First Advantage Corp’s Earnings Call Highlights Strong Growth

First Advantage Corporation ((FA)) has held its Q2 earnings call. Read on for the main highlights of the call.

First Advantage Corporation’s recent earnings call painted a picture of robust financial health, underscored by strong revenue growth and successful strategic initiatives. The sentiment was largely positive, buoyed by the successful integration of the Sterling acquisition and high customer retention rates. However, macroeconomic uncertainties and a decline in base revenue performance tempered the outlook. Despite challenges in certain sectors, the company’s strategic initiatives and enterprise deals offer a promising path forward.

Strong Financial Performance

First Advantage Corporation reported a commendable financial performance in Q2 2025, with revenue reaching $391 million, marking a 1.5% year-over-year increase on a pro forma basis. This figure was at the top end of expectations, and the adjusted EBITDA margin improved significantly to 29.2%, representing a 270 basis point increase from the previous year.

Successful Integration of Sterling Acquisition

The integration of the $2.2 billion Sterling acquisition is progressing ahead of schedule, with substantial synergy realization efforts contributing positively to the financial outcomes. This strategic move has been pivotal in enhancing the company’s financial performance.

High Customer Retention

Customer retention remained impressively high at over 96%, consistent with past results. This reflects the company’s strong customer-centric approach and its ability to maintain a loyal customer base.

International Growth

International segments outperformed expectations, with international revenue up 7.2% in the quarter. This growth was driven by strong performances in the EMEA region and the U.K., highlighting the company’s successful global expansion efforts.

Enterprise Deal Success

Two out of three large enterprise deals went live in Q2, with significant contributions expected from these deals in the retail gig economy and Australia. These deals are anticipated to bolster the company’s financial performance in the coming quarters.

Base Revenue Decline

Despite the overall positive performance, base revenue performance remained negative year-on-year. Expectations for the second half of the year have been revised from modestly positive to slightly negative, indicating challenges in maintaining base revenue growth.

Macro Uncertainty Impacting Hiring Plans

Policy changes, including those related to immigration and tariffs, have led to uncertainty among customers, causing them to adopt a ‘wait-and-see’ approach. This macroeconomic uncertainty is impacting hiring plans and overall business sentiment.

Retail and E-commerce Volume Decline

The retail and e-commerce verticals continue to face challenges, with a decline in order volumes influenced by tariffs impacting U.S. consumer behavior. This sector remains a point of concern for the company.

Forward-Looking Guidance

First Advantage provided robust forward-looking guidance, emphasizing their strong performance and strategic initiatives. The company reaffirmed its full-year guidance, projecting full-year adjusted EBITDA margins of 28%, with adjusted diluted EPS expected in the mid to high $0.20 range for the remaining quarters. Despite a slightly negative outlook for base growth in the second half of the year, the company remains confident in its diverse global verticals and customer segments to drive sustained growth.

In conclusion, First Advantage Corporation’s earnings call highlighted a generally positive financial outlook, driven by strategic acquisitions and strong customer retention. While macroeconomic uncertainties and sector-specific challenges persist, the company’s strategic initiatives and successful enterprise deals provide a solid foundation for future growth.