First Advantage Corporation

Good day, and thank you for standing by. Welcome to the First Advantage Third Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during that session, you will need to press star 1 on your telephone. If you require any assistance during the call, please press star 0. I would now like to hand the conference over to your speaker today, Ms. Stephanie Gorman, Vice President of Investor Relations. Ms. Gorman, you may begin.

Thank you, Chris. Good morning, everyone, and welcome to First Advantage's third quarter 2021 earnings conference call. In the Investors section of our website, you will find the earnings press release and slide presentation to accompany today's discussion. This webcast is being recorded and will be available for replay on our Investor Relations website. Before we begin our prepared remarks, I need to remind everyone that our discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are discussed in more detail in our filings with the SEC, including our initial public offering perspective, dated June 22, 2021, and our second quarter, 2021, Form 10-Q. Such factors may be updated from time to time in our periodic filings with the SEC, and we do not undertake any obligation to update forward-looking statements. Throughout this conference call, we will also present and discuss non-GAAP financial measures. Reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures to the extent available without unreasonable effort appear in today's earnings press release and presentation. which are available on our investor relations website at investors.fadv.com. I'm joined on our call today by Scott Staples, FirstAdvantages' CEO, and David Gamze, our CFO. We will take your questions after our prepared remarks. I will now hand the call over to Scott.

Thank you, Stephanie, and good morning, everyone. Welcome to FirstAdvantages' third quarter conference call. For those of you who are new to our story, we have included a company overview on slide four. We are a leading global provider of technology solutions for screening, verifications, safety, and compliance related to human capital. Our technology and delivery capabilities stand out in a fragmented market, allowing us to grow business with existing and new customers alike. We accomplish this through our one, core global technology platform, our growing in-house proprietary databases that now include more than 600 million criminal education and work history records, our API integrations with more than 600 third-party data providers, our laser focus on specific industry verticals, and our global capabilities. We serve a large total addressable market of $13 billion, which offers us 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 more than 75 million screenings, which demonstrates our ability to handle scale and underscores the importance of our solutions to help improve companies' risk management and compliance practices. Over the 12-month period ended September 30, 2021, we grew revenues 37%. to $656 million, of which approximately 85% were from North American markets and 15% from international. Over the same 12-month period, we grew adjusted EBITDA 50% year over year to $202 million and achieved an adjusted EBITDA margin of 31%. Moving on to slide five, Let me share some additional highlights from the third quarter. Our exceptional third quarter performance included a 41% year-over-year increase in revenues and a 48% increase in adjusted EBITDA driven by broad-based increases in hiring and screening growth globally and across our key verticals as the economy continued to recover from the impacts of the COVID-19 pandemic. These results reflect strong demand for our existing customers, new customer wins, and growth in our international business. Let's look deeper into our performance. Number one, demand for our solution continues to grow, supported by favorable macroeconomic tailwinds and job trends, including hiring growth, increasing turnover, greater worker mobility, growing quit rates, and new job creation. Number two, we experience strong demand from our existing customers with robust base growth and continued upsell and cross-sell momentum driven by broad-based hiring and screening growth across key verticals and geographies. Number three, we also are pleased to report continued new customer growth fueled by our verticalized go-to-market teams differentiated technology solutions, and global capabilities. In the third quarter, we added new customers across all key verticals. Number four, revenues in our international markets have continued to recover nicely on an organic basis. This is in addition to the strong performance to date of the UK screening business we acquired in March. Number five, We also continued to expand margins due to investments in robotic process automation, proprietary databases, new product innovation, and our focus on improving operating efficiencies. We remain focused on these areas to improve margins in the future. We are number six. And finally, Today we announce the signing of definitive purchase agreements for two acquisitions that are well aligned with our M&A strategy. Corporate screening, a healthcare and higher education focused screening and compliance solution provider in North America, and Multilatin, a screening and verifications provider in Latin America. I'll discuss these more in a few moments. Let's move on to slide six. A summary of our verticalized go-to-market approach which differentiates first advantage in the marketplace and is a key enabler of our growth strategy by driving customer expansion, upsell, and cross-sell opportunities. 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 advise our customers on best practices, hiring data, onboarding benchmarking, and product optimization. Verticalization also drives our product development roadmaps to help us better develop products that are aligned with specific customer verticals. We are thrilled with how our vertical go-to-market strategy has successfully fueled growth in our business over the past four years. Moving to slide seven, let's take a closer look at the two definitive purchase agreements we announced this morning, both of which we expect to close during the fourth quarter. Both corporate screening and multi-Latin align with our capital allocation priorities and will provide us with accelerated vertical expertise, product innovation, and in the case of MultiLatin, international expansion. Corporate screening will strengthen FirstAdvantage's healthcare and higher education solutions in North America with its comprehensive screening and compliance offerings that are tailored to these customers. It will bring healthcare and higher education expertise and technology an impressive customer base and an experienced management team while also expanding our share in this strategic vertical. Moving now to Multilatin. This business is headquartered in Mexico City, providing services across Latin America, and will expand our presence in that region. It will supplement our existing international expansion initiatives, including the UK screening business we acquired in March of this year, by adding local market operations compliance, and sales and customer success teams. Multilatin also has a diverse international and local customer base, as well as an experienced management team. Both acquisitions will be funded with cash from our balance sheet. Together, the two businesses generate in the area of $15 million in annual revenues, with Multilatin's revenues in the low single-digit millions with the remainder comprising corporate screening. Each company is expected to have a positive financial contribution on our business, and the senior management teams for both of these businesses will join First Advantage upon closing. We are excited to welcome corporate screening and Multilatin to the First Advantage team. In addition to our M&A strategy, we remain focused on organic growth through investments in technology, human capital, and new products to support our business as we scale. As part of these investments in human capital to build our team, I'm excited to share that we have recently added two new positions to our senior leadership team to support our efforts in delivering an industry-leading customer experience across our global footprint. Our new Chief Operations Officer International has more than 20 years of expertise and will reside in Hong Kong, leading our operations and customer care in international markets. Our new Senior Vice President of Customer Care Americas has more than 25 years of customer experience technology expertise and will reside in the U.S., leading our customer experience for the Americas. We are confident that both of these new leaders will lead our teams in delivering innovative solutions and insights that help our customers hire smarter and onboard faster. Turning to slide eight, I would like to spend a few minutes on robotic process automation and our proprietary databases. Robotic process automation, or RPA, and artificial intelligence are core to our product strategy. We have been pioneers in using both these technologies to do things better, faster, and more cost effectively, resulting in improved customer experiences, faster turnaround times, and ultimately benefiting our bottom line. We currently have more than 2,750 bots in operation. Our product strategy includes the building out of proprietary databases which give us competitive advantage as we deliver faster and more efficient screens and drives cost savings for our customers and margin improvement for us. These databases leverage artificial intelligence and machine learning to increase the value and usability of the data. This helps improve our insights and drive business value for customers. I am pleased to share that since the beginning of the year, The size of our repository of education and work history records has increased by nearly three times. And the size of our criminal record database has increased by nearly 50% to over 550 million records. Growth in both RPA and our proprietary databases drives faster turnaround times, improved quality, increased accuracy, and enhanced efficiency for our customers while also improving our operating efficiencies and supporting robust growth and margin expansion. Let's now turn to slide nine. We continue to prioritize investments in new product innovation, technology, automation, and the cloud to help us maintain and enhance our industry leadership position and increase customer penetration. Our product strategy mirrors our cloud strategy, which focuses on innovation and the applicant experience. By leveraging the cloud, we have created flexible architectures through APIs and microservices. This helps drive best-in-class speed and turnaround times with customers. Our entire applicant experience is cloud-enabled with an API-first design, which allows us to add new, state-of-the-art technologies easily to help our customers onboard applicants faster. Now, let me illustrate with three product innovations that we have recently developed and begun launching to give you a sense of some of the things we are working on. First, I'll start with our identification product, RightID. RightID was developed to help our customers mitigate risks related to ID fraud. Originally in the residential market, but now this product is being used in other verticals as well. RightID is fully integrated into our mobile workflow and provides our customers with a seamless applicant experience. This product leverages artificial intelligence and facial recognition technology to analyze the likeness of a selfie and the digital information on the government-issued ID. If the ID appears to be counterfeit or the selfie is not live, then the technology will flag as such. The process takes less than two minutes and can be done anywhere. When used alongside other solutions, this works to help mitigate ID fraud. RightID is cloud native with a flexible API-first architecture that enables us to leverage artificial intelligence technologies, resulting in one of the most robust ID fraud mitigation tools in the market. Second is our instant verification technology. Instant verification is a revolutionary product that addresses our customers' need for fast turnaround times and enhanced accuracy. We are able to use our API-first design in the cloud for nearly instant, automated verification of current employment. With instant verification, customers can verify current employment information literally in seconds. Customers experience faster turnaround times and higher confidence in applicant-provided information. We launched this product in September of this year, and I'm proud of our team's execution in further establishing FirstAdvantages leadership and innovation in employment verifications. Third is Extended Force. Extended Force was developed to help detect and mitigate risk related to customers' extended workforce. We utilize industry-leading API-first design to enable our customers to screen high volumes of contingent, contract, and temporary workers. Our customers save time with our mobile-enabled Streamline onboarding application, which returns rapid screening results and even creates digital badges, which provide confirmation of an active, clear background check for their contractors and contingent workers. We have received great feedback, praising its ease of use, and we are happy to see new wins have nearly tripled this year with this product. Next, I will turn the call over to our CFO, David Gamze, to give you more detail on our results for the quarter and discuss full year 2021 guidance. David?

David Gamze Thank you, Scott. Good morning. Turning to slide 11, We reported revenues of $192.9 million for the quarter, a 41 percent increase over the prior year period, of which 34.5 percent represents organic growth. It is worth noting that the third quarter of 2020 was also a strong quarter, up over 10 percent compared to the third quarter of 2019, despite the broader impacts of the COVID pandemic. Results have continued to benefit from hiring trends that picked up in late 2020, and that growth has continued through Q3 2021 and into Q4 to date. Early reads on October show solid revenues, continuing the strong performance and trends we have seen this year. Revenue increases from our existing customers made up $39.9 million of our growth. driven by robust base growth and continued upsell and cross-sell momentum, which was strong and broad-based across key verticals and geographies. Revenues from new customers contributed $7.4 million, driven by our verticalized go-to-market strategy and differentiated global technology solutions. Revenues from our UK screening business acquisition contributed $8.8 million to the quarterly growth. Also included in our revenues was a minimal foreign currency benefit of $400,000 in the quarter. Adjusted EBITDA for the quarter was $63.9 million, a 48% year-over-year increase, reflecting higher revenues as well as margin expansion due in part to increased investments in robotic process automation and proprietary databases, cost discipline, and operating leverage. This resulted in an adjusted EBITDA margin of 33.2 percent, a 160 basis point increase versus the prior year quarter. We had adjusted net income of $42.2 million, or 28 cents per diluted share, in the third quarter of 2021 compared to $22.3 million, or 17 cents per diluted share, in the third quarter of 2020. This growth was positively impacted by all of the factors just mentioned, along with the additional favorable impact of lower outstanding debt and lower interest rates, which together lowered our interest expense to $4.7 million in the third quarter of 2021. Our adjusted effective tax rates were 24.2% and 25.7% in Q3 2021 and Q3 2020, respectively. The lower rate in Q3 2021 was driven primarily by favorable R&D tax credit estimates and adjustments and other discrete items. We want to give you a sense of our consistent track record of growth over time and some of the seasonality in our business. On slide 12, you will see our quarterly revenues going back to 2019. In 2020, we demonstrated the resiliency of our business model by growing revenues, adjusted EBITDA, and margins despite the economic and hiring challenges created by the pandemic. Both in past years and in 2021 to date, we maintained and grew our business due to deep customer relationships, our focus on enterprise customers, and the success of our verticalized sales force. Our seasonal trend typically shows higher revenues from September through November, as many companies ramp up their hiring ahead of the holiday season. We expect this trend to continue with a slightly different quarterly distribution. This year, we anticipate the sequential third to fourth quarter trend will be impacted by the acceleration of seasonal hiring, which ramped up earlier this year during the third quarter. We continue to expect strong year-over-year growth in the fourth quarter. However, the growth rate will also be tempered partially as a result of an exceptionally strong fourth quarter of 2020. We are still anticipating double-digit, full-year, year-over-year growth rates in the range of 34 to 35 percent. Moving to slide 13, you will see our excellent track record of expanding adjusted EBITDA margins. Our margins have benefited from expanded utilization of our proprietary databases and increased automation with third-party data providers. Additionally, as Scott mentioned, robotic process automation and other technology innovations have driven operational efficiencies, increased accuracy, and enhanced customer turnaround times. We also continue to leverage our G&A infrastructure. We have an intense focus on operational excellence, and we tightly control operational costs and associated headcounts to achieve cost efficiencies while maintaining a variable cost structure to accommodate demand fluctuations. We employ a disciplined balance between cost efficiencies and strategic investments as we continue to leverage G&A costs while investing in technology and sales. Turning now to cash flows, balance sheet, and capital allocation on slide 14. In the third quarter of 2021, operating cash flows increased 95 percent versus the prior year quarter to $27.8 million, which includes the impact of IPO and public company-related costs. During the third quarter, we spent $6.4 million on purchases of property and equipment and capitalized software development costs. We ended the third quarter with total debt of $564.7 million in cash of $275.5 million. With LTM adjusted EBITDA of $201.5 million, we lowered our net leverage ratio to 1.4 times. We also have $100 million in borrowing capacity under our revolving credit facility with no outstanding balances under this facility. Now let me remind you of our capital allocation priorities. First, we continue to evaluate additional acquisition opportunities that are expected to be accretive and align with our strategic priorities, including adding vertical expertise, expanding internationally or into adjacent solutions, or adding complementary data or technologies. Our recently announced acquisitions of corporate screening and multi-Latin, which Scott spoke about earlier, are both excellent examples of acquisitions aligned with key pillars of our M&A strategy. Both of these will be funded from cash on the balance sheet. In addition, we pursue opportunities to increase organic growth through investments in new product development, technology and automation, as well as their sales, solution engineering, and customer success functions. And finally, we continue to focus on maintaining a strong balance sheet, conservative capital structure, and a flexible leverage profile. Next, on slide 15, is our updated guidance for full year 2021. Based on our strong third quarter results, October revenue performance, and the anticipation of ongoing positive trends for the remainder of the fourth quarter, we are increasing our full-year 2021 guidance for revenues, adjusted EBITDA, and adjusted net income. We now expect to generate 2021 revenues in the range of $680 to $686 million, resulting in 34 to 35 percent revenue growth for full-year 2021 compared to 2020. This revised range reflects continuing favorable macroeconomic tailwinds, broad-based hiring and screening demand across our existing and new customers, high customer retention, continuing new customer upsell and cross-sell wins, and contribution from our UK screening business acquisition. Additionally, we anticipate our 2021 adjusted EBITDA will be in the range of $208 million to $211 million, driven by continued strong flow-through from incremental revenues, increased automation, additional efficiencies, and operating leverage, offset by new public company costs and additional investments in product, technology, and sales. We expect our 2021 adjusted net income to be between $125 and $128 million due to all of the factors I just mentioned, in addition to the positive impact of lower outstanding debt and lower interest rates. We also anticipate capital expenditures will remain unchanged since our previous guidance in the range of $25 to $26 million, which includes purchases of property and equipment and capitalized software development costs. We believe that our adjusted effective tax rate for full year 2021 will be in the range of 25.5% to 26.5%, a slight improvement from our previous expectations. This adjusted effective tax rate is the ongoing rate that would apply to our adjusted pre-tax income based on geographic mix and expected discrete items. We had U.S. federal net operating loss carry forwards of approximately $168 million as of September 30, 2021, and we expect our cash tax payments to be approximately $9.5 million for the full year 2021. Please note that our guidance does not include results from corporate screening in multi-Latin businesses for which the signing of definitive purchase agreements was announced this morning. We expect to close both of these acquisitions during the fourth quarter of this year. Now, on slide 16, we show our company's long-term organic annual growth targets. We believe we can achieve organic revenue growth rates of 8 to 10 percent in the long term based on our proven growth formula of base growth, upsell, cross-sell, and new customer wins as well as their performance track record and their identified market opportunity. Additionally, we target long-term adjusted EBITDA growth of 11% to 14% based on the incremental revenues generated, continued automation, and further operating efficiencies. We have a long-term target of 14% to 18% growth for adjusted net income based on all the factors I just described, plus leveraging non-operating expenses. Based on discussions with their clients around their 2022 outlooks, we expect 2022 to be another year with successful top-line growth. While we are still in the midst of our planning discussions, we believe that our 2022 top-line revenue growth will be generally in line with our long-term target before the impact of acquisitions. We intend to continue to achieve operating leverage in order to drive bottom-line results consistent with their long-term goals. We have a great historical track record of accomplishing this. We plan to provide full 2022 guidance when we report on Q4 and full-year 2021 results. And with that, I will turn the call back over to Scott. Thank you, Dave.

Moving to slide 18, for the key reasons we've summarized on this slide, we are very excited about the bright future that we see for First Advantage. We are a global leader in a large, fragmented, and growing market with growth that continues to be fueled by macroeconomic tailwinds that are driving a robust hiring environment. Our differentiated and embedded technology platforms provides mission-critical solutions to diversified industries and highly loyal customers thanks to our verticalized go-to-market strategy. We continue to expand our proprietary databases, extending our competitive advantage through product differentiation, faster turnaround times, and cost efficiencies. For investors, our bright future is reinforced by our performance. Over time, we've demonstrated our resilient financial model, consistent track record, and ability to grow revenues, margins, and cash flow. At this time, we will ask the operator to open the line for your questions.

Thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw your question, please press the pound key. Our first question comes from Hamza Mazari of Jefferies. Your line is open.

Hey, good morning. This is actually Ryan Gunning filling in for Hamza. My first question, I guess, is in terms of vertical exposure, which end markets are seeing greater growth relative to others, and are there any verticals you think you're underpenetrated in where there's, you know, more white space opportunity? David, do you want that one?

Sure. What I would tell you is we've seen growth across all verticals. We don't break that out and disclose that separately. The acquisitions that we just did with corporate screening will really help enhance our healthcare vertical, but we're seeing really broad-based growth from all segments.

Got it. Thank you. That's helpful. And then for my follow-up, I guess, could you just talk about whether any supply chain issues at your customers are impacting hiring plans at all, maybe in specific verticals?

What we've seen is our clients are trying to hire anyone and everyone that they can, and they started earlier, and it's a constant effort to get talent and to get employees. We've also seen a lot of churn and turnover, which also adds to more screening as well.

Got it. That's very helpful. Thanks a lot, Ted.

Thank you. Our next question comes from Ashish Sabhadra of RBC Capital Markets. Your line is open.

Yeah, thanks for taking my question, and congrats on such a strong quarter. Also, thanks for providing an early look into the 2022 top line and growth. I was just wondering if you could help parse what are the assumptions that are going into your preliminary guidance for 2022 top line, how much of it is coming from a strong job market and the benefit that you're going to see from increased cross-sell, up-sell, increased package density. So any color will be helpful. Thanks.

Again, we're in very early stages relative to 2022, and we'll be giving full guidance when we report on Q4. But based on discussions with our clients, we are optimistic that there will be another successful growth year for us.

Okay, that's very helpful. And then maybe just a quick question on the proprietary database. We've seen significant increase in record in 2021. You've talked about the verified and the national criminal file. My question was, is there an opportunity to also move some of the third-party data sources in-house, and how should we think about the growth in the proprietary databases also going forward? Thanks.

Yeah, I mean, first of all, you know, as we use more and more of our proprietary data, you know, where we are, third-party data costs are trending down, obviously. And so, obviously, it's more profitable for us to use our own data. But our data strategy really varies across geographies and across industries. And so, it's really hard to sort of give a blanket statement as to what we would do regarding data. We're always looking for ways to to optimize our data. And so we'll continue to look at that strategy as we go forward.

Thanks, and congrats again on strong results.

Thank you.

Thank you. Our next question comes from David Tugert of Evercore ISI. Your line is open.

Thank you. Good morning. Could you help dimension for us what the outlook for SG&A expenses might be over the next few quarters, especially as travel and entertainment expenses kind of come back into the cost structure, you know, as the sales force gets out and starts meeting, you know, more with clients in person.

So we have clearly factored that in to all of our forecasts going forward in addition to public company costs that we're going to have to grow over. So that will flatten G&A, the leverage that we get from it, which should start up again in the second half of 2022.

Got it. Thanks for that. And then as a follow-up, could you talk about your international expansion plans, clearly with the hiring of a new COO to run your international business? You know, what are the major new geographies you're focused on internationally, you know, and what are, you know, How much can you expand your TAM as you become a little bit more international focused?

Yeah, absolutely. So if you look at the TAM of this whole industry, we are obviously intrigued by the potential for international growth. I think our international go-to-market strategy is not that far off from our domestic go-to-market strategy, where the first priority is always going to be organic growth. We are looking for expansion in the regions we are through potential M&A, but we'll be opportunistic about it. Focusing on organic growth and focusing on the geographies that we're in is going to be priority number one. But we do obviously see, you know, nice expansion opportunities, you know, in certain geographies. And hence the, you know, the acquisition that we did that we announced this morning in Latin America is a sign of that. And the acquisition that we announced back in March in the UK is also a sign of that.

Understood. Thank you.

Thank you. And we have Stromo Rosenbaum of Stifel. Your line is open.

Hi, good morning. Thank you for taking my questions. You guys had some pretty good margin expansion, and I wanted to focus a little bit on how much of that is coming from some of the increases you're talking about in terms of the proprietary databases. Or is it really just a very small factor at this point in time and really it's coming from the other items that you talked about? And, you know, just a little bit of discussion and, you know, given all the success that you're having in building the database, does it make sense to try to accelerate the build over there?

So clearly we had large margin expansion in the quarter. Most of that was driven through the incremental revenue fall through and the way that we were able to leverage those incremental revenues. We did get some additional benefit through automation and some from our proprietary databases. But we're really good at expanding margins through the incremental revenue fall-through.

So that's the primary thing that we should think about. It's the revenue fall-through, less taking out from the proprietary data and the databases. Okay, that's helpful. And then just One other thing that's interesting, there's actually a Wall Street Journal article, I believe it's out today, in terms of there's such a tough time that clients are having now in terms of getting people into positions that a lot of them are loosening up or dropping some of the background screening requirements. And I wanted to ask you if you could comment on that. What are you seeing in your client base? I mean, your results seem to indicate that either that's really not something that you're seeing or despite some of that happening, there's such a wave of positive momentum that it doesn't really make a difference. And maybe you can just kind of give us some color on that.

Yeah, I really think there's two pieces to it. We also saw the article as well. One, we are not seeing our customers, you know, asking for that. In fact, you know, we're probably seeing the opposite where, you know, our customers are really asking for, you know, more risk mitigation, heavier focus on compliance and safety. And that's really driven, you know, the concept of the package density, which we've mentioned before as, you know, companies doing actually more and more screens. So that's point number one. But I think point number two is really important because through the automation that we've been talking to you about and through the AI and the machine learning that we've rolled out, we are just becoming faster and faster. So we can actually return background screens very quickly with high levels of accuracy based off of the automation that we brought in. So companies really don't have to move to that model that you saw in the Wall Street Journal with First Advantage because we can provide fast checks to begin with.

Great. Thank you very much. There's a good quarter.

Thank you. Next we have Andrew Stenneman of J.P. Morgan. Your line is open.

Hi, Scott. you've been really kind of, let's call it enthusiastic about the prospect of post-hiring background monitoring. And, you know, I kind of always wondered, you know, why hasn't this market already kind of adopted and penetrated? And why do you feel like, you know, it will, you know, sometime on the, let's say, reasonable horizon?

Yeah, you're right. I really think it's a great product. It's great technology, a great product. In the past, we have mentioned continuous monitoring, which is our post-hire monitoring product. It allows customers to continuously screen and monitor their employee base, which, as you can imagine, that should be something that customers should want to do versus a single snapshot in time that looks backwards historically. It still represents a very small percentage of our revenues today, as you stated, but we still believe this product represents meaningful growth and opportunity for first advantage in the future.

But, Scott, did you say what's going to change to get client adoption? I'm just not sure what's going to change.

Yeah, it's a longer sales cycle and a longer sales process because customers Quite honestly, it involves change management on the client side. They have to think differently about how they do background checks and what they're going to do with this new data and this new information once they receive it. Companies today just haven't thought through those processes, so it's the combination of HR and legal working internally to figure out, okay, what is it that we're going to do? screen for? What is it that we're going to monitor? How are we going to ingest that data? How are we going to react on that data? And that's just been a little bit slow because that just is obviously a lot more complicated than just hiring a company to do a historical snapshot in time background check. But this is, we think, a superior product and we think it's a great product for the future. But it's just going to take a while for market adoption. Okay. Thank you.

Thank you. And to ask a question, you will need to press star 1 on your telephone. To withdraw your question, please press the pound key. Our next question comes from Gary Bisbee of Bank of America Securities. Your line is open.

Hey, guys. Good morning. So the first question, obviously very strong labor markets at the moment. I wonder if you could help us just think through how much of this pretty tremendous revenue growth is coming from sort of base business growth as you described it prior to the IPO, and also just benefits from tight labor markets. So, you know, harder to get employees who are doing more screens per job you fill, that kind of stuff, versus, you know, just the underlying factors you can control more, like new business wins, like upsell of additional solutions, et cetera. How much – If you could divide those down roughly or give some color, it would be helpful. Thank you.

I think the best way to think about that, Gary, is there are a number of levers, right, that we've always talked about. Base growth, upsell, cross-sell, new logo. All of that have been very positive contributors. International really came back strong this year, particularly in Q3. That's been very robust. We're seeing all of those markets. with tremendous growth. And then relative to the base growth, it clearly has been higher this year than it has been historically. You know, maybe it's the new norm. We like it a lot. The clients are extremely active in trying to hire everyone that they possibly can. Because of the turnover, the mobility, the great resignation, if you will, we're seeing a lot of that churn result in more and more screens. And that's driving our base growth.

Is there any way to think about, you know, the concept of tough comps next year, you know, if and when some of these factors normalize? I mean, I heard you on the early 22 commentaries, so certainly you sound like you expect to continue to deliver quite robust growth. But how do you think about that? And I guess is there anything you can do, you know, if and when, you know, it gets tougher from a macro perspective?

Well, if you look at our long-term targets, those basically have gone back to historical norms. Ultimately, in our model, we see that happening. We could be wrong in the fact that it could be a permanent change, which would just add to that growth. But we are forecasting that it will return to a more historical normal rate long-term.

Okay. All right, thank you.

Thank you. And I see no further questions in the queue. I will turn it back over to Scott Staples for closing comments.

Thank you, Operator, and thanks, everyone, for your questions. Obviously, we're very proud of our accomplishments and are excited about what's ahead. We believe First Advantage is very well positioned for future growth, and we will continue to focus on delivering value for our shareholders. Thank you for joining us, and have a great day.

This concludes today's conference call. Thank you all for participating. You may now disconnect, and have a pleasant day.