First Advantage Corporation

Good day, everyone. 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. Hosting the call today from First Advantage is Stephanie Gorman, Vice President of Investor Relations. At this time, all participants have been placed in a listen-only mode to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, 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. 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.

Thank you, Erica. Good morning, everyone, and welcome to First Advantage's First Quarter 2025 earnings conference call. 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 would like 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 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 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. Reconciliation 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 company results, consisting of First Advantage and Sterling Check Court historical results, and 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. I am joined on our call today by Scott Staples, our Chief Executive Officer, and Stephen Marks, our Chief Financial Officer. After our prepared remarks, we will take your questions. I will now hand the call over to Scott.

Thank you, Stephanie, and good morning, everyone. Thank you for joining our call. We have four key messages for today. First, we are pleased to share our first 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 positive 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-closed 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. Third, we are seeing the benefits of our combined business as we execute on our FA 5.0 strategy. We are accelerating our new -to-market approach, winning and retaining customers across verticals with our outstanding combined capabilities and well-aligned high performance culture. And fourth, we are reaffirming our full year 2025 guidance. We are 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 command drivers. We remain confident in our strategy and positioning in the market to create long-term shareholder value. On that note, and before moving on, I would like to briefly address the hot topics of tariffs and reduction in U.S. government spending. As a quick reminder, 87% of our 2024 pro-former revenues were generated in the U.S. We do have meaningful international operations. However, importing and exporting goods is not part of our business. While tariffs could 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 have not 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. 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. 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. 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 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 platform 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. 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 verticals, customer segments, and between hourly and sourly 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 had been more stable and predictable since the middle of last year. We have seen a slowdown in our order volumes within the retail and e-commerce vertical, though 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 policy uncertainty. This is causing our customers to take a wait and see approach, which may cause stagnation in our business volumes. Turning to slide six, we remain laser focused on our post-closed 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 ClickChat Call customer care platform to Sterling customers, giving customers across our global platforms access to our award-winning customer service and allowing us to streamline operations. Since first deployed by First Advantage in 2023, ClickChat Call has delivered impressive improvements in customer satisfaction and service levels while also reducing our costs. 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 -in-class technology and software capabilities. 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. We were thrilled to have hosted a record number of attendees, including both customers and prospect, at our annual Collaborate user conference in mid-April. Attendees, including a healthy number of 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 a clear competitive advantage. Our customers and team left the event energized and excited about what is coming next from First Advantage. With that, I will now turn the call over to Stephen.

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 swiftly execute our integration program and implement our FA 5.0 strategy. Starting with our first quarter results on slide 8. As you heard, our first quarter revenues exceeded our expectations, coming in at $355 million, or 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 expectations for this quarter, despite remaining negative on a -on-year basis. Our -to-market success continued to hit our historical rates, with the combined contribution of new logo and upsell cross-sell revenues delivering 9.3 percent growth in the quarter, and our retention remained high at a level of 96 percent. Adjusted EBITDA for the first quarter also exceeded our expectations, coming in at $92 million, with an adjusted EBITDA margin of 26 percent, up approximately 200 basis points versus the prior year on a pro forma basis. 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 remained focused on improving the historical operating margins of the sterling business, as the mix and cost structure of sterling is a bit different than FirstAdvantage'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. 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 percent of our target 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 actioned run rate synergies, $12 million have been realized since we began our integration efforts, of which approximately $8 million contributed to our Q1 results. We are pleased to see the success of our integration and synergy execution come to fruition so quickly. On slide ten, we are showing our revenue growth algorithm drivers. Note that while our historical data is broken out separately, we will be providing combined data going forward as our -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 continued to closely manage our working capital and focus on cash flow generation. Our -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. 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. Our synergized LTM pro forma adjusted EBITDA net leverage ratio at quarter end was 4.4 times. Additionally, in April, we entered into a $250 million interest rate swap effective through April 2028, which locks in a 3.56 percent 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. Moving to slide 12 in our 2025 guidance, I'll start with a quick reminder that -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. 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 percent 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 percent and up 2 percent year over year. 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 improvement from Q2 to Q3 with fourth quarter's growth rate about on par with the third. Starting with Q2, we expect adjusted EBITDA margins to be around or above 28 percent. 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. 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 dollars for 2025. Keep in mind that embedded in this assumption are one-time costs related to synergy achievement which we are focused on minimizing when we can, the payout of deferred transactions and the transaction proceeds tied to equity vesting as well as our assumption for required working capital based on our revenue guidance and integration status. We have provided a chart in the appendix to the earnings presentation with FX, CAFEX, 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.

Thanks, Stephen. 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. As a reminder, we will be hosting our inaugural investor day on May 28th. At that event, we plan to share more about our FA 5.0 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 our customers hire smarter and onboard faster. Lastly, I want to thank the entire First Advantage team for their hard work and consistent dedication to serving our customers. With that, we will open the line for questions.

Thank you. 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. 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. Our first question comes from Shlomo Rosebaum with Steeple.

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 clients. On the one hand, you said that you are encouraged about April, about what you are seeing. But on the other hand, you are saying that you are seeing some weight in C from the clients. So could you just reconcile those two comments and give us a view as to what exactly is it that you are seeing? And then keeping the guidance the way that it is with the strong quarter, is that just giving yourself some room in case things do deteriorate?

Yes, great question. So I think I am going to work backwards on that. And the first answer is yes. Obviously, we are 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 one thing that we have always been very, good at is 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. But our clients, when we asked them about forecasting the rest of the quarter, the rest of the year, they are just not really willing to do that yet, because they are in a wait and see mode. So I think I have mentioned this before. A lot of our clients have got into this -in-time hiring mode, where they trigger hiring quickly based on business needs or macroeconomic influences. And that is fine with us, because speed is what we are known for. But that is why we are in the wait and see mode, because that is what our clients are telling us.

Okay, thanks. And just one follow-up. I am a little bit of a broken record. I have heard on this in terms of since the acquisition. But you focus a little bit more on retention. And talk about how retention, specifically in the sterling base, is trending -a-vis your original deal model. And that is what I would say is probably the biggest concern that I had going into the deal. And it seems like it is holding up. So are there any areas that are pretty good for a combined company with this kind of integration?

Yeah, and this was, I think, the result of laser focus on this exact topic. And we have been planning this for over a year of how we are going to not only serve customers, but how we are going to communicate to customers. So we have been over-communicating, especially to the sterling base, about what is coming with this -of-breed technology approach. And quite honestly, they have 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 of that is what I gave in the script was one of the very first things we launched to the sterling install base was ClickChat call. 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 are loving it. So I think it was that as an example of other things that we are going to be rolling out across both the first-advantage install base, when we find -of-breed from the sterling platform that we are going to be bringing to first-advantage customers and vice versa. So I would use the word excitement for the sterling customer base. And obviously, we are extremely happy with retention. And we are also happy with how many sterling customers came to our user conference, collaborate. They were very excited to attend an event like that. And then the last thing I will say is that it was 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 stand story. What is also really important for us was that also signaled to us that the market was also excited about this acquisition. It is not slowing down, you know, new logo and upsell, cross-sell. And in some cases, it may be accelerating it. So all those things put together, you know, we really have a good view and very enthusiastic about this integration.

Thank you. And we will go next to the line of Ashish Salbhashra with RBC Capital Markets. Please go ahead.

Hey, morning guys. This is Bill Chion for Ashish Salbhashra. I appreciate you guys taking our questions. 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 expected?

Thanks. Steve, you want that? 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 math in here of as we get to the middle of the year, the costs get easier. You know, base first turned negative in the second half of 2022. So the second half of 2025 just has more compounded, easier comps in it. So there's an element of that. And then what we've really seen coming in, in the overall volume is just, you know, period to period sequential stability. So obviously 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 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 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. So once we get to that base neutral state, we feel really good about the condition we're in primed for good results.

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

Appreciate

it.

Thank you guys.

Thank you. And we'll go next to the line of Andrew Steinerman with JP Morton. Please go ahead.

Hey, Scott. Your team just spoke about getting back base revenue to neutral. I just wanted to do 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, the algo included two to 4% base growth. Obviously there was upside. Now there's, there's downside to base growth, but you know, if we're going to look at base growth, you know, thinking about quits in particular, level of quits currently and prospectively, do you feel like base growth could grow two to 4% over the medium term after we get back to neutral here this year?

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, our model has us, as Steven mentioned, getting to neutral base by the end of this year, 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, you know, a record number of deals this quarter, that, that turns into base a year from now. So that, that should also help the growth.

Well said. Thank you.

Thank you. 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 taking my questions. Scott, you, 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, 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, of win rates being better, just trying to kind of unpack if, 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. I would say, you know, keep in mind the first advantage in sterling brands were, 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 a, that's a good thing. 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 of them. You know, we mentioned the Gartner report of, 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, it's driving a lot of upsell, cross out. And I can guarantee you that not every provider in this space has technology solutions available for that. So those things kind of trend in our favor as, as our customers and, and prospects look to find vendors and partners with, with state of the art technologies and, and, and partners who can combine data sources and technologies into a single use. That's also extremely important to them. So that is driving a lot of this nice volume and I think was a big component of the Q1 record deals that we had. 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.

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, for how long you expect it to take for those to onboard and then start generating revenue?

Yeah, I mean, yeah, 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 revenueing all three of them this year. All three of them probably will eat Q2, early Q3, which would be sort of on schedule with that, that six months that it takes to get them up and running.

Great, thank you.

Thank you. And we'll go next to Manaveh Patnaik from Barclays. Please go ahead.

Hi, this is Princy Thomas on Fermanos. I 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.

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, historical 96 plus percent retention levels. 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 died down in recent months, which is obviously a healthy business trend. So as long as, you know, we can get 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. You know, obviously every time you open up the Wall Street Journal webpage, 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 bookings, 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 those are all enterprise bookings too, I'd add. So those are all half a million dollars or more of ACV. I mean, the bookings come pretty radically over the year. There's 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. 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, pipelines got us really excited. It certainly de-risks some of our second half of the year go get in terms of new logo upsell cross sell. And that part of the guidance, we have a lot of high degree of confidence in.

Great. Thank you. Thank you. And we will go next to Stephanie Moore with Jefferies. Please go ahead.

Hey, good morning. This is Harold Lanteron for Stephanie Moore. So just piggybacking off of your last question before, you did highlight the dollars, fuel size, increasing. So did you just provide a little more color there? How many more products are you selling to the same client? How much of this is a benefit from sterling? The same thing there would be helpful.

Yeah, I don't think we disclose product by product growth. But 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 because, you know, what we're seeing 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 broader protection. So you can't really, you know, say it's one product or it's one service. 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 what we call normal packages. So that's helped as well. The sterling, I think the sterling upside of, you know, driving more upsell cross sell either across the first advantage installed base or probably more importantly, across the sterling installed install base is just on the verge of really starting to happen. So we haven't even factored that stuff in yet. So for example, selling first advantages, i9 solution or first advantages, watsi solution to sterling install, install base customers is just starting to happen. So that's typical iceberg. So that really didn't influence the, the Q1, you know, results we had with the sales engine. 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.

Great. Thank you for the color there. And then, you know, just on the, the synergies, I think you're now running rate of 37 million. The original target was 50 to 70. You look, you increased on the 60 to 70. So I guess, you know, given the scene we captured now, is there, do you think that you guys are well positioned to increase this further on just, you know, help us think about what's left on the integration finance and continue to integrate the, as you continue your relationship with your cashier? Thank you.

Yeah, great, great question. And I mean, obviously that was a huge internal focus for us in Q1. You know, we had established a healthy pipeline that allowed us to bring that, you know, 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, and, you know, new logo and upsell cross-sell is certainly one, but synergies on the profitability side was the other. 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 we had, 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 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. We'll keep trying to find ways to enhance profitability, whether it's through synergies, whether it's through organic cost savings. We're constantly having a focus there as a management team.

Thank you. That's all for me.

Thank you. 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. We'll go next to Scott Wurzel 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, your difference relative to US trends, whether that's in base growth or upsell, cross sell and new logos, I'm just wondering if you can talk about any changing or differing trends between US and international. Thanks.

Yeah, I mean, I'm really happy with the results from international. International is up 8%. And keep in mind that makes, you know, three, four straight quarters where international has really delivered. 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 ahead of the rest of the world. And now it's come back, you know, 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 a Mia, it's India, it's APAC, it's Australia, all, all showing good signs of growth. I would say that from a trend standpoint, nothing unique from a macro standpoint, because not only is it across all regions, it's really across all verticals as well. So nothing really to call out. 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, you know, 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. 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. And just as a follow up on the implementation of AI agents on the criminal records processing. So I wonder if you can share a little bit more about that, how widely available or implemented is that right now and any feedback you've received from customers given the sort of improved processing times there?

Yeah, again, I'm going to give an advertisement to come to our investor day. We'll go into a little bit more

detail on this.

Don't want to give out too much information because of 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. So the visible impact to clients is just in faster turnaround times and stuff like that. But they can't see anything functionally different. But obviously it drives faster turnaround times, higher quality, et cetera. But we'll go into way more detail on this in the investor day.

Okay.

Thanks, guys.

Thank you. And we'll take our next question from Jeff Silber with BMO Capital Markets.

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. 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, first of all, I think we approached this in, I would say, a pretty unique way. So although it was an acquisition on paper, we treated it as a merger internally. And by treating it as a merger, we went into it with mindset of best in breed approach. So whoever had the best piece of functionality 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, we came with the mindset that we would adopt that. That's what our best in breed approach is. So 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 best in breed across everything. So whether that's 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's a number of things that First Advantage was doing better, and there's a number of things that Sterling 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. And that's what customers are seeing. We're not forcing them to something that was legacy First Advantage just because we are walking through why we're picking certain features and functionality in the tech stack and on the data side as well. That's why they're enthusiastic about it, because they see these things as upgrades. These are all upgrades to a platform they were already happy on, whether it was First Advantage side or Sterling side. 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. 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.

That's helpful. And I think this question may have been asked, but I just wanted to circle back on it. Is there anywhere to parse out how retention held up for legacy Sterling clients versus legacy First Advantage clients?

There kind of is. I mean, the lines are really blurring because what we're also finding is, hey, maybe it's a legacy Sterling retail client. There's a better fit for them on an FA platform. So there's some migration going on there. But I tell you, if you zoom in on all the data, it's a very consistent number across the entire company set. And I think even if you look domestic versus international, the legacy entity it came from, that 96% rate plus or minus is very consistent across the company.

All right. Appreciate the call. Thanks so much.

Thank you. And I see no further questions in queue. 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 call and webcast. At this time, you may disconnect your line and have a wonderful day.