First Advantage(US:FA)2025-11-06 21:18Revenue Performance - First Advantage generated revenues of $409.2 million for the three months ended September 30, 2025, compared to $199.1 million for the same period in 2024, representing a 105.5% increase[116] - For the nine months ended September 30, 2025, revenues reached $1,154.4 million, up from $553.1 million in the same period of 2024, marking a 108.5% increase[116] - Revenues for Q3 2025 were $409.2 million, a 105.5% increase from $199.1 million in Q3 2024[134] - Revenues for the first nine months of 2025 reached $1,154.4 million, up 108.7% from $553.1 million in the same period of 2024[135] - Total revenues for the three months ended September 30, 2025, reached $409.2 million, up 105.7% from $199.1 million in 2024[176] - Total revenues for the nine months ended September 30, 2025, were $1.15 billion, up 108.5% from $553.1 million in 2024[176] Cost and Expenses - Cost of services for Q3 2025 was $222.0 million, a 120.1% increase from $100.9 million in Q3 2024[137] - Cost of services for the first nine months of 2025 totaled $622.4 million, a 122.0% increase from $280.4 million in the same period of 2024[140] - Cost of services as a percentage of revenue was 54.3% in Q3 2025, compared to 50.7% in Q3 2024[139] - Product and technology expense for Q3 2025 was $25.1 million, a 94.7% increase from $12.9 million in Q3 2024[142] - Selling, general, and administrative expenses for the three months ended September 30, 2025, were $57.5 million, an increase of $11.4 million or 24.8% compared to the same period in 2024[145] - For the nine months ended September 30, 2025, selling, general, and administrative expenses increased by $55.2 million or 44.0%, totaling $180.5 million compared to $125.4 million in 2024[147] - Depreciation and amortization for the three months ended September 30, 2025, was $62.3 million, an increase of $32.1 million or 106.4% compared to $30.2 million in 2024[149] - Interest expense, net for the three months ended September 30, 2025, was $40.0 million, an increase of $22.9 million or 132.9% compared to $17.2 million in 2024[153] Net Income and Adjusted Metrics - Net income for the three months ended September 30, 2025, was $2.6 million, an increase of $11.5 million compared to a net loss of $(8.9) million in 2024[162] - Adjusted EBITDA for the three months ended September 30, 2025, was $118.5 million, representing an Adjusted EBITDA Margin of 29.0%, compared to $64.0 million and 32.2% in 2024[169] - For the nine months ended September 30, 2025, Adjusted EBITDA was $324.6 million, with an Adjusted EBITDA Margin of 28.1%, compared to $166.4 million and 30.1% in 2024[170] - Net loss for the nine months ended September 30, 2025, was $(38.3) million, an increase of $(28.4) million compared to $(9.9) million in 2024[164] - Adjusted Net Income for the three months ended September 30, 2025, was $52.3 million, a 37.7% increase from $38.0 million in the same period of 2024[181] - Adjusted Net Income for the nine months ended September 30, 2025, was $129.8 million, a 38.7% increase from $93.5 million in 2024[183] - Adjusted Diluted Earnings Per Share for the three months ended September 30, 2025, was $0.30, compared to $0.26 for the same period in 2024[182] Acquisition and Integration - The acquisition of Sterling Check Corp. on October 31, 2024, enhances First Advantage's capabilities and expands service offerings in background and identity verification[111] - The company recognized $199.4 million in revenues from Sterling, contributing 100.1% to Q3 2025 revenues due to the acquisition completed on October 31, 2024[136] - Sterling personnel expenses recognized after the Sterling Acquisition amounted to $19.8 million, with approximately $1.2 million related to cash compensation due to the conversion of Sterling equity awards[144] - The Sterling Acquisition contributed approximately $1.4 million and $7.5 million in transaction-related expenses for the three and nine months ended September 30, 2025, respectively[173] - Integration and restructuring charges related to the Sterling Acquisition amounted to approximately $3.8 million for the three months ended September 30, 2025[174] - Integration and restructuring charges related to the Sterling Acquisition were approximately $3.8 million and $15.4 million for the three and nine months ended September 30, 2025, respectively[192] Cash Flow and Debt - As of September 30, 2025, the company had $216.8 million in cash and cash equivalents and $250.0 million available under its revolving credit facility[195] - Total debt outstanding as of September 30, 2025, was $2,139.5 million[195] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $129.2 million, an increase of $15.3 million compared to $113.9 million for the same period in 2024[203] - Net cash used in investing activities increased to $37.3 million for the nine months ended September 30, 2025, compared to $21.7 million for the same period in 2024[204] - Net cash used in financing activities was $(45.0) million for the nine months ended September 30, 2025, primarily due to a $45.5 million increase in principal repayments on the term loan[205] Tax and Regulatory Changes - The enactment of the One Big Beautiful Bill Act (OBBBA) introduces significant changes to the U.S. corporate tax regime, which may impact future taxable income and the effective tax rate[122] - The effective tax rates for the three and nine months ended September 30, 2025, were approximately 25.1% and 25.3%, respectively[193] Market Conditions and Customer Base - Approximately 86% of revenues for the nine months ended September 30, 2025, were generated in the United States, with the remaining 14% from international markets[116] - Current macroeconomic conditions, including elevated interest rates and inflation, are impacting customer demand and hiring activity, which may affect revenue growth[120] - The company anticipates that evolving consumer trends and labor market dynamics may influence future seasonality in hiring and demand for services[117] - First Advantage's diversified customer base and focus on innovative solutions contribute to the stability of its business and long-term financial performance[124] - The company has 80,000 customers globally, including multinational and mid-sized companies, utilizing its comprehensive suite of HR technology solutions[112] Special Dividends - The company declared a one-time special cash dividend of $1.50 per share on August 8, 2023, paid on August 31, 2023[196]