First Advantage’s first quarter was marked by strong sales execution and successful integration of its Sterling acquisition, both of which contributed to results that exceeded Wall Street’s expectations. Management attributed the company’s performance to robust upsell and cross-sell activity, high customer retention rates, and disciplined cost management. CEO Scott Staples highlighted that “our sales pipeline momentum continues with 14 enterprise bookings in the first quarter and 78 in the last 12 months, each with $500,000 or more of expected annual contract value.” Despite some softness in select verticals such as retail and e-commerce, the company saw healthy demand across compliance and financial services, as well as improved stability in international markets.
Is now the time to buy FA? Find out in our full research report (it’s free).
First Advantage (FA) Q1 CY2025 Highlights:
- Revenue: $354.6 million vs analyst estimates of $344.4 million (109% year-on-year growth, 2.9% beat)
- Adjusted EPS: $0.17 vs analyst estimates of $0.13 (30.2% beat)
- Adjusted EBITDA: $92.11 million vs analyst estimates of $81.79 million (26% margin, 12.6% beat)
- The company reconfirmed its revenue guidance for the full year of $1.55 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $0.95 at the midpoint
- EBITDA guidance for the full year is $430 million at the midpoint, above analyst estimates of $416.5 million
- Operating Margin: 2.1%, up from -0.4% in the same quarter last year
- Market Capitalization: $2.85 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions First Advantage’s Q1 Earnings Call
- Shlomo Rosenbaum (Stifel) asked how management reconciles strong April order volumes with client caution. CEO Scott Staples explained that clients are in “just-in-time hiring mode,” responding quickly to business needs but remaining hesitant to forecast future demand.
- Will Chi (RBC Capital Markets) inquired if expectations for base growth have changed due to macro volatility. CFO Steven Marks replied that base growth assumptions remain largely unchanged, with easier year-over-year comparisons expected to aid results in the second half.
- Andrew Steinerman (JPMorgan) questioned when base growth might return to the 2-4% range seen historically. Staples stated that, while stability is evident, positive base growth is likely not until early 2026.
- Andrew Nicholas (William Blair) sought clarity on trends in RFP volumes and the impact of digital identity needs. Staples said RFP volumes are stable, but demand for digital identity solutions is driving more upsell and cross-sell activity.
- Scott Wurtzel (Wolfe Research) asked about international growth trends and the rollout of AI in criminal records processing. Staples noted broad-based international recovery and that AI agents are improving turnaround times, though details will be shared at Investor Day.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace of synergy capture and operational improvements from the Sterling integration, (2) continued momentum in sales pipeline conversion and deal onboarding, and (3) adoption rates for AI-driven products and digital identity solutions. Execution in these areas, along with stable customer retention and macro trends, will be critical markers for assessing management’s strategy.
First Advantage currently trades at $16.43, up from $14.98 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
