First Advantage Corp (NASDAQ:FA) Posts Mixed Q3 2025 Results, Raises Full-Year Outlook

First Advantage Corporation (NASDAQ:FA) reported financial results for the third quarter of 2025, delivering a performance that presented a mixed picture for investors. While the company demonstrated significant year-over-year growth and provided an optimistic refined outlook for the full year, its quarterly results against analyst expectations and a substantial debt load appeared to influence early market sentiment.

Quarterly Performance vs. Estimates

The HR technology provider posted revenues of $409.2 million for the quarter ended September 30, 2025. This figure fell short of the analyst consensus estimate of $416.0 million. On the profitability front, the company reported an adjusted diluted earnings per share (EPS) of $0.30, which narrowly surpassed the estimated $0.29.

Key financial highlights from the quarter include:

• Revenue: $409.2 million (vs. estimate of $416.0 million)
• Adjusted EPS: $0.30 (vs. estimate of $0.29)
• Adjusted EBITDA: $118.5 million
• Adjusted EBITDA Margin: 29.0%
• Cash Flow from Operations: $72.4 million

The GAAP net income was $2.6 million, or $0.01 per diluted share. The company noted that these results were impacted by $6.3 million in expenses and $41.7 million in depreciation and amortization related to the acquisition of Sterling Check Corp.

Market Reaction and Refined Guidance

Following the earnings release, the stock traded lower in the pre-market session, indicating a negative initial reaction from investors. This movement likely reflects the revenue miss for the quarter.

However, management struck a confident tone regarding the future, refining its full-year 2025 guidance upwards. The updated forecast now sits at or above the midpoints of its original projections, citing the successful integration of Sterling and the realization of synergies.

The refined full-year 2025 guidance is as follows:

• Revenue: $1.535 billion to $1.570 billion (Prior: $1.5 billion to $1.6 billion)
• Adjusted EBITDA: $430 million to $440 million (Prior: $410 million to $450 million)
• Adjusted Net Income: $170 million to $180 million (Prior: $152 million to $182 million)
• Adjusted Diluted EPS: $0.98 to $1.02 (Prior: $0.86 to $1.03)

This updated sales guidance of up to $1.57 billion compares favorably to the analyst consensus estimate of $1.584 billion for the full year. For the upcoming fourth quarter, analysts are projecting revenue of $399.0 million and EPS of $0.28.

Strategic Highlights and Financial Position

CEO Scott Staples highlighted "profitable growth" and success in new client acquisition, despite a "consistently flat" hiring growth environment. He emphasized that the integration of Sterling is "progressing ahead of schedule" and delivering promised strategic and financial benefits.

CFO Steven Marks pointed to "solid cash flow generation," which has enabled the company to make a voluntary debt repayment of $25 million after the quarter's end, bringing the total principal repayments for the year to $70.5 million. The company's financial statements show a significant long-term debt balance of $2.10 billion as of September 30, 2025, making this deleveraging focus a key point for investors.

Conclusion

First Advantage's third-quarter results present a tale of two timelines. In the immediate term, the company slightly missed revenue expectations, which appears to have dampened investor enthusiasm. Over the longer term, the robust refined guidance for 2025 suggests management has strong visibility into continued growth and profitability, driven by the successful Sterling integration. The market's ultimate judgment will likely hinge on the company's ability to execute on this optimistic outlook and continue its progress in reducing debt.

For a detailed look at historical earnings and future analyst estimates for First Advantage, you can review the data here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial advice, or any other type of professional advice. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.