FIRST ADVANTAGE CORP
For the period ended Jun 30, 2025. Filed Aug 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 7, 2025
FA$23.53+1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0000950170-25-066989
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0001193125-25-175442
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 155 previous paragraphs and 190 current paragraphs.
102 unchanged; 52 reworded; 16 added; 1 removed; 0 previous and 20 current paragraphs rearranged.
Tables are not compared: 15 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S. Significant provisions of the OBBBA include the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented periodically through 2027. We are currently assessing the impact of the OBBBA on our consolidated financial statements.
Current report
Loss on Extinguishment of Debt: Reflects losses on the extinguishment of debt.
Current report
Revenues were $745.2 million for the six months ended June 30, 2025, compared to $354.0 million for the six months ended June 30, 2024. Revenues for the six months ended June 30, 2025 increased by $391.3 million, or 110.5%, compared to the six months ended June 30, 2024.
Current report
Cost of services was $400.4 million for the six months ended June 30, 2025, compared to $179.5 million for the six months ended June 30, 2024. Cost of services for the six months ended June 30, 2025 increased by $220.9 million, or 123.0%, compared to the six months ended June 30, 2024.
Current report
$7.0 million of Sterling personnel expenses recognized after the Sterling Acquisition
Current report
Product and technology expense was $52.8 million for the six months ended June 30, 2025, compared to $26.1 million for the six months ended June 30, 2024. Product and technology expense for the six months ended June 30, 2025 increased by $26.7 million, or 102.1%, compared to the six months ended June 30, 2024.
Current report
$1.1 million related to cash compensation expense due to the conversion of Sterling equity awards to cash awards as part of the transaction.
Current report
Selling, general, and administrative expense was $123.1 million for the six months ended June 30, 2025, compared to $79.3 million for the six months ended June 30, 2024. Selling, general, and administrative expense for the six months ended June 30, 2025 increased by $43.8 million, or 55.2%, compared to the six months ended June 30, 2024.
Current report
Interest expense, net was $91.4 million for the six months ended June 30, 2025, compared to $10.9 million for the six months ended June 30, 2024. Interest expense, net for the six months ended June 30, 2025 increased by $80.4 million or 736.4%, compared to the six months ended June 30, 2024.
Current report
Loss on Extinguishment of Debt
Current report
Loss on extinguishment of debt for the three and six months ended June 30, 2025, relates to the write-off of unamortized deferred financing costs as a result of a voluntary principal repayment of $15.0 million on the Company’s outstanding Amended First Lien Credit Facility.
Current report
Our benefit for income taxes was $(5.4) million for the six months ended June 30, 2025, compared to $(0.7) million for the six months ended June 30, 2024. Our benefit for income taxes for the six months ended June 30, 2025 increased by $4.7 million, compared to the six months ended June 30, 2024.
Current report
Net Income (Loss) and Net Income (Loss) Margin
Current report
Net income was $0.3 million for the three months ended June 30, 2025, compared to $1.9 million for the three months ended June 30, 2024. Net income for the three months ended June 30, 2025 decreased by $1.6 million compared to the three months ended June 30, 2024.
Current report
Adjusted EBITDA was $206.1 million for the six months ended June 30, 2025 and represented an Adjusted EBITDA Margin of 27.7%. Adjusted EBITDA was $102.3 million for the six months ended June 30, 2024 and represented an Adjusted EBITDA Margin of 28.9%. Adjusted EBITDA for the six months ended June 30, 2025 increased by $103.7 million, or 101.4%, compared to the six months ended June 30, 2024, primarily due to the Sterling Acquisition.
Current report
On July 30, 2025, the Company amended its 2024 First Lien Credit Agreement to (i) reduce the interest rate on its Amended First Lien Credit Facility by 0.50% to a range of 2.50% to 2.75%, based on the first lien ratio, plus SOFR and (ii) reduce the interest rate on its Amended Revolver by 0.50% to a range of 2.25% to 2.75%, based on the first lien ratio, plus SOFR.
Removed paragraphs (1)
Previous report
Net loss and Net loss Margin
Reworded paragraphs (52)
Previous wording
The following discussion and analysis of First Advantage Corporation’s financial condition and results of operations is provided as a supplement to the condensed consolidated financial statements for the three months ended March 31, 2025, and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2024, our “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. All discussions and information in this Quarterly Report on Form 10-Q regarding our business and financial results relate solely to our operations prior to the acquisition of Sterling Check Corp. (“Sterling” and such acquisition, the “Sterling Acquisition”), unless otherwise indicated.
Current wording
The following discussion and analysis of First Advantage Corporation’s financial condition and results of operations is provided as a supplement to the condensed consolidated financial statements for the three and six months ended June 30, 2025, and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2024, our “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. All discussions and information in this Quarterly Report on Form 10-Q regarding our business and financial results in 2024 relate solely to our operations prior to the acquisition of Sterling Check Corp. (“Sterling” and such acquisition, the “Sterling Acquisition”), unless otherwise indicated.
Previous wording
For additional information on these and other factors that could cause First Advantage’s 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 “SEC”), as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. The forward-looking statements included in this Quarterly Report on Form 10-Q speak only as of the date of this Form 10-Q, 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.
Current wording
For additional information on these and other factors that could cause First Advantage’s 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 “SEC”), as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Form 10-Q, 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.
Previous wording
We generated revenues of $354.6 million for the three months ended March 31, 2025, as compared to $169.4 million for the three months ended March 31, 2024. Approximately 86% of our revenues for the three months ended March 31, 2025 was generated in the United States, while the remaining 14% was generated abroad. Other than the United States, no single country accounted for 10% or more of our total revenues for the three months ended March 31, 2025. Please refer to “Results of Operations” for further details.
Current wording
We generated revenues of $390.6 million for the three months ended June 30, 2025, as compared to $184.5 million for the three months ended June 30, 2024 and generated revenues of $745.2 million for the six months ended June 30, 2025, as compared to $354.0 million for the six months ended June 30, 2024. Approximately 86% of our revenues for the three and six months ended June 30, 2025 was generated in the United States, while the remaining 14% was generated abroad. Other than the United States, no single country accounted for 10% or more of our total revenues for the three and six months ended June 30, 2025. Please refer to “Results of Operations” for further details.
Previous wording
Current macroeconomic conditions—including elevated interest rates, persistent inflation, and fluctuations in job openings and hiring activity—continue to impact portions of the global economy. Additionally, global economic volatility driven by geopolitical tensions, ongoing conflicts, including in the Ukraine and Middle East, and uncertainty around monetary policy has led to increased caution across our customer base. Emerging and ongoing trade disputes between major global economies have also contributed to supply chain disruptions, increasing costs and reducing business confidence, particularly in sectors with global exposure. These trade tensions can slow economic activity, impact cross-border hiring trends, and reduce demand for certain customer verticals that rely on international talent and operations. Furthermore, the current U.S. presidential administration has signaled its intention to implement significant changes to U.S. trade policy, the size of the federal government and the enforcement of various regulations, which has increased economic uncertainty. These policy shifts could introduce additional market instability and reduce investor confidence and could negatively affect our business, financial condition, and operating results.
Current wording
Current macroeconomic conditions—including elevated interest rates, persistent inflation, and fluctuations in job openings and hiring activity—continue to impact portions of the global economy. Additionally, global economic volatility driven by geopolitical tensions, ongoing conflicts, including in the Ukraine and Middle East, and uncertainty around monetary policy has led to increased caution across our customer base. Emerging and ongoing trade disputes between major global economies have also contributed to supply chain disruptions, increasing costs and reducing business confidence, particularly in sectors with global exposure. These trade tensions can slow economic activity, impact cross-border hiring trends, and reduce demand for certain customer verticals that rely on international talent and operations. Furthermore, the current U.S. presidential administration continues to signal its intention to implement significant changes to U.S. trade policy, the size of the federal government and the enforcement of various regulations, which has increased economic uncertainty. These policy shifts could introduce additional market instability and reduce investor confidence and could negatively affect our business, financial condition, and operating results.
Previous wording
Despite these macroeconomic headwinds, we are confident in the overall long-term health of our business, the strength of our product offerings, and our ability to continue to execute on our strategy and help our customers hire smarter and onboard faster. Our continued focus on delivering innovative solutions that enhance workplace safety and address evolving compliance requirements and diversified customer base have contributed to the stability of our business and long-term financial performance.
Current wording
Despite these macroeconomic changes, we are confident in the overall long-term health of our business, the strength of our product offerings, and our ability to continue to execute on our strategy and help our customers hire smarter and onboard faster. Our continued focus on delivering innovative solutions that enhance workplace safety and address evolving compliance requirements as well as our diversified customer base have contributed to the stability of our business and long-term financial performance.
Previous wording
Our other expense, net consists of interest expense, net. Interest expense, net relates primarily to our debt service costs, the interest-related unrealized gains and losses of our interest rate derivative instruments and, to a lesser extent, the interest on our finance lease obligations and the amortization of deferred financing costs. Additionally, interest expense, net includes interest income earnings on our cash and cash equivalent balances held in interest-bearing accounts.
Current wording
Interest expense, net: Relates primarily to our debt service costs, the interest-related unrealized gains and losses of our interest rate derivative instruments and, to a lesser extent, the interest on our finance lease obligations and the amortization of deferred financing costs. Additionally, interest expense, net includes interest income earnings on our cash and cash equivalent balances held in interest-bearing accounts.
Previous wording
Provision for income taxes consists of domestic and foreign corporate income taxes related to earnings from our sale of services, with statutory tax rates that differ by jurisdiction. Our effective tax rate may be affected by many other factors including changes in tax laws, regulations or rates, new interpretations of existing laws or regulations, shifts in the allocation of income earned throughout the world, and changes in overall levels of income before tax.
Current wording
Provision for income taxes consists of domestic and foreign corporate income taxes related to earnings from our sale of products and services, with statutory tax rates that differ by jurisdiction. Our effective tax rate may be affected by many other factors including changes in tax laws, regulations or rates, new interpretations of existing laws or regulations, shifts in the allocation of income earned throughout the world, and changes in overall levels of income before tax.
Previous wording
Comparison of Results of Operations for the three months ended March 31, 2025 compared to the three months ended March 31, 2024
Current wording
Comparison of Results of Operations for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024
Previous wording
Revenues were $354.6 million for the three months ended March 31, 2025, compared to $169.4 million for the three months ended March 31, 2024. Revenues for the three months ended March 31, 2025 increased by $185.2 million, or 109.3%, compared to the three months ended March 31, 2024.
Current wording
Revenues were $390.6 million for the three months ended June 30, 2025, compared to $184.5 million for the three months ended June 30, 2024. Revenues for the three months ended June 30, 2025 increased by $206.1 million, or 111.7%, compared to the three months ended June 30, 2024.
Previous wording
revenues of $187.5 million, or 110.7%, attributable to Sterling as a result of the Sterling Acquisition completed on October 31, 2024; and
Current wording
revenues of $203.7 million, or 110.4%, attributable to Sterling as a result of the Sterling Acquisition completed on October 31, 2024; and
Previous wording
revenues of $5.1 million, or 3.0%, from new customers, primarily attributable to our First Advantage Americas segment.
Current wording
revenues of $4.7 million, or 2.5%, from new customers, primarily attributable to our First Advantage Americas segment.
Previous wording
These revenue increases were offset by a net decrease of $7.4 million, or 4.4%, in revenues from existing customers, primarily due to macroeconomic pressures across a number of our customer verticals that led to reduced overall customer demand, as well as the impact of lost customers. These decreases in existing customer revenues were partially mitigated by continued strength from upselling and cross-selling initiatives, which contributed an additional $7.2 million, or 4.3%, in revenue growth.
Current wording
These revenue increases were offset by a net decrease of $2.3 million, or 1.2%, in revenues from existing customers, primarily due to macroeconomic pressures across a number of our customer verticals that led to reduced overall existing customer demand, as well as the impact of lost customers. These decreases in existing customer revenues were partially mitigated by continued strength from upselling and cross-selling initiatives, which contributed an additional $9.1 million, or 4.9%, in revenue growth.
Previous wording
Cost of services was $192.6 million for the three months ended March 31, 2025, compared to $87.2 million for the three months ended March 31, 2024. Cost of services for the three months ended March 31, 2025 increased by $105.4 million, or 120.9%, compared to the three months ended March 31, 2024.
Current wording
Cost of services was $207.8 million for the three months ended June 30, 2025, compared to $92.3 million for the three months ended June 30, 2024. Cost of services for the three months ended June 30, 2025 increased by $115.5 million, or 125.1%, compared to the three months ended June 30, 2024.
Previous wording
The increase in cost of services was primarily due to $105.7 million of Sterling costs of services recognized after the Sterling Acquisition.
Current wording
The increase in cost of services was primarily due to $113.2 million of Sterling costs of services recognized after the Sterling Acquisition.
Previous wording
Cost of services as a percentage of revenues was 54.3% for the three months ended March 31, 2025, compared to 51.5% for the three months ended March 31, 2024. The cost of services percentage of revenues for the first quarter of 2025 was impacted by Sterling’s higher relative cost of services due to the segment’s product and customer mix and other variations in customer ordering mix.
Current wording
Cost of services as a percentage of revenues was 53.2% for the three months ended June 30, 2025, compared to 50.0% for the three months ended June 30, 2024. The cost of services percentage of revenues for the second quarter of 2025 was impacted by Sterling’s higher relative cost of services due to the segment’s product and customer mix and other variations in customer ordering mix.
Previous wording
Product and technology expense was $27.2 million for the three months ended March 31, 2025, compared to $12.5 million for the three months ended March 31, 2024. Product and technology expense for the three months ended March 31, 2025 increased by $14.7 million, or 117.8%, compared to the three months ended March 31, 2024.
Current wording
Product and technology expense was $25.7 million for the three months ended June 30, 2025, compared to $13.7 million for the three months ended June 30, 2024. Product and technology expense for the three months ended June 30, 2025 increased by $12.0 million, or 87.7%, compared to the three months ended June 30, 2024.
Previous wording
a $1.0 million increase in Legacy First Advantage professional service fees related to continued investments in our technology platform.
Current wording
a $2.5 million increase in professional service fees related to continued investments in our technology platform; and
Previous wording
a $2.4 million increase in Legacy First Advantage personnel expenses as a result of additional investments made to enhance our products, solutions, and technology platform; and
Current wording
a $1.8 million increase in Legacy First Advantage personnel expenses as a result of additional investments made to enhance our products, solutions, and technology platform.
Previous wording
$11.1 million of Sterling expenses recognized after the Sterling Acquisition, of which approximately $0.5 million related to cash compensation expense due to the conversion of Sterling equity awards to cash awards as part of the transaction;
Current wording
$14.5 million of Sterling personnel expenses recognized after the Sterling Acquisition, of which approximately $0.9 million related to cash compensation expense due to the conversion of Sterling equity awards to cash awards as part of the transaction;
Previous wording
Selling, general, and administrative expense was $65.6 million for the three months ended March 31, 2025, compared to $40.7 million for the three months ended March 31, 2024. Selling, general, and administrative expense for the three months ended March 31, 2025 increased by $24.9 million, or 61.3%, compared to the three months ended March 31, 2024.
Current wording
Selling, general, and administrative expense was $57.5 million for the three months ended June 30, 2025, compared to $38.6 million for the three months ended June 30, 2024. Selling, general, and administrative expense for the three months ended June 30, 2025 increased by $18.8 million, or 48.7%, compared to the three months ended June 30, 2024.
Previous wording
Selling, general, and administrative expense increased primarily due to $30.5 million of Sterling expenses recognized after the Sterling Acquisition, which include:
Current wording
Selling, general, and administrative expense increased primarily due to $28.2 million of Sterling expenses recognized after the Sterling Acquisition, which include:
Previous wording
$1.9 million related to post-combination restructuring costs.
Current wording
$1.2 million related to post-combination restructuring costs;
Previous wording
These increases in selling, general, and administrative expense were partially offset by a $7.9 million decrease in transaction costs attributable to the Sterling Acquisition related to professional service, legal, and other fees, that did not reoccur as the acquisition was completed on October 31, 2024.
Current wording
These increases in selling, general, and administrative expense were partially offset by a $8.2 million decrease in transaction costs attributable to the Sterling Acquisition related to professional service, legal, and other fees, that did not reoccur as the acquisition was completed on October 31, 2024.
Previous wording
$3.2 million related to share-based compensation expense due to the conversion of Sterling equity awards to First Advantage equity awards as part of the transaction;
Current wording
$4.3 million related to share-based compensation expense due to the conversion of Sterling equity awards to First Advantage equity awards as part of the transaction;
Previous wording
$2.9 million related to cash compensation expense due to the conversion of Sterling equity awards to cash awards as part of the transaction; and
Current wording
$4.0 million related to cash compensation expense due to the conversion of Sterling equity awards to cash awards as part of the transaction; and
Previous wording
Depreciation and amortization was $61.7 million for the three months ended March 31, 2025, compared to $29.8 million for the three months ended March 31, 2024. Depreciation and amortization for the three months ended March 31, 2025 increased by $31.8 million, or 106.8%, compared to the three months ended March 31, 2024. This increase was primarily due to the impact of the step up in fair value of property and equipment and intangible assets as a result of the application of purchase accounting related to the Sterling Acquisition, which is being amortized on an accelerated basis based on the relative projected discounted cash flows of each asset.
Current wording
Depreciation and amortization was $61.9 million for the three months ended June 30, 2025, compared to $30.0 million for the three months ended June 30, 2024. Depreciation and amortization for the three months ended June 30, 2025 increased by $31.9 million, or 106.5%, compared to the three months ended June 30, 2024. This increase was primarily due to the impact of the step up in fair value of property and equipment and intangible assets as a result of the application of purchase accounting related to the Sterling Acquisition.
Previous wording
Interest expense, net was $46.6 million for the three months ended March 31, 2025, compared to $3.6 million for the three months ended March 31, 2024. Interest expense, net for the three months ended March 31, 2025 increased by $43.0 million or 1,204.8%, compared to the three months ended March 31, 2024.
Current wording
Interest expense, net was $44.8 million for the three months ended June 30, 2025, compared to $7.4 million for the three months ended June 30, 2024. Interest expense, net for the three months ended June 30, 2025 increased by $37.4 million or 509.1%, compared to the three months ended June 30, 2024.
Previous wording
Our provision for income taxes was $2.2 million for the three months ended March 31, 2025, compared to a benefit of $(1.4) million for the three months ended March 31, 2024. Our provision for income taxes for the three months ended March 31, 2025 increased by $3.6 million, compared to the three months ended March 31, 2024.
Current wording
Our (benefit) provision for income taxes was $(7.6) million for the three months ended June 30, 2025, compared to $0.7 million for the three months ended June 30, 2024. Our provision for income taxes for the three months ended June 30, 2025 decreased by $8.3 million, compared to the three months ended June 30, 2024.
Previous wording
The increase in our provision for income taxes was primarily due to the jurisdictional mix of earnings, higher income taxes in the jurisdictions outside of the U.S., and U.S. state income taxes during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.
Current wording
The decrease in our provision for income taxes was primarily due to the net loss before income taxes, jurisdictional mix of earnings, higher income taxes in the jurisdictions outside of the U.S., and U.S. state income taxes, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.
Previous wording
Net loss margin was (11.6)% for the three months ended March 31, 2025, compared to (1.7)% for the three months ended March 31, 2025, as increases in depreciation and amortization, primarily as a result of the Company’s Sterling Acquisition and reduced demand from customers more impacted by macroeconomic factors, contributed to lower profitability.
Current wording
Net income margin was 0.1% for the three months ended June 30, 2025, compared to 1.0% for the three months ended June 30, 2025, as increases in depreciation and amortization, primarily as a result of the Company’s Sterling Acquisition and reduced demand from customers more impacted by macroeconomic factors, contributed to lower profitability.
Previous wording
Net loss was $(41.2) million for the three months ended March 31, 2025, compared to $(2.9) million for the three months ended March 31, 2024. Net loss for the three months ended March 31, 2025 increased by $38.3 million compared to the three months ended March 31, 2024.
Current wording
Net loss was $(40.9) million for the six months ended June 30, 2025, compared to $(1.0) million for the six months ended June 30, 2024. Net loss for the six months ended June 30, 2025 increased by $(39.8) million compared to the six months ended June 30, 2024.
Previous wording
Management believes that Adjusted EBITDA is a strong indicator of our overall operating performance and is useful to management and investors as a measure of comparative operating performance from period to period. 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 exclude the impact of share-based compensation because it is a non-cash expense and we believe that excluding this item provides meaningful supplemental information regarding performance and ongoing cash generation potential. We exclude loss on extinguishment of debt, transaction and acquisition related charges, integration and restructuring charges, and other charges because such expenses are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis.
Current wording
Management believes that Adjusted EBITDA is a strong indicator of our overall operating performance and is useful to management and investors as a measure of comparative operating performance from period to period. We define Adjusted EBITDA as net income (loss) 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 exclude the impact of share-based compensation because it is a non-cash expense and we believe that excluding this item provides meaningful supplemental information regarding performance and ongoing cash generation potential. We exclude loss on extinguishment of debt, transaction and acquisition related charges, integration and restructuring charges, and other charges because such expenses are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis.
Previous wording
Adjusted EBITDA was $92.1 million for the three months ended March 31, 2025 and represented an Adjusted EBITDA Margin of 26.0%. Adjusted EBITDA was $46.6 million for the three months ended March 31, 2024 and represented an Adjusted EBITDA Margin of 27.5%. Adjusted EBITDA for the three months ended March 31, 2025 increased by $45.6 million, or 97.8%, compared to the three months ended March 31, 2024, primarily due to the Sterling Acquisition.
Current wording
Adjusted EBITDA was $113.9 million for the three months ended June 30, 2025 and represented an Adjusted EBITDA Margin of 29.2%. Adjusted EBITDA was $55.8 million for the three months ended June 30, 2024 and represented an Adjusted EBITDA Margin of 30.2%. Adjusted EBITDA for the three months ended June 30, 2025 increased by $58.2 million, or 104.3%, compared to the three months ended June 30, 2024, primarily due to the Sterling Acquisition.
Previous wording
Share-based compensation for the three months ended March 31, 2025 and 2024 includes approximately $1.9 million and $2.6 million, respectively of incrementally recognized expense associated with the May 2023 modification of the vesting terms of outstanding unvested and unearned performance-based options, restricted stock units, and restricted stock awards.
Current wording
Share-based compensation for the three and six months ended June 30, 2025 includes approximately $1.8 million and $3.8 million, respectively, of incrementally recognized expense associated with the May 2023 modification of the vesting terms of outstanding unvested and unearned performance-based options, restricted stock units, and restricted stock awards. The three and six months ended June 30, 2024 includes approximately $2.5 million and $5.1 million, respectively, of incrementally recognized expense associated with the May 2023 modification of the vesting terms of outstanding unvested and unearned performance-based options, restricted stock units, and restricted stock awards.
Previous wording
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 $3.8 million of expense associated with the Sterling Acquisition. The three months ended March 31, 2024 include approximately $11.1 million of expense associated with the Sterling Acquisition, as well as incremental professional service fees incurred related to the Company's initial public offering and the subsequent one-time compliance efforts.
Current wording
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 and six months ended June 30, 2025 include approximately $2.3 million and $6.1 million of expense, respectively, associated with the Sterling Acquisition. The three and six months ended June 30, 2024 include approximately $9.2 million and $20.3 million of expense, respectively, associated with the Sterling Acquisition, primarily consisting of legal, regulatory, and diligence professional service fees. The three and six months ended June 30, 2024 also include insurance costs incurred related to the Company's initial public offering.
Previous wording
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 $7.8 million of expense associated with the integration of Sterling.
Current wording
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 and six months ended June 30, 2025 include approximately $3.7 million and $11.6 million of expense, respectively, associated with the integration of Sterling.
Previous wording
See the reconciliation of net loss to Adjusted EBITDA above. Segment Adjusted EBITDA margins are calculated using segment gross revenues and segment Adjusted EBITDA. Consolidated Adjusted EBITDA margin is calculated using consolidated revenues and consolidated Adjusted EBITDA.
Current wording
See the reconciliation of net income (loss) to Adjusted EBITDA above. Segment Adjusted EBITDA margins are calculated using segment gross revenues and segment Adjusted EBITDA. Consolidated Adjusted EBITDA margin is calculated using consolidated revenues and consolidated Adjusted EBITDA.
Previous wording
Similar to Adjusted EBITDA, management believes that Adjusted Net Income and Adjusted Diluted Earnings Per Share are strong indicators of our overall operating performance and are useful to our management and investors as measures of comparative operating performance from period to period. We define Adjusted Net Income for a particular period as net loss 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—diluted.
Current wording
Similar to Adjusted EBITDA, management believes that Adjusted Net Income and Adjusted Diluted Earnings Per Share are strong indicators of our overall operating performance and are useful to our management and investors as measures of comparative operating performance from period to period. We define Adjusted Net Income for a particular period as net income (loss) 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—diluted.
Previous wording
Adjusted Net Income was $30.5 million for the three months ended March 31, 2025, compared to $24.8 million for the three months ended March 31, 2024. Adjusted Net Income for the three months ended March 31, 2025 increased by $5.7 million, or 23.0% compared to the three months ended March 31, 2024, primarily due to the Sterling Acquisition. This increase was offset by changes in acquisition-related depreciation and amortization and our capital structure that are captured in interest expense.
Current wording
Adjusted Net Income was $47.0 million for the three months ended June 30, 2025, compared to $30.8 million for the three months ended June 30, 2024. Adjusted Net Income for the three months ended June 30, 2025 increased by $16.2 million, or 52.7% compared to the three months ended June 30, 2024, primarily due to the Sterling Acquisition. This increase was offset by changes in acquisition-related depreciation and amortization and our capital structure that are captured in interest expense.
Previous wording
Adjusted Diluted Earnings Per Share was $0.17 for the three months ended March 31, 2025, consistent with the three months ended March 31, 2024, as increases in Adjusted Net Income were offset by the incremental interest on the transaction financing and the dilutive impact of the new shares issued for the Sterling Acquisition.
Current wording
Adjusted Diluted Earnings Per Share was $0.27 for the three months ended June 30, 2025, compare to $0.21 for the three months ended June 30, 2024, as increases in Adjusted Net Income were offset by the incremental interest on the transaction financing and the dilutive impact of the new shares issued for the Sterling Acquisition.
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Current report — wording carried from elsewhere
Our other expense, net consists of the following:
Current report — wording carried from elsewhere
The increase in revenues is due to:
Current report — wording carried from elsewhere
revenues of $391.3 million, or 110.5%, attributable to Sterling as a result of the Sterling Acquisition completed on October 31, 2024; and
Current report — wording carried from elsewhere
revenues of $8.7 million, or 2.4%, from new customers, primarily attributable to our First Advantage Americas segment.
Current report — wording carried from elsewhere
These revenue increases were offset by a net decrease of $8.7 million, or 2.4%, in revenues from existing customers, primarily due to macroeconomic pressures across a number of our customer verticals that led to reduced overall existing customer demand, as well as the impact of lost customers. These decreases in existing customer revenues were partially mitigated by continued strength from upselling and cross-selling initiatives, which contributed an additional $16.3 million, or 4.6%, in revenue growth.
Current report — wording carried from elsewhere
The increase in cost of services was primarily due to $219.0 million of Sterling costs of services recognized after the Sterling Acquisition.
Current report — wording carried from elsewhere
Cost of services as a percentage of revenues was 53.7% for the six months ended June 30, 2025, compared to 50.7% for the six months ended June 30, 2024. The cost of services percentage of revenues for the second quarter of 2025 was impacted by Sterling’s higher relative cost of services due to the segment’s product and customer mix and other variations in customer ordering mix.
Current report — wording carried from elsewhere
The increase in product and technology expense was primarily due to:
Current report — wording carried from elsewhere
a $6.3 million increase in professional service fees related to continued investments in our technology platform; and
Current report — wording carried from elsewhere
a $4.2 million increase in Legacy First Advantage personnel expenses as a result of additional investments made to enhance our products, solutions, and technology platform.
Current report — wording carried from elsewhere
$1.0 million related to share-based compensation expense due to the conversion of Sterling equity awards to First Advantage equity awards as part of the transaction; and
Current report — wording carried from elsewhere
Selling, general, and administrative expense increased primarily due to $61.8 million of Sterling expenses recognized after the Sterling Acquisition, which include:
Current report — wording carried from elsewhere
$3.0 million related to post-combination restructuring costs.
Current report — wording carried from elsewhere
These increases in selling, general, and administrative expense were partially offset by a $16.8 million decrease in transaction costs attributable to the Sterling Acquisition related to professional service, legal, and other fees, that did not reoccur as the acquisition was completed on October 31, 2024.
Current report — wording carried from elsewhere
Depreciation and amortization was $123.6 million for the six months ended June 30, 2025, compared to $59.8 million for the six months ended June 30, 2024. Depreciation and amortization for the six months ended June 30, 2025 increased by $63.8 million, or 106.6%, compared to the six months ended June 30, 2024. This increase was primarily due to the impact of the step up in fair value of property and equipment and intangible assets as a result of the application of purchase accounting related to the Sterling Acquisition.
Current report — wording carried from elsewhere
This increase in interest expense was primarily attributable to higher interest expense on the Company’s Amended First Lien Credit Facility (as defined below), resulting from an incremental term loan principal amount of $1,620.3 million and an incremental revolver availability amount of $150.0 million, in connection with the Sterling Acquisition. Increases in interest expense were further impacted by increases in unrealized losses on the Company’s interest swaps resulting from interest rate volatility experienced during the period.
Current report — wording carried from elsewhere
The increase in our benefit for income taxes was primarily due to the increase of net book loss before income taxes, jurisdictional mix of earnings, higher income taxes in the jurisdictions outside of the U.S., and U.S. state income taxes, during the six months ended June 30, 2025, as compared to the three months ended June 30, 2024.
Current report — wording carried from elsewhere
Net loss margin was (5.5)% for the six months ended June 30, 2025, compared to (0.3)% for the six months ended June 30, 2024, as increases in depreciation and amortization, primarily as a result of the Company’s Sterling Acquisition and reduced demand from customers more impacted by macroeconomic factors, contributed to lower profitability.
Current report — wording carried from elsewhere
Adjusted Net Income was $77.5 million for the six months ended June 30, 2025, compared to $55.5 million for the six months ended June 30, 2024. Adjusted Net Income for the six months ended June 30, 2025 increased by $21.9 million, or 39.5% compared to the six months ended June 30, 2024, primarily due to the Sterling Acquisition. This increase was offset by changes in acquisition-related depreciation and amortization and our capital structure that are captured in interest expense.
Current report — wording carried from elsewhere
Adjusted Diluted Earnings Per Share was $0.44 for the six months ended June 30, 2025, compare to $0.38 for the six months ended June 30, 2024, as increases in Adjusted Net Income were offset by the incremental interest on the transaction financing and the dilutive impact of the new shares issued for the Sterling Acquisition.