UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2024~~2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-31666

First Advantage Corporation

(Exact Name of Registrant as Specified in its Charter)


Delaware	84-3884690
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1 Concourse Parkway NE, Suite 200 Atlanta, GA	30328
(Address of principal executive offices)	(Zip Code)

(~~888~~678) ~~314~~868-~~9761~~4151

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common Stock, $0.001 par value per share

     FA

     The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November~~May 82, ~~2024,~~2025 the registrant had ~~172~~173,~~652~~673,~~487~~549 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	5
	Notes to Unaudited Condensed Consolidated Financial Statements	76
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3632
Item 4.	Controls and Procedures	3632
PART II.	OTHER INFORMATION	3733
Item 1.	Legal Proceedings	3733
Item 1A.	Risk Factors	3733
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3733
Item 3.	Defaults Upon Senior Securities	3833
Item 4.	Mine Safety Disclosures	3833
Item 5.	Other Information	3833
Item 6.	Exhibits	3934
Signatures		4035

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

First Advantage Corporation

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)	September 30, 2024			December 31, 2023
(in thousands, except share and par value amounts)	March 31, 2025			December 31, 2024
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	~~307~~171,~~392~~994		$	~~213~~168,~~774~~688
Restricted cash		88797			~~138~~795
Accounts receivable (net of allowance for doubtful accounts of $1,284 and $1,036 at September 30, 2024 and December 31, 2023, respectively)		143,020			142,690
Accounts receivable (net of allowance for doubtful accounts of $5,074 and $3,832 at March 31, 2025 and December 31, 2024, respectively)		266,052			266,800
Prepaid expenses and other current assets		1329,~~667~~032			1331,~~426~~041
Income tax receivable		23,~~808~~928			38,~~710~~669
Total current assets		~~466~~471,~~975~~803			~~373~~475,~~738~~993
Property and equipment, net		55291,~~403~~764			79307,~~441~~539
Goodwill		~~822~~2,~~277~~128,018			~~820~~2,~~654~~124,528
Trade names, net		60,990			66,229
Intangible assets, net		955,357			987,948
Customer lists, net		238,821			275,528
Deferred tax asset, net		5,169			5,682
Other intangible assets, net		1,898			2,257
Other assets		19,580			21,203
Deferred tax asset, net		3,172			2,786
TOTAL ASSETS	$	3,871,691		$	3,922,893
Other assets		7,598			10,021
TOTAL ASSETS	$	1,657,134		$	1,630,654
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	71116,~~108~~037		$	47120,~~024~~872
Accrued compensation		1845,~~687~~047			1652,~~379~~805
Accrued liabilities		2245,~~962~~055			1644,~~162~~700
Current portion of operating lease liability		2,566			3,354
Current portion of long-term debt		21,850			21,850
Income tax payable		3,534			264
Current portion of operating lease liability		3,861			4,245
Deferred revenues		2,495			1,856
Income tax payable		4,374			1,942
Total current liabilities		121,352			85,039
Deferred revenues		4,774			4,274
Long-term debt (net of deferred financing costs of $4,880 and $6,268 at September 30, 2024 and December 31, 2023, respectively)		559,844			558,456
Total current liabilities		240,998			250,688
Deferred tax liability, net		48,181			71,274
Long-term debt (net of deferred financing costs of $40,253 and $41,861 at March 31, 2025 and December 31, 2024, respectively)		2,117,434			2,121,289
Operating lease liability, less current portion		4,340			5,931
Deferred tax liability, net		214,649			222,738
Other liabilities		2,703			3,221
Operating lease liability, less current portion		7,918			9,149
Total liabilities		736,420			723,921
Other liabilities		11,937			11,990
Total liabilities		2,592,936			2,615,854
COMMITMENTS AND CONTINGENCIES (Note 12)
EQUITY
Common stock - $0.001 par value; 1,000,000,000 shares authorized, 145,558,948 and 145,074,802 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		146			145
Common stock - $0.001 par value; 1,000,000,000 shares authorized, 173,641,193 and 173,171,145 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively		174			173
Additional paid-in-capital		~~998~~1,~~707~~511,463			~~977~~1,~~290~~504,007
Accumulated deficit		(59201,~~442~~002	)		(49159,~~545~~808	)
Accumulated other comprehensive loss		(1831,~~697~~880	)		(2137,~~157~~333	)
Total equity		~~920~~1,~~714~~278,755			~~906~~1,~~733~~307,039
TOTAL LIABILITIES AND EQUITY	$	13,~~657~~871,~~134~~691		$	13,~~630~~922,~~654~~893

The accompanying notes are an integral part of these condensed consolidated financial statements.

First Advantage Corporation

Condensed Consolidated Statements of Operations and Comprehensive (Loss~~) Income~~

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
(in thousands, except share and per share amounts)	~~2024~~2025			~~2023~~2024			~~2024~~			~~2023~~
REVENUES	$	~~199~~354,~~119~~588		$	~~200~~169,~~364~~416		$	~~553,081~~		$	~~561,199~~
OPERATING EXPENSES:
Cost of services (exclusive of depreciation and amortization below)		~~100~~192,~~879~~565			~~101~~87,~~410~~192			~~280,419~~			~~285,468~~
Product and technology expense		1227,~~909~~155			1312,~~107~~466			~~39,052~~			~~38,374~~
Selling, general, and administrative expense		4665,~~050~~585			3040,~~217~~662			~~125,352~~			~~88,881~~
Depreciation and amortization		3061,~~168~~666			3229,~~419~~822			~~89,968~~			~~96,341~~
Total operating expenses		~~190~~346,~~006~~971			~~177~~170,~~153~~142			~~534,791~~			~~509,064~~
INCOME FROM OPERATIONS		9,113			23,211			18,290			52,135
INCOME (LOSS) FROM OPERATIONS		7,617			(726	)
OTHER EXPENSE, NET:
Interest expense, net		1746,~~191~~580			73,~~557~~570			~~28,114~~			~~20,125~~
Total other expense, net		1746,~~191~~580			73,~~557~~570			~~28,114~~			~~20,125~~
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES		(8,078	)		15,654			(9,824	)		32,010
LOSS BEFORE PROVISION FOR INCOME TAXES		(38,963	)		(4,296	)
Provision for income taxes		782			4,881			83			9,530
Provision (benefit) for income taxes		2,231			(1,388	)
NET (LOSS) INCOME	$	(8,860	)	$	10,773		$	(9,907	)	$	22,480
NET LOSS	$	(41,194	)	$	(2,908	)
Foreign currency translation income (loss)		5,~~531~~453			(1,~~610~~773	)		~~2,460~~			~~(523~~	)
COMPREHENSIVE (LOSS) INCOME	$	(3,329	)	$	9,163		$	(7,447	)	$	21,957
COMPREHENSIVE LOSS	$	(35,741	)	$	(4,681	)
NET (LOSS) INCOME	$	(8,860	)	$	10,773		$	(9,907	)	$	22,480
NET LOSS	$	(41,194	)	$	(2,908	)
Basic net (loss) income per share	$	(0.06	)	$	0.08		$	(0.07	)	$	0.16
Basic and diluted net loss per share	$	(0.24	)	$	(0.02	)
Diluted net (loss) income per share	$	(0.06	)	$	0.07		$	(0.07	)	$	0.15
Weighted average number of shares outstanding - basic and diluted		172,756,497			143,591,713
Weighted average number of shares outstanding - basic		144,096,312			143,231,707			143,851,357			144,392,463
Weighted average number of shares outstanding - diluted		144,096,312			144,733,357			143,851,357			146,392,996

The accompanying notes are an integral part of these condensed consolidated financial statements.

First Advantage Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
(in thousands)	~~2024~~2025			~~2023~~2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(9,907	)	$	22,480
Net loss	$	(41,194	)	$	(2,908	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		8961,~~968~~666			9629,~~341~~822
Amortization of deferred financing costs		1,~~388~~608			~~1,362~~453
Bad debt expense		92			134
Bad debt recovery		(712	)		(112	)
Deferred taxes		(237,~~115~~553	)		(87,~~723~~808	)
Share-based compensation		197,~~303~~967			104,~~449~~751
Loss on foreign currency exchange rates		—			26
Loss on disposal of fixed assets and impairment of ROU assets		132		0
(Gain) loss on disposal of fixed assets and impairment of ROU assets		(272	)		1,724
Change in fair value of interest rate swaps		3,936			(7,045	)
Change in fair value of interest rate swaps		(1,006	)		(2,201	)
Changes in operating assets and liabilities:
Accounts receivable		~~(151~~1,927	)		~~(12~~13,~~162~~736	)
Prepaid expenses and other assets		~~1,184~~(993	)		8(3,~~661~~345	)
Accounts payable		23(6,~~115~~038	)		~~531~~468
Accrued compensation and accrued liabilities		9(8,~~917~~615	)		(86,~~389~~608	)
Deferred revenues		~~591~~482			87185
Operating lease liabilities		(~~722~~91	)		(~~1,134~~328	)
Other liabilities		(~~673~~366	)		(~~198~~11	)
Income taxes receivable and payable, net		47,~~150~~315			(23,~~908~~863	)
Net cash provided by operating activities		~~113~~19,~~862~~471			~~106~~38,~~080~~329
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalized software development costs		(2010,~~384~~628	)		(186,~~781~~135	)
Purchases of property and equipment		(~~1,386~~485	)		(~~1,798~~321	)
Other investing activities		2937			(~~231~~575	)
Acquisitions of businesses, net of cash acquired		25			(41,122	)
Net cash used in investing activities		(11,076	)		(7,031	)
Net cash used in investing activities		(21,716	)		(61,932	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock under share-based compensation plans		5,862			4,089
Repayments of Amended First Lien Credit Facility		(5,463	)		—
Net settlement of share-based compensation plan awards		(3,790	)		(254	)
Proceeds from issuance of common stock under share-based compensation plans		1,688			976
Payments on deferred purchase agreements		(703	)		(703	)
Net settlement of share-based compensation plan awards		(2,204	)		(41	)
Cash dividends paid		(211	)		(217,683	)
Payments on deferred purchase agreements		—			(234	)
Payments on finance lease obligations		(3	)		(97	)
Cash dividends paid		(11	)		(12	)
Share repurchases		—			(55,917	)
Payments on finance lease obligations		(3	)		—
Net cash provided by (used in) financing activities		1,155			(270,565	)
Net cash (used in) provided by financing activities		(5,993	)		689
Effect of exchange rate on cash, cash equivalents, and restricted cash		~~267~~906			(~~372~~328	)
Increase (decrease) in cash, cash equivalents, and restricted cash		93,568			(226,789	)
Increase in cash, cash equivalents, and restricted cash		3,308			31,659
Cash, cash equivalents, and restricted cash at beginning of period		~~213~~169,~~912~~483			~~391~~213,~~796~~912
Cash, cash equivalents, and restricted cash at end of period	$	~~307~~172,~~480~~791		$	~~165~~245,~~007~~571
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes, net of refunds received	$	193,~~168~~003		$	212,~~006~~510
Cash paid for interest	$	3641,~~174~~881		$	3311,~~787~~954
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired on account	$	~~926~~973		$	25585
Non-cash property and equipment additions	$	~~540~~—		$	—540
Excise taxes on share repurchases incurred but not paid	$	(10	)	$	558
Dividends declared but not paid	$	—		$	701

The accompanying notes are an integral part of these condensed consolidated financial statements.

First Advantage Corporation

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(in thousands)	Common Stock			AdditionalPaid-In-Capital			AccumulatedDeficit			Accumulated OtherComprehensiveLoss			Total Stockholders’Equity
BALANCE – December 31, 2023	$	145		$	977,290		$	(49,545	)	$	(21,157	)	$	906,733
BALANCE – December 31, 2024	$	173		$	1,504,007		$	(159,808	)	$	(37,333	)	$	1,307,039
Share-based compensation		—			47,~~751~~967			—			—			47,~~751~~967
Forfeitures of previously declared cash dividends		—			6			—			—			6
Proceeds from issuance of common stock under share-based compensation plans		0			976			—			—			976
Common stock withheld for tax obligations on restricted stock unit and option settlement	(0)				(41	)		—			—			(41	)
Foreign currency translation		—			—			—			(1,773	)		(1,773	)
Net loss		—			—			(2,908	)		—			(2,908	)
BALANCE – March 31, 2024	$	145		$	982,982		$	(52,453	)	$	(22,930	)	$	907,744
Share-based compensation		—			5,048			—			—			5,048
Forfeitures of previously declared cash dividends		—			5			—			—			5
Proceeds from issuance of common stock under share-based compensation plans		02			~~221~~1,688			—			—			~~221~~1,690
Common stock withheld for tax obligations on restricted stock unit and option settlement	~~(0)~~	(1	)		(~~270~~2,204	)		—			—			(~~270~~2,205	)
Foreign currency translation		—			—			—			(15,~~298~~453	)		(15,~~298~~453	)
Net income		—			—			1,861			—			1,861
Net loss		—			—			(41,194	)		—			(41,194	)
BALANCE – June 30, 2024	$	145		$	987,986		$	(50,592	)	$	(24,228	)	$	913,311
BALANCE – March 31, 2025	$	174		$	1,511,463		$	(201,002	)	$	(31,880	)	$	1,278,755
Share-based compensation		—			9,504			—			—			9,504
Excise tax on repurchase of common stock								10						10
Forfeitures of previously declared cash dividends		—			31			—			—			31
Proceeds from issuance of common stock under share-based compensation plans		1			4,665			—			—			4,666
Common stock withheld for tax obligations on restricted stock unit and option settlement	(0)				(3,479	)		—			—			(3,479	)
Foreign currency translation		—			—			—			5,531			5,531
Net loss		—			—			(8,860	)		—			(8,860	)
BALANCE – September 30, 2024	$	146		$	998,707		$	(59,442	)	$	(18,697	)	$	920,714


(in thousands)	Common Stock		Additional Paid-In-Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
BALANCE – December 31, 2023	$	145	$	977,290		$	(49,545	)	$	(21,157	)	$	906,733
Share-based compensation		—		4,751			—			—			4,751
Forfeitures of previously declared cash dividends		—		6			—			—			6
Proceeds from issuance of common stock under share-based compensation plans		0		976			—			—			976
Common stock withheld for tax obligations on restricted stock unit and option settlement	(0)			(41	)		—			—			(41	)
Foreign currency translation		—		—			—			(1,773	)		(1,773	)
Net loss		—		—			(2,908	)		—			(2,908	)
BALANCE – March 31, 2024	$	145	$	982,982		$	(52,453	)	$	(22,930	)	$	907,744

The accompanying notes are an integral part of these condensed consolidated financial statements.

First Advantage Corporation

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Continued)

(Unaudited)

(in thousands)	Common Stock			AdditionalPaid-In-Capital			AccumulatedDeficit			Accumulated OtherComprehensiveLoss			Total Stockholders’Equity
BALANCE – December 31, 2022	$	149		$	1,176,163		$	(27,363	)	$	(22,331	)	$	1,126,618
Share-based compensation		—			2,058			—			—			2,058
Repurchases of common stock		(2	)		—			(25,515	)		—			(25,517	)
Proceeds from issuance of common stock under share-based compensation plans		0			1,399			—			—			1,399
Common stock withheld for tax obligations on restricted stock unit and option settlement		0			(25	)		—			—			(25	)
Foreign currency translation		—			—			—			869			869
Net income		—			—			1,925			—			1,925
BALANCE – March 31, 2023	$	147		$	1,179,595		$	(50,953	)	$	(21,462	)	$	1,107,327
Share-based compensation		—			3,601			—			—			3,601
Repurchases of common stock		(2	)		—			(27,337	)		—			(27,339	)
Proceeds from issuance of common stock under share-based compensation plans		0			705			—			—			705
Common stock withheld for tax obligations on restricted stock unit and option settlement		0			(186	)		—			—			(186	)
Foreign currency translation		—			—			—			218			218
Net income		—			—			9,782			—			9,782
BALANCE – June 30, 2023	$	145		$	1,183,715		$	(68,508	)	$	(21,244	)	$	1,094,108
Share-based compensation		—			4,790			—			—			4,790
Repurchases of common stock		0			—			(3,619	)		—			(3,619	)
Cash dividends declared, $1.50 per share		—			(218,384	)		—			—			(218,384	)
Proceeds from issuance of common stock under share-based compensation plans		0			1,985			—			—			1,985
Common stock withheld for tax obligations on restricted stock unit and option settlement		0			(43	)		—			—			(43	)
Foreign currency translation		—			—			—			(1,610	)		(1,610	)
Net income		—			—			10,773			—			10,773
BALANCE – September 30, 2023	$	145		$	972,063		$	(61,354	)	$	(22,854	)	$	888,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

First Advantage Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Organization, Nature of Business, and Basis of Presentation

First Advantage Corporation, a Delaware corporation, was formed on November 15, 2019. Hereafter, First Advantage Corporation and its subsidiaries will collectively be referred to as the “Company.”

The Company derives its revenues from a variety of background check and compliance services performed across all phases of the workforce lifecycle from pre-onboarding services to post-onboarding and ongoing monitoring services, covering employees, contractors, contingent workers, tenants, and drivers. We generally classify our service offerings into three categories: pre-onboarding, post-onboarding, and adjacent products.

Pre-onboarding services are comprised of an extensive array of products and solutions that customers typically utilize to enhance their evaluation process and support compliance from the time a job or other application is submitted to a successful ~~applicant~~candidate’s onboarding date. This includes searches such as criminal background checks, drug / health screenings, extended workforce screening, biometrics and identity checks, education / workforce verification, driver records and compliance, healthcare credentials, and executive screening.

Post-onboarding services are comprised of continuous monitoring and re-screening solutions, which are important tools to help our customers keep their end customers, workforces, and other stakeholders safer, more productive, and more compliant. Our post-monitoring solutions include criminal records, healthcare sanctions, motor vehicle records, social media, and global sanctions screening continuously or at regular intervals selected by our customers.

Adjacent products include products that complement our pre-onboarding and post-onboarding products and solutions. This includes fleet /and vehicle compliance, hiring tax credits and incentives, resident /and tenant screening, employment eligibility, and investigative research.

Basis of Presentation —The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The Company includes the results of operations of acquired companies prospectively from the date of acquisition.

The condensed consolidated financial statements included herein are unaudited, but in the opinion of management, such financial statements include all adjustments, consisting of normal recurring adjustments, necessary to summarize fairly the Company’s financial position, results of operations, and cash flows for the interim periods presented. The interim results reported in these condensed consolidated financial statements should not be taken as indicative of results that may be expected for future interim periods or the full year. For a more comprehensive understanding of the Company and its condensed consolidated financial statements, these interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024.

The Company has historically experienced seasonality with respect to certain customer industries as a result of fluctuations in hiring volumes and other economic activities. Generally, the Company’s highest revenues have historically occurred between October and November of each year, driven by many customers’ pre-holiday season hiring initiatives. Certain customers across various industries also historically increase their hiring throughout the second quarter of the year as winter concludes, and the school year ends, giving rise to student and graduate hiring, and increased commercial activity tied to outdoor activities.

Use of Estimates — The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Changes in these estimates and assumptions may have a material impact on the condensed consolidated financial statements and accompanying notes.

Significant estimates, judgments, and assumptions, include, but are not limited to, the determination of the fair value and useful lives of assets acquired and liabilities assumed through business combinations, goodwill impairment, revenue recognition, capitalized software, assumptions used for purposes of determining share-based compensation, and income tax liabilities and assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.

Note 2. Summary of Significant Accounting Policies

Fair Value of Financial Instruments — Certain financial assets and liabilities are reported at fair value in the accompanying consolidated balance sheets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement. ASC 820 establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation techniques required by ASC 820 are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1 — Quoted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 — Significant inputs to the valuation model are unobservable (supported by little or no market activities). These inputs may be used with internally developed methodologies that reflect the Company’s best estimate of fair value from a market participant.

The carrying amounts of cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-term maturities of these financial instruments (Level 1). The fair values and carrying values of the Company’s ~~long-term~~ debt are disclosed in Note 6, “~~Long-term~~ Debt”.

The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of ~~September~~March 3031, ~~2024~~2025 (in thousands):

	Level 1		Level 2		Level 3
Assets
Interest rate swaps	$	—	$	97	$	—
Liabilities
Interest rate swaps	$	—	$	42,~~984~~428	$	—

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Other intangible assets are subject to nonrecurring fair value measurement as the result of business acquisitions. The fair values of these assets were estimated using the present value of expected future cash flows through unobservable inputs (Level 3).

Business Combinations— The Company records business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method of accounting, identifiable assets acquired and liabilities assumed are recorded at their acquisition-date fair values. The excess of the purchase price over the estimated fair value is recorded as goodwill. Changes in the estimated fair values of net assets recorded for acquisitions prior to the finalization of more detailed analysis, but not to exceed one year from the date of acquisition, will adjust the amount of the purchase price allocable to goodwill. Measurement period adjustments are reflected in the period in which they occur.

In valuing ~~the~~ trade names, customer lists, ~~and~~ software developed for internal use, and other intangible assets, the Company utilizes variations of the income approach, which relies on historical financial and qualitative information, as well as assumptions and estimates for projected financial information. The Company considers the income approach the most appropriate valuation technique because the inherent value of these assets is their ability to generate current and future income. Projected financial information is subject to risk if estimates are incorrect. The most significant estimate relates to projected revenues and profitability. If the projected revenues and profitability used in the valuation calculations are not met, then the asset could be impaired.

Concentrations of Credit Risk — Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. Cash is deposited with major financial institutions and, at times, such balances with each financial institution may be in excess of insured limits. The Company has not experienced, and does not anticipate, any losses with respect to its cash deposits. Accounts receivable represent credit granted to customers for services provided. The Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral on accounts receivable. The Company had one customer which represented approximately 1511% ~~and 13%~~ of its consolidated revenues during the three ~~and nine~~ months ended ~~September~~March 3031, 2024, ~~respectively~~in its First Advantage Americas segment. The Company ~~had~~did ~~one~~not ~~customer~~have any customers which represented ~~approximately 11~~10% or more of its consolidated revenues ~~during~~in ~~both~~any segment during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2025. Additionally, the Company did not have any customers which represented 10% or more of its consolidated accounts receivable, net for any period presented.

The Company has entered into interest rate derivative agreements with a counterparty bank to reduce its exposure to interest rate volatility. The Company has determined the counterparty bank to be a high credit quality institution. The Company does not enter into financial instruments for trading or speculative purposes.

Foreign Currency — The functional currency of all of the Company’s foreign subsidiaries is the applicable local currency. The translation of the applicable foreign currencies into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenues and expense accounts using average exchange rates prevailing during the fiscal year. Adjustments resulting from the translation of foreign currency financial statements are accumulated net of tax in a separate component of equity. Currency translation income (loss) included in accumulated other comprehensive loss was approximately $5.5 million and $(1.8) million for the three months ended March 31, 2025 and 2024, respectively.

~~Foreign~~Gains ~~Currency~~or —losses ~~The~~resulting ~~functional~~from ~~currency of all of the Company’s~~ foreign ~~subsidiaries is the applicable local~~ currency. ~~The~~transactions ~~translation~~are ofincluded ~~the applicable foreign currencies into U.S. dollars is performed for balance sheet accounts using current exchange rates~~ in ~~effect at~~ the ~~balance~~accompanying ~~sheet~~condensed ~~date~~consolidated ~~and~~statements ~~for~~of ~~revenues~~operations and ~~expense~~comprehensive ~~accounts~~loss, ~~using~~except ~~average~~for ~~exchange~~those ~~rates~~relating ~~prevailing~~to ~~during~~intercompany ~~the~~transactions ~~fiscal year. Adjustments resulting from the translation~~ of ~~foreign~~a ~~currency~~long-term ~~financial~~investment ~~statements~~nature, which are ~~accumulated~~captured ~~net of tax~~ in a separate component of equity. ~~Currency~~as ~~translation (loss) income included in~~ accumulated other comprehensive loss ~~was approximately $5~~.5 ~~million~~Currency ~~and~~transaction $(~~1.6~~loss) ~~million~~income ~~for~~included in the ~~three~~accompanying ~~months~~condensed ~~ended~~consolidated ~~September~~statements ~~30,~~of ~~2024~~operations and ~~2023, respectively. Currency translation (loss) income included in accumulated other~~ comprehensive loss was approximately $2(0.51) million and $(0.5)0 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively.

~~Gains~~Recent orAccounting ~~losses~~Pronouncements ~~resulting~~— ~~from~~There ~~foreign~~were ~~currency~~no ~~transactions~~accounting ~~are~~pronouncements ~~included~~issued induring the accompanying condensed consolidated statements of operations and comprehensive (loss) income, except for those relating to intercompany transactions of a long-term investment nature, which are captured in a separate component of equity as accumulated other comprehensive loss. Currency transaction income (loss) included in the accompanying condensed consolidated statements of operations and comprehensive (loss) income was approximately $(0.6) million and $0.1 million for the three months ended ~~September~~March 3031, ~~2024~~2025 ~~and~~that ~~2023,~~are ~~respectively.~~expected ~~Currency~~to ~~transaction~~have ~~income~~a ~~(loss)~~material ~~included~~impact inon the ~~accompanying~~ condensed consolidated ~~statements~~financial ~~of operations and comprehensive (loss) income was approximately $(0~~statements.~~04) million and $(0.2) million for the nine months ended September 30, 2024 and 2023, respectively.~~

Recent Accounting Pronouncements — There were no accounting pronouncements issued during the nine months ended September 30, 2024 that are expected to have a material impact on the condensed consolidated financial statements.

Note 3. Acquisitions

~~Acquisition~~2024 ~~of Sterling Check Corp.~~Acquisition

On ~~February~~October 2831, 2024, wethe ~~entered~~Company ~~into~~completed anthe ~~Agreement~~acquisition ~~and~~of ~~Plan~~Sterling ofCheck ~~Merger~~Corp. (“Sterling” and such acquisition, the “~~Merger~~Sterling ~~Agreement~~Acquisition”), bya leading provider of background screening and ~~among~~identity ~~First~~verification ~~Advantage,~~services. The cash-and-stock transaction valued Sterling ~~Check~~at ~~Corp~~approximately $2.,2 abillion ~~Delaware~~and ~~corporation~~was ~~(“Sterling”),~~financed through cash on hand and ~~Starter~~the ~~Merger~~issuance ~~Sub~~of new debt and common stock as described in Note 6, ~~Inc~~“Debt”., aThe ~~Delaware~~acquisition ~~corporation~~extended First Advantage’s high-quality and ancost-effective ~~indirect~~background screening, ~~wholly~~identity, ~~owned~~and ~~subsidiary~~verification technology solutions for the benefit of ~~First~~both ~~Advantage~~companies' ~~(“Merger~~customers ~~Sub”).~~across industry verticals and geographies.

OnSterling ~~October~~was ~~31,~~determined ~~2024,~~to ~~following~~constitute ~~the~~a ~~satisfaction~~business orand ~~waiver of~~ the ~~applicable~~Company ~~closing~~was ~~conditions,~~deemed ~~including~~to ~~receipt~~be of the ~~requisite~~acquirer ~~regulatory~~under ~~approvals,~~ASC ~~First~~805. ~~Advantage~~The ~~completed~~Company ~~its~~recorded ~~acquisition~~a ofpreliminary ~~Sterling,~~allocation ~~pursuant to the Merger Agreement. Under the terms~~ of the ~~Merger~~purchase ~~Agreement,~~price ~~Merger~~to ~~Sub~~assets ~~merged~~acquired ~~with~~ and ~~into~~liabilities ~~Sterling,~~assumed ~~with~~based ~~Sterling~~on ~~continuing~~their asestimated ~~the~~fair ~~surviving~~values ~~corporation~~as ~~in such merger and becoming an indirect, wholly owned subsidiary~~ of ~~First~~October ~~Advantage. The Sterling stockholders received approximately $1~~31,~~224.6~~ ~~million in cash and 27~~2024.15 ~~million~~During ~~shares~~the ofthree ~~First~~months ~~Advantage~~ended ~~common~~March ~~stock with a fair value of $507.7 million. The transaction extends First Advantage’s high-quality and cost-effective background screening~~31, ~~identity~~2025, ~~and verification technology solutions for~~ the ~~benefit~~Company ofrecorded ~~both~~a ~~companies' customers across industry verticals and geographies. The cash-and-stock transaction values Sterling at approximately~~ $20.2 ~~billion~~million ~~and~~adjustment ~~was~~related ~~financed~~to ~~through cash on hand and~~ the ~~issuance~~valuation of ~~new~~certain ~~debt~~tax ~~and common stock as described in Note 6, “Long-term Debt”~~liabilities.

Due to the limited amount of time since closing the transaction, the preliminary allocation of the purchase price is not yet complete. The initial purchase price allocation will be provided within our Annual Report on Form 10-K for fiscal year ended December 31, 2024, and we expect most of the purchase price will be allocated to goodwill and other identifiable intangible assets. The acquisition will be accounted for in accordance with ASC 805, Business Combinations and Sterling’s results of operations will be consolidated in the Company’s financial statements effective November 1, 2024. Acquisition-related costs through October 31, 2024 were approximately $48.9 million and expensed as incurred.

2023 Acquisition

On September 1, 2023, the Company acquired 100% of the equity interest of a digital identity and biometrics solutions company headquartered in New York, for $41.0 million. The acquired company operates under the trade name Infinite ID. The acquisition expanded the Company’s network and portfolio of identity solutions in the United States. The Company determined that the acquired company constitutes a business and the Company was deemed to be the acquirer under ASC 805. The Company recorded a preliminary allocation of the purchase price to assets acquired and liabilities assumed based on their estimated fair values as of September 1, 2023. The allocation was finalized as of June 30, 2024 with an immaterial adjustment recorded related to the valuation of deferred taxes.

The allocation of the purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date. The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed (in thousands):

Consideration
Cash purchase price	$	41,000
Cash consideration	$	1,152,163
Other transaction adjustments		97
Plus: fair value of assumed Sterling equity awards to receive cash attributable to pre-combination service		15,905
Total fair value of consideration transferred	$	41,097
Plus: repayment of Sterling's outstanding debt		535,046
Current assets	$	1,335
Plus: fair value of First Advantage common stock issued		490,098
Property and equipment, including software developed for internal use		5,959
Plus: fair value of assumed Sterling equity awards to receive equity awards attributable to pre-combination service		4,487
Trade name		2,300
Total fair value of consideration transferred	$	2,197,699
Customer lists		3,800
Current assets	$	227,469
Other intangible assets		2,400
Property and equipment, including software developed for internal use		273,370
Other assets		236
Intangible assets		717,000
Total liabilities		(1,084	)
Deferred tax asset		58,100
Total identifiable net assets	$	14,946
Other assets		12,516
Goodwill	$	26,151
Current liabilities		(150,026	)
Deferred tax liability		(238,077	)
Other liabilities		(16,226	)
Total identifiable net assets	$	884,126
Goodwill	$	1,313,573

Goodwill recognized is not expected to be deductible for tax purposes. Results of operations have been included in the condensed consolidated financial statements of the Company’s Americas segment since the date of acquisition. The acquisition is not material to the Company’s financial position as of September 30, 2024 or results of operations for the three and nine months ended September 30, 2024, and therefore, pro forma operating results and other disclosures for the acquisition are not presented.8

The fair values and useful lives of the acquired intangible assets by category were as follows (in thousands):


	Balance Sheet Location	Estimated Fair Values		Useful Life (in years)
Customer lists	Intangible assets, net	$	655,000	14 years
Software developed for internal use	Property and equipment, net		259,000	5 years
Trade names	Intangible assets, net		62,000	5 years

As of the date these condensed consolidated financial statements were issued, the purchase accounting related to this acquisition was incomplete as the valuation of deferred taxes and certain customary transaction adjustments were not yet finalized. The Company has reflected the provisional amounts in these consolidated financial statements. As such, the above balances may be adjusted in a future period as the valuation is finalized and these adjustments may be material to the consolidated financial statements.

Pro Forma Results

The following summary, prepared on a pro forma basis pursuant to ASC 805, presents the Company’s consolidated results of operations for the three months ended March 31, 2024, as if the Sterling Acquisition had been completed on January 1, 2023. The pro forma results below include the impact of certain adjustments related to the amortization of intangible assets, transaction-related costs incurred as of the acquisition date, and interest expense on related borrowings, and in each case, the related income tax effects, as well as certain other post-acquisition adjustments attributable to the Sterling Acquisition. This pro forma presentation does not include any impact of transaction synergies. The pro forma results are not necessarily indicative of the results of operations that actually would have been achieved had the Sterling Acquisition been consummated as of January 1, 2023.


(in thousands, unaudited)	Three Months Ended March 31, 2024
Revenue	$	355,136
Net loss	$	(33,158	)

Note 4. Property and Equipment, net

Property and equipment, net as of ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024 consisted of the following (in thousands):

	September 30, 2024			December 31, 2023
	March 31, 2025			December 31, 2024
Furniture and equipment	$	2732,~~616~~316		$	2632,~~576~~054
Capitalized software for internal use, acquired by business combination		~~232~~490,~~434~~407			~~232~~490,~~505~~346
Capitalized software for internal use, developed internally or otherwise purchased		~~107~~132,~~994~~968			86125,~~704~~973
Leasehold improvements		23,~~816~~022			23,~~275~~007
Total property and equipment		~~370~~658,~~860~~713			~~348~~651,~~060~~380
Less: accumulated depreciation and amortization		(~~315~~366,~~457~~949	)		(~~268~~343,~~619~~841	)
Property and equipment, net	$	55291,~~403~~764		$	79307,~~441~~539

Depreciation and amortization expense of property and equipment was approximately $1527.96 million and $1615.95 million for the three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023, respectively. Depreciation and amortization expense of property and equipment was approximately $47.1 million and $50.0 million for the nine months ended September 30,~~ 2024 ~~and 2023~~, respectively.

~~Note 5. Goodwill, Trade Names, Customer Lists and Other Intangible Assets~~9

~~The~~Note ~~changes~~5. inGoodwill ~~the~~and ~~carrying~~Other ~~amount~~Intangible ~~of goodwill for the nine months ended September 30, 2024 by reportable segment were as follows (in thousands):~~ Assets

	Americas			International		Total
Balance – December 31, 2023	$	703,797		$	116,857	$	820,654
Adjustments to initial purchase price allocations		(368	)		—		(368	)
Foreign currency translation		(114	)		2,105		1,991
Balance – September 30, 2024	$	703,315		$	118,962	$	822,277

The changes in the carrying amount of goodwill for the three months ended March 31, 2025 by reportable segment were as follows (in thousands):


	First Advantage Americas		First Advantage International		Sterling		Total
Balance – December 31, 2024	$	703,294	$	114,341	$	1,306,893	$	2,124,528
Adjustments to initial purchase price allocations		—		—		208		208
Foreign currency translation		2		1,032		2,248		3,282
Balance – March 31, 2025	$	703,296	$	115,373	$	1,309,349	$	2,128,018

The following summarizes the gross carrying value and accumulated amortization for the Company’s trade names, customer lists, and other intangible assets as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Useful Life (in years)
Trade names	$	157,937	$	(44,173	)	$	113,764	5-20 years
Customer lists		1,172,012		(332,074	)		839,938	13-14 years
Other intangible assets		2,400		(745	)		1,655	5 years
Total	$	1,332,349	$	(376,992	)	$	955,357


	December 31, 2024
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Useful Life (in years)
Trade names	$	157,740	$	(39,265	)	$	118,475	5-20 years
Customer lists		1,170,327		(302,632	)		867,695	13-14 years
Other intangible assets		2,400		(622	)		1,778	5 years
Total	$	1,330,467	$	(342,519	)	$	987,948

Amortization expense of trade names, customer lists, and other intangible assets was approximately $34.1 million and $14.3 million for the three months ended March 31, 2025 and 2024, respectively. Trade names and customer lists are amortized on an accelerated basis based upon their estimated useful life. Other intangible assets are amortized on a straight-line or accelerated basis over their expected useful life of five years.

~~The~~Note ~~following~~6. summarizes the gross carrying value and accumulated amortization for the Company’s trade names, customer lists, and other intangible assets as of September 30, 2024 and December 31, 2023 (in thousands):Debt

	September 30, 2024
	GrossCarrying Value		AccumulatedAmortization			Net Carrying Value		Useful Life(in years)
Trade names	$	96,505	$	(35,515	)	$	60,990	20 years
Customer lists		521,117		(282,296	)		238,821	13-14 years
Other intangible assets		2,400		(502	)		1,898	5 years
Total	$	620,022	$	(318,313	)	$	301,709

The fair value of the Company’s debt obligation approximated its book value as of March 31, 2025 and December 31, 2024 and consisted of the following (in thousands):

	December 31, 2023
	March 31, 2025			December 31, 2024
	GrossCarrying Value			AccumulatedAmortization			Net Carrying Value		Useful Life(in years)
Amended First Lien Credit Facility	$	2,179,537		$	2,185,000
Trade names	$	96,321		$	(30,092	)	$	66,229	20 years
Less: Current portion of long-term debt	$	(21,850	)	$	(21,850	)
Customer lists		520,105			(244,577	)		275,528	13-14 years
Total long-term debt	$	2,157,687		$	2,163,150
Other intangible assets		2,400			(143	)		2,257	5 years
Less: Deferred financing costs		(40,253	)		(41,861	)
Total	$	618,826		$	(274,812	)	$	344,014
Long-term debt, net	$	2,117,434		$	2,121,289

~~Amortization~~First ~~expense~~Advantage ~~of trade names~~Holdings, ~~customer lists~~LLC, ~~and~~an ~~other~~indirect ~~intangible~~wholly-owned ~~assets~~subsidiary ~~was~~of ~~approximately~~the ~~$14.3~~Company, ~~million~~is ~~and~~a ~~$15.5~~party ~~million~~to ~~for~~a ~~the~~First ~~three~~Lien ~~months~~Credit ~~ended~~Agreement ~~September~~(as 30amended, “2024 ~~and~~First ~~2023~~Lien Credit Agreement”), ~~respectively.~~which ~~Amortization~~provides ~~expense~~for a term loan of ~~trade~~$2.185 ~~names,~~billion ~~customer~~due ~~lists~~October 31, ~~and~~2031, ~~other~~carrying ~~intangible~~an ~~assets~~interest ~~was~~rate ~~approximately~~of ~~$42~~3.800% ~~million~~to ~~and $46.~~3.25%, ~~million~~based ~~for~~on the ~~nine~~first ~~months~~lien ~~ended September 30~~ratio, ~~2024~~plus ~~and~~the ~~2023,~~Secured ~~respectively.~~Overnight ~~Trade~~Financing ~~names~~Rate ~~and~~as ~~customer~~administered ~~lists~~by ~~are~~the ~~amortized~~Federal onReserve anBank ~~accelerated~~of ~~basis~~New ~~based~~York ~~upon~~(“SOFR”) ~~their~~and ~~estimated~~an ~~useful~~applicable ~~life.~~margin ~~Other~~(“Amended ~~intangible~~First ~~assets~~Lien ~~are~~Credit ~~amortized~~Facility”), onand a ~~straight-line~~$250.0 ormillion ~~accelerated~~revolving ~~basis~~credit ~~over~~facility ~~their~~due ~~expected~~October ~~useful~~31, ~~life~~2029 of(“Amended ~~five years~~Revolver”).

~~Note~~The 6Amended First Lien Credit Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1.00% ~~Long-term~~of ~~Debt~~the principal amount. The Amended Revolver has no amortization.

The ~~fair~~2024 ~~value~~First ofLien Credit Agreement is collateralized by substantially all assets and capital stock owned by direct and indirect domestic subsidiaries and are governed by certain restrictive covenants including limitations on indebtedness, liens, and other corporate actions such as investments and acquisitions. In the event the Company’s ~~long-term~~outstanding ~~debt~~indebtedness ~~obligation~~under ~~approximated~~the ~~its~~Amended ~~book~~Revolver ~~value~~exceeds as40.0% of ~~September~~the 30aggregate principal amount of the revolving commitments then in effect, ~~2024~~it ~~and~~is ~~December~~required to maintain a consolidated first lien leverage ratio no greater than 7.75 to 1.00. As of March 31, ~~2023~~2025, there were no outstanding borrowings under the Amended Revolver and ~~consisted~~$2,179.5 ofmillion outstanding under the ~~following~~Amended ~~(in~~First ~~thousands):~~Lien Credit Facility. As the Company had no outstanding amounts under the Amended Revolver, it was not subject to the consolidated first lien leverage ratio covenant. The Company was compliant with all covenants under the agreement as of March 31, 2025.

	September 30, 2024			December 31, 2023
First Lien Credit Facility	$	564,724		$	564,724
Less: Deferred financing costs		(4,880	)		(6,268	)
Long-term debt, net	$	559,844		$	558,456

First Advantage Holdings, LLC, an indirect wholly-owned subsidiary of the Company, is a party to a First Lien Credit Agreement (as amended, “Credit Agreement”), which provides for a term loan of $766.6 million due January 31, 2027, carrying an interest rate of 2.75% to 3.00%, based on the first lien ratio, plus LIBOR (“First Lien Credit Facility”) and a $100.0 million revolving credit facility due July 31, 2026 (“Revolver”). Pursuant to an amendment in June 2023, the reference rate under the Credit Agreement was transitioned from LIBOR (the London Interbank Offer Rate) to SOFR (the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York), with the addition of an applicable margin. The Credit Agreement is collateralized by substantially all assets and capital stock owned by direct and indirect domestic subsidiaries and are governed by certain restrictive covenants including limitations on indebtedness, liens, and other corporate actions such as investments and acquisitions. In the event the Company’s outstanding indebtedness under the Revolver exceeds 35% of the aggregate principal amount of the revolving commitments then in effect, it is required to maintain a consolidated first lien leverage ratio no greater than 7.75 to 1.00. As of September 30, 2024, there were no outstanding borrowings under the Revolver and $564.7 million outstanding under the First Lien Credit Facility. As the Company had no outstanding amounts under the Revolver, it was not subject to the consolidated first lien leverage ratio covenant. The Company was compliant with all other covenants under the agreement as of September 30, 2024.

In connection with the acquisition of Sterling, on October 31, 2024, the Company refinanced its existing First Lien Credit Agreement and all related Sterling debt (the “2024 First Lien Credit Agreement”). The 2024 First Lien Credit Agreement provides for a term loan of $2.185 billion due October 31, 2031, carrying an interest rate of 3.00% to 3.25%, based on the first lien ratio, plus SOFR (“Amended First Lien Credit Facility”) and a $250.0 million revolving credit facility due October 31, 2029 (“Amended Revolver”). Similar to the Company’s existing debt, the 2024 First Lien Credit Agreement is collateralized by substantially all assets and capital stock owned by direct and indirect domestic subsidiaries and are governed by certain restrictive covenants including limitations on indebtedness, liens, and other corporate actions such as investments and acquisitions. In the event the Company’s outstanding indebtedness under the Amended Revolver exceeds 40% of the aggregate principal amount of the revolving commitments then in effect, it is required to maintain a consolidated first lien leverage ratio no greater than 7.75 to 1.00.

Note 7. Derivatives

To reduce exposure to variability in expected future cash outflows on variable rate debt attributable to the changes in one-month ~~LIBOR~~SOFR, the Company has historically entered into interest rate derivative instruments to economically offset a portion of this risk and may do so in the future. ~~In June 2023, the Company transitioned the reference rate for its interest rate derivative agreements from one-month LIBOR to one-month SOFR.~~

As of ~~September~~March 3031, ~~2024~~2025, the Company had the following outstanding derivatives that were not designated as a hedge in qualifying hedging relationships:

Product	Effective Date	Maturity Date	Notional	Rate
Interest rate swap(a)	June 30, 2023	February 28, 2026	$100.0 million	4.32%
Interest rate swap	June 30, 2023	February 28, 2026	$100.0 million	4.32%
Interest rate swap	December 29, 2023	December 31, 2026	$150.0 million	3.86%
Interest rate swap	March 1, 2024	December 31, 2026	$150.0 million	3.76%
Interest rate swap	August 31, 2024	December 31, 2026	$160.0 million	3.72%
Interest rate swap	October 31, 2024	October 31, 2027	$275.0 million	3.94%

In conjunction with the June 2023 transition of the reference rate from LIBOR to SOFR, the fixed rate was reduced from 4.36% to 4.32%.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements; however, the Company has not elected to apply hedge accounting for these instruments.

The following is a summary of location and fair value of the financial positions recorded related to the derivative instruments as of March 31, 2025 and December 31, 2024 (in thousands):

		Fair Value
Derivatives not designatedas hedging instruments	Balance Sheet Location	AsMarch ~~of September 30~~31, ~~2024~~2025		~~As of~~ December 31, ~~2023~~2024
Interest rate collars	Prepaid expenses and other current assets	$	—	$	1,986
Interest rate swaps	Prepaid expenses and other current assets	$	97	$	3,110
Interest rate swaps	Accrued liabilities	$	42,~~984~~428	$	~~1,576~~247

The following is a summary of location and amount of gains and (losses) recorded related to the derivative instruments (in thousands):

Gain (Loss)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Derivatives not designatedas hedging instruments

Income Statement Location

~~2024~~2025

~~2023~~2024

~~2024~~

~~2023~~

Interest rate collars

Interest expense, net

—

~~109~~951

~~951~~

~~878~~

Interest rate swaps

Interest expense, net

(83,~~171~~936

)

~~857~~6,094

~~1,323~~

Note 8. Income Taxes

The Company’s income tax expense and balance sheet accounts reflect the results of the Company and its subsidiaries.

InFor ~~accordance~~the ~~with~~three ~~ASC~~months ~~740-270,~~ended ~~Interim~~March ~~Reporting~~31, ~~at the end of each interim period~~2025, the Company isestimated ~~required to determine~~ the ~~best estimate of its~~ annual effective tax rate ~~and~~based ~~then~~on ~~apply~~projected ~~that~~income ~~rate in providing~~ for ~~income taxes on an interim period. However, in certain circumstances where~~ the ~~Company~~full isyear ~~unable~~and torecorded ~~make~~ a ~~reliable~~quarterly ~~estimate of the annual effective~~ tax ~~rate,~~provision ~~ASC~~in ~~740-270~~accordance ~~allows~~with the ~~actual~~annual effective tax rate ~~for the interim period to be used. As of September 30, 2024, the Company calculated its effective rate~~ and ~~applied~~adjusted ~~that rate to the results~~ for ~~the~~discrete ~~three~~tax ~~and~~items ~~nine~~in ~~months ended September 30, 2024. The Company used this approach because it was unable to reasonably estimate its annual effective rate due to~~ the ~~variability of the rate as a result of small changes in forecasted income and fluctuations in annual pre-tax income and loss between quarters~~period.

The effective income tax rate for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 was (95.7)% ~~and (0~~.~~8)%,~~ ~~respectively.~~ The Company’s effective income tax rate for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 was lower than the U.S. federal statutory rate of 21% primarily due to a jurisdictional mix of earnings ~~with~~as ~~the~~a ~~Company~~result ~~recording~~of significant ~~Sterling~~ acquisition ~~expenses~~related indepreciation ~~the~~and amortization impacting U.S. net loss in the period, ~~nondeductible~~income ~~share-based~~taxes ~~compensation~~in the majority of the jurisdictions outside of the U.S., and U.S. state income taxes.

The effective income tax rate for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 was 3132.23% ~~and 29~~.~~8%,~~ ~~respectively.~~ The Company’s effective income tax rate for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 was higher than the U.S. federal statutory rate of 21%, primarily due to nondeductible share-based compensation, ~~the Global Intangible Low-Taxed Income (“GILTI”) inclusion,~~ and U.S. state income taxes.

Note 9. Revenues

Substantially all of the Company’s revenues are recognized at a point in time when the orders are completed and the completed reports are reported, or otherwise made available. For revenues delivered over time, the output method is utilized to measure the value to the customer based on the transfer to date of the services promised, with no rights of return once consumed. In these cases, revenues on transactional contracts with a defined price but an undefined quantity is recognized utilizing the right to invoice expedient resulting in revenues being recognized when the service is provided and becomes billable. Additionally, under this practical expedient, the Company is not required to estimate the transaction price.

The Company considers negotiated and anticipated incentives and estimated adjustments, including historical collections experience, when recording revenues.

The Company’s contracts with customers generally include standard commercial payment terms acceptable in each region, and do not include any financing components. The Company does not have any significant obligations for refunds, warranties, or similar obligations. The Company records revenues net of sales taxes.

Contract balances are generated when the revenues recognized in a given period varies from billing. A contract asset is created when the Company performs a service for a customer and recognizes more revenues than what has been billed. The contract asset balance was $86.38 million and $45.89 million as of ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, respectively, and is included in accounts receivable, net in the accompanying condensed consolidated balance sheets.

A contract liability is created when the Company transfers a good or service to a customer and recognizes less than what has been billed. The Company recognizes these contract liabilities as deferred revenues when the Company has an obligation to perform services for a customer in the future and has already received consideration from the customer. The contract liability balance was $24.58 million and $14.93 million as of ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, respectively, and is included in deferred revenues in the accompanying condensed consolidated balance sheets. An immaterial amount of revenues was recognized in the current period related to the beginning balance of deferred revenues.

For additional disclosures about the disaggregation of our revenues, see Note 15, “Reportable Segments.”

Note 10. Share-based Compensation

Share-based compensation expense is recognized in cost of services, product and technology expense, and selling, general, and administrative expense, in the accompanying condensed consolidated statements of operations and comprehensive (loss) ~~income~~ as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2024

2023

2024

2023

2025

2024

Share-based compensation expense

Cost of services

~~414~~532

~~330~~357

~~1,181~~

~~918~~

Product and technology expense

~~703~~803

~~640~~654

~~2,040~~

~~1,665~~

Selling, general, and administrative expense

86,~~387~~632

3,~~820~~740

~~16,082~~

~~7,866~~

Total share-based compensation expense

97,~~504~~967

4,~~790~~751

~~19,303~~

~~10,449~~

Prior to the Company’s Initial Public Offering (“IPO”), all share-based awards were issued by Fastball Holdco, L.P., the Company’s previous parent company, under individual grant agreements and the partnership agreement of such parent company (collectively, the “2020 Equity Plan”). In connection with the IPO, the Company adopted the 2021 Omnibus Incentive Plan (as amended by the First Amendment, dated as of May 10, 2023, the “2021 Equity Plan”).

In ~~May~~October ~~2023~~2024, ~~the~~as ~~Company’s~~part ~~Board~~ of ~~Directors approved a modification of~~ the ~~vesting~~Sterling ~~terms~~Acquisition, ~~of outstanding~~ unvested ~~and~~Sterling ~~unearned~~restricted ~~performance-based options~~stock, restricted stock units, and ~~restricted~~net ~~stock~~option ~~(collectively,~~shares ~~“Performance~~underlying ~~Awards”)~~in-the-money ~~previously~~stock ~~issued~~option ~~under~~awards ~~its~~were ~~equity~~converted ~~plans.~~to ~~The~~an ~~modification,~~unvested ~~effective~~cash ~~May 10~~award, ~~2023,~~an ~~allowed~~unvested ~~for~~First ~~unvested~~Advantage ~~and~~restricted ~~unearned~~stock ~~Performance~~award, ~~Awards~~or ~~outstanding~~a asFirst ofAdvantage ~~the~~restricted ~~date~~stock ofunit (“RSU”) at the ~~modification,~~holder’s toelection. ~~vest~~Converted ~~based~~awards onare ~~time~~subject onto the ~~fourth,~~same ~~fifth,~~terms and ~~sixth~~conditions ~~anniversaries~~(including ~~of the relevant~~ vesting) ~~commencement date,~~ as ~~set~~applied ~~forth~~to ~~in each grant agreement (~~the ~~“Vesting~~replaced ~~Commencement~~Sterling ~~Date”),~~equity ~~while~~award. ~~preserving~~All out-of-the-money ~~eligibility~~Sterling tostock ~~vest~~options, ~~upon~~whether ~~the~~vested ~~Company’s~~or ~~investors receiving a targeted money-on-money return~~unvested, ~~subject~~were tocanceled ~~continued~~for ~~service~~no consideration.

InAs ~~connection~~of ~~with~~March 31, 2025, the Company’s ~~declaration~~had ofapproximately a$35.9 ~~one-time~~million ~~special~~of ~~dividend~~unrecognized inpre-tax ~~August~~non-cash ~~2023~~compensation expense, ~~the~~comprised ~~exercise price~~ of ~~outstanding~~approximately ~~stock~~$7.9 ~~option~~million ~~awards~~related ~~and~~to restricted stock, ~~purchases~~$13.6 ~~under~~million ~~the~~related ~~Company’s~~to ~~employee~~RSUs, ~~stock~~and ~~purchase~~approximately ~~plan~~$14.4 ~~(“ESPP”)~~million ~~was~~related ~~reduced~~to bystock ~~$1.50~~options, inwhich ~~accordance~~the ~~with~~Company ~~the~~expects ~~non-discretionary~~to ~~anti-dilution~~recognize ~~provisions~~over ofa ~~the~~weighted ~~equity~~average ~~and~~period ~~stock~~of ~~purchase~~1.1 ~~plans~~years.

In August 2024 and September 2024, the Company modified the equity award agreements for its Chief Financial Officer and President, Americas, respectively, as part of each executive’s retirement agreement. The modifications allowed for accelerated vesting of certain unvested equity awards that would have otherwise been forfeited at retirement and modified certain provisions of the outstanding stock option agreements. As a result of the modifications, the related awards were revalued, resulting in an incremental $4.2 million of compensation expense to be recognized in 2024.

2020 Equity Plan

Awards issued under the 2020 Equity Plan consist of options and profit interests. No awards have been issued under the plan since the Company’s IPO.

A summary of the stock option activity for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 is as follows:

		Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
December 31, 2023	Grants outstanding		1,915,252		$	5.15
December 31, 2024	Grants outstanding		1,602,966		$	5.15
	Grants exercised		(~~156~~145,~~107~~483	)	$	5.2311
	Grants cancelled/forfeited		(1629,~~978~~074	)	$	5.1119
September 30, 2024	Grants outstanding		1,742,167		$	5.15	5.4 Years	$25.6 million
March 31, 2025	Grants outstanding		1,428,409		$	5.15	4.8 Years	$12.8 million
September 30, 2024	Grants vested		726,095		$	5.12	5.4 Years	$10.7 million
March 31, 2025	Grants vested		1,009,021		$	5.13	4.7 Years	$9.0 million
September 30, 2024	Grants unvested		1,016,072		$	5.18
March 31, 2025	Grants unvested		419,388		$	5.20

2021 Equity Plan

The 2021 Equity Plan is intended to provide a means through which to attract and retain key personnel and to provide a means whereby our directors, officers, employees, consultants, and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, thereby strengthening their commitment to our welfare and aligning their interests with those of our stockholders. The 2021 Equity Plan provides for the grant of awards of stock options, stock appreciation rights, restricted shares, restricted stock units, and other equity-based or cash-based awards as determined by the Company’s Compensation Committee. The 2021 Equity Plan initially had a total of 17,525,000 shares of common stock reserved. The number of reserved shares automatically increases on the first day of each calendar year commencing on January 1, 2022 and ending on January 1, 2030, in an amount equal to the lesser of (x) 2.5% of the total number of shares of common stock outstanding on the last day of the immediately preceding calendar year and (y) a number of shares as determined by the Board of Directors. As of ~~September~~March 3031, ~~2024~~2025, 1922,~~896~~713,~~715~~947 shares were available for issuance under the 2021 Equity Plan.

Stock Options

A summary of the stock option activity for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 is as follows:

		Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
December 31, 2023	Grants outstanding		4,686,659		$	13.61
December 31, 2024	Grants outstanding		4,517,897		$	14.38
	Grants issued		~~307~~553,~~136~~266		$	1714.5523
	Grants exercised		(~~252~~6,~~784~~487	)	$	13.5693
	Grants cancelled/forfeited		(9418,~~323~~824	)	$	13.8764
September 30, 2024	Grants outstanding		4,646,688		$	13.87	7.0 Years	$27.8 million
March 31, 2025	Grants outstanding		5,045,852		$	14.37	7.4 Years	$2.5 million
September 30, 2024	Grants vested		2,159,459		$	13.65	6.9 Years	$13.2 million
March 31, 2025	Grants vested		2,602,560		$	13.71	6.5 Years	$1.6 million
September 30, 2024	Grants unvested		2,487,229		$	14.06
March 31, 2025	Grants unvested		2,443,292		$	15.06

The fair value for stock options granted for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Options
Expected stock price volatility		35.0947	%
Risk-free interest rate		34.8802	%
Expected term (in years)		6.25
Fair-value of the underlying unit	$	1714.5523

Restricted Stock Units

A summary of the ~~restricted stock units (“~~RSU”) activity for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 is as follows:

		Shares			Weighted Average Grant Date Fair Value
December 31, 2023	Nonvested RSUs		507,143		$	15.10
December 31, 2024	Nonvested RSUs		775,651		$	16.61
	Granted		~~287~~272,~~383~~382		$	1614.8023
	Vested		(~~145~~46,~~241~~900	)	$	1415.5068
	Forfeited		(569,~~387~~940	)	$	14.7872
September 30, 2024	Nonvested RSUs		592,898		$	16.02
March 31, 2025	Nonvested RSUs		991,193		$	16.02

Restricted Stock

A summary of the restricted stock activity for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 is as follows:

		Shares			Weighted Average Grant Date Fair Value
December 31, 2023	Nonvested restricted stock		1,954,630		$	8.50
December 31, 2024	Nonvested restricted stock		1,177,743		$	10.01
	Vested		(~~586~~729,~~927~~520	)	$	711.7342
September 30, 2024	Nonvested restricted stock		1,367,703		$	10.24
March 31, 2025	Nonvested restricted stock		448,223		$	11.74

AsSterling ofAcquisition ~~September~~Awards 30, 2024, the Company had approximately $29.4 million of unrecognized pre-tax non-cash compensation expense, comprised of approximately $8.5 million related to restricted stock, $8.1 million related to RSUs, and approximately $12.8 million related to stock options, which the Company expects to recognize over a weighted average period of 0.9 years.

~~2021~~Restricted ~~Employee~~ Stock ~~Purchase Plan~~ Units

The ~~Company~~following ~~adopted~~table summarizes the ~~ESPP,~~RSUs ~~which~~issued ~~allows~~by ~~eligible~~the ~~employees~~Company toas ~~voluntarily~~part ~~make after-tax contributions~~ of upthe toSterling ~~15%~~Acquisition. ofThese ~~such~~include ~~employee’s~~Sterling ~~cash~~restricted ~~compensation to acquire Company~~ stock ~~during~~units ~~designated~~and ~~offering~~net ~~periods.~~option ~~Each~~shares ~~offering~~underlying ~~period consists of one six~~in-~~month~~the-money ~~purchase~~stock ~~period.~~option ~~During~~awards ~~the~~that ~~holding~~were ~~period,~~unvested ~~ESPP~~at ~~purchased~~close ~~shares~~and ~~are~~converted ~~not~~to ~~eligible~~unvested ~~for~~First ~~sale~~Advantage ~~or broker transfer~~RSUs. The ~~Company~~RSUs ~~recorded~~granted anas ~~associated~~a ~~expense~~result of ~~approximately~~the ~~$0.2~~conversion ~~million~~retain ~~for both~~ the ~~three~~vesting ~~months~~attributes ~~ended~~(including ~~September~~the ~~30,~~original ~~2024~~service ~~and~~period ~~2023.~~vesting ~~The~~start ~~Company~~dates) ~~recorded an associated expense~~ of ~~approximately $0.5 million and $0.7 million for~~ the ~~nine~~original ~~months ended September 30, 2024 and 2023, respectively~~award.

A summary of the RSU activity for the three months ended March 31, 2025 is as follows:


		Shares			Weighted Average Grant Date Fair Value
December 31, 2024	Nonvested RSUs		89,673		$	18.70
	Vested		(69,431	)	$	18.70
	Forfeited		(1,789	)	$	18.70
March 31, 2025	Nonvested RSUs		18,453		$	18.70

Restricted Stock

The following table summarizes the restricted stock issued by the Company as part of the Sterling Acquisition. These include Sterling restricted stock and net option shares underlying in-the-money stock option awards that were unvested at close and converted to unvested First Advantage restricted stock. The restricted stock granted as a result of the conversion retain the vesting attributes (including the original service period vesting start dates) of the original award.

A summary of the restricted stock activity for the three months ended March 31, 2025 is as follows:


		Shares			Weighted Average Grant Date Fair Value
December 31, 2024	Nonvested restricted stock		692,714		$	18.70
	Vested		(271,992	)	$	18.70
	Forfeited		(24,594	)	$	18.70
March 31, 2025	Nonvested restricted stock		396,128		$	18.70

2021 Employee Stock Purchase Plan (“ESPP”)

The Company’s ESPP allows eligible employees to voluntarily make after-tax contributions of up to 15% of such employee’s cash compensation to acquire Company stock during designated offering periods. Each offering period consists of one six-month purchase period. During the holding period, ESPP purchased shares are not eligible for sale or broker transfer. The Company recorded an associated expense of approximately $0.1 million and $0.2 million for three months ended March 31, 2025 and 2024, respectively.

Note 11. Equity

Preferred Stock

As of ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, 250,000,000 shares of Preferred Stock were authorized, and no Preferred Stock was issued or outstanding.

Share Repurchase Program

The Company did not repurchase any shares of common stock during the nine months ended September 30, 2024. As of September 30, 2024, the remaining authorized value of shares available to be repurchased under the Repurchase Program was approximately $80.5 million. In connection with the execution of the Merger Agreement, the Company suspended purchases under its Repurchase Program.

Note 12. Commitments and Contingencies

There have been no material changes to the Company’s contractual obligations as compared to December 31, ~~2023~~2024.

The Company is involved in litigation from time to time in the ordinary course of business. At times, the Company, given the nature of its background screening business, ~~could~~is ~~become~~ subject to lawsuits, or potential class action lawsuits, in multiple jurisdictions, related to claims brought primarily by consumers or individuals who were the subject of its screening services.

For all pending matters, the Company believes it has meritorious defenses and intends to defend vigorously or otherwise seek indemnification from other parties as appropriate. However, the Company has recorded a liability of $411.32 million and $511.26 million as of ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, respectively, for matters that it believes entail a loss that is both probable and estimable. This is included in accrued liabilities in the accompanying condensed consolidated balance sheets.

The Company will continue to evaluate information as it becomes known and will record an estimate for losses at the time when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable.

Note 13. Related Party Transactions

The Company had no material related party transactions for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025.

Note 14. Net (Loss) ~~Income~~ Per Share

Basic weighted-average shares outstanding excludes nonvested restricted stock. Diluted weighted average shares outstanding is similar to basic weighted-average shares outstanding, except that the weighted-average number of shares is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common share had been issued, including the dilutive impact of nonvested restricted stock. The potentially dilutive securities outstanding during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025, had an anti-dilutive effect and were therefore not included in the calculation of diluted net (loss) ~~income~~ per share. Basic and diluted net (loss) ~~income~~ per share was calculated as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2024			2023			2024			2023
	2025			2024
Basic net (loss) income per share	$	(0.06	)	$	0.08		$	(0.07	)	$	0.16
Basic and diluted net loss per share	$	(0.24	)	$	(0.02	)
Diluted net (loss) income per share	$	(0.06	)	$	0.07		$	(0.07	)	$	0.15
Numerator:
Numerator:
Net loss (in thousands)	$	(41,194	)	$	(2,908	)
Net (loss) income (in thousands)	$	(8,860	)	$	10,773		$	(9,907	)	$	22,480
Denominator:
Denominator:
Weighted average number of shares outstanding - basic and diluted		172,756,497			143,591,713
Weighted average number of shares outstanding - basic		144,096,312			143,231,707			143,851,357			144,392,463
Add stock options to purchase shares and restricted stock units		—			1,501,650			—			2,000,533
Weighted average number of shares outstanding - diluted		144,096,312			144,733,357			143,851,357			146,392,996

For the three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, a total of 3,~~312~~863,~~675~~961 and 43,~~739~~287,~~037~~852 stock options, ~~and~~ RSUs ~~were excluded from the calculation of diluted net (loss) income per share~~, ~~respectively, because their effect was anti-dilutive. For the nine months ended September 30, 2024~~ and ~~2023,~~restricted ~~3,244,309 and 4,754,689~~ stock ~~options~~awards ~~and RSUs~~ were excluded from the calculation of diluted net (loss) ~~income~~ per share, respectively, because their effect was anti-dilutive.

Note 15. Reportable Segments

WeThe ~~have~~Company ~~two~~has three reportable segments,: Americas and International. Our chief operating decision maker (“CODM”) uses the profit measure of Adjusted EBITDA, on both a consolidated and a segment basis, to allocate resources and assess performance of our businesses. We use Adjusted EBITDA as our profit measure because it eliminates the impact of certain items that we do not consider indicative of operating performance, which is useful to compare operating results between periods. Our CODM also uses Adjusted EBITDA as a compensation measure for both segment and corporate management under our incentive compensation plans. Adjusted EBITDA is also a measure frequently used by securities analysts, investors, and other interested parties in their evaluation of the operating performance of companies similar to ours.

•

WeFirst ~~define~~Advantage ~~Adjusted~~Americas. ~~EBITDA~~This assegment ~~net~~pertains ~~(loss)~~to ~~income~~our ~~before~~Legacy ~~interest,~~First ~~taxes,~~Advantage ~~depreciation,~~business and ~~amortization,~~performs ~~and~~a asvariety ~~further adjusted for loss on extinguishment~~ of ~~debt,~~background ~~share-based~~check ~~compensation, transaction~~ and ~~acquisition-related~~compliance ~~charges,~~services ~~integration~~across ~~and~~all ~~restructuring~~phases ~~charges,~~of ~~and other non-cash charges. We exclude~~ the ~~impact~~workforce oflifecycle ~~share~~from pre-~~based~~onboarding ~~compensation~~services ~~because~~to ~~it is a non~~post-~~cash~~onboarding ~~expense~~ and weongoing ~~believe~~monitoring ~~that~~services, ~~excluding~~covering ~~this~~employees, ~~item~~contractors, ~~provides~~contingent ~~meaningful~~workers, ~~supplemental~~tenants, ~~information regarding performance~~ and ~~ongoing cash generation potential~~drivers. We ~~exclude~~generally ~~loss~~classify onour ~~extinguishment~~service ofofferings ~~debt,~~into ~~transaction~~three ~~and~~categories: ~~acquisition~~pre-onboarding, ~~related charges~~post-onboarding, ~~integration~~ and ~~restructuring~~adjacent ~~charges,~~products. ~~and~~We ~~other~~deliver ~~charges~~our ~~because~~solutions ~~such~~across ~~expenses~~multiple ~~are~~industry ~~episodic~~verticals in ~~nature and have no direct correlation to~~ the ~~cost~~United ofStates, ~~operating~~Canada, ~~our~~and ~~business~~Latin ~~on an ongoing basis~~America.

•

~~The~~First ~~segment~~Advantage ~~financial~~International. ~~information~~The ~~below~~First ~~aligns~~Advantage ~~with~~International ~~how~~segment wepertains ~~report information~~ to our ~~CODM~~Legacy toFirst ~~assess~~Advantage ~~operating~~business ~~performance~~ and ~~how~~provides ~~the~~services ~~Company~~similar ~~manages the business. Corporate costs are generally allocated~~ to ~~the~~our ~~segments~~Americas ~~based~~segment ~~upon~~in ~~estimated~~regions ~~revenue~~outside ~~levels~~of ~~and other assumptions that management considers reasonable. The CODM does not review~~ the ~~Company’s assets by segment; therefore, such information is not presented~~Americas. ~~The~~We ~~accounting~~primarily ~~policies~~deliver ofour ~~the~~solutions ~~segments~~across ~~are~~multiple ~~the~~industry ~~same~~verticals ~~as described~~ in ~~Note~~the 2Europe, ~~“Summary~~India, ~~of Significant Accounting Policies”~~ and ~~Note~~Asia ~~9, “Revenues~~Pacific.”

•

~~The~~Sterling. ~~following~~This segment is acomprised ~~description~~ of ~~our~~the ~~two~~acquired ~~reportable~~entity, Sterling Check Corp., which was acquired on October 31, 2024. The Sterling segment provides similar services as compared to First Advantage’s Americas and International segments: on a global basis.

~~Americas.~~Our ~~This~~chief ~~segment~~operating ~~performs~~decision amaker ~~variety~~(“CODM”) uses the performance measure of ~~background~~Adjusted ~~check~~EBITDA, on both a consolidated and ~~compliance~~a ~~services~~segment ~~across~~basis, ~~all~~to ~~phases~~allocate resources and assess performance of ~~the~~our ~~workforce~~businesses. ~~lifecycle~~Our ~~from~~CODM ~~pre-onboarding~~also ~~services~~uses Adjusted EBITDA as a performance measure for both segment and corporate management under our incentive compensation plans. Corporate costs are generally allocated to ~~post-onboarding~~the segments based upon estimated revenue levels and ~~ongoing~~other ~~monitoring~~assumptions that management considers reasonable. Adjusted cost of services, ~~covering~~consists ~~employees,~~of ~~contractors,~~amounts ~~contingent~~paid ~~workers~~to third parties for access to government records, ~~tenants~~other third-party data and services, our internal processing fulfillment and ~~drivers.~~customer Wecare ~~generally~~functions, ~~classify~~and ~~our~~other ~~service~~cost ~~offerings~~of ~~into~~services ~~three~~excluding ~~categories:~~depreciation ~~pre-onboarding~~and amortization, ~~post~~share-~~onboarding~~based compensation expenses, transaction expenses, and ~~adjacent~~integration ~~products~~expenses. WeOther ~~deliver~~segment ~~our~~items ~~solutions~~consist ~~across~~of ~~multiple~~product ~~industry~~and ~~verticals~~technology inand ~~the~~selling, ~~United~~general, ~~States~~and administrative expenses, ~~Canada~~but similarly excludes depreciation and amortization, share based compensation, and ~~Latin~~other ~~America~~expenses excluded from Adjusted EBITDA.

~~International.~~ The ~~International~~CODM ~~segment~~does ~~provides~~not ~~services~~review ~~similar~~the toCompany’s ~~our~~assets ~~Americas~~by segment inas ~~regions~~it ~~outside~~does ofnot provide additional insights into the ~~Americas~~performance of our business; therefore, such information is not presented. WeThe ~~primarily~~accounting ~~deliver~~policies ~~our~~of ~~solutions~~the ~~across~~segments ~~multiple~~are ~~industry~~the ~~verticals~~same as described in ~~the~~Note ~~Europe~~1. “Organization, ~~India~~Nature of Business, and ~~Asia~~Basis ~~Pacific~~of Presentation” and Note 2. “Summary of Significant Accounting Policies” included in the Annual Report on Form 10-K for the year ended December 31, 2024.

AReconciliations ~~reconciliation~~ of Segment Adjusted EBITDA to net (loss) ~~income~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024 is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31, 2025
	2024			2023			2024			2023
	First Advantage Americas			First Advantage International			Sterling			Total
Adjusted EBITDA
Total revenues	$	145,353		$	23,775		$	187,518		$	356,646
Americas	$	58,637		$	60,188		$	153,900		$	157,168
Intersegment revenues		(491	)		(1,263	)		(304	)		(2,058	)
International		5,409			4,603			12,465			12,154
External revenues	$	144,862		$	22,512		$	187,214		$	354,588
Total	$	64,046		$	64,791		$	166,365		$	169,322
Less:
Adjustments to reconcile to net (loss) income:
Adjusted cost of services		74,183			13,848			104,802
Interest expense, net		17,191			7,557			28,114			20,125
Other segment items		30,863			6,561			34,277
Provision for income taxes		782			4,881			83			9,530
Segment Adjusted EBITDA	$	40,307		$	3,366		$	48,439		$	92,112
Depreciation and amortization		30,168			32,419			89,968			96,341
Adjustments to reconcile to net loss:
Share-based compensation		9,504			4,790			19,303			10,449
Interest expense, net											46,580
Transaction and acquisition-related charges(a)		13,218			1,571			35,083			3,832
Provision for income taxes											2,231
Integration, restructuring, and other charges(b)		2,043			2,800			3,721			6,565
Depreciation and amortization											61,666
Net (loss) income	$	(8,860	)	$	10,773		$	(9,907	)	$	22,480
Share-based compensation											7,967
Transaction and acquisition-related charges (a)											3,996
Integration, restructuring, and other charges (b)											10,866
Net loss										$	(41,194	)


	Three Months Ended March 31, 2024
	First Advantage Americas			First Advantage International			Sterling		Total
Total revenues	$	149,127		$	22,023		$	—	$	171,150
Intersegment revenues		(315	)		(1,419	)		—		(1,734	)
External revenues	$	148,812		$	20,604		$	—	$	169,416
Less:
Adjusted cost of services		76,070			12,837			—
Other segment items		29,388			6,297			—
Segment Adjusted EBITDA	$	43,669		$	2,889		$	—	$	46,558
Adjustments to reconcile to net loss:
Interest expense, net										3,570
Benefit for income taxes										(1,388	)
Depreciation and amortization										29,822
Share-based compensation										4,751
Transaction and acquisition-related charges (a)										11,992
Integration, restructuring, and other charges (b)										719
Net loss									$	(2,908	)

(a)

(b)

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.

Geographic Information

The Company categorizes revenues by geographic region in which the revenues and invoicing are recorded. Other than the United States, no single country accounted for 10% or more of our total revenues during these periods.

The following summarizes revenues by geographical region (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2024			2023			2024			2023
	2025			2024
Revenues
Americas	$	174,905		$	176,046		$	486,410		$	490,784
United States	$	303,789		$	146,206
International		26,624			25,805			72,834			74,766
All other countries		50,799			23,210
Eliminations		(2,410	)		(1,487	)		(6,163	)		(4,351	)
Total revenues	$	354,588		$	169,416
Total revenues	$	199,119		$	200,364		$	553,081		$	561,199

The following table sets forth net long-lived assets by geographic area (in thousands):

	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
Long-lived assets, net
United States, country of domicile	$	1,021,330	$	1,083,318
United States	$	2,951,959	$	2,996,933
All other countries		~~163~~435,~~393~~281		~~168~~436,~~068~~741
Total long-lived assets, net	$	13,~~184~~387,~~723~~240	$	13,~~251~~433,~~386~~674

Note 16. Subsequent Events

InOn ~~connection~~April ~~with~~16, 2025, the ~~refinancing~~Company ofentered ~~the~~into ~~First~~an ~~Lien~~interest ~~Credit~~rate ~~Facility~~swap asagreement ~~part~~with ofa ~~the~~notional ~~acquisition~~amount of ~~Sterling,~~$250.0 ~~the~~million. ~~Company~~The ~~will~~interest ~~record~~rate ~~the~~swap ~~related~~will ~~accounting~~hedge inour ~~the~~outstanding ~~fourth~~debt ~~quarter~~with ofa ~~2024.~~floating ~~Additionally,~~SOFR inrate ~~connection~~ with ~~the~~a ~~acquisition~~fixed rate of ~~Sterling, the Company entered into separation agreements with certain Sterling executives~~3.56%. The ~~Company~~interest ~~will~~rate ~~incur~~swap ~~incremental~~agreement ~~compensation~~is ~~expense~~effective ~~related~~as ~~to separation payments and accelerated vesting~~ of ~~certain~~April ~~equity~~30, ~~awards~~2025 inand ~~the~~matures ~~fourth~~on ~~quarter~~April of30, ~~2024~~2028.

On ~~November~~May 47, ~~2024~~2025, the Company ~~entered~~made ~~into an interest rate swap agreement with~~ a ~~notional~~voluntary ~~amount~~principal repayment of $~~275~~15.0 million. ~~The~~on ~~interest~~its ~~rate~~outstanding ~~swap~~Amended ~~will~~First ~~hedge~~Lien aCredit ~~portion~~Facility. ofThe ~~the~~repayment ~~floating~~was ~~one-month~~made ~~SOFR~~using ~~rate~~available cash on hand and reflects the Company’s ~~2024~~ongoing ~~First~~efforts ~~Lien~~to ~~Credit~~reduce ~~Agreement~~leverage ~~with~~and astrengthen ~~fixed~~its ~~rate~~balance ~~of 3~~sheet.~~94%.~~ ~~The~~No ~~interest~~prepayment ~~rate~~penalties ~~swap~~were ~~agreement is effective as of October 31, 2024 and matures on October 31, 2027~~incurred.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 nine~~ months ended ~~September~~March 3031, ~~2024~~2025, and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, ~~2023~~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, ~~2023~~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.

Forward-Looking Statements

This Quarterly Report on Form 10-Q 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,” 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: the failure to realize the expected benefits of ~~our~~the ~~acquisition of~~ Sterling Acquisition, 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, 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 (“AI”); 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; operating in a penetrated and competitive market; our reliance on third-party data providers; our sales to government entities and higher-tier contractors to governmental customers which involve unique competitive, procurement, budget, administrative and contractual risks; 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; real or perceived errors, failures, or bugs in our products could adversely affect our business, results of operations, financial condition, and growth prospects; our ability to identify attractive targets or successfully complete such transactions; ~~the timing, manner and volume of repurchases of common stock pursuant to our share repurchase program;~~ failure to comply with anti-corruption laws and regulations; disruptions at our Global Operating Center and other operating centers; our contracts with our customers, which do not guarantee exclusivity or contracted volumes; 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; 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; risks relating to public opinion, which may be magnified by incidents or adverse publicity concerning our industry or operations; our reliance on third-party vendors to carry out certain portions of our operations; our dependence on the service of our key ~~executive~~executives and other employees, and our ability to find and retain qualified employees; our ability to obtain, maintain, protect and enforce our intellectual property and other proprietary information; our ability to maintain, protect, and enforce the confidentiality of our trade secrets; the use of open-source software in our applications; ~~the indemnification provisions in our contracts with our customers and third-party data suppliers;~~ seasonality in our operations from quarter to quarter; 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; Silver Lake’s control of us and the potential conflict of its interest with ours or those of our stockholders; and changing interpretations of tax laws.

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~~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.

Glossary of Selected Terminology

The following terms are used in this Form 10-Q, unless otherwise noted or indicated by the context:

•

“Americas” in regards to our business, means the United States, Canada, and Latin America;

•

“First Advantage,” the “Company,” “we,” “us,” and “our” mean the business of First Advantage Corporation and its subsidiaries;

•

“International” in regards to our business, means all geographical regions outside of the United States, Canada, and Latin America;

•

“Legacy First Advantage” refers to First Advantage Corporation and its subsidiaries, prior to the Sterling Acquisition, encompassing its core business operations, established workforce, existing processes, and the technology systems in place;

•

“Revenues attributable to the Company’s acquisitions” means revenues recognized in the first year following each acquisition; and

•

“Silver Lake” means Silver Lake Group, L.L.C., together with its affiliates, successors, and assignees.

Certain monetary amounts, percentages, and other figures included in this Quarterly Report on Form 10-Q have been subject to rounding adjustments. Percentage amounts included in this Quarterly Report on Form 10-Q have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Quarterly Report on Form 10-Q may vary from those obtained by performing the same calculations using the figures in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Certain other amounts that appear in this Quarterly Report on Form 10-Q may not sum due to rounding.

Website and Social Media Disclosure

We use our websites (https://fadv.com/ and https://investors.fadv.com/) to distribute company information. We make available free of charge a variety of information for investors, including our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with, or furnish it, to the ~~Securities and Exchange Commission (“~~SEC”). The information we post on our websites may be deemed material. Accordingly, investors should monitor our websites, in addition to following our press releases, filings with the SEC, and public conference calls and webcasts. In addition, you may opt in to automatically receive email alerts and other information about First Advantage when you enroll your email address by visiting the “Email Alerts” section of our investor website at https://investors.fadv.com/. The contents of our websites and social media channels are not, however, a part of this Quarterly Report on Form 10-Q.

Overview

First Advantage is a leading ~~global~~ provider of ~~employment~~global ~~background~~software ~~screening,~~and ~~identity,~~data ~~and~~in ~~verification~~the ~~solutions~~HR technology industry. Enabled by its proprietary technology and AI, First Advantage’s ~~delivers~~platforms, ~~innovative~~data, ~~services~~ and ~~insights~~APIs ~~that~~power ~~help~~comprehensive ~~customers~~employment ~~mitigate~~background ~~risk and hire the best talent: employees~~screening, ~~contractors,~~digital ~~contingent~~identity ~~workers~~solutions, ~~tenants,~~ and ~~drivers~~verification services.

Our comprehensive product suite includes criminal background checks, drug /and health screening, extended workforce screening, biometrics and identity, education /and work verifications, resident screening, fleet /and driver compliance, executive screening, data analytics, continuous monitoring, social media monitoring, and hiring tax incentives. We derive a substantial majority of our revenues from pre-onboarding screening and perform screens in over 200 countries and territories, enabling us to serve as a one-stop-shop provider to both multinational companies and growth companies. Our more than 30,000 customers are global enterprises, mid-sized companies, and small companies, and our products and solutions are used by personnel in recruiting, human resources, risk, compliance, vendor management, safety, and/or security.

~~Our~~On ~~products~~October ~~are sold both individually and packaged. The First Advantage platform offers flexibility for customers to specify which products to include in their screening package~~31, ~~such as Social Security numbers~~2024, ~~criminal~~we ~~records,~~completed ~~education~~our ~~and~~acquisition ~~work~~of ~~verifications~~Sterling, ~~sex~~a ~~offender registry, and~~ global ~~sanctions.~~provider ~~Generally,~~of ~~our~~technology-enabled ~~customers order a~~ background ~~screening~~and ~~package~~identity orverification ~~selected~~services. ~~combination~~This ofstrategic ~~screens~~acquisition ~~related~~enhances toour acapabilities ~~single individual before they onboard that individual. The type~~ and ~~mix~~expands ofour ~~products~~service ~~and~~offerings, ~~solutions~~allowing weus ~~sell~~ to deliver a ~~customer~~comprehensive ~~vary~~hiring ~~by customer size, their screening requirements,~~ and ~~industry~~risk ~~vertical.~~management ~~Therefore,~~solution ~~order~~that ~~volumes~~begins ~~are~~with ~~not~~identity ~~comparable~~verification ~~across both customers~~ and ~~periods.~~extends ~~Pricing~~through ~~can~~criminal ~~also~~background ~~vary considerably by customer depending on the product mix in their~~ screening ~~packages~~, ~~order~~credential ~~volumes~~verification, ~~screening~~drug ~~requirements~~ and ~~preferences~~health screening, and ~~pass-through~~ongoing ~~and~~risk ~~third-party out of pocket costs~~monitoring.

Together, we derive a substantial majority of our revenues from pre-onboarding screening and perform screens in over 200 countries and territories, enabling us to serve as a one-stop-shop provider to both multinational companies and growth companies. Our 80,000 customers are global enterprises, mid-sized companies, and small companies, and our products and solutions are used by personnel in recruiting, human resources, risk, compliance, vendor management, safety, and/or security.

WeOur ~~enter~~platforms ~~into~~offer ~~contracts~~flexibility ~~with~~for ~~our~~ customers ~~that~~to ~~are~~specify ~~typically~~which ~~three~~products ~~years~~to include in ~~length.~~their ~~These~~screening ~~contracts~~package, ~~set~~such ~~forth~~as ~~the~~Social ~~general~~Security ~~terms~~numbers, ~~and~~criminal ~~pricing~~records, ofeducation ~~our products~~ and ~~solutions~~work ~~but~~verifications, ~~generally~~sex dooffender ~~not~~registry, ~~include~~and ~~minimum~~global ~~order~~sanctions. ~~volumes~~Generally, orour ~~committed~~customers order ~~volumes.~~a ~~Accordingly,~~background ~~contracts~~screening dopackage ~~not~~or ~~provide~~selected ~~guarantees~~combination of ~~future~~screens ~~revenues.~~related ~~Due~~ to ~~our~~a ~~contract~~single ~~terms~~individual ~~and~~before ~~the~~they ~~nature~~onboard ofthat ~~the~~individual. ~~background~~The ~~screening~~type ~~industry,~~and wemix ~~determined~~of ~~our~~products ~~contract~~and ~~terms~~solutions ~~for~~we ~~ASC~~sell ~~606~~to ~~purposes~~a ~~are~~customer ~~less~~vary ~~than~~by ~~one~~customer ~~year.~~size, Wetheir ~~typically~~screening ~~bill~~requirements, ~~our~~and ~~customers~~industry atvertical. ~~the~~Therefore, ~~end~~order ofvolumes ~~each~~are ~~month~~not ~~and~~comparable ~~recognize~~across ~~revenues~~customers asor ~~completed~~periods. ~~orders~~Package ~~are~~pricing ~~reported~~can oralso ~~otherwise~~vary ~~made~~considerably ~~available~~by tocustomer ~~our~~depending ~~customers.~~on ~~Approximately~~the ~~90%~~product ofmix ~~our~~in ~~criminal~~their ~~searches~~screening ~~performed~~packages, inorder ~~the~~volumes, ~~United~~screening ~~States~~requirements inand ~~2023~~preferences, ~~were~~pass-through ~~completed~~and ~~the~~third-party ~~same~~out ~~day~~of ~~they~~pocket ~~were~~costs, ~~submitted.~~and bundling of products.

We ~~generated~~enter ~~revenues~~into ofcontracts ~~$199.1~~with ~~million~~our ~~for~~customers ~~the~~that ~~three~~are ~~months~~typically ~~ended~~three ~~September~~years ~~30,~~in ~~2024,~~length. asThese ~~compared~~contracts toset ~~$200.4~~forth ~~million for~~ the ~~three~~general ~~months~~terms ~~ended~~and ~~September~~pricing ~~30,~~of ~~2023~~our products and ~~generated~~solutions ~~revenues~~but ofgenerally ~~$553.1~~do ~~million~~not ~~for~~include ~~the~~minimum ~~nine~~order ~~months~~volumes ~~ended~~or ~~September~~committed ~~30,~~order ~~2024~~volumes. Additionally, asa ~~compared~~majority toof ~~$561.2~~Sterling’s ~~million~~enterprise ~~for~~customer ~~the~~contracts ~~nine~~are ~~months~~exclusive ~~ended~~to ~~September~~Sterling ~~30,~~or ~~2023.~~require ~~Approximately~~Sterling ~~87%~~to ofbe ~~our~~used ~~revenues~~as ~~for~~ the ~~nine~~primary ~~months~~provider. ~~ended~~Due ~~September~~to ~~30,~~our ~~2024~~contract ~~was~~terms ~~generated~~and in the ~~Americas,~~nature ~~predominantly~~of in the ~~United~~background ~~States~~screening industry, ~~while~~we ~~the~~determined ~~remaining~~our ~~13%~~contract ~~was~~terms ~~generated~~for ~~internationally.~~ASC ~~Other~~606 ~~than~~purposes ~~the~~to ~~United~~be ~~States,~~three noyears ~~single~~or ~~country~~less. ~~accounted~~We ~~for~~typically ~~10%~~bill orour ~~more~~customers ofat ~~our~~the ~~total~~end ~~revenues~~of ~~for~~each ~~the~~month ~~three~~ and ~~nine~~recognize ~~months~~revenues ~~ended~~as ~~September~~completed ~~30,~~orders ~~2024.~~are ~~Please~~reported ~~refer~~or tootherwise ~~“Results~~made ofavailable ~~Operations”~~to ~~for~~our ~~further details~~customers.

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.

Segments

We manage our business and report our financial results in ~~two~~three reportable segments, First Advantage Americas, ~~and~~First Advantage International, and Sterling:

•

First Advantage Americas. This segment pertains to our Legacy First Advantage business and performs a variety of background check and compliance services across all phases of the workforce lifecycle from pre-onboarding services to post-onboarding and ongoing monitoring services, covering employees, contractors, contingent workers, tenants, and drivers. We generally classify our service offerings into three categories: pre-onboarding, post-onboarding, and adjacent products. We deliver our solutions across multiple industry verticals in the United States, Canada, and Latin America.

•

First Advantage International. The First Advantage International segment pertains to our Legacy First Advantage business and provides services similar to our Americas segment in regions outside of the Americas. We primarily deliver our solutions across multiple industry verticals in the Europe, India, and Asia Pacific.

•

Sterling. This segment is comprised of the acquired entity, Sterling Check Corp., which was acquired on October 31, 2024. The Sterling segment provides similar services as compared to First Advantage’s Americas and International segments on a global basis.

Seasonality

We experience seasonality with respect to certain industries due to fluctuations in hiring volumes and other economic activity. For example, pre-onboarding revenues generated from our customers in the retail and transportation industries are historically highest during the months of October and November, leading up to the U.S. holiday season and lowest in December and at the beginning of the new year, following the U.S. holiday hiring season. Certain customers across various industries also historically increase their hiring throughout the second quarter of the year as winter concludes, ~~commercial activity tied to outdoor activities increases,~~ and the school year ends, giving rise to student and graduate hiring, and increased commercial activity tied to outdoor activities. We expect that further growth in e-commerce, the continued demand for healthcare workers, the continued digital transformation of the economy, and other economic ~~forces~~factors may impact future seasonality, but we are unable to predict these potential shifts and how our business may be impacted.

Recent Developments

Acquisition of Sterling Check Corp.

On February 28, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among First Advantage, Sterling Check Corp., a Delaware corporation (“Sterling”), and Starter Merger Sub, Inc., a Delaware corporation and an indirect, wholly owned subsidiary of First Advantage (“Merger Sub”).

On October 31, 2024, following the satisfaction or waiver of the applicable closing conditions, including receipt of the requisite regulatory approvals, First Advantage completed its acquisition of Sterling, pursuant to the Merger Agreement. Under the terms of the Merger Agreement, Merger Sub, merged with and into Sterling, with Sterling continuing as the surviving corporation in such merger and becoming an indirect, wholly owned subsidiary of First Advantage. The Sterling stockholders received approximately $1,224.6 million in cash and 27.15 million shares of First Advantage common stock with a fair value of $507.7 million. We believe the transaction extends First Advantage’s high-quality and cost-effective background screening, identity, and verification technology solutions for the benefit of both companies' customers across industry verticals and geographies. The cash-and-stock transaction values Sterling at approximately $2.2 billion and was financed through cash on hand and the issuance of new debt and common stock. See Note 6, “Long-term Debt,” to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further information.

Recent Developments

Current Economic Conditions

~~Macroeconomic~~Our results are influenced by our customers’ underlying business performance and hiring trends, which drive demand for background screening and adjacent products. Our customers’ businesses can be affected by a variety of factors, including ~~inflation,~~overall ~~interest~~economic ~~rates~~conditions, ~~consumer~~hiring ~~spending~~velocity and turnover, ~~variability~~and inother ~~hiring~~industry-related ~~activity~~trends. ~~and~~We ~~job~~are ~~openings~~also exposed to macroeconomic cyclicality, ~~and~~as ~~global~~companies ~~economic~~often scale back hiring and ~~geopolitical~~reduce ~~developments,~~reliance ~~have~~on ~~negatively~~contingent ~~impacted~~workforces ~~significant~~during ~~portions~~periods of ~~the~~economic ~~global economy~~slowdown, ~~and~~which ~~created~~can ~~volatility~~adversely inaffect ~~the~~demand ~~financial~~for ~~markets.~~our products and solutions.

IfCurrent 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 ~~uncertainty~~volatility isdriven ~~sustained~~by orgeopolitical ~~increases~~tensions, weongoing ~~may~~conflicts, ~~experience~~including ain ~~negative~~the ~~impact~~Ukraine onand ~~new~~Middle ~~business~~East, and uncertainty around monetary policy has led to increased caution across our customer ~~renewals~~base. Emerging and ~~demand~~ongoing ~~levels~~trade disputes between major global economies have also contributed to supply chain disruptions, ~~sales~~increasing costs and ~~marketing~~reducing ~~efforts~~business confidence, ~~revenue~~particularly ~~growth~~in ~~rates~~sectors with global exposure. These trade tensions can slow economic activity, ~~customer~~impact ~~deployments~~cross-border hiring trends, and reduce demand for certain customer ~~collections,~~verticals ~~product~~that ~~development~~rely on international talent and operations. Furthermore, orthe ~~other~~current ~~financial~~U.S. ~~metrics~~presidential administration has signaled its intention to implement significant changes to U.S. ~~Any~~trade policy, the size of ~~these~~the ~~factors~~federal government and the enforcement of various regulations, which has increased economic uncertainty. These policy shifts could ~~harm~~introduce additional market instability and reduce investor confidence and could negatively affect our business, financial condition, and operating results.

~~Despite~~If ~~the~~this ~~continuing~~economic uncertainty ~~associated~~continues ~~with~~or ~~these conditions~~worsens, we ~~are~~may ~~confident~~face inpressure ~~the~~on ~~overall~~new ~~long-term~~business ~~health~~generation, ofcustomer ~~our business~~renewals, ~~the~~overall ~~strength~~demand ~~of our product offerings~~levels, sales and ~~our~~marketing ~~ability~~effectiveness, torevenue ~~continue~~growth, tocustomer ~~execute~~onboarding, oncollection ~~our~~cycles, ~~strategy~~ and ~~help~~product ~~our~~development ~~customers hire smarter and onboard faster~~initiatives. Our ability to ~~deliver~~sustain ~~innovative~~growth ~~products~~will ~~and~~also ~~solutions~~depend ~~that~~on ~~enhance workplace safety and address compliance risks has contributed to~~ the ~~durability~~long-term ofstability, ~~our financial results. For additional information~~diversity, ~~see our “Risk Factors”~~ and ~~“Management’s~~resilience ~~Discussion and Analysis~~ of ~~Financial Condition and Results of Operations” included in~~ the ~~Company’s~~industry ~~Annual~~verticals ~~Report~~we onserve ~~Form~~and ~~10-K~~rely ~~for~~upon ~~the~~to ~~year~~drive ~~ended~~our ~~December 31, 2023~~revenues.

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.

For additional information, see 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 (the “2024 Annual Report”).

Components of our Results of Operations

Revenues

The Company derives revenues from a variety of background screening and adjacent products that cover all phases of the workforce lifecycle from pre-onboarding screening services to post-onboarding and ongoing monitoring services, covering employees, contractors, contingent workers, tenants, and drivers. We generally classify our products and solutions into three major categories: pre-onboarding, post-onboarding, and adjacent products, each of which is enabled by our ~~technology~~technologies, proprietary internal databases, and data analytics capabilities. Pre-onboarding products, which comprise the substantial majority of our revenues, span an extensive array of products that customers typically utilize to enhance their ~~applicant~~candidate evaluation process and ~~help~~support ~~ensure~~ compliance with their workforce onboarding criteria from the time an application is submitted to ana ~~applicant~~candidate’s successful onboarding. Post-onboarding products are comprised of continuous monitoring, re-screening, and other solutions to help our customers keep their end customers, workforces, and other stakeholders safer, more productive, and more compliant. Adjacent products include products that complement our pre-onboarding and post-onboarding solutions such as fleet /and vehicle compliance, hiring tax credits and incentives, resident /and tenant screening, employment eligibility, and investigative research.

Our suite of products is available individually or through packaged solutions that can be configured and tailored according to our customers’ needs. We typically bill our customers at the end of each month and recognize revenues after completed orders are reported or otherwise made available to our customers, with a substantial majority of our customers’ orders completed the same day they are submitted. We recognize revenues for other products over time as the customer simultaneously receives and consumes the benefits of the products and solutions delivered.

Operating Expenses

We incur the following expenses related to our cost of revenues and operating expenses:

•

Cost of Services (exclusive of depreciation and amortization below): Consists of amounts paid to third parties for access to government records, other third-party data and services, and our internal processing fulfillment and customer care functions. In addition, cost of services includes expenses from our drug screening lab and collection site network as well as our court runner network. Third-party cost of services are largely variable in nature and are typically invoiced to our customers as direct pass-through costs. Cost of services also includes our salaries and benefits expense for personnel involved in the processing and fulfillment of our screening products and solutions, as well as our customer care organization and robotics process automation implementation team. Other costs included in cost of services relate to allocations of certain overhead costs for our revenue-generating products and solutions, primarily consisting of certain facility costs and administrative services allocated by headcount or another related metric. We do not allocate depreciation and amortization to cost of services.

•

Product and Technology Expense: Consists of salaries and benefits of personnel involved in the maintenance of our technology and its integrations and APIs, product marketing, management of our network and infrastructure capabilities, and maintenance of our information security and business continuity functions. A portion of the personnel costs are related to the development of new products and features that are primarily developed through agile methodologies. ~~These~~Certain of these costs are ~~partially~~ capitalized, and therefore, are partially reflected as amortization expense within the depreciation and amortization cost line item. Product and technology expense also includes third-party costs related to our cloud computing services, software licensing and maintenance, telecommunications, and other data processing functions. We do not allocate depreciation and amortization to product and technology expense.

•

Selling, General, and Administrative Expense: Consists of sales, customer success, marketing, and general and administrative expenses. Sales, customer success, and marketing expenses consist primarily of employee compensation such as salaries, bonuses, sales commissions, share-based compensation, and other employee benefits for our verticalized sales and customer success teams. General and administrative expenses include travel expenses and various corporate functions including finance, human resources, legal, and other administrative roles, in addition to certain professional service fees and expenses incurred in connection with ~~our~~the ~~IPO and our acquisition of~~ Sterling Acquisition. We expect ~~our~~ selling, general, and administrative expenses to increase in the short-term, primarily as a result of additional ~~public~~Sterling ~~company~~integration ~~related reporting and compliance~~ costs. Over the long-term, we expect ~~our~~ selling, general, and administrative expenses to decrease as a percentage of revenues as we leverage our past investments. We do not allocate depreciation and amortization to selling, general, and administrative expenses.

•

Depreciation and Amortization: Property and equipment consisting mainly of capitalized software costs, furniture, hardware, and leasehold improvements are depreciated or amortized and reflected as operating expenses. We also amortize the capitalized costs of finite-life intangible assets acquired in connection with business combinations.

We have a flexible cost structure that allows our business to adjust quickly to the impacts of macroeconomic events and scale to meet the needs of large ~~new~~ customers. Operating expenses are influenced by the amount of revenues, customer mix, and product mix that contribute to our revenues for any given period, as well as the progress of our integration of Sterling. As revenues grow, we would generally expect cost of services to grow in a similar fashion, albeit influenced by the effects of automation, productivity, and other efficiency initiatives as well as customer and product mix shifts and third-party pass-through costs. We regularly review expenses and investments in the context of ~~revenues~~revenue growth and any shifts we identify in the business in order to align with our overall financial objectives. While we expect operating expenses to increase in absolute dollars to support our continued growth, we believe that, in the long term, operating expenses as a percentage of total revenues will decline gradually in the future as our business grows and our operating efficiency and automation initiatives continue to advance.

Other Expense, Net

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 ~~capital~~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. ~~We also earn interest income on our short-term investments which are fixed-time deposits having a maturity date within twelve months.~~

Provision for Income Taxes

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.

In accordance with ASC 740-270, Interim Reporting, at the end of each interim period, the Company is required to determine the best estimate of its annual effective tax rate and then apply that rate in providing for income taxes on an interim period. However, in certain circumstances where the Company is unable to make a reliable estimate of the annual effective tax rate, ASC 740-270 allows the actual effective tax rate for the interim period to be used. As of September 30, 2024, the Company calculated its effective rate and applied that rate to the results for the three and nine months ended September 30, 2024. The Company used this approach because it was unable to reasonably estimate its annual effective rate due to the variability of the rate as a result of small changes in forecasted income and fluctuations in annual pre-tax income and loss between quarters.23

Results of Operations

The information contained below should be read in conjunction with our accompanying historical condensed consolidated financial statements and the related notes.

Comparison of Results of Operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
(in thousands, except percentages)	~~2024~~2025			~~2023~~2024			~~2024~~			~~2023~~
Revenues	$	~~199~~354,~~119~~588		$	~~200~~169,~~364~~416		$	~~553,081~~		$	~~561,199~~
Operating Expenses:
Cost of services (exclusive of depreciation and amortization below)		~~100~~192,~~879~~565			~~101~~87,~~410~~192			~~280,419~~			~~285,468~~
Product and technology expense		1227,~~909~~155			1312,~~107~~466			~~39,052~~			~~38,374~~
Selling, general, and administrative expense		4665,~~050~~585			3040,~~217~~662			~~125,352~~			~~88,881~~
Depreciation and amortization		3061,~~168~~666			3229,~~419~~822			~~89,968~~			~~96,341~~
Total operating expenses		~~190~~346,~~006~~971			~~177~~170,~~153~~142			~~534,791~~			~~509,064~~
Income from operations		9,113			23,211			18,290			52,135
Income (loss) from operations		7,617			(726	)
Other Expense, Net:
Interest expense, net		1746,~~191~~580			73,~~557~~570			~~28,114~~			~~20,125~~
Total other expense, net		1746,~~191~~580			73,~~557~~570			~~28,114~~			~~20,125~~
(Loss) income before provision for income taxes		(8,078	)		15,654			(9,824	)		32,010
Loss before provision for income taxes		(38,963	)		(4,296	)
Provision for income taxes		782			4,881			83			9,530
Provision (benefit) for income taxes		2,231			(1,388	)
Net (loss) income	$	(8,860	)	$	10,773		$	(9,907	)	$	22,480
Net loss	$	(41,194	)	$	(2,908	)
Net (loss) income margin		(4.4	)%		5.4	%		(1.8	)%		4.0	%
Net loss margin		(11.6	)%		(1.7	)%

Revenues

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
(in thousands)	~~2024~~2025			~~2023~~2024			~~2024~~			~~2023~~
Revenues
Americas	$	174,905		$	176,046		$	486,410		$	490,784
First Advantage Americas	$	145,353		$	149,127
International		26,624		$	25,805			72,834		$	74,766
First Advantage International		23,775			22,023
Eliminations		(2,410	)	$	(1,487	)		(6,163	)	$	(4,351	)
Sterling		187,518			—
Total revenues	$	199,119		$	200,364		$	553,081		$	561,199
Eliminations		(2,058	)		(1,734	)
Total revenues	$	354,588		$	169,416

Revenues were $~~199~~354.16 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $~~200~~169.4 million for the three months ended ~~September~~March 3031, ~~2023~~2024. Revenues for the three months ended ~~September~~March 3031, ~~2024~~2025 ~~decreased~~increased by $1185.2 million, or 0109.63%, compared to the three months ended ~~September~~March 3031, ~~2023~~2024.

The ~~decrease~~increase in revenues ~~was~~is ~~primarily~~ due to: a net decrease of $9.3 million, or 4.7%, in existing customer revenues, primarily driven by the impact of macroeconomic factors affecting the hiring industry, particularly in our Americas segment, which have resulted in reduced demand from our customers and the impact of lost accounts. These consolidated decreases were partially offset by ongoing strength in upselling and cross-selling incremental services to existing customers, contributing $14.7 million, or 7.3%, of additional revenues.

•

~~The~~revenues ~~decrease~~of in$187.5 ~~existing~~million, ~~customer~~or ~~revenues~~110.7%, ~~was~~attributable ~~further~~to ~~offset~~Sterling ~~by:~~as a result of the Sterling Acquisition completed on October 31, 2024; and

•

revenues of $5.81 million, or 23.90%, from new customers, primarily attributable to our ~~Americas~~First ~~segment;~~Advantage ~~and~~Americas segment.

~~revenues~~These revenue increases were offset by a net decrease of $27.34 million, or 14.14%, ~~attributable~~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 ~~Infinite~~impact IDof ~~acquisition~~lost customers. These decreases in ~~the~~existing ~~Americas~~customer ~~segment~~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.

Revenues were $553.1 million for the nine months ended September 30, 2024, compared to $561.2 million for the nine months ended September 30, 2023. Revenues for the nine months ended September 30, 2024 decreased by $8.1 million, or 1.4%, compared to the nine months ended September 30, 2023.

The decrease in revenues was primarily due to a net decrease of $39.0 million, or 7.0%, in existing customer revenues, primarily driven by the impact of macroeconomic factors affecting the hiring industry which have resulted in reduced demand from our customers and the impact of lost accounts. These consolidated decreases were partially offset by ongoing strength in upselling and cross-selling to existing customers, contributing $31.0 million, or 5.5%, of additional revenues, and increased revenues from certain existing customers that were impacted by macroeconomic conditions, to a lesser extent, as compared to other existing customers.

The decrease in existing customer revenues was further offset by:

revenues of $22.5 million, or 4.0%, from new customers, primarily attributable to our Americas segment; and

revenues of $8.4 million, or 1.5%, attributable to the Infinite ID acquisition in the Americas segment.

Pricing remained relatively stable across all periods.

Cost of Services

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands, except percentages)

~~2024~~2025

~~2023~~2024

~~2024~~

~~2023~~

Cost of services

~~100~~192,~~879~~565

~~101~~87,~~410~~192

~~280,419~~

~~285,468~~

Revenues

~~199~~354,~~119~~588

~~200~~169,~~364~~416

~~553,081~~

~~561,199~~

Cost of services as a % of revenue

5054.73

5051.65

~~50.7~~

~~50.9~~

Cost of services was $~~100~~192.96 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $~~101~~87.42 million for the three months ended ~~September~~March 3031, ~~2023~~2024. Cost of services for the three months ended ~~September~~March 3031, ~~2024~~2025 ~~decreased~~increased by $0105.54 million, or 0120.59%, compared to the three months ended ~~September~~March 3031, ~~2023~~2024. ~~The decrease in cost of services was primarily due to a decrease in variable third-party data expenses as a result of decreased revenue volumes and increased automation.~~

25The increase in cost of services was primarily due to $105.7 million of Sterling costs of services recognized after the Sterling Acquisition.

Cost of services as a percentage of revenues was 5054.73% for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to 5051.65% for the three months ended ~~September~~March 3031, ~~2023~~2024. The cost of services percentage of revenues for the ~~third~~first quarter of ~~2024~~2025 was impacted by aSterling’s ~~variation~~higher relative cost of services due to the segment’s product and customer mix and other variations in customer ordering mix.

Cost of services was $280.4 million for the nine months ended September 30, 2024, compared to $285.5 million for the nine months ended September 30, 2023. Cost of services for the nine months ended September 30, 2024 decreased by $5.0 million, or 1.8%, compared to the nine months ended September 30, 2023.

The decrease in cost of services was primarily due to:

a $3.9 million decrease in variable third-party data expenses as a result of decreased revenue volumes, variation in customer ordering mix, and increased automation; and

a $1.7 million decrease in personnel expenses in our operations and customer care functions as a result of productivity efficiencies from the implementation of additional automation programs.

Cost of services as a percentage of revenues was 50.7% for the nine months ended September 30, 2024, compared to 50.9% for the nine months ended September 30, 2023. The cost of services percentage of revenues for the nine months ended September 30, 2024 was impacted by cost savings from the Company’s continued implementation of automation and other process and facilities efficiencies. These decreases were partially offset by slight increases in certain third-party data costs.

Product and Technology Expense

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

~~2024~~2025

~~2023~~2024

~~2024~~

~~2023~~

Product and technology expense

1227,~~909~~155

1312,~~107~~466

~~39,052~~

~~38,374~~

Product and technology expense was $1227.92 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $1312.15 million for the three months ended ~~September~~March 3031, ~~2023~~2024. Product and technology expense for the three months ended ~~September~~March 3031, ~~2024~~2025 ~~decreased~~increased by $014.27 million, or 1117.58%, compared to the three months ended ~~September~~March 3031, ~~2023~~2024.

~~Product~~The increase in product and technology expense ~~decreased~~was primarily due to:

•

a$11.1 million of Sterling expenses recognized after the Sterling Acquisition, of which approximately $0.45 million ~~decrease~~related into ~~software~~cash ~~license~~compensation ~~fees~~expense due to the conversion of Sterling equity awards to cash awards as part of the transaction; ~~and~~

•

a $02.34 million ~~decrease~~increase in ~~professional~~Legacy ~~service~~First ~~fees.~~Advantage personnel expenses as a result of additional investments made to enhance our products, solutions, and technology platform; and

•

~~These decreases were partially offset by~~ a $01.30 million increase in ~~personnel~~Legacy ~~expenses~~First asAdvantage aprofessional ~~result~~service offees ~~increased~~related ~~share-based~~to ~~compensation~~continued ~~expense and additional~~ investments ~~made~~in ~~to enhance~~ our ~~product, solutions, and~~ technology platform.

Product and technology expense was $39.1 million for the nine months ended September 30, 2024, compared to $38.4 million for the nine months ended September 30, 2023. Product and technology expense for the nine months ended September 30, 2024 increased by $0.7 million, or 1.8%, compared to the nine months ended September 30, 2023.

Product and technology expense increased primarily due to a $2.4 million increase in personnel expenses as a result of increased share-based compensation expense and additional investments made to enhance our product, solutions, and technology platform. The increase was partially offset by a $1.7 million decrease in software license fees.

Selling, General, and Administrative Expense

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

~~2024~~2025

~~2023~~2024

~~2024~~

~~2023~~

Selling, general, and administrative expense

4665,~~050~~585

3040,~~217~~662

~~125,352~~

~~88,881~~

Selling, general, and administrative expense was $4665.16 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $3040.27 million for the three months ended ~~September~~March 3031, ~~2023~~2024. Selling, general, and administrative expense for the three months ended ~~September~~March 3031, ~~2024~~2025 increased by $1524.89 million, or 5261.43%, compared to the three months ended ~~September~~March 3031, ~~2023~~2024.

Selling, general, and administrative expense increased primarily due to: $30.5 million of Sterling expenses recognized after the Sterling Acquisition, which include:

•

$93.72 million ofrelated ~~professional~~to ~~service,~~share-based ~~legal,~~compensation ~~and~~expense ~~other~~due ~~fees~~to ~~incurred~~the ~~related~~conversion of Sterling equity awards to ~~the~~First ~~Company’s~~Advantage ~~acquisition~~equity awards as part of ~~Sterling;~~the ~~and~~transaction;

•

a $42.69 million ~~increase~~related into ~~share-based~~cash compensation expense ~~primarily~~due asto athe ~~result~~conversion of ~~modifications~~ ~~made~~Sterling ~~to the~~ equity ~~award~~awards ~~agreements~~to ~~for~~cash ~~the~~awards ~~Company’s Chief Financial Officer and President, Americas,~~ as part of ~~each~~the ~~executive’s~~transaction; ~~retirement agreement,~~ and ~~incremental awards granted.~~

•

26$1.9 million related to post-combination restructuring costs.

~~The~~These ~~increase~~increases in selling, general, and administrative expense ~~was~~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.

~~a $1.6 million decrease in personnel expenses primarily due to nonrecurring separation costs related to the Company’s 2023 cost savings actions not recurring in 2024.~~25

Selling, general, and administrative expense was $125.4 million for the nine months ended September 30, 2024, compared to $88.9 million for the nine months ended September 30, 2023. Selling, general, and administrative expense for the nine months ended September 30, 2024 increased by $36.5 million, or 41.0%, compared to the nine months ended September 30, 2023.

Selling, general, and administrative expense increased primarily due to:

a $29.9 million increase in professional service and legal fees incurred related to the Company’s acquisition of Sterling;

a $8.2 million increase in share-based compensation expense primarily as a result of a modification to the vesting terms of outstanding unvested and unearned performance-based equity awards in May 2023 and incremental awards granted and modifications made to the equity award agreements for the Company’s Chief Financial Officer and President, Americas, as part of each executive’s retirement agreement; and

a $1.3 million increase in expenses related to litigation in the ordinary course of business.

The increase in selling, general, and administrative expense was partially offset by:

a $4.4 million decrease in personnel expenses due to certain cost savings actions taken by the Company primarily in the second half of 2023 and the nonrecurring separation costs related to these savings not recurring in 2024; and

a $2.1 million decrease in expenses related to the impairment of certain operating lease assets resulting from office space exited in 2023 that did not reoccur in 2024.

Depreciation and Amortization

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

~~2024~~2025

~~2023~~2024

~~2024~~

~~2023~~

Depreciation and amortization

3061,~~168~~666

3229,~~419~~822

~~89,968~~

~~96,341~~

Depreciation and amortization was $3061.27 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $3229.48 million for the three months ended ~~September~~March 3031, ~~2023~~2024. Depreciation and amortization for the three months ended ~~September~~March 3031, ~~2024~~2025 ~~decreased~~increased by $231.38 million, or 6106.98%, compared to the three months ended ~~September~~March 3031, ~~2023~~2024. This ~~decrease~~increase was ~~partially~~primarily ~~offset~~due byto ~~increases~~the impact of the step up in ~~depreciation~~fair ~~related~~value toof property and equipment and intangible assets ~~placed~~as ina ~~service~~result ~~during~~of the ~~three~~application ~~months~~of ~~ended~~purchase ~~September~~accounting 30related to the Sterling Acquisition, ~~2024~~which is being amortized on an accelerated basis based on the relative projected discounted cash flows of each asset.

Depreciation and amortization was $90.0 million for the nine months ended September 30, 2024, compared to $96.3 million for the nine months ended September 30, 2023. Depreciation and amortization for the nine months ended September 30, 2024 decreased by $6.4 million, or 6.6%, compared to the nine months ended September 30, 2023. This decrease was partially offset by increases in depreciation related to assets placed in service during the nine months ended September 30, 2024.

Interest Expense, Net

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

~~2024~~2025

~~2023~~2024

~~2024~~

~~2023~~

Interest expense, net

1746,~~191~~580

73,~~557~~570

~~28,114~~

~~20,125~~

Interest expense, net was $1746.26 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $73.6 million for the three months ended ~~September~~March 3031, ~~2023~~2024. Interest expense, net for the three months ended ~~September~~March 3031, ~~2024~~2025 increased by $943.60 million or ~~127~~1,204.58%, compared to the three months ended ~~September~~March 3031, ~~2023~~2024.

~~The~~This increase in interest expense, ~~net~~ was primarily attributable to ahigher ~~$8.2~~interest ~~million~~expense ~~unrealized loss~~ on the Company’s ~~interest~~Amended ~~rate~~First ~~swaps~~Lien ~~recorded~~Credit inFacility ~~2024~~ (as adefined ~~result~~below), ofresulting ~~volatility~~from inan ~~the~~incremental ~~interest~~term ~~rate~~loan ~~environment.~~principal ~~Interest~~amount ~~expense~~of $1,620.3 ~~net~~million ~~for~~and ~~the~~an ~~three~~incremental ~~months~~revolver ~~ended~~availability ~~September~~amount ~~30,~~of ~~2024~~$150.0 ~~was~~million, ~~further~~in ~~impacted~~connection bywith ~~lower~~the ~~interest~~Sterling ~~income~~Acquisition. ~~earned~~Increases onin ~~cash held within~~ interest ~~bearing~~expense ~~accounts~~were asfurther aimpacted ~~result~~by ofincreases ~~lower~~in ~~cash~~unrealized losses on ~~hand due to~~ the Company’s ~~one~~interest ~~time,~~swaps ~~special~~resulting ~~dividend~~from ~~paid~~interest inrate ~~August~~volatility ~~2023.~~experienced during the period.

Interest expense, net was $28.1 million for the nine months ended September 30, 2024, compared to $20.1 million for the nine months ended September 30, 2023. Interest expense for the nine months ended September 30, 2024 increased by $8.0 million or 39.7% compared to the nine months ended September 30, 2023.

The increase in interest expense, net was primarily attributable to higher interest expense on the First Lien Credit Facility as a result of increasing interest rates and lower interest income earned on cash held within interest bearing accounts as a result of lower cash on hand. Interest expense, net for the nine months ended September 30, 2024 was further impacted by $1.0 million of unrealized loss on the Company’s interest rate swaps recorded in 2024 as a result of volatility in the interest rate environment.

Provision for Income Taxes

	Three Months Ended September 30,					Nine Months Ended September 30,
	Three Months Ended March 31,
(in thousands)	~~2024~~2025		~~2023~~2024			~~2024~~		~~2023~~
Provision for income taxes	$	782	$	4,881		$	83	$	9,530
Provision (benefit) for income taxes	$	2,231	$	(1,388	)

Our provision for income taxes was $02.82 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to a benefit of $4(1.94) million for the three months ended ~~September~~March 3031, ~~2023~~2024. Our provision for income taxes for the three months ended ~~September~~March 3031, ~~2024~~2025 ~~decreased~~increased by $43.16 million, compared to the three months ended ~~September~~March 3031, ~~2023~~2024.

The ~~decrease~~increase in our provision for income taxes was primarily due to the ~~decrease~~jurisdictional mix of earnings, higher income ~~before~~taxes in the jurisdictions outside of the U.S., and U.S. state income taxes during the three months ended ~~September~~March 3031, ~~2024~~2025, as compared to the three months ended ~~September~~March 3031, ~~2023~~2024.

~~Our~~Net ~~provision~~loss ~~for~~and ~~income~~Net ~~taxes~~loss ~~was~~Margin $0.1 million for the nine months ended September 30, 2024, compared to $9.5 million for the nine months ended September 30, 2023. Our provision for income taxes for the nine months ended September 30, 2024 decreased by $9.4 million, compared to the nine months ended September 30, 2023.

The decrease in our provision for income taxes was primarily due to the decrease of income before income taxes during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.


	Three Months Ended March 31,
(in thousands, except percentages)	2025			2024
Net loss	$	(41,194	)	$	(2,908	)
Net loss margin		(11.6	)%		(1.7	)%

Net loss was $(~~Loss~~41.2) ~~Income~~million ~~and~~for ~~Net~~the three months ended March 31, 2025, compared to $(~~Loss~~2.9) ~~Income~~million ~~Margin~~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.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except percentages)	2024			2023			2024			2023
Net (loss) income	$	(8,860	)	$	10,773		$	(9,907	)	$	22,480
Net (loss) income margin		(4.4	)%		5.4	%		(1.8	)%		4.0	%

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.

Net (loss) income was $(8.9) million for the three months ended September 30, 2024, compared to $10.8 million for the three months ended September 30, 2023. Net (loss) income for the three months ended September 30, 2024 decreased by $19.6 million compared to the three months ended September 30, 2023. 26

Net (loss) income margin was (4.4)% for the three months ended September 30, 2024, compared to 5.4% for the three months ended September 30, 2024, as increases in selling, general, and administrative expenses, as a result of the Company’s acquisition of Sterling and reduced demand from customers more impacted by macroeconomic events, contributed to lower profitability.

Net (loss) income was $(9.9) million for the nine months ended September 30, 2024, compared to $22.5 million for the nine months ended September 30, 2023. Net (loss) income for the nine months ended September 30, 2024 decreased by $32.4 million compared to the nine months ended September 30, 2023.

Net (loss) income margin was (1.8)% for the nine months ended September 30, 2024 compared to 4.0% for the nine months ended September 30, 2023, as increases in selling, general, and administrative expenses, as a result of the Company’s acquisition of Sterling and reduced demand from customers more impacted by macroeconomic events, contributed to lower profitability, particularly as the Company cycled over the growth experienced in 2023 due to the post-pandemic recovery.

Key Operating and Financial Metrics

In addition to our results determined in accordance with GAAP, we believe certain measures are useful in evaluating our 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 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.

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. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP.

Adjusted EBITDA and Adjusted EBITDA Margin

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.

Adjusted EBITDA was $6492.01 million for the three months ended ~~September~~March 3031, ~~2024~~2025 and represented an Adjusted EBITDA Margin of 3226.20%. Adjusted EBITDA was $6446.86 million for the three months ended ~~September~~March 3031, ~~2023~~2024 and represented an Adjusted EBITDA Margin of 3227.35%. Adjusted EBITDA for the three months ended ~~September~~March 3031, ~~2024~~2025 ~~decreased~~increased by $045.76 million, or 197.18%, compared to the three months ended ~~September~~March 3031, ~~2023.~~2024, primarily due to the Sterling Acquisition.

Adjusted EBITDA was $166.4 million for the nine months ended September 30, 2024 and represented an Adjusted EBITDA Margin of 30.1%. Adjusted EBITDA was $169.3 million for the nine months ended September 30, 2023 and represented an Adjusted EBITDA Margin of 30.2%. Adjusted EBITDA for the nine months ended September 30, 2024 decreased by $3.0 million, or 1.7%, compared to the nine months ended September 30, 2023.

Adjusted EBITDA declined during the nine months ended September 30, 2024, as macroeconomic events impacted our revenues attributed to existing customers. These decreases were partially offset by increased revenues from certain existing and new customers, including ongoing strength in upselling and cross-selling, cost structure benefits due to increased automation, operational efficiencies, and certain other cost savings actions taken by the Company.

The following table presents a reconciliation of Adjusted EBITDA for the periods presented.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

~~2024~~2025

~~2023~~2024

~~2024~~

~~2023~~

Net (loss) income

(8,860

)

10,773

(9,907

)

22,480

Net loss

(41,194

)

(2,908

)

Interest expense, net

1746,~~191~~580

73,~~557~~570

~~28,114~~

~~20,125~~

Provision for income taxes

782

4,881

9,530

Provision (benefit) for income taxes

2,231

(1,388

)

Depreciation and amortization

3061,~~168~~666

3229,~~419~~822

~~89,968~~

~~96,341~~

Share-based compensation(a)

97,~~504~~967

4,~~790~~751

~~19,303~~

~~10,449~~

Transaction and acquisition-related charges(b)

133,~~218~~996

111,~~571~~992

~~35,083~~

~~3,832~~

Integration, restructuring, and other charges(c)

210,~~043~~866

~~2,800~~719

~~3,721~~

~~6,565~~

Adjusted EBITDA

6492,~~046~~112

6446,~~791~~558

~~166,365~~

~~169,322~~

(a)

Share-based compensation for the three ~~and nine~~ months ended ~~September~~March 3031, 2025 and 2024, includes approximately $61.69 million and $112.76 million, respectively, of incrementally recognized expense associated with the May 2023 ~~vesting~~ modification ~~and retirements~~ of the ~~Company's~~vesting ~~Chief~~terms ~~Financial~~of ~~Officer~~outstanding unvested and ~~President,~~unearned ~~Americas. Share~~performance-based ~~compensation~~options, ~~for~~restricted ~~the~~stock ~~three and nine months ended September 30~~units, ~~2023, includes approximately $2.5 million~~ and ~~$4.0~~restricted ~~million,~~stock ~~respectively, of incrementally recognized expense~~awards. ~~See Note 10, "Share-based Compensation", to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further information.~~

(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 ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 include approximately $133.28 million ~~and $33.5 million~~ of expense, ~~respectively,~~ associated with the ~~acquisition~~Sterling ofAcquisition. ~~Sterling,~~The ~~primarily~~three ~~consisting~~months ofended ~~legal,~~March ~~regulatory~~31, ~~and~~2024 ~~diligence~~include ~~professional~~approximately ~~service fees~~$11.1 ~~The~~million ~~three~~of ~~and~~expense ~~nine~~associated ~~months~~with ~~ended~~the ~~September~~Sterling 30Acquisition, ~~2024~~as ~~and~~well ~~2023~~as ~~also~~incremental ~~include~~professional ~~insurance~~service ~~costs~~fees incurred related to the Company's initial public offering and the subsequent one-time compliance efforts.

(c)

We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenues. The following table presents the calculation of Adjusted EBITDA Margin for the periods presented.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands, except percentages)

~~2024~~2025

~~2023~~2024

~~2024~~

~~2023~~

Adjusted EBITDA

6492,~~046~~112

6446,~~791~~558

~~166,365~~

~~169,322~~

Revenues

~~199~~354,~~119~~588

~~200~~169,~~364~~416

~~553,081~~

~~561,199~~

Adjusted EBITDA Margin

3226.20

3227.35

~~30.1~~

~~30.2~~

The following table presents a calculation of Adjusted EBITDA by segment for the periods presented. See Note 15, “Reportable Segments” to the condensed consolidated financial statements for a reconciliation of Adjusted EBITDA for the periods presented by segment.

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
(in thousands, except percentages)	~~2024~~2025			~~2023~~2024			~~2024~~			~~2023~~
Adjusted EBITDA(1)
Americas	$	58,637		$	60,188		$	153,900		$	157,168
First Advantage Americas	$	40,307		$	43,669
International		5,409			4,603			12,465			12,154
First Advantage International		3,366			2,889
Adjusted EBITDA	$	64,046		$	64,791		$	166,365		$	169,322
Sterling		48,439			—
Revenues
Adjusted EBITDA	$	92,112		$	46,558
Americas	$	174,905		$	176,046		$	486,410		$	490,784
Revenues
International		26,624			25,805			72,834			74,766
First Advantage Americas	$	145,353		$	149,127
Less: intersegment eliminations		(2,410	)		(1,487	)		(6,163	)		(4,351	)
First Advantage International		23,775			22,023
Total revenues	$	199,119		$	200,364		$	553,081		$	561,199
Sterling		187,518			—
Adjusted EBITDA Margin
Less: intersegment eliminations		(2,058	)		(1,734	)
Americas		33.5	%		34.2	%		31.6	%		32.0	%
Total revenues	$	354,588		$	169,416
International		20.3	%		17.8	%		17.1	%		16.3	%
Adjusted EBITDA Margin
Adjusted EBITDA Margin		32.2	%		32.3	%		30.1	%		30.2	%
First Advantage Americas		27.7	%		29.3	%
First Advantage International		14.2	%		13.1	%
Sterling		25.8	%	n/a
Adjusted EBITDA Margin		26.0	%		27.5	%

(1)

See the reconciliation of net (loss) ~~income~~ 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.

Adjusted Net Income and Adjusted Diluted Earnings Per Share

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) ~~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.

Adjusted Net Income was $3830.05 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $4024.08 million for the three months ended ~~September~~March 3031, ~~2023~~2024. Adjusted Net Income for the three months ended ~~September~~March 3031, ~~2024~~2025 ~~decreased~~increased by $25.07 million, or 523.10% compared to the three months ended ~~September~~March 3031, ~~2023~~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.

Adjusted Diluted Earnings Per Share was $0.2617 for the three months ended ~~September~~March 3031, ~~2024~~2025, ~~compared~~consistent towith ~~$0.28 for~~ the three months ended ~~September~~March 3031, ~~2023.~~2024, ~~Adjusted~~as ~~Diluted~~increases ~~Earnings~~in ~~Per~~Adjusted ~~Share~~Net ~~for~~Income ~~the~~were ~~three~~offset ~~months~~by ~~ended~~the ~~September~~incremental ~~30,~~interest ~~2024~~on ~~decreased~~the bytransaction ~~$0.02,~~financing orand ~~7.1%~~the ~~compared~~dilutive toimpact of the ~~three~~new ~~months~~shares ~~ended~~issued ~~September~~for ~~30,~~the ~~2023.~~Sterling Acquisition.

~~Adjusted~~Gains ~~Net~~or ~~Income~~losses ~~was~~and ~~$93.5~~actual ~~million~~cash ~~for~~payments ~~the~~and ~~nine~~receipts ~~months~~on ~~ended~~the ~~September~~Company’s ~~30,~~interest ~~2024,~~rate ~~compared~~swaps toimpact ~~$103.2 million for~~ the ~~nine~~comparability ~~months~~of ~~ended September 30, 2023.~~ Adjusted Net Income ~~for~~and ~~the~~Adjusted ~~nine~~Diluted ~~months~~Earnings ~~ended~~Per ~~September~~Share ~~30,~~across ~~2024~~historical ~~decreased by $9~~periods.7 ~~million, or 9.4%, compared to the nine months ended September 30, 2023.~~

Adjusted Diluted Earnings Per Share was $0.64 for the nine months ended September 30, 2024, compared to $0.71 for the nine months ended September 30, 2023. Adjusted Diluted Earnings Per Share for the nine months ended September 30, 2024 decreased by $0.07, or 9.9% compared to the nine months ended September 30, 2023.28

Adjusted Net Income and Adjusted Diluted Earnings Per Share declined during the nine months ended September 30, 2024 as reduced demand from customers more impacted by macroeconomic events contributed to lower revenues and profitability. Adjusted Net Income and Adjusted Diluted Earnings Per Share were further impacted by changes in acquisition-related depreciation and amortization and changes in our capital structure that are captured in interest expense. Gains or losses and actual cash payments and receipts on the Company’s interest rate swaps impact the comparability of Adjusted Net Income and Adjusted Diluted Earnings Per Share across historical periods. Adjusted Diluted Earnings Per Share is further impacted by shares repurchased under the Company’s Repurchase Program.

The following table presents a reconciliation of Adjusted Net Income for the periods presented.

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
(in thousands)	~~2024~~2025			~~2023~~2024			~~2024~~			~~2023~~
Net (loss) income	$	(8,860	)	$	10,773		$	(9,907	)	$	22,480
Net loss	$	(41,194	)	$	(2,908	)
Provision for income taxes		782			4,881			83			9,530
Provision (benefit) for income taxes		2,231			(1,388	)
(Loss) income before provision for income taxes		(8,078	)		15,654			(9,824	)		32,010
Loss before provision for income taxes		(38,963	)		(4,296	)
Debt-related charges(a)		106,~~057~~803			2(3,~~532~~014	)		~~6,781~~			~~7,033~~
Acquisition-related depreciation and amortization(b)		2250,~~646~~039			2522,~~660~~625			~~67,887~~			~~76,615~~
Share-based compensation(c)		97,~~504~~967			4,~~790~~751			~~19,303~~			~~10,449~~
Transaction and acquisition-related charges(d)		133,~~218~~996			111,~~571~~992			~~35,083~~			~~3,832~~
Integration, restructuring, and other charges(e)		210,~~043~~866			~~2,800~~719			~~3,721~~			~~6,565~~
Adjusted Net Income before income tax effect		4940,~~390~~708			5332,~~007~~777			~~122,951~~			~~136,504~~
Less: Adjusted income taxes(f)		1110,~~400~~222			127,~~972~~991			~~29,422~~			~~33,279~~
Adjusted Net Income	$	3730,~~990~~486		$	4024,~~035~~786		$	~~93,529~~		$	~~103,225~~

The following table presents the calculation of Adjusted Diluted Earnings Per Share for the periods presented.

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2024			2023			2024			2023
	2025			2024
Diluted net (loss) income per share (GAAP)	$	(0.06	)	$	0.07		$	(0.07	)	$	0.15
Diluted net loss per share (GAAP)	$	(0.24	)	$	(0.02	)
Adjusted Net Income adjustments per share
Provision for income taxes		0.01			0.03			0.00			0.07
Provision (benefit) for income taxes		0.01			(0.01	)
Debt-related charges(a)		0.0704			(0.02	)		~~0.05~~			~~0.05~~
Acquisition-related depreciation and amortization(b)		0.1529			0.1816			~~0.46~~			~~0.52~~
Share-based compensation(c)		0.0605			0.03			~~0.13~~			~~0.07~~
Transaction and acquisition-related charges(d)		0.0902			0.0108			~~0.24~~			~~0.03~~
Integration, restructuring, and other charges(e)		0.0106			0.0200			~~0.03~~			~~0.04~~
Adjusted income taxes(f)		(0.0806	)		(0.0905	)		~~(0.20~~	)		~~(0.23~~	)
Adjusted Diluted Earnings Per Share (Non-GAAP)	$	0.2617		$	0.2817		$	~~0.64~~		$	~~0.71~~
Weighted average number of shares outstanding used in computation of Adjusted Diluted Earnings Per Share:
Weighted average number of shares outstanding—diluted (GAAP)		~~144~~172,~~096~~756,~~312~~497			~~144~~143,~~733~~591,~~357~~713			~~143,851,357~~			~~146,392,996~~
Options and restricted stock not included in weighted average number of shares outstanding—diluted (GAAP) (using treasury stock method)		2,~~492~~217,~~320~~580			—2,110,928			~~2,318,217~~			—
Adjusted weighted average number of shares outstanding—diluted (Non-GAAP)		~~146~~174,~~588~~974,~~632~~077			~~144~~145,~~733~~702,~~357~~641			~~146,169,574~~			~~146,392,996~~

(a)

Represents the non-cash interest expense related to the amortization of debt issuance costs for the February 2021 ~~February~~and October 2024 refinancing of the Company’s First Lien Credit Facility ~~(as defined below)~~. 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 ~~assets~~ 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)

(d)

(e)

(f)

Effective tax rates of approximately 2325.1% and 2324.94% have been used to compute Adjusted Net Income and Adjusted Diluted Earnings Per Share for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024,~~2025 ~~respectively. Effective tax rates of approximately 24.5%~~ and ~~24.4% have been used to compute Adjusted Net Income and Adjusted Diluted Earnings Per Share for the three and nine months ended September 30~~2024, ~~2023,~~ respectively.

3229

Liquidity and Capital Resources

Liquidity

The Company’s primary liquidity requirements are for working capital, debt service, continued investments in software development and other capital expenditures, and other strategic investments, including the Sterling Acquisition. Inand ~~2023,~~related ~~the Company fully utilized its remaining U~~integration.S. ~~Federal~~In ~~income tax net operating loss carryforwards. As a result~~addition, income taxes are and will be a material use of funds, depending on our future profitability, and future tax rates. The Company’s liquidity needs are met primarily through existing balance sheet cash, cash flows from operations, as well as funds available under our revolving credit facility and proceeds from our term loan borrowings, including incremental term loan borrowings incurred to fund the ~~Acquisition~~Sterling ~~pursuant to commitment letters entered into with certain financial institutions~~Acquisition. Our cash flows from operations include cash received from customers, less cash costs to provide services to our customers, which includes general and administrative costs and interest payments.

As of ~~September~~March 3031, ~~2024~~2025, we had $~~307~~172.40 million in cash and cash equivalents and $~~100~~250.0 million available under our revolving credit facility. As of ~~September~~March 3031, ~~2024~~2025, we had $~~564~~2,179.75 million of total debt outstanding. AsWe abelieve ~~result~~our ofcash ~~the~~on ~~refinancing~~hand, ~~related~~together towith ~~the~~amounts ~~acquisition~~available ofunder ~~Sterling~~our revolving credit facility, ~~the~~and ~~Company~~cash provided by operating activities are and will ~~have~~continue ~~$2.185~~to ~~billion~~be ofadequate ~~total~~to ~~debt~~meet ~~outstanding~~our operational and ~~$250~~business needs in the next twelve months.0 ~~million~~To ~~available~~the ~~under~~extent additional funds are necessary to meet our ~~revolving~~long-term ~~credit~~liquidity ~~facility.~~needs ~~The~~as ~~debt~~we ~~balance~~continue ~~outstanding~~to ~~requires~~execute 1%our ~~annual~~business ~~prepayments~~strategy, towe anticipate that they will be ~~made~~obtained ~~quarterly.~~through ~~Additionally~~the incurrence of additional indebtedness, ~~the~~additional ~~Company~~equity ~~used~~financings ~~approximately~~or ~~$230~~a ~~million~~combination of ~~its~~these ~~cash~~potential ~~and~~sources of funds. In the event that we need access to additional cash, ~~equivalents~~we may not be able to ~~fund~~access the ~~acquisition~~credit ofmarkets ~~Sterling~~on ~~and~~commercially ~~related~~acceptable terms or at all. Our ability to fund future operating expenses and ~~expects~~capital ~~cash~~expenditures and ~~cash~~our ~~equivalents~~ability ~~from~~to ~~Sterling~~meet ~~after~~future ~~close~~debt toservice beobligations ~~approximately~~or ~~$55~~refinance ~~million~~our indebtedness will depend on our future operating performance, ~~resulting~~which inwill abe ~~consolidated~~affected ~~cash~~by general economic, financial, and ~~cash~~other ~~equivalents~~factors ~~balance~~that ~~after~~may ~~close~~be ofbeyond ~~more~~our ~~than~~control, ~~$125~~including ~~million.~~those described under our “Risk Factors” included in our 2024 Annual Report.

We believe our cash on hand, together with amounts available under our revolving credit facility, and cash provided by operating activities are and will continue to be adequate to meet our operational and business needs in the next twelve months. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds. In the event that we need access to additional cash, we may not be able to access the credit markets on commercially acceptable terms or at all. Our ability to fund future operating expenses and capital expenditures and our ability to meet future debt service obligations or refinance our indebtedness will depend on our future operating performance, which will be affected by general economic, financial, and other factors that may be beyond our control, including those described under our “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Share Repurchase Program

On August 2, 2022, the Company’s Board of Directors authorized the repurchase of up to $50.0 million of the Company’s common stock over the 12-month period ending August 2, 2023 (the “Repurchase Program”). Stock repurchases may be effected through open market repurchases at prevailing market prices, including through the use of block trades and trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, privately-negotiated transactions, through other transactions in accordance with applicable securities laws, or a combination of these methods on such terms and in such amounts as the Company deems appropriate and will be funded from available capital. The Company is not obligated to repurchase any specific number of shares, and the timing, manner, value, and actual number of shares repurchased will depend on a variety of factors, including the Company’s stock price and liquidity requirements, other business considerations and general market and economic conditions. No shares will be purchased from SLP Fastball Aggregator, L.P. and its affiliates. The Company may discontinue or modify purchases without notice at any time. The Company has used and plans to use its existing cash to fund repurchases made under the share repurchase program.

On November 8, 2022, the Company’s Board of Directors authorized an increase to the total available amount under its Repurchase Program to $150.0 million and extended the program through December 31, 2023. On February 28, 2023, the Company’s Board of Directors authorized an increase to the total available amount under its Repurchase Program to $200.0 million. On September 14, 2023, the Company announced that its Board of Directors approved a one-year extension of its share repurchase authorization, extending the previously authorized $200.0 million program through December 31, 2024. Through November 8, 2024, the Company repurchased approximately $119.5 million of shares under the Repurchase Program. In connection with the execution of the Merger Agreement, the Company suspended purchases under its Repurchase Program.

Dividends

On August 8, 2023, the Company’s Board of Directors declared a one-time special cash dividend of $1.50 per share to stockholders of record at the close of business on August 21, 2023. ~~Since~~The cash dividend was paid on August 31, 2023. ~~through~~Any ~~September~~further 30determination to pay dividends on our capital stock will be at the discretion of our Board of Directors, ~~2024~~subject to applicable laws, ~~the~~and ~~Company~~will ~~has~~depend ~~paid~~on anour ~~aggregate~~financial ~~cash~~condition, ~~dividend~~operating ofresults, ~~$218.0~~capital ~~million~~requirements, ~~with~~general ~~cash~~business ~~from~~conditions, ~~the~~and ~~balance~~other ~~sheet.~~factors that our Board of Directors considers relevant.

33Credit Agreement

~~Long~~At December 31, 2023, First Advantage Holdings, LLC, an indirect wholly-~~Term~~owned ~~Debt~~subsidiary of the Company, was a party to a First Lien Credit Agreement (as amended, “Credit Agreement”), which provided for a term loan of $766.6 million due January 31, 2027 (“First Lien Credit Facility”), carrying an interest rate of 2.75% to 3.00%, based on the first lien ratio, plus the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (“SOFR”) (subsequent to an amendment in June 2023 to transition the reference rate from LIBOR (the London Interbank Offer Rate)), with the addition of an applicable margin, and a $100.0 million revolving credit facility due July 31, 2026 (“Revolver”).

In ~~February~~connection ~~2020,~~with athe ~~new~~Sterling ~~financing~~Acquisition, ~~structure~~on ~~was~~October ~~established~~31, ~~which~~2024, ~~included~~the aCompany ~~new~~refinanced its existing First Lien Credit Agreement ~~(as~~and ~~amended,~~all related Sterling debt (the “2024 First Lien Credit Agreement”). The 2024 First Lien Credit Agreement ~~provided~~provides ~~financing~~for ina ~~the~~term ~~form~~loan of a $~~670~~2.0185 ~~million~~billion ~~term loan~~ due ~~January~~October 31, ~~2027~~2031, carrying an interest rate of 3.00% to 3.25%, based on the first lien ratio, plus SOFR (“Amended First Lien Credit Facility”) and a $75250.0 million ~~new~~ revolving credit facility due ~~January~~October 31, ~~2025~~2029 (“Amended Revolver”).

OnBorrowings ~~February~~under 1the 2024 First Lien Credit Agreement bear interest at a rate per annum equal to an applicable margin plus, ~~2021~~at our option, weeither ~~amended~~(a) a base rate or (b) SOFR, which is subject to a floor of 0.00% per annum. The applicable margins under the 2024 First Lien Credit Agreement toare ~~fund~~subject ~~$100.0~~to ~~million~~stepdowns ofbased ~~additional~~on our first lien ~~term~~net ~~loans~~leverage ~~and~~ratio. ~~reduce~~In addition, the ~~applicable~~borrower, ~~margins~~First byAdvantage Holdings, LLC is required to pay a commitment fee on any unutilized commitments under the revolving credit facility. The commitment fee rate ranges between 0.25% and 0.50% per annum based on our first lien net leverage ratio. The borrower is also required to pay customary letter of credit fees. The Amended First Lien Credit Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1.00% of the principal amount. The Amended Revolver has no amortization.

InThe ~~connection~~2024 ~~with~~First ~~its~~Lien ~~IPO,~~Credit Agreement requires the ~~Company~~borrower ~~entered~~to ~~into~~prepay anoutstanding ~~amendment~~term toloans, ~~increase~~subject ~~the~~to ~~borrowing~~certain ~~capacity~~exceptions, ~~under~~with ~~the~~certain ~~Revolver~~proceeds from ~~$75.0~~non-ordinary ~~million~~course asset sales, issuance of debt not permitted by the credit agreement to ~~$100.0~~be ~~million~~incurred and ~~extend~~annual ~~the~~excess ~~maturity~~cash ~~date~~flows. ~~from~~In ~~January~~addition, 31any voluntary prepayment of term loans in connection with certain repricing transactions on or prior to April 30, 2025 are subject to ~~July~~a 311.00% prepayment premium. Otherwise, ~~2026~~the borrower may voluntarily repay outstanding loans without premium or penalty, other than customary “breakage” costs.

Borrowings under the First Lien Agreement bear interest at a rate per annum equal to an applicable margin plus, at our option, either (a) a base rate or (b) LIBOR, which is subject to a floor of 0.00% per annum. Pursuant to an amendment in June 2023, the reference rate under the Credit Agreement was transitioned from LIBOR to SOFR (the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York), with the addition of an applicable margin. The applicable margins under the First Lien Agreement are subject to stepdowns based on our first lien net leverage ratio. In connection with the closing of the IPO, each applicable margin was reduced further by 0.25%. In addition, the borrower, First Advantage Holdings, LLC, which is an indirect wholly-owned subsidiary of the Company, is required to pay a commitment fee on any unutilized commitments under the revolving credit facility. The commitment fee rate ranges between 0.25% and 0.50% per annum based on our first lien net leverage ratio. The borrower is also required to pay customary letter of credit fees.30

The 2024 First Lien Credit ~~Facility~~Agreement ~~amortizes~~is inunconditionally ~~equal~~guaranteed ~~quarterly~~by ~~installments~~Fastball inParent, ~~aggregate~~Inc., ~~annual~~a ~~amounts~~wholly-owned ~~equal~~subsidiary toof ~~1.00%~~the Company and the direct parent of the ~~principal~~borrower, ~~amount.~~and ~~The~~material ~~Revolver~~wholly ~~has~~owned nodomestic ~~amortization~~restricted subsidiaries of Fastball Parent, Inc. The 2024 First Lien Credit ~~Facility~~Agreement ~~requires~~and the ~~borrower~~guarantees toof ~~prepay~~such ~~outstanding~~obligations, ~~term~~are ~~loans~~secured, subject to ~~certain~~permitted liens and other exceptions, ~~with~~by ~~certain~~(1) ~~proceeds~~a ~~from~~first ~~non-ordinary~~priority ~~course~~security ~~asset~~interest ~~sales,~~in ~~issuance~~certain oftangible ~~debt~~and ~~not~~intangible ~~permitted~~assets byof the ~~credit~~borrower ~~agreement~~and tothe beguarantors ~~incurred~~ and ~~annual~~(2) ~~excess~~a ~~cash~~first-priority ~~flows.~~pledge Inof ~~addition,~~100% ~~any~~of ~~voluntary~~the ~~prepayment~~capital stock of ~~term~~the ~~loans~~borrower inand ~~connection~~of ~~with~~each ~~certain~~wholly-owned ~~repricing~~material ~~transactions~~restricted onsubsidiary orof ~~prior~~the toborrower ~~August~~and 1the guarantors (which pledge, ~~2021~~in ~~were~~the ~~subject~~case toof aany 1non-U.~~00%~~S. ~~prepayment~~subsidiary ~~premium~~of a U.S. ~~Otherwise~~subsidiary, ~~the~~does ~~borrower~~not ~~may~~include ~~voluntarily~~more ~~repay~~than ~~outstanding~~65% ~~loans~~of ~~without~~the ~~premium~~voting orstock ~~penalty,~~of ~~other~~such ~~than~~non-U.S. ~~customary “breakage” costs~~subsidiary).

InThe ~~connection~~2024 ~~with~~First ~~the~~Lien ~~closing~~Credit ofAgreement ~~the~~contains ~~IPO~~customary affirmative covenants, onnegative ~~June~~covenants ~~30,~~and ~~2021,~~events ~~the~~of ~~Company~~default ~~repaid~~(including ~~$200.0~~upon ~~million~~a change of ~~the~~control). The 2024 First Lien Credit ~~Facility~~Agreement ~~outstanding,~~also ofincludes ~~which~~a ~~$44.3~~“springing” ~~million~~first ~~was~~lien ~~applied~~net toleverage ~~all~~ratio oftest, applicable only to the ~~remaining~~Amended ~~quarterly~~Revolver, ~~amortizing~~that ~~principal~~requires ~~payments~~such ~~due~~ratio ~~under~~to ~~the~~be ~~First~~no ~~Lien~~greater ~~Agreement~~than 7.75:1.00 ~~The~~on ~~remaining~~the ~~$564~~last day of any fiscal quarter if more than 40.70% ~~million~~of ~~term~~the ~~loan~~Amended Revolver is ~~scheduled~~utilized on such date. See Note 6, “Debt,” to ~~mature~~the condensed consolidated financial statements included elsewhere in this Quarterly Report on ~~January~~Form ~~31,~~10-Q ~~2027~~for further information.

The First Lien Agreement is unconditionally guaranteed by Fastball Parent, Inc., a wholly-owned subsidiary of the Company and the direct parent of the borrower, and material wholly owned domestic restricted subsidiaries of Fastball Parent, Inc. The First Lien Agreement and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by (1) a first priority security interest in certain tangible and intangible assets of the borrower and the guarantors and (2) a first-priority pledge of 100% of the capital stock of the borrower and of each wholly-owned material restricted subsidiary of the borrower and the guarantors (which pledge, in the case of any non-U.S. subsidiary of a U.S. subsidiary, does not include more than 65% of the voting stock of such non-U.S. subsidiary).

The First Lien Agreement contains customary affirmative covenants, negative covenants, and events of default (including upon a change of control). The First Lien Agreement also includes a “springing” first lien net leverage ratio test, applicable only to the Revolver, that requires such ratio to be no greater than 7.75:1.00 on the last day of any fiscal quarter if more than 35.0% of the Revolver is utilized on such date.

In connection with the acquisition of Sterling, on October 31, 2024, First Advantage Holdings, LLC, a subsidiary of the Company (the “Borrower”), refinanced its existing First Lien Credit Agreement and all related Sterling debt. See Note 6, “Long-term Debt,” to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further information.

Cash Flow Analysis

Comparison of Cash Flows for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024

The following table is a summary of our cash flow activity for the periods presented:

	Nine Months Ended September 30,
	Three Months Ended March 31,
(in thousands)	~~2024~~2025			~~2023~~2024
Net cash provided by operating activities	$	~~113~~19,~~862~~471		$	~~106~~38,~~080~~329
Net cash used in investing activities		(2111,~~716~~076	)		(617,~~932~~031	)
Net cash provided by (used in) financing activities		1,155			(270,565	)
Net cash (used in) provided by financing activities		(5,993	)		689

Cash Flows from Operating Activities

Net cash provided by operating activities was $~~113~~19.95 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, compared to $~~106~~38.13 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. Net cash provided by operating activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 ~~increased~~decreased by $718.89 million compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. Cash flows from operating activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 were ~~impacted~~lower bydue ~~the~~to ~~timing~~interest payments of ~~payments~~$41.4 million on the Company’s Amended First Lien Credit Facility, the timing of professional service and legal ~~fees~~fee payments related to the Company’s acquisition and integration of Sterling, and ~~the~~continued ~~continuation~~moderate ~~of more modest~~ hiring activity ~~from~~by our customers ~~resulting~~due ~~from~~to the current ~~hiring~~macroeconomic environment. ~~This was offset in part by lower accounts receivable driven by increased cash collections from customers.~~

Cash Flows from Investing Activities

Net cash used in investing activities was $2111.71 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, compared to $617.90 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. Net cash used in investing activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 ~~decreased~~increased by $404.20 million compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. The ~~decrease~~increase in cash flows used in investing activities was primarily due toincreased ~~the~~spend ~~$41.1~~on ~~million~~software ~~Infinite~~development IDrelated ~~acquisition,~~to ~~net of cash acquired and other transaction adjustments, during~~ the ~~nine~~Sterling ~~months ended September 30, 2023, slightly offset by increased spend on software development~~platform.

Cash Flows from Financing Activities

Net cash ~~provided by~~ (used in) provided by financing activities was $1(6.20) million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, compared to $~~(270~~0.6)7 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. Net cash ~~provided~~used byin financing activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 was primarily driven by ~~cash~~a ~~net inflows related to share-based compensation activity~~$5.5 ~~These~~million ~~inflows~~increase ~~were~~in ~~offset~~principal ~~by cash outflows related to~~ payments on the ~~deferred purchase of a software platform and dividends paid on vested RSUs as a result of the~~ Company’s ~~August~~Amended ~~2023~~First ~~one-time~~Lien ~~special~~Credit ~~dividend~~Facility. Net cash ~~used~~provided inby financing activities for ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 ~~were~~was ~~impacted~~driven by ~~the Company’s one-time special~~ cash ~~dividend~~inflows ofrelated ~~$1.50~~to ~~per~~ share-based tocompensation ~~stockholders~~activity. ofThese ~~record~~inflows atwere ~~the~~offset ~~close~~by ~~of business on August 21, 2023 and shares repurchased under the Company’s Repurchase Program. An aggregate~~ cash ~~dividend~~outflows ofrelated ~~$217.7~~to ~~million~~payments ~~was paid~~ on ~~August 31, 2023. During~~ the ~~nine~~deferred ~~months~~purchase ~~ended~~of ~~September 30, 2023, the Company repurchased 4,140,519 shares for~~ a ~~total~~software ~~cost of $55~~platform.~~9 million. These outflows were offset partially by cash inflows related to share-based compensation activity.~~

Contractual Obligations and Commitments

During the three months ended March 31, 2025, there have been no significant changes to our contractual obligations and commitments compared with those disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Annual Report.

Recently Issued Accounting Standards

See Note 2 to the condensed consolidated financial statements for disclosure of the impact that recent accounting pronouncements may have on the condensed consolidated financial statements.

Critical Accounting Policies and Estimates

During the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025, there have been no significant changes to our critical accounting policies and estimates compared with those disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in ~~the~~our ~~Company’s~~2024 Annual Report ~~on Form 10-K for the year ended December 31, 2023~~.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As of ~~September~~March 3031, ~~2024~~2025, no material change had occurred in our market risks, compared with the disclosure in our 2024 Annual Report ~~on Form 10-K for the year ended December 31, 2023~~.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosures.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving their desired control objectives. Based on the evaluation of management’s disclosure controls and procedures as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, the disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

During the quarter covered by this report, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are currently in the process of integrating the Sterling operations, control processes and information systems into our systems and control environment. We believe that we have taken the necessary steps to monitor and maintain appropriate internal controls over financial reporting during this integration.

3632

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Information in response to this Item is included in “Part I — Item 1. — Note 12 — Commitments and Contingencies” and is incorporated by reference into Part II of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors.

As of ~~September~~March 3031, ~~2024~~2025, no material changes had occurred in our risk factors, compared with the disclosure in our 2024 Annual Report ~~on Form 10-K for the year ended December 31, 2023~~.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~The following information relates to the Company’s purchase of its common stock during each month within the third quarter of 2024:~~None

Period	Total Number of Shares Purchased		Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
July 1, 2024 through July 31, 2024		—	$	—		—	$	80,478,639
August 1, 2024 through August 31, 2024		—	$	—		—	$	80,478,639
September 1, 2024 through September 30, 2024		—	$	—		—	$	80,478,639
Total		—	$	—		—	$	80,478,639

Average price paid per share for shares purchased as part of our Repurchase Program (includes brokerage commissions).

On August 2, 2022, the Company’s Board of Directors authorized the repurchase of up to $50.0 million of the Company’s common stock over the 12-month period ending August 2, 2023. On November 8, 2022, the Company’s Board of Directors authorized an increase to the total available amount under its Repurchase Program to $150.0 million and extended the program through December 31, 2023. On February 28, 2023, the Company’s Board of Directors authorized an increase to the total available amount under its Repurchase Program to $200.0 million. On September 14, 2023, the Company announced that its Board of Directors approved a one-year extension of its share repurchase authorization, extending the previously authorized $200.0 million program through December 31, 2024. Through November 8, 2024, the Company repurchased approximately $119.5 million of shares under the Repurchase Program.

Stock repurchases may be effected through open market repurchases at prevailing market prices, including through the use of block trades and trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, privately-negotiated transactions, through other transactions in accordance with applicable securities laws, or a combination of these methods on such terms and in such amounts as the Company deems appropriate and will be funded from available capital. The Company is not obligated to repurchase any specific number of shares, and the timing, manner, value, and actual number of shares repurchased will depend on a variety of factors, including the Company’s stock price and liquidity requirements, other business considerations and general market and economic conditions. No shares will be purchased from SLP Fastball Aggregator, L.P. and its affiliates. The Company may discontinue or modify purchases without notice at any time. In connection with the execution of the Merger Agreement, the Company suspended purchases under its Repurchase Program.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not applicable

Item 5. Other Information.

During the three months ended ~~September~~March 3031, ~~2024~~2025, none of our directors or officers (as defined in Rule 16a-1(f) of the ~~Securities~~ Exchange Act ~~of 1934, as amended~~) adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K), except as described in the table below.

Trading Arrangement

Director/Officer Name

Title

Date of Adoption/Termination

Rule 10b5-1(1)

Non-Rule 10b5-1

Scheduled Expiration Date of Rule 10b5-1 Trading Plan(2)

Aggregate Number of Securities to Be Purchased or Sold

David L. Gamsey

Chief Financial Officer(3)

Adopted August 9, 2024

August 8, 2025

Sale of up to 325,000 shares of common stock in multiple transactions

Joelle Smith

President

Adopted February 28, 2025

February 27, 2026

Sale of up to 69,402 shares of common stock in multiple transactions

Joseph Jaeger

President, Americas(3)

Adopted August 12, 2024

November 21, 2025

Sale of up to 50,000 shares of common stock in multiple transactions

Bret T. Jardine

Chief Legal Officer & Corporate Secretary

Adopted August 16, 2024

August 15, 2025

Sale of up to 40,286 shares of common stock in multiple transactions

(1)

Intended to satisfy the affirmative defense of Rule 10b5-1(c).

(2)

A trading plan may also expire on such earlier date that all transactions under the trading plan are completed.

~~In connection with their respective retirements, each of David L. Gamsey and Joseph Jaeger, was not an “officer” of the Company as of November 12, 2024.~~ 33

Appointment of Global Chief Operating Officer

On November 11, 2024, the Company’s Board of Directors promoted Douglas Nairne to the role of Global Chief Operating Officer (principal operating officer), effective as of November 11, 2024. As Global Chief Operating Officer, Mr. Nairne will oversee all of the Company’s global operations, customer care, and customer onboarding teams.

Mr. Nairne, 58, previously served as the Company’s Chief Operations Officer – International since joining the Company in October 2021, and was responsible for First Advantage’s operations in the Asia-Pacific (APAC), India and Europe, Middle East, and Africa (EMEA) regions. Prior to joining the Company, Mr. Nairne served as the Chairman and Chief Executive Officer of Dataflow Group, a background screening company for employers recruiting high-risk, internationally mobile professionals from July 2011 to July 2018 and served in an advisory position from July 2018 to September 2021. Mr. Nairne’s past experience includes positions as an officer in the Canadian Army, a journalist for the South China Morning Post, and Chief Operating Officer of IntegraScreen. Mr. Nairne holds a B. A. from the University of Manitoba, a master’s in journalism from Hong Kong University, and a master’s in business administration from the Hong Kong University of Science and Technology and Northwestern University’s Kellogg School of Management.

In connection with the promotion of Mr. Nairne: (i) his annual base salary will increase to $500,000.00 (to be converted into HKD at the applicable exchange rate), (ii) he will be eligible to receive a discretionary annual cash bonus of up to 60% of his annual base salary, and (iii) he will receive a one-time cash bonus of $100,000.00 in connection with the Company’s acquisition of Sterling Check Corp. Additionally, on November 14, 2024, Mr. Nairne will receive a grant of equity awards, pursuant to the First Advantage 2021 Omnibus Incentive Plan (as amended) and the Company’s current forms of equity awards (substantially in the forms filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as Exhibit 10.9 (Form of Restricted Stock Unit Award Grant Notice and Agreement) and Exhibit 10.5 (Form of Standard Option Award Grant Notice and Agreement)), having a fair value equal to $1,000,000.00, comprised of 50% stock options and 50% restricted stock units, with each grant vesting annually in four equal installments from November 1, 2024. The exact number of stock options and restricted stock units subject to the awards will be determined on November 14, 2024, based on the prior twenty day average closing price of the Company’s common stock in the case of the restricted stock units and using a Black-Scholes valuation for the stock options. The per share exercise price of the stock options will be the closing price on November 14, 2024.

Mr. Nairne was not appointed pursuant to any arrangement or understanding with any other person, has no family relationships with any director or executive officer of the Company, and there are no transactions involving Mr. Nairne that would be required to be reported under Item 404(a) of Regulation S-K.

Item 6. Exhibits.

ExhibitNumber		Description
2.1		Agreement and Plan of Merger, dated as of February 28, 2024, by and among First Advantage Corporation, Sterling Check Corp. and Starter Merger Sub, Inc. (incorporated herein by reference to Exhibit 2.1 of First Advantage’s Form 8-K filed on March 1, 2024).
2.2		Waiver of Brazil Antitrust Filing Obligation and Closing Condition, dated as of March 25, 2024, related to the Agreement and Plan of Merger, dated as of February 28, 2024, by and among First Advantage Corporation, Sterling Check Corp. and Starter Merger Sub, Inc. (incorporated herein by reference to Exhibit 2.2 of First Advantage’s Form 10-Q filed on May 9, 2024).
3.1		Amended and Restated Certificate of Incorporation of First Advantage Corporation (incorporated herein by reference to Exhibit 3.1 of First Advantage’s Form 8-K filed on June 25, 2021).
3.2		Amended and Restated Bylaws of First Advantage Corporation (incorporated herein by reference to Exhibit 3.2 of First Advantage’s Form 8-K filed on June 25, 2021).
10.1		~~Retirement~~Employment ~~Agreement~~Offer Letter, dated asApril ~~of August 7~~6, ~~2024~~2016, between ~~David L. Gamsey and~~ First Advantage ~~Corporation~~Background ~~(incorporated~~Services ~~herein~~and bySteven ~~reference to Exhibit 10~~Marks.~~1 of First Advantage’s Form 8-K filed on August 8, 2024).~~
10.2		~~Retirement~~Employment ~~Agreement~~Letter, dated asOctober ~~of September 3~~19, ~~2024~~2022, between ~~Joseph Jaeger and~~ First Advantage ~~Corporation~~Limited ~~(incorporated~~and ~~herein~~Douglas ~~by reference to Exhibit 10~~Nairne.~~1 of First Advantage’s Form 8-K filed on September 3, 2024).~~
10.3		Letter Agreement, dated as of October 31, 2024, by and among First Advantage Corporation, Broad Street Principal Investments, L.L.C., Checkers Control Partnership, L.P., Broad Street Control Advisors, L.L.C. and the other parties thereto (incorporated herein by reference to Exhibit 10.1 of First Advantage’s Form 8-K filed on October 31, 2024).
10.4		Amendment No. 4 to the First Lien Credit Agreement, among Fastball Parent, Inc., First Advantage Holdings, LLC, each lender from time to time party thereto, Bank of America, N.A., as Administrative Agent and Collateral Agent and the Issuing Banks party thereto from time to time, dated October 31, 2024 (incorporated herein by reference to Exhibit 10.2 of First Advantage’s Form 8-K filed on October 31, 2024).
31.1		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

3934

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FIRST ADVANTAGE CORPORATION
Date: November 12, 2024	By:	/s/ Scott Staples
Date: May 8, 2025	By:	/s/ Scott Staples
		Scott Staples
		Chief Executive Officer(principal executive officer)
Date: November 12, 2024	By:	/s/ Steven Marks
Date: May 8, 2025	By:	/s/ Steven Marks
		Steven Marks
		Executive Vice President & Chief Financial Officer(principal financial officer and principal accounting officer)

4035

Filing Compare · FIRST ADVANTAGE CORP