Summary of First Advantage (FA) FY Conference Call - September 03, 2025 Company Overview - **Company**: First Advantage (FA) - **Industry**: Background screening and data services - **Key Executives**: Scott Staples (CEO), Steven Marks (CFO), Stephanie Gorman (IR) Core Business Insights - **Global Reach**: First Advantage operates in 200 countries and territories, serving 80,000 customers, with a strong focus on enterprise clients [6][7] - **Value Proposition**: The company emphasizes its technology, software, and data capabilities, positioning itself as a category leader in the background check space [9] - **Unique Offerings**: FA customizes its products by vertical, enhancing its ability to meet specific industry needs [7][48] Growth Strategy - **Revenue Growth Drivers**: - Base growth (same-store sales) - New logo growth (4-5% annually) - Upsell and cross-sell opportunities (4-5% additional growth) - High customer retention rate (over 96%) [12][16][17] - **Market Dynamics**: The company is experiencing a stabilization in the job market, with a focus on "just in time hiring" rather than growth hiring [25][26] Market Trends and Customer Insights - **Job Market Stability**: The job market is described as flat, with clients cautious about hiring due to economic uncertainties [24][25] - **Client Sentiment**: Clients are not reducing workforces but are cautious in their hiring plans, focusing on backfill and seasonal hiring [25][26] Financial Performance and Projections - **Base Growth Assumptions**: The company anticipates slight negative growth in the second half of the year, with a long-term outlook of 2-3% positive growth by 2026 [30][36] - **Vertical Mix**: The company has a balanced mix of white-collar and blue-collar clients, with healthcare being the largest vertical (24% of business) [40][42] Total Addressable Market (TAM) - **Background Screening TAM**: Estimated at $14 billion, with 50% currently vended and 50% unvended, indicating significant growth potential [50][51] - **Digital Identity Market**: An additional $10 billion TAM is emerging due to increased risks associated with hiring processes [50][55] Merger and Integration Insights - **Merger with Sterling**: The merger is seen as beneficial, combining complementary technologies and vertical strengths, with a focus on achieving $65-80 million in cost synergies [66][68] - **Cultural Integration**: The integration process has been smooth, with a focus on creating a new company culture that leverages the strengths of both organizations [71][75] Technology and Innovation - **AI Investments**: First Advantage has invested heavily in AI, enhancing its verification processes and customer interactions, leading to improved efficiency and margins [81][83] - **Proprietary Data**: The company maintains two large proprietary databases with approximately 900 million records, providing a competitive edge in background checks [87][88] Conclusion - **Outlook**: First Advantage is well-positioned for growth, leveraging its technology, market presence, and strategic focus on verticals to capitalize on emerging opportunities in the background screening and digital identity markets [49][55]

Core Viewpoint - Fountain Asset Corp. reported strong financial results for Q2 and the first half of 2025, highlighting significant gains in investment activities and an increase in net asset value [1][6]. Summary of Financial Results for Q2/25 - The company realized $0.47 million in gains from the sale of portfolio investments, driven by increased trading prices in the technology sector [4]. - Net assets as of June 30, 2025, were valued at $8.59 million, or $0.13 per share, up from $5.51 million, or $0.09 per share, at the end of 2024, representing a 44% increase [5][8]. - Net comprehensive income for Q2/25 was $3.01 million, compared to a net comprehensive loss of $0.49 million for Q2/24 [8]. Summary of Financial Results for Six Months Ended June 30, 2025 - For the six months ended June 30, 2025, net comprehensive income was $3.06 million, compared to a net comprehensive loss of $0.95 million for the same period in 2024 [8]. - Total income from investment activities was $3.65 million, contrasting with a total loss of $0.54 million for the first half of 2024 [8]. - Net realized gains on the sale of portfolio investments reached $1.76 million, compared to net realized losses of $0.14 million for the same period in 2024 [8]. - Net unrealized gains on portfolio investments were $1.82 million, compared to net unrealized losses of $0.41 million for the first half of 2024 [8]. - Total expenses for the six months were $0.58 million, up from $0.40 million in the same period of 2024, while operating expenses decreased to $0.29 million from $0.39 million [8]. Company Overview - Fountain Asset Corp. operates as a merchant bank, providing equity financing, bridge loan services, and strategic financial consulting across various industries, including marijuana, oil & gas, mining, real estate, manufacturing, retail, financial services, and biotechnology [7].

Core Insights - First Advantage Corporation released its 2024 Sustainability Impact Report, highlighting its commitment to responsible business practices and progress in environmental, community, and governance priorities [1][2] Group 1: Company Growth and Acquisitions - The 2024 report marks a milestone year for First Advantage, highlighted by the acquisition of Sterling Check Corp., which closed on October 31, 2024 [2] - The CEO emphasized that the combination with Sterling provides an opportunity for growth while maintaining a focus on purpose, responsibility, and impact [3] Group 2: Sustainability Efforts - The report outlines sustainability focus areas including people and community, environment and climate, governance and accountability, and policy and process [2] - The company conducted third-party assessments of Scope 1, 2, and 3 greenhouse gas emissions to align with the Task Force on Climate-related Financial Disclosures (TCFD) [5] Group 3: Employee Development and Inclusion - Following the acquisition, First Advantage updated its Culture & Inclusion priorities, expanding Employee Resource Groups into Employee Impact Groups [5] - Employees across 19 countries completed 131,740 training hours, leading to a 74% increase in the speed at which new hires became ready to work on live cases [5] Group 4: Data Privacy and Compliance - First Advantage maintained its ISO 27001 and ISO 27701 certifications, with Australian operations newly certified in 2024 [5] - The company earned Data Privacy Framework certifications across its EU, UK, and Swiss locations, reflecting its commitment to data protection [5] Group 5: Governance and Corporate Oversight - The company demonstrated strong governance through a well-qualified board of directors overseeing various committees [5]

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and changes in stockholders' equity, along with detailed notes explaining accounting policies, acquisitions, debt, and segment performance for the periods ended June 30, 2025 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and equity as of June 30, 2025 | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (vs. Dec 31, 2024) | | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------ | | Total Assets | $3,871,212 | $3,922,893 | $(51,681) | | Total Liabilities | $2,572,049 | $2,615,854 | $(43,805) | | Total Equity | $1,299,163 | $1,307,039 | $(7,876) | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) This section presents the company's financial performance, including revenues, expenses, and net income (loss) for the periods | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Revenues | $390,633 | $184,546 | +111.7% | $745,221 | $353,962 | +110.5% | | Total Operating Expenses | $352,896 | $174,643 | +102.1% | $699,867 | $344,785 | +102.9% | | Income from Operations | $37,737 | $9,903 | +281.0% | $45,354 | $9,177 | +394.2% | | Interest Expense, net | $44,785 | $7,353 | +509.1% | $91,365 | $10,923 | +736.4% | | Net Income (Loss) | $308 | $1,861 | -83.4% | $(40,886) | $(1,047) | -3899.6% | | Basic EPS | $0.00 | $0.01 | -100.0% | $(0.24) | $(0.01) | -2300.0% | | Diluted EPS | $0.00 | $0.01 | -100.0% | $(0.24) | $(0.01) | -2300.0% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details cash flows from operating, investing, and financing activities for the six months | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | | Net cash provided by operating activities | $56,816 | $70,372 | $(13,556) | | Net cash used in investing activities | $(23,816) | $(13,812) | $(10,004) | | Net cash (used in) provided by financing activities | $(21,107) | $213 | $(21,320) | | Increase in cash, cash equivalents, and restricted cash | $14,862 | $55,737 | $(40,875) | | Cash, cash equivalents, and restricted cash at end of period | $184,345 | $269,649 | $(85,304) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section outlines changes in common stock, paid-in capital, accumulated deficit, and comprehensive loss | Equity Component (in thousands) | December 31, 2024 | June 30, 2025 | Change | | :------------------------------ | :---------------- | :------------ | :----- | | Common Stock | $173 | $174 | +$1 | | Additional Paid-In-Capital | $1,504,007 | $1,517,179 | +$13,172 | | Accumulated Deficit | $(159,808) | $(200,694) | $(40,886) | | Accumulated Other Comprehensive Loss | $(37,333) | $(17,496) | +$19,837 | | Total Stockholders' Equity | $1,307,039 | $1,299,163 | $(7,876) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1. Organization, Nature of Business, and Basis of Presentation](index=8&type=section&id=Note%201.%20Organization,%20Nature%20of%20Business,%20and%20Basis%20of%20Presentation) This note describes the company's business, services, and basis for financial statement presentation - The Company provides background check and compliance services across the workforce lifecycle, categorized into pre-onboarding, post-onboarding, and adjacent products[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - The Company experiences seasonality, with highest revenues typically in October-November due to pre-holiday hiring and increased hiring in Q2 due to the end of the school year and increased commercial activity[25](index=25&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=9&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines key accounting principles and methods, including fair value and revenue recognition Fair Value Hierarchy | Fair Value Hierarchy | Description | | :------------------- | :---------- | | Level 1 | Quoted prices for identical instruments in active markets | | Level 2 | Quoted prices for similar instruments in active markets, or model-derived valuations with observable inputs | | Level 3 | Significant unobservable inputs to the valuation model | - The Company did not have any customers representing **10% or more of consolidated revenues** in Q2 2025, but had one customer representing approximately **11%** in Q2 2024 in its First Advantage Americas segment[35](index=35&type=chunk) [Note 3. Acquisitions](index=11&type=section&id=Note%203.%20Acquisitions) This note details the Sterling Check Corp. acquisition, including consideration and adjustments - First Advantage acquired Sterling Check Corp. on October 31, 2024, for approximately **$2.2 billion**, financed by cash, new debt, and common stock[40](index=40&type=chunk) - Measurement period adjustments for the Sterling acquisition resulted in a **$6.4 million increase to goodwill**, finalized as of June 30, 2025[42](index=42&type=chunk) Consideration Transferred | Consideration Transferred (in thousands) | Amount | | :--------------------------------------- | :----- | | Cash consideration | $1,152,163 | | Fair value of First Advantage common stock issued | $490,098 | | Repayment of Sterling's outstanding debt | $535,046 | | Total fair value of consideration transferred | $2,197,699 | [Note 4. Property and Equipment, net](index=13&type=section&id=Note%204.%20Property%20and%20Equipment,%20net) This note details property and equipment, including net carrying value and depreciation Total Property and Equipment, net | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Total property and equipment, net | $275,635 | $307,539 | $(31,904) | - Depreciation and amortization expense for property and equipment increased by approximately **$12.0 million (76.4%)** for the three months ended June 30, 2025, and by **$24.0 million (76.7%)** for the six months ended June 30, 2025, compared to the same periods in 2024[47](index=47&type=chunk) [Note 5. Goodwill and Other Intangible Assets](index=13&type=section&id=Note%205.%20Goodwill%20and%20Other%20Intangible%20Assets) This note presents goodwill by segment and net carrying value of other intangible assets Goodwill by Segment | Goodwill by Segment (in thousands) | December 31, 2024 | June 30, 2025 | Change | | :--------------------------------- | :---------------- | :------------ | :----- | | First Advantage Americas | $703,294 | $703,340 | +$46 | | First Advantage International | $114,341 | $117,664 | +$3,323 | | Sterling | $1,306,893 | $1,322,355 | +$15,462 | | Total Goodwill | $2,124,528 | $2,143,359 | +$18,831 | Intangible Assets | Intangible Assets (in thousands) | June 30, 2025 Net Carrying Value | December 31, 2024 Net Carrying Value | Change | | :------------------------------- | :------------------------------- | :----------------------------------- | :----- | | Trade names | $109,294 | $118,475 | $(9,181) | | Customer lists | $814,497 | $867,695 | $(53,198) | | Other intangible assets | $1,536 | $1,778 | $(242) | | Total Intangible Assets, net | $925,327 | $987,948 | $(62,621) | [Note 6. Debt](index=14&type=section&id=Note%206.%20Debt) This note details debt obligations, including the Amended First Lien Credit Facility and repayments Debt | Debt (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :------------------ | :------------ | :---------------- | :----- | | Amended First Lien Credit Facility | $2,164,538 | $2,185,000 | $(20,462) | | Long-term debt, net | $2,104,285 | $2,121,289 | $(17,004) | - The Company made a voluntary principal repayment of **$15.0 million** on its Amended First Lien Credit Facility in May 2025, resulting in a **$0.3 million loss** on extinguishment of debt[52](index=52&type=chunk) [Note 7. Derivatives](index=15&type=section&id=Note%207.%20Derivatives) This note provides information on the fair value of interest rate swaps and their impact on interest expense Derivative Fair Value | Derivative (in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | Change | | :------------------------ | :----------------------- | :--------------------------- | :----- | | Interest rate swaps (asset) | $0 | $3,110 | $(3,110) | | Interest rate swaps (liability) | $5,720 | $247 | +$5,473 | - Interest expense, net, included a **loss of $2.483 million** from interest rate swaps for the three months ended June 30, 2025, compared to a **gain of $2.132 million** in the prior year; for the six months, it was a **loss of $6.419 million** compared to a **gain of $8.226 million**[54](index=54&type=chunk) [Note 8. Income Taxes](index=15&type=section&id=Note%208.%20Income%20Taxes) This note presents effective income tax rates and the (benefit) provision for income taxes Income Tax Metrics | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Effective Income Tax Rate | 104.2% | 27.0% | 11.6% | 40.0% | | (Benefit) Provision for Income Taxes (in thousands) | $(7,610) | $689 | $(5,379) | $(699) | - The effective tax rates for 2025 were primarily impacted by the jurisdictional mix of earnings, significant acquisition-related depreciation and amortization affecting U.S. net loss, and income taxes in foreign jurisdictions[56](index=56&type=chunk) [Note 9. Revenues](index=16&type=section&id=Note%209.%20Revenues) This note describes revenue recognition policies and provides details on contract assets and liabilities - Substantially all revenues are recognized at a point in time when orders are completed and reports are made available to customers[58](index=58&type=chunk) Contract Balance | Contract Balance (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :------------------------------ | :------------ | :---------------- | :----- | | Contract asset | $11,600 | $5,900 | +$5,700 | | Contract liability (deferred revenues) | $4,800 | $4,300 | +$500 | [Note 10. Share-based Compensation](index=16&type=section&id=Note%2010.%20Share-based%20Compensation) This note outlines share-based compensation expense and unrecognized compensation expense Share-based Compensation Expense | Share-based Compensation Expense (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :---------------------------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Total share-based compensation expense | $5,742 | $5,048 | +13.8% | $13,709 | $9,799 | +39.9% | - As of June 30, 2025, the Company had approximately **$32.7 million** of unrecognized pre-tax non-cash compensation expense, expected to be recognized over a weighted average period of **1.3 years**[64](index=64&type=chunk) [Note 11. Equity](index=20&type=section&id=Note%2011.%20Equity) This note provides information on the company's equity structure, including preferred stock status - No Preferred Stock was issued or outstanding as of June 30, 2025, or December 31, 2024[75](index=75&type=chunk) [Note 12. Commitments and Contingencies](index=20&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) This note discloses commitments and contingencies, including liabilities for probable legal proceedings - The Company has recorded a liability of **$10.0 million** as of June 30, 2025, for probable and estimable losses related to legal proceedings, a decrease from **$11.6 million** at December 31, 2024[78](index=78&type=chunk) [Note 13. Related Party Transactions](index=20&type=section&id=Note%2013.%20Related%20Party%20Transactions) This note reports on the absence of material related party transactions - No material related party transactions occurred for the six months ended June 30, 2025[80](index=80&type=chunk) [Note 14. Net Income (Loss) Per Share](index=21&type=section&id=Note%2014.%20Net%20Income%20(Loss)%20Per%20Share) This note presents basic and diluted net income (loss) per share Net Income (Loss) Per Share | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic net income (loss) per share | $0.00 | $0.01 | $(0.24) | $(0.01) | | Diluted net income (loss) per share | $0.00 | $0.01 | $(0.24) | $(0.01) | - Potentially dilutive securities were anti-dilutive and excluded from diluted EPS calculations for both three and six months ended June 30, 2025 and 2024, due to the net loss[82](index=82&type=chunk) [Note 15. Reportable Segments](index=22&type=section&id=Note%2015.%20Reportable%20Segments) This note provides financial information by reportable segment, including Adjusted EBITDA and revenues - The Company operates in three reportable segments: First Advantage Americas, First Advantage International, and Sterling (acquired October 31, 2024)[87](index=87&type=chunk)[110](index=110&type=chunk) Segment Adjusted EBITDA | Segment Adjusted EBITDA (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | First Advantage Americas | $51,260 | $51,594 | $91,567 | $95,263 | | First Advantage International | $4,340 | $4,167 | $7,706 | $7,056 | | Sterling | $58,346 | $0 | $106,785 | $0 | | Total Segment Adjusted EBITDA | $113,946 | $55,761 | $206,058 | $102,319 | Revenues by Geographic Region | Revenues by Geographic Region (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $334,907 | $158,871 | $638,696 | $305,077 | | All other countries | $55,726 | $25,675 | $106,525 | $48,885 | | Total revenues | $390,633 | $184,546 | $745,221 | $353,962 | [Note 16. Subsequent Events](index=24&type=section&id=Note%2016.%20Subsequent%20Events) This note discloses significant events after the reporting period, including credit amendments and repayments - On July 30, 2025, the Company amended its 2024 First Lien Credit Agreement to reduce interest rates on its Amended First Lien Credit Facility and Amended Revolver by **0.50%**[93](index=93&type=chunk) - On August 1, 2025, the Company made a voluntary principal repayment of **$25.0 million** on its Amended First Lien Credit Facility using available cash[94](index=94&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition, results of operations, and cash flows, highlighting the impact of the Sterling acquisition, macroeconomic conditions, and key financial metrics for the three and six months ended June 30, 2025 [Overview](index=26&type=section&id=Overview) This section provides an overview of the company's global HR technology business and the Sterling acquisition impact - First Advantage is a global HR technology provider offering employment background screening, digital identity solutions, and verification services, powered by proprietary technology and AI[101](index=101&type=chunk) - The acquisition of Sterling Check Corp. on October 31, 2024, significantly enhanced the Company's capabilities and expanded its service offerings globally[103](index=103&type=chunk) - The Company serves over **80,000 customers** globally across various industries, with a substantial majority of revenues derived from pre-onboarding screening[104](index=104&type=chunk) [Recent Developments](index=28&type=section&id=Recent%20Developments) This section discusses macroeconomic impacts on hiring trends and new tax legislation - Current macroeconomic conditions, including elevated interest rates, persistent inflation, and geopolitical tensions, continue to impact the global economy and customer hiring trends, potentially affecting demand for the Company's services[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, includes permanent extension of certain Tax Cuts and Jobs Act provisions and restoration of favorable tax treatment for business provisions, with the Company currently assessing its impact[114](index=114&type=chunk) [Components of our Results of Operations](index=28&type=section&id=Components%20of%20our%20Results%20of%20Operations) This section explains revenue drivers and flexible cost structure, anticipating long-term expense decline - Revenues are primarily derived from pre-onboarding, post-onboarding, and adjacent products, with pre-onboarding services comprising the substantial majority[117](index=117&type=chunk) - The Company maintains a flexible cost structure, expecting operating expenses as a percentage of total revenues to decline gradually in the long term due to growth, operating efficiency, and automation initiatives[119](index=119&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes financial performance, including revenue growth, costs, and net income (loss) Results of Operations Summary | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Revenues | $390,633 | $184,546 | +111.7% | $745,221 | $353,962 | +110.5% | | Cost of services | $207,841 | $92,348 | +125.1% | $400,406 | $179,540 | +123.0% | | Product and technology expense | $25,676 | $13,677 | +87.7% | $52,831 | $26,143 | +102.1% | | Selling, general, and administrative expense | $57,473 | $38,640 | +48.7% | $123,058 | $79,302 | +55.2% | | Depreciation and amortization | $61,906 | $29,978 | +106.5% | $123,572 | $59,800 | +106.6% | | Interest expense, net | $44,785 | $7,353 | +509.1% | $91,365 | $10,923 | +736.4% | | Net income (loss) | $308 | $1,861 | -83.4% | $(40,886) | $(1,047) | -3899.6% | - Revenue growth was primarily driven by **$203.7 million** (Q2) and **$391.3 million** (6M) attributable to the Sterling Acquisition, along with new customer revenues, partially offset by a net decrease from existing customers due to macroeconomic pressures[127](index=127&type=chunk)[128](index=128&type=chunk)[134](index=134&type=chunk) - Cost of services as a percentage of revenues increased due to Sterling's higher relative cost of services and variations in customer ordering mix[131](index=131&type=chunk)[133](index=133&type=chunk) [Key Operating and Financial Metrics](index=37&type=section&id=Key%20Operating%20and%20Financial%20Metrics) This section presents key non-GAAP financial measures including Adjusted EBITDA and Adjusted Net Income Key Operating and Financial Metrics | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Adjusted EBITDA | $113,946 | $55,761 | +104.3% | $206,058 | $102,319 | +101.4% | | Adjusted EBITDA Margin | 29.2% | 30.2% | -1.0 pp | 27.7% | 28.9% | -1.2 pp | | Adjusted Net Income | $46,965 | $30,753 | +52.7% | $77,451 | $55,539 | +39.5% | | Adjusted Diluted EPS | $0.27 | $0.21 | +28.6% | $0.44 | $0.38 | +15.8% | - Adjusted EBITDA and Adjusted Net Income increased significantly due to the Sterling Acquisition, though Adjusted EBITDA Margin slightly decreased[160](index=160&type=chunk)[161](index=161&type=chunk)[170](index=170&type=chunk)[172](index=172&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses liquidity sources, including cash, operating cash flows, and recent debt refinancing - The Company's primary liquidity sources are cash on hand (**$184.3 million** as of June 30, 2025), cash flows from operations, and a **$250.0 million** revolving credit facility[183](index=183&type=chunk)[184](index=184&type=chunk) - In connection with the Sterling Acquisition, the Company refinanced its debt, resulting in a **$2.185 billion** term loan and a **$250.0 million** revolving credit facility[187](index=187&type=chunk) - Post-period, the Company amended its credit agreement to reduce interest rates by **0.50%** and made a voluntary principal repayment of **$25.0 million** on August 1, 2025[188](index=188&type=chunk)[94](index=94&type=chunk) [Contractual Obligations and Commitments](index=44&type=section&id=Contractual%20Obligations%20and%20Commitments) This section confirms no significant changes to contractual obligations and commitments during the reporting period - No significant changes to contractual obligations and commitments occurred during the three and six months ended June 30, 2025[197](index=197&type=chunk) [Recently Issued Accounting Standards](index=44&type=section&id=Recently%20Issued%20Accounting%20Standards) This section states that no new accounting pronouncements are expected to materially impact the financial statements - No accounting pronouncements issued during the six months ended June 30, 2025, are expected to have a material impact on the condensed consolidated financial statements[39](index=39&type=chunk)[198](index=198&type=chunk) [Critical Accounting Policies and Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no significant changes to critical accounting policies and estimates during the reporting period - No significant changes to critical accounting policies and estimates occurred during the six months ended June 30, 2025[199](index=199&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the Company's market risks as of June 30, 2025, compared to the disclosures in its 2024 Annual Report - No material changes in market risks occurred as of June 30, 2025, compared to the 2024 Annual Report[200](index=200&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025. No material changes in internal control over financial reporting occurred during the quarter, with ongoing integration of Sterling's operations - Disclosure controls and procedures were evaluated as effective at a reasonable assurance level as of June 30, 2025[201](index=201&type=chunk)[202](index=202&type=chunk) - No material changes in internal control over financial reporting occurred, and the Company is integrating Sterling's operations, control processes, and information systems[203](index=203&type=chunk) PART II. OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, and executive compensation [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the information on legal proceedings from Note 12, Commitments and Contingencies, in Part I of this report - Information on legal proceedings is incorporated by reference from Note 12, Commitments and Contingencies[206](index=206&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes in the Company's risk factors compared to the disclosure in its 2024 Annual Report - No material changes in risk factors occurred compared to the 2024 Annual Report[207](index=207&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities and no use of proceeds to disclose for the period - No unregistered sales of equity securities and use of proceeds[208](index=208&type=chunk) [Item 3. Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities[208](index=208&type=chunk) [Item 4. Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that the disclosure requirements for mine safety are not applicable to the Company - Mine Safety Disclosures are not applicable[208](index=208&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) This section provides details on Rule 10b5-1 trading arrangements and updates to the employment agreements for key executives, Steven Marks (CFO) and Douglas Nairne (Global COO), including changes to their base salaries, annual performance bonus targets, and post-termination benefits - Director James L. Clark adopted a Rule 10b5-1 trading arrangement on June 12, 2025, for the sale of up to **4,416 shares** of common stock[209](index=209&type=chunk) - Steven Marks, CFO, received a base salary increase to **$450,000** and an annual performance bonus target increase to **50%** of base salary, effective November 8, 2024[211](index=211&type=chunk) - Douglas Nairne, Global COO, received a base salary increase to **$500,000** and an annual performance bonus target increase to **60%** of base salary, effective November 1, 2024[212](index=212&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including merger agreements, corporate governance documents, executive compensation arrangements, and certifications - Key exhibits include the Agreement and Plan of Merger for Sterling Check Corp., amended corporate documents, and employment agreements for Steven Marks and Douglas Nairne[215](index=215&type=chunk) Signatures This section contains the official certifications by the company's CEO and CFO, confirming report accuracy [Signatures](index=48&type=section&id=Signatures) This section contains the signatures of the Company's Chief Executive Officer and Chief Financial Officer, certifying the filing of the report on August 7, 2025 - The report was signed by Scott Staples (CEO) and Steven Marks (EVP & CFO) on August 7, 2025[220](index=220&type=chunk)

Financial Data and Key Metrics Changes - The company's Q2 revenues reached $391 million, reflecting a 1.5% increase year-over-year on a pro forma basis [25][26] - Adjusted EBITDA for Q2 was $114 million, with an adjusted EBITDA margin of 29.2%, an improvement of 270 basis points compared to the previous year [26] - Adjusted diluted EPS was $0.27, representing a 29% year-over-year increase [26] Business Line Data and Key Metrics Changes - The company reported strong upsell and cross-sell performance, contributing to a 9% growth in the quarter [25] - Retention rates remained high at over 96%, consistent with historical performance [11][26] - The transportation vertical showed positive growth despite macro-related slowing, while retail and e-commerce experienced declines in order volumes [13][14] Market Data and Key Metrics Changes - International growth was robust, with a 7.2% increase in the quarter, outperforming the Americas in all growth algorithm metrics [58][60] - The company noted a normalization in hiring volumes across the macro environment, leading to updated expectations for slightly negative base growth in the second half of the year [16][30] Company Strategy and Development Direction - The company is focused on executing its FA five point zero strategy, which includes increasing market share in target verticals, accelerating international growth, and enhancing product offerings [10][22] - The integration of the Sterling acquisition is ahead of schedule, with a synergy target range increased to $65 million to $80 million within two years [10][27] - The company is leveraging its digital identity solutions as a competitive differentiator in the market [15][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties, citing a diverse range of global verticals and customer segments [17][30] - The company reaffirmed its full-year guidance despite updated expectations for base performance in the second half of the year [30][31] - Management highlighted the importance of customer conversations and the overall tone of caution among clients regarding hiring plans [42][53] Other Important Information - The company generated adjusted operating cash flows of nearly $48 million, a 17% increase year-over-year [28] - The cash balance at the end of Q2 was $184 million, providing ample liquidity for future operations [28] - The company plans to continue making voluntary principal debt repayments, showcasing its commitment to reducing net leverage [29][73] Q&A Session Summary Question: Change in base growth assumption for the back half - Management indicated that the change is broad-based and not specific to one vertical, driven by overall market perception and policy uncertainties [38][39] Question: Impact of Jennie I initiative on hiring - Management noted that clients are generally in a wait-and-see mode regarding hiring, with no specific ties to the Jennie I initiative [42][44] Question: Performance of various verticals - Management reported that staffing and financial services performed well, while healthcare saw a slight decline, which is not a major concern [48][49] Question: International growth metrics - International growth was up 7.2% in the quarter, with a diversified go-to-market strategy contributing to this success [57][60] Question: Upsell and cross-sell contributions from Sterling acquisition - Management stated that it is still early to track specific contributions from the Sterling acquisition, with expectations for revenue synergies to materialize more in 2026 [63][66] Question: Trends in July compared to Q2 - Management confirmed that July trends were consistent with Q2, indicating continued strong performance [70][71] Question: Interest outlook and debt repayment - Management confirmed that the updated outlook accounts for recent debt repricing and voluntary prepayments, with expectations for stable interest rates [88][90] Question: Competitive environment post-Sterling acquisition - Management noted that win rates have improved, but emphasized a focus on execution and customer relationships rather than competitor actions [92][96] Question: Digital identity framework developments - Management highlighted ongoing education and client interest in digital identity solutions, but refrained from providing specific revenue metrics at this time [101][102] Question: Impact of One Big Beautiful Bill Act on business - Management indicated it is too early to assess the long-term impacts of the new tax law, but it will support deleveraging and investment in synergy programs [104][105]

Financial Data and Key Metrics Changes - The second quarter revenues reached $391 million, reflecting a 1.5% increase year-over-year on a pro forma basis [23] - Adjusted EBITDA for Q2 was $114 million, with an adjusted EBITDA margin of 29.2%, an improvement of 270 basis points compared to the previous year [24] - Adjusted diluted EPS was $0.27, representing a 29% year-over-year increase [24] Business Line Data and Key Metrics Changes - The transportation vertical showed positive growth despite macro-related slowing in base volumes, driven by upsell and cross-sell initiatives [11] - The retail and e-commerce sector experienced a decline in order volumes due to tariffs impacting U.S. consumers [11] - Healthcare hiring momentum tapered slightly, but the overall outlook for the industry remains positive [12] Market Data and Key Metrics Changes - International growth was strong, with a 7.2% increase in the quarter, particularly in EMEA and the U.K. markets [56] - The overall customer retention rate remained high at over 96% [24] - The macro environment has led to a normalization of hiring volumes, with a cautious tone among customers regarding their hiring plans [14] Company Strategy and Development Direction - The company is executing its FA 5.0 strategy, focusing on increasing market share in target verticals, accelerating international growth, and enhancing product offerings [8] - The integration of the $2.2 billion Sterling acquisition is ahead of schedule, emphasizing customer retention and synergy realization [8][9] - The company aims to achieve adjusted EBITDA margins of 28% for the full year, reflecting a meaningful expansion from 2024 [29] Management's Comments on Operating Environment and Future Outlook - Management noted a shift in base growth expectations for the second half of the year to slightly negative due to macroeconomic uncertainties [14][28] - Despite the cautious outlook, management remains confident in the company's ability to generate upsell and cross-sell revenues [29] - The company anticipates continued strong performance in the second half, supported by a robust deal pipeline and high customer retention [29] Other Important Information - The company has increased its synergy target range to $65 million to $80 million within two years, with $47 million already actioned as of Q2 [25] - The company is focused on reducing net leverage towards approximately three times adjusted EBITDA within 24 months post-acquisition [27] - The passing of the One Big Beautiful Bill Act is expected to significantly reduce cash tax payments for 2025, enhancing free cash flow [31] Q&A Session Summary Question: Change in base growth assumption for the back half - Management indicated that the change is broad-based and not specific to one vertical, driven by overall market perception [36][38] Question: Impact of Jennie I initiative on hiring - Customers are generally in a wait-and-see mode regarding hiring, influenced by broader policy uncertainties rather than specific initiatives [40][41] Question: Performance of verticals, particularly staffing - Staffing held its own, with financial services performing well, while healthcare saw a slight decline, which is not a major concern [46][48] Question: International growth metrics - International growth was up 7.2% in the quarter, with a diversified go-to-market strategy contributing to this success [56][58] Question: Upsell and cross-sell contributions from Sterling acquisition - Early revenue synergies from the Sterling acquisition are expected to materialize more in 2026, with current focus on improving customer experience [62][66] Question: Trends in July compared to Q2 - July trends were consistent with Q2, indicating continued strong performance despite cautious outlook for the second half [70][72] Question: Sales force adjustments due to weaker demand - The company is not reducing the sales force but is maintaining it to capitalize on expected demand as macro uncertainties clear up [116]

Q2 2025 Performance Highlights - Revenues reached $391 million, a 1.5% year-over-year growth assuming the Sterling acquisition occurred on 1/1/2023[21, 23] - Adjusted EBITDA was $114 million, resulting in a 29.2% Adjusted EBITDA Margin[21] - Adjusted Net Income amounted to $47 million with an Adjusted Diluted EPS of $0.27[21] - Adjusted Operating Cash Flow was $47.7 million after adjusting for $10.4 million in Sterling acquisition and integration costs[23, 49] Synergy Realization and Cost Management - $47 million in run-rate synergies were actioned as of June 30, 2025, progressing towards a total run rate synergy target of $65 million to $80 million within 2 years[38, 69] - $18 million in year-to-date synergies were realized as of June 30, 2025[38] - Debt was repriced in July, reducing the borrowing rate by 50 bps, leading to approximately $10 million in annual cash interest savings[49] Financial Outlook and Capital Structure - Full year 2025 revenue guidance is reaffirmed at $1.5 billion to $1.6 billion[53] - Full year 2025 Adjusted EBITDA guidance is reaffirmed at $410 million to $450 million, with an Adjusted EBITDA Margin of approximately 27% to 28%[53] - Full year 2025 Adjusted Net Income is projected to be $152 million to $182 million, with Adjusted Diluted Earnings Per Share of $0.86 to $1.03[53] - Net leverage is targeted to reach approximately 2-3x within 24 months post-closing, with total debt repayments exceeding $45 million since closing[46, 47]

Group 1: Earnings Performance - First Advantage reported quarterly earnings of $0.27 per share, exceeding the Zacks Consensus Estimate of $0.24 per share, and up from $0.21 per share a year ago, representing an earnings surprise of +12.50% [1] - The company posted revenues of $390.63 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.31%, compared to year-ago revenues of $184.55 million [2] - Over the last four quarters, First Advantage has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Group 2: Stock Performance and Outlook - First Advantage shares have declined approximately 13.5% since the beginning of the year, while the S&P 500 has gained 7.9% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.28 on revenues of $410.13 million, and for the current fiscal year, it is $0.96 on revenues of $1.54 billion [7] Group 3: Industry Context - The Technology Services industry, to which First Advantage belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Financial Performance Overview [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) First Advantage reported significant revenue growth in Q2 2025, primarily driven by the acquisition of Sterling Check Corp, with revenues more than doubling to $390.6 million, while GAAP Net Income was minimal at $0.3 million due to substantial acquisition-related expenses, Adjusted EBITDA and Adjusted Diluted EPS showed strong year-over-year growth, reaching $113.9 million and $0.27, respectively Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $390.6 M | $184.5 M | +111.7% | | Net Income | $0.3 M | $1.9 M | -84.2% | | Adjusted EBITDA | $113.9 M | $55.8 M | +104.1% | | Adjusted Diluted EPS | $0.27 | $0.21 | +28.6% | - GAAP Net Income was significantly impacted by **$7.3 million** in expenses and **$41.3 million** in depreciation and amortization related to the Sterling acquisition and integration[5](index=5&type=chunk) - The company generated **$37.3 million** in Cash Flows from Operations, or **$47.7 million** on an adjusted basis after excluding cash costs associated with the Sterling acquisition[5](index=5&type=chunk) [Full Year 2025 Guidance](index=1&type=section&id=Full%20Year%202025%20Guidance) The company reaffirmed its full-year 2025 guidance, signaling confidence in its business outlook and the expected benefits from realized synergies following the Sterling acquisition, with management expecting revenues to be between $1.5 billion and $1.6 billion for the full year Full Year 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenues | $1.5 billion – $1.6 billion | | Adjusted EBITDA | $410 million – $450 million | | Adjusted Net Income | $152 million – $182 million | | Adjusted Diluted EPS | $0.86 – $1.03 | [Management Commentary](index=2&type=section&id=Management%20Commentary) Management expressed satisfaction with the solid Q2 financial performance, achieved despite macroeconomic uncertainties, highlighting the seamless integration of the Sterling acquisition, advancement of the FA 5.0 strategy, and strong momentum in international markets and Digital Identity solutions, alongside improvements to capital structure through credit facility repricing and voluntary debt repayments - CEO Scott Staples highlighted the company's resilient business model, consistent go-to-market execution, and progress on the FA 5.0 strategic priorities, including the Sterling integration[6](index=6&type=chunk) - The company is experiencing strong customer interest in its Digital Identity solutions and continued momentum in international markets[6](index=6&type=chunk) - At its recent Investor Day, the company introduced a long-term projected Adjusted Diluted EPS compound annual growth rate (CAGR) of **19% to 25%**[7](index=7&type=chunk) - CFO Steven Marks noted that the company repriced its credit facility in July, reducing the borrowing rate by **50 basis points**, and has made over **$45 million** in voluntary principal debt repayments year-to-date[8](index=8&type=chunk) Condensed Financial Statements [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's balance sheet showed total assets of $3.87 billion, a slight decrease from year-end 2024, with Goodwill and Intangible Assets remaining significant components at $2.14 billion and $0.93 billion, respectively, while total liabilities stood at $2.57 billion, with long-term debt being the largest component Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $502,846 | $475,993 | | Goodwill & Intangibles, net | $3,068,686 | $3,112,476 | | **Total Assets** | **$3,871,212** | **$3,922,893** | | Total Current Liabilities | $253,391 | $250,688 | | Long-term Debt, net | $2,104,285 | $2,121,289 | | **Total Liabilities** | **$2,572,049** | **$2,615,854** | | **Total Equity** | **$1,299,163** | **$1,307,039** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the second quarter of 2025, revenues more than doubled to $390.6 million from $184.5 million in the prior-year period, offset by a corresponding increase in operating expenses, particularly Cost of Services and Depreciation & Amortization, with higher interest expense contributing to a near break-even Net Income of $0.3 million, compared to $1.9 million in Q2 2024 Q2 Statement of Operations Summary (in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Revenues** | **$390,633** | **$184,546** | | Total Operating Expenses | $352,896 | $174,643 | | **Income from Operations** | **$37,737** | **$9,903** | | Interest Expense, net | $44,785 | $7,353 | | **Net Income** | **$308** | **$1,861** | | **Diluted Net Income Per Share** | **$0.00** | **$0.01** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, the company generated $56.8 million in net cash from operating activities, a decrease from $70.4 million in the same period of 2024, while net cash used in investing activities increased to $23.8 million, primarily for capitalized software, and financing activities used $21.1 million, driven by debt repayments Six Months Ended June 30 Cash Flow Summary (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $56,816 | $70,372 | | Net Cash used in Investing Activities | ($23,816) | ($13,812) | | Net Cash (used in) provided by Financing Activities | ($21,107) | $213 | | **Increase in Cash** | **$14,862** | **$55,737** | Reconciliation of Non-GAAP Financial Measures [Reconciliation of Net Income to Adjusted EBITDA](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) The company reconciled its Q2 2025 GAAP Net Income of $0.3 million to a non-GAAP Adjusted EBITDA of $113.9 million, with major adjustments including adding back $61.9 million in depreciation and amortization, $44.8 million in net interest expense, $5.7 million in share-based compensation, and a combined $8.6 million in transaction, integration, and restructuring charges Q2 2025 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Description | Amount | | :--- | :--- | | Net Income | $308 | | Interest expense, net | $44,785 | | (Benefit) for income taxes | ($7,610) | | Depreciation and amortization | $61,906 | | Share-based compensation | $5,742 | | Transaction & integration charges | $8,561 | | Other adjustments | $254 | | **Adjusted EBITDA** | **$113,946** | - Transaction and integration charges for Q2 2025 included approximately **$2.3 million** and **$3.7 million**, respectively, related to the Sterling acquisition[34](index=34&type=chunk)[35](index=35&type=chunk) [Reconciliation of Net Income to Adjusted Net Income and EPS](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income%20and%20EPS) To arrive at non-GAAP Adjusted Net Income of $47.0 million for Q2 2025, the company adjusted its pre-tax loss by excluding items such as $50.9 million in acquisition-related D&A, share-based compensation, and other charges, then applied an effective tax rate of 25.6%, resulting in an Adjusted Diluted EPS of $0.27, compared to a GAAP Diluted EPS of $0.00 Q2 2025 Reconciliation of GAAP EPS to Adjusted Diluted EPS | Description | Per Share Amount | | :--- | :--- | | **Diluted net income per share (GAAP)** | **$0.00** | | Adjustments (net of tax) | $0.27 | | **Adjusted Diluted Earnings Per Share (Non-GAAP)** | **$0.27** | - The most significant adjustment was for acquisition-related depreciation and amortization, which added **$50.9 million** to pre-tax income, or **$0.29** per share before tax effects[36](index=36&type=chunk)[37](index=37&type=chunk) [Reconciliation of Operating Cash Flow](index=10&type=section&id=Reconciliation%20of%20Operating%20Cash%20Flow) The company presented an Adjusted Operating Cash Flow metric to provide insight into liquidity from core operations, where for Q2 2025, GAAP cash flow from operating activities of $37.3 million was adjusted by adding back $10.3 million in cash costs related to the Sterling acquisition and integration, resulting in an Adjusted Operating Cash Flow of $47.7 million Q2 2025 Reconciliation of Operating Cash Flow (in thousands) | Description | Amount | | :--- | :--- | | Cash flows from operating activities (GAAP) | $37,345 | | Add: Cost paid related to Sterling acquisition | $10,345 | | **Adjusted Operating Cash Flow** | **$47,690** | Other Information [Conference Call and Webcast Information](index=3&type=section&id=Conference%20Call%20and%20Webcast%20Information) First Advantage scheduled a conference call and webcast for 8:30 a.m. ET on August 7, 2025, to discuss the second quarter 2025 financial results with investors and analysts - The company will host a conference call to review its Q2 2025 results on August 7, 2025, at **8:30 a.m. ET**[11](index=11&type=chunk)[12](index=12&type=chunk) [Forward-Looking Statements and Risk Factors](index=3&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) The press release includes forward-looking statements concerning the company's operations and financial performance, cautioning that these statements are subject to numerous risks and uncertainties, including macroeconomic conditions, regulatory changes, data security breaches, and the ability to successfully integrate the Sterling acquisition and realize its expected benefits - The report contains forward-looking statements that are not historical facts and are subject to various risks and uncertainties[14](index=14&type=chunk)[15](index=15&type=chunk) - Key identified risks include negative macroeconomic changes, operating in a highly regulated industry, potential data security breaches, and failure to realize the expected benefits of the Sterling acquisition[15](index=15&type=chunk)[20](index=20&type=chunk) [About First Advantage](index=5&type=section&id=About%20First%20Advantage) First Advantage is a leading global provider of HR technology software and data, with platforms powered by proprietary technology and AI, offering comprehensive employment background screening, digital identity solutions, and verification services to 80,000 organizations in over 200 countries and territories - First Advantage is a leading provider of global software and data in the HR technology industry, serving **80,000 organizations**[25](index=25&type=chunk) - Core services include employment background screening, digital identity solutions, and verification services, enabled by proprietary technology and AI[25](index=25&type=chunk)

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted Earnings Per Share, and Adjusted Operating Cash Flows are non-GAAP measures. Please see the schedules accompanying this earnings release for a reconciliation of these measures to their most directly comparable respective GAAP measures. Reaffirms Full Year 2025 Guidance Second Quarter 2025 Highlights Reaffirming Full Year 2025 Guidance Reaffirming full year 2025 guidance ranges, including the expected benefits of realized synergie ...