Summary of First Advantage (FA) 2025 Conference Call Company Overview - **Company**: First Advantage - **Industry**: Pre-employment screening and digital identity solutions - **Key Executives**: Scott Staples (CEO), Steven Marks (CFO) [2][3] Core Business Insights - First Advantage is the leading provider in the pre-employment screening market, with a revenue of **$1.5 billion** and **$457 million** in EBITDA [5] - The total addressable market (TAM) for background screening is approximately **$14 billion**, with half currently being serviced and the other half representing growth opportunities, particularly in international markets [6] - The digital identity market has emerged as a new TAM of **$10 billion**, driven by increasing identity fraud risks in recruitment processes [6][7] Market Dynamics - Over **50%** of new clients in the APAC region are first-time screeners, indicating significant growth potential in international markets [6] - Companies are increasingly focused on risk management and brand protection, leading to higher demand for background screening services [6][8] - Gartner predicts that by **2028**, **1 in 4** job candidates will use some form of fraud in their applications [9] Competitive Landscape - First Advantage holds a **25%** market share in a fragmented market with several mid-market players and numerous smaller competitors [10] - The company has a strong technology and vertical integration strategy, allowing for customized solutions tailored to specific industries [12] Technology and Innovation - First Advantage has invested heavily in automation, AI, and proprietary data, spending **$130 million** annually on R&D [17] - The company has developed AI-driven customer service solutions, improving customer satisfaction and operational efficiency [19] Financial Performance - First Advantage has maintained a **96%** customer retention rate and has seen revenue growth through upselling and cross-selling [23][34] - The company aims to achieve **$2 billion** in revenue and **$600 million** in EBITDA by **2028**, with an EPS target of **$1.65 to $2** [32][34] - The company is focused on deleveraging post-acquisition of Sterling, with a target leverage ratio of **2 to 3 times** by the end of next year [30] Strategic Initiatives - The integration of Sterling is a key focus, with expected synergies now estimated between **$65 million to $80 million** [25] - The FA 5.0 strategy emphasizes vertical penetration, technology integration, and financial discipline [41][46] Risk Management - The company operates primarily in resilient sectors such as healthcare, which provides insulation from economic volatility [39][40] - First Advantage's large enterprise clients are better positioned to absorb market fluctuations compared to smaller businesses [38] Conclusion - First Advantage is well-positioned in a growing market with significant opportunities in digital identity and international expansion. The company's focus on technology, customer retention, and strategic acquisitions will drive future growth and profitability [34][60]

Summary of First Advantage FY Conference Call Company Overview - **Company Name**: First Advantage - **Industry**: HR Technology and Background Screening - **Business Model**: Global software, data, and services company focused on HR tech, providing background screening and compliance services in over 200 countries and territories [6][7][8] Key Points and Arguments Business Transformation - First Advantage has transitioned from a background screening company to a comprehensive software, data, and services provider over the past eight years [9] - The company went public on Nasdaq approximately four years ago [9] Acquisition of Sterling - The acquisition of Sterling has positioned First Advantage as the largest player in the background screening space, with a market cap significantly larger than its nearest competitor [10][12] - The rationale for the acquisition included complementary strengths in verticals, enhancing technology platforms, and filling gaps in market coverage [12][13] Competitive Landscape - First Advantage is categorized as a leader in the market, with a competitive moat against mid-sized players and smaller companies [16][17] - The company invests $120 to $130 million annually in R&D, which exceeds the revenue of many smaller competitors [17][18] Market Dynamics - The total addressable market (TAM) for First Advantage has grown from $13 billion to $14 billion, with significant opportunities in the APAC region [28] - Digital identity is emerging as a critical area, with a TAM of $10 billion, driven by increasing fraud in recruitment processes [32] Financial Outlook - First Advantage aims to achieve $1.8 to $2 billion in revenue by 2028, with a consistent growth rate of 7% to 9% expected [38][40] - The company anticipates EBITDA of approximately $600 million by 2028, with a focus on high-quality earnings and free cash flow conversion [41][42] Labor Market Insights - The labor market has stabilized, with a job openings to unemployed ratio returning to a normalized level of 1:1 [49] - The company has maintained a 96% customer retention rate post-acquisition, indicating strong client relationships [39][50] International Growth - Significant growth opportunities exist in the UK, India, and Australia, particularly due to the digitization of data sources in these regions [54][55] - The combined entity of First Advantage and Sterling enhances international business capabilities [57] AI and Technology Integration - First Advantage is leveraging AI and machine learning to improve data processing and customer experience, with dedicated teams focused on innovation [59][61] - The fragmented nature of data in the background screening industry presents opportunities for AI to streamline operations and enhance service delivery [61] Additional Important Insights - The company is focused on integrating the two businesses post-acquisition and achieving cost synergies of $65 to $80 million [46] - Procurement departments are increasingly favoring larger vendors like First Advantage for their technology and risk management capabilities [36][37]

First Advantage (FA) 2025 Investor Day Summary Company Overview - **Company**: First Advantage - **Event**: Inaugural Investor Day held on May 28, 2025 - **Focus**: Providing global software and data solutions for hiring and onboarding processes [1][2] Core Industry Insights - **Industry**: Background screening and identity verification - **Market Dynamics**: The industry is evolving with increasing complexity and a focus on risk and safety, making background screening a C-suite and board-level discussion [17] - **Digital Identity**: The digital identity space represents a $10 billion Total Addressable Market (TAM), highlighting significant growth potential [25][36] Strategic Vision - **FA 5.0 Strategy**: Launched on January 1, 2025, focusing on integrating the Sterling acquisition and enhancing market presence [64] - **Acquisition of Sterling**: Seen as a strategic move to enhance market position, with expectations of synergy benefits and improved customer offerings [18][66][75] Financial Performance - **Current Financials**: Strong revenue, EBITDA, and free cash flow positions; projected revenue by 2028 is estimated between $1.8 billion to $2 billion [19][78] - **Retention Rate**: 96% gross retention rate post-Sterling acquisition, indicating strong customer satisfaction and minimal attrition [30] Growth Opportunities - **Vertical Market Focus**: Emphasis on increasing market share in targeted verticals, particularly healthcare, which is now the largest and fastest-growing segment [33][85] - **Global Expansion**: Plans to enhance global presence, particularly in the UK, EU, Australia, India, and emerging APAC markets [89][97] - **Cross-Sell and Upsell Potential**: Identified $400 million in potential cross-sell opportunities among top customers, with a high win rate for existing customers [92][93] Technology and Innovation - **Automation and AI**: 70% of transactions in the U.S. are fully automated, driving efficiency and customer satisfaction [22][23] - **Product Development**: Continuous investment in proprietary data and technology to enhance service offerings and customer experience [15][21] Competitive Landscape - **Market Share**: First Advantage holds approximately 25% market share in a $24 billion market, indicating significant room for growth [47] - **Competitive Moat**: Size, scale, and advanced technology provide a competitive advantage over smaller players in the industry [50][51] Customer Engagement - **Customer Experience**: Focus on improving customer and candidate experience through new technology and support systems [56][58] - **Consultative Selling**: Leveraging data and insights to educate customers on best practices and enhance service offerings [52][53] Conclusion - **Outlook**: First Advantage is well-positioned for future growth with a strong strategic vision, robust financial performance, and a commitment to innovation and customer satisfaction [80][81]

Strategic Overview - First Advantage is positioned as a leading provider of global software and data in the HR technology industry, operating in a large and growing market[23, 25] - The company has a pro forma revenue of $1.5 billion and synergized pro forma adjusted EBITDA of $457 million as of LTM 3/31/25[29] - First Advantage addresses a $24 billion+ global total addressable market, with opportunities to outgrow the market's expected 6%-7% growth rate[36] Sterling Acquisition & Synergies - The acquisition of Sterling Check Corp closed on October 31, 2024, with a purchase value of $2.2 billion (77% cash / 23% stock)[71] - The company is increasing its synergy target from the Sterling acquisition to $65 million - $80 million, with $37 million in run rate synergies actioned as of 3/31/2025[81] Financial Performance & Outlook - First Advantage reaffirms its FY25 guidance, projecting total revenues between $1.5 billion and $1.6 billion, and adjusted EBITDA between $410 million and $450 million[208] - The company targets revenue of $1.8 billion - $2.0 billion by 2028, representing a 4%-7% CAGR, and an adjusted EBITDA margin of 31%-32%[83, 228] - First Advantage aims for an adjusted diluted EPS of $1.65 - $2.00 by 2028, a 19%-25% CAGR[83, 228] - The company has a total debt of $2.2 billion and net debt of $2.0 billion as of 3/31/2025, with a revolver availability of $250 million[198] - The company is targeting a net leverage range of 2x – 3x[200]

Core Insights - Fountain Asset Corp. reported financial results for Q1 2025, highlighting significant realized gains and a focus on reducing operating expenses [1][2][5] Financial Performance - The company realized $1.29 million in gains from the sale of portfolio investments during Q1 2025 [3] - Net assets as of March 31, 2025, were valued at $5.57 million, or $0.09 per share, reflecting a slight increase from $5.51 million, or $0.09 per share, at the end of 2024 [4][8] - Net comprehensive income for Q1 2025 was $0.05 million, a recovery from net comprehensive losses of $0.45 million in Q1 2024 [8] - Total gains from investment activities amounted to $0.39 million, compared to losses of $0.28 million in Q1 2024 [8] - The company reported net unrealized losses of $0.96 million on portfolio investments, contrasting with net unrealized gains of $0.04 million in Q1 2024 [8] - Total expenses for Q1 2025 were $0.34 million, up from $0.17 million in Q1 2024, while operating expenses remained stable at $0.16 million compared to $0.17 million in Q1 2024 [8] Strategic Focus - The CEO emphasized the company's commitment to growth-oriented goals and the importance of realigning the investment portfolio to capitalize on market trends [5] - The company continues to seek ways to reduce ongoing expenditures while maximizing revenues to enhance its financial position [5][6]

Core Viewpoint - First Advantage Corporation is hosting its inaugural Investor Day to present its strategic vision, financial growth outlook, and key initiatives in the HR technology industry [1][2][3] Group 1: Event Details - The Investor Day will take place in New York City on May 28, 2025, starting at 8:30 a.m. ET and concluding around 11:30 a.m. ET [1] - The event will feature presentations from CEO Scott Staples and other executive management team members, along with multiple Q&A sessions [2] Group 2: Company Strategy and Growth - CEO Scott Staples emphasized the execution of the FA 5.0 strategy to enhance shareholder value and solidify the company's leadership in the background screening industry [3] - The recent acquisition of Sterling has significantly expanded First Advantage's capabilities and market reach, positioning the company for profitable growth [3] Group 3: Company Overview - First Advantage is a leading provider of global software and data in the HR technology sector, focusing on employment background screening, digital identity solutions, and verification services [4] - The company serves over 80,000 organizations across more than 200 countries, leveraging proprietary technology and AI to modernize hiring and onboarding processes [4]

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) First Advantage reported increased revenues and a widened net loss in Q1 2025, primarily due to the Sterling acquisition and higher interest expenses [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets and liabilities slightly decreased, with goodwill and intangible assets remaining significant components of the balance sheet Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $171,994 | $168,688 | | Goodwill | $2,128,018 | $2,124,528 | | Intangible assets, net | $955,357 | $987,948 | | **Total Assets** | **$3,871,691** | **$3,922,893** | | Long-term debt, net | $2,117,434 | $2,121,289 | | **Total Liabilities** | **$2,592,936** | **$2,615,854** | | **Total Equity** | **$1,278,755** | **$1,307,039** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q1 2025 revenues more than doubled due to the Sterling acquisition, but a significant increase in interest expense led to a widened net loss Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | **Revenues** | **$354,588** | **$169,416** | | Total operating expenses | $346,971 | $170,142 | | Income (Loss) from Operations | $7,617 | $(726) | | Interest expense, net | $46,580 | $3,570 | | **Net Loss** | **$(41,194)** | **$(2,908)** | | Basic and diluted net loss per share | $(0.24) | $(0.02) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased in Q1 2025 due to higher interest payments, while investing and financing activities primarily involved capitalized software and debt repayments Q1 2025 vs Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $19,471 | $38,329 | | Net cash used in investing activities | $(11,076) | $(7,031) | | Net cash (used in) provided by financing activities | $(5,993) | $689 | | **Increase in cash, cash equivalents, and restricted cash** | **$3,308** | **$31,659** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the Sterling acquisition's impact, including significant goodwill, altered debt structure, new segment reporting, and a subsequent debt repayment - The company completed the acquisition of Sterling Check Corp. on October 31, 2024, for a total consideration of approximately **$2.2 billion**, resulting in the recognition of **$1.31 billion in goodwill**[42](index=42&type=chunk)[44](index=44&type=chunk) - In Q1 2024, one customer represented approximately **11% of consolidated revenues**. In Q1 2025, no single customer accounted for **10% or more of revenues**[37](index=37&type=chunk) - The company now reports in three segments: First Advantage Americas, First Advantage International, and the new Sterling segment. For Q1 2025, Sterling contributed **$187.5 million in total revenues** and **$48.4 million in Segment Adjusted EBITDA**[87](index=87&type=chunk)[88](index=88&type=chunk) - Subsequent to quarter end, on May 7, 2025, the company made a voluntary principal repayment of **$15.0 million** on its Amended First Lien Credit Facility[94](index=94&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 revenue growth driven by the Sterling acquisition, offset by existing customer declines, leading to increased expenses and a widened net loss despite Adjusted EBITDA growth [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q1 2025 revenues significantly increased due to the Sterling acquisition, but higher cost of services, depreciation, and a surge in interest expense led to a substantial net loss Q1 2025 Revenue Change Drivers (in millions) | Driver | Revenue Impact (in millions) | % of 2024 Revenue | | :--- | :--- | :--- | | Sterling Acquisition | +$187.5 | +110.7% | | New Customers | +$5.1 | +3.0% | | Existing Customers (Net Decrease) | -$7.4 | -4.4% | | **Total Increase** | **+$185.2** | **+109.3%** | - Cost of services as a percentage of revenue increased from **51.5% to 54.3%** year-over-year, impacted by Sterling's higher relative cost of services due to its product and customer mix[128](index=128&type=chunk) - Interest expense increased by **$43.0 million (1,204.8%)** due to an incremental **$1.62 billion** in term loan principal related to the Sterling Acquisition financing[135](index=135&type=chunk)[136](index=136&type=chunk) [Key Operating and Financial Metrics (Non-GAAP)](index=31&type=section&id=Key%20Operating%20and%20Financial%20Metrics%20%28Non-GAAP%29) Adjusted EBITDA significantly increased in Q1 2025 due to the Sterling acquisition, though margin compressed, while Adjusted Diluted EPS remained flat despite higher adjusted net income Non-GAAP Financial Metrics (in thousands, except per share data) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Adjusted EBITDA | $92,112 | $46,558 | | Adjusted EBITDA Margin | 26.0% | 27.5% | | Adjusted Net Income | $30,486 | $24,786 | | Adjusted Diluted Earnings Per Share | $0.17 | $0.17 | Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | **Net loss** | **$(41,194)** | **$(2,908)** | | Interest expense, net | 46,580 | 3,570 | | Provision (benefit) for income taxes | 2,231 | (1,388) | | Depreciation and amortization | 61,666 | 29,822 | | Share-based compensation | 7,967 | 4,751 | | Transaction and acquisition-related charges | 3,996 | 11,992 | | Integration, restructuring, and other charges | 10,866 | 719 | | **Adjusted EBITDA** | **$92,112** | **$46,558** | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company maintained sufficient liquidity with **$172.0 million** in cash and a **$250.0 million** revolving credit facility, supported by a refinanced **$2.185 billion** term loan - As of March 31, 2025, liquidity consisted of **$172.0 million in cash and cash equivalents** and **$250.0 million available** under the revolving credit facility[165](index=165&type=chunk) - In connection with the Sterling Acquisition, the company entered into a new credit agreement with a **$2.185 billion term loan** due 2031 and a **$250.0 million revolving credit facility** due 2029[168](index=168&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that as of March 31, 2025, there have been no material changes in its market risks compared to the disclosures in its 2024 Annual Report - No material change had occurred in the company's market risks as of March 31, 2025, compared with the disclosure in the 2024 Annual Report[180](index=180&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2025, while actively integrating Sterling's operations and control processes - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the reporting period[182](index=182&type=chunk) - The company is in the process of integrating the Sterling operations, control processes, and information systems, and has taken steps to monitor and maintain appropriate internal controls during this integration[183](index=183&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course litigation, with an **$11.2 million** liability recorded for probable and estimable losses as of March 31, 2025 - Information regarding legal proceedings is incorporated by reference from Note 12, which states the company has recorded a liability of **$11.2 million** for pending matters as of March 31, 2025[185](index=185&type=chunk)[81](index=81&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors as of March 31, 2025, compared to those disclosed in the 2024 Annual Report - As of March 31, 2025, no material changes had occurred in the company's risk factors compared with the disclosure in its 2024 Annual Report[186](index=186&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[187](index=187&type=chunk) [Other Information](index=38&type=section&id=Item%205.%20Other%20Information) President Joelle Smith adopted a Rule 10b5-1 trading plan on February 28, 2025, for the potential sale of up to **69,402 shares** of common stock - On February 28, 2025, President Joelle Smith adopted a Rule 10b5-1 trading plan for the sale of up to **69,402 shares** of common stock[188](index=188&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits) The report lists various exhibits filed, including the Sterling merger agreement, corporate governance documents, and officer certifications - Exhibits filed include the Agreement and Plan of Merger with Sterling Check Corp., corporate governance documents, and certifications from the Principal Executive Officer and Principal Financial Officer[190](index=190&type=chunk)

Financial Data and Key Metrics Changes - The first quarter revenues were $355 million, nearly flat compared to the previous year on a pro forma basis [22] - Adjusted EBITDA for the first quarter was $92 million, with an adjusted EBITDA margin of 26%, up approximately 200 basis points year-over-year on a pro forma basis [23] - Adjusted diluted EPS was $0.17, flat year-over-year [24] Business Line Data and Key Metrics Changes - Combined upsell, cross-sell, and new logo rates delivered 9.3% growth in the quarter, with retention remaining high at 96% [23][13] - The sales pipeline momentum included 14 enterprise bookings in the first quarter, totaling 78 in the last twelve months, each with $500,000 or more of expected annual contract value [13] - The average deal size increased, indicating strong package density and value selling across most verticals and geographies [13] Market Data and Key Metrics Changes - The transportation vertical showed healthy demand, while there was a slowdown in order volumes within the retail and e-commerce verticals [15][16] - International operations reported an 8% increase, with growth across all regions including EMEA, India, APAC, and Australia [90] Company Strategy and Development Direction - The company is focused on executing its FA five-point-zero strategy, emphasizing customer retention, synergy realization, and integration of the Sterling acquisition [8][9] - The integration process is on track, with a focus on leveraging the best solutions and technologies from both First Advantage and Sterling [18] - The company aims to achieve run rate synergies of $60 million to $70 million within two years post-acquisition [26] Management's Comments on Operating Environment and Future Outlook - Management remains cautious due to macroeconomic uncertainties but has not observed significant changes in fundamental demand drivers [9][11] - The company expects base revenues to remain a growth headwind in Q2 but anticipates sequential improvement later in the year [29][30] - Management is confident in achieving adjusted EBITDA margins around or above 28% starting in Q2, with free cash flow projected between $65 million and $95 million for 2025 [31] Other Important Information - The company has contingency plans in place to manage potential economic slowdowns and is prepared to take actions to reduce costs as needed [11] - The company hosted a record number of attendees at its annual Collaborate User Conference, indicating strong customer engagement [20] Q&A Session Summary Question: Can you elaborate on the cross currents from clients? - Management noted strong order volumes but clients are in a wait-and-see mode regarding forecasting due to macroeconomic conditions [36][38] Question: How is retention trending for the Sterling base? - Retention remains high at 96%, with Sterling customers excited about new features and upgrades [40][42] Question: What gives confidence in the guidance? - Confidence stems from strong new logo generation and upsell/cross-sell revenue, with a focus on maintaining historical retention levels [71] Question: Are you seeing more RFPs post-Sterling? - RFP volumes are normal, driven by trends in the industry, particularly around digital identity [66] Question: How long does onboarding for large deals typically take? - Onboarding for large and complex deals typically takes about six months, with revenue expected to start in late Q2 or early Q3 [68] Question: How is the international business performing? - International operations have shown consistent growth, with an 8% increase, driven by a focus on risk and compliance [90]

Financial Data and Key Metrics Changes - First quarter revenues reached $355 million, nearly flat compared to the previous year on a pro forma basis [22] - Adjusted EBITDA for the first quarter was $92 million, with an adjusted EBITDA margin of 26%, up approximately 200 basis points year-over-year on a pro forma basis [23] - Adjusted diluted EPS was $0.17, flat year-over-year, impacted by increased interest on transaction financing and the dilutive effect of new shares issued for the acquisition [24] Business Line Data and Key Metrics Changes - Combined upsell, cross-sell, and new logo rates delivered 9.3% growth in the quarter, with retention remaining high at 96% [23] - The sales pipeline momentum included 14 enterprise bookings in the first quarter, totaling 78 in the last twelve months, each with $500,000 or more of expected annual contract value [13] - The average deal size increased, indicating strong package density and value selling across most verticals and geographies [13] Market Data and Key Metrics Changes - International operations saw an 8% increase, marking three to four consecutive quarters of growth, with positive momentum across all regions [85] - The transportation vertical experienced healthy demand, while retail and e-commerce showed a slowdown in order volumes [15] - The company noted that 87% of 2024 pro forma revenues were generated in the U.S., with limited direct exposure to U.S. Federal government hiring [10][11] Company Strategy and Development Direction - The company is focused on executing its FA five-point-zero strategy, emphasizing customer retention, synergy realization, and integration of the Sterling acquisition [8][9] - The integration process is on track, with a focus on leveraging the best solutions and technologies from both First Advantage and Sterling [17] - The company aims to reduce net leverage towards approximately three times pro forma adjusted EBITDA within 24 months post-close [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model despite macroeconomic uncertainties, noting that they have not observed sustained changes in demand drivers [9] - The company is prepared with contingency plans to reduce costs if economic conditions worsen [12] - Guidance for the full year 2025 remains reaffirmed, with expectations for base revenues to improve sequentially later in the year [29] Other Important Information - The company actioned an incremental $17 million in run-rate synergies in Q1, bringing the total to $37 million, exceeding synergy goals [24] - The company hosted a record number of attendees at its annual Collaborate User Conference, indicating strong customer engagement [20] - The implementation of AI agents in criminal records processing has improved speed and quality, enhancing customer satisfaction [19] Q&A Session Summary Question: Can you elaborate on the cross currents from clients? - Management acknowledged the unique macroeconomic times and emphasized a conservative outlook while noting strong order volumes and a "just in time" hiring mode among clients [37][38] Question: How is retention trending for Sterling clients? - Retention remains high at 96%, with Sterling customers excited about new features and upgrades, indicating successful communication and integration efforts [40][41] Question: What gives confidence in the guidance? - Confidence stems from strong new logo generation, upsell/cross-sell revenue, and historical retention levels, despite underlying base volume uncertainties [69][70] Question: How is the international business performing? - International business is up 8%, with growth across all regions, driven by a focus on risk and compliance [85][86] Question: What insights have been gained from the Sterling integration? - The integration has been treated as a merger, focusing on adopting the best practices from both companies, leading to a successful and rapid integration process [93][96]

Core Viewpoint - First Advantage reported quarterly earnings of $0.17 per share, exceeding the Zacks Consensus Estimate of $0.13 per share, with a year-over-year comparison showing no change in earnings [1][2] Financial Performance - The company achieved revenues of $354.59 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.51%, and showing a significant increase from $169.42 million in the same quarter last year [2] - Over the last four quarters, First Advantage has exceeded consensus EPS estimates two times and topped revenue estimates twice [2] Stock Performance - First Advantage shares have declined approximately 20.1% since the beginning of the year, contrasting with the S&P 500's decline of 4.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.24 on revenues of $382.37 million, and for the current fiscal year, it is $0.92 on revenues of $1.53 billion [7] - The trend of estimate revisions for First Advantage is mixed, which may change following the recent earnings report [6] Industry Context - The Technology Services industry, to which First Advantage belongs, is currently ranked in the top 27% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]