First Advantage (FA) Q3 2025 earnings summary

Executive summary

• Achieved profitable growth in Q3 2025, with revenues up 3.8% year-over-year on a pro forma basis and adjusted EBITDA margin of 29%, driven by new customer wins, upsell/cross-sell, and digital identity solutions.

• Integration of the Sterling acquisition completed ahead of schedule, delivering strategic and financial benefits, increased synergy targets ($65M–$80M), and high customer retention.

• Customer retention improved to 97%, supported by strong upsell, cross-sell, and new logo wins, especially in enterprise and international markets.

• Digital identity products and expanded offerings are major growth drivers, enhancing client stickiness and competitive differentiation.

• The company remains resilient amid flat hiring trends and macroeconomic uncertainty, leveraging a diversified vertical and geographic mix.

Financial highlights

• Q3 2025 revenues reached $409.2 million, up 3.8% year-over-year pro forma and 105.5% reported, driven by the Sterling acquisition.

• Adjusted EBITDA was $118.5 million (29.0% margin), up 8.4% year-over-year; Adjusted Net Income was $52.3 million; Adjusted diluted EPS was $0.30.

• Net income for Q3 2025 was $2.6 million (0.6% margin), compared to a net loss in Q3 2024.

• Adjusted Operating Cash Flow was $80.5 million, up 77.7% year-over-year; cash balance at quarter-end was $216.8 million.

• Over $70 million in debt principal repaid year-to-date, including a $25 million voluntary repayment post-quarter.

Outlook and guidance

• Full-year 2025 guidance narrowed: revenues $1.535–$1.570 billion, Adjusted EBITDA $430–$440 million, Adjusted Net Income $170–$180 million, Adjusted diluted EPS $0.98–$1.02, and margin ~28%.

• Q4 revenue growth expected around 6% year-over-year; adjusted EBITDA margin for Q4 projected at 28%.

• Free cash flow for 2025 anticipated at $110 million–$120 million.

• Long-term targets: $1.8B–$2.0B revenue, $560M–$630M Adjusted EBITDA, 31%–32% margin, $1.65–$2.00 Adjusted Diluted EPS, and net leverage of 2.0x–3.0x.

• Guidance midpoints are at or above original ranges, reflecting realized synergies and strong Q3 momentum.