First Advantage (FA) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenues reached $355 million, exceeding expectations due to the Sterling acquisition, strong sales execution, and high customer retention (96%).

• Integration of the $2.2 billion Sterling acquisition is progressing ahead of schedule, with $37 million in run-rate synergies actioned toward a $60–$70 million target.

• Net loss for Q1 2025 was $(41.2) million, reflecting higher interest, depreciation, and integration costs from the Sterling deal.

• Adjusted EBITDA was $92.1 million (26.0% margin), and adjusted net income was $30.5 million; adjusted diluted EPS was $0.17, flat year-over-year.

• Full-year 2025 guidance is reaffirmed, with confidence in strategy and execution despite macroeconomic uncertainty.

Financial highlights

• Q1 2025 revenue was $355 million, nearly flat year-over-year on a pro forma basis, but up 109% year-over-year due to the Sterling acquisition.

• Adjusted EBITDA reached $92.1 million, with a 26.0% margin, up from $46.6 million in Q1 2024.

• Adjusted net income was $30.5 million; adjusted diluted EPS was $0.17, flat year-over-year.

• Adjusted operating cash flow was $33.3 million; cash balance at quarter-end was $172 million.

• Net loss margin was (11.6)% in Q1 2025, compared to (1.7)% in Q1 2024.

Outlook and guidance

• Full-year 2025 guidance reaffirmed: revenues of $1.5–$1.6 billion, adjusted EBITDA of $410–$450 million, adjusted net income of $152–$182 million, and adjusted diluted EPS of $0.86–$1.03.

• Q2 revenue expected to be between down 2% and up 2% year-over-year; adjusted EBITDA margin projected at or above 28%.

• Adjusted diluted EPS anticipated to improve sequentially, reaching low to mid-20s cents in Q2 and mid to high 20s cents in H2.

• Free cash flow for 2025 projected at $65–$95 million, including one-time synergy and transaction-related costs.

• Guidance includes expected benefits from Sterling synergies and increased scale.