Q1 2022 First Advantage Corp Earnings Call

Operator: [Operator Instructions] -- You will need to press *1 on your telephone. If you require any further assistance, please press *0. I would now like to hand the conference over to your speaker, Ms. Stephanie Gorman, Vice President of Investor Relations. Please go ahead.

Stephanie Gorman: Thank you, Sherri. Good morning everyone and welcome to First Advantage's first quarter 2022 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 need 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 2021 Form 10-K and our Form 10-Q for the first quarter of 2022 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.

Stephanie Gorman: Reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures to the extent available without unreasonable effort appear in today's earnings press release and presentation, which are available on our Investor Relations website. I'm joined on our call today by Scott Staples, First Advantage's Chief Executive Officer; and David Gamsey, our Chief Financial Officer. After our prepared remarks, we will take your questions. I will now hand the call over to Scott.

Scott Staples: Thank you Stephanie, and good morning everyone. Thank you for joining our first quarter 2022 conference call.

Scott Staples: We are extremely proud of our outstanding results from the first quarter, surpassing even our own high growth expectations. 

Scott Staples: This excellent performance by our First Advantage team members across the globe demonstrates that we are doing an incredible job helping our customers hire smarter and onboard faster, which is our rallying cry and how we win. 

Speaker 4: Which is our rally cry and how we win.

Scott Staples: And given the extremely strong finish to the quarter and our positive outlook for sustained momentum in our business today, we are raising our full year guidance.

Scott Staples: Looking at the last 12 months ended March 31, we had extremely high growth, with revenues up 45%, adjusted EBITDA up 56% and superior adjusted EBITDA margins of 32%.

Speaker 4: Adjusted EBITDA up 56% and superior adjusted EBITDA margins of 32%.

Scott Staples: Now more than ever, our customers depend on product innovation, speed and quality to help them navigate this dynamic and fast moving macro environment. At First Advantage, we leverage automation, machine learning, artificial intelligence and integrations to do things better, faster and more cost effectively.

Scott Staples: .With an impressive gross retention rate of over 96%, our customers include more than half of the Fortune 100 companies and more than one-third of Fortune 500 companies, who typically have immense hiring volumes and high standards for risk management and compliance.

Scott Staples: Some key highlights of our excellent quarter are summarized on Slide 5, and I am very proud of our team and what we have accomplished.

Scott Staples: We delivered outstanding financial performance across key verticals and geographies, growing revenues for the quarter by 44%. This was our seventh consecutive quarter of double-digit revenue and adjusted EBITDA growth.

Scott Staples: We are thrilled to have closed the quarter in such a strong fashion. And of note, we accomplished this impressive growth even in a quarter, where the overall GDP in the U.S. was reported to have contracted, demonstrating the resiliency and growth profile of our business.

Speaker 4: And of note, we accomplished this impressive growth even in a quarter where the overall GDP in the U's was reported to have contracted, demonstrating the resiliency and growth profile of our business.

Scott Staples: Strong momentum from our existing customers continued along with additions from new customers and upsell/cross-sell wins.

Scott Staples: We also maintained our very high customer retention during the quarter. Our differentiated verticalized go-to-market strategy, innovative solutions and automation, and global capabilities are driving customers to expand their relationship with us.

Scott Staples: Customers continue to depend on First Advantage to help them hire smarter and onboard faster in a macroeconomic and hiring backdrop that show no signs of abating.

Scott Staples: Driven by the great onboarding as well as high sustained job switching and churn, we expect these trends to continue through 2022, as they usher in a new era of high velocity hiring.

Scott Staples: In addition to the top line momentum, we also grew Q1 adjusted EBITDA by 46% and expanded our adjusted EBITDA margins on a year-over-year basis. This reflects our continuing efforts to drive operational efficiencies and automation, grow the usage of our proprietary databases and leverage our G&A infrastructure. We remain focused on these initiatives to deliver ongoing superior margins.

Scott Staples: This reflects our continuing efforts to drive operational efficiencies and automation.

Scott Staples: Grow the usage of our proprietary databases and leverage our G&A infrastructure.

Scott Staples: We remain focused on these initiatives to deliver ongoing superior margins.

Scott Staples: As previously announced, effective January 1, we acquired Form I-9 Compliance, which added Form I-9 and E-Verify employment eligibility compliance solutions to our product suite and offer strong cross-sell opportunities to our existing clients.

Scott Staples: We have also lapped one year since our screening business acquisition in the UK as of March 31. These acquisitions, along with the acquisitions of Corporate Screening and MultiLatin, are performing ahead of our expectations. And we are extremely pleased as they drive impressive upsell and cross-sell business and new customer pipelines.

Speaker 4: These acquisitions, along with the acquisitions of corporate screening and multil-latin, are performing ahead of our expectations and we are extremely pleased as they drive impressive upsell and cross-sell business and new customer pipelines.

Scott Staples: We will continue to seek acquisitions that align with the needs of our customers, our M&A strategy and that are accretive to our business. And finally, we are excited to have published our inaugural ESG report on May 4. Our commitment to ESG is an extremely important priority for the company and I will share more about our efforts in a few moments.

Speaker 4: And finally, we are excited to have published our inorural ESG report on May fourth. Our commitment to ESG is an extremely important priority for the company and I will share more about our efforts in a few moments.

Scott Staples: Now on slide six, I would like to provide some perspectives on the compelling macro trends that are driving sustained churn and hiring and ultimately creating strong tailwinds behind our long-term revenue growth outlook, despite any near-term challenges in the global macro environment.

Scott Staples: First the composition of the workforce is evolving to the benefit of our business and industry.

Scott Staples: One of the most important drivers of increased churn and hiring is the shifting demographics of the American workforce. Millennial and Gen Z representation has grown significantly, now approaching half of the workforce and representing the largest group of job seekers.

Speaker 4: Millennial and genz representation has grown significantly, now approaching half of the workforce and representing the largest group of job seekers.

Scott Staples: With the rise of these generations in the job market, we are seeing compression in the average job tenure of workers. Millennials and Gen Z on average are characterized by much shorter job tenures, as they change jobs frequently in search of opportunities for growth and development, greater pay, new experiences and alignment with their values.

Speaker 4: Millennials and genz on-average are characterized by much shorter job tenures, as they change jobs frequently in search of opportunities for growth and development, greater pay, new experiences and alignment with their values.

Scott Staples: More broadly, the preferences of workers across generations has accelerated towards flexibility, nontraditional working arrangements and more frequent job changes. Now workers will consider leaving jobs if they do not meet demands for flexibility and work-life balance.

Speaker 4: Now workers will consider leaving jobs if they do not meet demands for flexibility and work-life balance.

Scott Staples: A recent Gartner study shows that US total annual employee turnover will likely jump by nearly 20% from the pre-pandemic annual average. Another powerful statistic is that 29% of employees are actively looking for new jobs, right now with a different company.

Speaker 4: Another powerful statistic is that 29% of employees are actively looking for new jobs, right now with a different company.

Scott Staples: And that 51% are not actively looking but would consider a switch if the opportunity arose, according to a survey recently conducted by Grant Thorton.

Scott Staples: Another trend continuing to increase hiring, which touches on the themes of flexibility and the changing nature of the workforce, is the growing number of retirees who are unretiring and returning to work, as reported recently by the Wall Street Journal.

Scott Staples: Economists believe a major contributing factor is inflation. Rising cost of living plus rising wages is pushing more people, including retirees back into the labor force.

Scott Staples: One survey indicated 79% of workers aged 57% to 75 prefer to continue to work rather than leave the workforce entirely and in the capacity that is flexible or has reduced hours. We believe these factors, and more, are lasting trends that contribute to a long-term elevated rate of hiring.

Scott Staples: Building upon this, on slide seven we have highlighted structural tailwinds that we believe support sustainable growth and resiliency in our industry. Looking at long-term job hires and quits data, there has been a consistent upward trend. This bodes well for our industry, which is largely connected to job turnover and hiring.

Speaker 4: Looking at long-term job hires and quit data, there has been a consistent upward trend.

Speaker 4: This bodes well for our industry, which is largely connected to job turnover and hiring.

Scott Staples: Additionally, we expect these high ongoing rates of churn and backfill to moderate some of the historical seasonal trends in the industry. From overall macroeconomic growth, due to generational shifts and the changing nature of how we work, the factors I discussed a few moments ago underpin these incredibly positive long-term trends and we see significant runway ahead.

Speaker 4: From overall macroeconomic growth to generational shift and the changing nature of how we work. The factors I discussed a few moments ago underpinned these incredibly positive long-term trends and we see significant runway ahead.

Scott Staples: Additionally, we believe the attractive long-term jobs growth trends and even more pronounced in our key verticals. This is an important linchpin of our verticalized go-to-market strategy and why we prioritize these verticals in particular. We believe these verticals have the highest needs for the speed, quality and candidate experience we deliver with our products and solutions and have some of the strongest outlooks for overall long-term growth.

Speaker 4: We believe these verticals have the highest needs for the speed, quality and candidate experience. We deliver with our products and solutions and have some of the strongest outlooks for overall long-term growth.

Scott Staples: Our support of virtually every major high-growth industry, through our verticalized go-to-market strategy, differentiates us in the background screening market. Further building upon this, in April, we hosted our annual user conference called Collaborate, which brings together customers, partners and thought leaders.

Speaker 4: Further building upon this, in April we hosted our annual user conference, called collaborate, which brings together customers, partners and thought leaders.

Scott Staples: During the conference, our team spent a lot of time talking with our great customers, discussing our tech and solutions and listening to their feedback. We heard that our customers are currently navigating, a very competitive job market. They are valuing speed, quality and candidate experience more than ever, due to the challenges of attracting talent in the current environment.

Speaker 4: We heard that our customers are currently navigating a very competitive job market.

Speaker 4: They are valuing speed, quality and canit experience more than ever throughue to the challenges of attracting talent in the current environment.

Scott Staples: Candidates today have many choices and often act fast when accepting a new job offer. This puts a heavy burden on employers, to complete background screens as quickly and easily as possible while balancing the needs for risk management and compliance. All of this creates an incredible opportunity for First Advantage, and we believe we are well positioned to capitalize on these lasting trends.

Speaker 4: All of this creates an incredible opportunity for first advantage, and we believe we are well positioned to capitalize on these lasting trends.

Scott Staples: Turning to Slide 8. At First Advantage, we are focused on staying on the leading edge of product and technology innovation, to best serve our customers' needs. In support of these efforts, I am pleased to announce, that we have promoted Joelle Smith, from Chief Experience Officer to President Data Technology and Experience.

Speaker 4: At first advantage. We are focused on staying on the leading edge of product and technology innovation to best serve our customers' needs.

Speaker 4: In support of these efforts, I am pleased to announce that we have promoted Joel Smith from Chief experience Officer to President. Data technology and experience.

Scott Staples: Throughout her career, Joelle has built a reputation for leading transformative growth initiatives, fueled by innovation with an unrelenting focus on customer experience. Joelle has been instrumental in accelerating our technology and product leadership.

Speaker 4: Joel has been instrumental in accelerating our technology and product leadership.

Scott Staples: In her expanded role, she will lead our efforts in data, product and technology and continue to further enhance our already outstanding applicant and customer experience as we continue to strategically invest in our growth.

Scott Staples: And along these lines, we are excited to share the next chapter of our applicant experience. First advantage was a first mover in mobile applicant experience within the background screening industry. And the latest evolution of profile advantage continues to raise the bar versus our competitors.

Speaker 4: First advantage was a first mover in mobile applicant experience within the background screening industry, and the latest evolution of profile advantage continues to raise the bar versus our competitors.

Scott Staples: Its superior user interface reduces application time by half, while improving quality. On the back end, this technology leverages AI, machine learning, APIs and a robust partner ecosystem. Together these provide ease of use, intelligent workflows and timely results.

Speaker 4: On the back end. This technology leverages API, machine learning, APIs and a robust partner ecosystem.

Speaker 4: Together these provide ease of use, intelligent workflows and timely results.

Scott Staples: On top of this, our agnostic design allows for rapid plug-in-plug-out of strategic partners within the ecosystem, enabling us to take full advantage of the latest technologies and innovative sources of data and analytics as they evolve over time. These updates are the result of the feedback loops we have with our customers and our ongoing investments in product and technology.

Speaker 4: These updates are the result of the feedback loops we have with our customers and our ongoing investments in product and technology.

Scott Staples: Another powerful aspect of the versatility and flexibility of our technology is our ability to deliver innovative, integrative solutions with newly acquired businesses. For example, following last year's acquisition in the UK, we have launched new innovative products and identified partnership opportunities that expand market coverage and enhance our offerings.

Scott Staples: One such technology partnership, is with the digital identity company Yoti, which we have brought together with our proprietary KnowYourPeople solution. This timely partnership, is directly aligned with the UK's introduction of digital identity verification by the Disclosure and Barring Service, which manages criminal record search services in England and Wales.

Speaker 4: This timely partnership is directly aligned with the? U K's introduction of digital identity verification by the disclosure and barring service, which manages criminal record search services in England and Wales.

Scott Staples: We deliver this solution through a seamless experience, which enables UK employers, to offer job applicants remote digital identity services to carry out ID checks. With our innovative new solution, we are optimally positioned as a first mover in this important and attractive market. These are both great examples, of being highly responsive to the needs of our customers and using their direct feedback to make the hiring process faster and easier, while enhancing compliance and risk mitigation.

Speaker 4: With our innovative new solution, we are optimly positioned as a first mover in this important and attractive market.

Speaker 4: These are both great examples of being highly responsive to the needs of our customers and using their direct feedback to make the hiring process faster and easier, while enhancing compliance and risk mitigation.

Scott Staples: Ultimately, our deep customer relationships and the product innovation they unlock are what continue to differentiate us in the marketplace.

Scott Staples: Moving to Slide 9, we are excited to have published our innorural ESG report.

Scott Staples: People are at the heart of everything we do at first advantage. Our expertise in human capital is essential for our customers and is driving our tremendous growth. Our commitment to ESG is fundamental to our corporate culture and how we run our business.

Speaker 4: Our commitment to ESG is fundamental to our corporate culture and how we run our business.

Scott Staples: As we work to deliver value to our stakeholders, we focus on certain key themes, including a responsibility to protect the environment.

Scott Staples: We run our business with a sustainable mindset. Culturally, we have a deep commitment to the environment and we are working continuously to expand our strategies around sustainability. While our business operations inherently have a modest carbon footprint, we continue to look for ways to reduce and minimize our impact. From a social perspective, we believe the strength of our business ties directly to our team members who support it and the communities in which we operate.

Scott Staples: Our culture is the foundation of our success, and people are at the center of everything we do. Even as we continue to grow on an international scale, employees will remain our most important assets. Our company culture is a big contributor to why we win as a business and have strong Net Promoter Scores.

Speaker 4: Our company culture is a big contributor to why we win as a business and have strong net Promoter scores.

Scott Staples: Building upon this, our volunteer program called FA Cares, helps mobilize our employees across the US, to give back to our communities both through in-person volunteerism as well as virtual engagement. Also each and every year, First Advantage donates to support the Boys & Girls Club of America.

Scott Staples: Additionally, we would like to express our deep concern for the people of Ukraine and the growing humanitarian crisis there. While we continue to have minimal exposure in that region, this is a humanitarian crisis. And as a result, we have been donating to UNICEF as they deliver aid to children and families in Ukraine in need of safe water, health care, nutrition and protection. We are also committed to strong governance on behalf of our stakeholders. We take our responsibilities to our shareholders, our customers and the people they seek to hire very seriously. These obligations require robust governance principles and practice.

Scott Staples: We are committed to a strong Board as evidenced by our well-qualified directors of diverse backgrounds who oversee the audit, compensation and nominating and corporate governance committees. We're excited about the collective efforts to embrace ESG at First Advantage. Our work will continue to evolve as we identify relevant metrics and goals to monitor and measure our ESG performance and progress in the future.

Scott Staples: I will now turn the call over to our CFO, David Gamsey for more details on our financial results. David?

David L. Gamsey: Thank you Scott, and good morning everyone. We are very proud of our results from another excellent quarter. We grew both revenues and adjusted EBITDA by over 40% on a year-over-year basis, which represents our seventh consecutive quarter of double-digit revenue and adjusted EBITDA growth. Now let's take a look at some of those numbers. Turning to slide 11.

David L. Gamsey: Our first quarter revenues of $189.9 million represented 43.8% growth from the prior year quarter, of which 32.6% was organic. On a constant currency basis, our revenues would have been approximately $1 million higher. This was a great quarter by any measure, but please remember that we are lapping Q1 2021 before our international business has fully recovered from the pandemic.

Speaker 5: On a constant currency basis, our revenues would have been approximately $1 million higher.

Speaker 5: This was a great quarter by any measure.

Speaker 5: But please remember that we are lapping Q1 2021 before our international business had fully recovered from the pandemic.

David L. Gamsey: Our international business began to accelerate from pandemic lows in March 2021 and has since maintained strong performance and growth rates. International revenues in Q1 of 2022 were $31.7 million, up 91.6% from Q1 2021 with 45.5% organic growth and represented 17% of total consolidated revenues in the quarter.

Speaker 5: And has since maintained strong performance in growth rates. International revenues in Q1 of 2022 were $31.7 million, up ninety one point six percent from Q1 and thousand and twenty-one with 46% organic growth, and represented 17% of total consolidated revenues in the quarter.

David L. Gamsey: In the first quarter, revenues from our existing customer base contributed $33.9 million to our year-over-year growth. Revenues from new customers contributed $9.1 million to our year-over-year growth, showing strong momentum on a sequential quarter-over-quarter basis. Revenues from our acquisitions contributed $14.8 million in total during the quarter.

Speaker 5: Revenues from new customers contributed $9.1 million to our year-over-year growth, showing strong momentum on a sequential quarter-over-quarter basis.

Speaker 5: Revenues from our acquisitions contributed $14.8 million in total during the quarter.

David L. Gamsey: Adjusted EBITDA for the quarter grew 46.5% to $53.6 million, reflecting higher revenues and year-over-year margin expansion from ongoing improvements in operating efficiencies, automation, use of proprietary databases and G&A leverage.

David L. Gamsey: Our adjusted EBITDA margin of 28.2% increased 50 basis points year-over-year, a great performance in our softest seasonal quarter. Results are after additional incremental public company costs, increased insurance premiums and new investments in technology and sales.

Speaker 5: Results are after: additional incremental public company costs, increased insurance premiums and new investments in technology and sales.

David L. Gamsey: We continue to be pleased with the high quality of earnings and the small number of add-backs included in our results. Inflation is having only a marginal impact on our cost structure. We are seeing some wage inflation, which has already been included in our financial guidance for 2022.

Speaker 5: Inflation is having only a marginal impact on air cost structure.

Speaker 5: We are seeing some wage inflation, which has already been included in our financial guidance for 2020 -two.

David L. Gamsey: Adjusted net income increased 63.4% to $33.5 million from $20.5 million in Q1 2021. Adjusted diluted EPS was $0.22 per diluted share for the quarter, increasing from $0.06 per diluted share in the first quarter of 2021. Note that the prior year quarter was before our IPO and at that time the share count was materially lower.

Speaker 5: Adjusted diluted EPS was 22 cents per diluted share for the quarter, increasing from six cents per diluted share in the first quarter of 2021 and.

Speaker 5: Note that the prior year quarter was before our IPO and at that time the share count was materially lower.

David L. Gamsey: As it relates to our adjusted net income calculation, beginning in 2022 we will now be adjusting for the change in fair value of our interest rate swaps.

Speaker 5: Beginning in 2022, we will now be adjusting for the change in fair value of our interest rate swaps.

David L. Gamsey: This decision was made as a result of the increased interest rate volatility observed during Q1, which has resulted in a $5.3 million gain associated with our interest rate swap. While this Q1 gain is extremely favorable to the company, we did not want these non-cash adjustments impacting comparability in future periods. Therefore, we have excluded this $5.3 million gain from our adjusted net income calculation.

Speaker 5: Therefore we have excluded the $5.3 million gain from our adjusted net income calculation.

David L. Gamsey: We have determined that the impact to the previous periods was not significant, and therefore, we will not be recasting previously reported amounts. We have provided further details within our 10-Q which, we expect to file later today.

Speaker 5: We have provided further details within our 10 -q, which we expect to file later today.

David L. Gamsey: Interest income net was $900,000 for the quarter, benefiting from lower outstanding debt and interest rates as well as a favorable adjustment on our interest rate swaps that I previously mentioned. Utilizing our interest rate collar, approximately 50% of our long-term debt is capped with a 1.5%, one-month LIBOR rate through February 2024, creating resiliency in the current rate environment.

Speaker 5: Utilizing our interest rate collar, approximately 50% of our long-term debtas, capped with a 2% one month LIBOR rate through February 2024, creating resiliency in the current rate environment.

David L. Gamsey: The adjusted effective tax rate for the quarter was approximately 25.1% consistent with the 25.7% in the prior year comparable quarter. We are pleased that in our first year as a new public company, we have been able to beat and raise every quarter on revenues, adjusted EBITDA and adjusted net income.

Speaker 5: We are pleased that in our first year as a new public company we have been able to beat and raise every quarter on revenues, adjusted EBITDA and adjusted net income.

David L. Gamsey: On slides 12 and 13, you will see our consistent track record of delivering growth.

David L. Gamsey: While we were not immune to the extreme headwinds of the pandemic in 2020, we weathered the related downturn well and continued to grow. We expect these revenue and adjusted EBITDA growth trends to continue. We had positive contributions from base growth, new customer sales, up-sell/cross-sell and acquisitions.

Speaker 5: We expect these revenue and adjusted EBITDA growth trends to continue.

Speaker 5: We had positive contributions from base growth, new customer sales upsell, cross-sell and acquisitions.

David L. Gamsey: We have typically experienced some modest seasonality, with revenue and adjusted EBITDA margins benefiting the most from September through November from hiring during the holiday season, and then subsequently moderating in Q1.

Speaker 5: and then subsequently moderating in Q1.

David L. Gamsey: On Slide 13 you can see our track record of growing adjusted EBITDA and margins over time as we continue to drive operational efficiencies in automation and grow our usage of proprietary databases.

David L. Gamsey: These advancements help our margins and just as importantly, improve turnaround times, quality and customer experience which are critical requirements and buying criteria for our customers.

David L. Gamsey: As our business further grows and scales, we continue to intensely focus on enhancing operational excellence, controlling operational costs and leveraging G&A while maintaining a variable cost structure that can accommodate demand fluctuations.

David L. Gamsey: We employ a disciplined balance between cost efficiencies and strategic investments, as we continue to leverage our efficient G&A infrastructure while investing in product, technology, sales and customer experience. Next, turning to slide 14.

David L. Gamsey: In the first quarter, operating cash flows increased 75.4% versus the comparable prior year quarter to $41.6 million. This is a substantial increase driven by our increased profitability and revenue growth, reflecting our strong cash flow conversion which we expect will continue throughout the year. During the quarter, we spent $7.6 million on purchases of property and equipment and capitalized software development cost.

David L. Gamsey: We ended the quarter with total debt of $564.7 million and cash of $307.7 million after, fully funding the $19.8 million Form I-9 Compliance acquisition from cash on the balance sheet. Based on our last 12 months adjusted EBITDA of over $243 million, we had a net leverage ratio of 1.1 times at March 31st 2022.

Speaker 5: Based on our last 12 months adjusted EBITDA of over $243 million, we had a net leverage ratio of one point one X at March thirty-first 2020 -two.

David L. Gamsey: We also have $100 million in borrowing capacity under our revolving credit facility, with no outstanding balances under this facility. Our capital allocation priorities, include the following. We are constantly evaluating acquisition opportunities that are expected to be accretive and aligned with our strategic priorities including adding vertical capabilities, expanding internationally or adding complementary services data or technologies.

Speaker 5: Our capital allocation priorities include the following.

Speaker 5: We are constantly evaluating acquisition opportunities that are expected to be accretive, in align with our strategic priorities, including adding vertical capabilities, expanding internationally or adding complementary services, data or technologies.

David L. Gamsey: We have completed and closed on four strategic and successful acquisitions in the past four quarters. We are seeing a tremendous amount of deal flow, and we are well positioned to capitalize on future M&A opportunities. We have over $300 million of cash on the balance sheet an extremely attractive leverage position, strong cash flow generation and a seasoned leadership team with deep M&A execution experience.

Speaker 5: We are seeing a tremendous amount of deal flow and we are well positioned to capitalize on future EA opportunities.

Speaker 5: We have over $3 million of cash on the balance sheet and extremely attractive leverage position. Strong cash flow generation in a seasoned leadership team with deep MMA execution experience.

David L. Gamsey: We also, continue to invest to support and drive organic growth, which include investments in technology, automation and product innovation as well as initiatives through our sales, solution engineering and customer success functions.

David L. Gamsey: We believe it is important to maintain a strong balance sheet with a conservative capital structure and a flexible leverage profile. We expect to fund potential future acquisitions first from available cash on the balance sheet. Our strong cash generation allows us to also consider paying down debt.

David L. Gamsey: And our balance sheet strength and flexibility enables us to evaluate possible new alternatives to increase shareholder value. We continue to review all such possibilities on an ongoing basis.

Speaker 5: We continue to review all such possibilities on an ongoing basis.

David L. Gamsey: Next, slide 15 summarizes our guidance for the full year 2022, which we are raising across the board.

David L. Gamsey: We now expect to generate full year 2022 revenues in the range of $820 million to $835 million, representing approximately 15% to 17% year-over-year growth.

David L. Gamsey: Like we covered on our last call, we are expecting growth to continue for the rest of the year, keeping in mind our strong second half 2021 performance. This increase in revenue guidance is supported by a robust and expanding new business, upsell and cross-sell pipeline.

Speaker 5: This increase in revenue guidance is supported by our robust in expanding new business upsell and cross-sell pipeline.

David L. Gamsey: We anticipate strong flow-through from these increased revenues and as such have increased our 2022 adjusted EBITDA guidance to a range of $253 million to $259 million. 

Speaker 5: And as such, have increased our 2022 adjusted EBITDA guidance to a range of 253 to $259 million.

David L. Gamsey: This will further expand our superior adjusted EBITDA margins, quality of earnings, and cash flow generation. We expect our margins to increase in the second half of the year as we expand revenues and grow over public company costs with our implied adjusted EBITDA margins above 30% for the balance of the year.

David L. Gamsey: You'll recall that during our fourth quarter 2021 earnings call which we held just seven weeks ago we provided additional color on our Q1 revenue and adjusted EBITDA expectations.

David L. Gamsey: The guidance we are providing today not only accounts for our first quarter outperformance, but also includes an additional raise to guidance to reflect a stronger outlook for the remainder of the year.

David L. Gamsey: We expect our 2022 adjusted net income to be between $157 million and $161 million due to all the factors previously discussed and taking into account the current rising interest rate environment. There are no material changes to the other guidance assumptions we provided last quarter.

Speaker 5: In taking into account the current rising interest rate environment.

Speaker 5: There are no material changes to the other guidance assumptions we provided last quarter.

Multiple speakers: [David Gamsey] Based on current, trends in our business close dialogue with our customers regarding their growth plans and hiring forecasts and our internal growth initiatives and outlook, we maintain a high degree of confidence in our full year 2022 guidance ranges. I will now turn the call back over to Scott. [Scott Staples]  Thank you, David.

Speaker 5: I will now turn the call back over to scot. Thank you, David.

Scott Staples: In conclusion today, on slide 17, I will summarize for you the investment highlights for First Advantage and why we are confident about the future of our company.

Scott Staples: We are a global leader in a large and fragmented market that we believe will continue to grow both in the Americas and internationally. We have a fantastic enterprise-focused customer base that is diversified across resilient and growing industry verticals due primarily to our verticalized go-to-market strategy.

Scott Staples: Our historical and ongoing investments in automation, artificial intelligence and machine learning are enabling our customers to hire smarter and onboard faster. Our strong cash flow generation is driven by revenue growth and superior margins from our attractive and resilient financial model.

Speaker 4: Our strong cash flow generation is driven by revenue growth and superior margins from our attractive and resilient financial model.

Scott Staples: Our differentiated and embedded proprietary technology provides customers with mission-critical products and solutions. We continue to expand our proprietary databases, which extends our competitive advantage through product leadership, faster turnaround times, and cost efficiencies.

Speaker 4: We continue to expand our proprietary databases, which extends our competitive advantage through product leadership, faster turnaround times and cost efficiencies.

Scott Staples: We expect that background screening market growth will continue, fueled partially by macroeconomic tailwinds, structural societal changes, and jobs market trends. We are extremely well-positioned to take advantage of these long-term trends.

Speaker 4: We are extremely well positioned to take advantage of these long-term trends.

Scott Staples: Thank you very much for your time and your ongoing support. At this time, we will ask the operator to open the call for your questions.

Operator: Thank you. As a reminder, to ask a question you will need to press Star one on your telephone. We ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. To withdraw your question, press the pound key. Please standby while we compile the Q&A roster. Our first question comes from Ashish Sabadra with RBC Capital Markets.

Multiple speakers: [Unknown - John] Hi, this is John filling in for Ashish. Congratulations on the strong results. Maybe could you just highlight any verticals that are seeing outside strength? It seems like there's been just a lot of kind of increased momentum since the seven weeks ago. Thanks. [David Gamsey] Yes, thanks for the question John. [Scott Staples]Yeah. I think the best way to look at this, is that we are actually getting really great results from all verticals and geographies.

Multiple speakers: [Scott Staples] So it's almost like all pistons are firing at the same time here and there's not really one or two standout verticals. We're getting really consistent good growth across our entire vertical go-to-market strategy. [Unknown - John] Great. Thank you. And then maybe just quickly it seems like new customers are really punching over their weight in terms of the long-term targets, maybe around low double digits percent of revenue growth in the quarter. Could you talk more about what you're seeing in the market and how you're winning? Anything also related to the competitive environment would be helpful? Thanks. [Scott Staples]  Yeah. I think, our message and positioning is absolutely spot on right now.

Scott Staples: Because if you look at the job market everybody is fighting for talent. And we continuously, throughout this call and in previous calls keep talking about our positioning of hire smarter onboard faster. This is all – this market has turned into a high-velocity hiring market regardless of what industry you're in. Even if the industry or the company was never a high-volume hirer, in today's world they have to have the mindset of a high-volume hirer, because they'll lose that candidate to someone else. So candidate dropout and candidate fallout in the recruiting process for our customers is massive right now. It's a huge issue. They spend time, money, effort trying to land talent. And in a lot of cases they will – they could possibly lose that talent if the background check is not done quickly and doesn't have a great candidate experience. So as I mentioned earlier, speed, accuracy, candidate experience, turnaround times are more important now than ever before. And that really falls nicely into our sweet spot of our technology and the automation that we bring within the technology, where we are just returning results extremely quickly.

Speaker 4: Speed accuracy, candid experience. Turnaround times are more important now than ever before, and that really falls nicely into our sweet spot of our technology and the automation that we bring within the technology, where we are just returning results extremely quickly.

Multiple speakers: [Unknown - John] Great. Thank you for the color. [Operator] Thank you. Our next question will come from David Togut with Evercore. Please go ahead.

Millie Wu: Hi. Good morning. And thank for taking the question. This is Millie on for David. Congrats again on the strong quarter. Can you give us more color on your medium-term strategy for international expansion? In particular, geographic targets maybe revenue mix target or normalized inorganic growth contributions?

Multiple speakers: [Scott Staples] I think at a high level the first answer is, we're very bullish on the international market in general. We think that there are certainly pockets across the world, where jobs are flowing to and we are focused on those geographies. But keep in mind, our first growth strategy in any market or any region is going to be organic. So we are looking to fuel our sales teams and our customer success teams around the globe, with better technology, more products to sell, et cetera. I think this also plays into potential M&A strategies as we look to expand in certain regions with potential M&A. But that would always be strategic and depends on the geography. But we feel very confident in our organic growth engines. They have performed extremely well over the last four to five years, and that will be our top priority is growing organically and then strategically looking at alternatives. [Millie Wu ] Got it. Thank you. Just as a follow-up, can you give us an update on your M&A pipeline in the coming quarters? [Scott Staples] Yeah. I would just tell you that the M&A pipeline is very strong. We're getting a lot of inbounds. It's a very active M&A market. We're tending to see the opportunities being in sort of what I would call the midrange to mom-and-pop size. And we'll continue to look at the M&A pipeline with the strategic lens. We certainly don't need M&A for scale we've got that on our own. So our M&A strategy will always be strategic in potentially adding geographic strengths internationally, or vertical strength in the US, or potentially other product lines like we just did with the announcement of the Form I-9 Compliance acquisition in early January. That's a great example of just adding a product to our sales bag so that we could sell more to existing customers.

Speaker 9: We've got that on our own. So our Ma strategy: it will always be strategic in potentially adding geographic strength internationally or vertical strength in the? U's or potentially other product lines, like we just did with the announcement of the four my nine compliance acquisition in early January . That's a great example of just, you know, adding a product to our sales bag So that we could sell more to existing customers.

Multiple speakers: [Milly Wu] Perfect, thank you. [Operator] Thank you. Our next question comes from Shlomo Rosenbaum with Stifel. Please go ahead.

Multiple speakers: [Shlomo Rosenbaum] Hi. Thank you very much. One just a little more of a housekeeping then another strategic one. Just on the housekeeping side David, just trying to understand a little bit what's going on below the operating margin line. I'm seeing, the adjusted EBITDA going up $2 million to $3 million, but the adjusted net income only going up by like $1 million at the low end. Is that an interest expense issue? Is that a tax rate going up a little bit? Maybe you can just fill in a little bit of the blanks over there? [David Gamsey]  It's really driven by interest rates. So, we've factored in eight bumps in our guidance model that commenced in March. [Shlomo Rosenbaum] Okay. Can you just maybe discuss what interest rate or interest expense you're looking at? And just give us a little -- between what you saw before and what you're thinking about now. And then I just want to ask you one question about M&A. [David Gamsey] Well, as you heard, about 50% of our debt is capped at 1.5% on the one-month LIBOR rate. But we essentially have rates going up from LIBOR rates from almost zero at the beginning of the year to 2% by the end of the year. [Shlomo Rosenbaum ] Okay. And then, it seems pretty obvious that you guys would like to make a big acquisition just given the capacity and the ability for you guys to potentially expand into other areas. Could you just talk a little bit about just what are the expectations that are out there for some of the larger assets? Given everything that's going on, is the pricing expectations higher lower, the same as what you've seen over the last several quarters? And you've also alluded to looking for some other things alternatives to maximize shareholder value. Would you consider starting a dividend with the cash flow capabilities that you have.

Speaker 12: capabilities that you have.

David L. Gamsey: First of all, from an E and a perspective, we're seeing a tremendous amount of deal flow right now. As scot, there are a lot of midsize and mom a pop type of companies coming to market and we've really seen that pickup over the last 30 to 45 days. So we're evaluating a number of opportunities. But also, scot said, they need to be strategic, they need to make sense. We're certainly not going to overpay for them. So we continue to evaluate those regularly and there are some interesting deals that are out there that we're evaluating. In regards to other options, there is a possibility we could pay down some debt later in the year if for interest rates continue to go up, which we all think it will, which would fall through to our adjusted net income line. That is when alternative. Outside of that, we regularly have discussions about what some other alternatives are to maximizing shareholder value.

Multiple speakers: [David Gamsey] And we'll continue to have those on an ongoing basis. [Shlomo Rosenbaum] Thank you. [Operator] Thank you. Our next question will come from Heather Balsky with Bank of America. Please go ahead. [Heather Balsky] Hi. Thanks for taking my question. I was just hoping you could talk a little bit about your success in upsell/cross-sell. You called that out as one of the reasons for raising your guide. Where are you seeing the most traction right now? That would be great. Thanks.

Scott Staples: We're seeing traction across, I think three buckets. And so it's not just one single area. We continue to see customers prioritizing risk safety and compliance. So we're getting a lot of upsell/cross-sell from, what we call package density, where customers are continuously adding more to their packages so that they protect their brand, they protect their workforce, et cetera. And given all our investments in automation, we're actually able to add the density to those packages without affecting time lines and turnaround times.

Scott Staples: So that's been very attractive to our customers and driven some of the upsell/cross-sell. The other thing is the addition of new products. We continue to roll out new products. And one great example there is the ability now to offer Form I-9 Compliance and E-Verify solutions within our own company. So that's kind of bucket number two. And then bucket number three is, we're getting a lot of geographic expansion. So, existing customers in one region, giving us their business in another region. So, I think it's really across all three buckets that's driving the upsell/cross-sell.

Multiple speakers: [Heather Balsky] Helpful. And I'm just hoping you could talk with us about your -- you showed a slide with your sort of focused growth areas. How are those end verticals performing relative to your base business, or is there a significant relative outperformance? [Scott Staples] David, do you want that?

Multiple speakers: [David Gamsey] Sure. We operate in six primary verticals. And as we previously mentioned, they're all performing very well right now. We feel very fortunate that they're all firing on all cylinders. And it's not just in the verticals, but also in all of our geographies. So we're seeing good organic growth coming across all verticals and all geographies and they're all contributing to the overall growth. [Heather Balsky ] Thank you.  [Operator ] Thank you. Our next question will come from Andrew Steinerman with JPMorgan. Please go ahead. [Andrew Steinerman] Hi, Dave. I know you mentioned organic revenue growth earlier. I think when you refer to organic revenue growth in that context, it doesn't account for constant currency. So just to make sure we have all the same numbers, it would be great if you could mention organic constant currency revenue growth for the first quarter. And then also what's the organic constant currency revenue growth assumed in the 2022 guide?

David L. Gamsey: So in Q1, constant currency had a negative impact on our revenues of $1 million. And in our guidance, constant currency we have baked in a negative $4 million into our guidance.

Andrew Steinerman: Okay. That's great. If it's okay I'm just going to ask a second question too. Could you just mention right now, you did say that your input cost inflation and wage inflation was manageable. I was just wondering what First Advantage's approach is to price increases this year on their background check packages. And when I say on your background check packages, I mean kind of separate from any pass-through cross-sell to third-party providers.

Multiple speakers: [David Gamsey] Right. So as you know and why you made that comment is obviously, all the out-of-pocket, third-party costs are passed through including any increases associated with those. And so we're covered from that perspective. We do evaluate price increases from time to time. Most of our contracts give us the ability to pass on CPI increases. We will selectively do that throughout the year. We do not do it on a blanket basis. But we do look at our different customers in our different verticals and their different packages and we do pass on some selective increases. And we have already built that into our guidance. [Andrew Steinerman] Makes sense. Thank you very much.

Multiple speakers: [Operator]  Thank you. Our next question comes from Manav Patnaik with Barclays. Please go ahead. [Ronan Kennedy] Hi, good morning, how are you? This is Ronan Kennedy on for Manav. May I – so understood that there was broad-based strength across both verticals and regions. And you also obviously delivered strong growth in the face of declining GDP. There wasn't really any mention of a recession. Obviously, you also had strong performance in 2020. So would a downturn or a contraction in economic growth be a non-factor? Can you just kind of further unpack the recession resiliency and the support provided by the verticalized end markets that you're exposed to?

Multiple speakers: [Scott Staples]  David, why don't you start with that and I'll add in. [David Gamsey ] Okay. So in regards to potential recession or downturn. Yes it creates a certain element of uncertainty but we've dealt with that before. And in fact if you look at 2020, we actually grew during the pandemic. So far there it's not had any impact on the demand for our services. The underlying fundamentals remain strong. In fact inflation from that perspective is contributing to turnover and more high-velocity hiring. So we think that's helping us.

Multiple speakers: [David Gamsey] We are a mission-critical function. Companies are going to have to continue to use us. And when you think in terms of backfill churn turnover, that's going to occur even in a recessionary or a downturn environment, we don't have any real customer concentration and we have a very variable and flexible cost structure, so we think we're really well positioned to handle any type of downturn. [Scott Staples] Yes. I would just add in. I think we're in the middle of a generational switch of the job market here. We're seeing things that we've never seen before. And these aren't trends that will go away in a quarter or two. We think there's long-term trends here that are favorable to the business and the industry.

Ronan Kennedy: Very good. Thank you. And then as a follow up if I may. Apologies, if I missed it. Can you talk about the contribution that came from post-onboarding screening, whether it be continuous monitoring, ID and the outlook for the opportunity there?

David L. Gamsey: So about 90% of our business comes from pre-onboarding screening. The other 10% would be other areas of business or post onboarding. Those are still up-and-coming areas. We are talking to clients, there seems to be interest around it. Today the revenue contribution is still very modest but we're very confident that it will continue to grow in the future.

Multiple speakers: [Ronan Kennedy ] Okay. Thank you. Appreciate it.  [Operator] Thank you. As a reminder, if you would like to ask a question, please press the Star then one key on your telephone. Our next question comes from Pete Christiansen with Citi. Please go ahead. [Pete Christiansen] Good morning. Thanks for the question. Scott, David, nice results here. I was just wondering if you could talk a little bit about sales force productivity on the new logo front. And how are you looking at the landscape for RFP activity this year in that area?

David L. Gamsey: So, I was just going to throw out a number Scott. In Q1, our new logos contributed $9.1 million, other revenue which was about 7%. That's an increase over the prior quarter. So that's kind of the number. Scott, why don't you take it from there?

Multiple speakers: [Scott Staples] Yes, I was going to say that we're seeing pretty consistent and strong deal flow. That I don't think it's any different than previous quarters, or previous years. We've invested in the sales team, so we do actually have a larger sales force. But we are seeing a lot of activity in the market. And I'll go back to this point one more time, is that our messaging is very favorable in this market around helping people with high-volume hiring. So we're very excited about the opportunity to win more RFPs and what it might be. But I would say that, one of the big differentiators of this company over the last four or five years has been the productivity of our sales force and our customer success teams at driving, not only new logo, but upsell/cross-sell. [Pete Christiansen] That's really good commentary there. Very helpful. And to the point that was just made in the previous question. 

Multiple speakers: [Pete Christiansen] First Advantage certainly grew during the pandemic. I mean, we're starting to see some general unwind of conditions, those companies that benefited during the pandemic versus those that haven't. I'm just wondering, if you're seeing any switch among your existing book of business, those who benefited in the pandemic, versus those who perhaps haven't. Any noticeable changes there in some of the underlying numbers? Or at least towards their indications for future hiring. Thank you. [Scott Staples] Yes. Again, I think, we're hearing very consistent messages from our customer base across all verticals, including the ones that did well during the pandemic is that, they are in full hiring mode. And I think one of the big differences that we're seeing in the space is that, this industry typically had some seasonality to it. We're seeing that seasonality go away, because what we're hearing from customers is that,they're now in constant hire mode, versus ramping up for peaks and ramping down for valleys. They are just in constant hiring mode. And that sort of will take away some of the seasonality in our business. We've sort of factored all that into our plans, but I think that's an interesting phenomenon that we'll keep an eye on. [Pete Christiansen] Constant hire mode. Music to your ears, I'm sure. [Scott Staples] Absolutely. [Pete Christiansen] Thank you, guys. Great job. [Operator] Thank you. Our next question will come from Hamzah Mazari with Jefferies. Please, go ahead. [Hans Hoffman] Hi. This is Hans Hoffman filling in for Hamzah. I just wanted to drill down on the M&A pipeline a little bit more. Could you just talk about how big is it today versus maybe a year ago? How valuations are working right now? And then, I know you guys mentioned, with the focus on adding vertical capabilities, expanding internationally and adding services and technology. Are there any of those areas that are a particular focus right now? [Scott Staples] I think I'm going to work backwards on your question.

Scott Staples: I think, we're looking at all opportunities equally. Whether it's a geographic expansion, whether it's a strategic play for bolstering a vertical or whether it's adding a new technology or a product, we're kind of looking at things as they come. We have invested in the hiring of a new Head of Corporate Development, who is managing the pipeline and driving more opportunities for us. So we have put some more structure and investment around the whole M&A team. We don't calculate or don't measure the M&A pipeline on size. Because our strategy is strategic, size really doesn't matter. We're looking at deals that will help reinforce our positioning and messaging in the market. But David's comment earlier is spot on in that deal flow has significantly increased over the last 30 to 45 days. It almost feels like we get a new deal put in front of us on a weekly basis.

Scott Staples: [Scott Staples] I think a lot of companies in the space are for sale right now and we're taking it on a one-by-one basis. And valuations are pretty much the same as maybe a few quarters ago, but I think given that some of the changes with the market that valuations may tick down a bit, but we still haven't actually seen that happen yet. [Hans Hoffman] Got it. Thank you. And then just for my follow-up. On the international side, I think the mix with the guide, 16% 17% of total revenues. Can you just remind us I guess how big that opportunity could be? Could we potentially see that get to 40% 50% of total revenues? Just any color there would be helpful. Thanks. [Scott Staples] Well first let's start with the definition of international. Just so it's clear, we've lumped Americas together. 

Scott Staples: So, all of Canada, US, South America are all under our Americas. So, anything outside of that is what we would call international. So, if you actually put Canada and Latin America into our international number, our international number would actually be a lot bigger. Even though it is pretty sizable today, we're pretty proud of our international mix. But just wanted to be clear on first the definition. Second, I think international again as I mentioned earlier we're very bullish on the international market. We think the international market is a great growth market. But keep in mind that the US market is huge and will continue to grow and grow and grow. So even if the international market just absolutely crushes it for us, it still would never get to the numbers that you were talking about because the US market is such a great growth market for us. Yes, we do expect international to be a higher percentage of our mix in the future, but not dramatically higher because again the US will continue to grow.

Speaker 9: And we will continue to grow and grow and grow. So even if the international market does absolutely crushes it for us, it still will never get to the numbers that you were talking about, because the? U's market is such a great growth market for us. Yes yes, we do expect international to be a higher percentage of our mix in the future, but not dramatically higher because again, the U's will continue to grow.

Multiple speakers: [Hans Hoffman] Got it. That's helpful. Thank you. [Operator] And we do have a follow-up question from Shlomo Rosenbaum with Stifel. Please go ahead.

Multiple speakers: [Shlomo Rosenbaum] Hi, thank you. Hey David, I'm sorry if I missed it. I know Andrew asked about the organic constant currency growth expected for 2022. You said there was $14.8 million of acquisition revenue in the first quarter. Do you mind telling us how much acquisition growth is embedded in the guidance, maybe on a revenue basis or a growth basis? [David Gamsey] Sure. So, the implied guidance for revenues is revenue growth of between 15% and 17%. On an organic basis that would be 11% to 13%. [Shlomo Rosenbaum] Perfect. Thank you very much. [Operator] Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Scott Staples for any closing remarks. [Scott Staples] Thank you, operator and thanks to everyone for your participation. We are off to a great start in 2022 and we are excited about the opportunities ahead. We think First Advantage is well positioned for continued growth and our focus remains on delivering value for our shareholders. Thank you for your support. Have a great day.

Speaker 5: On an organic basis that would be 11 to 13%. Perfect, Thank you very much. Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to MR scot staples for any closing remarks. Thank you operator, and thanks to everyone for your participation. We are off to a great start in 2022 and we are excited about the opportunities ahead. We think first advantage is well positioned for continued growth and our focus remains on delivering value for our shareholders. Thank you for your support. Have a great day.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker 3: Good morning everyone and welcome the first advantages: first quarter 2022 earnings conference call. In the Investors section of our website you will find 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 need to remind everyone that our discussion today will include forward looking statements. Such forwardlooking statements are not guarantees of future performance. Actual results may differ, materially 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 se C, including our 2021 Form 10-K and our Form 10-Q for the first quarter of 2022, to be filed with the se C to. Such factors may be updated from time to time in our period filings with the se C and we do not undertake any obligation to update forward looking statements. Throughout this conference call, we will also present and discussed non-GAAP financial measures.

Speaker 3: Reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures, to the extent available without unreasonable effort, appeherear in today's earnings press release and presentation, which are available on our Investor Relations website. i'am joined on our call today by stapl's first admanages, Chief Executive Officer and David gamsey, our Chief Financial Officer. After our prepared remarks, we will take your questions. I will now him the call over to scot. Thank you Stephanie, and good morning everyone. Thank you for joining our first quarter thousand and 22 conference callt. We are extremely proud of our outstanding results from the first quarter, surpassing even our own high growth expectations.

Speaker 9: This excellent performance by our first advantaged team members across the globe demonstrates that we are doing an incredible job helping our customers higher, smarter and onboard faster.

Speaker 9: Which is our rally cry and how we win, and given the extremely strong finish to the quarter and our positive outlook for sustained momentum in our business, today we are raising our full year guidance.

Speaker 9: Looking at the last 12 months and did March thirty-first we had extremely high growth with revenues up 45% and.

Speaker 9: Adjusted EBITDA up 56% and superior adjusted EBITDA margins of 32%. Now more than ever, our customers depend on product innovation, speed and quality to help them navigate this dynamic and fast-moving macro environment.

Speaker 9: At first advantage. We leverage automation, machine learning, artificial intelligence and integrations to do things better, faster and more cost-effectively.

Speaker 9: With an impressive gross retention rate of over 96%. Our customers include more than half of the Fortune 100 companies and more than one-third of Fortune 500 companies, who typically have immense hiring volumes and high standards for risk management and compliance.

Speaker 9: Some key highlights of our excellent quarter are summarizede on Slide 5, and I am very proud of our team and what we have accomplishedwe delivered outstanding financial performance across key verticals and geographies, growing revenues for the quarter by 44 percentthis was our seventh consecutive quarter of double-digit revenue and adjusted EBITDA growth.

Speaker 9: We are thrilled to have closed the quarter in such a strong fashion and, of note, we accomplished this impressive growth even in a quarter where the overall GDP in the? U's was reported to have contracted, demonstrating the resiliency and growth profile of our businessstrong momentum from our existing customers continued, along with additions from new customers and upsell cross-sell winswe also maintained our very high customer retention during the quarter. Our differentiated, verticalized go-to-market strategyinnovative solutions and automation and global capabilities: our driving customers to expand their relationship with us.

Speaker 9: Customers continue to depend on first advantage to help them higher, smarter and onboard faster, in a macro, economic and hiring backdrop that show no signs of abatingdriven by the great onboarding, as well as high than job switching and churn. We expect these trends to continue through 2022, as they usher in a new error of high velocity hiringin. Addition to the top line momentum, we also, group Q1, adjusted EBITDA by 46% and expanded our adjusted EBITDA margins on a year-over-year basisthis reflects our continuing efforts to drive operational efficiencies and automation.

Speaker 9: Grow the usage of our proprietary databases and leverage our gna infrastructurewe remain focused on these initiatives to deliver ongoing superior margins, as previously announced, effective January . First, we acquired Form I nine compliance, which added Form I nine and e-verify employment eligibility compliance solutions to our product suite and offer strong cross-sell opportunities to our existing clients.

Speaker 9: We have also lapped one year since our screening business acquisition in the U? K as of March thirty-firstthese acquisitions, along with the acquisitions of corporate screening and mulil-latin, are performing ahead of our expectations and we are extremely pleased as they drive impressive upsell and cross-sell business and new customer pipelines.

Speaker 9: We will continue to seek acquisitions that align with the needs of our customers- our mna strategy- and that are accretive to our business.

Speaker 9: And finally, we are excited to have published our inorural ESG report on May fourth. Our commitment to ESG is an extremely important priority for the company and I will share more about our efforts in a few moments.

Speaker 9: Now on Slide 6, I would like to provide some perspectives on the compelling macro trends that are driving sustained churn and hiring and ultimately creating strong tailwinds behind our long-term revenue growth outlook. Despite any near-term challenges in the global macro environmentfirst, the composition of the workforce is evolving to the benefit of our business and industry.

Speaker 9: one of the most important drivers of increased churn and hiring is the shifting demographics of the American workforce. Millennial and genz representation has grown significantly, now approaching half of the workforce and representing the largest group of job seekers. With the rise of these generations in the job market, we are seeing compression in the average job tenure of workers. Millennials and genz, on average, are characterized by much shorter job tenures, as they changed jobs frequently in search of opportunities for growth and development, greater pay, new experiences and alignment with their values. More broadly, the preferences of workers across generations has accelerated towards flexibility, nontraditional working arrangements and more frequent job changes.

Speaker 9: Now workers will consider leaving jobs if they do not meet demands for flexibility and work life balance. A recent Gartner study shows that U's total annual employee turnover will likely jump by nearly 20% from the prepandemic annual average.

Speaker 9: Another powerful statistic is that 29% of employees are actively looking for new jobs right now with a different company, and that 51% are not actively looking but would consider a SW if the opportunity arose. According to a survey recently conducted by grant tho.r, ton.

Speaker 9: Another trend continuing to increase hiring, which touches on the themes of flexibility and the changing nature of the workforce, is the growing number of retirees who are unretiring and returning to work, as reported recently by the Wall Street Journal.

Speaker 9: Economists believe a major contributing factor is inflation. Rising cost of living plus rising wages is pushing more people, including retireree, back into the labor force.

Speaker 9: one survey indicated 79% of workers aged 57% to 75 prefer to continue to work rather than leave the workforce entirely, and in a capacity that is flexible or has reduced hours. We believe these factors, and more, our lasting trends that contribute to a long-term elevated rate of hiring.

Speaker 9: Building upon this, on Slide seven we have highlighted structural tailwinds that we believe support sustainable growth and resiliency in our industry.

Speaker 9: Looking at long-term job hires and quit data, there has been a consistent upward trend. This bodes well for our industry, which is largely connected to job turnover and hiring.

Speaker 9: Additionally, we expect these high ongoing rates of churn and backvillle to moderate some of the historical seasonal trends in the industry.

Speaker 9: From overall macroeconomic growth to generational shift and the changing nature of how we work. The factors I discussed a few moments ago underpin these incredibly positive long-term trends and we see significant runway aheadadditionally, we believe the attractive long-term jobs growth trends and even more pronounced in our key verticals. This is an important Lynch pin of our verticalize go-to-market strategy and why we prioritize these verticals in particularwe believe these verticals have the highest needs for the speed, quality and candidate experience we deliver with our products and solutions and have some of the strongest outlooks for overall long-term growth. Our support of virtually every major high growth industry through our verticalize go-to-market strategy differentiates us in the background screening marketfurther building upon this in April .

Speaker 9: We hosted our annual user conference called collaborate, which brings together customers, partners and thought leaders. During the conference, our team spent a lot of time talking with our great customers, discussing our tech and solutions and listening to their feedback. We heard that our customers our currently navigating a very competitive job market. They are valuing speed, quality and canid experience more than ever due to the challenges of attracting talent in the current environment.

Speaker 9: Candidates today has many choices and often Act fast when accepting a new job offerthis puts a heavy burden on employers to complete background screens as quickly and easily as possible, while balancing the needs for risk management and complianceall of this creates an incredible opportunity for first advantage, and we believe we are well positioned to capitalize on these lasting trends. Turning to Slide 8: at first advantage, we are focused on staying on the leading edge of product and technology innovation to best serve our customers' needs. In support of these efforts, I am pleased to announce that we have promoted Joel Smith from Chief experience Officer to President: data technology and experience. Throughout her career, Joel has built a reputation for leading transformative growth initiatives fueled by innovation, with an unrelenting focus on customer experience. jowell has been instrumental in accelerating our technology and product leadership.

Speaker 9: In her expanded role, she will lead our efforts in data product and technology and continue to further enhance our already outstanding applicant and customer experience, as we continue to strategically invest in our growthand, along these lines, we are excited to share the next chapter of our applicant experience.

Speaker 9: First advantage was a first mover in mobile applicant experience within the background screening industry, and the latest evolution of profile advantage continues to raise the bar versus our competitors.

Speaker 9: Its superior user interface reduces application time by has, H while improving quality on the back end. This technology leverages AI, machine learning, APIs and a robust partner ecosystem.

Speaker 9: Together these provide ease of use, intelligent workflows and timely results. On top of this, our agnostic design allows for rapid plug in, plug out of strategic partners within the ecosystem, enabling us to take full advantage of the latest technologies and innovative sources of data and analytics as they evolve over time. These updates are the result of the feedback loops we have with our customers and our ongoing investments in product and technologyanother powerful aspect of the versatility and flexibility of our technology is our ability to deliver innovative, innogrative solutions with newly acquired businesses. For example, following last year's acquisition in the U K, we have launched new innovative products and identified partnership opportunities that expand market coverage and enhance our offerings.

Speaker 9: one such technology partnership is with the digital identity company yotti, which we have brought together with our proprietary no-your people solution. This timely partnership is directly aligned with the? U K's introduction of digital identity verification by the disclosure and barring service, with which manages criminal record search services in England and Wales.

Speaker 9: We deliver this solution through a seamless experience which enables U K employers to offer job applicants remote digital identity services to carry out idchecks. With our innovative new solution, we are optimly positioned as a first mover in this important and attractive market. These are both great examples of being highly responsive to the needs of our customers and using their direct feedback to make the hiring process faster and easier, while enhancing compliance and risk mitigation.

Speaker 9: Ultimately, our deep customer relationships and the product innovation they unlock are what continue to differentiate us in the marketplace.

Speaker 9: Moving to Slide 9, we are excited to have published our inorural ESG report. People are at the heart of everything we do at first advantage. Our expertise in human capital is essential for our customers and is driving our tremendous growth.

Speaker 9: Our commitment to ESG is fundamental to our corporate culture and how we run our business. As we work to deliver value to our stakeholders, we focus on certain key themes, including a responsibility to protect the environment. We run our business with a sustainable mindset. Culturally, we have a deep commitment to the environment and we are working continuously to expand our strategies around sustainability. While our business operations inherently have a modest carbon footprint, we continue to look for ways to reduce and minimize our impact.

Speaker 9: From a social perspective, we believe the strength of our business ties directly to our team members who support it and the communities in which we operateour culture is the foundation of our success, and people are at the center of everything we do. Even as we continue to grow on an international scale, employees will remain our most important assets.

Speaker 9: Our company culture is a big contributor to why we win as a business and have strong net Promoter scores.building upon this, our volunteer program called FFA CARES helps mobilize our employees across the? U's to give back to our communities, both through in-person and volunteerism, as well as virtual engagement. Also, each and every year, first advantageed donated to support the Boys and girth Club of America. Additionally, we would like to express our deep concern for the people of Ukraine and the growing humanitarian cris there. While we continue to have minimal exposure in that region, this is a humanitarian cris and, as a result, we have donated to unicef as they deliver aid to children and families in Ukraine in need of safe order, health care, nutrition and protection.

Speaker 9: We are also committed to strong governance on behalf of our stakeholders. We take our responsibility to our shareholders, our customers and the people they seek to hire very seriously. These obligations require robust governance principles and practice. We are committed to a strong Board, as evidenced by our well-qualified Directors of diverse backgrounds who oversee the audit, compensation and Nominating and corporate governance committees.

Speaker 4: We're excited about the collective efforts to embrace ESG at first advantage. Our work will continue to evolve as we identify relevant metrics and goals to monitor and measure our ESG performance and progress in the future.

Speaker 9: I will now turn the call over to our CFO , David gamy, for more details on our financial results. davidthank you scot, and good morning everyone. We are very proud of our results from another excellent quarter. We grew both revenues and adjusted EBITDA by over 40% on a year-over-year basis, which represents our seventh consecutive quarter of double-digit revenue and adjusted EBITDA growthnow let's take a look at some of those numbersturning to Slide Eleven.

Speaker 5: Our first quarter revenues of $189.9 million represented 44% growth from the prior year quarter, of which 33% was organic. On a constant currency basis, our revenues would have been approximately $1 million higher. This was a great quarter by any measure.

Speaker 5: But please remember that we are lapping Q1 2021, before our international business had fully recovered from the pandemic. Our international business began to accelerate from pandemic lows in March 2021 and has since maintained strong performance in growth rates.

Speaker 5: International revenues in Q1 of 2022 were $31.7 million, up 92% from Q1 2021, with 46% organic growth, and represented 17% of total consolidated revenues in the quarterin the first quarter, revenues from our existing customer base contributed $33.9 million to our year-over-year growth.

Speaker 5: Revenues from new customers contributed $9.1 million to our year-over-year growth, showing strong momentum on a sequential quarter-over-quarter basis.

Speaker 5: Revenues from our acquisitions contributed $14.8 million in total during the quarteradjusted EBITDA for the quarter grew 46% to $53.6 million, reflecting higher revenues and year-over-year margin. Expansion from ongoing improvements and operating efficiencies automation, use of proprietary databases and gna leverage. Our adjusted EBITDA margin of 28% increased 50 basis pointints year-, over--year, a great performance in our softest seasonal quarter.

Speaker 5: Results are after additional incremental public company costs, increased insurance premiums and new investments in technology and sales. We continue to be pleased with the high quality of earnings and the small number of add-backs included in our results.

Speaker 5: Inflation is having only a marginal impact on our cost structure. We are seeing some wage inflation, which has already been included in our financial guidance for 2020 -two.

Speaker 5: Adjusted net income increased 63% to $33.5 million from $20.5 million in Q1 000, and twenty-oneadjusted diluted EPS was 22 cents per diluted share for the quarter, increasing from six cents per diluted share in the first quarter of 2021.

Speaker 5: Note that the prior year quarter was before our IPO and at that time, the share count was materially loweras it relates to our adjusted net income calculationbeginning in 2022, we will now be adjusting for the change in fair value of our interest rate swapsthis decision was made as a result of the increased interest rate volatility observed during Q1, which has resulted in a $5.3 million gain associated with our interest rate swapwhile this Q1 gain is extremely favorable to the company, we did not want these noncast adjustments impacting comparability in future periodstherefore we have excluded the $5.3 million gain from our adjusted net income calculation.

Speaker 5: We have determined that the impact to the previous periods was not significant and therefore we will not be recasting previously reported amounts. We have provided further details within our 10 -q, which we expect to file later todayinterest income net was $9 thousand for the quarter, benefiting from lower outstanding debt and interest rates, as well as the favorable adjustment on our interest rate swaps that I previously mentioned.

Speaker 5: Utilizing our interest rate collar approximately 50% of our long-term debt, as capped with a 2% one -month LIBOR rate through February 2024, creating resiliency in the current rate environment.

Speaker 5: The adjusted effective tax rate for the quarter was approximately 25%, consistent with the 26% and the prior year comparable quarter.

Speaker 5: We are pleased that in our first year as a new public company we have been able to beat and raise every quarter on revenues, adjusted EBITDA and adjusted net income.

Speaker 5: On slides 12 and 13, you will see our consistent track record of delivering growthwhile we were not immune to the extreme headwinds of the pandemic in 2020, we weathered the related downturn well and continue to grow. We expect these revenue and adjusted EBITDA growth trends to continue.

Speaker 5: We had positive contributions from base growth, new customer sales, up sell, cross-sell and acquisitions. We have typically experienced some modest seasonality, with revenue and adjusted EBITDA margins benefiting the most from September through November , from hiring during the holiday season and then subsequently moderating in Q1.

Speaker 5: On Slide 13, you can see our track record of growing adjusted EBITDA and margins over time, as we continue to drive operational efficiencies and automation and grow our usage of proprietary databasesthese advancements help our margins and, just as importantly, improve turnaround times, quality and customer experience, which are critical requirements and buying criteria for our customers.

Speaker 5: As our business further grows and scales. We continue to intensely focus on enhancing operational excellence, controlling operational costs and leveraging gna, while maintaining a variable cost structure that can accommodate demand fluctuationswe employ a disciplined balance between cost efficiencies and strategic investments, as we continue to leverage our efficient gna infrastructure while investing in product technology, sales and customer experiencenext Turning to Slide fourteen.

Speaker 5: In the first quarter, operating cash flows increased 75% versus the comparable prior year quarter to $41.6 million. This is a substantial increase driven by our increased profitability and revenue growth, reflecting our strong cash flow conversion, which we expect will continue throughout the year. During the quarter we spent $7.6 million on purchases of property and equipment and capitalized software development costswe ended the quarter with total debt of $564.7 million in cash of $307.7 million after fully funding the $19.8 million Form I nine compliance acquisition from cash on the balance sheet based on our last 12 months adjusted EBITDA.

Speaker 5: Of over $243 million. We had a net leverage ratio of one point one X at March thirty-first, 2000 and twenty-twowe also have $1 million in borrowing capacity under our revolving credit facility, with no outstanding balances under this facility. Our capital allocation priorities include the followingwe are constantly evaluating acquisition opportunities that are expected to be accretive in ign, with our strategic priorities including adding vertical capabilities, expanding internationally or adding complementary services, data or technologies.

Speaker 5: We have completed and closed on four strategic and successful acquisitions in the past four quarterswe are seeing a tremendous amount of deal flow and we are well positioned to capitalize on future EA opportunities.

Speaker 5: We have over $3 million of cash on the balance sheet and extremely attractive leverage position. Strong cash flow generation in a seasoned leadership team with deep Ma execution experiencewe also continue to invest to support and drive organic growth which include investments in technology automation and product innovation as well as initiatives through our sales. Solution engineering and customer success functionswe believe it is important to maintain a strong balance sheet with a conservative capital structure and a flexible leverage profile. We expect to fund potential future acquisitions first from available cash on the balance sheet. Our strong cash generation allows us to also consider paying down debt and.

Speaker 5: Our balance sheet strength and flexibilility enables us to evaluate possible new alternatives to increase shareholder value. We continue to review all such possibleibilities on an ongoing basisnext Slide 15 summarizes our guidance for the full year 2022, which we are raising across the Board. We now expect to generate full year 2000 and twentthousandy-two revenues in the range of 820 to $835 million, representing approximately 15 to 17% year-over-year growth.

Speaker 5: Like we cover on our last call. We are expecting growth to continue for the rest of the year, keeping in mind our strong second half 2021 performance. This increase in revenue guidance is supported by our robust and expanding new business upsell and cross-sell pipeline. We anticipate strong flow through from these increased revenues and, as such, have increased our 2022 adjusted EBITDA guidance to a range of 253 to $259 million. This will further expand our superior adjusted EBITDA margins, quality of earnings and cash flow generation. We expect our margins to increase in the second half of the year as we expand revenues and grow over public company costs, with our implied adjusted EBITDA margins above 30% for the balance of the yearyou'll recall.

Speaker 5: That during our fourth quarter 2021 earnings call which we held just seven weeks ago. We provided additional color on our Q1 revenue and adjusted EBITDA expectations. The guidance we are providing today not only accounts for our first quarter outperformance but also includes an additional raise to guidance to reflect a stronger outlook. For the remainder of the year. We expect our 2022 adjusted net income to be between one hundred and sixty-seven and one hundred and sixty-one million dollars due to all the factors previously discussed.

Speaker 5: In taking into account the current rising interest rate environment. There are no material changes to the other guidance assumptions we provided last quarter.

Speaker 5: Based on current trends in our business, closeed dialogue with our customers regarding their growth plans. In hiring forecasts and our internal growth initiatives and outlook, we maintain a high degree of confidence and our full year 2022 guidance ranges. I will now turn the call back over to scot.

Speaker 7: Thank you, David. In conclusion, today on Slide 17, I will summarize for you with the investment highlights for first advantage and while we are confident about the future of our company.

Speaker 9: We are a global leader in a large and fragmented market that we believe will continue to grow, both in the Americas and internationally. We have a fantastic enterprise-focused to customer base that is diversified across resilient and growing industry verticals, due primarily to our verticalized go-to-market strategy.

Speaker 9: Our historical and ongoing investments in automation, artificial intelligence and machine learning are enabling our customers to hire smarter and onboard faster.

Speaker 9: Our strong cash flow generation is driven by revenue growth and superior margins from our attractive and resilient financial modelour. Differentiated and embedded proprietary technology provides customers with mission-critical products and solutions. We continue to expand our proprietary databases, which extends our competitive advantage through product leadership, faster turnaround times and cost efficiencies.

Speaker 9: We expect that background screening, market growth will continue, fueled partially by macroeconomic tailwinds, structural societal changes and jobs market trends. We are extremely well positioned to take advantage of these long-term trends.

Speaker 9: Thank you very much for your time and your ongoing support. At this time we will ask the operator to open the call for your questions. Thank you as a reminder to ask a question you will need to press Star one on your telephone. We ask that you please limit yourself to one question and one follow up question. You may then return to the queue to withdraw your question press. The pankey Please stand by while we compile the Q a roster. Our first question comes from a she subbrada with RBC Capital market Hi. This is John phill first she regulations in the strong results. Maybe could you just highlight any of verticals that are seen outside strength that seems like there's been just a lot of kind of increased momentum. Since the seven weeks ago. Thanks.

Speaker 1: Yeah thanks for the last, I'm sorry. Yeah, I think the best way to look at this is that we are actually getting really great results from all verticals and geographies.

Speaker 9: So it's almost like all systems are firing at the same time here and there's not really one or to stand out verticals. We're getting really consistent good growth across our entire vertical go-to-market strategys. Great, Thank you. And then maybe just quickly, it seems like new customers are really ouching over their weight in terms of the long-term charargets- maybe around low double digits percent of revenue growth in the quarter. Could you talk more about what you're seeing in the market and how you're winning anything? Also really, the competitive environment would be helpful.

Speaker 20: Yeah I think I think you know our. Our message and positioning is absolutely spot on right now because if you look at the job market, everybody is fighting for talent and we continuously, throughout this call and in previous calls, keep talking about. You know our positioning of: higher smarter, on board faster, this is all. This market has turned into a high velocity hiring market, regardless of what industry here and even if the company, even if the industry or the company was never a high volume higher, they have to have the in this. In today's world, they have to have the mindset of a high volume H because they'll lose that candidate to someone else, So candidate drop out and candidate fall out in the recruiting process. For our customers is massive. Right now. It's a huge issue. They spend time money, effort trying to land talent and in a lot of cases they LL could possibly lose that talent.

Speaker 9: If the background check is not done quickly and and doesn't have a great candidate experience. So, as I mentioned earlier speed accuracy, candidate experience, turnaround times are more important now than ever before, and that really falls nicely into our sweet spot of our technology and the automation that we bring within the technology, where you know we are just returning results extremely quickly. Great, Thank you for the call. Thank you, our next question will come from David. To get with ever cops, Please go ahead. Hi, good morning and thank you for taking the question. This is millyyoung for David congrresss. Again on the strong quarter, can you give us more color on your medium term strategy of for international expansion in partget geographic targets, maybe revenue nextix target or normalized the organic growth contributions?

Speaker 9: I think at a high level. The first first, you know, first answer is we're very bullish on the international market in general. You know, we think that's. There're certainly pockets across the world where jobs are flowing to and you know we are focused on on those geographies. But keep in mind, our first growth strategy in any market or any region is going to be organic. So you know we are looking to fuel, you know our, our sales teams and our customer success teams around the globe. You know, with better technology, more products to sell, ETC. I think this also plays into potential M a strategies as we look to expand in certain regions with potential M A. but that would always be strategic and depends on the geography. But we're FA, we feel very confident in, or in our organic growth engines. They have, you know, performed extremely well over the last four to five years and that will be our top priority is, you know, growing organically and then strategically looking at alternatives.

Speaker 16: Got it, Thank you, just want to follow up. Can you give us and update on your M a pipeline in the coming quarter? syeah, I would just tell you that you know the M a pipeline is very strong. We're getting a lot of inbounds. It's a very active M a market. We're tending to see the opportunities being in sort of what I would call, you know, the mid range to mom and pop size and we'll continue to look at the M a pipeline with the strategic lens. You know we certainly don't need M a for scale. We've got that on our own. So our M a strategy, it will always be strategic in potentially adding geographic strength internationally or vertical strength in the? U's or potentially other product lines, like we just did with the announcement of the form nine compliance.

Speaker 5: Guidance model for the that commenced in March.

Speaker 11: Can you just maybe discuss what interest rate your interest expense are looking at? And you know, just give us a little between what you saw before and what you're thinking about now. And then I just want to ask you one question about them. manywell, as you heard, are about 50% of our debt. Is cap that one and a half percent. On the one M livebor rate, we essentially have rates going up from livelow rates from almost zero at the beginning of the year to 2% by the end of the yearok. Thank you, and then you know it's it seems pretty, you know pretty obvious that you guys would like to make a big acquisition. You know just, given the capacity and you know the ability for you guys to, you know, to potentially expand into other areas, could you talk a little bit about just you know. one are the expectations that are out there?

Speaker 21: For some of the larger assets. Given everything that's going on, is the pricing expectations higher lower, the same as what you've seen over the last several quarters? And you've also alluded to looking for some other things, alternatives to maximize shareholder value. Would you consider start to get dividend with the cash flow capabilities that you have?

Speaker 5: First of all, from an M anda perspective, we're seeing a tremendous amount at de alflow right now. As scot said, there are a lot of midsize and momama pop type of companies coming to market and we've really seen that pickup over the last 30 to 45 days. So we're evaluating a number of opportunities. But also, scot said they need to be strategic, they need to make sense and we're certainly not going to overpay for them. So we continue to evaluate those regularly and there are some interesting deals that are out there that we valuating.

Speaker 6: In regards to other options, there is a possibility we could pay down some debt later in the year if for interest rates continue to go up, which we all think it will, which would fall through to our adjusted net income line. That is when alternative. Outside of that, we regularly have discussions about what some other alternatives are to maximizing shareholder value, and we'll continue to have those on an ongoing basis, as you.

Speaker 2: Thank you. Our next question will come from Heather ballsky with Bank of America. Please go ahead Hi. Thanks for taking my question. I was just hoping you could talk a little bit about your success in upsell cross-sell. You call that out is one of the reasons for raising your guide. Where are you seeing the most traction right now? That'd be great thing.

Speaker 1: We're seeing. We're seeing traction across, I think, three buckets and so it's not just know one single area. We continue to see customers prioritizing risk, safety and compliance. So we're getting- we're getting a lot of upsell, cross sell from what we call package density, where customers are continuously adding more to their packages So that you know they protect their, their brand, they protect their workforce, ETC. And, given all our investments in automation, we're actually able to add those, add the density to those packages without affecting timelines and turnaround times.

Speaker 9: So that's been very attractive to our customers and driven some of the upsell crossso. The other thing is the addition of new products. We continue to roll out new products and that you know that you know the one great example there is. You know the ability out to offer. You know Form my nine compliance and verified solutions. Know with our, with our own company, within our own company. So that's kind of bucket number two And then bucket number three is we're getting a lot of geographic expansion. So existing customers in one region you know giving us their business in another region. So I think it's really across all three buckets. That's driving the upsell crosssell. Helpful and- and I'm just hoping you could talk us about your- you showed a live, your sort of focus, growth area you how, how are those? And vertical performing relative to your, your iness? Is there a significant enough?

Speaker 13: Relative about performance. sureir, we operate in six primary verticals and as, as we previously mentioned, they're all performing very well right now it's we feel very fortunate that they're all firing on all cylinders and it's not just in the verticals but also in all of our geographies. So we're seeing good organic growth coming across all verticals and all geographies and they're all contributing to the overall growth. Thank you, Thank you. Our next question will come from andrews dinerman with J P Morgan. Please go ahead. I Dave, I know you mentioned organic reveny growth earlier. I think when you refer to organic REV growth in that context, it doesn't account for constant currencies. So just that, make sure we have all the sameved numbers. Every be great if you can mention organic constant currency revue growth for the first quarter and then also.

Speaker 14: What the organic constant currency REV growth assumed in the 22 guide. So in Q1 constant currency had a negative impact on our revenues of one million dollars and in our guidance constant currency we have baked a negative $4 million into our guidance. That's great if it took. We just going to ask a second question to could you just mention right now. You did say that input cost inflation, wage inflation was manageable. Was just wondering what first antag approach is to price increases this year on their background check packages- and when I say on your background check packages I mean kind of separate from any pass through cost of third party providers. Right? So, as you know, and why you made that comment- is obviously all the out of pocket third party costs are passed through, including any increases associated with those, and so we're covered from that perspective. We do evaluate price increases from time to time. Most of our contracts give us the ability.

Speaker 5: To pass on CPI increases. We will selectively do that throughout the year. We do not do it on a blanket basis, but we do look at our different customers and our different verticals and there different packages and we do pass on some selective increases and we have already built that into our guidance. Make sense. Thank you very much.

Speaker 1: thankyouour next question comes from caty with frankclay. Please go ahead. I the morning away this proneing Kennedy out may So understood that the broad based strength across both verticals and regions- and you also obviously delivered strong growth in the case of clining GDP there wasn't really any mention of recession- obviously also had strong performance in 2020. So it would it downturn or a contraction in economic growth be a non factor? Can you just kind a further unimpact: the recession resiliency and the spt provided by the vertical ized and markets that you're exclsive? David, want you start with that and'll add add ok, So in regards. So potential recession or downturn yes, it creates a certain element of uncertainty, but we've dealt with that before in. In fact, if you look at 2020, we actually grew during the pandemic.

Speaker 5: So far there's it's not had any impact on the demand for our services. The underlying fundamentals remain strong. In fact inflation, from that perspective, is contributing to turnover and more high velocity hiring. So we think that's helping uswe're in mission-critical function. Companies are going to have to continue to use us and when you think in terms of backfill churn, turnover- that's going to occur even in a recessionary or downturn environment. We don't have any real customer concentration and we have a very variable and flexible cost structure. So we think we're really well positioned to handle any type of downturn.

Speaker 9: You know. I would just added, and I think we're in the know, in the middle of a generational itch, you know, switch of of the job market here this is, you know we're seeing things that you know we've never seen before and these aren't, these aren't trends that you know, that'll go away in a quarter, or to you know we think there's long term trend here that are favorable to the business and the industry. Very good, Thank you. And then, as a follow up, may policies, if I missed, can you talk about the contribution that came from a post on boarding screening, whether it be continuous monitoring, ID and the outlook for the opportunity there?

Speaker 1: So about 90% of our business comes from pre-onboarding screening.

Speaker 6: The other 10% would be other areas of business or post-onboarding. Those are still up and coming areas. We are talking to clients. There seems to be interest around it. Today the revenue contribution is still very modest but we're very confident that it will continue to grow in the future.

Speaker 11: Thank you, AP. Thank you as a reminder. If you would like to ask a question, please press the Star and one key on your telephone. Our next question comes from Pete Christiansen with city. Please go ahead.

Speaker 18: Good morning. Thanks for the question, scot David. Nice results here. I was just wondering if you talk a little bit about sales force productivity on the new logo on the note- sorry the new logo front, and how are you looking at the landscape for RFP activity this year in that area?

Speaker 17: I no, what our good guide? I was just going to throw out a num ERS guide. In Q1, our new logos contributed nine point one million dollars of air revenue, which is about 7%. That's an increase over the prior quarter. So that's kind of the numnumbernumbersscot once you take it from there.

Speaker 9: Yeah I was going to say that you know we're seeing pretty consistent and strong deal flow. You know that I don't think it's any different than previous quarters or previous years. You know we've invested in the sales teams, that we do actually have a larger sales force, but we are seeing a lot of activity in the market and i- I'll go back to this zero point one more time is that you know our messaging is very favorable in this market around. You know helping people with high volume hiring. So you know we're know very excited about you know the opportunity to. You know when more our fees and and what it might be. But I I would say that one of the you know big differentiators of this company over the last four or five years has been, you know the productivity of our, of our sales force and our customer success teams that driving not only new logo but upsell, crosssell.

Speaker 18: That's really really good commentary there, very helpful and and to the point that just made in the previous question. First adevent certainly grew during the pandemic. I mean we're starting to see some general unlineind of conditions, those companies that benefited during the pandemic versus those that haven't. I'm just wondering if you're seeing any switch among your, your existing book of business, those who benefited in the pandemic versus those who who perhaps haven't any noticeable changes there in some of the underlying numbers and or at least towards their indications for future hir rate.

Scott Staples: Yes. Again, I think we're hearing very consistent messages from our customer base across all verticals, including the ones that you know did well during the pandemic, is that they are in full mode -- full hiring mode. And I think one of the big differences that we're seeing in the space is that this industry, typically had some seasonality to it. We're seeing that seasonality go away because what we're hearing from customers is that they're now in constant hire mode versus ramping up for peaks and ramping down for valleys. They are just in constant hiring mode and that sort of will take away some of the seasonality in our business. We've sort of factored all of that into our plans, but I think that's an interesting phenomenon that we'll keep an eye on.

Multiple speakers: [Pete Christiansen] Constant hire mode. Music to your ears, I'm sure. [Scott Staples] Absolutely.  [Pete Christiansen] Thank you, guys. Great job. [Operator] Thank you. Our next question will come from Hamzah Mazari with Jefferies. Please, go ahead. [Hans Hoffman] Hi. This is Hans Hoffman filling in for Hamzah. I just wanted to drill down on the M&A pipeline a little bit more. Could you just talk about how big is it today versus maybe a year ago? How valuations are working right now? And then, I know you guys mentioned, with the focus on adding vertical capabilities, expanding internationally and adding services and technology. Are there any of those areas that are a particular focus right now?

Multiple speakers: [Scott Staples] I think I'm going to work backwards on your question. I think, we're looking at all opportunities equally. Whether it's a geographic expansion, whether it's a strategic play for bolstering a vertical or whether it's adding a new technology or a product, we're kind of looking at things as they come. We have invested in the hiring of a new Head of Corporate Development, who is managing the pipeline and driving more opportunities for us. So we have put some more structure and investment around the whole M&A team. We don't calculate or don't measure the M&A pipeline on size. Because our strategy is strategic, size really doesn't matter. We're looking at deals that will help reinforce our positioning and messaging in the market. But David's comment earlier is spot on in that deal flow has significantly increased over the last 30 to 45 days. It almost feels like we get a new deal put in front of us on a weekly basis. I think a lot of companies in the space are for sale right now and we're taking it on a one-by-one basis. And valuations are pretty much the same as maybe a few quarters ago, but I think given that some of the changes with the market that valuations may tick down a bit, but we still haven't actually seen that happen yet. [Hans Hoffman] Got it. Thank you. And then just for my follow-up. On the international side, I think the mix with the guide, 16% 17% of total revenues. Can you just remind us I guess how big that opportunity could be? Could we potentially see that get to 40% 50% of total revenues? Just any color there would be helpful. Thanks. [Scott Staples]   Well first let's start with the definition of international. Just so it's clear, we've lumped Americas together. So, all of Canada, US, South America are all under our Americas. So, anything outside of that is what we would call international. So, if you actually put Canada and Latin America into our international number, our international number would actually be a lot bigger. Even though it is pretty sizable today, we're pretty proud of our international mix. But just wanted to be clear on first the definition. Second, I think international again as I mentioned earlier, we're very bullish on the international market. We think the international market is a great growth market.

Speaker 19: that opportunity could be? Could we potentially see that get to 40% 50% of total revenues? Just any color there would be helpful. Thanks. [Scott Staples]   Well first let's start with the definition of international. Just so it's clear, we've lumped Americas together. So, all of Canada, US, South America are all under our Americas. So, anything outside of that is what we would call international. So, if you actually put Canada and Latin America into our international number, our international number would actually be a lot bigger. Even though it is pretty sizable today, we're pretty proud of our international mix. But just wanted to be clear on first the definition. Second, I think international again as I mentioned earlier, we're very bullish on the international market. We think the international market is a great growth market.

Multiple speakers: [Scott Staples] But keep in mind that the US market is huge and will continue to grow and grow and grow. So even if the international market just absolutely crushes it for us, it still would never get to the numbers that you were talking about because the US market is such a great growth market for us. Yes, we do expect international to be a higher percentage of our mix in the future, but not dramatically higher because again the US will continue to grow. [Hans Hoffman ] Got it, its helpful. Thank you.  [Operator] Thank you. And we do have a follow-up question from Shlomo Rosenbaum with Stifel. Please go ahead. [Shlomo Rosenbaum] Hi, thank you. Hey David, I'm sorry if I missed it. I know Andrew asked about the organic constant currency growth expected for 2022. You said there was $14.8 million of acquisition revenue in the first quarter. Do you mind telling us how much acquisition growth is embedded in the guidance, maybe on a revenue basis or a growth basis?

Multiple speakers: [David Gamsey] Sure. So, the implied guidance for revenues is revenue growth of between 15% and 17%. On an organic basis that would be 11% to 13%. [Shlomo Rosenbaum]  Perfect. Thank you very much.

Multiple speakers: [Operator] Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Scott Staples for any closing remarks. [Scott Staples] Thank you, operator and thanks to everyone for your participation. We are off to a great start in 2022 and we are excited about the opportunities ahead. We think First Advantage is well positioned for continued growth and our focus remains on delivering value for our shareholders. Thank you for your support. Have a great day. [Operator]   Ladies and gentlemen this concludes today's conference call. Thank you for your participation. You may now disconnect.