First Advantage Raises Outlook as Revenue Growth Accelerates
Adjusted EBITDA reached $128.5 million as margins rebounded from the first quarter.
First Advantage Corporation (FA), the background-screening provider, reported faster second-quarter growth as revenue rose 14.9% from a year earlier, accelerating from 8.6% in the first quarter.
The quarter marked a turn in profitability trends. Adjusted EBITDA margin rebounded 1.3 percentage points sequentially to 28.6%, reversing four consecutive quarters of compression, though it remained 0.6 point below the year-earlier period.
Revenue increased to $448.8 million from $390.6 million a year earlier and rose 16.5% sequentially. GAAP net income climbed to $16.9 million, or $0.10 a diluted share, from $0.3 million, or $0.00 a share, while adjusted diluted earnings increased 29.6% to $0.35 a share.
The improvement was driven by stronger base revenue, upselling and cross-selling, large contract wins and healthy customer retention. First Advantage recorded 20 enterprise bookings, with demand broadening across industrials and manufacturing in addition to transportation and logistics and retail and e-commerce.
Adjusted EBITDA rose 12.8% from a year earlier and 22.0% from the first quarter. Sterling-related transaction and acquisition charges declined to about $0.3 million from $2.3 million, while integration expense fell to about $2.2 million from $3.7 million.
First Advantage now expects 2026 revenue of $1.67 billion to $1.71 billion, raising the midpoint by $27.5 million. It forecasts adjusted EBITDA of $472 million to $486 million and adjusted diluted earnings of $1.23 to $1.29 a share, up from its previous range of $1.15 to $1.25.
Operating cash flow nearly doubled to $73.6 million and rose about 49% sequentially. The company repurchased $18.7 million of shares during the quarter and increased its August debt prepayment to $45 million after making two separate $25 million payments earlier in the year.