First Advantage Raises 2026 Guidance After Q3 Growth

First Advantage Corp. (NASDAQ: FA) raised its full-year 2026 guidance after third-quarter revenue increased 14% and adjusted diluted earnings per share rose 27%, supported by broad-based volume growth in the Americas, large customer wins and an earlier-than-expected start to peak holiday hiring.

The background-screening and risk-management company now expects 2026 revenue of $1.72 billion to $1.745 billion, representing growth of 9% to 11% from 2025. Its previous forecast called for $1.67 billion to $1.71 billion and growth of 6% to 9%. The low end of each updated guidance range exceeds the high end of the corresponding prior range.

First Advantage also forecast adjusted EBITDA of $488 million to $498 million, up 11% to 13%, with an adjusted EBITDA margin of about 28.5%. Prior guidance called for $472 million to $486 million and a margin of approximately 28.3%.

Adjusted net income is expected to reach $227 million to $232 million, while adjusted diluted EPS is projected at $1.30 to $1.33. The company previously expected adjusted net income of $214 million to $225 million and adjusted diluted EPS of $1.23 to $1.29.

Revenue Growth Broadens Across the Americas

Third-quarter revenue rose to $465.8 million from $409.2 million a year earlier. Constant-currency revenue growth was 13.8%, with foreign exchange reducing reported revenue by about $0.1 million.

First Advantage attributed the performance to accelerating volumes across the Americas, contributions from large contracts launched toward the end of 2025, earlier holiday-season hiring and some customer initiatives that carried over from the second quarter. The company also reported a healthy pace of order volumes in October and continued stability in the broader hiring environment.

Combined contributions from new customers, upselling and cross-selling totaled 12.5%. Base revenue grew 5%, marking a third consecutive quarter of positive base growth, while gross retention remained at 96%. First Advantage recorded 14 enterprise bookings during the quarter, defined as contracts with at least $500,000 of expected annual value.

Revenue growth was broad-based across nearly every Americas vertical. Management highlighted labor demand in transportation and logistics and retail and e-commerce, as well as demand in industrials and manufacturing, including aerospace and defense activity.

Earnings and Margin Expand

Adjusted EBITDA increased 15% to $136.5 million from $118.5 million. The adjusted EBITDA margin was 29.3%, compared with 29.0% a year earlier and 28.6% in the second quarter.

The company said the sequential margin increase reflected revenue growth, operating leverage, lower data costs, Sterling acquisition synergies and broader cost discipline, partly balanced by changes in product mix.

Adjusted net income rose to $67.3 million from $52.3 million, and adjusted diluted EPS increased to $0.38 from $0.30. On a GAAP basis, net income was $20.5 million, or $0.12 per diluted share, compared with $2.6 million, or $0.01 per diluted share, in the prior-year quarter.

Operating cash flow declined 12% to $63.8 million from $72.4 million, partly reflecting the scale of recent revenue growth. First Advantage ended September with $240.9 million of cash and cash equivalents.

The company has repaid $165.5 million of debt since closing the Sterling acquisition. Its synergized net leverage ratio stood at 3.5 times as of Sept. 30, down from 4.4 times two years earlier, with a midterm target below 3 times. Full-year free cash flow is expected to range from $180 million to $195 million, including capital expenditures and capitalized software development of $70 million to $75 million.

Sterling Synergies and Data Investment

First Advantage had actioned $71 million of run-rate synergies from the Sterling acquisition as of Sept. 30, within its target range of $65 million to $80 million. Management expects to finish 2026 near or at the upper end of that range.

The company also announced the $125 million acquisition of Data Diver Technologies, a platform that uses artificial intelligence and automation to collect, aggregate, retain and deliver criminal and court records. The presentation indicated that the transaction closed in November 2026.

First Advantage expects the acquisition to expand automated coverage across U.S. jurisdictions, strengthen its proprietary data offering and support product development. The acquired business also includes a small employment-screening operation serving small and midsize businesses, which First Advantage plans to integrate into its broader operations.

Separately, the company is introducing Criminal SmartHub, an intelligent routing platform for criminal-record fulfillment workflows. It is also developing an employment-screening identity verification product through an exclusive strategic partnership with ID.me.

First Advantage reaffirmed its 2028 targets, which include revenue of $1.8 billion to $2.0 billion, adjusted EBITDA of $560 million to $630 million, an adjusted EBITDA margin of 31% to 32%, adjusted diluted EPS of $1.65 to $2.00 and net leverage of 2.0 to 3.0 times. These figures are long-term targets rather than period-specific guidance and assume no additional inorganic growth beyond Sterling.

The outlook remains subject to changes in customer onboarding volumes and labor-market conditions, as well as inflation, interest-rate volatility, geopolitical and trade uncertainty. First Advantage also identified evolving privacy, data-security and AI regulations, cybersecurity threats, reliance on third-party data providers, integration risks and its debt burden as factors that could cause actual results to differ from its expectations.