed in Q2 to sell Media Guarantors, a CAC Group unit selling completion guarantees for film and TV production, and classified it as held for sale with no impairment recorded.
Takeaway: Baldwin's 30% revenue growth was bought, not earned: the legacy book's core commissions were flat, falling insurance prices are a growing drag, and acquisitions more than doubled amortization while interest expense rose $14.3 million in a year. The $32.50 cash offer means shareholders no longer depend on whether that mix turns around.
What comes next
The release did not include a numerical outlook. Management's stated view is that Baldwin has "largely lapped the idiosyncratic, one-time headwinds" and expects them to become tailwinds in the second half of 2026. The filing's own detail points the other way on pricing: the commercial-property rate headwind widened in Q2, and Medicare churn is continuing.
The bigger development came after the quarter. On September 14, 2026 Baldwin signed a merger agreement under which an entity owned by Sequence Holdings, with equity financing committed by DFO Management (the Michael Dell family office), will buy the company for $32.50 per Class A share in cash, an equity value of about $4.6 billion and an enterprise value of about $7.7 billion including about $3.1 billion of net debt to be assumed or refinanced. The company says that is roughly 20 times trailing-twelve-month adjusted EBITDA of about $396 million. Holders of a majority of the Class B shares have already consented; the deal still needs a shareholder vote and regulatory approvals, is not conditioned on financing, and is expected to close in Q1 2027, after which the stock would be delisted from Nasdaq.
Our read: for public shareholders the Q3 and Q4 results matter mainly as a check that nothing derails the deal. What to watch in the Q3 10-Q, expected in early November: whether organic growth actually re-accelerates from 2% as management predicts, whether the commercial-property rate drag keeps widening, and how much merger-related cost is added to the adjusted figures.