First Advantage Corporation

Second-quarter 2026 revenue was $449 million, up 15% year over year; adjusted EBITDA was $128.5 million, up 13%; adjusted EBITDA margin was 28.6%, up 130 basis points sequentially; and adjusted diluted EPS was $0.35, up 30% year over year. Operating cash flow was $73.6 million, up $36.3 million, or 97% year over year. For full-year 2026, management raised guidance to revenue of $1.67 billion to $1.71 billion, adjusted EBITDA of $472 million to $486 million, adjusted net income of $214 million to $225 million, and adjusted diluted EPS of $1.23 to $1.29. At the midpoint, that implies about 7% revenue growth, 9% adjusted EBITDA growth, and 21% adjusted diluted EPS growth. For Q3, management expects total revenue growth in the mid- to high single digits; for Q4, low to mid-single-digit revenue growth; adjusted EBITDA margins to remain largely consistent with Q2; and adjusted diluted EPS in the low to mid-$0.30 range in both Q3 and Q4.

Scott Staples framed the quarter as First Advantage’s strongest yet, saying the company is executing well on its FA 5.0 strategy through product innovation, AI, and go-to-market discipline. He highlighted durable enterprise demand, strong new bookings, and rising adoption of products like Digital Identity, while stressing that the business is built to perform across different macro environments. His tone was confident and upbeat, but he also noted caution around geopolitical uncertainty and the need to stay disciplined on guidance and capital deployment.

Steven Marks emphasized that the quarter benefited from operating leverage, synergy realization, and disciplined spending. He said cash flow was strong at $73.6 million, cash on hand was $238 million at June 30, and leverage was 3.7x after $165.5 million of total debt repayment since the Sterling acquisition, including a $25 million repayment in May and a $45 million prepayment this week. He also noted $63 million of run-rate acquisition synergies had been actioned against a goal of $65 million to $80 million, and that the company expects margins to stay largely consistent in the back half while continuing targeted reinvestment in sales and product.

Analysts pressed management on whether the stronger base growth and customer activity reflected a better hiring environment or one-time customer initiatives. Management said the lift came from multiple customers running large rescreening, monitoring, restructuring, and hiring programs, plus some broad-based improvement in labor trends; they expect that extra activity to continue into Q3 but normalize in Q4. Questions also focused on margins, capital allocation, and M&A, and management said deleveraging remains the top priority, share repurchases remain opportunistic, and the company does not need M&A to reach its 2028 targets, though it would consider attractive add-on deals later.