Group 1 - The current employment market is experiencing significant changes, with job number revisions and rate cuts being prominent topics of discussion [1] - The company utilizes BLS JOLTS data but questions its accuracy, preferring insights from customer feedback and order volumes [1] - Customer feedback and order volumes indicate a different narrative compared to the mainstream media and JOLTS data [1]

Summary of Conference Call Company Overview - The conference call features First Advantage, with CEO Scott Staples and CFO Steven Marks discussing the company's performance and outlook in the employment services industry [1][2]. Industry Insights - The current job market is described as flat, with no significant peaks or valleys in hiring or layoffs. Clients are engaging in just-in-time hiring rather than growth hiring [3][4][5]. - Earnings for companies remain strong, leading to continued demand for products and services, which supports the flat job market outlook [5][6]. - International demand has shown growth, particularly in the healthcare sector, although some segments like hospital networks are sluggish due to funding uncertainties [9][10]. Financial Performance and Projections - Base growth is expected to be negative for the year, with a slight improvement anticipated in the second half, influenced by external factors such as tariffs and policy changes [13][14]. - Long-term targets for base growth are projected at 2-3%, with expectations of a neutral state in the next 18 months due to ongoing policy noise [17][18]. - International growth was reported at over 7% last quarter, indicating optimism for future performance [18]. AI and Technology Impact - AI is expected to create jobs in the short term as industries adapt, but certain sectors like BPO and IT services may face long-term impacts [21][22]. - First Advantage has implemented AI in customer care, resulting in a 30% reduction in headcount, with plans for further optimization [25][29]. - The company is focused on using AI to enhance quality and customer experience rather than immediate cost savings [30]. Growth Strategies - First Advantage aims for 4-5% growth from new logos, leveraging its strong brand and complementary verticals from the Sterling acquisition [38][39]. - Upsell and cross-sell opportunities are driven by increased demand for risk management and security in employment background checks, particularly in response to rising fraud concerns [54][56]. - The integration of digital identity solutions with I-9 processes is highlighted as a unique offering that addresses current market needs [62][63]. Capital Allocation and Future Plans - The company is focused on completing the integration of Sterling, achieving synergy targets, and deleveraging its balance sheet [64][65]. - First Advantage plans to maintain a conservative approach to M&A, prioritizing debt reduction over new acquisitions in the near term [69][70]. Key Metrics - Retention rate is a key performance indicator, with a target of over 96% [64]. - The company is currently free cash flow positive and has already prepaid $45 million of its debt [65]. This summary encapsulates the key points discussed during the conference call, providing insights into First Advantage's current position, industry dynamics, and strategic direction.

Core Points - Fountain Asset Corp. held its Annual General and Special Meeting on September 4, 2025, where all proposed resolutions were approved by shareholders [1][2] - The shareholders re-elected the board of directors, including Paul Kelly as chairman, and reappointed MNP LLP as auditors for the upcoming year [2] - A new Equity Incentive Plan was adopted, replacing the existing stock option plan [2] 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 [3]

Company Overview - First Advantage is a leader in the HR tech and data space, focusing on managing customer risk related to onboarding and human capital [6]. - The company specializes in background screening services, helping clients validate their hiring processes [6]. Recent Developments - There has been renewed interest in the space, particularly as First Advantage marks four years since going public and has undergone significant transformation, including the acquisition of Sterling [3][4].

Summary of First Advantage (FA) 2025 Conference Call Company Overview - **Company**: First Advantage - **Industry**: HR technology and data services, specifically in background screening and risk management [6][8] Key Points and Arguments 1. **Market Position**: First Advantage is a leader in the HR tech space, focusing on managing customer risks related to onboarding and human capital [6][8] 2. **Service Evolution**: The company has evolved from traditional background checks to a broader "know your people" approach, emphasizing digital identity and compliance [7][8] 3. **Complexity in Background Screening**: The background screening process is complicated due to the existence of nearly 4,000 unique court jurisdictions in the U.S. that do not communicate with each other [11][12] 4. **Volume of Checks**: First Advantage and Sterling conducted over 190 million checks last year, with turnaround times of one day or less [13] 5. **Investment in Technology**: The company invests approximately $130 million annually in product technology and innovation to automate and refine data acquisition processes [13][19] 6. **Just-in-Time Hiring**: Corporations are increasingly adopting just-in-time hiring practices, requiring efficient screening processes to onboard employees quickly [14][15] 7. **Mobile Experience**: The majority of background checks are now completed via mobile devices, reflecting changing applicant expectations [16] 8. **Data Ownership**: First Advantage owns over 900 million records, which allows for better margin control and competitive advantages [20][26] 9. **Cross-Selling Opportunities**: The integration of Sterling has opened up cross-selling opportunities, such as offering tax credit services to Sterling's customer base [46][48] 10. **Post-Employment Monitoring**: The company is expanding its services in post-employment monitoring, particularly in transportation and healthcare sectors [33][34] 11. **Market Trends**: The company is seeing a shift in customer needs towards more comprehensive risk management solutions, including digital identity verification [62][65] 12. **New Logo Growth**: The merger with Sterling has enhanced First Advantage's ability to attract new clients, with a focus on vertical integration and sales productivity [84][88] 13. **Base Growth Dynamics**: The company has experienced fluctuations in base growth due to market conditions but is seeing stabilization in recent quarters [90][92] 14. **Vertical Diversification**: The acquisition of Sterling has provided greater vertical diversification, particularly in healthcare and financial services [98][99] 15. **Capital Allocation Strategy**: First Advantage is focused on organic growth and integration synergies post-acquisition, with plans to explore inorganic growth strategies once leverage targets are met [100][102] Additional Important Content - **Customer Retention**: The company has maintained a customer retention rate of over 96%, indicating strong client satisfaction and loyalty [42][88] - **Regulatory Compliance**: There is a growing emphasis on compliance and monitoring in regulated industries, which presents opportunities for First Advantage's services [34][60] - **Technological Risks**: The rise of digital identity fraud and the need for robust verification processes are becoming critical issues for companies, creating demand for First Advantage's solutions [63][64] - **Future Outlook**: The company is optimistic about growth in digital identity solutions and anticipates a significant increase in demand for these services in the coming years [74][82]

Group 1 - The event is focused on Credit Bureau Day, featuring First Advantage, which is currently integrating following a significant merger [2] - The management team present includes CEO Scott Staples, CFO Steven Marks, and IR Stephanie Gorman [2] - The format of the event is a fireside chat, allowing for audience questions to be incorporated into the discussion [3]

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)