tapebrief
BRO · Q1 2026

BRO · Q2 2026 Earnings

Cautious

Brown & Brown

Reported July 27, 2026

30-second summary

Brown & Brown's Q2 FY2026 delivered the setup management pre-guided: consolidated organic ex-contingents landed at -0.7% (+0.7% with contingents), missing consensus on both revenue ($1.676B vs. $1.71B, -1.9%) and adjusted EPS ($1.07 vs. $1.08, -0.9%). The pharmacy consulting model change and cat property softening flagged at Q1 flowed through as expected, but adjusted EBITDAC margin of 35.7% held above the "around 35%" full-year Accession framing, and net income of $288M dropped through despite the organic reset. No forward guidance was issued for Q3 or FY2026 — a notable retrenchment from Q1's detailed forward color.

Headline numbers

EPS

Q2 FY2026

$1.07

-0.9% vs est.

Revenue

Q2 FY2026

$1.68B

+30.4% YoY

-1.9% vs est.

Operating margin

Q2 FY2026

22.9%

Key financials

Q2 FY2026
MetricQ2 FY2026Q2 FY2025YoYQ1 FY2026QoQ
Revenue$1.68B$1.28B+30.4%$1.90B-11.8%
EPS$1.07——$1.39-23.0%
Operating margin22.9%——28.0%-510bps

Guidance

Q2 FY2026 results met organic growth guidance despite pharmacy consulting headwinds and contingent business offset; company provided no forward guidance for Q3 or full-year FY2026.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
Organic Revenue Growth (excluding contingents)Q2 FY2026relatively flat-0.7%in-line with guidance of relatively flatMet
RevenueQ2 FY2026—$1.676B-$0.034B below consensus estimate of $1.71BMissed
EPS (Non-GAAP)Q2 FY2026—$1.07-$0.01 below consensus estimate of $1.08Missed

New guidance

MetricPeriodGuideYoY
Organic Revenue Growth with ContingentsQ2 FY20260.7%—
EBITDAC Margin - AdjustedQ2 FY202635.7%—

Segment performance

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Commissions and fees$1.654B—+32.4%
Investment and other income$0.022B—-38.9%

Other KPIs

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Organic Revenue growth-0.7%——
Organic Revenue with Contingents growth0.7%——
EBITDAC - Adjusted$598 million——
EBITDAC Margin - Adjusted35.7%——
Income Before Income Taxes Margin22.9%——
Diluted Net Income Per Share - Adjusted$1.07——
Diluted Net Income Per Share - Adjusted growth3.9%——
Net income attributable to the Company$288 million——

Management tone

Tone analysis is limited on this print — no earnings call transcript was available, so the observations below are drawn from the press release language and the shift in disclosure practice versus prior quarters.

Q3 FY2025 organic reset → Q4 FY2025 defensive escalation → Q1 FY2026 AI-first pivot with quantified offsets → Q2 FY2026 forward guidance withdrawn.

The most significant tone shift is what management stopped saying. Two quarters ago Q4 FY2025 delivered detailed forward color: Q1 FY2026 Specialty Distribution "somewhat flat," Accession "modest negative impact on adjusted margins," retail improvement over 2.8%. Q1 FY2026 escalated to even more granular forward disclosure: Q2 Specialty Distribution "relatively flat" ex-contingents, Retail improvement each quarter vs. Q1, 50–100bps pharmacy consulting headwind for "next couple of quarters," FY contingents up YoY. Q2 FY2026 provides one sentence — "great momentum as we head into the back half of the year" — and nothing else. The retreat from quantified forward color to generic optimism is a step-change, particularly when consolidated organic ex-contingents just landed negative.

Contingent commissions have completed their transition from cyclical kicker to load-bearing disclosure. Three quarters ago in Q4 FY2025 Powell first reframed contingents as "recurring nature." Q1 FY2026 formalized the framing: "when E&S rates are decreasing, our contingents will increase. This inverse correlation creates more stability in our revenues, margins, and cash flow." Q2 FY2026 puts a hard number on the dependency: without the 140bps contingent uplift, consolidated organic is -0.7% instead of +0.7%. The rebranding is now fully load-bearing — the reported organic-with-contingents figure requires the contingent lift to remain positive.

The Accession margin framing is being tested in real time. Q4 FY2025 raised the long-term band to 32–37%. Q1 FY2026 came in at 38.5% (above the band), which Powell attributed to seasonality and contingent timing. Q2 FY2026 at 35.7% is the first "cleaner" test — it lands above the ~35% Accession-inclusive framing but 280bps below Q1 and within the middle of the raised long-term band rather than at the upper end. This is neither confirmation nor rejection of the raised band, but it is the first quarter where the arithmetic of the raise stops being obviously supported by contingent timing.

Answers to last quarter's watch list

Q2 FY2026 Specialty Distribution organic vs. the "relatively flat" ex-contingents guide — Consolidated organic ex-contingents landed at -0.7%, in-line with the "relatively flat" framing at the total-company level. Segment-level Specialty Distribution ex-contingents was not broken out in the press release. Status: Continue monitoring
Q2 FY2026 Retail organic with the pharmacy 50–100bps drag — Segment-level retail organic was not disclosed in the press release; the "modest improvement vs. Q1" test cannot be adjudicated from the print alone. The consolidated -0.7% ex-contingents outcome is consistent with pharmacy drag flowing through as forecast, but the segment split is required to confirm. Status: Not resolved
Litigation-related revenue migration — The $31M annualized figure was not updated in the press release. Absence of a revision either way suggests the $31M is holding as the operating framework, but no explicit reaffirmation was offered. Status: Continue monitoring
FY2026 contingents trajectory — Contingents contributed a 140bps uplift to Q2 organic, roughly comparable to Q1's dependency, but no explicit FY dollar figure was disclosed. Management flagged the growing reliance on contingents at Q1; Q2 confirms the pattern without upgrading the FY color. Status: Continue monitoring
Adjusted EBITDAC margin in Q2 FY2026 — Landed at 35.7%, above the ~35% Accession-inclusive framing but 280bps below Q1's 38.5% and 100bps below the year-ago 36.7%. This sits in the middle of the raised 32–37% long-term band rather than above it — a cleaner test than Q1 but not decisive either direction. Status: Continue monitoring
Effective tax rate trajectory — Press release discloses income before income taxes of $383M and income tax expense of $94M, an effective tax rate of 24.5% — closer to the prior 24–25% guide than Q1's 22.8% run-rate. Status: Continue monitoring
AI productivity quantification — No AI-specific data points disclosed in the press release. The Q1 25%-submission-automation claim was not anchored with a Q2 margin or expense-ratio data point. Status: Not resolved
Pharmacy consulting headwind duration — Management did not update the "next couple of quarters" framing. Given the Q2 outcome landed at consolidated organic -0.7% ex-contingents, the headwind flowed through as forecast without material acceleration or roll-off. Status: Continue monitoring

What to watch into next quarter

Whether Q3 FY2026 brings a return to quantified forward guidance — the retreat from specific forward color at Q2 is the most notable disclosure shift in this print; if Q3 similarly offers only qualitative language, visibility concerns become structural

Q3 FY2026 consolidated organic ex-contingents — with Q1 approximately flat and Q2 at -0.7%, watch whether the trend continues to erode or the pharmacy roll-off (previously guided as "next couple of quarters") delivers a bounce

Segment-level disclosure of Retail vs. Specialty Distribution organic — press release did not break these out at the split provided; watch whether the Q3 disclosure package restores segment visibility or continues at the consolidated level

Adjusted EBITDAC margin trajectory — Q2 at 35.7% is the first data point in the middle of the 32–37% raised long-term band; watch whether Q3 drifts lower toward the 32% floor or holds above 35%

Contingent commissions dollar disclosure at Q3 — with contingents contributing 140bps to Q2 organic and Organic Contingents of $61M vs. $45M PY, watch for an explicit FY dollar guide

Litigation-related revenue update — whether the $31M annualized figure holds, expands, or shrinks; further migration would extend the drag beyond FY2026

Investment and other income roll-off — Q2 FY2026's $22M was down 38.9% YoY as pre-Accession offering-proceeds carry rolls off; watch whether this stabilizes or continues to decline into H2

Sources

  1. Brown & Brown Q2 FY2026 press release (Exhibit 99.1, SEC filing): https://www.sec.gov/Archives/edgar/data/79282/000119312526318245/bro-ex99_1.htm

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