First Advantage Q1 2025 Earnings Summary: Growth from Sterling Acquisition, Guidance Reaffirmed Despite Net Loss

Key Results (Q1 2025 vs. Q1 2024):
• Revenue: $354.6 million (up 109%)
• Net loss: $(41.2) million vs. $(2.9) million
• Net loss margin: (11.6%) vs. (1.7%)
• GAAP EPS: $(0.24) vs. $(0.02)
• Adjusted net income: $30.5 million (up from $24.8 million)
• Adjusted EPS: $0.17 (unchanged)
• Adjusted EBITDA: $92.1 million (up 98%)
• Adjusted EBITDA margin: 26.0% (down slightly from 27.5%)
• Cash from operations: $19.5 million (down from $38.3 million)
• Adjusted operating cash flow: $33.3 million (after adding back $13.8 million Sterling integration costs)

Sterling Acquisition Impact:
• $15.3 million in acquisition and integration expenses in Q1
• $41.2 million of depreciation/amortization from Sterling included in GAAP net loss
• $37 million in annual cost synergies already realized; targeting $60–$70 million

Balance Sheet Highlights:
• Cash: $172.0 million (up from $168.7 million at year-end)
• Total assets: $3.87 billion
• Total debt (net of costs): $2.12 billion
• Total equity: $1.28 billion

Full-Year 2025 Guidance (Reaffirmed):
• Revenue: $1.5–$1.6 billion
• Adjusted EBITDA: $410–$450 million
• Adjusted net income: $152–$182 million
• Adjusted EPS: $0.86–$1.03

Management Commentary:
• Strong momentum from upselling and cross-selling, with high customer retention
• Sterling integration ahead of schedule
• Automation and AI initiatives driving efficiency
• Investor Day scheduled for May 28, 2025, to detail the new "FA 5.0" strategy

First Advantage Corporation reported its fourth quarter and full-year 2024 financial results, highlighting the completion of the Sterling acquisition and issuing guidance for 2025.

Key financial results:

- Full-year 2024
- Revenue: $860.2 million
- Net loss: $(110.3) million, impacted by $130.5 million in acquisition-related expenses
- Adjusted net income: $123.7 million
- Adjusted EBITDA: $249.3 million with a 29.0% margin
- GAAP diluted net loss per share: $(0.74), including $0.66 per share of acquisition-related expenses
- Adjusted diluted earnings per share: $0.82
- Cash flows from operations: $28.2 million, with adjusted operating cash flows of $164.5 million

- Fourth quarter 2024
- Revenue: $307.1 million
- Net loss: $(100.4) million, impacted by $97.1 million in acquisition-related expenses
- Adjusted net income: $30.2 million
- Adjusted EBITDA: $82.9 million with a 27.0% margin
- GAAP diluted net loss per share: $(0.62), including $0.43 per share of acquisition-related expenses
- Adjusted diluted earnings per share: $0.18
- Cash flows from operations: $(85.7) million, with adjusted operating cash flows of $39.4 million

2025 guidance:

- Revenue expected to be between $1.5 billion and $1.6 billion
- Adjusted EBITDA projected at $410 million to $450 million
- Adjusted net income forecasted between $152 million and $182 million
- Adjusted diluted earnings per share expected to range from $0.86 to $1.03

First Advantage CEO Scott Staples emphasized the company’s strong progress in integrating Sterling, with $20 million in cost synergies already realized. The synergy target was revised upward from $50-$70 million to $60-$70 million. The company is focused on expanding its offerings through AI, technology, and product innovation while continuing strategic execution.

CFO Steven Marks noted that the 2025 guidance reflects expected synergies and macroeconomic factors, including potential headwinds in the labor market during the first half of the year.

The company will host a conference call to discuss its financial results and 2025 outlook.