First Advantage Reports First Quarter 2025 Results
- Integration of Sterling acquisition progressing ahead of schedule with $37M in run-rate cost synergies achieved
- Strong customer retention levels and sequential quarterly improvement in base business
- Q1 performance exceeded company expectations
- Successful upsell, cross-sell, and new logo acquisition strategy
- Net loss of $(41.2) million, with net loss margin of (11.6)%
- Significant acquisition-related expenses and depreciation costs impacting bottom line
- Adjusted EBITDA margin declined to 26.0% from 27.5% year-over-year
Insights
First Advantage posts mixed Q1 results with Sterling acquisition driving doubling revenue but creating large GAAP losses while adjusted EPS remained flat.
First Advantage's Q1 2025 results present a tale of two financial pictures - significant GAAP losses but stable adjusted metrics. Revenue more than doubled to $354.6 million (up 109% year-over-year), primarily due to the Sterling Check Corp. acquisition completed approximately six months ago. However, the company reported a net loss of $41.2 million with a margin of -11.6%, largely attributed to $15.3 million in acquisition-related expenses and $41.2 million in Sterling depreciation and amortization.
Looking at adjusted figures, which exclude these acquisition costs, the company delivered Adjusted EBITDA of $92.1 million with a 26.0% margin (down from 27.5% last year) and Adjusted EPS of $0.17 (flat year-over-year despite the revenue doubling). This indicates the combined entity is experiencing some margin dilution during this integration phase.
The integration appears to be progressing faster than planned, with management reporting they've already "actioned $37 million in run rate cost synergies" toward their ultimate goal of $60-70 million. This accelerated synergy capture hasn't translated to raised guidance, however, as management reaffirmed their full-year 2025 projections for revenue of $1.5-1.6 billion and Adjusted EBITDA of $410-450 million.
Customer metrics remain positive, with management highlighting "sequential quarterly improvement in the base business" and "continued high customer retention levels." The company also mentioned implementing AI and automation initiatives to improve operational efficiency, though specific details weren't provided.
This quarter represents a transitional period as First Advantage works through integrating its largest acquisition while maintaining operational performance. While the significant GAAP losses might appear concerning, management characterized the quarter as "exceeding our expectations" and demonstrated confidence by maintaining full-year guidance.
Reaffirms Full Year 2025 Guidance
First Quarter 2025 Highlights1
- Revenues of
$354.6 million - Net Loss of
$(41.2) million , a net loss margin of (11.6)%, includes$15.3 million of expenses related to the acquisition of Sterling Check Corp. (鈥淪terling鈥�) and related integration, and$41.2 million of Sterling depreciation and amortization - Adjusted Net Income of
$30.5 million - Adjusted EBITDA of
$92.1 million ; Adjusted EBITDA Margin of26.0% - GAAP Diluted Net Loss Per Share of
$(0.24) , includes$0.07 per share of expenses incurred related to the Sterling acquisition and related integration - Adjusted Diluted Earnings Per Share of
$0.17 - Cash Flows from Operations of
$19.5 million ; Adjusted Operating Cash Flows of$33.3 million , after adjusting for$13.8 million of cash costs directly associated with the Sterling acquisition and related integration
Reaffirming Full Year 2025 Guidance
- Reaffirming full year 2025 guidance ranges, including the expected benefits of realized synergies, for Revenues of
$1.5 billion to$1.6 billion , Adjusted EBITDA of$410 million to$450 million , Adjusted Net Income of$152 million to$182 million , and Adjusted Diluted Earnings Per Share of$0.86 t o$1.03 2
ATLANTA, May 08, 2025 (GLOBE NEWSWIRE) -- First Advantage Corporation (NASDAQ: FA), a leading provider of global software and data in the HR technology industry, today announced financial results for the first quarter ended March听31, 2025.
Key Financials
(Amounts in millions, except per share data and percentages)
| 听 | 听 | Three Months Ended March听31, | ||||||
| 听 | 听 | 2025 | 听 | 2024 | ||||
| Revenues | 听 | $ | 354.6 | 听 | 听 | $ | 169.4 | 听 |
| Income (loss) from operations | 听 | $ | 7.6 | 听 | 听 | $ | (0.7 | ) |
| Net loss | 听 | $ | (41.2 | ) | 听 | $ | (2.9 | ) |
| Net loss margin | 听 | 听 | (11.6 | )% | 听 | 听 | (1.7 | )% |
| Diluted net loss per share | 听 | $ | (0.24 | ) | 听 | $ | (0.02 | ) |
| Adjusted EBITDA1 | 听 | $ | 92.1 | 听 | 听 | $ | 46.6 | 听 |
| Adjusted EBITDA听Margin1 | 听 | 听 | 26.0 | % | 听 | 听 | 27.5 | % |
| Adjusted听Net听Income1 | 听 | $ | 30.5 | 听 | 听 | $ | 24.8 | 听 |
| Adjusted Diluted Earnings Per Share1 | 听 | $ | 0.17 | 听 | 听 | $ | 0.17 | 听 |
1 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.
鈥淲e are pleased that First Advantage delivered solid financial performance in the first quarter, exceeding our expectations. We are continuing to see strong traction through upsell, cross-sell, and new logos, with sequential quarterly improvement in the base business and continued high customer retention levels. Our focused vertical strategy, with a depth of expertise across a broad range of industries, is delivering results and providing balance in the current environment,鈥� said Scott Staples, Chief Executive Officer.
鈥淚t has been approximately six months since we closed on our transformational Sterling acquisition. Our integration and synergy generation efforts are advancing ahead of schedule, and we have now actioned
Inaugural Investor Day to be Held on May 28, 2025
First Advantage will host its inaugural investor day in New York City and webcast live on Wednesday, May 28, 2025, with presentations beginning at 9:00 a.m. ET. Scott Staples, Chief Executive Officer, will be joined by other members of the executive management team to present a detailed overview of the Company鈥檚 strategic vision, financial growth outlook, and key initiatives related to the Company鈥檚 product and technology solutions, go-to-market excellence, and innovation. The event will also include Q&A sessions with executive leadership. (See issued on April 2, 2025.)
Reaffirming Full Year 2025 Guidance
鈥淐onsidering our modest outperformance versus expectations in the first quarter and our latest view of the macroeconomic environment, we are reaffirming our full year 2025 guidance, which includes our increased scale with the acquisition of Sterling and the expected benefits of realized synergies,鈥� commented Steven Marks, Chief Financial Officer. 鈥淲e remain focused on our integration plan execution, customer retention, synergy realization, and net leverage reduction.鈥�
The following table summarizes our full year 2025 guidance.
| 听 | As of May 8, 2025 |
| Revenues | |
| Adjusted EBITDA2 | |
| Adjusted Net Income2 | |
| Adjusted Diluted Earnings Per Share2 |
2听A reconciliation of the foregoing guidance for the non-GAAP metrics of Adjusted EBITDA and Adjusted Net Income to GAAP net (loss) income and Adjusted Diluted Earnings Per Share to GAAP diluted net (loss) income per share cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a material impact on its future GAAP financial results.
Actual results may differ materially from First Advantage鈥檚 full year 2025 guidance as a result of, among other things, the factors described under 鈥淔orward-Looking Statements鈥� below.
Conference Call and Webcast Information
First Advantage will host a conference call to review its first quarter 2025 results today, May 8, 2025, at 8:30 a.m. ET.
To participate in the conference call, please dial 800-267-6316 (domestic) or 203-518-9783 (international) approximately ten minutes before the 8:30 a.m. ET start. Please mention to the operator that you are dialing in for the First Advantage first quarter 2025 earnings call or provide the conference code FA1Q25. The call will also be webcast live on the Company鈥檚 investor relations website at 听under the 鈥淣ews & Events鈥� and then 鈥淓vents & Presentations鈥� section, where related presentation materials will be posted prior to the conference call.
Following the conference call, a replay of the webcast will be available on the Company鈥檚 investor relations website, . Alternatively, the live webcast and subsequent replay will be available at .
Forward-Looking Statements
This press release contains 鈥渇orward-looking statements鈥� within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. These forward-looking statements relate to matters such as our industry, business strategy, goals, and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources, and other financial and operating information. In some cases, you can identify these forward-looking statements by the use of words such as 鈥渁nticipate,鈥� 鈥渁ssume,鈥� 鈥渂elieve,鈥� 鈥渃ontinue,鈥� 鈥渃ould,鈥� 鈥渆stimate,鈥� 鈥渆xpect,鈥� 鈥渋ntend,鈥� 鈥渕ay,鈥� 鈥減lan,鈥� 鈥減otential,鈥� 鈥減redict,鈥� 鈥減roject,鈥� 鈥渇uture,鈥� 鈥渨ill,鈥� 鈥渟eek,鈥� 鈥渇oreseeable,鈥� 鈥渢arget,鈥� 鈥済uidance,鈥� the negative version of these words, or similar terms and phrases.
These forward-looking statements are subject to various risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Such risks and uncertainties include, but are not limited to, the following:
- negative changes in external events beyond our control, including our customers鈥� onboarding volumes, economic drivers which are sensitive to macroeconomic cycles, such as interest rate volatility and inflation, geopolitical unrest, global trade disputes, and uncertainty in financial markets;
- our operations in a highly regulated industry and the fact that we are subject to numerous and evolving laws and regulations, including with respect to personal data, data security, and artificial intelligence (鈥淎I鈥�);
- inability to identify and successfully implement our growth strategies on a timely basis or at all;
- potential harm to our business, brand, and reputation as a result of security breaches, cyber-attacks, or the mishandling of personal data;
- our reliance on third-party data providers;
- due to the sensitive and privacy-driven nature of our products and solutions, we could face liability and legal or regulatory proceedings, which could be costly and time-consuming to defend and may not be fully covered by insurance;
- our international business exposes us to a number of risks;
- the continued integration of our platforms and solutions with human resource providers such as applicant tracking systems and human capital management systems as well as our relationships with such human resource providers;
- our ability to obtain, maintain, protect and enforce our intellectual property and other proprietary information;
- disruptions, outages, or other errors with our technology and network infrastructure, including our data centers, servers, and third-party cloud and internet providers and our migration to the cloud;
- our indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and prevent us from meeting our obligations;
- the failure to realize the expected benefits of our acquisition of Sterling Check Corp.; and
- control by our Sponsor, "Silver Lake" (Silver Lake Group, L.L.C., together with its affiliates, successors, and assignees) and its interests may conflict with ours or those of our stockholders.
For additional information on these and other factors that could cause First Advantage鈥檚 actual results to differ materially from expected results, please see our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the 鈥淪EC鈥�), as such factors may be updated from time to time in our filings with the SEC, which are or will be accessible on the SEC鈥檚 website at www.sec.gov. The forward-looking statements included in this press release are made only as of the date of this press release, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.
Non-GAAP Financial Information
This press release contains 鈥渘on-GAAP financial measures鈥� that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States (鈥淕AAP鈥�). Specifically, we make use of the non-GAAP financial measures 鈥淎djusted EBITDA,鈥� 鈥淎djusted EBITDA Margin,鈥� 鈥淎djusted Net Income,鈥� 鈥淎djusted Diluted Earnings Per Share,鈥� and 鈥淎djusted Operating Cash Flow.鈥�
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share have been presented in this press release as supplemental measures of financial performance that are not required by or presented in accordance with GAAP because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes these non-GAAP measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation, and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash provided by (used in) operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP.
We define Adjusted EBITDA as net (loss) income before interest, taxes, depreciation, and amortization, and as further adjusted for loss on extinguishment of debt, share-based compensation, transaction and acquisition-related charges, integration and restructuring charges, and other non-cash charges. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenues. We define Adjusted Net Income for a particular period as net (loss) income before taxes adjusted for debt-related costs, acquisition-related depreciation and amortization, share-based compensation, transaction and acquisition-related charges, integration and restructuring charges, and other non-cash charges, to which we then apply the related effective tax rate. We define Adjusted Diluted Earnings Per Share as Adjusted Net Income divided by adjusted weighted average number of shares outstanding鈥攄iluted.
Additionally, we use Adjusted Operating Cash Flow to review the liquidity of our operations. We define Adjusted Operating Cash Flow as cash flows from operating activities less cash costs directly associated with the Sterling acquisition and related integration. We believe Adjusted Operating Cash Flow is a useful supplemental financial measure for management and investors in assessing the Company鈥檚 ability to pursue business opportunities and investments and to service its debt. Adjusted Operating Cash Flow is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows from operating activities.
For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures, see the reconciliations included at the end of this press release.
The presentations of these measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.
Numerical figures included in the reconciliations have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.
About First Advantage
First Advantage (NASDAQ: FA) is a leading provider of global software and data in the HR technology industry. Enabled by its proprietary technology and AI, First Advantage鈥檚 platforms, data, and APIs power comprehensive employment background screening, digital identity solutions, and verification services. With a strong emphasis on innovation, automation, and customer success, First Advantage empowers 80,000 organizations to hire smarter and onboard faster. Headquartered in Atlanta, Georgia, First Advantage serves customers in over 200 countries and territories, modernizing hiring and onboarding on a global scale. For more information, please visit our website at .
Investor Contact
Stephanie Gorman
Vice President, Investor Relations
(678) 868-4151
Condensed Financial Statements
| First Advantage Corporation | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| 听 | ||||||||
| (in thousands, except share and par value amounts) | 听 | March听31, 2025 | 听 | December听31, 2024 | ||||
| ASSETS | 听 | 听 | 听 | 听 | 听 | 听 | ||
| CURRENT ASSETS | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Cash and cash equivalents | 听 | $ | 171,994 | 听 | 听 | $ | 168,688 | 听 |
| Restricted cash | 听 | 听 | 797 | 听 | 听 | 听 | 795 | 听 |
| Accounts receivable (net of allowance for doubtful accounts of | 听 | 听 | 266,052 | 听 | 听 | 听 | 266,800 | 听 |
| Prepaid expenses and other current assets | 听 | 听 | 29,032 | 听 | 听 | 听 | 31,041 | 听 |
| Income tax receivable | 听 | 听 | 3,928 | 听 | 听 | 听 | 8,669 | 听 |
| Total current assets | 听 | 听 | 471,803 | 听 | 听 | 听 | 475,993 | 听 |
| Property and equipment, net | 听 | 听 | 291,764 | 听 | 听 | 听 | 307,539 | 听 |
| Goodwill | 听 | 听 | 2,128,018 | 听 | 听 | 听 | 2,124,528 | 听 |
| Intangible assets, net | 听 | 听 | 955,357 | 听 | 听 | 听 | 987,948 | 听 |
| Deferred tax asset, net | 听 | 听 | 5,169 | 听 | 听 | 听 | 5,682 | 听 |
| Other assets | 听 | 听 | 19,580 | 听 | 听 | 听 | 21,203 | 听 |
| TOTAL ASSETS | 听 | $ | 3,871,691 | 听 | 听 | $ | 3,922,893 | 听 |
| LIABILITIES AND EQUITY | 听 | 听 | 听 | 听 | 听 | 听 | ||
| CURRENT LIABILITIES | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Accounts payable | 听 | $ | 116,037 | 听 | 听 | $ | 120,872 | 听 |
| Accrued compensation | 听 | 听 | 45,047 | 听 | 听 | 听 | 52,805 | 听 |
| Accrued liabilities | 听 | 听 | 45,055 | 听 | 听 | 听 | 44,700 | 听 |
| Current portion of long-term debt | 听 | 听 | 21,850 | 听 | 听 | 听 | 21,850 | 听 |
| Current portion of operating lease liability | 听 | 听 | 3,861 | 听 | 听 | 听 | 4,245 | 听 |
| Income tax payable | 听 | 听 | 4,374 | 听 | 听 | 听 | 1,942 | 听 |
| Deferred revenues | 听 | 听 | 4,774 | 听 | 听 | 听 | 4,274 | 听 |
| Total current liabilities | 听 | 听 | 240,998 | 听 | 听 | 听 | 250,688 | 听 |
| Long-term debt (net of deferred financing costs of | 听 | 听 | 2,117,434 | 听 | 听 | 听 | 2,121,289 | 听 |
| Deferred tax liability, net | 听 | 听 | 214,649 | 听 | 听 | 听 | 222,738 | 听 |
| Operating lease liability, less current portion | 听 | 听 | 7,918 | 听 | 听 | 听 | 9,149 | 听 |
| Other liabilities | 听 | 听 | 11,937 | 听 | 听 | 听 | 11,990 | 听 |
| Total liabilities | 听 | 听 | 2,592,936 | 听 | 听 | 听 | 2,615,854 | 听 |
| EQUITY | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Common stock 鈥� | 听 | 听 | 174 | 听 | 听 | 听 | 173 | 听 |
| Additional paid-in-capital | 听 | 听 | 1,511,463 | 听 | 听 | 听 | 1,504,007 | 听 |
| Accumulated deficit | 听 | 听 | (201,002 | ) | 听 | 听 | (159,808 | ) |
| Accumulated other comprehensive loss | 听 | 听 | (31,880 | ) | 听 | 听 | (37,333 | ) |
| Total equity | 听 | 听 | 1,278,755 | 听 | 听 | 听 | 1,307,039 | 听 |
| TOTAL LIABILITIES AND EQUITY | 听 | $ | 3,871,691 | 听 | 听 | $ | 3,922,893 | 听 |
| First Advantage Corporation | ||||||||
| Condensed Consolidated Statements of Operations and Comprehensive Loss | ||||||||
| (Unaudited) | ||||||||
| 听 | ||||||||
| 听 | 听 | Three Months Ended March听31, | ||||||
| (in thousands, except share and per share amounts) | 听 | 2025 | 听 | 2024 | ||||
| REVENUES | 听 | $ | 354,588 | 听 | 听 | $ | 169,416 | 听 |
| 听 | 听 | 听 | 听 | 听 | 听 | 听 | ||
| OPERATING EXPENSES: | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Cost of services (exclusive of depreciation and amortization below) | 听 | 听 | 192,565 | 听 | 听 | 听 | 87,192 | 听 |
| Product and technology expense | 听 | 听 | 27,155 | 听 | 听 | 听 | 12,466 | 听 |
| Selling, general, and administrative expense | 听 | 听 | 65,585 | 听 | 听 | 听 | 40,662 | 听 |
| Depreciation and amortization | 听 | 听 | 61,666 | 听 | 听 | 听 | 29,822 | 听 |
| Total operating expenses | 听 | 听 | 346,971 | 听 | 听 | 听 | 170,142 | 听 |
| INCOME (LOSS) FROM OPERATIONS | 听 | 听 | 7,617 | 听 | 听 | 听 | (726 | ) |
| 听 | 听 | 听 | 听 | 听 | 听 | 听 | ||
| OTHER EXPENSE, NET: | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Interest expense, net | 听 | 听 | 46,580 | 听 | 听 | 听 | 3,570 | 听 |
| Total other expense, net | 听 | 听 | 46,580 | 听 | 听 | 听 | 3,570 | 听 |
| LOSS BEFORE PROVISION FOR INCOME TAXES | 听 | 听 | (38,963 | ) | 听 | 听 | (4,296 | ) |
| Provision (benefit) for income taxes | 听 | 听 | 2,231 | 听 | 听 | 听 | (1,388 | ) |
| NET LOSS | 听 | $ | (41,194 | ) | 听 | $ | (2,908 | ) |
| 听 | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Foreign currency translation income (loss) | 听 | 听 | 5,453 | 听 | 听 | 听 | (1,773 | ) |
| COMPREHENSIVE LOSS | 听 | $ | (35,741 | ) | 听 | $ | (4,681 | ) |
| 听 | 听 | 听 | 听 | 听 | 听 | 听 | ||
| NET LOSS | 听 | $ | (41,194 | ) | 听 | $ | (2,908 | ) |
| Basic and diluted net loss per share | 听 | $ | (0.24 | ) | 听 | $ | (0.02 | ) |
| Weighted average number of shares outstanding - basic and diluted | 听 | 听 | 172,756,497 | 听 | 听 | 听 | 143,591,713 | 听 |
| First Advantage Corporation | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (Unaudited) | ||||||||
| 听 | ||||||||
| 听 | 听 | Three Months Ended March听31, | ||||||
| (in thousands) | 听 | 2025 | 听 | 2024 | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Net loss | 听 | $ | (41,194 | ) | 听 | $ | (2,908 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Depreciation and amortization | 听 | 听 | 61,666 | 听 | 听 | 听 | 29,822 | 听 |
| Amortization of deferred financing costs | 听 | 听 | 1,608 | 听 | 听 | 听 | 453 | 听 |
| Bad debt recovery | 听 | 听 | (712 | ) | 听 | 听 | (112 | ) |
| Deferred taxes | 听 | 听 | (7,553 | ) | 听 | 听 | (7,808 | ) |
| Share-based compensation | 听 | 听 | 7,967 | 听 | 听 | 听 | 4,751 | 听 |
| Loss on disposal of fixed assets and impairment of ROU assets | 听 | 听 | 132 | 听 | 听 | 0 | 听 | |
| Change in fair value of interest rate swaps | 听 | 听 | 3,936 | 听 | 听 | 听 | (7,045 | ) |
| Changes in operating assets and liabilities: | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Accounts receivable | 听 | 听 | 1,927 | 听 | 听 | 听 | 13,736 | 听 |
| Prepaid expenses and other assets | 听 | 听 | (993 | ) | 听 | 听 | (3,345 | ) |
| Accounts payable | 听 | 听 | (6,038 | ) | 听 | 听 | 468 | 听 |
| Accrued compensation and accrued liabilities | 听 | 听 | (8,615 | ) | 听 | 听 | 6,608 | 听 |
| Deferred revenues | 听 | 听 | 482 | 听 | 听 | 听 | 185 | 听 |
| Operating lease liabilities | 听 | 听 | (91 | ) | 听 | 听 | (328 | ) |
| Other liabilities | 听 | 听 | (366 | ) | 听 | 听 | (11 | ) |
| Income taxes receivable and payable, net | 听 | 听 | 7,315 | 听 | 听 | 听 | 3,863 | 听 |
| Net cash provided by operating activities | 听 | 听 | 19,471 | 听 | 听 | 听 | 38,329 | 听 |
| CASH FLOWS FROM INVESTING ACTIVITIES | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Capitalized software development costs | 听 | 听 | (10,628 | ) | 听 | 听 | (6,135 | ) |
| Purchases of property and equipment | 听 | 听 | (485 | ) | 听 | 听 | (321 | ) |
| Other investing activities | 听 | 听 | 37 | 听 | 听 | 听 | (575 | ) |
| Net cash used in investing activities | 听 | 听 | (11,076 | ) | 听 | 听 | (7,031 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Repayments of Amended First Lien Credit Facility | 听 | 听 | (5,463 | ) | 听 | 听 | 鈥� | 听 |
| Proceeds from issuance of common stock under share-based compensation plans | 听 | 听 | 1,688 | 听 | 听 | 听 | 976 | 听 |
| Net settlement of share-based compensation plan awards | 听 | 听 | (2,204 | ) | 听 | 听 | (41 | ) |
| Payments on deferred purchase agreements | 听 | 听 | 鈥� | 听 | 听 | 听 | (234 | ) |
| Cash dividends paid | 听 | 听 | (11 | ) | 听 | 听 | (12 | ) |
| Payments on finance lease obligations | 听 | 听 | (3 | ) | 听 | 听 | 鈥� | 听 |
| Net cash (used in) provided by financing activities | 听 | 听 | (5,993 | ) | 听 | 听 | 689 | 听 |
| Effect of exchange rate on cash, cash equivalents, and restricted cash | 听 | 听 | 906 | 听 | 听 | 听 | (328 | ) |
| Increase in cash, cash equivalents, and restricted cash | 听 | 听 | 3,308 | 听 | 听 | 听 | 31,659 | 听 |
| Cash, cash equivalents, and restricted cash at beginning of period | 听 | 听 | 169,483 | 听 | 听 | 听 | 213,912 | 听 |
| Cash, cash equivalents, and restricted cash at end of period | 听 | $ | 172,791 | 听 | 听 | $ | 245,571 | 听 |
| 听 | 听 | 听 | 听 | 听 | 听 | 听 | ||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Cash paid for income taxes, net of refunds received | 听 | $ | 3,003 | 听 | 听 | $ | 2,510 | 听 |
| Cash paid for interest | 听 | $ | 41,881 | 听 | 听 | $ | 11,954 | 听 |
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Property and equipment acquired on account | 听 | $ | 973 | 听 | 听 | $ | 585 | 听 |
| Non-cash property and equipment additions | 听 | $ | 鈥� | 听 | 听 | $ | 540 | 听 |
Reconciliation of Consolidated Non-GAAP Financial Measures
| 听 | 听 | Three Months Ended March听31, | ||||||
| (in thousands, except percentages) | 听 | 2025 | 听 | 2024 | ||||
| Net loss | 听 | $ | (41,194 | ) | 听 | $ | (2,908 | ) |
| Interest expense, net | 听 | 听 | 46,580 | 听 | 听 | 听 | 3,570 | 听 |
| Provision (benefit) for income taxes | 听 | 听 | 2,231 | 听 | 听 | 听 | (1,388 | ) |
| Depreciation and amortization | 听 | 听 | 61,666 | 听 | 听 | 听 | 29,822 | 听 |
| Share-based compensation(a) | 听 | 听 | 7,967 | 听 | 听 | 听 | 4,751 | 听 |
| Transaction and acquisition-related charges(b) | 听 | 听 | 3,996 | 听 | 听 | 听 | 11,992 | 听 |
| Integration, restructuring, and other charges(c) | 听 | 听 | 10,866 | 听 | 听 | 听 | 719 | 听 |
| Adjusted EBITDA | 听 | $ | 92,112 | 听 | 听 | $ | 46,558 | 听 |
| Revenues | 听 | 听 | 354,588 | 听 | 听 | 听 | 169,416 | 听 |
| Net loss margin | 听 | 听 | (11.6 | )% | 听 | 听 | (1.7 | )% |
| Adjusted EBITDA Margin | 听 | 听 | 26.0 | % | 听 | 听 | 27.5 | % |
| (a) | Share-based compensation for the three months ended March 31, 2025 and 2024 includes approximately |
| (b) | Represents charges incurred related to acquisitions and similar transactions, primarily consisting of change in control-related costs, professional service fees, and other third-party costs. Transaction and acquisition related charges for the three months ended March 31, 2025 include approximately |
| (c) | Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to nonrecurring legal exposures, foreign currency (gains) losses, (gains) losses on the sale of assets, and other non-recurring items. Integration, restructuring, and other charges for the three months ended March 31, 2025 include approximately |
Reconciliation of Consolidated Non-GAAP Financial Measures (continued)
| 听 | 听 | Three Months Ended March听31, | ||||||
| (in thousands) | 听 | 2025 | 听 | 2024 | ||||
| Net loss | 听 | $ | (41,194 | ) | 听 | $ | (2,908 | ) |
| Provision (benefit) for income taxes | 听 | 听 | 2,231 | 听 | 听 | 听 | (1,388 | ) |
| Loss before provision for income taxes | 听 | 听 | (38,963 | ) | 听 | 听 | (4,296 | ) |
| Debt-related charges(a) | 听 | 听 | 6,803 | 听 | 听 | 听 | (3,014 | ) |
| Acquisition-related depreciation and amortization(b) | 听 | 听 | 50,039 | 听 | 听 | 听 | 22,625 | 听 |
| Share-based compensation(c) | 听 | 听 | 7,967 | 听 | 听 | 听 | 4,751 | 听 |
| Transaction and acquisition-related charges(d) | 听 | 听 | 3,996 | 听 | 听 | 听 | 11,992 | 听 |
| Integration, restructuring, and other charges(e) | 听 | 听 | 10,866 | 听 | 听 | 听 | 719 | 听 |
| Adjusted Net Income before income tax effect | 听 | 听 | 40,708 | 听 | 听 | 听 | 32,777 | 听 |
| Less: Adjusted income taxes(f) | 听 | 听 | 10,222 | 听 | 听 | 听 | 7,991 | 听 |
| Adjusted Net Income | 听 | $ | 30,486 | 听 | 听 | $ | 24,786 | 听 |
| 听 | 听 | Three Months Ended March听31, | ||||||
| 听 | 听 | 2025 | 听 | 2024 | ||||
| Diluted net loss per share (GAAP) | 听 | $ | (0.24 | ) | 听 | $ | (0.02 | ) |
| Adjusted Net Income adjustments per share | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Provision (benefit) for income taxes | 听 | 听 | 0.01 | 听 | 听 | 听 | (0.01 | ) |
| Debt-related charges(a) | 听 | 听 | 0.04 | 听 | 听 | 听 | (0.02 | ) |
| Acquisition-related depreciation and amortization(b) | 听 | 听 | 0.29 | 听 | 听 | 听 | 0.16 | 听 |
| Share-based compensation(c) | 听 | 听 | 0.05 | 听 | 听 | 听 | 0.03 | 听 |
| Transaction and acquisition related charges(d) | 听 | 听 | 0.02 | 听 | 听 | 听 | 0.08 | 听 |
| Integration, restructuring, and other charges(e) | 听 | 听 | 0.06 | 听 | 听 | 听 | 0.00 | 听 |
| Adjusted income taxes(f) | 听 | 听 | (0.06 | ) | 听 | 听 | (0.05 | ) |
| Adjusted Diluted Earnings Per Share (Non-GAAP) | 听 | $ | 0.17 | 听 | 听 | $ | 0.17 | 听 |
| 听 | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Weighted average number of shares outstanding used in computation of Adjusted Diluted Earnings Per Share: | 听 | 听 | 听 | 听 | 听 | 听 | ||
| Weighted average number of shares outstanding鈥攄iluted (GAAP and Non-GAAP) | 听 | 听 | 172,756,497 | 听 | 听 | 听 | 143,591,713 | 听 |
| Options and restricted stock not included in weighted average number of shares outstanding鈥攄iluted (GAAP) (using treasury stock method) | 听 | 听 | 2,217,580 | 听 | 听 | 听 | 2,110,928 | 听 |
| Adjusted weighted average number of shares outstanding鈥攄iluted (Non-GAAP) | 听 | 听 | 174,974,077 | 听 | 听 | 听 | 145,702,641 | 听 |
| (a) | Represents the non-cash interest expense related to the amortization of debt issuance costs for the February 2021 and October 2024 refinancing of the Company鈥檚 First Lien Credit Facility. This adjustment also includes the impact of the change in fair value of interest rate swaps, which represents the difference between the fair value gains or losses and actual cash payments and receipts on the interest rate swaps. |
| (b) | Represents the depreciation and amortization expense related to incremental intangible and developed technology assets recorded due to the application of ASC 805, Business Combinations. As a result, the purchase accounting related depreciation and amortization expense will recur in future periods until the related assets are fully depreciated or amortized, and the related purchase accounting assets may contribute to revenue generation. |
| (c) | Share-based compensation for the three months ended March 31, 2025 and 2024 includes approximately |
| (d) | Represents charges incurred related to acquisitions and similar transactions, primarily consisting of change in control-related costs, professional service fees, and other third-party costs. Transaction and acquisition related charges for the three months ended March 31, 2025 include approximately |
| (e) | Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to nonrecurring legal exposures, foreign currency (gains) losses, (gains) losses on the sale of assets, and other non-recurring items. Integration, restructuring, and other charges for the three months ended March 31, 2025 include approximately |
| (f) | Effective tax rates of approximately |
| 听 | 听 | Three Months Ended March听31, | ||||||
| (in thousands) | 听 | 2025 | 听 | 2024 | ||||
| Cash flows from operating activities, as reported (GAAP) | 听 | $ | 19,471 | 听 | 听 | $ | 38,329 | 听 |
| Cost paid related to the Sterling acquisition and integration | 听 | 听 | 13,844 | 听 | 听 | 听 | 548 | 听 |
| Adjusted Operating Cash Flow | 听 | $ | 33,315 | 听 | 听 | $ | 38,877 | 听 |
FAQ
What were First Advantage's (FA) key financial results for Q1 2025?
What is First Advantage's (FA) full-year 2025 guidance?
How much in cost synergies has First Advantage (FA) achieved from the Sterling acquisition?
When is First Advantage (FA) hosting its investor day in 2025?
What caused First Advantage's (FA) net loss in Q1 2025?
