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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 March 31, 2026


☐	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)

(678) 868-4151

(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 May 1, 2026, the registrant had 171,537,047 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	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32

PART II.	OTHER INFORMATION	33

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		36

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

First Advantage Corporation

Condensed Consolidated Balance Sheets

(Unaudited)


(in thousands, except share and par value amounts)	March 31, 2026			December 31, 2025
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	225,908		$	239,998
Restricted cash		111			86
Accounts receivable (net of allowance for doubtful accounts of $8,327 and $8,084 at March 31, 2026 and December 31, 2025, respectively)		287,676			297,281
Prepaid expenses and other current assets		21,317			15,323
Income tax receivable		4,306			9,010
Total current assets		539,318			561,698
Property and equipment, net		237,039			250,865
Goodwill		2,138,399			2,143,604
Intangible assets, net		820,653			857,111
Deferred tax asset, net		4,151			4,183
Other assets		14,604			16,341
TOTAL ASSETS	$	3,754,164		$	3,833,802
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	107,193		$	109,888
Accrued compensation		42,246			60,537
Accrued liabilities		42,347			49,140
Current portion of operating lease liability		3,372			3,568
Income tax payable		3,128			2,298
Deferred revenues		5,211			5,028
Total current liabilities		203,497			230,459
Long-term debt (net of deferred financing costs of $32,603 and $34,498 at March 31, 2026 and December 31, 2025, respectively)		2,056,934			2,080,039
Deferred tax liability, net		181,024			190,255
Operating lease liability, less current portion		4,862			5,525
Other liabilities		14,063			13,972
Total liabilities		2,460,380			2,520,250
COMMITMENTS AND CONTINGENCIES (Note 11)
EQUITY
Common stock - $0.001 par value; 1,000,000,000 shares authorized, 172,705,863 and 174,190,461 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively		173			174
Additional paid-in-capital		1,532,985			1,528,315
Accumulated deficit		(212,149	)		(194,632	)
Accumulated other comprehensive loss		(27,225	)		(20,305	)
Total equity		1,293,784			1,313,552
TOTAL LIABILITIES AND EQUITY	$	3,754,164		$	3,833,802

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

First Advantage Corporation

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)


	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2026			2025
REVENUES	$	385,201		$	354,588

OPERATING EXPENSES:
Cost of services (exclusive of depreciation and amortization below)		211,411			192,565
Product and technology expense		24,605			27,155
Selling, general, and administrative expense		53,475			65,585
Depreciation and amortization		62,190			61,666
Total operating expenses		351,681			346,971
INCOME FROM OPERATIONS		33,520			7,617

OTHER EXPENSE, NET:
Interest expense, net		29,841			46,580
Loss on extinguishment of debt		374			—
Total other expense, net		30,215			46,580
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		3,305			(38,963	)
Provision for income taxes		1,137			2,231
NET INCOME (LOSS)	$	2,168		$	(41,194	)

Foreign currency translation (loss) income		(6,920	)		5,453
COMPREHENSIVE LOSS	$	(4,752	)	$	(35,741	)

NET INCOME (LOSS)	$	2,168		$	(41,194	)
Basic net income (loss) per share	$	0.01		$	(0.24	)
Diluted net income (loss) per share	$	0.01		$	(0.24	)
Weighted average number of shares outstanding - basic		173,903,625			172,756,497
Weighted average number of shares outstanding - diluted		174,922,780			172,756,497

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

First Advantage Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
(in thousands)	2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	2,168		$	(41,194	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		62,190			61,666
Loss on extinguishment of debt		374			—
Amortization of deferred financing costs		1,520			1,608
Bad debt expense (recovery)		572			(712	)
Deferred taxes		(9,227	)		(7,553	)
Share-based compensation		4,430			7,967
Loss on disposal and impairment of long-lived assets		6,631			132
Change in fair value of interest rate swaps		(4,945	)		3,936
Changes in operating assets and liabilities:
Accounts receivable		8,339			1,927
Prepaid expenses and other assets		(5,502	)		(993	)
Accounts payable		(1,857	)		(6,038	)
Accrued compensation and accrued liabilities		(19,892	)		(8,615	)
Deferred revenues		201			482
Operating lease liabilities		87			(91	)
Other liabilities		(1,183	)		(366	)
Income taxes receivable and payable, net		5,525			7,315
Net cash provided by operating activities		49,431			19,471
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalized software development costs		(13,204	)		(10,628	)
Purchases of property and equipment		(2,812	)		(485	)
Other investing activities		2,000			37
Net cash used in investing activities		(14,016	)		(11,076	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of First Lien Credit Facility		(25,000	)		(5,463	)
Share repurchases		(19,492	)		—
Proceeds from issuance of common stock under share-based compensation plans		1,152			1,688
Net settlement of share-based compensation plan awards		(911	)		(2,204	)
Cash dividends paid		(10	)		(11	)
Payments on finance lease obligations		—			(3	)
Net cash used in financing activities		(44,261	)		(5,993	)
Effect of exchange rate on cash, cash equivalents, and restricted cash		(5,219	)		906
(Decrease) increase in cash, cash equivalents, and restricted cash		(14,065	)		3,308
Cash, cash equivalents, and restricted cash at beginning of period		240,084			169,483
Cash, cash equivalents, and restricted cash at end of period	$	226,019		$	172,791

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes, net of refunds received	$	5,768		$	3,003
Cash paid for interest	$	34,714		$	41,881
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired on account	$	2,386		$	973
Excise taxes on share repurchases incurred but not paid	$	195		$	—

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			Additional Paid-In-Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
BALANCE – December 31, 2025	$	174		$	1,528,315		$	(194,632	)	$	(20,305	)	$	1,313,552
Share-based compensation		—			4,430			—			—			4,430
Repurchases of common stock		(2	)		—			(19,685	)		—			(19,687	)
Proceeds from issuance of common stock under share-based compensation plans		1			1,151			—			—			1,152
Common stock withheld for tax obligations on restricted stock unit and option settlement	(0)				(911	)		—			—			(911	)
Foreign currency translation		—			—			—			(6,920	)		(6,920	)
Net income		—			—			2,168			—			2,168
BALANCE – March 31, 2026	$	173		$	1,532,985		$	(212,149	)	$	(27,225	)	$	1,293,784


(in thousands)	Common Stock			Additional Paid-In-Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
BALANCE – December 31, 2024	$	173		$	1,504,007		$	(159,808	)	$	(37,333	)	$	1,307,039
Share-based compensation		—			7,967			—			—			7,967
Forfeitures of previously declared cash dividends		—			5			—			—			5
Proceeds from issuance of common stock under share-based compensation plans		2			1,688			—			—			1,690
Common stock withheld for tax obligations on restricted stock unit and option settlement		(1	)		(2,204	)		—			—			(2,205	)
Foreign currency translation		—			—			—			5,453			5,453
Net loss		—			—			(41,194	)		—			(41,194	)
BALANCE – March 31, 2025	$	174		$	1,511,463		$	(201,002	)	$	(31,880	)	$	1,278,755

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, identity, and compliance services performed across all phases of the employee lifecycle from pre-onboarding services to post-onboarding and ongoing monitoring services, covering employees, contractors, contingent workers, 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’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, 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, 2025.

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, impairment of long-lived assets, 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 debt are disclosed in Note 5, “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 March 31, 2026 (in thousands):


	Level 1		Level 2		Level 3
Assets
Interest rate swaps	$	—	$	166	$	—
Liabilities
Interest rate swaps	$	—	$	1,596	$	—

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 trade names, customer lists, 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 did not have any customers which represented 10% or more of its consolidated revenues in any segment during the three months ended March 31, 2026 and 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. Foreign currency translation (loss) income included in accumulated other comprehensive loss was approximately $(6.9) million and $5.5 million for the three months ended March 31, 2026 and 2025, respectively.

Gains or losses resulting from foreign currency transactions are included in the accompanying condensed consolidated statements of operations and comprehensive loss, 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. Foreign currency transaction income (loss) included in the accompanying condensed consolidated statements of operations and comprehensive loss was approximately $4.0 million and $(0.1) million for the three months ended March 31, 2026 and 2025, respectively.

Recent Accounting Pronouncements — There were no accounting pronouncements issued during the three months ended March 31, 2026 that are expected to have a material impact on the condensed consolidated financial statements.

Note 3. Property and Equipment, net

Property and equipment, net as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands):


	March 31, 2026			December 31, 2025
Furniture and equipment	$	39,209		$	36,460
Capitalized software for internal use, acquired by business combination		468,570			467,477
Capitalized software for internal use, developed internally or otherwise purchased		176,246			163,266
Leasehold improvements		1,285			1,284
Total property and equipment		685,310			668,487
Less: accumulated depreciation and amortization		(448,271	)		(417,622	)
Property and equipment, net	$	237,039		$	250,865

Depreciation and amortization expense of property and equipment was approximately $27.8 million and $27.6 million for the three months ended March 31, 2026 and 2025, respectively.

Note 4. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the three months ended March 31, 2026 by reportable segment were as follows (in thousands):


	First Advantage Americas		First Advantage International			Sterling			Total
Balance – December 31, 2025	$	703,383	$	116,401		$	1,323,820		$	2,143,604
Foreign currency translation		8		(1,237	)		1,067			(162	)
Adjustment of goodwill for asset disposition		—		—			(5,043	)		(5,043	)
Balance – March 31, 2026	$	703,391	$	115,164		$	1,319,844		$	2,138,399

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, 2026 and December 31, 2025 (in thousands):


	March 31, 2026
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Useful Life (in years)
Trade names	$	158,280	$	(63,489	)	$	94,791	5-20 years
Customer lists		1,173,784		(449,085	)		724,699	13-14 years
Other intangible assets		2,400		(1,237	)		1,163	5 years
Total	$	1,334,464	$	(513,811	)	$	820,653


	December 31, 2025
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Useful Life (in years)
Trade names	$	158,382	$	(58,902	)	$	99,480	5-20 years
Customer lists		1,176,608		(420,263	)		756,345	13-14 years
Other intangible assets		2,400		(1,114	)		1,286	5 years
Total	$	1,337,390	$	(480,279	)	$	857,111

In January 2026, the Company sold certain customer relationships associated with an adjacent product to an unrelated third party for cash consideration. The customers transferred represented less than 0.5% of consolidated revenues for the year ended December 31, 2025. The Company retained the underlying technology, data, and other assets and continues to operate the subsidiary’s remaining portions of the business. Because the transaction did not represent a strategic shift or the disposal of a separate major line of business, the related operations are not presented as discontinued operations. In connection with the asset disposition, the Company derecognized $5.0 million of goodwill and $2.5 million of customer lists.

Amortization expense of trade names, customer lists, and other intangible assets was approximately $34.4 million and $34.1 million for the three months ended March 31, 2026 and 2025, 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.

Note 5. Debt

The fair value of the Company’s debt obligation approximated its book value as of March 31, 2026 and December 31, 2025 and consisted of the following (in thousands):


	March 31, 2026			December 31, 2025
First Lien Credit Facility	$	2,089,537		$	2,114,537
Less: Deferred financing costs		(32,603	)		(34,498	)
Long-term debt, net	$	2,056,934		$	2,080,039

First Advantage Holdings, LLC, an indirect wholly-owned subsidiary of the Company, is a party to a First Lien Credit Agreement (as amended, “2024 First Lien Credit Agreement”), which provided for a term loan of $2.185 billion due October 31, 2031 and a $250.0 million revolving credit facility due October 31, 2029.

On July 30, 2025, the Company amended its 2024 First Lien Credit Agreement (“2025 Amended First Lien Credit Agreement”) to reduce the interest rate on its term loan to a range of 2.50% to 2.75%, based on the first lien ratio, plus the Secured Overnight Financing Rate (“SOFR”) and an applicable margin (“First Lien Credit Facility”). The amendment also reduced the interest rate on its revolving credit facility to a range of 2.25% to 2.75%, based on the first lien ratio, plus SOFR (“Amended Revolver”). 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.

During the three months ended March 31, 2026, the Company made a voluntary principal prepayment of $25.0 million on its outstanding term loan. As a result of this prepayment, the Company recognized a loss on extinguishment of debt of $0.4 million, related to the write-off of unamortized deferred financing costs. No prepayment penalties were incurred. In accordance with the terms of the 2025 Amended First Lien Credit Agreement, this voluntary prepayment reduced the remaining scheduled future principal repayment obligations on the term loan.

The 2025 First Lien Credit Agreement contains customary affirmative covenants, negative covenants and events of default (including upon a change of control). The 2025 First Lien Credit Agreement also includes a “springing” first lien net leverage ratio test, applicable only to the Amended 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 40.0% of the Amended Revolver is utilized on such date. As of March 31, 2026, there were no outstanding borrowings under the Amended Revolver and $2,089.5 million outstanding under the First Lien Credit Facility. In addition, $0.7 million in letters of credit were issued under the 2025 Amended First Lien Credit Agreement to support three office leases. 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, 2026.

Note 6. Derivatives

To reduce exposure to variability in expected future cash outflows on variable rate debt attributable to the changes in one-month 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.

During the three months ended March 31, 2026, the Company had the following derivatives that were not designated as a hedge in qualifying hedging relationships:


Product	Effective Date	Maturity Date	Notional	Rate
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%
Interest rate swap	April 30, 2025	April 30, 2028	$250.0 million	3.56%

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, 2026 and December 31, 2025 (in thousands):


Derivatives not designated as hedging instruments	Balance Sheet Location	March 31, 2026		December 31, 2025
Interest rate swaps	Prepaid expenses and other current assets	$	166	$	—
Interest rate swaps	Accrued liabilities	$	1,596	$	6,492

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


		Three Months Ended March 31,
Derivatives not designated as hedging instruments	Income Statement Location	2026		2025
Interest rate swaps	Interest expense, net	$	4,945	$	(3,936	)

Note 7. Income Taxes

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

For the three months ended March 31, 2026, the Company estimated its annual effective tax rate based on projected full-year income and applied this rate to year-to-date pre-tax income. The resulting tax provision was adjusted to reflect discrete tax items recognized during the period.

The effective income tax rates for the three months ended March 31, 2026 was 34.4%. The Company’s effective income tax rate for the three months ended March 31, 2026 differed from the U.S. federal statutory rate of 21% primarily due to the jurisdictional mix of earnings, U.S. state income taxes, and non-deductible share-based compensation. The jurisdictional mix of earnings was impacted by significant acquisition-related depreciation and amortization, which resulted in a U.S. pre-tax loss while generating pre-tax income in most foreign jurisdictions.

The effective income tax rates for the three months ended March 31, 2025 was (5.7)%. The Company’s effective income tax rate for the three months ended March 31, 2025 was lower than the U.S. federal statutory rate of 21% primarily due to a jurisdictional mix of earnings, driven by significant acquisition-related depreciation and amortization resulting in a U.S. net loss in the period, income taxes in the majority of the jurisdictions outside of the U.S., and U.S. state income taxes.

Note 8. 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 from transactional contracts with a defined price but an undefined quantity are recognized utilizing the right to invoice expedient, with revenues recognized as the services are provided and become 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 $16.3 million and $16.9 million as of March 31, 2026 and December 31, 2025, 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 $5.2 million and $5.0 million as of March 31, 2026 and December 31, 2025, 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 14, “Reportable Segments.”

Note 9. 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 as follows (in thousands):


	Three Months Ended March 31,
	2026		2025
Share-based compensation expense
Cost of services	$	625	$	532
Product and technology expense		1,409		803
Selling, general, and administrative expense		2,396		6,632
Total share-based compensation expense	$	4,430	$	7,967

Prior to the Company’s 2021 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 October 2024, as part of the Sterling Acquisition, unvested Sterling restricted stock, restricted stock units, and net option shares underlying in-the-money stock option awards were converted to an unvested cash award, an unvested First Advantage restricted stock award, or a First Advantage restricted stock unit (“RSU”) at the holder’s election. Converted awards are subject to the same terms and conditions (including vesting) as applied to the replaced Sterling equity award. All out-of-the-money Sterling stock options, whether vested or unvested, were canceled for no consideration.

As of March 31, 2026, the Company had approximately $54.5 million of unrecognized pre-tax non-cash compensation expense related to its equity-based compensation plans. This amount includes approximately $30.1 million related to RSUs and $24.4 million related to stock options. The Company expects to recognize this expense over a weighted average period of 2.0 years.

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 three months ended March 31, 2026 is as follows:


		Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
December 31, 2025	Grants outstanding		1,275,393	$	5.15
March 31, 2026	Grants outstanding		1,275,393	$	5.15	3.9 Years	$8.4 million
March 31, 2026	Grants vested		1,157,563	$	5.14	3.9 Years	$7.7 million
March 31, 2026	Grants unvested		117,830	$	5.23

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 March 31, 2026, 22,452,133 shares were available for issuance under the 2021 Equity Plan.

Stock Options

A summary of the stock option activity for the three months ended March 31, 2026 is as follows:


		Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
December 31, 2025	Grants outstanding		5,225,103		$	14.52
	Grants issued		2,579,979		$	11.76
	Grants cancelled/forfeited		(24,427	)	$	13.60
March 31, 2026	Grants outstanding		7,780,655		$	13.61	7.5 Years	$0.1 million
March 31, 2026	Grants vested		3,645,095		$	13.94	5.5 Years	$0.1 million
March 31, 2026	Grants unvested		4,135,560		$	13.32

The fair value for stock options granted for the three months ended March 31, 2026 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		48.62	%
Risk-free interest rate		3.72	%
Expected term (in years)		6.25
Fair-value of the underlying unit	$	11.76

Restricted Stock Units

A summary of the RSU activity for the three months ended March 31, 2026 is as follows:


		Shares			Weighted Average Grant Date Fair Value
December 31, 2025	Nonvested RSUs		883,532		$	16.18
	Granted		1,755,287		$	11.76
	Vested		(107,795	)	$	15.13
	Forfeited		(12,784	)	$	13.55
March 31, 2026	Nonvested RSUs		2,518,240		$	13.16

Restricted Stock

A summary of the restricted stock activity for the three months ended March 31, 2026 is as follows:


		Shares			Weighted Average Grant Date Fair Value
December 31, 2025	Nonvested restricted stock		448,223		$	11.74
	Vested		(448,223	)	$	13.32
March 31, 2026	Nonvested restricted stock		—		$	-

Sterling Acquisition Awards

Restricted Stock Units

A summary of the RSU activity for the three months ended March 31, 2026 is as follows:


		Shares			Weighted Average Grant Date Fair Value
December 31, 2025	Nonvested RSUs		9,525		$	18.70
	Vested		(6,008	)	$	18.70
March 31, 2026	Nonvested RSUs		3,517		$	18.70

Restricted Stock

A summary of the restricted stock activity for the three months ended March 31, 2026 is as follows:


		Shares			Weighted Average Grant Date Fair Value
December 31, 2025	Nonvested restricted stock		180,766		$	18.70
	Vested		(120,053	)	$	18.70
March 31, 2026	Nonvested restricted stock		60,713		$	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 $0.2 million and $0.1 million for the three months ended March 31, 2026 and 2025, respectively.

Note 10. Equity

Preferred Stock

As of March 31, 2026 and December 31, 2025, 250,000,000 shares of Preferred Stock were authorized, and no Preferred Stock was issued or outstanding.

Share Repurchase Program

On February 25, 2026, the Company’s Board of Directors authorized the repurchase of up to $100.0 million of the Company’s common stock (the “2026 Repurchase Program”) with no expiration date.

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. 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 plans to use its existing cash to fund repurchases made under the 2026 Repurchase Program.

A summary of the stock repurchase activity under the 2026 Repurchase Program is summarized as follows (in thousands, except share and per share amounts):


	Three Months Ended March 31,
	2026
Shares repurchased		1,734,778
Average price per share	$	11.24
Costs recorded to accumulated deficit
Total repurchase costs	$	19,456
Additional associated costs		229
Total costs recorded to accumulated deficit	$	19,685

As of March 31, 2026, the remaining authorized value of shares available to be repurchased under this program was approximately $80.5 million.

Repurchased shares of common stock were retired. The par value of repurchased shares was deducted from common stock and the excess repurchase price over par value is reflected as a reduction to accumulated deficit. Additional associated costs include the related brokerage commissions and excise taxes on share repurchases.

Note 11. Commitments and Contingencies

There have been no material changes to the Company’s contractual obligations as compared to December 31, 2025.

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, is 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 $8.1 million and $8.7 million as of March 31, 2026 and December 31, 2025, 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 12. Related Party Transactions

The Company had no material related party transactions for the three months ended March 31, 2026.

Note 13. Net Income (Loss) 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 months ended March 31, 2026 had a dilutive effect and were included in the calculation of diluted net income per share for the period. The potentially dilutive securities outstanding during the three months ended March 31, 2025 had an anti-dilutive effect and were therefore not included in the calculation of diluted net loss per share. Basic and diluted net income (loss) per share was calculated as follows:


	Three Months Ended March 31,
	2026		2025
Basic net income (loss) per share	$	0.01	$	(0.24	)
Diluted net income (loss) per share	$	0.01	$	(0.24	)
Numerator:
Net income (loss) (in thousands)	$	2,168	$	(41,194	)
Denominator:
Weighted average number of shares outstanding - basic		173,903,625		172,756,497
Add stock options to purchase shares and restricted stock units		1,019,155		—
Weighted average number of shares outstanding - diluted		174,922,780		172,756,497

For the three months ended March 31, 2026 and 2025, a total of 6,647,968 and 3,863,961 stock options, RSUs, and restricted stock awards were excluded from the calculation of diluted net income (loss) per share, respectively, because their effect was anti-dilutive.

Note 14. Reportable Segments

The Company has three reportable segments:

•

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, 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.

Our chief operating decision maker (“CODM”) uses the performance measure of Adjusted EBITDA, on both a consolidated and a segment basis, to allocate resources and assess performance of our businesses. Our CODM also uses Adjusted EBITDA as a performance measure for both segment and corporate management under our incentive compensation plans. Corporate costs are generally allocated to the segments based upon estimated revenue levels and other assumptions that management considers reasonable. Adjusted cost of services consists of amounts paid to third parties for access to government records, other third-party data and services, our internal processing fulfillment and customer care functions, and other cost of services excluding depreciation and amortization, share-based compensation expenses, transaction expenses, and integration expenses. Other segment items consist of product and technology and selling, general, and administrative expenses, but similarly excludes depreciation and amortization, share based compensation, and other expenses excluded from Adjusted EBITDA.

The CODM does not review the Company’s assets by segment as it does not provide additional insights into the performance of our business; therefore, such information is not presented. The accounting policies of the segments are the same as described in Note 1. “Organization, Nature of Business, and Basis 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, 2025.

Reconciliations of Segment Adjusted EBITDA to net income (loss) for the three months ended March 31, 2026 and 2025 is as follows (in thousands):


	Three Months Ended March 31, 2026
	First Advantage Americas			First Advantage International			Sterling		Total
Total revenues	$	172,734		$	23,560		$	190,391	$	386,685
Intersegment revenues		(468	)		(1,135	)		119		(1,484	)
External revenues	$	172,266		$	22,425		$	190,510	$	385,201
Less:
Adjusted cost of services		90,176			13,792			111,604
Other segment items		32,807			8,296			24,723
Segment Adjusted EBITDA	$	49,751		$	1,472		$	54,064	$	105,287
Adjustments to reconcile to net income:
Interest expense, net										29,841
Provision for income taxes										1,137
Loss on extinguishment of debt										374
Depreciation and amortization										62,190
Share-based compensation										4,430
Transaction and acquisition-related charges (a)										565
Integration, restructuring, and other charges (b)										4,582
Net income									$	2,168


	Three Months Ended March 31, 2025
	First Advantage Americas			First Advantage International			Sterling			Total
Total revenues	$	145,353		$	23,775		$	187,518		$	356,646
Intersegment revenues		(491	)		(1,263	)		(304	)		(2,058	)
External revenues	$	144,862		$	22,512		$	187,214		$	354,588
Less:
Adjusted cost of services		74,183			13,848			104,802
Other segment items		30,863			6,561			34,277
Segment Adjusted EBITDA	$	40,307		$	3,366		$	48,439		$	92,112
Adjustments to reconcile to net loss:
Interest expense, net											46,580
Provision for income taxes											2,231
Depreciation and amortization											61,666
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	)

(a)

Represents charges incurred related to acquisitions and similar transactions, primarily consisting of change in control-related costs, professional service fees, and other third-party costs. Transaction and acquisition related charges for the three months ended March 31, 2026 and 2025 include approximately $0.2 million and $3.8 million, respectively, of expense associated with the Sterling Acquisition.

(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, 2026 and 2025 include approximately $1.4 million and $7.8 million, respectively, 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 March 31,
	2026		2025
Revenues
United States	$	329,406	$	303,789
All other countries		55,795		50,799
Total revenues	$	385,201	$	354,588

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


	March 31, 2026		December 31, 2025
Long-lived assets, net
United States	$	2,600,528	$	2,822,176
All other countries		603,886		438,668
Total long-lived assets, net	$	3,204,414	$	3,260,844

Note 15. Subsequent Events

On May 6, 2026, the Company made a voluntary principal repayment in the amount of $25.0 million under its First Lien Credit Facility. The repayment was made using available cash on hand. No prepayment penalties were 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 months ended March 31, 2026, and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2025, 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, 2025.

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 the Sterling Acquisition; adverse 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, uncertainty in financial markets, and changes in tax laws; 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”); our 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, social, ethical, and legal issues relating to the use of new and evolving technologies, employee or other internal misconduct, computer viruses, 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; failure to comply with anti-corruption, economic and trade sanctions, and anti-money laundering laws and regulations; disruptions at our Operation Centers of Excellence and other operational sites; our contracts with our customers, which do not guarantee exclusivity or contracted volumes; the timing, manner and volume of repurchases of common stock pursuant to our share repurchase program; 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 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; 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, 2025, filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Form 10-Q, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.

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;

•

“Sterling” refers to Sterling Check Corp., which became an indirect, wholly owned subsidiary of First Advantage on October 31, 2024, and now operates as a separate reportable segment;

•

“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 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 global software and data company. We provide comprehensive, end-to-end identity solutions, criminal background screening, credential verifications, drug and health screening, and continuous risk monitoring. Combining AI-powered proprietary technology platforms with proprietary data, primary source data, and third-party data, we help organizations hire with confidence and manage risk across the entire employee lifecycle.

We derive a substantial majority of our revenues from pre-onboarding screening and perform screens across over 200 countries and territories, enabling us to serve as a one-stop-shop provider to both multinational companies and growth companies. Our over 80,000 customers are global enterprises, mid-sized companies, and small companies, and our products and solutions are used by personnel in Executive Management, Human Resources, Talent Acquisition, Compliance, Risk, Legal, Safety, and Vendor Management.

Our platforms offer flexibility for customers to specify which products to include in their screening package, such as Social Security numbers, criminal records, education and work verifications, sex offender registry, and global sanctions. Generally, our customers order a background screening package or selected combination of screens related to a single individual before they onboard that individual. The type and mix of products and solutions we sell to a customer vary by customer size, their screening requirements, and industry vertical. Therefore, order volumes are not comparable across customers or periods. Package pricing can also vary considerably by customer depending on the product mix in their screening packages, order volumes, screening requirements and preferences, pass-through and third-party out-of-pocket costs, and bundling of products.

We enter into contracts with our customers that are typically three years in length. These contracts set forth the general terms and pricing of our products and solutions but generally do not include minimum order volumes or committed order volumes. Additionally, a majority of Sterling’s enterprise customer contracts are exclusive to Sterling or require Sterling to be used as the primary provider. Due to our contract terms and the nature of the background screening industry, we determined our contract terms for ASC 606 purposes to be three years or less. We typically bill our customers at the end of each month and recognize revenues as completed orders are reported or otherwise made available to our customers.

We generated revenues of $385.2 million for the three months ended March 31, 2026, as compared to $354.6 million for the three months ended March 31, 2025. Approximately 86% of our revenues for the three months ended March 31, 2026 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, 2026. Please refer to “Results of Operations” for further details.

Segments

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

•

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, and the school year ends, giving rise to student and graduate hiring, and increased commercial activity tied to outdoor activities. We expect that changes in consumer behavior, labor market conditions, technological innovation, and broader macroeconomic factors may impact future seasonality, but we are unable to predict these potential shifts and their impact to our business.

Recent Developments

Current Economic Conditions

Our results continue to be influenced by our customers’ underlying business performance, hiring patterns, and workforce strategies, which collectively drive demand for our background screening and adjacent solutions. Customer demand remains sensitive to a range of macroeconomic and labor-market factors, including hiring velocity, employee turnover, sector‑specific employment trends, and overall economic conditions. During periods of economic uncertainty, employers may reduce or delay hiring, slow onboarding activity, or take a more measured approach to workforce expansion, which can negatively impact demand for our solutions.

Macroeconomic conditions during the year have continued to be volatile. While parts of the global economy have demonstrated resilience, employers continue to operate in an environment characterized by elevated interest rates, inflationary pressure driven in part by higher energy and transportation costs, and uneven hiring activity across industries and geographies. Recent geopolitical developments, including ongoing conflict in the Middle East and resulting disruptions to global energy markets, have contributed to renewed inflation concerns, higher operating costs for many businesses, and increased uncertainty in planning and investment decisions. In addition, continued uncertainty surrounding global trade and tariff policies, shifting supply‑chain strategies, and evolving regulatory and compliance requirements have contributed to cautious employer behavior, particularly among customers with international operations or exposure to cyclical end markets.

Heightened geopolitical tensions, regional conflicts, and policy uncertainty have increased variability in customer hiring plans and workforce strategies. These conditions have resulted in slower decision‑making, increased cost scrutiny, and greater focus on operational efficiency, including the pace and scale of new hiring initiatives. If the economic uncertainty is sustained or increases, we may experience a negative impact on new business generation, customer renewals and overall demand levels, sales and marketing efforts, revenues growth rates, customer deployments, customer collections, product development, or other financial metrics. Any of these factors could harm our business, financial condition, and operating results. Our ability to grow our business will also depend on the long-term strength, diversity, and durability of the verticals that we focus on and rely upon to drive our revenues.

Despite these macroeconomic changes, we are confident in the overall long-term health of our business, the strength of our product offerings, and our ability to continue to execute on our strategy and help our customers hire with confidence and manage risk across the entire employee lifecycle. Our continued focus on delivering innovative solutions that enhance workplace safety and address evolving compliance requirements as well as our diversified customer base have contributed to the stability of our business and long-term financial performance.

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, 2025 (the “2025 Annual Report”).

Components of our Results of Operations

Revenues

The Company derives revenues from a variety of background screening and adjacent products performed across all phases of the workforce lifecycle from pre-onboarding screening services to post-onboarding and ongoing monitoring services, covering employees, contractors, contingent workers, 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 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 evaluation process and support compliance with their workforce onboarding criteria from the time an application is submitted to an applicant’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, 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. Certain of these costs are 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 acquisitions. Selling, general, and administrative expenses also include gains and losses from the sale of assets that do not constitute a sale of a business or discontinued operations. 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 customers. Operating expenses are influenced by revenue levels, customer and product mix, and the progress of acquisition-related integration activities. As revenues grow, we would generally expect cost of services to grow proportionally, although the rate of growth may vary based on automation, productivity initiatives, efficiency gains, shifts in mix, and third‑party pass‑through costs. We regularly review expenses and investments in the context of revenue trends and observed changes in the business to ensure alignment with our financial objectives. While we expect operating expenses to increase in absolute dollars as we support continued growth, we believe that, over the long term, operating expenses as a percentage of total revenues will gradually decline as we scale the business and advance our operating efficiency and automation initiatives.

Other Expense, Net

Our other expense, net consists of the following:

•

Interest expense, net: Relates primarily to our debt service costs, the interest-related unrealized gains and losses of our interest rate derivative instruments and, to a lesser extent, the interest on our finance lease obligations and the amortization of deferred financing costs. Additionally, interest expense, net includes interest income earnings on our cash and cash equivalent balances held in interest-bearing accounts.

•

Loss on Extinguishment of Debt: Represents non-operating expense incurred when we repay or refinance debt prior to maturity. This includes the write-off of unamortized debt issuance costs and early repayment penalties, if any.

Provision for Income Taxes

Provision for income taxes consists of U.S. domestic and foreign corporate income taxes related to earnings, with applicable statutory tax rates varying by jurisdiction. Our effective tax rate may be affected by a number of factors, including changes in tax laws, regulations, or statutory rates; regulatory guidance, or new administrative interpretations of judicial decisions; and shifts in proportion of income earned in jurisdictions with differing statutory tax rates.

As our business continues to expand globally, the distribution of pretax income across domestic and foreign jurisdictions may fluctuate, resulting in volatility in our effective tax rate. Additionally, the effective tax rate may also be affected by the availability of tax credits and incentives, non-deductible expenses, changes in valuation allowances, and the resolution of uncertain tax positions. These factors, individually or collectively, may cause our provision for income taxes and effective tax rate to differ materially from period to period.

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 months ended March 31, 2026 compared to the three months ended March 31, 2025


	Three Months Ended March 31,
(in thousands, except percentages)	2026			2025
Revenues	$	385,201		$	354,588

Operating Expenses:
Cost of services (exclusive of depreciation and amortization below)		211,411			192,565
Product and technology expense		24,605			27,155
Selling, general, and administrative expense		53,475			65,585
Depreciation and amortization		62,190			61,666
Total operating expenses		351,681			346,971
Income from operations		33,520			7,617

Other Expense, Net:
Interest expense, net		29,841			46,580
Loss on extinguishment of debt		374			—
Total other expense, net		30,215			46,580
Income (loss) before provision for income taxes		3,305			(38,963	)
Provision for income taxes		1,137			2,231
Net income (loss)	$	2,168		$	(41,194	)
Net income (loss) margin		0.6	%		(11.6	)%

Revenues


	Three Months Ended March 31,
(in thousands)	2026			2025
Revenues
First Advantage Americas	$	172,734		$	145,353
First Advantage International		23,560			23,775
Sterling		190,391			187,518
Eliminations		(1,484	)		(2,058	)
Total revenues	$	385,201		$	354,588

Revenues were $385.2 million for the three months ended March 31, 2026, compared to $354.6 million for the three months ended March 31, 2025. Revenues for the three months ended March 31, 2026 increased by $30.6 million, or 8.6%, compared to the three months ended March 31, 2025.

The increase in revenues is due to:

•

a net increase of $15.4 million, or 4.4% from existing customer revenues, primarily driven by continued strength from upselling and cross-selling initiatives which were offset by the impact of of lost accounts; and

•

revenues of $15.2 million, or 4.3%, from new customers, primarily attributable to our First Advantage Americas and Sterling segments.

Pricing remained relatively stable across all periods.

Cost of Services


	Three Months Ended March 31,
(in thousands, except percentages)	2026			2025
Cost of services	$	211,411		$	192,565
Revenues	$	385,201		$	354,588
Cost of services as a % of revenue		54.9	%		54.3	%

Cost of services was $211.4 million for the three months ended March 31, 2026, compared to $192.6 million for the three months ended March 31, 2025. Cost of services for the three months ended March 31, 2026 increased by $18.8 million, or 9.8%, compared to the three months ended March 31, 2025.

The increase in cost of services was primarily due to:

•

a $16.7 million increase in third-party data expenses as a result of increased revenue volumes; and

•

a $0.9 million increase in software costs.

Cost of services as a percentage of revenues was 54.9% for the three months ended March 31, 2026, compared to 54.3% for the three months ended March 31, 2025. The cost of services percentage of revenues for the first quarter of 2026 was impacted by product and customer mix and increases in third party costs.

Product and Technology Expense


	Three Months Ended March 31,
(in thousands)	2026		2025
Product and technology expense	$	24,605	$	27,155

Product and technology expense was $24.6 million for the three months ended March 31, 2026, compared to $27.2 million for the three months ended March 31, 2025. Product and technology expense for the three months ended March 31, 2026 decreased by $2.6 million, or 9.4%, compared to the three months ended March 31, 2025.

The decrease in product and technology expense was primarily due to:

•

a $2.0 million decrease in software expenses as a result of integration efforts related to the acquisition of Sterling; and

•

a $0.7 million decrease in professional services costs from non-recurring integration activities incurred in the prior year.

Selling, General, and Administrative Expense


	Three Months Ended March 31,
(in thousands)	2026		2025
Selling, general, and administrative expense	$	53,475	$	65,585

Selling, general, and administrative expense was $53.5 million for the three months ended March 31, 2026, compared to $65.6 million for the three months ended March 31, 2025. Selling, general, and administrative expense for the three months ended March 31, 2026 decreased by $12.1 million, or 18.5%, compared to the three months ended March 31, 2025.

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

•

a $4.6 million decrease in personnel expenses resulting from cost-savings actions implem

FIRST ADVANTAGE CORP 10-Q