First Advantage Corporation

Please stand by. Your meeting is about to begin. Good morning, everyone. My name is Beau, and I will be your conference operator today. I would like to welcome everyone to the First Advantage first quarter 2026 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 speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. Lastly, if you should require operator assistance today, please press star 0. Please note today's event is being recorded, and it is now my pleasure to turn the meeting over to Stephanie Gorman. Please go ahead, ma'am.

Thank you, Bo. Good morning, everyone, and welcome to First Advantage's first quarter 2026 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 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 2025 Form 10-K under Form 10-Q for the first quarter of 2026 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. 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. I'm joined on our call today by Scott Staples, our Chief Executive Officer, Joel Smith, our President, 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. Today we have four key messages. First, we delivered an exceptional first quarter. growing revenue 8.6% year-over-year and achieving adjusted EBITDA margins of over 27%, both favorable versus our previously communicated expectations. When combined with our diverse vertical mix, consistently high customer retention, and focus on cost discipline, We continue to drive excellent results amid this dynamic macroeconomic environment and consistently outpace broader hiring market trends. Second, we are executing and accelerating our FA 5.0 growth strategy. Our innovative product and platform approach is strengthening our customer value proposition and expanding our offerings, which is helping us win across the business. At the same time, our sales engine is humming as we drive growth through go-to-market execution and continued investment in our product capabilities. These actions position us well to capture incremental, meaningful growth opportunities, and Joelle will share more detail on what is driving our success in this area. Third, we continue to execute our balanced capital allocation strategy. supported by the success of our business, our strong cash flow generation, and our confidence in our continued growth. Through our $100 million share repurchase program announced last quarter, we made disciplined purchases at attractive valuations, repurchasing $19.5 million in shares through March 31st, with total repurchases of $33.3 million through May 1st. In addition, we continue to make meaningful progress on reducing net leverage. During the quarter, as previously announced, we made a $25 million voluntary debt payment, and just this week, we prepaid an additional $25 million of debt, bringing our total cumulative debt acquisition to $120.5 million. And finally, we are reaffirming our full-year 2026 guidance based on strong first quarter customer demand and our outlook for positive top-line momentum continued during the year. We remain confident in our positioning to create long-term shareholder value and deliver consistent progress toward our 2028 targets. Now, turning to slide five, we generated exceptional Q1 revenue growth, adjusted EBITDA, adjusted EBITDA margin, and adjusted diluted EPS. Impressively, in Q1, our combined upsell, cross-sell, and new logo growth contribution was 12%, enabled by our strong go-to-market momentum and outperforming our long-term revenue algorithm targets. Retention remained high at 97%. Looking at the macro hiring environment, in the first quarter, conditions remained relatively consistent. We continue to hear a neutral to positive tone from our enterprise customers, even as news headlines regarding layoffs and economic and policy uncertainty persist. We also continue to see workforce churn among both blue-collar and knowledge workers, which has helped drive steady improvement in our base revenue over the last several quarters, resulting in flat performance in the base in Q1. While broad acceleration has yet to emerge in macro hiring trends, Our enterprise customer base, diverse vertical mix, global footprint, and balance across hourly and salaried hiring continue to provide stability and support our confidence in driving growth through new logos, upsell, and cross-sell. We do not have any significant direct exposure to the Middle East, which limits our sensitivity to recent geopolitical developments in the region. it's also important to note that we operate in a highly regulated environment where accuracy auditability and trust are critical ai is raising the stakes for employment decisions and driving demand for deeper more comprehensive searches and greater decisions and driving demand for deeper more i'm sorry and greater package density This is where our business model and competitive moat matter. What we provide goes far beyond a software solution or data search. It is a highly differentiated platform built on deep regulatory expertise, significant compliance infrastructure, proprietary data assets, and a consultative service model tailored to the industries we serve. Importantly, employers trust us to help them navigate the growing complexity of modern hiring decisions. This includes determining where and how AI can be used responsibly in the screening process with the appropriate human in the loop oversight to help ensure accuracy, fairness, and compliance in high stakes employment decisions. That trust, is grounded in our deep domain expertise across a wide range of regulatory frameworks, including the Fair Credit Reporting Act, which credit bureaus and banks are both required to follow, Department of Transportation or DOT requirements, evolving state and local regulations governing data privacy, AI, and biometrics, as well as international data privacy laws such as GDPR in Europe and similar laws globally. Together, our combination of advanced technology, human judgment, and regulatory expertise allows our customers to rely on us as a trusted partner to manage human capital risk while confidently scaling their hiring processes. Against the current macro backdrop, it's also crucial to consider how AI is reshaping the future of work. and to understand how our resilient business model and strong competitive and differentiated position set us up to be a beneficiary of that change. AI will likely drive disruption in certain parts of the labor market, resulting in workforce churn as companies redesign jobs and organizational structures. At the same time, as AI adoption accelerates, Companies are not only investing in new technologies, but also creating new roles to manage, govern, and deploy those technologies responsibly. Additionally, there are other roles that should see resilience during this shift. For example, ones that require physical presence, regulated decision-making, or high-trust human interaction. Many of the customers and roles we support fall squarely into those categories. while there are differing views on how ai will reshape the workforce some research firms like the boston consulting group and the world economic forum reinforce what we are seeing which is that ai is reshaping how work gets done rather than just broadly eliminating jobs as well as driving greater momentum or movement within the later labor market and emergence of new roles and increased hiring complexity over time. In addition, we are seeing other supportive labor market trends, including the rise of job stacking, particularly among younger workers who are increasingly choosing to take on multiple part-time roles for greater flexibility, resulting in higher screening frequency per individual With these trends reinforcing the durability of demand for our solutions and increasing the stakes in employment decisions, we are well positioned to benefit. As I wrap up, I'd like to reiterate that our numbers and performance speak for themselves. Our sales engine is executing at a high level. Our product offerings are resonating. Our go-to-market focus on specific verticals and large enterprise customers is paying off. Our early-to-market positioning of our broader identity solutions is getting us in front of more buyers and driving our pipeline. Our investment in AI, automation, and positively impact our clients' user experience and bottom-line profitability. And our increasing usage of proprietary data is showing up in our results. All of this, combined with our winning culture, creates tangible market differentiators and helps us gain market share. As a category leader, we are extremely proud of what we have built and where we sit in the market. Now, I'm pleased to introduce Joelle Smith, who will provide an update on our FA5.0 strategy, which includes what we are doing with AI. Joelle joined First Advantage in 2017 and has been in her current role as president since 2024. She leads our product, data, and technology organizations, as well as our go-to-market team, including sales, customer success, and marketing. Joelle has been instrumental in creating our industry-leading platform and AI strategies, as well as expanding customer relationships and generating growth across the company. With that, I will now turn the call over to Joelle.