FA

First Advantage stock has delivered a strong 3 year run, yet current market multiples screen it as overvalued and the broader checks point to a mixed picture rather than a clear bargain or clear excess. Over the past 3 years, First Advantage has returned 50.8%, which puts more focus on whether the current share price already reflects much of that progress. Expectations around the durability of First Advantage's screening and verification revenue, and any pressure on margins or cash flow, can both have a material impact on how stretched or comfortable the valuation feels. The value score of 3 out of 6 checks signals a mixed picture rather than a clear bargain or clear overvaluation on the broader tests. For investors, the debate is whether First Advantage's recent share price strength and current multiples leave enough room for a satisfactory long term return from here. Compare First Advantage's mixed-value setup with other stocks that pair balance sheet strength and fundamentals by scanning the hand picked solid balance sheet and fundamentals stocks screener (52 results). The P/E ratio is a useful lens for First Advantage because earnings are a key driver of how investors frame the stock today. First Advantage currently trades on a P/E of 143.7x, which is far above both the Professional Services industry average of 22.5x and the peer group average of 18.5x. The fair P/E ratio from the tailored model is 58.7x, which already reflects the company specific profile on growth, margins, size and risk. Against that benchmark, the market price implies a large premium to the level that model suggests might be reasonable for the earnings on display. This gap does not say what will happen next, but it does mean buyers today are paying a high price for each dollar of current earnings in First Advantage compared with many alternatives in the sector. On the P/E multiple, First Advantage stock screens as overvalued relative to both its tailored fair ratio and the broader industry. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for First Advantage pick up where the valuation puzzle leaves off and set out the specific earnings, margin and growth paths that would need to hold for the stock to be worth materially more or less than today’s price, based on scenarios shared on the Community page. Instead of a single ratio or model output, they describe the future that figure depends on so you can watch how reality lines up over time. Community views on First Advantage are split between a meaningful upside case and a more cautious setup that leans toward limited value on today’s price. Bull case: 20% undervalued Read the full Bull Case to see why First Advantage could be undervalued Bear case: 24% overvalued Read the full Bear Case to see why First Advantage could be overvalued Do you think there's more to the story for First Advantage? Head over to our Community to see what others are saying! First Advantage currently screens as overvalued on earnings multiples, which means buyers are paying a rich price for each dollar of current profit compared with peers and a tailored fair P/E. With no intrinsic value cross check here, the market view does most of the heavy lifting. The key question is whether First Advantage can sustain the earnings and margin profile that would keep that premium from feeling stretched. The crux of the bull versus bear debate is how durable the higher quality, higher margin parts of the business really are over the next few years. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include FA. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

First Advantage’s Q2 results were driven by broad-based revenue growth across key verticals, ongoing customer adoption of AI-enabled products, and effective operational execution. Management highlighted robust enterprise bookings, strong upsell and cross-sell activity, and higher-than-anticipated base volumes, particularly from episodic customer initiatives that created surges in hiring and rescreening demand. CEO Scott Staples noted that the company’s technology platform and diverse vertical exposure helped absorb these volume increases efficiently, stating, “We are seeing broad-based improvement, both geographically and vertically, with high-volume hiring particularly strong in retail, transportation, and blue-collar staffing.” Is now the time to buy FA? Find out in our full research report (it’s free). Revenue: $448.8 million vs analyst estimates of $414.8 million (14.9% year-on-year growth, 8.2% beat) Adjusted EPS: $0.35 vs analyst estimates of $0.29 (22.7% beat) Adjusted EBITDA: $128.5 million vs analyst estimates of $116.5 million (28.6% margin, 10.3% beat) The company lifted its revenue guidance for the full year to $1.69 billion at the midpoint from $1.66 billion, a 1.7% increase Management raised its full-year Adjusted EPS guidance to $1.26 at the midpoint, a 5% increase EBITDA guidance for the full year is $479 million at the midpoint, in line with analyst expectations Operating Margin: 12.7%, up from 9.7% in the same quarter last year Market Capitalization: $3.61 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is 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. Shlomo Rosenbaum (Stifel) asked whether the broad-based improvement in customer tone is sustainable and whether recent customer initiatives reflect an improving environment or episodic events; CEO Scott Staples and President Joelle Smith clarified that while some initiatives were unexpected, base growth appears durable. Ashish Sabadra (RBC Capital Markets) questioned if positive momentum in base volumes would continue and asked about margin sustainability; CFO Steven Marks explained that while positive trends persist, margin benefits are expected to be steady as integration synergies are realized. Andrew Nicholas (William Blair) inquired about where share gains are most pronounced and potential margin impacts from custom initiatives; Staples highlighted high-volume hiring verticals, while Marks noted that margins were largely unaffected by episodic volume changes. Andrew Steinerman (JPMorgan) sought clarity on the nature of customer initiatives and capital allocation priorities; Staples explained recent growth stemmed from both rescreening and restructuring activities, and Marks reiterated deleveraging remains the top capital allocation priority. Stephanie Benjamin Moore (Jefferies) asked about the addressable market for large contracts and the main reasons clients are choosing First Advantage; Staples cited the company’s verticalization, proprietary data assets, and AI-driven automation as key competitive advantages. Looking ahead, the StockStory team will be monitoring (1) continued adoption and contract wins for Digital Identity and other AI-driven solutions, (2) the pace and sustainability of high-volume hiring activity in core verticals like transportation and retail, and (3) realization of remaining integration synergies from the Sterling acquisition. Progress in international markets and resilience against macro headwinds will also be important milestones. First Advantage currently trades at $20.95, up from $20.56 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 8:30 a.m. ET Vice President of Investor Relations - Stephanie Gorman Chief Executive Officer - Scott Staples President - Joelle Smith Chief Financial Officer - Steven Marks Operator: Good morning, everyone. My name is Bo, and I will be your conference operator today. I would like to welcome you to the First Advantage Second Quarter 2026 Earnings Conference Call and Webcast. Hosting the call today from First Advantage is Ms. Stephanie Gorman, Vice President of Investor Relations. is being recorded. [Operator Instructions] It is now my pleasure to turn the call over to Ms. Stephanie Gorman. Please go ahead, ma'am. Stephanie Gorman: Thank you, Bo. Good morning, everyone, and welcome to First Advantage's Second Quarter 2026 Earnings Conference Call. In the Investors section of our website, you will find the earnings press release and slide presentation to accompany today's discussion. This webcast is being recorded and will be available for replay on our Investor Relations website. Before we begin our prepared remarks, I would like to remind everyone that our discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are discussed in more detail in our filings with the SEC, including our 2025 Form 10-K and our Form 10-Q for the second quarter of 2026 to be filed with the SEC. Such factors may be updated from time to time in our periodic filings with the SEC, and we do not undertake any obligation to update forward-looking statements. Throughout this conference call, we will also present and discuss non-GAAP financial measures. Reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures to the extent available without unreasonable efforts appear in today's earnings press release and presentation, which are available on our Investor Relations website. I am joined on our call today by Scott Staples, our Chief Executive Officer; Joelle Smith, our President; and Steven Marks, our Chief Financial Officer. After our prepared remarks, we will take your questions. I will now turn the call over to Scott. Scott Staples: Thank you, Stephanie, and good morning, everyone. Thank you for joining our call. Today, we have 4 key messages. First, we delivered outstanding results in the second quarter with revenue growth of 15% year-over-year, adjusted EBITDA margins of 28.6% and adjusted diluted EPS growth of 30% year-over-year, meaningfully outperforming our previously communicated expectations. These results reflect the strength of our go-to-market performance, our state-of-the-art AI-driven proprietary technology platform and the durability of our diverse enterprise customer base and vertical mix. Second, we are making strong progress on our FA 5.0 growth strategy. Our focus on product innovation, platform capabilities and go-to-market execution is translating into tangible results, including robust enterprise bookings, strong upsell and cross-sell activity and continued customer adoption of our innovative products such as Digital Identity. As we expand the value we deliver to customers and further strengthen our capabilities, we believe we are well positioned to drive sustainable growth over the long term. Third, our strong cash flow generation continues to provide flexibility to execute our balanced and disciplined capital allocation strategy. We are constantly evaluating opportunities to create shareholder value and remain focused on deploying capital where it can have the greatest impact. Deleveraging remains a top priority. And in the second quarter, we made a previously announced $25 million voluntary debt repayment followed by an additional upsized $45 million voluntary prepayment this week, subsequent to quarter end. This brings our cumulative debt repayment since closing the Sterling acquisition to more than $165 million. We also continued to repurchase shares opportunistically, buying back nearly $19 million during the quarter with total repurchases through July 31 of $38 million or approximately 1.9% of total shares outstanding. And finally, we are raising our full year 2026 guidance across all metrics to reflect our strong first half performance, continuing go-to-market success, current labor market trends and our confidence in our growth outlook for the remainder of the year. Now turning to Slide 5. We delivered exceptional results in the second quarter with strong performance across revenue growth, adjusted EBITDA, adjusted EBITDA margin and adjusted diluted earnings per share. Our results in the quarter benefited from sustained momentum driven by our recent large contract wins and continued improvement in base revenue performance, reflecting our focus on controlling what we can control and executing consistently across our growth algorithm. At the same time, we are beginning to see encouraging signs of gradual improvement in the broader hiring market, which provided additional support to our results during the quarter. We believe the strength of our business, including our enterprise customer focus, diverse vertical mix, global footprint and balance across blue-collar and white-collar hiring with a strong go-to-market focus on high-volume enterprise hires continue to provide stability and reinforce our confidence in delivering durable growth across a variety of macro environments. One of First Advantage's key differentiators is our position as a global HR tech and data platform company, which is purposely built to help customers navigate the increasingly complex dynamics of human capital risk. Our team of data scientists and engineers are focused on transforming our products through the application of cutting-edge technologies, including AI. Equally important, our customers trust us because of our deep domain expertise across verticals and a wide range of regulatory frameworks, including the Fair Credit Reporting Act, or FCRA. In a rapidly evolving environment, this combination of AI-driven innovation and regulatory risk management and compliance leadership is what enables First Advantage to deliver high-quality, highly automated and high-volume screening globally at scale. Building on that point, we have spoken extensively about our strategy of applying AI to help our customers manage risk while preserving the speed, efficiency and user experience they expect. At the same time, we are also benefiting from AI across our own operations, leveraging our years of investment in automation, machine learning and AI. We have embedded these capabilities throughout our platform and proprietary data assets. Doing so has enabled us to strengthen our solutions such as SmartHub AI and Digital Identity fraud mitigation products, improve operational efficiency and support more scalable growth. A recent example is our shift from using third-party AI for the chat feature within our Click.Chat.Call customer care platform to a proprietary native AI chat experience that has been purposely built on our own infrastructure, trained by our own data and tailored to our needs. This transition enabled by the depth and expertise of our engineering teams creates a smoother handoff between AI and live agents, reduces our reliance on external platforms and allows us to deliver a better experience at a lower total cost. Across our operations, customer care, fulfillment, product development and engineering teams, AI is helping us enhance the customer experience, increase productivity and drive operating leverage while further strengthening our competitive differentiation. Before turning the call over to Joelle, I would like to highlight a few recent First Advantage recognitions and milestones. First, in June, we celebrated the fifth anniversary of First Advantage's initial public offering. I'm extremely proud of what we have accomplished as a public company on behalf of our stakeholders. We have delivered growth and profitability, successfully executed and integrated the transformational Sterling acquisition, innovated and led with best-in-class solutions, launched our FA 5.0 strategy and established long-term financial targets while making meaningful progress towards them. Second, we were added to the S&P Small Cap 600 Index on June 16, a milestone that reflects our expanded scale, strong financial performance and established track record as a public company. And third, we were ranked among TIME's America's Best Companies 2026 as the #1 Background Screening and Identity Verification company. We also placed in the top 25 nationwide in the professional services category and in the top 3 professional services companies ranked by financial performance. These recognitions reflect the excellence of our team as we continue competing and winning in our industry. With that, I will now turn the call over to Joelle, who will share more on our go-to-market execution, vertical performance, product innovation and customer engagement. Joelle Smith: Thank you, Scott, and good morning, everyone. This morning, I will provide an update on our go-to-market performance and the underlying dynamics behind our strong results this quarter. I'll start with the drivers of our robust 15% year-over-year Q2 revenue growth, which well exceeded our previously stated expectations and long-term growth algorithm target of 7% to 9%. Combined upsell, cross-sell and new logo revenues continued to deliver robust growth, achieving 12.5% growth in the quarter. Performance was driven by the continued growth from the 3 large go-lives from the end of 2025 that we have discussed on previous calls as well as the contribution from the many other enterprise deals we've won in prior quarters. Overall, our sales engine continues to help. In addition, base growth for the quarter came in exceptionally strong at 6.7%. We believe this reflects the breadth and scale of our business model. Underlying base trends continue to improve. And notably, we supported meaningfully higher-than-expected volumes from several customer initiatives during the quarter, which contributed roughly half of the quarter's base growth. It's an excellent example of how our scale and AI-enabled platform enable us to absorb and deliver periodic volume surges from time to time across multiple industry verticals while maintaining top speed and service. Even without this benefit, our overall base growth this quarter was particularly strong at the high end to above our long-term growth algorithm target range. Now switching gears to our continued go-to-market success. Our sales teams delivered an impressive 20 enterprise bookings in Q2. This is up from 17 in Q1 with each deal having an expected annual contract value of at least $500,000. These wins, combined with the continued strength and expansion in our late-stage pipeline, particularly within new logo opportunities, reinforce our confidence in the durability of our new logo and upsell, cross-sell growth and support our positive outlook for the balance of the year. Customer engagement also remains strong with retention of 96%, which is in line with our long-term model. This represents another quarter of excellent performance and demonstrates the success of our high-caliber go-to-market team and the market impact of our continued investment in our state-of-the-art platform. Now looking at our verticals on Slide 8. Overall, we continue to hear a neutral to positive tone from our enterprise customers who generally expect current hiring activity to continue through the balance of the year. The diversity of our customer base continues to be a key differentiator, supporting the robust momentum we saw across many of our largest verticals in Q2 despite some of the mixed headlines around broader employment you may have read. Transportation and logistics as well as retail and e-commerce all benefited from a combination of sustained base volumes, healthy consumer activity supporting labor demand and some workforce initiatives driving higher volumes. Industrial and manufacturing has also demonstrated notable growth as aerospace and defense customers expanded capacity and increased hiring. Trends in general staffing also remained positive, particularly within blue-collar staffing, indicative of the overall improvement we are seeing in the hiring environment, which is manifesting within our base momentum. Our remaining verticals showed minimal declines or were flat, including healthcare, where strong new upsell and cross-sell activity offset some remaining base softness as uncertainty of federal healthcare funding remains. Turning to our international business. Q2 revenues were up 2.4% year-over-year. Our global scale and consistent delivery across regions uniquely position us to win, particularly as U.S. and European multinationals continue to centralize and globalize their hiring process. We continue to be a partner of choice for managing their expanded streaming needs across geographies, which supports our growth and reinforces our confidence in the long-term international opportunity. At the same time, we have seen softer volumes emerge in some of the markets, such as India as global conflicts have persisted longer than many initially expected and are driving impacts, including higher fuel prices and broader economic disruption. Underlying much of this positive momentum across our business is the strength of our product portfolio, which continues to differentiate us in the market. As identity fraud continues to rise in both frequency and sophistication, customers are increasingly turning to fraud mitigation solutions like our Digital Identity products to help them mitigate risk and maintain shock throughout the screening and verification process. This trend is underscored by a recent Equifax survey of HR professionals, which found that nearly 3/4 of respondents encounter challenges with fabricated or misleading candidate information. Digital Identity continues to be the tip of the spear in our go-to-market strategy. As we have discussed, we believe it is not a feature, but an essential solution ahead of the screening process and customers continue to ask about it with increasing frequency as they navigate the challenging world they operate in. While Digital Identity still represents a modest portion of overall contract value, it remains a key differentiator and decision driver and is standard in most of the deals we quote. In Q2, adoption continued to build with implementation trends in line with last quarter, reinforcing the importance of this product line. Digital identity is just one example of how our product innovation strategy is translating into differentiated solutions for customers and strengthening our competitive position. There are several additional promising initiatives in the works with focus areas such as new verification products and additional offerings leveraging our SmartHub AI routing technology. We believe initiatives like these help drive continued product leadership, support our go-to-market success and optimize our fulfillment cost structure. We look forward to providing further updates as these products come to market. Beyond our innovation efforts, staying closely connected to our customers remains a top priority, and our global Collaborate User Conferences continue to be a powerful platform for engagement worldwide. Following our successful U.S. Collaborate User Conference in April, we held regional events in Singapore in June and India in July, with additional events planned in EMEA, Hong Kong and Australia later this fall. Across these conferences, we have connected with hundreds of customers and prospects, deepening relationships, gathering valuable market insight and reinforcing our confidence in the opportunities ahead. With that, I will now turn the call over to Steven. Steven Marks: Thank you, Joelle, and good morning, everyone. I'll start with second quarter results on Slide 10. Our second quarter revenues were up an impressive 15% year-over-year, coming in at $449 million, marking our fifth consecutive quarter of positive year-over-year revenue growth. As Joelle discussed, the underlying business continued to perform very well in Q2. Excluding the benefits to base from Joelle's mentioned customer initiatives, we estimate Q2 total revenue growth was still a very robust 11% to 12%, above both our previously communicated expectations and long-term growth algorithm target range. Adjusted EBITDA for the second quarter was $128.5 million, up 13% year-over-year. Our adjusted EBITDA margin of 28.6% came in above our stated expectations and reflects sequential quarterly improvement of 130 basis points, driven by strong operating leverage. Notably, we efficiently fulfilled the incremental Q2 volume within our existing cost structure without having to make structural changes to our operating model. Margins benefited from our strong execution on synergies and cost discipline while flexing to adapt to the product mix changes as a result of the large deals we have previously -- we have discussed previously, particularly as the positive base trends have provided more broad-based revenue distribution compared to what we saw in late 2025. Our adjusted diluted EPS was $0.35 per share, a 30% increase year-over-year. Our per share earnings growth was supported by our overall outperformance in the quarter, share buybacks and synergy realization. Earnings growth also benefited from our disciplined expense and capital management, combined with lower interest expense as a result of our debt repricing and voluntary debt prepayment. We continue to action cost synergies from our Sterling acquisition, reflecting our disciplined execution and strong integration progress. We remain on track to achieve our synergy goal within 2 years post closing. And as of quarter end, we had actioned $63 million in run rate acquisition synergies, moving closer to our total synergy goal of $65 million to $80 million. Overall, our outstanding Q2 results were enabled by our go-to-market momentum and execution, combined with our ability to flex to meet our customers' demand. Now turning to cash flow, net leverage and capital allocation on Slide 11. During the quarter, we generated operating cash flows of $73.6 million, a substantial increase of $36.3 million or 97% on a year-over-year basis. This impressive performance was driven by our revenue outperformance in the quarter, the larger scale of our business, our overall focus on cash flow and the curtailment of acquisition-related outflows. Our cash balance as of June 30, 2026, was $238 million. We are constantly evaluating our capital allocation options for driving shareholder value creation, remaining focused on opportunistic capital deployment across both deleveraging and share repurchasing. Achieving our target net leverage level of less than 3x remains a top priority and the pace of our debt paydown reflects that commitment. In line with this, just this week, we prepaid $45 million of debt, well exceeding the voluntary prepayments we've made each quarter for the last year. This is in addition to the previously announced $25 million prepayment we made on May 6 and brings our total debt repayment to $165.5 million since closing on the Sterling acquisition. As a result, our synergized adjusted EBITDA net leverage ratio at quarter end was 3.7x and represents a 0.7x decrease from when we closed the Sterling acquisition. Additionally, during the quarter, we repurchased $18.7 million of our shares through the $100 million share repurchase authorization that we announced in February. Our repurchases through the end of July totaled approximately $38 million with an average purchase price of $11.78 per share. This represents 3.2 million shares in total or approximately 1.9% of total shares outstanding. $61.8 million remains on our authorization. Going forward, we will continue to analyze our capital allocation approach to ensure we are opportunistically actioning a plan that maximizes ROI and shareholder value. Moving to Slide 12 and our 2026 guidance. Today, we are raising our previously announced full year guidance, supported by our exceptional performance in the first half of the year and our outlook for stability in the hiring market for the remainder of the year. We now expect 2026 total revenues in the range of $1.67 billion to $1.71 billion, adjusted EBITDA of $472 million to $486 million, adjusted net income of $214 million to $225 million and adjusted diluted EPS of $1.23 to $1.29 per share. At the midpoint, this represents approximately 7% year-over-year revenue growth, 9% year-over-year adjusted EBITDA growth and 21% year-over-year adjusted diluted EPS growth. Our updated and tightened guidance range reflects a balanced posture on our short-term outlook that incorporates the healthy state of our underlying demand trends as well as the ongoing geopolitical and macro uncertainty. As a result, the continuation of current trends would support performance above the midpoint of our range. However, consistent with our historical approach towards guidance, we believe it is prudent to account for a broader range of outcomes given the factors outside of our control. As we think about the second half of the year, please remember that our 2026 growth rates are being measured against an exceptionally strong second half of 2025, during which we grew a notable 12% year-over-year in Q4 2025. Notably, in Q3 of this year, we begin to lap the 12-month anniversary of the large 2025 go-lives we have discussed previously. And by Q4, those wins will be fully annualized. As we progress through the second half of the year, we expect that this will result in moderating growth rates compared to the exceptional start to this year. Zooming out, while growth rates may fluctuate from quarter-to-quarter, we expect to deliver full year results above our original expectations and in line with our long-term growth algorithm. Looking specifically at Q3, we saw revenue momentum continuing from Q2 into July, and we expect base to be slightly positive for the full quarter. Taken together with the new logo and upsell cross-sell trends we've discussed, we expect total revenue growth rates for Q3 in the mid- to high single digits, consistent with the expectations we shared last quarter. Looking ahead at Q4, we expect base to be neutral with our overall base momentum continuing into Q4, but partially offset by prior year's Q4 new logo and upsell cross-sell revenue being more evenly distributed across 2026, the dynamic we've been discussing with you for several quarters. For Q4, we also have a more modest level of expected new logo and upsell cross-sell contribution models as we comp against the strong Q4 2025 17% growth and navigate some instances of recent win implementations now extending into early 2027. As a result, we expect Q4 total revenue growth rate in the low to mid-single digits. Turning to adjusted EBITDA. Overall, we expect adjusted EBITDA margins to remain largely consistent with Q2 for the remainder of the year. And similarly, for adjusted diluted EPS, we expect meaningful year-over-year expansion, increasing versus prior year to the low to mid-$0.30 range in both Q3 and Q4. Having walked through our updated 2026 guidance, I want to close on Slide 13. This slide puts our 2026 guidance in the context of our longer-term growth trend in adjusted diluted EPS. The growth implied by our updated 2026 guidance midpoint is consistent with our track record of adjusted diluted EPS growth of 20% or more since 2024. This is also consistent with the longer-term adjusted diluted EPS growth rate implied by the midpoint of our 2028 target. With that, let me turn it back to Scott for closing remarks before we open the line for your questions. Scott Staples: Thank you, Steven. In closing, Q2 was our strongest quarter yet, and we expect our solid momentum to continue in the second half of 2026. We are focused on winning by providing best-in-class differentiated solutions for our customers. We remain confident in our ability to deliver consistent financial performance, and we are progressing well toward the 2028 financial targets we established during our Investor Day in May 2025. Thank you to the entire First Advantage team for the work you do to support our customers each day. With that, we will open the line for questions. Operator: [Operator Instructions] We'll go first this morning to Shlomo Rosenbaum with Stifel. Shlomo Rosenbaum: I just want to make sure first that I'm understanding the tone on the overall environment. It sounds like the tone is better from your clients and you're seeing a better growth. And it sounds like it's more broad-based. I want to make sure I'm understanding that right. And then I also want to ask about the detail on those customer initiatives, where it's something that was a pull forward or it was an episodic project that kind of came out of the blue. Just trying to understand what that is. And maybe you could give us the nature of it. Is that something that's indicative of an improving environment? Or is it just something else? Scott Staples: Yes. Thanks, Shlomo. I'll take the first part of your question, and then I'll have Joelle answer the second part of your question. So basically, your first part of the question is on the macro. What are we hearing? What are we seeing? And obviously, 6.7% growth in the base is great, slightly unexpected, but obviously, we love it. I think there's a couple of things going on. One, if you just look at job data, where you're seeing a lot of stabilization. You're seeing hires and quits absolutely flat for the last 6 months, and that's fine, right? Job openings continue to be really strong. Pre-pandemic, it was about $7 million, and now you're looking at $7.4 million. So that's all really good for base and for our business. Unemployment remains steady at 4.2% and job openings to unemployment is also favorable. So I think just pure labor statistics, you're seeing good numbers. And also, over the last couple of weeks, there's just been some really great articles in Wall Street Journal and other places around what's really going on in the labor market. And I think the impact of AI was highly overblown. And I think we're seeing -- as you used -- I'll use your exact term, we are seeing broad-based improvement. And I think it would go back to what we said over the last couple of quarters. We are continuing to hear, I would say, neutral to positive. The same comments I've given for the last 2 quarters, neutral to positive projections on hiring from our customers. And you know we talk to our customers all the time. So we are in front of literally hundreds and hundreds of our large customers and hearing a very consistent tone. And I think when you say broad-based, it's true geographically, and it's also true vertical-wise. If you look at our vertical performance, we got really nice growth out of retail and e-com, transportation and logistics, industrials, general staffing, especially the blue-collar staffing. The blue-collar staffers are doing extremely well. But all the other verticals were basically flat or just barely negative. So we're not getting these wide swings in verticals. And I think the only place geographically, we're seeing some slowdown is actually in India, and that's a direct reflection of the Iran war. Oil prices, gas prices are definitely affecting India economy and our customers in India. But as you know, it's not a huge piece of our business. So we're definitely seeing a combination of vertical -- broad-based vertical, broad-based geographic, really nice stabilization and obviously, even improvement in base. I'll turn it over to Joelle to talk about the customers. Joelle Smith: Awesome. Thanks, Scott. Hey, Shlomo. Yes, so the customer initiatives that we saw, which is roughly half of the base growth that was created, it created elevating screening activity. And these are really enterprise-wide labor reshaping programs. These programs created churn in their labor force and labor churn is always good for our business. We're also seeing a continuation of job stacking, which, as a reminder, is someone who's working 2 or more jobs at the same time. And we're seeing this across verticals, which is also good for our business. So these are the things that we've really kind of seen from customers. They're doing a lot of this work because they're large enterprises and large enterprises do these types of changes from time to time. Shlomo Rosenbaum: Okay. So it was not something you were expecting. It was not -- it was kind of an episodic thing that just came up in the quarter is the way to understand, just to clarify that the customer initiatives. Joelle Smith: Yes. It did accelerate through Q2. We do anticipate it continuing into Q3, but probably will normalize into Q4. But these programs do happen, and it wasn't just one group. It definitely happened across transportation, retail and e-com. Shlomo Rosenbaum: Okay. Great. And just to sneak in one other thing. Can you just talk a little bit more about what's going on with package density, how that might be helping the growth? And how much of a factor is Digital ID in terms of helping to improve the cross-sell and upsell? I don't know if you have metrics for that, and then I'll pass it off to someone else. Scott Staples: Yes. I'll take the package density, and then I'll again flip it back to Joelle to talk about Digital Identity and sort of our tip of spear go-to-market approach with Digital Identity. Package density continues to be strong. I mean if you look at the numbers, I'll give you sort of the color on it in a second. But I mean, if you look even back, go back and look at our results for even the last 5 years, and we've been public for 5 years. Upsell, cross-sell has been just a really good consistent driver of growth for us and package density is the #1 driver of that. So if you look at 2025, for example, upsell, cross-sell was 7% growth. And in Q1, it's 8%. And now in Q2, it's another 8%. The key component of package density, which is driving a lot of this growth is this whole focus on risk, risk mitigation, fraud prevention, and again, just unfortunately, the challenging world that we live in. Customers are continuously looking for more protection, more types of screens, deeper searches. There's just -- as we've talked about before, AI, what we call bad AI is enabling fraudsters and basically all levels of fraud to enter into the recruiting process. And we're fighting that bad AI with good AI. But that's just a piece of it. It's also can you go deeper on county searches, state searches, federal. We're continuously hearing this from our customers, and this is a great thing for our business. It's driving a lot of our cross-sell growth for many years now, and we don't see an end to it. The world, again, keeps getting more and more challenged, not less and less challenged, which is really good for our business. I'll flip it over to Joelle now to talk about Digital ID. Joelle Smith: Yes, absolutely. We are definitely seeing a lot of activity around Digital ID for the same reasons that Scott talked about with regards to just kind of the state of the world that we live in. We do -- we are seeing a significant increase in fraud, especially in the hiring market in workforce within the interview stage, the hiring stage and then even day 1. So the Digital Identity offerings that we have that are embedded into our screening process are creating a lot of opportunity for us, which is naturally just making the ACV and the size of deals larger. So that's also contributing to the package density increase that we're seeing. But it's changing the game with regards to how we are going to market. As Scott said, it really is the tip of the spear, and it's opening up all kinds of doors and conversations with people because it's reaching an elevated level within our customers. It's no longer just an HR conversation. The conversation is moving up to the other C-suite and even board levels because of the threat of some of these bad actors and the risk that it creates within these enterprise organizations. So we're definitely seeing a large attach rate with the Digital Identity, and it's obviously driving larger deal sizes for us. Operator: We'll go next now to Ashish Sabadra with RBC Capital Markets. Ashish Sabadra: Congrats on such a strong result. Maybe just a quick follow-up on the base growth. You mentioned the customer initiative, but the other half seems to be pretty broad-based across multiple industries. And it seems like that momentum continued in July. So should we expect that momentum going forward based on what you've seen so far and your conversations with your customers? Scott Staples: Steven, do you want to? Steven Marks: Yes. Ashish, it's a good question. I think certainly, it was broad-based growth in the second quarter, retail, e-com, transportation, logistics, but we also saw industrials and defense and those types of sectors that Scott mentioned before, staffing and certainly on the blue collar doing really well. July is obviously a good start, but there's still 2 more months in the quarter and a little bit of unknown, but we certainly think base will be positive for the quarter. Slightly positive that is. Before we were saying negative -- 0 to negative 2%, we're probably on the positive side of those numbers, which is a healthy step change in progression. And I think that reflects the customer sentiment and the volumes that we're seeing. So obviously, we've got a range of outcomes. And as Scott mentioned, a sustained kind of conflict in Iran and the Middle East could drag a little bit on consumer confidence and fuel prices. But overall, we're pretty confident in the base, and we like where the momentum started the quarter out in July. Ashish Sabadra: That's great color. And just maybe on the margin front, obviously, really great progress on the cost takeout initiative. You expect -- you mentioned second half margins more in line with the first. As we think about the puts and takes going forward, can you highlight some of the investments that may be weighing on the margins? Steven Marks: Yes. I think a couple of things there, Ashish. I mean, a, we're somewhat expecting our vertical mix to stay constant for the rest of the year, which means you're not going to see that large fluctuation in gross margins that we saw last year where we kind of shifted a little bit heavier towards some of the transportation type verticals where you just have a different mix of services. So that's why you're seeing that consistency there. And then as I mentioned on the prepared remarks, we're making very good progress on the synergies. It's still a little back of the year weighted. So you'll see more of that progression. If you looked in the slide deck, we've actioned $63 million, but we've only realized $51 million. So there's still $12 million that's going to flow through and a lot more of that is weighted towards the very end of the year or early next year when you kind of look at the pacing and flowing of that. So we're still very confident about overall getting leverage and accretion out of gross margins. We are making some targeted reinvestments in the business on sales and product as we talked about with you guys over the years, those are great investments for us and certainly return well. But overall, we think margins will be very consistent through the end of the year, which is still good year-on-year positive momentum, which we like in the model. Scott Staples: Ashish, Yes, I'll add one more thing. If you remember in last quarter's earnings call, we said that we would put a ribbon and bow on the synergy efforts and the integration efforts by December 31 of this year, and we are still on target to do that. So it doesn't mean we will fully realize everything by December 31, but we will fully action everything by December 31. So going into 2027, we will be done with all the integration and synergies for the Sterling acquisition, which is almost now approaching a 2-year anniversary. We will get some of the realization of those synergies, obviously, flowing into 2027, but we are definitely on target to wrapping it up December 31. Ashish Sabadra: Congrats for that. Operator: We'll go next now to Andrew Nicholas with William Blair. Andrew Nicholas: First, I wanted to just kind of ask on share gains. Obviously, upsell, cross-sell, new logos all remain pretty impressive. Just curious from a vertical perspective or even a geographic perspective, if there are specific kind of markets where your momentum is pronounced and maybe any thoughts on why that would be if that's the case? Scott Staples: Hey, Andrew. We're seeing great momentum anywhere you can classify something regardless of vertical, can classify it as high-volume hiring. There's still a tremendous demand for blue-collar workers, even white-collar workers where there's high turnover. We don't -- it's hard for us to actually break down like what's a corporate job versus some other job. But we know what's a trucker, what's a warehouse worker, what's a store clerk worker. And those jobs are just still in tremendous demand. So it actually -- that lends to transportation, it lends to retail e-com. It certainly lends to -- we're seeing great growth out of the healthcare staffers. We're seeing great growth out of blue-collar staffers and even hospitality, things like that where it's high volume. But even within things like industrials and manufacturing, there's tremendous growth in aerospace and defense right now. So our industrials business is doing extremely well. And you would obviously expect that given the results of the industrial companies, and we're benefiting from that as well. But even some of our financial services companies and things like that do have high-volume hiring components of them. And so we're getting just really nice growth across a lot of our large verticals. And the key is high-volume hiring, and that's our focus. As you know, for going on almost 10 years now, our focus vertically has been on the high-volume hires and the enterprise. And I think we're reaping the benefits of that. Andrew Nicholas: Got it. And then for my follow-up, just a quick one on margins. Are there any kind of nuances to the custom initiatives from a margin perspective? Are there higher or lower pass-throughs? Are there bulk discounts? Anything for us to thinking about in terms of that impact on Q2, and it sounds like Q3 as well? Steven Marks: Andrew, no, I mean, those initiatives are really just running more volume through their existing programs. I think the only real gross margin impact would be if it changes kind of the vertical chemistry a little bit. And if there's more volume, obviously, from a vertical that's more transportation-oriented or healthcare-oriented, it could have to move the needle a little bit. But overall, they're running core packages at normal terms and conditions. Operator: We'll go next now to Andrew Steinerman of JPMorgan. Andrew Steinerman: I just wanted to unpack this customer initiatives call out again. Maybe we can sort of cut through and I recognize there's certain things you can say about what your customers are doing and certain things you can't say. term enterprise reshaping was used. But just in plain English, what did your customers do? What segment was it in? Because as we look at the beat and the guide increase, obviously, there's a little gap there. I'm trying to understand that given you sound more positive. And then I have a follow-up on capital allocation. Scott Staples: Yes. [ Alex ], so think of it this way. First of all, it was multiple customers, and it was obviously great news. As Joelle mentioned, about half of the base increase in the quarter was attributed to these customers basically doing large-scale, whether it be rescreening or hiring. So it was a combination of both. We had some large customers across multiple verticals launched some large rescreening initiatives. And again, that goes back to the fact that we live in a challenging world and customers are very worried about what potentially existing employees have done since they've been hired. So doing some large rescreening on large employee bases is a great revenue lift for us. It doesn't mean they'll do it again next year. They may do it 2 years from now, but we're starting to see rescreening become a little bit more of a factor. We're starting to see monitoring become a little bit more of a factor. Again, it showcases the world that we're living in. And we also had some large customers doing some restructuring. So they were consolidating divisions or they were changing things and that led to actually more turnover and more hiring. So again, it's really hard to like say it was 1 or 2 things. It was a little bit across multiple customers, across multiple industries, but obviously, we're happy to take the business. Andrew Steinerman: Understood. Then maybe peeling back the envelope on capital allocation. This is one for Steven. You mentioned that you guys are being very thoughtful around capital allocation going forward from here. Obviously, your stock price has done well. Obviously, you've deleveraged in a pretty orderly way. Are you planning to change at all how you're thinking about capital allocation at this juncture? Do the priorities change at all? Is there potential for more organic reinvestment, inorganic investments, thinking about other ways to return capital to shareholders? My ears perked up a bit when you said that, but I just wanted to dig in on the capital allocation thoughts that you guys are having with the team. Steven Marks: Yes. Alex, it's a good question. It's not really change of posture at all. I think we've been saying since we kind of announced the share repurchase program back in February that our plan was always to be opportunistic. Certainly, we're pleased with the upward momentum in the stock price and obviously, still bought back some shares during the quarter, and we still feel that there may be an option there. But certainly, as you could tell by the upsized debt paydown we made this week, deleveraging is certainly a top priority and remains the top priority. We've always organically invested in the business, and there's no step change in what our plans are there. We'll continue to put some money behind the product and sales and marketing and making sure that we're successful in continuing the momentum that we have. So I think ultimately, we'll keep our eyes on the market. It's obviously very fluid these days and put our capital to where we believe the highest ROI for our shareholders are. Given where interest rates are heading and things like that, it could change just the composition from Q1 to Q2 and Q3 may look a little more different. But certainly, we feel good about where cash flow is, upsize the debt repayment, and that will remain a priority in terms of getting deleveraging down to have the right interest for our shareholders. Operator: We'll go next now to Jeff Silber with BMO Capital Markets. Jeffrey Silber: I wanted to go back to the updated guidance for the year. Maybe I'm misreading this a bit, but it seems to be that now the second half may be a little bit more tempered specifically at the top line compared to what you might have expected beforehand. I don't know if that's correct or not. Was there any front running maybe in the second quarter, some of these initiatives you thought might have come in the back half of the year came in the second quarter? Scott Staples: Yes, Jeff, good question. And no, none of it was a pull forward per se. I think we have a little bit maybe a touch more conservatism towards the second half, the prolonged geopolitical uncertainty and how that impacts consumer confidence. Our Retail and Transportation segment, we had an exceptional peak performance last year, and we have to comp against that. As this conflict drags on as fuel prices remain higher for longer and kind of drain the American consumer, we want to make sure that we can account for that range of outcomes in our base volumes and how we comp against last year. So I think that's the primary driver for, I would say, just a touch of conservatism maybe more than was there a quarter or 2 ago. But zoom out, we're still -- we've raised the bottom end of guidance by $45 million, raised the top end as well. I feel really good about where the year is heading. Jeffrey Silber: Okay. That's great. And Joelle, in your remarks, when you were talking about international, you talked about some softer volume trends. Can we just get a little bit more color exactly what's going on there? Joelle Smith: Sure. Yes. So that was really focused on India per se, and it's not really kind of across the broader international numbers. We're actually seeing some good growth in the other regions, EMEA and APAC. So India is really the one that's being heavily impacted, and that's mostly with the Iran conflict, fuel prices and just some of the general macro challenges that region is seeing. We're not losing any large customers. There's not a major change. It's just really about kind of the macro effect with India. Jeffrey Silber: Okay. Can you just remind us how large India is as a relative percentage of revenues? Scott Staples: When you look at overall international these days, Jeff, international is roughly 12%. India is probably in the neighborhood of 1/4 of that. It's -- the whole company, it's not a big piece of the picture. Operator: We go next now to Manav Patnaik at Barclays. Ronan Kennedy: This is Ronan Kennedy on for Manav. Combined new logo upsell, cross-sell contribution remained quite strong, I think, driven in part by the 3 large go-lives from late '25 and other enterprise wins. As these become fully annualized in 2H '26, how much of the growth rate is being supported by implementations reaching run rate versus your underlying sales productivity from new bookings, pipeline, ongoing share gains. So trying to understand the repeatable sales productivity versus run rate impact and those dynamics, please. Scott Staples: Ron, I'll take that. So as Joelle said in her prepared remarks, the sales engine is humming. There's no question about it. You are right in the fact that we had some really nice wins in 2025. So I think the only thing we're saying here is that, that creates some large grow-over challenges. It doesn't mean the sales engine is not performing well. In fact, it's performing the best it's probably ever performed. The number of go-lives that we have lined up for Q3 is an exceptional number. We're not prepared to give that number out. But we have a lot of deals that have been won that will be going live in Q3. But I think the only thing that we're saying here is that 2025 was so exceptional with -- especially with those large wins. It just makes the comp a little bit more challenging. And we still expect to have really good performance in Q3 and Q4. It's just comps that we're talking about. And again, sales engine continues to hum. Go-lives for Q3 look amazing. And the pipeline is literally the largest it's ever been, especially with late-stage pipeline. Those are all very promising signs. So again, probably just more of a comp issue. Ronan Kennedy: Got it. And then from a margin standpoint, I think Q2 demonstrated the ability to absorb that elevated customer volumes within the existing operating structure. Anything -- did you learn anything about the normalized incremental margin profile of the business when revenue growth accelerates? And as we move into '27 with integration winding down, can you remind us how we should think about margin expansion from, say, package density, Digital ID, fulfillment productivity, other initiatives that you're doing and that mix? Scott Staples: Yes. I think we've talked about this a lot over the years, how scalable our fulfillment structure is and how good our ops and our platform is of being able to account for volume increases and decreases and scale up and down. And I think we certainly put that to the test in Q2. And I think we're incredibly proud of how the platform responded, how our teams responded. And it's not like we had to go out there and hire a ton of people to handle the volume. As I mentioned in the prepared remarks, we're able to absorb it within the cost structure. Probably caused a little stress on some of our departments, but overall performed incredibly well. So we're really excited about that. And I think you're right, we've talked about this too over time. Some of the newer products that we talked about, Digital Identity and monitoring do have a slightly different data cost model to them since it does generate net higher unit profitability percentages. As we get more momentum there, that will become a part of the story. I think today, obviously, we're mainly focused on getting those implemented and getting those customers live on those new tools, and then we'll talk about the upside to net dollar profitability down the road. Operator: We'll go next now to Stephanie Moore of Jefferies. Stephanie Benjamin Moore: I wanted to maybe touch a little bit on some of the large contract wins that you've announced. Maybe just talk a little bit about what you view the TAM to be within that market, your overall share in that market as well? And then I think high level, what are you hearing from your clients as the key reason why they're choosing you to perform these services? Scott Staples: Stephanie, so there's a lot there. So I'll touch on a few things. And if I miss anything, Joelle, please jump in. If you look at our Investor Day deck from May of 2025, we've spelled out a pretty significant TAM within our core business, but we also spell out the additional TAM that Digital Identity and identity fraud represents, which is another $10 billion on top of our TAM. So the opportunity and the TAM is quite large. We still maintain about a 25% market share in the core business space. And that obviously is an encouraging thing for us because of all the sales momentum we have and our ability to take market share and even to add share of wallet within existing customers has been a big driver of growth for us. So I think some of the key drivers of our success, a lot of it is the verticalization. We've always said that verticalization is the secret sauce in this business, and it continues to be. And why is verticalization so important? It's because every industry is different, especially in our regulated industries such as financial services, healthcare, transportation. I think that a lot of people don't understand how all these transportation and logistics companies need to adhere to Department of Transportation rules and regulations, and we're great at it. And a lot of it -- the compliance is built, is hard coded into our platform. so that when a large transportation company is hiring a driver, they can feel safe and secure that First Advantage is doing everything possible to protect them. So I think verticalization is one. The proprietary data is also a big one. We have 1 billion proprietary records. We have 135 million in our verified database, which is prior work and education backgrounds. And we have $900 million in our national criminal record file, which is prior criminal data. And I think that gives us an advantage, the fact that we can leverage our own proprietary data on a very state-of-the-art user experience. We -- if you recall, over the last year plus, we've been launching a new candidate experience, and we're getting rave reviews on the user experience. So customers are very happy with our state-of-the-art tech platform. They're very happy with our proprietary data. And I think another thing that's been driving a lot of growth, and we talked about it earlier around package density with the whole world being a very challenging environment, that really helps us sell more, and we've got -- as you know, the First Advantage story, we've been leading the charge in automation. So we're using automation, APIs, AI to help us get data, make a faster interpretation of data, get results back to our customers with fast turnaround times. And that's also really important. So all the investments we've literally made over the last 10 years are making a significant difference in our selling ability. And then the last thing I'll add is that there's a pretty strong trend, and this started maybe 18 months ago, maybe 2 years ago in the industry around vendor consolidation and global expansion. So a lot of these multinationals, these big U.S. and European corporations who do business all over the world have been going under vendor consolidation programs and also looking for vendors like First Advantage who can do global screening. And there's very few of us. And that gives us a significant competitive advantage in the market. And if you look at our upsell, cross-sell, the biggest driver of our upsell cross-sell is definitely package density and the second biggest driver is global expansion. We have just done really well in winning more business, more share of wallet within existing customers. So for example, if we have their U.S. business or the EMEA business, we're now winning their APAC business. We're winning their business in Australia. We're winning their business in India or wherever it might be. That's been a big driver of upsell, cross-sell. Operator: We'll go next now to Scott Wurtzel of Wolfe Research. Scott Wurtzel: I just wanted to go back to the comments you made around implementations maybe kind of taking a little bit longer going into 2027. Just wondering if you can give a little bit more color on what might be driving that. Scott Staples: Well, I think the good news that's driving it is volume. There's lots of them. So it's a good problem to have, and we're obviously working on ways to accelerate that and speed that up. But I think that's the only driver of it is that we've got a lot of go-lives. We've won a lot of business. It's a good problem to have, and we'll figure out a way to revenue faster and automate as much as we can around the implementation and onboarding process. Scott Wurtzel: Got it. That's helpful. And then just a quick follow-up going back to capital allocation around the debt prepayment levels. It's good to see the upsized prepayment that you guys announced. I'm just wondering if -- I know these things can be a little bit fluid, but if you talked about in your guidance commentary around if trends remain consistent, you would be towards the higher end of the guide, could that potentially be indicative of a continued elevated level of debt prepayment going forward? Scott Staples: Yes, Scott, I think the good news is we've got a lot of free cash flow, and we have the ability to be opportunistic and flexible with our approach. So certainly, if interest rates trend higher and stock price stays higher, we will obviously probably lean more towards debt repayment. But we'll keep our options open as it comes around. But we are generating really good free cash flow. And as revenue ramps up, it continues to stay strong, our margins stay strong. We've curtailed a lot of the acquisition expenses. So -- we've seen a lot of that cash flow right to the bank account. And then at the end of the quarter, we'll make sure that we have a balanced approach and what to do with it. Operator: We'll go next now to Kyle Peterson of Needham. Kyle Peterson: Just one quick follow-up for me on the capital allocation discussion, particularly as it relates to M&A here. It sounds like you guys are getting towards the finish line of at least actioning out a lot of the synergies with Sterling, and that's been a really successful transaction for you guys. So I just wanted to see, would -- sometime like next year, would you guys be open to going back in the market with the balance sheet and the synergies actioned in a good spot? Or I guess, do you guys feel that you largely have everything you guys need from like a capability and platform perspective? Just any more color on how that could potentially fit in the strategy once all of the synergies have been actioned would be really helpful. Steven Marks: Yes. Kyle, good question. And I'll kind of go back to the last question, like we got the luxury of having good cash flow, and I'll let Scott provide some comment here in a second. But the good news is, for now, our focus is taking that cash flow and getting our leverage where it needs to be, being opportunistic if the market creates the right opportunity to buy back shares at a very appreciative amount for First Advantage. As we shared at our Investor Day last year, once our leverage range come down, we kind of have a little bit of a wider playbook. Certainly, over the short term, our focus is maximizing shareholder returns, getting leverage down to where it needs to be. I'll let Scott chime in a little bit, but on where he feels we are from a capability standpoint. But certainly on the short term, that's kind of our core focus is probably going to be on one of those 2 [ capital ]. Scott Staples: Kyle, I would just add, and Steven is spot on. First, let's pivot back to the 2028 Investor Day financials that we put out there. And we put out there revenue ranges of $1.8 billion to $2.0 billion, $560 million to $630 million of EBITDA, 31% to 32% of EBITDA margin, $1.65 to $2 of EPS. Those are phenomenal numbers. And we feel we're on a path to achieve those numbers without any M&A. So that's the good news is that we don't need -- we don't feel like we need help M&A-wise to achieve anything that we want to achieve. And we love the results that we announced today and the guidance that we've given today puts us on the path to achieving those numbers. I will say, though, that we'll always be opportunistic about M&A. If something falls in our lap, if something that looks appealing, becomes available, I think it would -- giving -- knowing how good our sales team is and the 80,000 customers we have, if we could add on something that would give us more to sell to same buyer, and it's more of like a plug on or a plug-in, that makes a lot of sense for us. Now financially, we're not even looking because we're clearly focused on deleveraging. But as we get into 2027 and certainly into 2028, I think we'll be opportunistic. I'm not sure we'll be hunting for stuff, but if something becomes available, we'll take a look. We're just laser-focused on delivering those 2028 Investor Day numbers that we had given, and we don't need M&A to get there. Operator: Thank you, ladies and gentlemen. That will bring us to the conclusion of our question-and-answer session and also bring us to the conclusion of today's conference call. We'd like to thank you all so much for joining the First Advantage Second Quarter 2026 Earnings Conference Call and Webcast. And again, thank you for joining us, and have a great day. Goodbye. Before you buy stock in First Advantage, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and First Advantage wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. First Advantage (FA) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. First Advantage (FA) is back in focus after its latest earnings release, an increase in its 2026 revenue guidance, and an update on share repurchases, giving investors fresh data points to reassess the stock. See our latest analysis for First Advantage. The share price of First Advantage has climbed sharply in recent months, with a 49.69% 90 day share price return and a 68.49% year to date share price return. The 3 year total shareholder return sits at 73.79%, suggesting momentum has been building around the company following its raised 2026 guidance, stronger quarterly results, and ongoing share repurchases. If the recent move in First Advantage has you looking for other potential ideas, this is a good moment to broaden your watchlist with the 19 top founder-led companies After a 90 day run of almost 50% and a year to date gain of more than 68%, the question around First Advantage now is simple: Do recent guidance, earnings and buybacks still leave meaningful upside, or has most of the move already happened? The most followed narrative puts First Advantage's fair value at $18.86, which sits below the latest close of $24.01. This creates a clear valuation gap for investors to weigh. Read the complete narrative. Investors may want to understand why this narrative supports a higher revenue base and potentially stronger margins over time. The case described here rests on compounding earnings power and a future valuation multiple that assumes those profits materialize. It can be useful to examine which growth, margin and cash flow assumptions would need to align for $18.86 to be a reasonable estimate. Result: Fair Value of $18.86 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this bullish First Advantage narrative still faces pressure from softer hiring volumes and a crowded screening market, which could squeeze pricing power and margins. Find out about the key risks to this First Advantage narrative. The analyst narrative suggests First Advantage is 27.3% overvalued at $24.01 versus a fair value of $18.86. Our DCF model points in the opposite direction. It indicates the stock is trading about 49.2% below an estimated future cash flow value of $47.25, which raises a clear question: Which set of assumptions do you trust more? For a closer look at how this cash flow view is built, including the key inputs that drive the gap to $47.25, Look into how the SWS DCF model arrives at its fair value. Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out First Advantage for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 52 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. With First Advantage pulling in different views on valuation, it makes sense to move quickly, check the data for yourself and weigh both the potential risks and rewards in context with the 3 key rewards and 1 important warning sign If First Advantage has sharpened your focus, do not stop here. Use the Simply Wall St screener to uncover fresh opportunities before others move first. Spot potential bargains early by scanning the screener containing 21 high quality undiscovered gems that combine solid fundamentals with the chance to grow into larger positions in your portfolio. Strengthen your core holdings with companies featured in the solid balance sheet and fundamentals stocks screener (48 results) that prioritize financial resilience and dependable fundamentals. Reduce portfolio swings by focusing on opportunities surfaced in the 83 resilient stocks with low risk scores that score well on stability and downside protection. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include FA. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Revenue growth of 15% was fueled by the continued ramp-up of three large 2025 contract wins and strong execution across the high-volume enterprise segment. Base revenue growth reached 6.7%, significantly outperforming historical targets due to broad-based hiring stability and specific large-scale customer labor reshaping initiatives. The company is successfully leveraging proprietary AI to replace third-party tools in customer care, improving the handoff between AI and live agents while reducing operational costs. Digital Identity products have become the 'tip of the spear' in go-to-market strategy, addressing rising fraud risks and increasing average contract values through higher package density. Vertical performance remains resilient, with notable strength in blue-collar staffing, transportation, and aerospace, offsetting localized softness in healthcare and the Indian market. Management attributes sustained momentum to a 'neutral to positive' hiring environment among enterprise clients, despite broader macroeconomic headlines. Full-year 2026 guidance was raised across all metrics to reflect first-half outperformance and confidence in the durability of high-volume hiring trends. Growth rates are expected to moderate in the second half of 2026 as the company laps exceptionally strong 2025 comparisons and fully annualizes prior large contract wins. Management maintains a balanced posture for Q4, accounting for potential macroeconomic volatility, geopolitical uncertainty, and the impact of higher fuel prices on consumer confidence. The company remains on track to fully action all Sterling acquisition synergies by December 31, 2026, providing a clear path toward 2028 long-term financial targets. Implementation timelines for recent enterprise wins are extending into early 2027 due to high volume, which may shift the timing of revenue realization. Deleveraging remains the top priority, evidenced by $165.5 million in cumulative debt repayments since the Sterling acquisition, including a $45 million voluntary prepayment post-quarter end. Share repurchases continued opportunistically, with $38 million deployed through July 31, representing approximately 1.9% of total shares outstanding. Geopolitical conflicts in the Middle East are driving economic disruption in the India market, specifically impacting fuel prices and local hiring volumes. The company achieved a milestone by being added to the S&P SmallCap 600 Index, reflecting its expanded scale and established public track record. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that roughly half of the base growth came from enterprise-wide labor reshaping and large-scale rescreening programs. These initiatives are expected to continue into Q3 but will likely normalize by Q4, as they are episodic rather than permanent shifts in hiring volume. Digital Identity is now standard in most quotes, moving sales conversations from HR departments to the C-suite and board levels due to fraud risks. While currently a modest portion of total contract value, it is a primary driver of increased package density and competitive differentiation. Management stated they do not need further M&A to reach their 2028 financial targets of $1.8 billion to $2.0 billion in revenue. While focused on deleveraging through 2026, the company will remain opportunistic for 'plug-in' acquisitions that add capabilities for their existing 80,000 customers. The 2.4% international growth was weighed down by India, where global conflicts and fuel prices have disrupted the local economy. Other international regions like EMEA and APAC continue to see healthy demand as multinationals centralize their global screening processes.

Posts Record Quarter and Raises Full Year 2026 Guidance Second Quarter 2026 Highlights1 Revenues of $448.8 million (14.9% growth year-over-year) Net income of $16.9 million (3.8% margin); Diluted net income per share of $0.10 Adjusted EBITDA of $128.5 million (28.6% margin) Adjusted Net Income of $61.4 million; Adjusted Diluted Earnings Per Share of $0.35 Cash Flows from Operations of $73.6 million Subsequent to the end of the quarter, voluntary debt prepayment of $45 million made on August 4, in addition to $25 million prepayment made on May 6 $18.7 million in shares repurchased under $100 million share repurchase program Raising Full Year 2026 Guidance Raising full year 2026 guidance ranges for Revenues of $1.67 billion to $1.71 billion, Adjusted EBITDA of $472 million to $486 million, Adjusted Net Income of $214 million to $225 million, and Adjusted Diluted Earnings Per Share of $1.23 to $1.292 ATLANTA, Aug. 06, 2026 (GLOBE NEWSWIRE) -- First Advantage Corporation (NASDAQ: FA), a global software and data company, today announced financial results for the second quarter ended June 30, 2026. Key Financials (Amounts in millions, except per share data and percentages) 1 Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share are non-GAAP measures. Please see the end of this earnings release for definitions and schedules with reconciliations of these measures to their most directly comparable respective GAAP measures.Note: "NA" indicates not applicable information; "NM" indicates not meaningful information. “Our outstanding second quarter performance, highlighted by 15% year-over-year revenue growth and exceptional per share earnings growth, demonstrated the strength of our AI-driven proprietary technology platform and our continued go-to-market momentum. In addition to our team’s excellent execution, our results benefited from sustained momentum driven by our recent large contract wins and continued improvement in base revenue performance. We further showcased the agility, flexibility, and scalability of our operations by seamlessly absorbing increased volumes and continuing to enable our customers to hire with speed and confidence,” said Scott Staples, Chief Executive Officer. “We continue to see increased customer demand across a number of our verticals, including in transportation & logistics, retail & e-commerce, industrials & manufacturing, and general staffing. We outpaced our previously stated expectations for the quarter as well as our long-term revenue growth algorithm target, supported by exceptional base growth, upsell and cross-sell outperformance, consistent new logo wins, including 20 enterprise bookings in the quarter, and healthy customer retention. As we mark the fifth anniversary of our IPO, we continue to win with our differentiated suite of products, including Digital Identity, underpinned by our proprietary data sets, deep customer relationships, and focused FA 5.0 strategy,” Staples concluded. Raising Full Year 2026 Guidance “We are progressing toward our long-term financial targets, with revenue growth, Adjusted EBITDA Margins, and robust cash flow reflecting the consistency and durability of our business. We continue to deploy capital in a balanced and disciplined manner, with a focus on deleveraging, as reflected by our previously announced $25 million debt prepayment during the quarter and an additional, upsized $45 million prepayment subsequent to quarter-end. We also repurchased $18.7 million of common stock during the quarter under our $100 million share repurchase program, with total repurchases through July 31, 2026 of $38.2 million, or approximately 1.9% of total shares outstanding,” said Steven Marks, Chief Financial Officer. “In view of our strong year-to-date performance, current labor market trends, and our confidence in our outlook for the remainder of the year, we are raising our full year guidance.” The following table summarizes our updated full year 2026 guidance. 2 A reconciliation of the foregoing guidance for the non-GAAP metrics of Adjusted EBITDA and Adjusted Net Income to GAAP net income and Adjusted Diluted Earnings Per Share to GAAP diluted net income per share cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a material impact on its future GAAP financial results. Actual results may differ materially from First Advantage’s full year 2026 guidance as a result of, among other things, the factors described under “Forward-Looking Statements” below. Conference Call and Webcast Information First Advantage will host a conference call to review its second quarter 2026 results today, August 6, 2026, at 8:30 a.m. ET. To participate in the conference call, please dial 800-274-8461 (domestic) or 203-518-9814 (international) approximately ten minutes before the 8:30 a.m. ET start. Please mention to the operator that you are dialing in for the First Advantage second quarter 2026 earnings call or provide the conference code FA2Q26. The call will also be webcast live on the Company’s investor relations website at https://investors.fadv.com under the “News & Events” and then “Events & Presentations” section, where related presentation materials will be posted prior to the conference call. Following the conference call, a replay of the webcast will be available on the Company’s investor relations website, https://investors.fadv.com. Alternatively, the live webcast and subsequent replay will be available at https://event.on24.com/wcc/r/5409234/68E3AC95DE943B08FC0B97F9AA813C80. Forward-Looking Statements This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. These forward-looking statements relate to matters such as our industry, business strategy, goals, and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources, and other financial and operating information. In some cases, you can identify these forward-looking statements by the use of words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” “target,” “guidance,” the negative version of these words, or similar terms and phrases. These forward-looking statements are subject to various risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Such risks and uncertainties include, but are not limited to, the following: the failure to realize the expected benefits of the Sterling Acquisition; adverse changes in external events beyond our control, including our customers’ onboarding volumes, economic drivers which are sensitive to macroeconomic cycles, such as interest rate volatility and inflation, geopolitical unrest, global trade disputes, uncertainty in financial markets, and changes in tax laws; our operations in a highly regulated industry and the fact that we are subject to numerous and evolving laws and regulations, including with respect to personal data, data security, and artificial intelligence ("AI"); our inability to identify and successfully implement our growth strategies on a timely basis or at all; potential harm to our business, brand, and reputation as a result of security breaches, cyber-attacks, social, ethical, and legal issues relating to the use of new and evolving technologies, employee or other internal misconduct, computer viruses, or the mishandling of personal data; operating in a penetrated and competitive market; our reliance on third-party data providers; our sales to government entities and higher-tier contractors to governmental customers which involve unique competitive, procurement, budget, administrative and contractual risks; due to the sensitive and privacy-driven nature of our products and solutions, we could face liability and legal or regulatory proceedings, which could be costly and time-consuming to defend and may not be fully covered by insurance; our international business exposes us to a number of risks; real or perceived errors, failures, or bugs in our products could adversely affect our business, results of operations, financial condition, and growth prospects; our ability to identify attractive targets or successfully complete such transactions; failure to comply with anti-corruption, economic and trade sanctions, and anti-money laundering laws and regulations; disruptions at our Operation Centers of Excellence and other operational sites; our contracts with our customers, which do not guarantee exclusivity or contracted volumes; the timing, manner and volume of repurchases of common stock pursuant to our share repurchase program; disruptions, outages, or other errors with our technology and network infrastructure, including our data centers, servers, and third-party cloud and internet providers and our migration to the cloud; the continued integration of our platforms and solutions with human resource providers such as applicant tracking systems and human capital management systems as well as our relationships with such human resource providers; risks relating to public opinion, which may be magnified by incidents or adverse publicity concerning our industry or operations; our reliance on third-party vendors to carry out certain portions of our operations; our dependence on the service of our key executives and other employees, and our ability to find and retain qualified employees; our ability to obtain, maintain, protect and enforce our intellectual property and other proprietary information; our ability to maintain, protect, and enforce the confidentiality of our trade secrets; the use of open-source software in our applications; seasonality in our operations from quarter to quarter; our indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and prevent us from meeting our obligations; Silver Lake’s control of us and the potential conflict of its interest with ours or those of our stockholders; and changing interpretations of tax laws. For additional information on these and other factors that could cause First Advantage’s actual results to differ materially from expected results, please see our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in our filings with the SEC, which are or will be accessible on the SEC’s website at www.sec.gov. The forward-looking statements included in this press release are made only as of the date of this press release, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law. Non-GAAP Financial Information This press release contains “non-GAAP financial measures” that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Specifically, we make use of the non-GAAP financial measures “Adjusted EBITDA,” “Adjusted EBITDA Margin,” “Adjusted Net Income,” and “Adjusted Diluted Earnings Per Share.” Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share have been presented in this press release as supplemental measures of financial performance that are not required by or presented in accordance with GAAP because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes these non-GAAP measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation, and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share are not recognized terms under GAAP and should not be considered as an alternative to net income as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation, and amortization, and as further adjusted for loss on extinguishment of debt, share-based compensation, transaction and acquisition-related charges, integration and restructuring charges, and other non-cash charges. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenues. We define Adjusted Net Income for a particular period as net income before taxes adjusted for debt-related costs, acquisition-related depreciation and amortization, share-based compensation, transaction and acquisition-related charges, integration and restructuring charges, and other non-cash charges, to which we then apply the related effective tax rate. We define Adjusted Diluted Earnings Per Share as Adjusted Net Income divided by adjusted weighted average number of shares outstanding—diluted. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures, see the reconciliations included at the end of this press release. The presentations of these measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. Certain monetary amounts, percentages, and other figures have been subject to rounding adjustments. Percentage amounts have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts may vary from those obtained by performing the same calculations using the figures in our press release. Certain other amounts that appear in this press release may not sum due to rounding. About First Advantage First Advantage (NASDAQ: FA) is a global software and data company. We provide comprehensive, end-to-end identity solutions, criminal background screening, credential verifications, drug and health screening, and continuous risk monitoring. Combining AI-powered proprietary technology platforms with proprietary data, primary source data, and third-party data, we help organizations hire with confidence and manage risk across the entire employee lifecycle. With over 80,000 customers worldwide – including approximately two-thirds of the Fortune 100 – we deliver fast, comprehensive, and reliable solutions for employers, their candidates, and their employees. We conduct more than 200 million screens annually across over 200 countries and territories, supported by our verticalized go-to-market strategy, decades of experience, and proprietary databases containing over 1 billion records. For more information, please visit our website at https://fadv.com/. Investor Contact Stephanie Gorman Vice President, Investor Relations [email protected] (678) 868-4151 Condensed Financial Statements Reconciliation of Consolidated Non-GAAP Financial Measures Reconciliation of Consolidated Non-GAAP Financial Measures (continued)

First Advantage (FA) came out with quarterly earnings of $0.35 per share, beating the Zacks Consensus Estimate of $0.29 per share. This compares to earnings of $0.27 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +20.69%. A quarter ago, it was expected that this provider of background screening services would post earnings of $0.21 per share when it actually produced earnings of $0.26, delivering a surprise of +23.81%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. First Advantage, which belongs to the Zacks Internet - Software industry, posted revenues of $448.76 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 7.60%. This compares to year-ago revenues of $390.63 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. First Advantage shares have added about 41.5% since the beginning of the year versus the S&P 500's gain of 12.8%. While First Advantage has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for First Advantage was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.34 on $436.26 million in revenues for the coming quarter and $1.23 on $1.68 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 44% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Salesforce (CRM), is yet to report results for the quarter ended July 2026. This customer-management software developer is expected to post quarterly earnings of $3.27 per share in its upcoming report, which represents a year-over-year change of +12.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Salesforce's revenues are expected to be $11.3 billion, up 10.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First Advantage Corporation (FA) : Free Stock Analysis Report Salesforce, Inc. (CRM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Revenue: $449 million in Q2 2026, up 15% year-over-year. Adjusted EBITDA: $128.5 million, up 13% year-over-year, with a margin of 28.6%. Adjusted Diluted EPS: $0.35 per share, a 30% increase year-over-year. Operating Cash Flow: $73.6 million in Q2, up 97% year-over-year. Base Revenue Growth: 6.7% in Q2, with upsell, cross-sell, and new logo revenues growing 12.5%. International Revenue: Up 2.4% year-over-year in Q2. Customer Retention: 96% in Q2. Enterprise Bookings: 20 deals in Q2, each with an expected annual contract value of at least $500,000. Debt Repayment: $25 million voluntary prepayment in Q2, plus an additional $45 million prepayment after quarter end; cumulative repayments since Sterling acquisition exceed $165 million. Share Repurchases: $18.7 million in Q2; total repurchases through July 31 were $38 million, or approximately 1.9% of total shares outstanding. Net Leverage: Synergized adjusted EBITDA net leverage ratio of 3.7 times at quarter end. Full-Year 2026 Guidance: Revenue of $1.67 billion to $1.71 billion; adjusted EBITDA of $472 million to $486 million; adjusted net income of $214 million to $225 million; adjusted diluted EPS of $1.23 to $1.29. Warning! GuruFocus has detected 7 Warning Sign with FA. Is FA fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. First Advantage Corp (NASDAQ:FA) delivered outstanding Q2 2026 results with 15% year-over-year revenue growth, significantly outperforming expectations. The company's go-to-market strategy is succeeding, with 20 enterprise bookings in Q2 and a record late-stage pipeline, indicating strong future growth potential. Base revenue growth was exceptionally strong at 6.7%, driven by broad-based improvement across key verticals like transportation, retail, and industrials, signaling a healthier hiring market. The company is making significant progress on its AI-driven technology platform, including a proprietary native AI chat experience, which enhances customer experience and drives operational efficiency. Strong cash flow generation is enabling a balanced capital allocation strategy, including aggressive debt repayment (over $165 million since the Sterling acquisition) and opportunistic share repurchases, while raising full-year 2026 guidance across all metrics. The company's growth rates are expected to moderate in the second half of 2026 due to difficult comparisons against exceptionally strong results from the prior year, particularly in Q4. International revenue growth was soft at 2.4%, with a notable slowdown in India due to the prolonged global conflict and its impact on fuel prices and the broader economy. The company faces ongoing geopolitical and macro uncertainty, which has led to a more conservative outlook for the second half of the year, particularly regarding consumer confidence in retail and transportation. Some recent contract wins are experiencing longer implementation timelines, with some go-lives now extending into early 2027, which could delay revenue recognition. While the healthcare vertical showed strength from new business, it still faces base softness due to uncertainty surrounding federal healthcare funding. Q: Can you provide more detail on the nature of the customer initiatives that drove roughly half of the quarter's base growth, and is this indicative of an improving environment?A: Joelle Smith (President) explained that these were enterprise-wide labor reshaping programs creating elevated screening activity and labor churn, which is good for the business. They also saw a continuation of job stacking (working two or more jobs). These initiatives accelerated through Q2, are anticipated to continue into Q3, but will likely normalize in Q4. They occurred across multiple customers and verticals, including transportation and retail/e-commerce. Q: How should we think about the sustainability of the strong base growth momentum seen in Q2, and what is the outlook for Q3 and Q4?A: Steven Marks (CFO) stated that base growth was broad-based across retail, e-commerce, transportation, logistics, industrials, and defense. July has started well, and they expect base to be slightly positive for Q3, a healthy step change from the previous expectation of negative 0% to negative 2%. For Q4, they expect base to be neutral, partially offset by prior year's new logo revenue becoming more evenly distributed. The prolonged geopolitical conflict could be a drag on consumer confidence and fuel prices. Q: Can you elaborate on the drivers of the strong upsell/cross-sell and new logo growth, and how much is being supported by implementations reaching run rate versus underlying sales productivity?A: Scott Staples (CEO) noted that the sales engine is performing at its best, with an exceptional number of go-lives lined up for Q3 and the largest late-stage pipeline ever. The strong 2025 wins create challenging comps, but the underlying sales productivity remains robust. Package density, driven by risk mitigation and fraud prevention, is the number one driver of upsell/cross-sell growth. Global expansion is the second biggest driver, as they win more business within existing customers across different geographies. Q: What is the company's current thinking on capital allocation, particularly regarding debt repayment, share repurchases, and M&A?A: Steven Marks (CFO) stated that deleveraging remains the top priority, evidenced by the upsized $45 million voluntary debt prepayment this week, bringing total repayments to $165.5 million since the Sterling acquisition. They will remain opportunistic with share repurchases, having bought back $38 million through July. Scott Staples (CEO) added that they do not need M&A to achieve their 2028 targets, but will remain opportunistic if a plug-in acquisition becomes available, particularly as they move into 2027 and 2028. Q: Can you provide more color on the margin performance in Q2 and the outlook for the second half of the year?A: Steven Marks (CFO) explained that Q2 margins benefited from efficiently fulfilling incremental volume within the existing cost structure without structural changes. They expect margins to remain largely consistent with Q2 for the remainder of the year. The company has actioned $63 million in run-rate acquisition synergies, with more realization weighted toward the end of the year. They are making targeted reinvestments in sales and product, but overall expect consistent margins with positive year-over-year momentum. Q: What is driving the softer volume trends in the international business, and how significant is it?A: Joelle Smith (President) clarified that the softness is focused on India, which is being heavily impacted by the Iran conflict, higher fuel prices, and broader macro challenges. They are not losing any large customers. Steven Marks (CFO) added that international is roughly 12% of total revenue, with India being approximately a quarter of that, so it is not a big piece of the overall picture. Q: Can you discuss the TAM, market share, and key reasons why customers are choosing First Advantage for large contract wins?A: Scott Staples (CEO) highlighted the significant TAM, including an additional $10 billion opportunity in digital identity and identity fraud. They maintain about a 25% market share in the core business. Key drivers of success include verticalization (the "secret sauce"), proprietary data (1 billion records), a state-of-the-art tech platform, and the trend of vendor consolidation and global expansion among multinationals. Their ability to handle high-volume hiring and provide fast turnaround times is a significant competitive advantage. Q: Why are some recent win implementations extending into early 2027, and what is being done about it?A: Scott Staples (CEO) stated that the driver is simply the high volume of go-lives, which is a "good problem to have." They are working on ways to accelerate the implementation and onboarding process through automation to recognize revenue faster. Q: Given the strong Q2 performance, why is the second-half guidance more tempered, and was there any pull-forward of demand?A: Steven Marks (CFO) clarified that there was no pull-forward. The tempered outlook reflects a touch more conservatism due to prolonged geopolitical uncertainty and its impact on consumer confidence, particularly in retail and transportation segments. They had an exceptional peak performance last year to comp against, and higher fuel prices could drain the American consumer. Despite this, they raised the bottom end of guidance by $45 million. Q: What did the Q2 performance reveal about the normalized incremental margin profile of the business, and how should we think about margin expansion into 2027?A: Steven Marks (CFO) noted that Q2 demonstrated the scalability of their fulfillment structure, as they absorbed elevated volumes without hiring a significant number of people. Newer products like digital identity and monitoring have a slightly different data cost model, generating higher net unit profitability percentages. As these products gain momentum, they will contribute to margin expansion. The company remains on track to fully action all Sterling integration synergies by December 31, 2026. For the complete transcript of the earnings call, please refer to the full earnings call transcript.