Q1 2025 First Advantage Corp Earnings Call

May 8, 2025

And I will be your conference operator today I would like to welcome you to the first advantage first quarter 2025 earnings conference call and webcast.

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On the call today from birth vantage is human Vice.

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Speaker Change: President of Investor Relations.

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At this time, all participants have been placed in a listen only mode to prevent any background noise.

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Speaker Change: After the Speakers' remarks, there will be a question and answer session.

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Speaker Change: I would like to ask a question. During this time, Please press star one mutual fund.

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Speaker Change: But at any point. Your question has been answered you may remove yourself from the queue by pressing star. Two lastly, if you should require operator assistance. Please press Star Zero. Please note today's event is being recorded it is now my pleasure to turn the call over to Stephanie Gorman you may begin.

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Stephanie Gorman: Thank you Erika good morning, everyone and welcome to the <unk> first.

Sam by year.

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Speaker Change: First quarter 2025 earnings conference call.

Speaker Change: The Investor section of our website, you'll find the earnings press release and slide presentation to accompany today's discussion.

Eric: Good day, everyone. My name is Eric and I will be your operator today.

Speaker Change: This webcast is recorded and will be available for reading right on our Investor Relations website.

I would like to walk you through the first quarter.

Eric: 2020 earnings.

Eric: Hum.

Speaker Change: Before we begin our prepared remarks, I would like to remind everyone that our discussion today will include forward looking statements.

Eric: Great.

Eric: Gorman.

Eric: Investor Relations.

Speaker Change: At this time, all participants have ladies and gentlemen prevent.

Speaker Change: Forward looking statements are not guarantees of future performance.

Speaker Change: Actual results may differ materially from those expressed or implied in the forward looking statements due to a variety of factors.

Speaker Change: After the Speakers' remarks, there will a question and answer session.

Chris: Well during this please Chris.

Factors are discussed in more detail in our filings with the SEC, including our 2024 Form 10-K, and our Form 10-Q for the first quarter of 2025 to be filed with the SEC.

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Speaker Change: My question has been answered you may please re queue by pressing star two.

Speaker Change: It required.

Speaker Change: Press Star Zero. Please note. This event is recorded.

Speaker Change: Such factors may be updated from time to time.

Speaker Change: Sure.

Gorman: Hey, Gorman you may begin.

Speaker Change: Periodic filings with the SEC and we do not undertake any obligation to update forward looking statements.

Speaker Change: Hey, good.

Speaker Change: Hey, Mike.

Speaker Change: And welcome to the first damages.

Speaker Change: Throughout this conference call. We will also present and discuss non-GAAP financial measures reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures.

Speaker Change: <unk> conference call.

Speaker Change: In the investors section of our web site.

Speaker Change: The earnings release slide presentation to accompany today's discussion.

Speaker Change: This webcast.

Speaker Change: The extent available without unreasonable effort appear in today's earnings press release and presentation, which are available on our Investor Relations website.

Speaker Change: And will be available for replay on our Investor Relations website.

Speaker Change: Before we begin our prepared remarks.

Speaker Change: Ladies first.

Speaker Change: Okay.

Speaker Change: To facilitate comparability, we will also discuss pro forma combined company results.

Speaker Change: Okay.

Speaker Change: Thank you Steve.

Speaker Change: Thank you Sir.

Speaker Change: <unk> of first advantage in Sterling chest CT historical results.

Speaker Change: Actual results could differ materially.

Speaker Change: Forward looking statements.

Speaker Change: And certain pro forma adjustments as if the acquisition of Sterling had occurred on January one 2023.

Speaker Change: Yes.

Speaker Change: Please go ahead, Sir I discussed in detail.

Speaker Change: The pro forma information does not constitute article 11 pro forma information.

Speaker Change: Including 44%.

Speaker Change: Okay.

Speaker Change: 10-Q for the first.

Speaker Change: I'm joined on our call today by five people, our Chief Executive Officer, and Stephen Moore, Our Chief Financial Officer. After our prepared remarks, we will take your questions.

Speaker Change: Hi, Julien.

Speaker Change: Okay.

Speaker Change: Doctor CBS from time to time.

Speaker Change: Filings with a b.

Speaker Change: <unk> undertakes any obligation.

Scott: I will now hand, the call over to Scott.

Speaker Change: Okay.

Scott: Thank you Stephanie and good morning, everyone.

Speaker Change: This conference call, we will answer Chris.

Speaker Change: Thank you for joining our call.

Speaker Change: non-GAAP.

Scott: We have four key messages.

Speaker Change: Reconciliations.

Speaker Change: Measured.

Speaker Change: First.

Speaker Change: The comparable GAAP financial measure.

Speaker Change: We used to share our results.

Speaker Change: Okay.

Speaker Change: Reasonable effort appearing.

Speaker Change: Our expectations our revenue performance was supported by the strength of our sales engine and increased scale.

Speaker Change: Two presentations, which are available.

Speaker Change: Patients website.

Speaker Change: We also saw the.

Speaker Change: Militate comparability.

Speaker Change: The impact of our accelerated synergy realization efforts and our adjusted EBITDA and adjusted EBITDA margins for the quarter.

Speaker Change: The pro forma company.

Speaker Change: The advantage in Sterling.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: This is all while we maintained our relentless focus on cost discipline, which supported our performance within the current uncertain macro environment.

Speaker Change: As if the acquisition occurred on trade.

Speaker Change: 2023.

Speaker Change: Alright appreciate it does not constitute.

Speaker Change: Okay.

Speaker Change: Second we are continuing to successfully execute on our post close priorities as we integrate our $2 2 billion dollar Sterling acquisition.

Speaker Change: On our call today.

Speaker Change: Paul.

Speaker Change: Okay.

Speaker Change: And Steve remarked, our Chief Financial Officer.

Speaker Change: After we will take.

Speaker Change: This includes a nonstop emphasis on our products and customers, while continuing the integration process focusing on customer retention actioning synergies and reducing net leverage.

Speaker Change: We will announce the call over to Tom.

Tom: Thank you Bethany.

Speaker Change: Everyone.

Speaker Change: Thank you for joining our call.

Speaker Change: We have some key messages for today.

Speaker Change: We are pleased to share our first quarter results.

Speaker Change: Third we are seeing the benefits of our combined business as we execute on our Fas five dot O strategy we.

Speaker Change: We exceeded our.

Speaker Change: Okay.

Speaker Change: <unk> was supported by the strong sales.

Speaker Change: We are accelerating our new go to market approach, winning and retaining customers across verticals with our outstanding combat combined capabilities and well aligned high performance culture.

Speaker Change: And at scale.

Speaker Change: Yes.

Speaker Change: Positive impact of our accelerated synergy realization.

Speaker Change: In our adjusted EBIT and adjusted EBITDA margin for the quarter.

Speaker Change: And fourth we are reaffirming our full year 2025 guidance.

Speaker Change: This is all while we maintained our relentless focus on cost discipline, which supported our performance within the current uncertain macro environment.

Speaker Change: Executing effectively on things, we can control within our business and despite an ever evolving and uncertain macro environment. We are.

Speaker Change: Second we are continuing to successfully execute on our post close priorities as we integrate our $2 2 billion dollar Sterling acquisition.

Speaker Change: Have not yet observed sustained and broad changes in our fundamental demand drivers.

Speaker Change: We remain confident in our strategy and positioning in the market to create long term shareholder value.

Speaker Change: On that note and before moving on.

Speaker Change: I'd like to briefly address the hot topics of tariff and reduction in U S government.

Speaker Change: Third we are seeing the benefits of our combined business as we exit.

Speaker Change: As a quick reminder, 87% of our 2020 for pro forma revenues were generated in the U S.

Speaker Change: Okay. Thank you very much.

Speaker Change: We do have meaningful international operations, however, importing exporting goods is not part of our.

Speaker Change: Okay.

Speaker Change: Impact our customers and their customers, we have not yet experienced any noticeable indirect impact.

Speaker Change: Additionally, we do not have meaningful direct exposure to U S. Federal government hiring and therefore, <unk> seen any material direct impact from efforts to streamline federal government spending.

Speaker Change: Despite this limited direct exposure, we remain vigilant in the current environment with frequent coordination across the businesses to ensure that we fully understand the latest market conditions.

Speaker Change: We have contingency plans in place if the economic slowdown incrementally impacts our business and we are prepared to take actions to reduce cost as needed.

Speaker Change: Now turning to slide five and a closer look at our results in the first quarter.

Speaker Change: We were pleased with both our topline and bottom line first quarter results, which exceeded our expectations reinforcing our confidence and our resilient business model.

Speaker Change: Looking forward our early view of April results also gives us optimism for Q2.

Speaker Change: For the first quarter guide upsell cross sell and new logo rates performed in line with our historical growth algorithm and retention remained high at 96%.

Speaker Change: We are particularly proud of the work our team is doing to maintain these high levels of retention, while actioning and accelerating our integration playbook.

Speaker Change: Our sales pipeline momentum continues with 14 enterprise bookings in the first quarter and 78 in the last 12 months, each with $500000 or more of expected annual contract value.

Speaker Change: It was not just a good quarter for the number of bookings, but also the total value of these deals represented a record quarter for us.

Speaker Change: This was driven by increasing average deal size signaling strong package density and value selling which we are seeing across most verticals and geographies.

Speaker Change: The three large deals we discussed during last quarter's earnings call have all been officially book and we are moving forward swiftly to get these deals live and generating revenue.

Speaker Change: As a reminder, these deals include one with a significant retail customer in the retail gig economy.

Speaker Change: One in Australia, representing our largest international contract in the past number of years and one in healthcare leveraging our best in breed Park approach.

Speaker Change: We still expect the revenue to come in during the second half of the year.

Speaker Change: Progressive birth supports our confidence in the robust pipeline.

Speaker Change: As a reminder, the two U S deals have the potential to be top 10 customers.

Speaker Change: Our vertical strategy bolstered through the Sterling acquisition, focusing on large and growing sectors.

Speaker Change: Our balance across a diverse range of global.

Speaker Change: Consumer segment and between hourly and salaried focused customers enables us to weather a variety of macroeconomic scenarios.

Speaker Change: In Q1, we had healthy demand from our transportation vertical where recurring compliance services supported continued demand in the industry. We also saw positive momentum in financial services with continued stability in health care and recovery in our international regions.

Speaker Change: Which had been more stable and predictable since the middle of last year.

Speaker Change: We have seen a slowdown in our order volumes within the retail and e-commerce.

Speaker Change: So overall, our total business performed better than our original expectations for the quarter.

Speaker Change: We have seen some macro indicators around job turnover start to normalize as we expected and as a result, our base declines have improved.

Speaker Change: While our value proposition is within dating with customers and prospects. There is a high degree of macroeconomic and poverty uncertainty. This is causing our customers to take a wait and see approach would may cause stagnation in our business volumes.

Speaker Change: Turning to slide six.

Speaker Change: We remain laser focused on our post close priorities, we are executing our integration plan smoothly without disruptions customers and successfully delivering across all platforms, while integrating our capabilities.

Speaker Change: We are leveraging the best solutions and technologies from each of the first advantage and sterling platforms, increasing backend automation.

Speaker Change: While also launching new products, we believe our customers will value.

Speaker Change: For example, we have rolled out our AI enabled click chat call customer care.

Speaker Change: Curling customers, giving customers across our global platforms access to our award winning customer service and allowing us to streamline operations.

Speaker Change: Since first deployed by first advantage in 2023 click chat call has delivered impressive improvement in customer satisfaction and service levels, while also reducing our cost.

Speaker Change: Additionally, we continue to focus on innovation to support our customers' priorities of speed cost and efficiency, while optimizing our internal operations. And example of this is our recent implementation of AI agents and the automation of criminal records processing, which in certain applications.

Speaker Change: <unk> has increased our speed.

Speaker Change: From minutes per task to nearly instantaneous and eliminate all of this all of the manual touches delivering the leading speed and quality our customers expect from us.

Speaker Change: Our digital identity products are another example of our innovation leadership and represent a growing market opportunity for a best in class technology and software capabilities occur.

Speaker Change: According to a recent Gartner report.

Speaker Change: The rise of AI generated candidate profile, including fake identities bake faces and fake voices means that by 2028, one in four job candidates globally could be a stake.

Speaker Change: We have had an increasing number of our customers using our digital identity products to help them manage the this rapidly evolving challenge and we see strong future growth potential for these type of products.

Speaker Change: Additionally, we continue to keep our customers at the center of everything we do we were thrilled to have hosted a record number of attendees, including both customers and prospects at our at our annual collaborate user conference in mid April.

Speaker Change: Attendees, including a healthy number of Sterling customers were able to gain in depth knowledge into our products benchmark air programs against best practices and gain insights into trends impacting the HR industry.

Speaker Change: We were pleased to hear directly from our customers about how our proprietary data and advanced technology capabilities to solve the challenges they are facing in their pre and post onboarding programs, providing us with a clear competitive edge.

Speaker Change: Our customers and team have left the event energized and excited about what is coming next from first advantage.

With that I will now turn the call over to Steven.

Steven: Thank you Scott and good morning, everyone. Today I will provide color on our Q1 results give you an update on our synergy progress and discuss our reaffirmed guidance.

Steven: Please note that we plan to focus on our consolidated business going forward as we continue to swiftly execute our integration program and implement our <unk> strategy.

Steven: Starting with our first quarter results on slide eight.

Steven: As you heard our first quarter revenues exceeded our expectations coming in at $355 million nearly flat to last year on a pro forma basis in Q1, the volatility in our base performance continued to moderate and we were pleased that it modestly outperformed our expert expectations.

Steven: For this quarter, despite remaining negative on a year on year basis, our go to market success, continuing to hit our historical rates with the combined contribution of new logo and upsell cross sell revenues delivering nine 3% growth in the quarter and our retention remained high at a level of.

Steven: 96%.

Steven: Adjusted EBITDA for the first quarter also exceeded our expectations coming in at $92 million with an adjusted EBITDA margin of 26% up approximately 200 basis points versus the prior year on a pro forma basis.

Unknown Executive: Good day, everyone.

Steven: These results were enabled by our focus on accelerating synergies.

Erica: My name is Erica, and I will be your conference operator today. I would like to welcome you to the First Advantage First Quarter 2025 Earnings Conference Call and Webcast.

We won the volatility in our base performance continued to moderate and we were pleased that it modestly outperformed our expert expectations for this quarter. Despite remaining negative on a year on year basis. Our go to market success continue to hit our historical rates with the combined contribution of new logo.

Steven: <unk> approach to cost management, and the scalable nature of our business. Additionally, we remain focused on improving the historical operating margins of the Sterling business as the mix and cost structure of Sterling is a bit different than first advantages historical model.

Stephanie Gorman: Hosting the call today from First Advantage is Simone, Vice President of Investor Relations.

Erica: At this time, all participants have been placed in a listen-only mode to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. Lastly, if you should require operator assistance, please press star 0. Please note, today's event is being recorded.

And up sell cross sell revenues delivering nine 3% growth in the quarter and our retention remained high at a level of 96%.

Steven: Adjusted diluted EPS was <unk> 17.

Steven: Our flat year over year.

Steven: Benefit of our greater scale, which now include Sterling results was offset by the incremental interest on transaction financing and the dilutive impact of the new shares issued for the acquisition.

Adjusted EBITDA for the first quarter also exceeded our expectations coming in at $92 million with an adjusted EBITDA margin of 26% up approximately 200 basis points versus the prior year on a pro forma basis.

Steven: On slide nine you can see how we are making great progress on Actioning, our synergy program in Q1 reaction to an incremental $17 million and run rate synergies, bringing us to a total of $37 million. This represents a robust progress towards our synergy.

Stephanie Gorman: It is now my pleasure to turn the call over to Stephanie Gorman. You may begin.

Stephanie Gorman: Thank you, Erica.

Stephanie Gorman: Good morning, everyone, and welcome to First Advantage's first quarter 2025 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 recorded and will be available for replay on our investor relations website.

These results were enabled by our focus on accelerating synergies our disciplined approach to cost management and the scalable nature of our business. Additionally, we remain focused on improving the historical operating margins of the Sterling business as the mix and cost structure of Sterling is a bit different than first advair.

Steven: Goals.

Steven: And with the Q1 acceleration, we have exceeded our enhanced objective of actioning, 50% of our.

Stephanie Gorman: Before we begin our prepared remarks, I would like to remind everyone that our discussion today will include forward-looking statements. Such forward-looking statements are not guaranteed a future performance. Actual results may differ materially from those expressed or implied in forward-looking statements due to a variety of factors. These factors are discussed in more detail in our filings with the SEC, including our 2024 Form 10-K and our Form 10-Q for the first quarter of 2025 to be filed with the SEC. Such factors may be updated from time to time, periodic filings with the SEC, and we do not undertake any obligation to update for a booking statement.

Steven: In the first six months post closing.

<unk> historical model.

Steven: We remain confident in our ability to achieve our run rate synergy target range of $60 million to $70 million within two years.

Adjusted diluted EPS was <unk> 17.

We're flat year over year.

Benefit of our greater scale, which now includes Sterling results was offset by the incremental interest on the transaction financing and the dilutive impact of the new shares issued for the acquisition.

Of our $37 million of action run rate synergies $12 million had been realized since we began our integration efforts of which approximately $8 million contributed to our Q1 results.

On slide nine you can see how we are making great progress on Actioning, our synergy program in Q1 reaction to an incremental $17 million and run rate synergies, bringing us to a total of $37 million.

Steven: We are pleased to see the success of our integration and synergy execution come to fruition so quickly.

Steven: On slide 10, we are showing our revenue growth algorithm drivers.

Stephanie Gorman: Throughout this conference call, we will also present and discuss non-GAAP financial measures. Reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures, to the extent available without unreasonable effort, appear in today's earnings press release and presentation, which are available on our investor relations website. To facilitate comparability, we will also discuss pro forma combined company results consisting of First Advantage and Sterling Checkport historical results. In certain pro forma adjustments, as if the acquisition of Sterling had occurred on January 1, 2023, the pro forma information does not constitute Article 11 pro forma information.

Steven: Our historical data is broken out separately, we will be providing combined data going forward as our go to market organization is nearly fully integrated.

This represents a robust progress towards our synergy goals.

And with the Q1 acceleration, we have exceeded our enhanced objective of Actioning, 50% of our target in the first six months post closing.

Steven: In the first quarter base came in just better than we had expected.

We remain confident in our ability to achieve our run rate synergy target range of $60 million to $70 million within two years.

Steven: This upside combined with the sustained contribution from new logo and upsell cross sell plus strong customer retention and powered our Q1 results.

Of our $37 million of action run rate synergies $12 million had been realized since we began our integration efforts of which approximately $8 million contributed to our Q1 results.

Steven: Now turning to cash flow and that let net leverage on slide 11 during.

Steven: During the quarter, we generated adjusted operating cash flows of $33 $3 million and we continue to closely manage our working capital and focus on cash flow generation.

We are pleased to see the success of our integration and synergy execution come to fruition so quickly.

Stephanie Gorman: I'm joined on our call today by Scott Staples, our Chief Executive Officer, and Steven Marks, our Chief Financial Officer. After our prepared remarks, we will take your questions.

On slide 10, we are showing our revenue growth algorithm drivers.

Steven: Our year over year decline in adjusted operating cash flows was driven by the increased debt service from our acquisition related debt and management incentive plan payments related to operating as a combined company.

Note that while our historical data is broken out separately, we will be providing combined data going forward as our go to market organization is nearly fully integrated and.

Scott Staples: I will now hand the call over to Scott. Thank you, Stephanie, and good morning, everyone. Thank you for joining our call.

Steven: Our cash balance at March 31, 2025 was $172 million with this ample liquidity and cash flow subsequent to the end of the quarter, we made a voluntary principal debt payment of $15 million.

In the first quarter base came in just better than we had expected.

Scott Staples: We have four key messages for today. First, we are pleased to share our quarter results which exceeded our expectations. Our revenue performance was supported by the strength of our sales engine and increased scale. We also saw the impact of our accelerated synergy realization efforts in our adjusted EBITDA and adjusted EBITDA margins for the quarter. This is all while we maintain our relentless focus on cost discipline, which supported our performance within the current uncertain macro environment. Second, we are continuing to successfully execute on our post close priorities as we integrate our $2.2 billion Sterling acquisition. This includes a nonstop emphasis on our products and customers while continuing the integration process, focusing on customer retention, actioning synergies, and reducing net leverage.

This upside combined with the sustained contribution from new logo and upsell cross sell plus strong customer retention and powered our Q1 results.

Steven: This combined with the March 31 scheduled prepayment of $5 $5 million are the first steps of many to reduce our debt in line with our capital allocation priorities.

Now turning to cash flow and that let net leverage on slide 11 during.

During the quarter, we generated adjusted operating cash flows of $33 $3 million and we continue to closely manage our working capital and focus on cash flow generation.

Steven: Our synergize to LTM pro forma adjusted EBITDA net leverage ratio at quarter end was four four times.

Steven: Additionally in April we entered into a $250 million interest rate swap effective through April 2028, which lock in a 356% interest rate accelerating the benefits of anticipated future interest rate cuts and reducing our 2025 interest cost relative to <unk>.

Our year over year decline in adjusted operating cash flows was driven by the increased debt service from our acquisition related debt and management incentive plan payments related to operating as a combined company.

Our cash balance at March 31, 2025 was $172 million with this ample liquidity and cash flow subsequent to the end of the quarter, we made a voluntary principal debt payment of $15 million.

Steven: Current spot rates.

Steven: These actions demonstrate our capital allocation playbook coming to life and how we are committed to swiftly reducing net leverage towards approximately three times synergize pro forma adjusted EBITDA within 24 months post close.

Scott Staples: Third, we are seeing the benefits of our combined business as we execute on our FA 5.0 strategy. We are accelerating our new go-to-market approach, winning and retaining customers across verticals with our outstanding combined capabilities and well-aligned high-performance culture.

This combined with the March 31 scheduled prepayment of $5 $5 million are the first steps of many to reduce our debt in line with our capital allocation priorities.

Steven: Our long term net leverage target range remains at two to three times.

Our synergize to LTM pro forma adjusted EBITDA net leverage ratio at quarter end was four four times.

Steven: Moving to slide 12 425 guidance.

Steven: I'll start with a quick reminder, that year over year comparisons are on a pro forma basis to allow for easy comparability.

Scott Staples: and fourth, we are reaffirming our full year 2025 guide. executing effectively on things we can control within our business. And despite the ever-evolving and uncertain macro environment, we have not yet observed sustained and broad changes in our fundamental demand driver. We remain confident in our strategy and positioning in the market to create long-term shareholder value.

Additionally in April we entered into a $250 million interest rate swap effective through April 2028, which locks in a 356% interest rate accelerating the benefits of anticipated future interest rate cuts and reducing our 2025 interest cost relative to <unk>.

Steven: Modest outperformance in Q1 and early Q2 trends are encouraging as Scott mentioned, our customers remain in a wait and see mode as among many things the impacts of tariffs and other policies remain a key area of uncertainty across the global economy.

Current spot rates.

Steven: With this in mind, we are reaffirming our full year guidance today with our outlook for the remainder of the year, assuming a certain degree of macro stability.

These actions demonstrate our capital allocation playbook coming to life and how we are committed to swiftly reducing net leverage towards approximately three times synergize pro forma adjusted EBITDA within 24 months post close our long term net leverage target range remains at two to three times.

Scott Staples: On that note, and before moving on, I would like briefly address the hot topics of tariff and reduction in US government As a quick reminder, 87% of our 2024 pro forma revenues were generated in the US. We do have meaningful international operations. However, importing and exporting goods is not part of our business. To impact our customers and their customers, we have not yet experienced any noticeable indirect impact. Additionally, we do not have meaningful direct exposure to U.S. federal government hiring and therefore seen any material direct impact from efforts to streamline federal government spending. Despite this limited direct exposure, we remain vigilant in the current environment with frequent coordination across the businesses to ensure that we fully understand the latest market conditions.

Steven: We expect that base revenues will remain a growth headwind in Q2 and for the full year, improving sequentially and turning to neutral and then slightly positive later in the year.

Moving to slide 12, and our 2025 guidance I'll start with a quick reminder, that year over year comparisons are on a pro forma basis to allow for easy comparability.

Steven: We anticipate continued productivity of up sell cross sell and new logo growth consistent with historical trends and our robust deal pipeline supports our expectations for the full year.

Our modest outperformance in Q1 and early Q2 trends are encouraging.

Steven: We also expect customer retention to remain in line with our historical performance of 96%, even as we continue to diligently integrate the Sterling acquisition.

As Scott mentioned, our customers remain in a wait and see mode as among many things the impacts of tariffs and other policies remain a key area of uncertainty across the global economy.

Steven: FX doesn't.

Steven: FX typically doesn't play a large role in our business. However, we are currently forecasting it to be a mild headwind for the year.

With this in mind, we are reaffirming our full year guidance today with our outlook for the remainder of the year, assuming a certain degree of macro stability.

Steven: Looking at our quarterly phasing for the remainder of the year. We now expect Q2 revenues to come in between down, 2% and up 2% year over year.

We expect that base revenues will remain a growth headwind in Q2 and for the full year, improving sequentially and turning to neutral and then slightly positive later in the year.

Scott Staples: We have contingency plans in place if the economic slowdown incrementally impacts our business, and we are prepared to take actions to reduce costs as needed.

Steven: As Scott mentioned April was off to a good start which gives us some degree of confidence in our Q2 expectations in this period of macro uncertainty.

We anticipate continued productivity of up sell cross sell and new logo growth consistent with historical trends and our robust deal pipeline supports our expectations for the full year.

Scott Staples: Now, turning to slide five and a closer look at our results in the first quarter. We were pleased with both our top line and bottom line first quarter results, which exceeded our expectations, reinforcing our confidence in our resilient business model. Looking forward, our early view of April results also gives us optimism for Q2. For the first quarter, combined upsell, cross-sell, and new logo rates performed in line with our historical growth algorithm, and retention remained high at 96%. We are particularly proud of the work our team is doing to maintain these high levels of retention, while actioning and accelerating our integration playbook.

Steven: During the year, we will begin to lap easier comps and we anticipate sequential year over year total revenue growth improvement from Q2 to Q3 with fourth quarters growth rate about on part with a third.

We also expect customer retention to remain in line with our historical performance of 96%, even as we continue to diligently integrate the Sterling acquisition.

Steven: Starting with Q2, we expect adjusted EBITDA margins to be around or above 28%. We also anticipate that starting in Q2, we should see a considerable adjusted diluted EPS improvement as revenue ramps sequentially compared to Q1 and synergies are more fully realized.

FX doesn't.

FX typically doesn't play a large role in our business. However, we are currently forecasting it to be a mild headwind for the year.

Looking at our quarterly phasing for the remainder of the year. We now expect Q2 revenues to come in between down, 2% and up 2% year over year.

Steven: We expect that quarterly adjusted diluted EPS will be in the low to mid Twenty's in Q2, increasing to the mid to high <unk> and the final two quarters of the year.

Scott Staples: Our sales pipeline momentum continues with 14 enterprise bookings in the first quarter and 78 in the last 12 months, each with $500,000 or more of expected annual contract value. It was not just a good quarter for the number of bookings, but also the total value of these deals represented a record quarter for us. This was driven by increasing average deal size, signaling strong package density and value selling, which we are seeing across most verticals and geographies. The three large deals we discussed during last quarter's earnings call have all been officially booked, and we are moving forward swiftly to get these deals live and generating revenue.

As Scott mentioned April was off to a good start which gives us some degree of confidence in our Q2 expectations in this period of macro uncertainty.

Steven: We now anticipate free cash flow of $65 to $95 million for 2025.

Later in the year, we will begin to lap easier comps and we anticipate sequential year over year total revenue growth improvement from Q2 to Q3 with fourth quarters growth rate about on part with a third.

Steven: Keep in mind that embedded in this assumption are one time costs related to synergy achievement, which we are focused on minimizing where we can the payout of deferred transaction proceeds tied to equity vesting as well as our assumption for required working capital based on our revenue guidance and integration status.

Starting with Q2, we expect adjusted EBITDA margins to be around or above 28%. We also.

Steven: We have provided a chart in the appendix of the earnings presentation with FX Capex interest and other modeling assumptions with that let me turn it back to Scott for closing remarks before we open the line for your questions.

Anticipate that starting in Q2, we should see a considerable adjusted diluted EPS improvement as revenue ramps sequentially compared to Q1 and synergies are more fully realized we expect that quarterly adjusted diluted EPS will be in the low to mid twenty's in Q2, increasing to the mid to high Twenty's in the final.

Scott: Thanks Steven.

Speaker Change: In closing I would like to emphasize our consistent focus at first advantage delivering on our value creation playbook and shaping the future of our company to better serve our customers our diversified exposure to verticals customers and geographies.

Scott Staples: As a reminder, these deals include one with a significant retail customer in the retail gig economy, one in Australia, representing our largest international contract in the past number of years, and one in healthcare, leveraging our best in breed farm approach. We still expect this revenue to come in during the second half of the year, as this progresses further supports our confidence in the robust pipeline.

Two quarters of the year.

We now anticipate free cash flow of $65 to $95 million for 2025.

Keep in mind that embedded in this assumption are one time costs related to synergy achievement, which we are focused on minimizing where we can the payout of deferred transaction proceeds tied to equity vesting as well as our assumption for required working capital based on our revenue guidance and integration status we.

Speaker Change: Lines us with exciting growth opportunities, while also providing balance and resilience in an uncertain macro economic environment.

Speaker Change: As a reminder, we will be hosting our inaugural Investor day on May 28.

Scott Staples: As a reminder, the two U.S. deals have the potential to be top 10 customers. Our vertical strategy, bolstered through the Sterling acquisition, focuses on large and growing sectors. Our balance across a diverse range of global customer segments and between hourly and hourly focused customers enables us to weather a variety of macroeconomic scenarios. In Q1, we had healthy demand from our transportation vertical, where recurring compliance services supported continued demand in the industry. We also saw positive momentum in financial services with continued stability in healthcare and recovery in our international regions, which have been more stable and predictable since the middle of last year.

Speaker Change: At that event, we plan to share more about our <unk> strategy and update on our integration program as well as long term targets that will guide our business over the coming years.

We have provided a chart in the appendix of the earnings presentation with FX Capex interest and other modeling assumptions.

With that let me turn it back to Scott for closing remarks before we open the line for your questions.

Speaker Change: He will also detail the strengths of our business model, including our unique combination of technology and data that helps our customers higher smarter and onboard faster.

Thanks Steven.

In closing I would like to emphasize our consistent focus at first advantage delivering on our value creation playbook and shaping the future of our company to better serve our customers our diversified exposure to verticals customers and geographies aligns us with exciting growth opportunities, while also providing ballot.

Speaker Change: Lastly, I want to.

The first advantage team for their hard work and dedication to serving our customers with that we will open the line for questions.

Speaker Change: Thank you we will now begin the question and answer session. At this time, if you'd like to ask a question. Please press star one on your telephone keypad.

And resilience and an uncertain macroeconomic environment.

As a reminder, we will be hosting our inaugural Investor day on May 28.

Speaker Change: If at any point. Your question has been answered you may remove yourself from the queue by pressing star two.

At that event, we plan to share more about our <unk> strategy and update on our integration program as well as long term targets that will guide our business over the coming years, we will also detail the strengths of our business model, including our unique combination of technology and data that helps out.

Speaker Change: If you are using a speaker phone, we request that you pick up your handset, while asking a question to provide optimal sound quality.

Scott Staples: We have seen a slowdown in our order volumes within the retail and e-commerce role. So overall, our total business performed better than our original expectations for the quarter. We have seen some macro indicators around job turnover start to normalize, as we expected. And as a result, our base declines have improved. While our value proposition is resonating with customers and prospects, there is a high degree of macroeconomic and coffee uncertainty. This is causing our customers to take a wait and see approach, which may cause stagnation in our business volume.

Speaker Change: Thank you our first question comes from.

Bob: Hello, Bob.

Bob: <unk> with Stifel.

Bob: Thank you very much.

Speaker Change: The results are a surprisingly strong in the current uncertain environment and I wanted to ask you just to elaborate a little bit more about some of that.

Customers higher smarter and onboard faster.

Lastly, I want to thank the entire first advantage team for their hard work dedication to serving our customers with that we will open the line for questions.

Bob: <unk> current youre talking about from.

Speaker Change: From the clients on the one hand, you said that you're encouraged about April.

Thank you we will now begin the question and answer session. At this time, if you'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: What you're seeing but on the other hand, youre, saying that youre seeing some wait and see from the clients. So could you just reconcile those two comments and give us a view as to you know.

Scott Staples: For more information, visit www.FEMA.gov Turning to slide six. We remain laser-focused on our post-close priorities. We are executing our integration plans smoothly, without disruptions to customers, and successfully delivering across all platforms while integrating our capabilities. We are leveraging the best solutions and technologies from each of the First Advantage and Sterling platforms and increasing back-end automation. while also launching new products we believe our customers will value. For example, we have rolled out our AI-enabled click chat call customer care to Sterling customers, giving customers across our global platforms access to our award winning customer service and allowing us to streamline operations.

If at any point. Your question has been answered you may remove yourself from the queue by pressing star Kim.

Speaker Change: What exactly is it that you're seeing and then keeping the guidance the way that it is with this strong quarter is that just giving yourself some room in case things do deteriorate.

Speaker Change: If you are using a speaker phone, we request that you pick up your handset, while asking a question to provide optimal sound quality.

Thank you our first question comes from.

Speaker Change: Yes. So good question, so I think I'm going to work backwards on that in that first answer is yes.

Speaker Change: Shlomo Rosenbaum with Stifel.

Speaker Change: Okay. Thank you very much.

Speaker Change: Obviously.

Speaker Change: But the results are surprisingly strong in the current uncertain environment and I wanted to ask you just to elaborate a little bit more about that.

Speaker Change: We're in very unique macroeconomic times, and so we want to be a bit conservative with how we view the rest of the year.

Speaker Change: And I think.

Speaker Change: Currently we're talking about.

Speaker Change: One thing that we've always been very very good at is ongoing.

Speaker Change: From the clients on the one hand, you said that you're encouraged about April.

Eric: About what you're seeing but on the other hand, youre, saying that youre seeing some wait and see from the clients. So could you just reconcile those two comments in <unk>.

Speaker Change: Ongoing conversations with our customers we are in front of our customers all the time and so yes, we are seeing strong order volumes and you obviously saw that in our Q1 results and our commentary on April <unk>.

Scott Staples: Since first deployed by First Advantage in 2023, Click Chat Call has delivered impressive improvements in customer satisfaction and service levels, while also reducing our cost. Additionally, we continue to focus on innovation to support our customers' priorities of speed, cost, and efficiency while optimizing our internal operations. An example of this is our recent implementation of AI agents in the automation of criminal records processing, which in certain applications has increased our speed from minutes per task to nearly instantaneous and eliminate all of the manual touches, delivering the leading speed and quality our customers expect from us. Our digital identity products are another example of our innovation leadership and represent a growing market opportunity for our best-in-class technology and software capability.

Eric: Give us a view as to.

Eric: What exactly is it that you're seeing and then keeping the guidance the way that it is with this strong quarter is that just giving yourself some room in case things do deteriorate.

Speaker Change: But our clients.

Speaker Change: Or do we ask them about forecasting the rest of the quarter the rest of the year.

Speaker Change: They're they're just not really willing to do that yet because they're not they are uncertain about what the macro break. So that's why they are in a wait and see mode.

Speaker Change: Yes. Good question, so I think I'm going to work backwards on that in the first answer is yes.

Speaker Change: Obviously.

Speaker Change: So we've really I think I've mentioned this before we really got most of a lot of our clients have got into this just in time hiring mode, where they trigger hiring quickly based on business needs or macroeconomic influences that.

Speaker Change: We're in very unique macroeconomic times, and so we want to be a bit conservative with how we view the rest of the year.

Speaker Change: And I think.

Speaker Change: One thing that we've always been very very good at is.

Speaker Change: That's fine with us because speed is what we're known for but that's why we're in the wait and see mode, because thats, what our clients are telling us.

Ongoing conversations with our customers we are in front of our customers all the time and so yes, we are seeing strong order volumes and you obviously saw that in our Q1 results and our commentary on April.

Speaker Change: Okay. Thanks, and just one follow up on little bit of a broken record on this.

Speaker Change: In terms of.

Speaker Change: About that since the acquisition, but can you focus a little bit more on retention and <unk>.

Speaker Change: But our clients.

Scott Staples: According to a recent Gartner report, the rise of AI generated candidate profiles, including fake identities, fake faces, and fake voices means that by 2028, one in four job candidates globally could be a fake. We have had an increasing number of our customers using our digital identity products to help them manage this rapidly evolving challenge. And we see strong future growth potential for these type of products. Additionally, we continue to keep our customers at the center of everything we do.

Speaker Change: Or do we ask them about forecasting the rest of the quarter the rest of the year.

Speaker Change: Talk about how retention specifically in the Sterling base is trending vis vis your original deal model.

Speaker Change: Theyre, just not really willing to do that yet because they're not they are uncertain about what the macro break. So that's why they are in a wait and see mode.

Speaker Change: That's what I would say, it's probably the biggest concern that I had going into the deal and it seems like it's holding up so well.

Speaker Change: Are there any areas that are holding up better than others and it seems like 96% is pretty good for a combined company, but this.

Speaker Change: This kind of integration.

Speaker Change: Yeah and this was.

Speaker Change: That's fine with us because speed is what we're known for but that's why we're in the wait and see mode, because thats, what our clients are telling us.

Speaker Change: I think the result of laser focus on this exact topic and we've been planning this for over a year.

Scott Staples: We were thrilled to have hosted a record number of attendees, including both customers and prospects, at our annual Collaborate User Conference in mid-April. Attendees, including a healthy number of Sterling customers, were able to gain in-depth knowledge into our products, benchmark their programs against best practices, and gain insights into trends impacting the HR industry. We were pleased to hear directly from our customers about how our proprietary data and advanced technology capabilities solve the challenges they are facing in their pre and post onboarding programs, providing us with a clear competitive advantage.

Speaker Change: How we're going to not only serve customers, but how we're going to communicate with customers.

Speaker Change: Okay. Thanks, and just one follow up a little bit of a broken record on this.

Speaker Change: So we've been over communicating especially to the Sterling.

Speaker Change: In terms of.

Speaker Change: About that since the acquisition, but can you focus a little bit more on retention and talk about how retention specifically in the Sterling base is trending vis vis your original deal model.

Speaker Change: About.

Speaker Change: What's coming with this best of breed technology approach and quite honestly they've been very excited.

Speaker Change: The Sterling base is excited about.

Speaker Change: What what we essentially will be bringing in terms of upgrades and new features and functionality and the example of that is what I gave in the script was one of the very first things we launched to the Sterling installed base was quick chat call.

Speaker Change: What I would say, it's probably the biggest concern that I had going into the deal and it seems like it's holding up so.

Speaker Change: Any areas that are holding up better than others and it seems like 96% is pretty good for a combined company.

Speaker Change: Sterling customers in the past did not have the availability to chat with customer care.

Speaker Change: This kind of integration.

Scott Staples: Thank you.

Speaker Change: Yeah and this was.

Scott Staples: Our customers and team left the event energized and excited about what is coming next from First Advantage.

Speaker Change: I think the result of laser focus on this exact topic and we've been planning this for over a year.

Speaker Change: I had to dial an 800 number that is no longer the case, they can now chat and they are chatting, they're loving it.

Steven Marks: With that, I will now turn the call over to Steven. Thank you, Scott. And good morning, everyone. Today, I will provide color on our Q1 results, give you an update on our synergy progress, and discuss our reaffirmed guidance. Please note that we plan to focus on our consolidated business going forward as we continue to SWIFT execute our integration program and implement our FA 5.0 strategy. Starting with our first quarter results on slide eight. As you heard, our first quarter revenues exceeded our expectations, coming in at $355 million, nearly flat to last year on a pro forma basis.

Speaker Change: How we're going to not only serve customers, but how we're going to communicate with customers.

Speaker Change: So.

Speaker Change: I think it was.

Speaker Change: That as an example of other things that we're going to be rolling out across both the first advantage install base. When we find best of breed from the Sterling platform that we bring to first advantage customers and vice versa. So I would use the word excitement.

Speaker Change: So we've been over communicating especially to the Sterling.

Speaker Change: About.

Speaker Change: What's coming with this best of breed technology approach and quite honestly they've been very excited.

Speaker Change: The Sterling base is excited about.

Speaker Change: For the Sterling customer base, and obviously, we're extremely happy with retention and we're also happy with how many sterling customers came to our user conference collaborate.

Speaker Change: We're very excited to attend an event like that.

Speaker Change: Sterling customers in the past did not have the availability to chat with customer care.

Shlomo: And then the last thing I'll point, you to Shlomo is the.

Steven Marks: In Q1, the volatility in our base performance continued to moderate, and we were pleased that it modestly outperformed our expectations for this quarter, despite remaining negative on a year-on-year basis. Our go-to-market success continued to hit our historical rates, with the combined contribution of new logo and upsell cross-sell revenues delivering 9.3% growth in the quarter, and our retention remained high at a level of 96%. Adjusted EBITDA for the first quarter also exceeded our expectations coming in at $92 million with an adjusted EBITDA margin of 26% of approximately 200 basis points versus the prior year on a pro forma basis.

Speaker Change: Performance in Q1 from the sales team.

Speaker Change: I had to dial an 800 number that is no longer the case, they can now chat and they are chatting, they're loving it.

Speaker Change: So it's great to have the numbers, meaning the number of wins the number of bookings and obviously the large revenue. It was a record quarter from a bookings standpoint, but numbers are just part of the story.

Speaker Change: So.

Speaker Change: I think it was.

Speaker Change: It's also really important of the.

Speaker Change: For US was that also signaled to us that the market was also excited about this acquisition. It didn't it's not slowing down new logo and upsell cross sell and in some cases it may be accelerating it so all those things put together.

Speaker Change: For the Sterling customer base, and obviously, we're extremely happy with retention and we're also happy with how many sterling customers came to our user conference collaborate.

Speaker Change: We really have a good view.

Speaker Change: And very enthusiastic about it.

Speaker Change: This integration.

Speaker Change: We're very excited to attend an event like that.

Speaker Change: And then the last thing I'll point, you to Shlomo is the.

Steven Marks: These results were enabled by our focus on accelerating synergies, our disciplined approach to cost management, and the scalable nature of our business. Additionally, we remain focused on improving the historical operating margins of the sterling business as the mix and cost structure of sterling is a bit different than First Advantage's historical model. Adjusted Diluted EPS was $0.17 or flat year over year. The benefit of our greater scale, which now includes sterling results, was offset by the incremental interest on the transaction financing and the dilutive impact of the new shares issued for the acquisition. On slide nine, you can see how we are making great progress on actioning our Synergy Program.

Speaker Change: Performance in Q1 from the sales team.

Speaker Change: Thank you and we will go next to the line of Ashish <unk> with RBC capital markets. Please go ahead.

Speaker Change: Hey, Good morning, guys. This is Phil Chi on for Ashish departure I. Appreciate you guys taking my question.

Speaker Change: Maybe just wanted to kind of drill down and follow up on the question kind of what you guys are seeing.

Speaker Change: What's also really important of the.

Speaker Change: And then you guys had previously mentioned kind of expectations for base growth kind of in that second half.

Speaker Change: Kind of shifting more to neutral and then positive layer on with the general kind of market and macro volatility does that shift your base assumptions at all or is it still a kind of similar to what you've expected.

Speaker Change: You really have a good view.

Speaker Change: And very enthusiastic about about this integration.

Speaker Change: Steve.

Speaker Change: Yeah, not a major change.

Steven Marks: In Q1, we actioned an incremental $17 million in run rate synergies, bringing us to a total of $37 million. This represents robust progress towards our Synergy Goals. And with the Q1 acceleration, we have exceeded our enhanced objective of actioning 50% of our time in the first six months post-closing. We remain confident in our ability to achieve our run rate synergy target range of $60 to $70 million within two years. Of our $37 million of action run rate synergies, $12 million have been realized since we began our integration efforts, of which approximately $8 million contributed to our Q1 results.

Speaker Change: <unk> was negative five 5% in Q1, a little ahead of our expectations and certainly towards the higher end of our expectations.

Speaker Change: Thank you and we will go next to the line of Ashish <unk> with RBC capital markets. Please go ahead.

Speaker Change: There's a little bit of just just map and here as we get to the middle of the year the comps get easier.

Bill Chiasson: Good morning, guys. This is bill Chiasson Ashish departure I. Appreciate you guys taking my question.

Speaker Change: <unk> turned negative in the second half of 2022, so that the second half of 2025 just has more compounded.

Bill Chiasson: Maybe just wanted to kind of drill down and follow up on the question kind of when you guys are seeing.

Speaker Change: Easier comps and so theres an element of that and then what we've really seen coming in and the overall volume is just period to period sequential stability.

Bill Chiasson: I know you guys had previously mentioned kind of expectations for base growth kind of in that second half.

Bill Chiasson: You know kind of shifting more to neutral and then positive layer on with the general kind of market and macro volatility does that shift your base assumptions at all or is it still a kind of similar to what you've expected.

Speaker Change: So obviously, there's overhang from the macro we can't control what comes out of Washington, but based on what the trends were seeing today when you get to that that part of the year. There is an inherent stability that comes out of base.

Bill Chiasson: Steve.

Steven Marks: We are pleased to see the success of our integration and synergy execution come to fruition so quickly. On slide 10, we are showing our Revenue Growth Algorithm Drivers. Our historical data is broken out separately. We will be providing combined data going forward as our go-to-market organization is nearly fully integrated. In the first quarter, base came in just better than we had expected. This upside, combined with the sustained contribution from new logo and upsell cross-sell, plus strong customer retention, powered our Q1 results. Now, turning to cash flow and net leverage on slide 11, during the quarter, we generated adjusted operating cash flows of $33.3 million, and we continue to closely manage our working capital and focus on cash flow generation.

Bill Chiasson: Yes, not a major change.

Speaker Change: It's really a neutral state is what I would call. It when it's when it's obviously flat it's flat, but even when it slightly positive it's not a major growth engine.

Bill Chiasson: Base was negative five 5% in Q1, a little ahead of our expectations and certainly towards the higher end of our expectations.

Speaker Change: But you do also then have the sustained contribution of new logo and upsell cross sell pipeline success that Scott just talked about.

Bill Chiasson: There's a little bit of just just map and here as we get to the middle of the year the comps get easier.

Speaker Change: Our expectation that we still have a strong focus on customer retention. So once we get to that base neutral state. We felt really good about the condition we're in.

Bill Chiasson: <unk> turned negative in the second half of 2022, so that the second half of 2025 just has more compounded.

Speaker Change: In prime time for for good results.

Bill Chiasson: Easier comps in it. So there is an element of that and then what we've really seen coming in and the overall volume is just period to period sequential stability.

Speaker Change: Yeah, let me add to that.

Speaker Change: I think one thing to point out.

Speaker Change: Is that.

Speaker Change: New logos and upsell cross sell.

Bill Chiasson: So obviously, there's overhang from the macro we can't control what comes out of Washington, but based on what the trends were seeing today when you get to that back part of the year. There is an inherent stability that comes out of base.

Speaker Change: <unk>, new logo and upsell cross sell for 12 months and then after 12 months that converts to base and if you think about.

Speaker Change: Our consistent delivery on new logo upsell cross sell.

Bill Chiasson: It's really a neutral state is what I would call. It when it's when it's obviously flat it's flat, but even when it slightly positive it's not a major growth engine.

Speaker Change: All the wins, we had a year ago and whatever they start converting to base. So the sales engine.

Steven Marks: Our year-over-year decline in adjusted operating cash flows was driven by the increased debt service from our acquisition-related debt and management incentive plan payments related to operating as a combined company. Our cash balance at March 31st, 2025 was $172 million. With this ample liquidity and cash flow, subsequent to the end of the quarter, we made a voluntary principal debt payment of $15 million. This, combined with the March 31st scheduled prepayment of $5.5 million are the first steps of many to reduce our debt in line with our capital allocation priorities. Our synergized LTM pro forma adjusted EBITDA net leverage ratio at quarter end was 4.4 times.

Speaker Change: It's really been humming and that's going to also help base. So not only is it easier comps, but we're.

Bill Chiasson: But you do also then have the sustained contribution of new logo and upsell cross sell pipeline success that Scott just talked about.

Speaker Change: Barring some new logo upsell cross sell revenue into the base.

Bill Chiasson: And our expectation that we still have a strong focus on customer retention. So once we get to that base neutral state. We felt really good about the condition we're in.

Speaker Change: As they transition from one calculation to the other.

Bill Chiasson: In prime time for for good results.

Yeah.

Speaker Change: Appreciate it thank you guys.

Bill Chiasson: And let me add to that.

Speaker Change: Thank you and we'll go next in line.

Bill Chiasson: I think one thing to point out.

Bill Chiasson: Is that.

Andrew Steinman: Andrew Steinman with Jpmorgan. Please go ahead.

Bill Chiasson: New logos and upsell cross sell get tracked as new logo and upsell cross sell for 12 months and then after 12 months that converts debase.

Speaker Change: Hey, Scott.

Speaker Change: Just spoke about back base revenue neutral I just wanted to do a maybe a quick review on base revenue growth in the in the Algo for first advantage I'm sure you remember at the time of the IPO.

Bill Chiasson: Think about our consistent delivery on new logo upsell cross sell.

Bill Chiasson: All of the wins, we had a year ago and whatever they start converting to base. So the sales engine has really been humming and that's going to also help base. So not only is it easier comps, but we're pouring some new logo upsell cross sell revenue into the base.

Speaker Change: The Algonquin at 2% to 4% base growth.

Steven Marks: Additionally, in April, we entered into a $250 million interest rate swap effective through April 2028, which locks in a 3.56% interest rate, accelerating the benefits of anticipated future interest rate cuts and reducing our 2025 interest costs relative to current spot rates. These actions demonstrate our capital allocation playbook coming to life and how we are committed to swiftly reducing net leverage towards approximately three times synergized pro forma adjusted EBITDA within 24 months post-close. Our long-term net leverage target range remains at two to three times.

Speaker Change: Obviously, there was upside now there's there's downside the base growth, but you know if we're going to look at base growth you know that.

Speaker Change: About quits in particular level.

Speaker Change: Level of quits currently.

Speaker Change: And prospectively do.

Bill Chiasson: As they as they transition from one calculation to the other.

Speaker Change: Do you feel like base growth could grow 2% to 4% over the medium term after we get back to neutral here this year.

Bill Chiasson: Yeah.

Bill Chiasson: I appreciate it thank you guys.

Speaker Change: Thank you and we'll go next to the line of Andrew Steinman with Jpmorgan. Please go ahead.

Speaker Change: Yeah I mean.

Speaker Change: We look at the same data you look at Andrew, but if you look at quits openings hires unemployment they've all been flat.

Andrew Steinman: Hey, Scott.

Speaker Change: Tim just spoke about getting back base revenue neutral I just wanted to do it.

Speaker Change: A quick review on base revenue growth in the in the Algo for first advantage I'm sure you remember at the time of the IPO.

Speaker Change: So I think Steven may have used the term.

Steven Marks: Moving to slide 12 and 2025 guidance. I'll start with a quick reminder that year-over-year comparisons are on a pro forma basis to allow for easy comparability. Our modest outperformance in Q1 and early Q2 trends are encouraging. As Scott mentioned, our customers remain in a wait-and-see mode, as among many things, the impacts of tariffs and other policies remain a key area of uncertainty across the global economy. With this in mind, we are reaffirming our full year guidance today with our outlook for the remainder of the year assuming a certain degree of macro stability. We expect that base revenues will remain a growth headwind in Q2 and for the full year, improving sequentially and turning to neutral, and then slightly positive later in the year.

Speaker Change: Stability despite uncertainty.

Speaker Change: And I think that's an important term when it comes to the macro because we're seeing stability, but obviously there is an overhang of uncertainty.

Speaker Change: Could it 2% to 4% base growth.

Speaker Change: Obviously, there was upside now there is downside to base growth, but you know if we're going to look at base growth.

Speaker Change: No.

Speaker Change: I think ultimately yes.

Speaker Change: Thinking about quits in particular.

Speaker Change: We believe that we can get back to two to 3% to 4% positive base growth, but it probably won't be until early 2026.

Speaker Change: Level of quick currently and.

Speaker Change: And prospectively.

Speaker Change: Do you feel like base growth could grow 2% to 4% over the medium term after we get back to neutral here this year.

Speaker Change: Our our model.

Speaker Change: As Stephen mentioned getting to neutral base by the end of this year, but we're certainly expecting 2026 to start turning positive not that we wouldn't get that far out.

Speaker Change: Yeah.

Speaker Change: We look at the same data you look at Andrew, but if you look at quits openings hires unemployment they've all been flat.

Speaker Change: But the comps are getting easier and easier and as I mentioned earlier the sales engine keeps humming. So just for example.

Speaker Change: So.

Speaker Change: Steven May have used the term stability despite uncertainty.

Steven Marks: We anticipate continued productivity of upsell-cross-sell and new logo growth, consistent with historical trends, and our robust deal pipeline supports our expectations for the full year. We also expect customer retention to remain in line with our historical performance of 96% even as we continue to diligently integrate the Sterling acquisition. FX typically doesn't play a large role in our business. However, we are currently forecasting it to be a mild headwind for the year. Looking at our quarterly phasing for the remainder of the year, we now expect Q2 revenues to come in between down 2% and up 2% year over year.

Speaker Change: A record number of deals this quarter.

Speaker Change: And I think that's an important term when it comes to the macro because we're seeing stability, but obviously there is an overhang of uncertainty.

Speaker Change: That turns into base a year from now so that that should also help the growth.

Speaker Change: Perfect. Thank you.

Speaker Change: No.

Speaker Change: I think ultimately yes.

Speaker Change: Thank you.

Speaker Change: And well go next to Andrew Nichols with William Blair I'm, sorry, Andrew Nicholas with William Blair. Please go ahead.

Speaker Change: We believe that we can get back to two to 3% to 4% positive base growth, but it probably won't be until early 2026.

Speaker Change: Great. Thanks.

Andrew Nichols: Morning, and I appreciate you taking my questions. Scott you touched on in an answer earlier, but I wanted to open up the conversation a little bit more on market structure and maybe the volume of Rfps that youre seeing both sterling.

Speaker Change: Our our model.

Speaker Change: As Stephen mentioned getting to neutral basis by the end of this year, but we're certainly expecting 2026 to start turning positive not that we wouldn't get that far out.

Speaker Change: The bookings number as the pipeline commentary all really good or you also see.

Speaker Change: But the comps are getting easier and easier and as I mentioned earlier the sales engine keeps humming. So just for example.

Speaker Change: More rfps come your way.

Steven Marks: As Scott mentioned, April was off to a good start, which gives us some degree of confidence in our Q2 expectations in this period of macro uncertainty. Later in the year, we will begin to lack easier comps, and we anticipate sequential year-over-year total revenue growth improvement from Q2 to Q3, with fourth quarter's growth rate about on par with a third. Starting with Q2, we expect adjusted EBITDA margins to be around or above 28%. We also anticipate that starting in Q2, we should see a considerable adjusted diluted EPS improvement as revenue ramps sequentially compared to Q1 and synergies are more fully realized.

Speaker Change: Is that a function of win rates being better just trying to kind of unpack if if you're also seeing more interest.

Speaker Change: A record number of deals this quarter.

Speaker Change: That turns into base a year from now so that that should also help the growth.

Speaker Change: And if there's anything to quantify that that'd be helpful too.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: I don't think we can quantify it today, that's something we can certainly get into her investor day.

Speaker Change: And we'll go next to Andrew Nichols with William Blair Im sorry, Andrew Nicholas with William Blair. Please go ahead.

Speaker Change: A little more.

Speaker Change: In depth into the pipeline and stuff.

Andrew Nicholas: Great. Thanks.

Andrew Nicholas: Morning, and I appreciate you taking my questions Scott you touched on it in an answer earlier, but I wanted to open up the conversation a little bit more on market structure and maybe the volume of Rfps that youre seeing both sterling.

Speaker Change: I would say you know keep in mind the first advantage in Sterling brands were excellent in.

Speaker Change: In the market and we were already at pretty good RFP volumes and pretty good win rates. So the sales engine has been has been performing very well so rfps.

Steven Marks: We expect that quarterly adjusted diluted EPS will be in the low to mid-20s in Q2, increasing to the mid to high 20s in the final two quarters of the year. We now anticipate free cash flow of $65 to $95 million for 2025. Keep in mind that embedded in this assumptions are one-time costs related to energy achievement, which we are focused on minimizing when we can, the payout of deferred transaction proceeds tied to equity vesting, as well as our assumption for required working capital based on our revenue guidance and integration status.

Andrew Nicholas: The bookings numbers the pipeline commentary all really good or you also see.

Andrew Nicholas: More rfps come your way.

Speaker Change: Ah running.

Speaker Change: Is that a function of win rates being better just trying to kind of unpack if if you're also seeing more interest.

Speaker Change: About normal I would say, which is good because you take the combined company put together that's that's a good thing but.

Speaker Change: But I think whats driving it more and we'll certainly get into more of this in Investor day is that there's a lot of trends going on in the industry that I would say are fairly new and digital identity being one we mentioned the Gartner report.

Andrew Nicholas: And if there's anything to quantify that that'd be helpful too.

Speaker Change: Yeah.

Speaker Change: I don't think we can quantify it today, that's something we can certainly get into her investor day.

Speaker Change: A little more.

Speaker Change: In depth into the pipeline and stuff.

Speaker Change: Of.

Speaker Change: Deep fakes and fraud in the recruiting.

Speaker Change: I would say you know keep in mind the.

Steven Marks: we have provided a chart in the appendix to the earnings presentation with FX, CAPEX, interest, and other modeling assumptions.

Speaker Change: And on boarding cycle, hitting pretty pretty significant marks by the by 2028 companies are actually dealing with that now.

Speaker Change: First advantage in Sterling brands were excellent.

Speaker Change: In the market and we were already at pretty good RFP volumes and pretty good win rates.

Scott Staples: With that, let me turn it back to Scott for closing remarks before we open the line for your questions. Thanks, Steven. In closing, I would like to emphasize our consistent focus at First Advantage, delivering on our value creation playbook and shaping the future of our company to better serve our customers. Our diversified exposure to verticals, customers, and geographies aligns us with exciting growth opportunities while also providing balance and resilience in an uncertain macroeconomic environment.

Speaker Change: And that's driving a lot of Rfps is driving a lot of upsell cross sell and I can guarantee you that not every provider in that space has technology solutions available for that so.

Speaker Change: The sales engine has been has been performing very well so rfps.

Speaker Change: Our running about normal I would say, which is good because you take the combined company put together that's that's a good thing, but I think whats driving it more and we'll certainly get into more of this in Investor day is that there's a lot of trends going on in the industry that I would say are fairly new.

Speaker Change: So those things kind of trend in our favor as as our customers and prospects look too.

Speaker Change: Find vendors and partners with state of the art technologies and.

Speaker Change: And partners, who can combine data sources and technologies into a single views. That's also extremely important to them. So that is driving a lot of this nice volume and I think it was a big component of the Q1 record deals that we had.

Speaker Change: Digital identity being one of them we mentioned the Gartner report.

Scott Staples: As a reminder, we will be hosting our inaugural Investor Day on May 28th. At that event, we plan to share more about our FA5.0 strategy, an update on our integration program, as well as long-term targets that will guide our business over the coming years. We will also detail the strengths of our business model, including our unique combination of technology and data that helps our customers hire smarter and onboard faster.

Speaker Change: Of <unk>.

Speaker Change: Deep fakes and fraud in the recruiting.

Speaker Change: And on boarding cycle, hitting pretty pretty significant marks by the by 2028.

Speaker Change: But again I think we can dive a little bit more into that in investor day, but that is where we think a lot of growth will come from.

Speaker Change: These are actually dealing with that now.

Speaker Change: And that's driving a lot of Rfps is driving a lot of upsell cross sell and I can guarantee you that not every provider in that space has technology solutions available for that.

Speaker Change: Great. Thank you and then just for a quick follow up.

Speaker Change: On the large deals can you refresh us or remind us on the typical timing for how long you expect it to take for those to onboard and then they're generating what it is.

Speaker Change: So those things kind of trend in our favor as.

Scott Staples: Lastly, I want to thank First Advantage team for their hard work and consistent dedication to serving our customers.

Speaker Change: As our customers and prospects look too.

Speaker Change: Yeah I mean.

Speaker Change: Yeah every every prospect that we onboard has the.

Scott Staples: With that, we will open the line for questions. Thank you.

Speaker Change: Find vendors and partners with state of the art technologies, and and partners, who can combine data sources and technologies into a single views. That's also extremely important to them. So that is driving a lot of this nice volume and I think it was a big component of the Q1 record deals that we had but.

Unknown Executive: We will now begin the question and answer session. At this time, if you would like to ask a question, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two.

Speaker Change: Varying timeline of how long it takes to actually onboard them.

Speaker Change: Probably average about.

Speaker Change: 90 days or so for most customers, but when they are big and complicated like this typically it takes about six months.

Unknown Executive: If you are using a speakerphone, we request that you pick up your handset while asking your question to provide optimal sound quality. Thank you.

Speaker Change: So we are expecting.

Speaker Change: I think we can dive a little bit more into that in investor day, but that is where we think a lot of growth will come from.

Speaker Change: To start revenue in all three of them. This year all three of them probably late Q2 early Q3.

Shlomo Rosenbaum: Our first question comes from Shlomo Rosenbaum with Staple. Thank you very much. Scott, the results are surprisingly strong in the current uncertain environment. And I want to ask you just to elaborate a little bit more about some of the cross currents you're talking about from the clients. On the one hand, you said that you're encouraged about April, about what you're seeing. But on the other hand, you're saying that you're seeing some wait and see from the clients.

Speaker Change: Great. Thank you and then just for a quick follow up.

Speaker Change: Which would be sorted.

Speaker Change: On the large deals can you refresh us or remind us on the typical timing for how long you expect it to take for those to onboard and then they're generating revenue.

Speaker Change: That six months that it takes to get them up and running.

Speaker Change: Great. Thank you.

Speaker Change: Thank you and we'll go next to Manav Patnaik from Barclays. Please go ahead.

Speaker Change: Yeah I mean.

Speaker Change: Yeah every every prospect that we onboard has.

Thomas: Hi, This is Thomas on for Manav.

Wanted to go back to guidance and understand what gives you that confidence in the guide what would take it to the top and bottom of the range respectively.

Speaker Change: Varying timeline of how long it takes to actually on board them.

Speaker Change: Probably average about.

Scott Staples: So could you just reconcile those two comments and give us a view as to what exactly is it that you're seeing? And then keeping the guidance the way that it is with this strong quarter, is that just giving yourself some room in case things do deteriorate? Yeah, Shlomo, great question. So I think I'm going to work backwards on that. And the first answer is yes. Obviously, you know, we're in very unique macroeconomic times. And so we want to be a bit conservative with how we view the rest of the year. And I think You know, one thing that we've always been very, very good at is ongoing conversations with our customers, we are in front of our customers all the time.

Speaker Change: 90 days or so for most customers, but when they are big and complicated like this typically it takes about six months.

Thomas: Yes, it's a good question I mean, obviously.

Thomas: There is kind of an implied level are expected level of stability I think.

Speaker Change: So we are.

Speaker Change: Spec thing.

Speaker Change: To start revenue in all three of them. This year all three of them probably late Q2 early Q3.

Thomas: The stronger that that stability remains in the morning.

Thomas: The better well performance.

Thomas: You just heard from Scott, we do have a good healthy amount of confidence in the things that we can influence and control around new logo generation and an up sell cross sell revenue generation.

Speaker Change: Which would be sort of on schedule with that that six months that it takes to get them up and running.

Speaker Change: Great. Thank you.

Thomas: And we will remain focused to achieve those historical 96 plus percent retention levels.

Manav Patnaik: Thank you and we'll go next to Manav Patnaik from Barclays. Please go ahead.

Thomas: The real wildcard really comes down to kind of just the underlying base volumes.

Speaker Change: Hi, This is Thomas on for Manav.

Speaker Change: Just wanted to go back to guidance and understand what gives you that confidence in the guide what would take it to the top and bottom of the range respectively.

Scott: Like Scott mentioned in the prepared remarks.

Scott: We had a good Q1 in that respect and in the volatility sequentially died down in recent months, which is obviously a healthy business trends.

Shlomo Rosenbaum: And so yes, we are seeing strong order volumes. And you've, you obviously saw that in our q&a results and our commentary on April. But our clients are, you know, when we asked them about forecasting the rest of the quarter, the rest of the year, Okay, thanks.

Speaker Change: Yes, it's a good question I mean, obviously.

Scott: So as long as we can get our core verticals.

Speaker Change: There is kind of an implied level are expected level of stability I think.

Scott: That stable trend, we'll do well.

Speaker Change: The stronger that that stability remains in the morning.

Scott: Like Scott mentioned on a few questions ago, our approach towards guidance allows us to have a little bit of a conservative posture towards the rest of the year, which we think is the correct prudent approach given.

Speaker Change: The better well performance.

Speaker Change: You just heard from Scott, we do have a good healthy amount of confidence in the things that we can influence and control around new logo generation and an up sell cross sell revenue generation.

Scott: Just the pace of news and kind of the various.

Scott: Playing elements around here you know obviously every time you open up.

Speaker Change: We remain focused to achieve those historical 96 plus percent retention levels. So.

Scott: The Wall Street Journal Web page it it's something new and different some are good thing some are bad things and I think our guidance gives us enough flexibility to weather some of those storms.

Speaker Change: The real wildcard really comes down to kind of just the underlying base volumes.

Speaker Change: Got it and then in terms of your customer bookings.

Speaker Change:

Speaker Change: Like Scott mentioned in the prepared remarks.

Speaker Change: You said you had 78 in the last 12 months I just wanted to get an idea of the <unk>.

Speaker Change: We had a good Q1 in that respect in the volatility sequentially died down in recent months, which is obviously a healthy business trends.

Shlomo Rosenbaum: And just one follow up, I'm a little bit of a broken record on this in terms of, you know, about that acquisition, but you focus a little bit more on retention. And, you know, talk about how retention specifically in the Sterling base is trending vis-a-vis your original deal model. And, you know, that's what I would say is probably the biggest concern that I had going into the deal. And it seems like it's holding up. So, you know, are there any areas that are and it seems like 96% is pretty good for a combined company with this kind of integration.

Speaker Change: Average contract rate like a car.

Speaker Change: Contract timing for these.

Speaker Change: So as long as we can get our core verticals.

Speaker Change: Yeah. So hey, those are all enterprise bookings too I would add so those are all half a million dollars or more of ACB.

Speaker Change: That stable trend, we'll do well.

Speaker Change: Like Scott mentioned on a few questions ago, our approach towards guidance allows us to have a little bit of a conservative posture towards the rest of the year, which we think is the correct prudent approach given.

Speaker Change: The bookings come pretty ratably over the year. There is no one peak signing season, where we get those so we had 14 in the quarter. If you recall Q4 was a particularly strong bookings quarter coming out of the close of the acquisition. We had 25 in Q4.

Speaker Change: Just the pace of news and kind of the various.

Speaker Change: Playing elements around here you know obviously every time you open up the Wall Street Journal webpage at its something new and different some are good thing some are bad things and I think our guidance gives us enough flexibility to weather some of those storms.

Speaker Change: But as Scott mentioned at 14, it was actually a record dollar volume or <unk>.

Speaker Change: Bookings this quarter. So I think as I mentioned in your pipeline has got US really excited it's certainly de risks some of our second half of the year go get in terms of new logo upsell cross sell.

Scott Staples: Yeah, and this was, I think, the result of, you know, laser focus on this exact topic.

Speaker Change: Got it and then in terms of your customer bookings.

Scott Staples: And we've been planning this for over a year of, you know, how we're going to not only serve customers, but how we're going to communicate So we've been over communicating, especially to the Sterling base about, you know, what's coming with this best of breed technology approach. And quite honestly, they've been very excited. The Sterling base is excited about what we essentially will be bringing in terms of upgrades and new features and functionality. And the example that is what I gave in the script was, you know, one of the very first things we launched to the Sterling install base was click chat call.

Speaker Change: You said you had 78 in the last 12 months I just wanted to get an idea of the average contract rate like contract timing for these.

Speaker Change: And that part of the guidance, we have a lot of high degree of confidence in.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you and we will go next to Stephanie more with Jefferies. Please go ahead.

Speaker Change: Yeah. So hey, those are all enterprise bookings too I would add so those are all have a $1 million or more of ACB.

Heather: Hey, Good morning. This is Heather launch at all so if you want so just piggybacking off of your loss.

Speaker Change: The bookings come pretty ratably over the year. There is no one peak signing season, where we get those so we had <unk>.

Speaker Change: The question before.

Heather: The frontloaded.

Speaker Change: 114 in the quarter. If you recall Q4 was a particularly strong bookings quarter coming out of the close of the acquisition. We had 25 in Q4.

Speaker Change: So can you just provide a little more color there.

Speaker Change: What products are you showing sales decline how much of this is a benefit from Sterling Michelle.

Speaker Change: But as Scott mentioned at 14, it was actually a record dollar volume of bookings this quarter.

Speaker Change: Michelle isn't there.

Scott Staples: Sterling customers in the past did not have the availability to chat with customer care. They had to dial an 800 number. That is no longer the case. They can now chat, and they are chatting. They're loving it. So.

Speaker Change: Oh cool.

Speaker Change: I don't think we.

Speaker Change: I think as I mentioned in your pipeline has got US really excited it's certainly derisk some of our second half of the year go get in terms of new logo upsell cross sell.

Speaker Change: I don't think we disclosed product by product.

Speaker Change: Growth.

Speaker Change: But we do we did mention in the script.

Speaker Change: And that part of the guidance, we have a lot of high degree of confidence in.

Scott Staples: I think it was that as an example of other things that we're going to be rolling out across both the First Advantage install base when we find best of breed from the Sterling platform that we bring to First Advantage customers and vice versa. So I would use the word excitement for the Sterling customer base. And obviously, we're extremely happy with retention. And we're also happy with how many Sterling customers came to our user conference to collaborate. They were very excited to attend an event like that.

Speaker Change: Okay. Thank you.

Speaker Change: That a lot of this is driven by increased package density.

Speaker Change: Thank you and we will go next to Stephanie more with Jefferies. Please go ahead.

Speaker Change: And I'll spend just a little time there because.

Speaker Change: What we're seeing is as customers focusing heavily on risk and compliance and safety and security.

Speaker Change: Hey, Good morning. This is hero launch on August one so just piggybacking off of your loss.

Speaker Change: The question before.

Speaker Change: And they are just spending more.

Speaker Change: The Frontloaded our steel side.

Speaker Change: So can you just provide a little more color there.

Speaker Change: With us in regards to getting deeper and deeper and broader protection.

Speaker Change: While our products are you showing decline how much of this is a benefit from Sterling Michelle.

Speaker Change: So it's you can't really you know.

Speaker Change: Michelle isn't there would be helpful.

Say, it's one product or it's one service, it's a number of things.

Scott Staples: And then the last thing I'll point you to, Shlomo, is the Performance in Q1 from the sales... So it's great to have the numbers, meaning the number of wins, the number of bookings, and obviously the large revenue. It was a record quarter from a bookings standpoint. But numbers are just part of the story. What's also really important for us was that also signaled to us that the market was also excited about this acquisition. It's not slowing down, new logo and upsell cross out. And in some cases, it may be accelerating it. So all those things put together, we really have a good view and very enthusiastic about this integration.

Speaker Change: Yeah.

Speaker Change: I don't think we.

Speaker Change: Driving across it and we've also done a really good job of sort of bundling services like our <unk> solution.

Speaker Change: I don't think we've disclosed product by product.

Speaker Change: <unk>.

Speaker Change: Growth.

Speaker Change: Across.

Speaker Change: But we do we did mention in the script.

Speaker Change: The the what we'd call normal normal packages, so that has helped as well.

Speaker Change: That a lot of this is driven by increased package density.

Speaker Change: Sterling.

Speaker Change: And I'll spend just a little time there because.

Speaker Change: The Sterling I think the Sterling upside of.

Speaker Change: What we're seeing is as customers focusing heavily on risk and compliance and safety and security.

Speaker Change: Driving more upsell cross sell.

Speaker Change: Either across the first advantage install base or probably more importantly across the sterling installed install basis, just on the verge of really starting to happen. So we havent even factored in yet.

Speaker Change: And they're just spending more.

Speaker Change: <unk>.

Speaker Change: With us in regards to getting deeper and deeper and broader protection.

Speaker Change: So for example, selling.

Speaker Change: First advantages <unk> solution, our first advantages Watson solution to Sterling and Skol install base customers is just starting to happen. So its tip of iceberg, so that really didn't influence the.

Speaker Change: So it's you can't really you know.

Speaker Change: Say, it's one product or it's one service, it's a number of things.

Speaker Change: Arriving across it and we've also done a really good job of sort of bundling services like our <unk> solution.

Ashish Sabadra: And we will go next to the line of Ashish Sabadra with RBC Capital Markets. Please go ahead. Hey, morning, guys.

Speaker Change: The Q1.

Speaker Change: Across.

Speaker Change: Results, we had with the sales engine I think the Q1 results. We had with our sales engine is is really just more of a factor of <unk>.

Speaker Change: You know the the what we call normal normal packages. So that's helped as well.

Steven Marks: This is Will Cheon for Ashish Sabadra. I appreciate you guys taking our question. Maybe just wanted to kind of drill down and follow up on the question, kind of, you know, what you guys are seeing. I know you guys had previously mentioned kind of expectations for base growth kind of in that second half, you know, kind of shifting more to neutral and then positive later on. With the general kind of market and macro volatility, does that shift your base assumptions at all? Or is it still kind of similar to what you've... Not, not, yeah, not a major change, you know, base was negative five and a half percent in Q1, a little ahead of our expectations and certainly towards the higher end of our expectations, you know, there's a little bit of just, just math in here of as, as we get to the middle of the year, the COPs get easier, you know, base first turned negative in the second half of 2022, so that the second half of 2025 just has more compounded, easier COPs in it.

Speaker Change: Sterling.

Speaker Change: Of how well, we're doing with our our messaging around the acquisition.

Speaker Change:

Speaker Change: The Sterling I think the Sterling upside of.

Speaker Change: Our product Rollouts are our combined technology demos really really well.

Speaker Change: Driving more upsell cross sell.

Speaker Change: Either across the first advantage installed base or probably more importantly across the sterling installed install basis, just on the verge of really starting to happen. So we havent, even factored that stuff in yet so for example, selling.

Speaker Change: So I think that's also got prospects and customers very excited and that's kind of what drove it drove a lot of the growth.

Speaker Change: Great. Thank you for the color there and then just on the synergies I think your run.

Speaker Change: First advantages <unk> solution, our first advantages Watson solution Sterling and Skol install base customers is just starting to happen. So its tip of iceberg, so that really didn't influence the.

Speaker Change: Run rate of 37.

Speaker Change: The original target was 15 certainly look.

Speaker Change: The increase in the 60 to 70, so I guess given the seem to care too.

Speaker Change: The Q1.

Speaker Change: Results, we had with the sales engine I think the Q1 results. We had with our sales engine is is really just more of a factor of.

Speaker Change: Or do you think that you guys are well positioned to increase this further and just help us.

Speaker Change: Think about what the.

Speaker Change: Of how well, we're doing with our our messaging around the acquisition.

Speaker Change: Integration products continue to.

Speaker Change: Great.

Steven Marks: So, so there's an element of that, and then what we've really seen coming in, in overall volume is just, you know, period to period sequential stability, so obviously there's, there's overhang from the macro, we can't control what comes out of Washington, but based on what the trends we're seeing today, when you get to that back part of the year, there's an, there's an inherent stability that comes out of base, it's really a neutral state is what I would call it, you know, when it's, when it's obviously flat, it's flat, but even when it's slightly positive, it's not a major growth.

Speaker Change: Our product Rollouts are our combined technology demos really really well.

Speaker Change: As you continue the relation with your Joshua Thank you.

Speaker Change: Yeah, Great Great question, I mean, obviously that was a huge internal focus for us in Q1.

Speaker Change: So I think that's also got prospects and customers very excited and that's kind of what drove it drove a lot of the growth.

Speaker Change: We had established a healthy pipeline that allowed us to bring that that range up to that 60 to 70 like you mentioned, obviously, we used up a healthy amount of that pipeline and we're able to accelerate that into Q1, we had mentioned that last quarter that one of the ways. We were trying to focus on protecting our profitability during the year with some of the uncertainty was.

Speaker Change: Great. Thank you for the color there and then just on the synergies I think your run.

Speaker Change: Run rate.

Speaker Change: Oh man.

Speaker Change: The original target was supposed to give us certainty.

Speaker Change: The increase in the 60 to 70, so I guess given the assuming the character.

Steven Marks: Engine, but you do also then have the sustained contribution of new logo and upsell, cross sell the pipeline success that Scott just talked about and our expectation that we still have a strong focus on customer retention.

Speaker Change: Controlling the things, we can control and new logo and upsell cross sell is certainly one but synergies on the profitability side what was the other.

Speaker Change: Sure.

Speaker Change: You guys are well positioned to increase this further.

Speaker Change: And the whole management team had a healthy contribution towards that.

Speaker Change: Help us.

Steven Marks: So once we get to that base neutral state, we feel really good about the condition we're in and prime prime for good results. Let me add to that that, I think one thing to point out is that new logos and upsell cross sell get tracked as new logo and upsell cross sell for 12 months. And then after 12 months, that converts to base. And if you think about our consistent delivery on new logo upsell cross sell, you know, all the wins we had, you know, a year ago, and whatever, they start converting to base. So the sales engine has really been humming.

Speaker Change: Think about what the integration continues.

Speaker Change: We're now going back.

Speaker Change: Not to the drawing board, but we are going back to the pipeline, we've got to do a little bit more homework internally and kind of rebuild we obviously.

Speaker Change: Great.

Speaker Change: As you continue the relation with Nick Joseph.

Speaker Change: Action a lot of what we had we had planned.

Speaker Change: Yeah, Great Great question, I mean, obviously that was a huge internal focus for us in Q1.

Speaker Change: Is there potential I would say potentially more potential.

Speaker Change: We've just got to get that pipeline, we've got to have confidence in the numbers before we feel confident to raise targets at all.

Speaker Change: But obviously just because we've actually we've been so successful to date that doesn't make it any less of a priority for us the rest of the year will keep trying to find ways to enhance profitability, whether it's through synergies, whether it's through organic cost savings.

Steven Marks: And that's going to also help base. So not only is it easier comps, but we're you know, pouring some new logo upsell cross sell revenue back, you know, into the base as they as they transition from one calculation to the other. Appreciate it. Thank you guys.

Speaker Change: Controlling the things, we can control and new logo and upsell cross sell is certainly one but synergies on the profitability side what was the other.

Speaker Change: We're constantly having a focus there as a management team.

Speaker Change: Thank you that's all for me.

Speaker Change: And the whole management team had a healthy contribution towards that.

Speaker Change: Thank you as a reminder, at this time it seems like the ask a question. It is the star and one on your Touchtone telephone.

Speaker Change: We're now going back.

Speaker Change: Not to the drawing board, but we're going back to the pipeline, we've got to do a little bit more homework internally and kind of rebuild we obviously.

Well go next to Scott <unk> with Wolfe Research. Please go ahead.

Unknown Executive: Thank you.

Hey, good morning, and thank you for taking my questions first one I just wanted to touch on just the international side of the business and if you're seeing any changes there are difference relative to U S trends, whether that's base growth or upsell cross sell and new logos I'm. Just wondering if you can talk about and you're changing or differing trends between U S and international banks.

Speaker Change: Action a lot of what we had we had planned.

Andrew Steinerman: And we'll go next in the line of Andrew Steinerman with J.P. Morgan. Please go ahead. Hey, Scott. Your team just spoke of it back, base revenue to neutral. I just wanted to do maybe a quick review on base revenue growth in the ALGO for First Advantage. I'm sure you remember at the time of the IPO, the ALGO included 2% to 4% base growth. Obviously, there was upside. Now, there's downside to base growth. But if we're going to look at base growth, thinking about quits in particular, level of quits currently, and prospectively, do you feel like base growth could grow 2% to 4% over the medium term after we get back to neutral here this year?

Speaker Change: Is there a potential I would say potentially more potential.

Speaker Change: We've just got to get that pipeline, we've got to have confidence in the numbers before we feel confident to raise targets at all.

Speaker Change: Yeah, I mean honestly, we're really happy with the.

Speaker Change: Results from International International is up 8%.

Speaker Change: We're constantly having a focus there as a management team.

Speaker Change: And keep in mind.

Speaker Change: That makes you know now three or four straight quarters, where international has really delivered.

Speaker Change: Thank you that's all for me.

Speaker Change: Thank you as a reminder, at this time it seems like the ask a question. It is the star and one on your Touchtone telephone.

Speaker Change: And I think it's really more of a.

Speaker Change: The more result of the fact that international actually went down earlier than the U S.

Scott: We'll go next to Scott <unk> with Wolfe Research. Please go ahead.

Scott Staples: Yeah, I mean, you know, we, we look at the same data, you look at Andrew, but if you look at quits, openings, hires, unemployment, they've all been flat. So I think Steven may have used the term, you know, stability, despite uncertainty. And I think that's an important term when it comes to the macro, because we're seeing stability, but obviously, there's an overhang of uncertainty. So I think ultimately, yes, we believe that we can get back to two to three to 4% positive base growth, but it probably won't be until early 2026. Our model has us, as Steven mentioned, getting to neutral base by the end of this year.

Scott: Hey, good morning, and thank you for taking my questions first one just wanted to touch on just the international side of the business and if youre seeing any changes there are difference relative to U S trends, whether that's a base growth or upsell cross sell and new logos I'm. Just wondering if we could talk about are you changing or differing trends between U S and international.

Speaker Change: So international was dragging on the business a bit for a couple of years and really.

Speaker Change: It hit bottom way way ahead of the rest of the world that now has come back pretty strong for us. So.

Speaker Change: Theres not any unique trends there because we're getting it across we're getting growth across all regions.

Speaker Change: So it's not just one single region. So it is EMEA.

Speaker Change: Yeah, I mean honestly, we're really happy with.

Speaker Change: It's India APAC, it's Australia, all all showing good signs of growth.

Scott: Results.

Scott: From International International was up 8%.

Scott: And keep in mind.

Speaker Change: <unk>.

Speaker Change: I would say that from.

Scott: That makes now three or four straight quarters, where international has really delivered.

Speaker Change: From a trend standpoint, nothing unique from a macro standpoint because.

Scott: And I think it's really more of a.

Speaker Change: Not only is it across all regions and Thats really across all verticals as well so nothing really to call out the only thing I would call out is and this is maybe a.

Scott: The more result of the fact that international actually went down earlier than the U S.

Scott: So international was dragging on the business a bit for a couple of years and really add or at hit bottom way way ahead of the rest of the world that now has come back pretty strong for us. So.

Speaker Change: A little bit of a.

Scott Staples: But we're certainly expecting 2026 to start turning positive, not that we want to get that far out. But the cops are getting easier and easier. And as I mentioned earlier, the sales engine keeps humming. So just for example, a record number of deals this quarter, that turns into base a year from now. So that should also help the growth.

Speaker Change: Marketing shot out to go look at our global trends report that really produce a couple of weeks ago.

Speaker Change: International does have a slightly slightly different drivers in the U S. There, it's a lot more focused on risk and compliance.

Scott: Theres not any unique trends there because we're getting it across we're getting growth across all regions.

Speaker Change: And I think that helps us.

Speaker Change: Because of our global footprint.

Scott: So it's not just one single region. So it is EMEA.

Speaker Change: Think that's driving a little bit of the ability for us to win deals like we just announced with this large deal in Australia, I mean, I think it's.

Scott: It's India APAC, it's Australia, all all showing good signs of growth.

Unknown Executive: Well said. Thank you.

Scott: <unk>.

Andrew Nicholas: And we'll go next to Andrew Nichols with William Blair. I'm sorry, Andrew Nicholas with William Blair. Please go ahead. Great, thanks. Good morning, and I appreciate you taking my questions.

Scott: I would say that.

Speaker Change: We're seen as a trusted source for global risk and compliance because of our compliance team because of our global operations actually being in region. I think gives us a little bit of a competitive advantage. So that's a little thing that slightly nuance to what the U S market fees, but other than that there's no really major <unk>.

Speaker Change: From a trend standpoint, nothing unique from a macro standpoint because.

Speaker Change: Not only is it across all regions and Thats really across all verticals as well so nothing really to call out the only thing I would call out is and this is maybe.

Scott Staples: Scott, you touched on it in the answer earlier, but I wanted to open up the conversation a little bit more on market structure and maybe the volume of RFPs that you're seeing post Sterling. The bookings numbers, the pipeline commentary, all really good. Are you also seeing more RFPs come your way? Is that a function of win rates being better? Just trying to kind of unpack if you're also seeing more interest, and if there's anything to quantify that, that would be helpful, too. Yeah, I don't, I don't think we can quantify it today. That's something we can certainly get into for Investor Day, a little more in depth into the pipeline and stuff.

Speaker Change: A little bit of a.

Speaker Change: Marketing Shout out to go look at our global trends report that we produced a couple of weeks ago.

Speaker Change: <unk>.

Speaker Change: Thanks, that's helpful and just as a follow up on the implementation of AI agents on the criminal records processing. So I wonder if you could share a little bit more about that you know how widely available are implemented is that right now and any feedback you've received from customers.

Speaker Change: International does have a slightly slightly different drivers in the U S. It's a lot more focused on risk and compliance.

Speaker Change: And I think that helps us.

Speaker Change: Because of our global footprint.

Speaker Change: Given the sort of improved processing times there.

Speaker Change: That's driving a little bit of the ability for us to win deals like we just announced with this large deal in Australia, I mean, I think it's.

Speaker Change: Yeah, again, I'll give a kind of give a advertisement to come to our investor day, where we'll go into a little bit more detail on this.

Speaker Change: I don't want to give out too much information because of.

Speaker Change: We're seeing as a trusted source for global risk and compliance because of our compliance team because of our global operations actually being in region and I think gives us a little bit of a competitive advantage. So that's a little thing that slightly nuance to what the U S market fees, but other than that there's no really major dip.

Speaker Change: You know competitive protection here, but I will say that.

Speaker Change: When you do something like.

Scott Staples: I would say, you know, keep in mind, the First Advantage and Sterling brands were excellent in the market. And we were already at pretty good, you know, RFP volumes and pretty good win rates. So the sales engine, you know, has been has been performing very well. So RFPs are running about normal, I would say, which is good, because you take the combined company put together, that's, that's a good thing.

Speaker Change: AIA agents on the on the criminal side.

Speaker Change: Kind of a behind the scenes type of thing so the visible impact to clients is Justin faster turnaround times and stuff like that but I can't see anything functionally different.

Speaker Change: <unk>.

Speaker Change: Thanks, that's helpful and just as a follow up on the implementation of AI agents on the criminal records processing. So I'm wondering if you could share a little bit more about that you know how widely available are implemented is that right now and any feedback you've received from customers.

Speaker Change: But obviously it drives Turner faster turnaround times higher quality et cetera will go into a more detail on this.

Speaker Change: In the Investor day.

Speaker Change: Given the sort of improved processing times there.

Speaker Change: Great. Thanks, guys.

Scott Staples: But I think what's driving it more, and we'll certainly get into more of this in Investor Day, is that there's a lot of trends going on in the industry that I would say are fairly new. And digital identity being one, you know, we mentioned the Gartner report of of deep fakes and fraud in the recruiting and onboarding cycle, you know, hitting pretty, pretty significant marks by the by 2028. Companies are actually dealing with that now. And that's driving a lot of RFPs is driving a lot of upsell cross sell. And I can guarantee you that not every provider in the space has technology solutions available for that.

Speaker Change: Thank you and well take our next question from Jeff Silber with BMO capital markets.

Speaker Change: GAAP again I'll get it.

Speaker Change: Can you give a advertisement to come to our Investor day, where we'll go into a little bit more detail on this.

Speaker Change: Thanks, So much I wanted to go back to the Sterling integration you've owned the company for about six months now a little more than that.

Speaker Change: Don't want to give out too much information because of.

Speaker Change: Competitive protection here, but I will say that.

Speaker Change: Is there anything you've learned from them or are there things that they were doing that maybe hey. This is a good idea we should be incorporated in our business as well.

Speaker Change: When you do something like.

Speaker Change: AIA agents on the on the criminal side.

Speaker Change: Yes, I think.

Speaker Change: Kind of a behind the scenes type of thing so the visible impact to clients is Justin faster turnaround times and stuff like that but they can't see anything functionally different.

Speaker Change: So I think we.

Speaker Change: First of all I think we approached this.

Speaker Change: And I would say a pretty unique way.

Speaker Change: Although it was an acquisition on paper.

Speaker Change: But obviously it drives Turner faster turnaround times higher quality et cetera will go into more detail on this.

Speaker Change: We we treated it as a merger.

Scott Staples: So those things kind of trend in our favor as, as our will come from.

Speaker Change: Internally.

Speaker Change: In the Investor day.

Speaker Change: And by trading it as a merger.

Speaker Change: Great. Thanks, guys.

Speaker Change: We went into it with a mindset of best in breed approach. So whoever had the best.

Speaker Change: Thank you and well take our next question from Jeff Silber with BMO capital markets.

Speaker Change: Piece of functionality in.

Speaker Change: Thanks, So much I wanted to go back to the Sterling integration you've owned the company for about six months now a little more than that.

Speaker Change: In the technology stack whoever had the best team, whether it's sales or customer support whoever had the best function whatever it might be.

Speaker Change: Is there anything you've learned from them or are there things that they were doing that maybe hey. This is a good idea we should be incorporated in our business as well.

Speaker Change: We came with the mindset that we would adopt that that's what our best of breed approach is so it's not just across technology stack, it's across the entire company.

Speaker Change: Yes, I think.

Speaker Change: So I think yes.

Speaker Change: So I think we both learned from each other and we're taking a best of breed across everything so whether thats, you know sales marketing or whether it's operational and film in or whether it's technology and there's literally.

Speaker Change: First of all I think we approached this.

Speaker Change: And I would say a pretty unique way so although it was an acquisition on paper.

Scott Staples: Great, thank you. And then just for a quick follow up, on the large deals, can you refresh us or remind us on the typical timing for how long you expect it to take for those to onboard and then start generating? Yeah, I mean, every, every prospect that we onboard, you know, has a, you know, a varying timeline of how long it takes to actually onboard them, you know, we probably average about 90 days or so for most customers. But when they're big and complicated like this, it typically takes about six months. So we are expecting to start revenuing all three of them this year, all three of them probably late Q2, early Q3, which would be sort of that six months that it takes to get them up and running.

Speaker Change: We treated it as a merger.

Speaker Change: Internally and by trading it as a merger.

Speaker Change: This long long list dozens and dozens and dozens of.

Speaker Change: We went into it with a mindset of best in breed approach.

Speaker Change: Things, we bucket in okay. That's better this one is better than that one or that one is better than this one and thats exactly what were doing.

Speaker Change: Whoever had the best.

Speaker Change: Piece of functionality.

Speaker Change: So.

Speaker Change: There's a number of things that personally vantage was doing better and there's a number of things that sterling being better and we're clearly going to take whichever one is better.

Speaker Change: In the technology stack whoever had the best team, whether it's sales or customer support whoever had the best function whatever it might be.

Speaker Change: We came with the mindset that we would adopt that that's what our best of breed approach is so it's not just across technology stack, it's across the entire company.

Speaker Change: I think thats been the secret sauce to the success of this integration and that's what customers are saying, we're not forcing them.

Speaker Change: To something that was legacy first advantage is because we are walking through why we're why we're picking certain features and functionality in the tech stack and on the data side as well.

Speaker Change: So I think we both learn from each other and we're taking a best of breed across everything so whether that's you know sales marketing or whether it's operational in film in or whether it's technology and there's literally with long long list dozens and dozens and dozens of.

Speaker Change: And there.

Speaker Change: That's why they are enthusiastic about it because they see these things as upgrades.

Unknown Executive: Great, thank you. Thank you.

Speaker Change: These are all upgrades to what they were to a platform. They are already happy off whether it's first advantage side or.

Manav Patnaik: And we'll go next to Manav Patnaik from Barclays. Please go ahead.

Speaker Change: Things, we bucket in okay. That's better this one is better than that one that one is better than this one and thats exactly what were doing.

Speaker Change: Birling side, and I think you said.

Princey Thomas: Hi, this is Princey Thomas on for Manav. I just wanted to go back to guidance and understand what gives you confidence in the guide, what would take it to the top and bottom of the range, respectively. Yeah, it's a good question. I mean, obviously, there is kind of an implied level or expected level of stability. I think, you know, the stronger that stability remains, and the better we'll perform. You know, like you just heard from Scott, we do have a good, healthy amount of confidence in the things that we can influence and control around, you know, new logo generation and upsell cross-sell revenue generation, and we'll remain focused to achieve those, you know, 96 plus percent retention levels.

Speaker Change: All of that.

Speaker Change: One of the things that's made this extremely easy is what we've also found as an amazing culture here.

Speaker Change: So.

Speaker Change: This is these are two high performing organizations that have come together, we talk the same language and we think the same way with culturally aligned that's what's made this integration happened so quickly and as Stephen said, we're even actually ahead of plan with synergies and integration because of the cultural alignment.

Speaker Change: <unk>.

Speaker Change: That's been the secret sauce to the success of this integration and that's what customers are saying, we're not forcing them.

Speaker Change: To something that was legacy first event, just because we are walking through why we're why we're picking certain features and functionality in the tech stack and on.

Speaker Change: Okay. That's helpful and I think this question may have been asked but I just wanted to circle back on it is there any way to parse out how retention held up for legacy Sterling clients versus legacy first advantage clients.

Speaker Change: The data side as well.

Speaker Change: In there.

Speaker Change: That's why they are enthusiastic about it because they see these things and upgrades.

Speaker Change: These are all upgrades to what they were two a platform. They are already happy at whether its first advantage side or.

Steven Marks: So, you know, the real wild card really comes down to kind of the underlying base volumes. You know, like Scott mentioned in the prepared remarks, you know, we had a good Q1 in that respect, and the volatility sequentially, you know, died down in recent months, which is obviously a healthy business trend. So, as long as, you know, we can our core verticals, you know, with that stable trend, we'll do well. But, you know, like Scott mentioned a few questions ago, you know, our approach towards guidance, you know, allows us to have a little bit of a conservative posture towards the rest of the year, which we think is the correct, prudent approach given, you know, just the pace of news and kind of the various playing elements around here.

Speaker Change: They're kind of is I mean, it's the lines are really blurring because what we're also finding is and maybe at the legacy Sterling retail client there is a better fit for them on an FAA platform. So there is some migration going on there, but I would tell you. If you really zoom in on all the data its a very consistent number across the entire company set and I think even.

Speaker Change: Sterling side, and having said all of that.

Speaker Change: One of the things that made this extremely easy is what we've also found as an amazing culture here.

Speaker Change: This is these are two high performing organizations that have come together, we talk the same language. We think the same way culturally aligned that's what's made this integration happened so quickly and as Stephen said, we're actually ahead of plan with synergies and integration because of the cultural alignment.

Speaker Change: Even if you look domestic versus international the legacy entity. It came from that 96% rate plus or minus is very consistent across across the company.

Speaker Change: I appreciate the color. Thanks, so much.

Speaker Change: Thank you and I see no further questions in queue.

Speaker Change: I'd like to thank you all for joining us today and for your participation. This concludes the first advantage first quarter 2025 earnings conference.

Steven Marks: You know, obviously, every time you open up the Wall Street Journal web page, it's something new and different. Some are good things, some are bad things, and I think our guidance gives us enough flexibility to weather some of those storms. and then in terms of your customer book. You said you had 78 in the last 12 months. I just wanted to get an idea of the average contract rate, like contract timing for these. Yeah, I mean, so, A, those are all enterprise bookings, too, I'd add. So, those are all half a million dollars or more of ACV.

Speaker Change: Colin webcast at this time you may disconnect your lines and have a wonderful.

Speaker Change: They're kind of is it the lines are really blurring because what we're also finding is hey, maybe at the legacy Sterling retail client there is a better fit for them on an FAA platform. So there is some migration going on there, but I would tell you. If you really zoom in on all the data its a very consistent number across the entire company is that and I think even.

Speaker Change: Even if you look domestic versus international the legacy entity. It came from that 96% rate plus or minus is very consistent across across the company.

Steven Marks: I mean, the bookings come pretty radibly over the year. There's no one peak signing season where we get those. So, we had, you know, 14 in the quarter. If you recall, Q4 was a particularly strong bookings quarter coming out of the close of the acquisition. We had 25 in Q4. But as Scott mentioned, at 14, it was actually a record dollar volume of bookings this quarter. So, I think, as I mentioned, you know, pipeline's got us really excited. It certainly de-risks some of our second half of the year go-get in terms of new local upsell, cross-sell, and that part of the guidance we have a lot of high degree of confidence in.

Speaker Change: I appreciate the color. Thanks, so much.

Speaker Change: Thank you and I see no further questions in queue.

Speaker Change: I'd like to thank you all for joining us today and for your participation. This concludes the first advantage first quarter 2025 earnings conference.

Speaker Change: Colin webcast at this time you may disconnect your lines and have a wonderful day.

Speaker Change: [noise].

Speaker Change: Sure.

Speaker Change: Mhm.

Unknown Executive: Thank you.

Speaker Change: Hum.

Stephanie Moore: And we will go next to Stephanie Moore with Jeffrey. Please go ahead. Hey, good morning.

Speaker Change: [music].

Speaker Change: Uh huh.

Speaker Change: Mhm.

Speaker Change: [music].

Heraldo: This is Heraldo on for Stephanie Gorman. So just piggybacking off of your last question before, you did highlight that the Irish steel size is increasing. So can you just provide a little more color there? How many more products are you selling to the same client? How much would it be a benefit from sterling? The same thing there would be helpful. Yeah, I don't think we don't think we disclose product by product growth. But we do. We did mention in the script that a lot of this is driven by increased package density. And I'll spend just a little time there.

Scott Staples: Because You know, what we're seeing is, is customers focusing, you know, heavily on risk and compliance and safety and security. And they're just, you know, spending more, you know, with us in regards to getting deeper and deeper and broader protection. So it's, you can't really, you know, say it's one product, or it's one service, it's, it's a number of things driving across it. And we've also done a really good job of sort of bundling services like our i9 solution, you know, across, you know, the, the, what we call normal, normal packages. So that's helped as well.

Scott Staples: The Sterling, the Sterling, I think the Sterling upside of, you know, driving more upsell cross sell, either across the First Advantage install base, or probably more importantly, across the Sterling install, install base is just on the verge of really starting to happen. So we haven't even factored up in yet. So for example, selling First Advantage's i9 solution, or First Advantage's Watsi solution to Sterling install, install base customers is just starting to happen. So that's the tip of the iceberg. So that really didn't influence the, the Q1, you know, results we had with the sales engine.

Scott Staples: I think the Q1 results we had with the sales engine is, is really just more of a factor of, of, you know, just how well we're doing with our, our messaging around the acquisition, our product rollouts, our, our combined technology demos really, really well. So I think that's also got prospects and customers very excited. And that's kind of what drove it, drove a lot of the growth.

Steven Marks: Great. Thank you for the call there. And then, you know, just on the synergies, I think you're at a run rate of 37 million. The original target was 50 to 70. You increased it to 60 to 70. So I guess, you know, given what's going to be captured now, do you think that, you know, you guys are well-positioned to increase this further and just, you know, help us think about what's left on the integration front as you continue to integrate, as you continue the relationship you captured? Thank you. Yeah, great, great question. And I mean, obviously, that was a huge internal focus for us in Q1.

Steven Marks: You know, we had established a healthy pipeline that allowed us to bring that, you know, that that range up to that 60 to 70. Like you mentioned, obviously, we used up a healthy amount of that pipeline, and we're able to accelerate that into Q1. You know, we had mentioned that last quarter that, you know, one of the ways we were trying to focus on protecting our profitability during the year with some of the uncertainty was, you know, controlling the things we can control and, you know, new logo and upsell cross-sell. Upsell is certainly one, but Synergy is on the profitability side with the other.

Steven Marks: And the whole management team had a healthy contribution towards that. We're now going back, not to the drawing board, but we're going back to the pipeline. We've got to do a little bit more homework internally and kind of rebuild. We obviously actioned a lot of what we had planned. Is there potential, you know, I would say potentially more potential. We've just got to get that pipeline. We've got to have confidence in the numbers before we feel confident to raise targets at all. But obviously, just because we've been so successful to date, that doesn't make it any less of a priority for us the rest of the year.

Steven Marks: We'll keep trying to find ways to enhance profitability, whether it's through Synergy, whether it's through organic cost savings. We're constantly having a focus there as a management team. Thank you.

Unknown Executive: That's all. Thank you.

Unknown Executive: As a reminder, at this time, if you would like to ask a question, it is the star and one on your touch phone telephone.

Scott Wurtzel: We'll go next to Scott Wurtzel with Wolf Research. Please go ahead. Hey, good morning, and thank you for taking my questions. First one, just wanted to touch on just the international side of the business. And if you're seeing any changes or difference relative to US trends, whether that's in base growth or upsell, cross-sell, new logos, I'm just wondering if you can talk about any changing or differing trends between US and international. Yeah, I mean, obviously, really happy with the results from from international internationals up 8%. And keep in mind, that makes, you know, now three, four straight quarters where international has really delivered.

Scott Staples: And I think it's really more of a you know, the more result of the fact that international actually went down earlier than the US. So international was, you know, dragging on the business a bit for a couple years, and really had hit bottom way, way ahead of the rest of the world. And now it's come back, you know, pretty strong for us. So there's not any unique trends there, because we're getting it across, we're getting growth across all regions. So it's not just one single region. So it's EMEA, it's India, it's AIPAC, it's Australia, all showing good signs of growth.

Scott Staples: I would say that, from a trend standpoint, nothing unique from a macro standpoint, because not only is it across all regions, but it's really across all verticals, as well. So nothing really to call out.

Scott Staples: The only thing I would call out is, this is maybe a little bit of a marketing shout out to, you know, go look at our global trends report that we produced a couple of weeks ago. International does have a slightly, slightly different drivers than the US there, it's a lot more focused on risk and compliance. And I think that helps us because of our global footprint. So I think that's driving a little bit of the ability for us to win deals like we just announced with this large deal in Australia. I mean, I think it's we're seen as a trusted source for global risk and compliance because of our compliance team, because of our global operations actually being in region.

Scott Staples: And this, I think, gives us a little bit of a competitive advantage. So that's a little thing that's slightly nuanced to what the US market sees. But other than that, there's no really major difference. Thanks, that's helpful.

Scott Staples: And just as a follow up on the implementation of AI agents on the criminal records processing, so I'm wondering if you can share a little bit more about that, you know, how widely available or implemented is that right now and any feedback you've received from customers, you know, given the sort of improved processing times there? Yep. Again, I'm going to give an advertisement to come to our investor day where we'll go into a little bit more detail on this. Don't want to give out too much information because of, you know, competitive protection here. But I will say that when you do something like AI agents on the criminal side, it's really kind of a behind the scenes type of thing.

Unknown Executive: So the visible impact to clients is just in, you know, faster turnaround times and stuff like that. But they can't see anything functionally different. But obviously, it drives faster turnaround times, higher quality, etc. But we'll go into way more detail on this in the investor day. Thanks, guys.

Jeff Silber: Thank you, and we'll take our next question from Jeff Silber with BMO Capital Marks. Thanks so much.

Scott Staples: I wanted to go back to the Sterling integration. You've owned the company for about six months now, a little more than that. Is there anything you've learned from them? Were there things that they were doing that may be, hey, this is a good idea. We should be incorporated in our business as well. Yeah, I think. So I think, you know, we, first of all, I think we approached this in a, I would say a pretty unique way.

Scott Staples: So although it was an acquisition on paper, we, we treated it as a merger internally. And by treating it as a merger, we went into into it with a mindset of best in breed approach. So whoever had the best People Functionality in the technology stack, whoever had the best team, whether it's sales or customer support, whoever had the best, you know, function, whatever it might be, we came to the mindset that we would adopt that. That's what our best in breed approach is. It's not just across the technology stack, it's across the entire company. So I think we've both learned from each other and we're taking, you know, best of breed across everything.

Scott Staples: So whether that's, you know, sales, marketing, or whether it's operational and fulfillment or whether it's technology. And there's literally lists, long, long lists, dozens and dozens and dozens of things we bucket in. Okay, that's better. This one's better than that one, or that one's better than this one. And that's exactly what we're doing. So there were, there's a number of things that First Advantage was doing better. And there's a number of things that German is doing better. And we're clearly going to take whichever one is better. I think that's been the secret sauce to the success of this integration.

Scott Staples: And that's what customers are seeing. We're not forcing them to something that was legacy First Advantage just because we are through why we're picking certain features and functionality in the tech stack and on the data side as well. And that's why they're enthusiastic about it, because they see these things as upgrades. These are all upgrades to what they were, to a platform they were already happy on, whether it was First Advantage side or Sterling side.

Scott Staples: And having said all that, One of the things that's made this extremely easy is what we've also found is an amazing culture fit. This is these are two high performing organizations that have come together. We talk the same language, we think the same way, we're culturally aligned. That's what's made this integration happen so quickly. And as Steven said, we're even actually ahead of plan with synergies and integration because of the cultural alignment.

Scott Staples: And I think this question may have been asked, but I just wanted to circle back on it. Is there any way to parse out how retention held up for legacy sterling clients versus legacy First Advantage clients? All right. Appreciate the call. Thanks so much.

Unknown Executive: Thank you, and I see no further questions in queue.

Unknown Executive: I'd like to thank you all for joining us today and for your participation.

Unknown Executive: This concludes the First Advantage First Quarter 2025 earnings conference call and webcast. At this time, you may disconnect your line and have a wonderful

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