First Advantage Reports Fourth Quarter and Full Year 2024 Results

Completed Acquisition of Sterling; Issues Full Year 2025 Guidance

Full Year 2024 Highlights¹

• Revenues of $860.2 million
• Net Loss of $(110.3) million, a net loss margin of (12.8)%, includes $130.5 million of expenses incurred related to the acquisition of Sterling Check Corp. ("Sterling”)
• Adjusted Net Income of $123.7 million
• Adjusted EBITDA of $249.3 million; Adjusted EBITDA Margin of 29.0%
• GAAP Diluted Net Loss Per Share of $(0.74), includes $0.66 per share of expenses incurred related to the Sterling acquisition
• Adjusted Diluted Earnings Per Share of $0.82
• Cash Flows from Operations of $28.2 million; Adjusted Operating Cash Flows of $164.5 million, after adjusting for $136.3 million of cash costs directly associated with the Sterling acquisition
• Closed the Sterling acquisition on October 31, 2024, which was first announced on February 29, 2024

Fourth Quarter 2024 Highlights¹

• Revenues of $307.1 million
• Net Loss of $(100.4) million, a net loss margin of (32.7)%, includes $97.1 million of expenses incurred related to the acquisition of Sterling
• Adjusted Net Income of $30.2 million
• Adjusted EBITDA of $82.9 million; Adjusted EBITDA Margin of 27.0%
• GAAP Diluted Net Loss Per Share of $(0.62), includes $0.43 per share of expenses incurred related to the Sterling acquisition
• Adjusted Diluted Earnings Per Share of $0.18
• Cash Flows from Operations of $(85.7) million; Adjusted Operating Cash Flows of $39.4 million, after adjusting for $125.1 million of cash costs directly associated with the Sterling acquisition

Full Year 2025 Guidance

• Introducing full year 2025 guidance ranges, including the expected benefits of 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 to $1.03²

ATLANTA, Feb. 27, 2025 (GLOBE NEWSWIRE) -- First Advantage Corporation (NASDAQ: FA), a leading global provider of employment background screening, identity, and verification solutions, today announced financial results for the fourth quarter and full year ended December 31, 2024.

Key Financials

(Amounts in millions, except per share data and percentages)

^{1 Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted Earnings Per Share, and Adjusted Operating Cash Flow 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.}

"2024 was a milestone year for First Advantage as we advanced our strategy with the transformational acquisition of Sterling,” said Scott Staples, Chief Executive Officer. "We are progressing well on our integration efforts, actioning and realizing our synergy targets, and accelerating our strategic execution, all while enabling a seamless experience for customers. We have already actioned $20 million in run rate cost synergies, and we are pleased to announce that we have updated our run rate synergy target range from $50 million to $70 million previously to $60 million to $70 million. Alongside our efforts on the transaction, we have been refining our updated strategy that prioritizes growth and innovation of our business through new technologies, AI, and product initiatives.”

"For the full year and fourth quarter of 2024, we delivered solid results amid an uncertain macroeconomic environment. Considering the pre-acquisition results from Sterling, the combined company generated approximately $1.51 billion of revenues and nearly $397 million of Adjusted EBITDA in 2024. The combination of upsell, cross-sell, and new logo growth rates for the year for both First Advantage and Sterling performed in line with the respective historical revenue growth algorithms, and our team continued to demonstrate outstanding execution with important new logo and upsell bookings,” Staples concluded.

Full Year 2025 Guidance

"We are introducing our full year 2025 guidance, which includes our increased scale with the acquisition of Sterling and the expected benefits of synergies,” commented Steven Marks, Chief Financial Officer. "Our full year 2025 guidance ranges reflect the realization of synergies already actioned or expected to be actioned in 2025, our prudent posture towards growth in 2025 due in part to our expectation that base will remain a headwind through the middle of the year as we fully lap prior year base declines, and our latest view of the macroeconomic environment and labor market. In the year ahead, we plan to maintain our product and customer focus while continuing the integration process, maintaining customer continuity, actioning synergies, and reducing net leverage.”

The following table summarizes our full year 2025 guidance.

^{2 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's full-year 2025 guidance as a result of, among other things, the factors described under "Forward-Looking Statements” below.

Conference Call and Webcast Information

First Advantage will host a conference call to review its fourth quarter and full year 2024 results today, February 27, 2025, at 8:30 a.m. ET.

To participate in the conference call, please dial 800-445-7795 (domestic) or 785-424-1699 (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 fourth quarter and full year 2024 earnings call or provide the conference code FA4Q24. The call will also be webcast live on the Company's investor relations website at https://investors.fadv.com under the "News & Events” and then "Events & Presentations” 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's investor relations website, https://investors.fadv.com. Alternatively, the live webcast and subsequent replay will be available at https://event.on24.com/wcc/r/4818015/A54E8C5466B3E71E29525C125548AFA6.

Forward-Looking Statements

This press release contains "forward-looking statements” 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 "anticipate,” "assume,” "believe,” "continue,” "could,” "estimate,” "expect,” "intend,” "may,” "plan,” "potential,” "predict,” "project,” "future,” "will,” "seek,” "foreseeable,” "target," "guidance,” 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' onboarding volumes, economic drivers which are sensitive to macroeconomic cycles, such as interest rate volatility and inflation, geopolitical unrest, 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;
• 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's actual results to differ materially from expected results, please see our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the "SEC”), as such factors may be updated from time to time in our filings with the SEC, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which is expected to be filed after this press release, which are or will be accessible on the SEC's 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 "non-GAAP financial measures” 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 ("GAAP”). Specifically, we make use of the non-GAAP financial measures "Adjusted EBITDA,” "Adjusted EBITDA Margin,” "Adjusted Net Income,” "Adjusted Diluted Earnings Per Share,” "Constant Currency Revenues,” "Constant Currency Adjusted EBITDA,” and "Adjusted Operating Cash Flow.”

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted Earnings Per Share, Constant Currency Revenues, and Constant Currency Adjusted EBITDA 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, Adjusted Diluted Earnings Per Share, Constant Currency Revenues, and Constant Currency Adjusted EBITDA 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, Adjusted Diluted Earnings Per Share, Constant Currency Revenues, and Constant Currency Adjusted EBITDA 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-diluted. We define Constant Currency Revenues as current period revenues translated using prior-year period exchange rates. We define Constant Currency Adjusted EBITDA as current period Adjusted EBITDA translated using prior-year period exchange rates.

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. We believe Adjusted Operating Cash Flow is a useful supplemental financial measure for management and investors in assessing the Company's 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 global provider of employment background screening, identity, and verification solutions. Enabled by its proprietary technology, First Advantage delivers innovative services and insights that help customers mitigate risk and hire the best talent: employees, contractors, contingent workers, tenants, and drivers. Headquartered in Atlanta, Georgia, First Advantage performs screens in over 200 countries and territories on behalf of its 80,000 customers. For more information about how to hire smarter and onboard faster with First Advantage, visit the Company's website at https://fadv.com/.

Investor Contact

Stephanie Gorman

Vice President, Investor Relations

[email protected]

(888) 314-9761

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