First Advantage (FA) Stifel 2024 Cross Sector Insight Conference summary

Market and business environment

• Staffing, healthcare, and transportation sectors show positive trends, while retail and financial services remain soft but are improving compared to previous periods.

• International markets like India have stabilized, and APAC is expected to bottom out within a quarter or two.

• Base growth is projected to remain negative for the rest of the year but should improve sequentially.

• New logo and cross-sell/upsell growth remain steady at 4-6% per quarter, with attrition at the lower end of 3%.

• Easier year-over-year comparisons are expected to begin in Q3 and Q4, potentially aiding reported growth.

Sterling acquisition rationale and integration

• The acquisition complements verticals, with minimal client overlap and strong geographic fit.

• Seasonality and client concentration risks are reduced, and the deal was made at a favorable valuation.

• At least $50 million in cost synergies are anticipated within 18-24 months, mainly from eliminating overlapping costs and improving efficiency.

• No forced platform migration for Sterling clients, aiming to minimize disruption and attrition.

• Revenue synergies are possible but not included in the base model; cross-selling of products and expanded data assets are expected.

Operational flexibility and cost management

• Cost of sales is highly variable, with 72% tied to third-party costs that scale with volume.

• Workforce and investment levels are actively managed to match demand, with levers like furloughs and delayed investments used as needed.

• Cost discipline is maintained as a routine practice, not just during downturns.