First Advantage Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the First Advantage Second Quarter 2021 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. Please be advised that today's conference is being recorded. If you require further assistance, Please press star zero. I would now like to hand the conference over to your speaker today, Stephanie Gorman, Vice President of Investor Relations. Please go ahead.

Thank you, Angie. Good morning, everyone, and welcome to First Advantage's inaugural financial results conference call, highlighting our second quarter 2021 results. We are excited to have so many new shareholders joining us today after our successful initial public offering at the end of June. In the investor section of our website, you will find the earnings press release and slide presentation to accompany today's discussion. This webcast is being recorded and will be available for replay on our investor relations website. Before we begin our prepared remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are discussed in more detail in our filings with the SEC, including our prospectus for our initial public offering dated June 22, 2021, as such factors may be updated from time to time in our periodic filings with the SEC. We do not undertake any obligation to update forward-looking statements. Throughout this conference call, we will also be presenting and discussing 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 at investors.fadv.com. I am joined on our call today by Scott Staples, FirstAdvantages CEO. and David Gamzee, our CFO. After our prepared remarks, we will have time to take your questions. I will now hand the call over to Scott.

Thank you, Stephanie, and good morning, everyone. Welcome to First Advantage conference call discussing our second quarter performance, our first earnings call as a publicly traded company. Starting on slide four, In June, we completed a successful IPO for 29.3 million public shares listed on the NASDAQ Global Select Market Stock Exchange under the ticker symbol FA. The offering was upsized and priced at the top of the range, indicated a launch at launch at $15 per share, which resulted in net proceeds to the company of approximately $316.5 million. On first day of trading, we closed 31% above our offering price, giving First Advantage a market cap of approximately $3 billion. This is a major milestone for our company, and we remain committed to continuing to profitably grow our business and provide exceptional value to our customers, and in turn, to driving shareholder value. I am incredibly proud of our team, whose hard work enables First Advantage to serve our over 30,000 customers worldwide with robust technology solutions for screening, verifications, safety, and compliance related to their human capital. I want to thank our shareholders for their confidence in our company. I look forward to speaking with and meeting many of you in the days, weeks, and months ahead. For our new investors, a company overview is included on slide five. We are a leading global provider of technology solutions for screening, verification, safety, and compliance related to human capital. We have proven our ability to deliver value added solutions, therefore growing with our customers and winning new ones in what is a fragmented market where our technology and delivery capabilities stand out. We accomplish this through our single core technology platform, robust proprietary data, unique industry verticalization, state of the art technology, and global capabilities. We serve a large and growing total addressable market of 13 billion, which includes a tremendous amount of white space, allowing us to further differentiate and capture additional market share. Our customers include 55 of the Fortune 100 companies, And among our customer base, we enjoy long-tenured relationships averaging 12 years across our top 100 customers, as well as a high gross retention rate of 95%. In 2020 alone, we completed over 75 million screens, which demonstrates our technology's ability to handle scale and reinforces the importance companies are placing on risk management and compliance today. Over the last 12-month period, ending June 30, 2021, we grew revenues 29% to $600 million, of which approximately 88% were from North American markets and 12% from international. Over the same 12-month period, we grew adjusted EBITDA 46% year-over-year and achieved a strong adjusted EBITDA margin of 30%. We continue to focus on environmental, social, and governance strategies that drive value for our stakeholders and further differentiate first advantage from our competitors. Two of our priorities are governance and diversity. In the second quarter, we established our public company board, adding three new independent directors. All three have served on other public company boards and have held or currently hold leadership positions within large, high-performing organizations. Susan Bell, who serves as our Audit Committee Chair and sits on our Compensation Committee, was previously Managing Partner of the Atlanta Office of Ernst & Young. James Clark, who serves on our Nominating and Corporate Governance Committee, is currently President and CEO of the Boys and Girls Club of America. And Judith Sim, who serves as our nominating and corporate governance committee chair and sits on our audit committee, was previously a senior marketing executive at Oracle. Next, moving on to slide six, let me share some insights and highlights from the second quarter. It's an exciting time at First Advantage as we continue our journey as a customer-focused technology and product innovation leader. I want to share some key highlights from our second quarter performance. First, we have been and will continue to be the beneficiary of certain favorable macroeconomic and jobs trends and tailwinds, including hiring growth, new job creation, increasing turnover, and greater worker mobility. Second, we experienced increased momentum from our existing customers driven by broad-based hiring and screening growth across key verticals and geographies. This included base growth from robust hiring and screening and continued upsell and cross-sell momentum. Customers also continued to increase the depth and breadth of their screening requirements, which we refer to as package density, to provide even greater levels of risk management and security. Third, We experienced continued strength in new customer wins fueled by our verticalized go-to-market teams, differentiated technology solutions, and global capabilities. We have some great new customers that have chosen to partner with First Advantage. Fourth, we have seen a substantial rebound in international markets from the COVID impacted second quarter of 2020. driven in large part by customers in the IT services, BPO, and financial services industries. These strong international revenues came back sooner and at a higher level than previously anticipated. Fifth, we have seen continued margin expansion from robotic process automation, utilization of our proprietary data and intelligent routing technology, further operational efficiencies, and G&A leverage. And six, I want to highlight our recent UK screening business acquisition, which we completed at the end of March 2021. This acquisition adds to the breadth of our international capabilities and establishes first advantage as a market leader in the UK. Before David takes us through our Q2 performance and highlights, I would like to spend a few moments describing our business and differentiated technology platform as shown on slide seven. We provide mission-critical software for many of the largest, most sophisticated companies in the world. Our single global proprietary core technology platform is often our customers' first line of defense when it comes to human capital risk management, as we focus on workplace safety, brand protection, and compliance. We leverage technology and process automation to deliver faster and more efficient screens driving cost savings for our customers and margin improvement for us. Robotic process automation or RPA and artificial intelligence are core to our product strategy and we have been pioneers in using these technologies to do things better, faster, and more cost effectively. Our own proprietary databases give us great leverage and enhance our screening turnaround times. Additionally, We have 600 plus third-party data sources where we have built automated and or integrated connections to data, both in the US and globally. We have built similar integrations with over 65 third-party human capital management and applicant tracking system software platforms. Our partners include companies like Workday, SAP, Oracle, Salesforce, iSIMS, and dozens of others drive leads for first advantage and the certified integrations we have with these partners add value to customers and increase customer loyalty and retention. Our technology supports the changes we are seeing in the macro environment. The ways in which people want to work are changing, and this creates opportunity for us. In today's workforce, millennials and younger generations work differently than previous generations. They are more likely to switch jobs in pursuit of earning higher wages. faster career development, and better workplace culture fit. This, along with increasing use of contingent workers, flexible workers, contractors, and freelancers, means people are changing jobs more frequently, and there are cases, for example, where we could screen the same person at three or four different companies in a single year because of freelancing or contracting. Additionally, the world is a smaller place today. with multinational corporations sourcing talent from all over the globe, and we are able to complete screens in over 200 countries and territories. Our enterprise customers may be finding applicants locally, but an applicant could be from a different country or have been educated in yet another country. We can validate their experience and education across geographies, and we are one of the few companies that have the global reach to help companies screen people internationally. Our scale provides a number of strategic benefits, including differentiated capabilities, such as global coverage, a single tech platform, and the ability to accumulate and curate large volumes of data. This ultimately helps us deliver a differentiated value proposition in one of the highest customer satisfaction ratings in the industry. Next on slide eight, I'll discuss our verticalized go-to-market approach. About four years ago we rolled out a new transformational go-to-market strategy focused on specific verticals or industry sectors and aligned our sales and product teams accordingly. This strategy enables us to be subject matter experts in these industry segments and use industry-specific data to consult our customers on best practices, hiring and onboarding benchmarking, and product optimization. It also enables us to develop vertically aligned products with our customers, providing input and direction into our product roadmaps. The vertical strategy helps us differentiate in the market, drives upsell and cross-sell opportunities, and fuels our new customer sales. In summary, we are thrilled with the successful results of our vertical go-to-market strategy and the growth it is driving in our business. Next, I will turn the call over to our CFO, David Gamze to review our results for the quarter and for the full year 2021 guidance. David?