FA 10-K & 10-Q changes, risk factors and insider trading

You should carefully consider the following risk factors and all of the information contained in this Annual Report. If any of the following risks occur, our business, financial condition, and results of operations could be materially and adversely affected. The following risk factors have been organized by category for ease of use; however, many of the risks may have impacts in more than one category.

Macroeconomic developments such as the global or regional economic effects resulting from inflation and related economic curtailment initiatives, interest rate volatility, foreign exchange rate fluctuations, geopolitical developments,unrest, warsconflicts in Europe and the Middle East, evolvingglobal trade policies between the U.S. and international trade partners,disputes, or the occurrence of similar events in other countries that lead to uncertainty or instability in economic, political, or market conditions could negatively affect our business, operating results, financial condition, and outlook.

In addition, international,International, regional, or domestic political unrestunrest, terrorism, and the related potential impact on global stability, terrorist attacks, and the potential for other hostilitieshostilities, inas variouswell parts of the world,as public health crises, and climate-related natural disastersdisasters, continue to contribute tocreate a climate of economic and political uncertainty that could adversely affect our results of operations and financial condition, including our revenue growth and profitability.

Global credit and capital markets have experienced significantcontinued volatility and disruption due to the above factors. A substantial majority of our revenues are derived from pre-onboarding screening products, which is heavily influenced by hiring volumes. The businesses of some of our largest customers and their decision to hire depend in part on favorable macroeconomic conditions, including consumer spending, the general availability of credit, the level and volatility of interest rates, and inflation levels. To the extent these macroeconomic factors are at suboptimal levels, our existing and potential customers could delay or defer onboarding new or replacement workers, reduce the size of their workforce, or seek to decrease spending on their screening programs. As a result, our products could face reduced demand and our business, results of operations, and financial condition could slow or decline. Similarly, demand for our tenant screening products is subject to trends in real estate rental markets, which may be affected by macroeconomic factors beyond our control, including housing markets, stock market volatility, recession, job losses and unemployment levels, debt levels, and uncertainty about the future.

As a provider of technology solutions fortechnology-enabled screening and verifications,verifications solutions, we are subject to numerousextensive and evolving international, federal, state, and local laws and regulations, including, without limitation, inthose the areas ofgoverning consumer protection, privacy, and data protection. See “Business—Government Regulations” and “Risk Factor—Continued scrutiny of collection, use, and processing of personal data and data security could lead to increased restrictions, loss of revenue opportunity, greater costs of compliance, and lost efficiency.” We expect that these laws and regulations will continue to evolve, change, and expand and, in most instances, become more stringent and complex with time. In particular, President Trump’s election, coupled with Republican control of the Senate and the House of Representatives (albeit by narrow margins) could lead to new legislative and regulatory initiatives or the roll-back of initiatives of the previous presidential administration.

Compliance with these laws and regulations requires significant expense and resources, which could increase significantly as these laws and regulations evolve. Further, regulations are often the product of administrative interpretation and judicial construction, which could result in inconsistent implementation across jurisdictions. We must reconcile the many potential differences between the laws and regulations among the various domestic and international jurisdictions that may be involved in the provision of our solutions. A failureFailure to identify, comply, and reconcile the many laws and regulations we are subject to could result in the imposition of penalties and fines, restrictions on our operations, breach of contract or indemnification claims against us, loss of revenues, reputational harm, and could otherwise adversely affect our business, results of operations, and financial condition. Further, we acquired a company in 2013 that was subject to multiple FTC consent decrees that had been imposed on it in the years prior to our acquisition and to which we now remain subject. The consent decrees require us to comply with the FCRA and to maintain a comprehensive information security program to be audited biennially. Under these circumstances, failure to comply with the decrees and/or relevant law or regulations may subject us to increased risk.

Our products and solutions are subject to various complex laws and regulations governing cybersecurity, privacy, and data protection on the federal, state, and local levels, and in foreign jurisdictions. The regulatory framework for privacy issues is rapidly evolving and is likely to remain uncertain and inconsistently enforced for the foreseeable future. Many federal, state, and foreign governmental bodies and agencies have adopted or are considering adopting laws and regulations regarding collecting, processing, handling, maintenance, storage, use, disclosure, sale, and transmission of personal and other sensitive information, including mandatory consumer notification should the unauthorized access of consumer information occur, and further expansion of requirements is possible. It is possible that these restrictions could limit our current or future service offerings, reduce our profitability, or otherwise materially and adversely affect our ability to conduct our business or to do so economically. Further, if our practices or products are perceived to violate applicable laws or regulations, we may be subject to increased scrutiny and public criticism, litigation, investigation, fines, and reputational harm, which could disrupt our business and expose us to liability. Given the nature of our business and the volume of data processed in the ordinary course of our operations, it is possible for breaches to occur, whether intentionally from hackers or other third parties, or unintentionally, for example, if we inadvertently send or otherwise make available information to an unauthorized recipient.

In the United States, we are subject to numerous federal and state laws governing the collection, processing, use, transmission, disclosure, and sale of personal data (which may also be referred to as personal information, personally identifiable information, and/or non-public personal information). For example, inthe California,California Consumer Privacy Rights Act (“CPRA”), which amended and expanded the CCPA, provides for enhanced consumer protections for California residents,protections, a private right of action for certain data breaches of certain personal informationbreaches, and imposes statutory fines and damages for such data breaches or other CCPA violations, as well as a requirement ofand “reasonable” cybersecurity.cybersecurity requirements. Other states also have or are in the process of imposing similar privacy obligations. In addition, laws such as the Biometric Information Privacy Act in Illinois have also restricted the collection and use of biometric information. These and other laws and regulations require us to continuously review our data processing practices and policies, may cause us to incur substantial costs with respect to compliance, and could require us to adapt our products and solutions, which may reduce their utility to our customers.

Outside of the United States, we are subject to foreign rules and regulations. For example, we are subject to enhanced compliance and operational requirements under the GDPR,General Data Protection Regulation (“GDPR”), which expanded the scope of data protection in the European Union (“EU”) to foreign companies who process the personal data of EU residents, imposed a strict data protection compliance regime with stringent penalties for noncompliance and included new rights for data subjects such as the “portability” of personal data. In particular, under the GDPR, fines of up to 20 million euros, or up to 4% of the annual global revenue of the noncompliant company, whichever is greater, could be imposed for violations of certain of the GDPR’s requirements. If we were found to be in breach of the GDPR, or the UK’s version of the GDPR, the potential penalties we might face could have a material adverse impact on our business, financial condition, results of operations, and cash flows. Compliance with the GDPR requires time and expense and may require us to make changes to our business operations.

We cannot guarantee that we will succeed in appropriately identifying and successfully executing our strategic plans to grow our businesses, and our inability to do so may be the result of external factors beyond our control. Our ability to grow our business will depend, in large part, on our ability to further penetrate our existing markets, attract new customers, andincrease identifyengagement by existing customers, expand internationally, and invest effectively invest in growingfaster-growing industry verticals. The success of anynew enhancementor of our currentenhanced products andor solutions or any new product or solution depends on several factors, including the timely completion, introduction, and market acceptance of enhanced or new products and solutions, adaptation to new industry standards and technological changes, the ability to maintain and to develop relationships with third parties, and the ability to attract, retain, and effectively train sales and marketing personnel. Our growth could be limited if we fail to innovate or adapt to market trendstrends, emerging technologies, customer expectations, and product innovations adequately. Any new products and solutions we develop or acquire may not be introduced in a timely or cost-effective manner and may not achieve the market acceptance necessary to generate significant revenues, and any new markets in which we attempt to sell our products and solutions, including new countries or regions, may not be receptive or implementation may be delayed. Our future growth will be adversely affected if we do not identify and invest in faster-growing industry verticals. In addition, any expansion into new markets will require an investment in the continuous monitoring of local laws and regulations, which increases our costs and the risk of the products or service failing to comply with such local laws or regulations. We may also incur costs associated with such plans that are above anticipated amounts.

To successfully manage ourgrowth growth,effectively, we will also need to maintain appropriate staffing levels and update our operating, financial and other systems, procedures, and controls accordingly. Our efforts to grow our business and execute our business strategy may place significant demands on and strain our personnel and organizational structure, including our management, staff, and information systems. If we fail to effectively manage our growth, our business, results of operations, and financial condition could be materially adversely affected.

We are increasingly building artificial intelligence and machine learning into many of our offerings and utilize data gathered from various sources in our services to train our machine-learning models. Regulatory and policy focus on AI has intensified globally, with emerging frameworks in the U.S., EU, and U.K. addressing transparency, bias mitigation, and ethical use of algorithms. Compliance with these frameworks may require additional investment in research and development, governance controls, and auditing processes, diverting resources from other initiatives. As with many cutting-edge innovations, artificial intelligence and machine learning present new risks and challenges, and existing laws and regulations may apply to us in new ways, the nature and extent of which are difficult to predict. The continuous development, maintenance and operation of our machine-learning models is expensive and complex, and may involve unforeseen difficulties including material performance problems, and undetected defects or errors with new machine-learning or other artificial intelligence capabilities. Some of those difficulties could arise from undetected or uncorrected inaccuracies or unrepresentative tendencies in the data. We may encounter technical obstacles, and it is possible that we may discover additional problems that prevent our machine-learning models from operating properly. If our machine-learningAI-driven modelssolutions dofail notto function reliably,as intended, we may incorrectlyexperience processincorrect background checkscheck or sufferresults, extended processing timestimes, or service disruptions, leading to customer dissatisfaction and potential liability. Furthermore, competitors or other failuresthird ofparties may adopt and integrate AI into their products and operations more rapidly or effectively than we do, potentially diminishing our services,competitive which could result in customer dissatisfaction. The risksposition and challengesnegatively presented by artificial intelligence and machine learning could undermine public confidence in artificial intelligence and machine learning which could slow its adoption and affectimpacting our business.operating results.

Developing, protecting, and maintaining our strong reputation among customers, applicants, and third-party partners and vendors is critical to our success. The importance of our brand may increase if competitors offer more products similar to ours or if more competitors enter the market. Our brand may suffer if our service quality declines or if our customer initiatives are not successful. Additionally, the successful protection and maintenance of our brand will depend on our ability to obtain, maintain, protect, and enforce trademarktrademarks and other intellectual property protection for our brand. If we fail to successfully promote, protect, and maintain our brand, we may lose our existing customers to our competitors or be unable to attract new customers.

Demand for our products and solutions is subject to our customers’ continual evaluation of their need for our products and solutions and is impacted by several factors, including their hiring andvolumes, workforce needs,strategies, changing regulatory landscape, and budget availability.priorities. Demand for our offerings is also dependent on the size of our customers’ operations. Our customers could reduce their operations for a variety of reasons, including general economic slowdown,uncertainty, cost-containment measures, workforce automation and adoption of AI-driven hiring tools, divestitures and spin-offs, business model disruption, or poor financial performance, or as a result of increasing workforce automation.performance. Demand for drug screenings may decline as a result of evolving U.S. drug laws. For example, the legalization of cannabis in several U.S. states has led to a decrease in orders for marijuana screenings. Our revenues may be significantly reduced should our customers decide to downsize their screening programs or take such programs in-house.

The global market for our screening, verifications, and adjacent products isremains fragmented and competitive.competitive, even as consolidation among larger firms increases. Our competitors vary based on their targeted customer size, industry vertical, geography, and product focus. We compete with large players with broad capabilities and product suites, vertical-focused specialist firms that target customers operating in select industries, mid-size playersplayers, and competitors that serve SMB customers. Some competitors are alignedfocused to aon specific productpre‑ inand certain pre-onboardingpost‑onboarding product lines,categories, such asincluding drug /and health screening and executive screening.screening services. In ouraddition, we face competition from providers offering adjacent productssolutions market,such we compete with certain companies specializing inas fleet and vehicle compliance, hiring tax credits and incentives, resident and tenant screening, employment eligibility,eligibility verification, and investigative research.

In our competitive market environment, we primarily compete on the basis of brand reputation and awareness, accuracy, compliance,compliance expertise, turnaround time, user experience, and price. We must continue to innovate and ensure market acceptance of our products and solutions in order to maintain and grow our business and market share. We are continually subject to the risk that our competitors may develop products and technologies that are superior to ours or achieve greater market acceptance than ours. Continuing strong competition could result in increased pricing pressure, increased sales and marketing expenses, loss of customers, and greater investments in research and development, each of which could negatively impact our results of operations. The revenues of our competitors and the resources they have available vary depending on size, specialty, and geographic footprint. Some competitors may be able to allocate resources more efficiently than we can or anticipate and respond to existing and emerging market trends, customer preferences, and technologies due to their size and resources. If we fail to compete successfully, our business, financial position, and results of operations could be materially and adversely affected.

We rely extensively on data, information, and services provided by or derived from a variety of external sources, including our suppliers, customers, strategic partners, various public filings, credit bureaus, publicly available information, and government authorities. Our suppliers could at any point decline to continue providing data or provide untimely or inaccurate data. These data sources have in the past increased the costs for their services, and we expect they will continue to do so from time to time. It may not be possible for us to recover any or all of the costs of any increases in fees by passing such costs along to our customers. If we try to do so, it could have a negative impact on customer relationships. In addition, the increase in such costs could cause our customers to choose to forgo certain services, thereby reducing demand for our products and solutions. Our suppliers could also request or require us to enter into minimum order contracts with clawback enforcement provisions. Some suppliers, such as certain criminal data suppliers and drug testing laboratories and collection sites we use, are also owned or may in the future be acquired by one or more of our competitors, which could make us especially vulnerable to unforeseen price increases or outright declinations to continue our relationships. Because our agreements with third-party data providers are generally non-exclusive, we are subject to the risk they may choose to enter into an exclusive arrangement with one of our competitors or maintain an exclusive proprietary database that is not shared with us. These risks could be exacerbated if our customers request we engage with a particular provider for their orders. We cannot guarantee that we will be able to identify and engage replacement providers on acceptable terms or obtain data from alternative sources in the event our suppliers are no longer able or are unwilling to provide us with certain data or services. If we were to lose access to external data or if our access or use were restricted or were to become less economical or desirable, our ability to timely complete requested services and products at a level of quality acceptable to our customers could be negatively impacted, which could adversely affect our business, results of operations and financial condition.

Sales to government entities and higher-tier contractors to governmental customers involve unique competitive, procurement, budget, administrative and contractual risks, any of which could materially adversely impact our business, financial condition and results of operationsoperations.

the federal Civil False Claims Act (and similar state and local false claims acts), which provides for substantial civil penalties for violations, including for submission of or causing the submission of a false or fraudulent claim to the U.S. government for payment or approval; and federal, state, and local laws and regulations regarding procurement integrity, including gratuity, bribery and anti-corruption requirementsrequirements, as well as limitations on political contributions and lobbying.

Further, entities providing services to governments are required to comply with a variety of complex laws, regulations and contractual provisions relating to the formation, administration, or performance of government contracts that give public sector customers substantial rights and remedies, many of which are not typically found in commercial contracts. These may include rights with respect to price protection, the accuracy of information provided to the government, contractor compliance with supplier equal opportunity, socio-economicsocioeconomic and affirmative action policies and reporting requirements and other terms that are particular to government contracts. Federal, state and local governments routinely investigate and audit contractors for compliance with these requirements, and the qui tam provisions of the federal Civil False Claims Act (and similar state and local false claims acts) authorize a private person to file civil actions on behalf of the federal and state governments and retain a share of any recovery, which can include treble damages and civil penalties. If it is determined that we have failed to comply with these requirements, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, costs associated with the triggering of price reduction clauses, fines and suspension or debarment from future government business, and we may suffer reputational damage. Further, the negative publicity that could arise from any such penalties, sanctions or findings could have a material adverse effect on our reputation and reduce our ability to compete for new contracts with both government and commercial customers.

The nature of the products and solutions we provide and the information and data collected, processed, transmitted, disclosed, used, and reported by us (including personal information, confidential information, and other sensitive and/or regulated information) subjects us to potential liability from customers, consumers, data subjects, third parties, and government authorities relating to claims of legal or regulatory non-compliance, defamation, invasion of privacy, false light, negligence, intellectual property infringement, misappropriation or other violation and/or other related causes of action. Such liability may depend on actions or events beyond our control, such as how our customers use the information we provide or the veracity of the data we are provided by third parties. For example, we may from time to time be subject to legal claims by applicants for allegedly failing to comply with the FCRA in relation to issues regarding the accuracy of our reports. Likewise, our customers may seek indemnification for losses allegedly caused by negligent hiring or retention by asserting our reports failed to disclose information that would have resulted in an adverse employment decision had it been reported or if we improperly interpret a customer’s custom processing instructions. Such lawsuits and other proceedings could divert resources from our management and potentially subject us to equitable remedies. In addition, punitive damages are available as a remedy under the FCRA, which we are subject to and are generally not covered by insurance. We may also face adverse publicity in connection with such incidents, which could have a negative effect on our reputation and business.

If we are unable to fully protect the security and privacy of our data and electronic transactions, or if we or our third-party service providers are unable to prevent any data security breach, incident, unauthorized access, and/or misuse of our information by our customers, employees, vendors, or hackers, it could result in significant liability (including litigation and regulatory actions and fines), cause lasting harm to our brand and reputation, and causeloss us to loseof existing customers and fail to win new customers.business opportunities.

We perform screenings and verifications internationally, including helping businesses screen their applicants with backgrounds that include international jurisdictions outside of the business’ domestic base of operations. In 2024,2025, we performed screens for our customers on individuals fromacross over 200 countries and territories, and we seek to continue to expand our international operations. The laws and regulations governing our international operations are numerous, varied, and evolving. It may be difficult to correctly identify, interpret, and support compliance with these laws and regulations, and we cannot be certain we will avoid liability for noncompliance or improper compliance with such laws and regulations. Any such cost or liability could have a material adverse effect on our business, financial condition, and results of operations. See “—We operate in a highly regulated industry and are subject to numerous and evolving laws and regulations” and “—If regulatory regimes continue to heighten their scrutiny over personal data and data security, it could lead to increased restrictions, loss of revenue opportunity, greater costs of compliance, and lost efficiency.”

Our products are complex, and therefore undetected errors, failures, bugs, or defects may be present in our products or occur in the future in our products, our technology, or our software, or technology or software we license from third parties, including open sourceopen-source software, especially when updates or new products are released. Such software and technology are used in IT environments with different operating systems, system management software, devices, databases, servers, storage, middleware, custom, and third-party applications and equipment and networking configurations, which may cause errors, failures, bugs, or defects in the IT environment into which such software and technology are deployed. This diversity increases the likelihood of errors, failures, bugs, or defects in those IT environments. Despite testing by us, real or perceived errors, failures, bugs, or defects may not be found until our customers use our products. Real or perceived errors, failures, bugs or defects in our products could result in negative publicity, loss of or delay in market acceptance of our products and harm to our brand, weakening of our competitive position, claims by customers for losses sustained by them or failure to meet the stated service level commitments in our customer agreements. In such an event, we may be required, or may choose, for customer relations or other reasons, to expend significant additional resources in order to help correct the problem. Any real or perceived errors, failures, bugs, or defects in our products could also impair our ability to attract new customers, retain existing customers or expand their use of our products, which would adversely affect our business, results of operations, and financial condition.

Additionally, if customers fail to adequately deploy protection measures or updateupdates to our products, customers and the public may erroneouslyincorrectly believeperceive that our products are especially susceptible to cyber-attacks. Real or perceived security breaches against our products could cause disruption or damage to our customers’ networks or other negative consequences and could result in negative publicity to us, damage to our reputation, lead to other customer relations issues and adversely affect our revenue and results of operations. We may also be subject to liability claims for damages related to real or perceived errors, failures, bugs, or defects in our products. A material liability claim or other occurrence that harms our reputation or decreases market acceptance of our products may harm our business and results of operations. Finally, since some of our customers use our products for compliance reasons, any errors, failures, bugs, defects, disruptions in service, or other performance problems with our products may damage our customers’ business and could hurt our reputation.

Although we expect significant benefits to result from the acquisition of Sterling, there can be no assurance that we will actually realize any of them, or realize them within the anticipated timeframe. Achieving these benefits will depend, in part, on our ability to integrate Sterling’s business successfully and efficiently. The challengesintegration involvedprocess in this integration, which will beremains complex and timetime-consuming consuming,and includeinvolves thechallenges followingsuch as:

If we do not successfully manage these risks and the other challenges inherent in integrating an acquired business, then we may not achieve the anticipated benefits of the acquisition of Sterling onin our anticipated timeframe or at all and our revenue, expenses, operating results, financial condition and stock price could be materially adversely affected. The successful integration of the Sterling business willis requirerequiring significant management attention and may divert it from our business and operational issues.

We may not be able to integrate or manage acquired businesses, including Sterling, and strategic partnerships so as to produce returns that justify the investment. Integrating acquisitions or other business relationships, including the acquisition of Sterling, may result in unforeseen operating difficulties and expenditures, disrupt our ongoing business, divert our resources, and require significant management attention that would otherwise be available for the ongoing development of our business. In particular, it may prove difficult to integrate the personnel, operations, intellectual property, and/or technology systems of any acquired organizations, and to maintain uniform standards, policies, and procedures across multiple platforms and locations, including for those located outside of the United States. This may result in a greater than anticipated increase in the transaction, remediation, and integration costs and could discourage us from entering intopursuing acquisitions where the potential for such costs outweigh the perceived benefit. Further, although we conduct due diligence with respect to the business and operations of each of the companies we acquire, we may not have identifiedidentify all material facts concerning these acquired companies, including Sterling, which could result in unanticipated events or liabilities. We cannot guarantee that any acquisitions we seek to enter intopursue will be carried out on favorable terms or that the anticipated benefits of any acquisition, investment, or business relationship, including the acquisition of Sterling, will materialize as intended or that no unanticipated liabilities will arise.

We are subject to evolving anti-corruption laws, economic and trade sanctions, and anti-money laundering rules in several jurisdictions in which we operate, including the U.S. FCPA and the U.K. Bribery Act.Act, and similar laws globally. The evolution of this regulatory regime has generally brought about more aggressive investigations and enforcement, which, if targeted towards us, could materially adversely impact our business. We have policies and procedures in place to assist us with monitoring the evolution of these laws and ensuring our ongoing compliance. We are continuously in the process of reviewing, upgrading, and enhancing these protocols. However, we cannot guarantee that our employees, consultants, or agents will not take actions that amount to a violation of these laws and regulations for which we may be ultimately responsible or that our policies and procedures will be adequate in protecting us from liability. Further, our services agreements with several customers contain contractual provisions mandating our ongoing compliance with applicable anti-corruption, economic, and trade sanctions or anti-money laundering laws or regulations. If we are deemed to be in violation of any such rules, our business activities could be restricted or terminated. In addition, we could face civil and criminal penalties, including fines, which could damage our reputation and customer relationships and materially impact our results of operations or financial condition.

Disruptions at our GlobalOperation OperatingCenters Centerof Excellence and other operational sites could adversely impact our business.

Our GlobalOperation OperatingCenters Centerof Excellence in Bangalore,Manila, Philippines, and in Bangalore and Mumbai, India providesprovide critical support for our operations by processing screening requests, undertaking aperforming manual review of records and verifications work, handling certain customer calls and interactions, and completing certain internal shared service support functions. We also have other important operational sites, including Fishers, Indiana; and Atlanta, Georgia; Manila, Philippines; and Mumbai, India.Georgia. If our operations at our GlobalOperation OperatingCenters Centerof Excellence or such other sites are disrupted, even for a brief period of time, whether due to malevolent acts, defects, computer viruses, climate change, natural disasters such as earthquakes, fires, hurricanes or floods, power or telecommunications failures, or other external events beyond our control, it could result in interruptions in service to our customers, damage to our reputation, harm to our customer relationships, and reduced revenues and profitability. In addition, strikes, wars, terrorism, and other geopolitical unrest could cause disruptions in our business and lead to interruptions, delays, or loss of critical data. We may not have sufficient protection or recovery plans in certain circumstances, such as a significant natural disaster, and our business interruption insurance may be insufficient to compensate us for losses that occur. In the case of such an event, customers could elect to terminate our relationship, delay or withhold payment to us, or even make claims against us.

We enjoymaintain long-standing relationships with many of our customers,customers; buthowever, many of our customer contracts and services agreements do not typically require our customers to use our products exclusively or commit to minimum engagement or order volumes. As a result, we rely on our customers’ continuing demand for our products and solutions, our technology, our value proposition, and our brand and reputation to compete. Our customers can stop doing business with us for any reason at any time with minimal notice and without penalty, which theyand may leverage this flexibility to renegotiate our arrangements on terms less favorable to us. The loss of a significant customer or any reduced demand for our products and solutions by our customers, especiallyparticularly ourfrom large customers, would have a negativenegatively impact on our business. For the year ended December 31, 2024,2025, we had oneno customer who accounted for approximately10% 12%or more of our revenues. We cannot guarantee that we will maintain relationships with any of our customers on acceptable terms or at all or retain, renew or expand upon our existing agreements. The failure to do so could negativelyadversely affect our business, financial condition, and results of operations.

Our operating model depends on the efficient and unimpeded operation of our global technology and data processing systems. We currently operate data centers and servers around the world and rely on our third-party cloud providers to host certain of our websites, databases, and web-based services. Our property and business interruption insurance coverage may not be adequate to fully compensate us for losses that may occur. Severe impairment or total destruction of our data centers could occur, and recovery could be difficult and may not be possible at all. In the event of an accessibility outage or other incident at our data centers or with respect to our third-party cloud providers, our operations could be disrupted, data could be lost, and our systems or the quality of our products and solutions could be compromised,compromised. andSuch weevents could sufferresult in financial loss, reputation damage, potential liability, or customer loss, any of which could have an adverse impact on our business, results of operations, and financial condition. Such outages may be impossible to predict, plan for, or avoid.

We are currently integrating certain of our software and our systems.systems as a result of the Sterling Acquisition. This integration is complex and will require significant changes to our platforms. Scaling and adapting our technology will require a significant lead time and investment in financial and human capital. We cannot guarantee that this transition will be without operational interruptions or other forms of disruption, including loss of information, delayed turnaround times, and deficiencies in our design, implementation, or maintenance of the system. If we experience outages or interruptions in the products and solutions we provide for extended periods of time, our customers could face accessibility issues which would have an adverse impact on our business, results of operations, and financial condition.

We engage and integrate with many third-party human resource software providers, including applicant tracking systems and human capital management systems, to ensure that customers benefit fromdeliver an integrated solution that allowsenables themcustomers to easily perform both human resource functions and screenings and verifications through a core platform. This depends on our ability to seamlessly integrate our platforms and systems with those of the human resource software providers. If our engagement or arrangements with such providers are terminated for any reason, we risk losing the opportunity for continued integration with the software applications of these companies, which could jeopardize our ability to provide a seamless interface for our customers, result in service disruptions, errors, or delays, increase costs and reduce the quality of our products, and ultimately put us at a competitive disadvantage in maintaining our customer relationshipsretaining and obtainingacquiring new ones.customers. Further, if a provider updates its products without providing sufficient notice to us, there could be disruptions to the integration, which could result in errors, delays, interruptions, operational inefficiencies, and interruptions.customer dissatisfaction.

We operate in an industry that involvesis thehighly risksensitive ofto negativepublic publicity,perception, especially relating toregarding cybersecurity, privacy, and data protection, and adverse developments with respect to our industry may also, by association, negatively impact our reputation. For example, when information services companies are involved in high-profile events involving data theft, these events could result in increased legal and regulatory scrutiny, adverse publicity, and potential litigation concerning the commercial use of such information for our industry in general. If there is a perception that the practices of our business or our industry constitute an invasion of privacy, our business and results of operations may be negatively impacted. There have been and may continue to be perception issues, social stigmas, and negative media attention regarding the collection, use, accuracy, correction, and sharing of personal data, which could materially adversely affect our business, results of operations, and financial condition.

Our ability to deliver products and services to our customers effectively requires us to work with certain third-party vendors and service providers. For example, we engage third-party vendors to maintain and upgrade portions of our software and technology. In addition, from time to time and in certain geographic locations, we engage third-party support service providers depending on demand requirements on our operations and customer service call centers. Our business, therefore, depends on such third parties meeting our expectations and the expectations of our customers in timeliness, quality, and volume. We cannot guarantee our third-party providers will be able to do so on a cost-effective basis or at all due to a number of factors. Some of the third-party vendors that we rely on conduct operations outside of the United States, which subjects us to the risk that economic, political, and military events in foreign jurisdictions might cause an interruption to our operations. We may not be able to ensure that our third-party vendors perform in accordance with agreed-upon, regulated, and expected standards. We could be held accountable for their failure to do so, which may subject us to fines or other sanctions. If our third-party vendors do not meet our expectations and those of our customers, it could negatively affect our reputation, harm our relationships with existing customers, and hamper our ability to win new customers.

While we have entered into agreements with some of these third-party service providers, they have no obligation to renew their agreements with us on commercially reasonable terms or at all. If any one of our third-party service provider’s ability to perform their obligations wasis impaired, we may not be able to find an alternative supplier in a timely manner or on acceptable financial terms, which could result in operational interruptions.interruptions and increased costs.

In addition, any shift in business strategy, corporate reorganization, or financial difficulties, such as bankruptcy faced by our third-party providers, may have negative effects on our ability to implementexecute our business strategy.

Furthermore, we may also be subject to claims of intellectual property infringement, misappropriation, or violation by third parties, including our competitors. Even if we are unaware of such rights, we may be found by courts to be infringing upon, misappropriating, or violating them. If such claims are successfully asserted against us or if we decide to settle such matters, we could be required to pay substantial damages or ongoing royalty payments, obtain licenses, which may not be available on commercially reasonable terms, or at all, modify our products and solutions (including our applications), or discontinue certain products. We may also be obligated to indemnify applicants, customers, vendors, or partners in connection with any such claim or litigation. Even if we prevail in a dispute, any litigation regarding intellectual property could be costly, time-consuming, and require the deployment of significant resources, and could result in lasting harm being done to our brand and reputation, results of operations or financial condition, or have other adverse consequences.

In order to safeguard our innovations and maintain competitive advantages, we partially rely on trade secrets. We cannot guarantee that we will be successful in maintaining, protecting, or enforcing the confidentiality of our trade secrets or that our non-disclosure agreements will provide sufficient protection of our trade secrets, know-how, or other proprietary information in the event of any unauthorized use, misappropriation, or other disclosure. Although we have takenimplemented stepsmeasures to protect our trade secrets, including entering into confidentiality agreements with third parties and confidential information and inventions agreements with employees, consultants, and advisors, we cannot provide any assurances that any of these parties may not breach the agreements and disclose our proprietary information, including our trade secrets. For example, if a party to one of our non-disclosure agreements were to breach said agreement, we cannot guarantee that adequate remedies will be available to rectify any subsequent damages or losses of confidential and proprietary information. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside of the United States are less willing or unwilling to protect trade secrets. It is also possible that our trade secrets will become known by some other mechanism or independently developed by our competitors, and we would have no right to prevent them from using that technology or information to compete with us. For example, a significant portion of our proprietary databases is assembled from publicly available information sources, and third parties, including our competitors, could compile similar or competing databases by accessing the same publicly available information sources.

We have in the past incorporated, and may in the future continue to incorporate, certain “open-source” software into our codebase and our products and solutions. Open-source software is generally licensed by its authors or other third parties under open-source licenses, which typically do not provide any representations, warranties, or indemnity coverage by the licensor. Some of these licenses provide that combinations of open sourceopen-source software with a licensee’s proprietary software are subject to the open sourceopen-source license and require that the combination be made available to third parties in source code form, at no cost, or subject to other unfavorable conditions. Some open-source licenses may also require the licensee to grant licenses under certain of its own intellectual property to third parties. From time to time, there have been claims challenging the ownership of open-source software against companies that incorporate such software into their products or applications. The terms of various open-source licenses have not been interpreted by courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our use of open-source software or our proprietary rights. In addition, if we were to combine our applications with open-source software in a certain manner, we could, under certain of the open-source licenses, be required to publicly release or license, at no cost, our products that incorporate the open-source software or the affected portions of our source code, which could allow our competitors or other third parties to create similar products and solutions with lower development effort, time, and costs, and could ultimately result in a loss of transaction volume for us. If we inappropriately use open-source software, we may be required to redesign our applications, seek licenses from third parties in order to continue offering our products, which may not be available on commercially reasonable terms, or at all, discontinue the sale of our products or solutions, or take other remedial actions, each of which could reduce or eliminate the value of our technologies and could adversely impact our business, operating results, or financial condition.

We experience seasonality with respect to certain industries we service due to fluctuations in hiring volumes and other economic activity. For example, pre-onboarding revenues generated from our customers in the retail and transportation industries are historically highest during the months of October and November leading up to the U.S. holiday season and lowest in December and at the beginning of the firstnew quarteryear, following the U.S. holiday hiring season. Certain customers across various industries also historically increase their hiring throughout the second quarter of the year as winter concludes, and the school year ends, giving rise to student and graduate hiring, and increased commercial activity tied to outdoor activities.

Further, digital transformation, growthchanges in e-commerce,consumer and other economic, demographic, andbehavior, labor market shiftsconditions, technological innovation, and broader macroeconomic factors can impact seasonality trends, making it difficult for us to predict how our seasonality may evolve in the future. As a result, it may be difficult to forecast our results of operations accurately, and there can be no assurance that the results of any particular quarter or other period will serve as an indication of our future performance.

Tax laws and related interpretations with respect to income taxation are frequently reviewed and amended by governmental bodies, officials, and regulatory agenciesauthorities in the United StatesU.S. and other jurisdictions in which we do business.operate. In 2023, we fully utilized our remaining U.S. Federalfederal income tax net operating loss carryforward.carryforwards, other than those subject to significant limitation under IRC Section 382. As a result, beginning in 2024, income taxestax have becomebecame a material use of funds. Our provision for income taxes and liquidity may therefore be adversely affected by increases in statutory tax rates, implementation of global minimum tax rules under the OECD Pillar Two framework, evolving state and local tax regimes, and heightened enforcement activity. These changes, along with new state-level taxes and digital services tax proposals in certain foreign jurisdictions, may increase our effective tax rate and cash tax obligations. Additionally, changes to our operating model, changesshifts in the mix of income and expenses inacross countries with differing tax rates, foreign currency fluctuations, and changes in the valuation of deferred tax assets and liabilities,liabilities could materially affect our tax position. The timing and scope of future tax law changes remain uncertain, and any enacted changes could require us to modify our tax strategies, increase compliance costs, or changesresult in higher tax laws, regulations, or administrative interpretations.liabilities. It cannotis benot predictedpossible to predict whether or when tax laws, regulations, and rulings may be enacted, issued, or amendedamended, thator could materially and adverselythe impact such changes may have on our financial position, results of operations, or cash flows.

While we seek to partner with organizations that mitigate their business risks associated with climate change, we recognize that there are inherent risks wherever business is conducted. Access to clean water and reliable energy in the communities where we conduct our business, whether for our offices or for our vendors, is a priority. Our major sites in the United States andStates, India, and the Philippines are vulnerable to climate change effects. WhileIn thisaddition, dangercertain hasthird-party avendors low-assessedand riskcloud ofservice disruptingproviders normalthat businesssupport operations,our itoperations hasmay thealso potentialbe impactlocated onin employees’regions abilitiessusceptible to commuteclimate-related todisruptions, workincreasing orour toindirect work from home and stay connected effectively.exposure. Climate-related events, including the increasing frequency of extreme weather events and their impact on the United States, IndiaIndia, the Philippines and other major regions’ critical infrastructure, have the potential to disrupt our business, our third-party suppliers and/or the business of our customers, and may cause us to experience higher attrition, losseslosses, and additional costs to maintain or resume operations. Further, emerging climate-related regulations and disclosure requirements may increase compliance costs and require additional investment in sustainability initiatives.

We receive debt ratings from major credit rating agencies in the U.S. Factors that may impact our credit ratings include debt levels, planned asset purchases or sales. Liquidity, asset quality, cost structure and pricing levels could also be considered by the rating agencies. Any downgrade in our credit ratingratings or the ratings of our indebtedness, or adverse conditions in the debt capital markets, could:

In addition, the credit agreement includes financial covenants requiring us to maintain specified leverage ratios and other financial condition tests, which may become more restrictive if macroeconomic conditions deteriorate or if our operating performance declines. As a result of these covenants and restrictions, we are and will be limited in how we conduct our business, and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. In addition, we are required to maintain specified financial ratios and satisfy other financial condition tests. The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot guarantee that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.

changes in accounting principles; and other events or factors, including those resulting from informational technology system failures and disruptions, cybersecurity incidents, geopolitical instability, natural disasters, war, acts of terrorism or responses to these events.

The following discussion and analysis is intended to help the reader understand the results of operations and financial condition of First Advantage Corporation and should be read in conjunction with our consolidated financial statements included elsewhere in this Annual Report. The discussion contains forward-looking statements involving risks, uncertainties and assumptions that could cause our results to differ materially from expectations. See “Cautionary Notice Regarding Forward-Looking Statements.” Factors that might cause such differences include those described in Item 1A. “Risk Factors” and elsewhere in this Annual Report.

On October 31, 2024, we completed our acquisition of Sterling, a global provider of technology-enabled background and identity verification services. This strategic acquisition enhancesenhanced our capabilities and expandsexpanded our service offerings, allowing us to deliver a comprehensive hiring and risk management solution that begins with identity verification and extends through criminal background screening, credential verification, drug and health screening, and ongoing risk monitoring.

Together, weWe derive a substantial majority of our revenues from pre-onboarding screening and perform screens inacross over 200 countries and territories, enabling us to serve as a one-stop-shop provider to both multinational companies and growth companies. Our over 80,000 customers are global enterprises, mid-sized companies, and small companies, and our products and solutions are used by personnel in recruiting,Executive humanManagement, resources,Human risk,Resources, compliance,Talent vendorAcquisition, management,Compliance, safety,Risk, Legal, Safety, and/or security.Vendor Management.

Our products are sold both individually and packaged. Our platforms offer flexibility for customers to specify which products to include in their screening package, such as Social Security numbers, criminal records, education and work verifications, sex offender registry, and global sanctions. Generally, our customers order a background screening package or selected combination of screens related to a single individual before they onboard that individual. The type and mix of products and solutions we sell to a customer vary by customer size, their screening requirements, and industry vertical. Therefore, order volumes are not comparable across both customers andor periods. PricingPackage pricing can also vary considerably by customer depending on the product mix in their screening packages, order volumes, screening requirements and preferences, pass-through and third-party out of pocketout-of-pocket costs, and bundling of products.

We enter into contracts with our customers that are typically three years in length. These contracts set forth the general terms and pricing of our products and solutions but generally do not include minimum order volumes or committed order volumes. Additionally, a majority of Sterling’s enterprise customer contracts are exclusive to Sterling or require Sterling to be used as the primary provider. Due to our contract terms and the nature of the background screening industry, we determined our contract terms for ASC 606 purposes to be three years or less. We typically bill our customers at the end of each month and recognize revenues as completed orders are reported or otherwise made available to our customers. Approximately 90% of the criminal searches performed in the United StatesU.S. are completed the same day they are submitted.

We generated revenues of $1,574.4 million for the year ended December 31, 2025, which represents an increase of 83.0% as compared to $860.2 million for the year ended December 31, 2024, which represents an increase of 12.6% as compared to $763.8 million for the year ended December 31, 2023.2024. Approximately 86% of our revenues for the year ended December 31, 20242025 was generated in the U.S., while the remaining 14% was generated abroad. Other than the United States,U.S., no single country accounted for 10% or more of our total revenues for the year ended December 31, 2024.2025.

First Advantage Americas. This segment pertains to our Legacy First Advantage business and performs a variety of background check and compliance services across all phases of the workforce lifecycle from pre-onboarding services to post-onboarding and ongoing monitoring services, covering employees, contractors, contingent workers, tenants, and drivers. We generally classify our service offerings into three categories: pre-onboarding, post-onboarding, and adjacent products. We deliver our solutions across multiple industry verticals in the United States, Canada, and Latin America.

Our results arecontinue impactedto be influenced by our customers’ underlying business performanceperformance, hiring patterns, and hiringworkforce trends,strategies, all of which drive their demand for our background screening and adjacent products.solutions. OurCustomer customers’demand business can beis affected by a variety of macroeconomic and labor‑market factors, including generalhiring velocity, turnover rates, sector‑specific employment trends, and broader economic conditions, hiring velocity and turnover, and other industry-related trends.conditions. We are also exposed to macroeconomic cyclicality, as companies typicallyoften reduce employeehiring, hiringdelay onboarding, and flexiblescale workforcesback incontingent weakerworkforce usage during an economic environments,slowdown, which can negatively impact demand for our products and solutions. Recent trends inCurrent macroeconomic factors, conditions—including inflation,elevated interest rates, recentpersistent declinesinflation, and fluctuations in job openings and hiring activity and job openings, stability of the global banking system, global health crises, global supply chain constraints, and global economic and geopolitical developments, —continue to negatively impactaffect portions of the global economy,economy and create volatilitya inmore thecautious financialposture markets.across many employers.

If the economic uncertainty is sustained or increases, we may experience a negative impact on new business,business generation, customer renewals and overall demand levels, sales and marketing efforts, revenues growth rates, customer deployments, customer collections, product development, or other financial metrics. Any of these factors could harm our business, financial condition, and operating results. Our ability to grow our business will also depend on the long-term strength, diversity, and durability of the verticals that we focus on and rely upon to drive our revenues.

Despite the continuing uncertainty associated with these events,macroeconomic changes, we are confident in the overall long-term health of our business, the strength of our product offerings, and our ability to continue to execute on our strategy and help our customers hire smarterwith confidence and onboardmanage faster.risk across the entire employee lifecycle. Our abilitycontinued tofocus deliveron delivering innovative products and solutions that enhance workplace safety and address evolving compliance risksrequirements hasas well as our diversified customer base have contributed to the durabilitystability of our business and long-term financial results.performance.

We areremain focused on continuing to growexpanding our customer base, particularly with respectparticular toemphasis high-growthon strategic Enterprise customers in attractive industry verticals. In 2024,2025, we performed nearlyover 190200 million screens on behalf of over 80,000 customers, spanning the globe and all major industry verticals. Our customer acquisition strategy dependsrelies on our ability to continue todelivering cost-effectivelyinnovative, offer innovativecomprehensive, and comprehensivecost effective products and solutions,solutions; executeexecuting our verticalized go-to-marketgo‑to‑market strategy,strategy; and maintainmaintaining the strength of our reputationbrand and brand.reputation. New customers typically begin generating revenues within a number of months of executing a contract and increase order volumes over the subsequent three to five monththree-to-five-month period. We believe there issignificant opportunity to continueremains to increasegrow our domestic and international market share,share growby expanding our internationalglobal customer base,base and increaseincreasing adoption andof expansion ofour screening and verification products and solutions.

Our revenue growth depends in revenues dependspart on our ability to sellincrease moresales of products and solutions to existing customers. We typically growexpand ourrevenue revenueswith customers over time with customers as their underlying screening volumes grow and as they roll outdeploy our products and solutions toacross newadditional divisions or geographies, increase our share of wallet share in multi-providermulti‑provider programs, perform more extensive screens, andor purchaseadopt additional products and solutionsofferings such as identity solutions, continuous screening, hiring tax credits, employment eligibility, and fleet solutions. Our Customer Success teams work closely with our customers to further developenhance their screening, compliance, and risk management programs within their organization andand, in doing so, frequently identify opportunities to expandbroaden their relationshipuse withof First Advantage.Advantage Oursolutions. revenueRevenue growth withfrom existing customers is also dependentdepends uponon our ability to retain those customers. WeIn 2025, we achieved a gross retention rate of approximately 96% for 2024.96%.

Our historical margin expansion has been largely driven by increased automation and deployment of RPA and AI technologies in the background screening process, which has increased our speed, efficiency, quality, and operating leverage. Additionally, we have gained operating leverage from efficiencies and managing general and administrative costs. In order to grow profitably, we make strategic investments that generate incremental revenues and enable us to deliver our products and solutions and support our customers in a cost-effective manner. Our ability to innovate and drive future reductions of operating costs through automation and digitization does require up-front investment.

The Company derives revenues from a variety of background screening and adjacent products thatperformed coveracross all phases of the workforce lifecycle from pre-onboarding screening services to post-onboarding and ongoing monitoring services, covering employees, contractors, contingent workers, tenants, and drivers. We generally classify our products and solutions into three major categories: pre-onboarding, post-onboarding, and adjacent products, each of which is enabled by our technologies, proprietary internal databases, and data analytics capabilities. Pre-onboarding products, which comprise the substantial majority of our revenues, span an extensive array of products that customers typically utilize to enhance their applicant evaluation process and support compliance with their workforce onboarding criteria from the time an application is submitted to an applicant’s successful onboarding. Post-onboarding products are comprised of continuous monitoring, re-screening, and other solutions to help our customers keep their end customers, workforces, and other stakeholders safer, more productive, and more compliant. Adjacent products include products that complement our pre-onboarding and post-onboarding solutions such as fleet and vehicle compliance, hiring tax credits and incentives, resident and tenant screening, employment eligibility, and investigative research.

Product and Technology Expense: Consists of salaries and benefits of personnel involved in the maintenance of our technology and its integrations and APIs, product marketing, management of our network and infrastructure capabilities, and maintenance of our information security and business continuity functions. A portion of the personnel costs are related to the development of new products and features that are primarily developed through agile methodologies. TheseCertain of these costs are partially capitalized, and therefore, are partially reflected as amortization expense within the depreciation and amortization cost line item. Product and technology expense also includes third-party costs related to our cloud computing services, software licensing and maintenance, telecommunications, and other data processing functions. We do not allocate depreciation and amortization to product and technology expense.

Selling, General, and Administrative Expense: Consists of sales, customer success, marketing, and general and administrative expenses. Sales, customer success, and marketing expenses consist primarily of employee compensation such as salaries, bonuses, sales commissions, share-based compensation, and other employee benefits for our verticalized sales and customer success teams. General and administrative expenses include travel expenses and various corporate functions including finance, human resources, legal, and other administrative roles, in addition to certain professional service fees and expenses incurred in connection with our IPO and our acquisition of Sterling. We expect our selling, general, and administrative expenses to increase in the short-term, primarily as a result of additional Sterling integration costs. Over the long-term, we expect our selling, general, and administrative expenses to decrease as a percentage of revenues as we leverage our past investments.acquisitions. We do not allocate depreciation and amortization to selling, general, and administrative expenses.

We have a flexible cost structure that allows our business to adjust quickly to the impacts of macroeconomic events and scale to meet the needs of large new customers. Operating expenses are influenced by therevenue amount of revenues,levels, customer and product mix, and productthe mixprogress thatof contributeacquisition-related tointegration our revenues for any given period.activities. As revenues grow, we would generally expect cost of services to grow inproportionally, a similar fashion, albeit influenced byalthough the effectsrate of growth may vary based on automation, productivity,productivity initiatives, efficiency gains, shifts in mix, and otherthird‑party efficiency initiatives as well as customer and product mix shifts and third-party pass-throughpass‑through costs. We regularly review expenses and investments in the context of revenue growthtrends and anyobserved shifts we identifychanges in the business in order to alignensure alignment with our overall financial objectives. While we expect operating expenses to increase in absolute dollars toas we support our continued growth, we believe that, inover the long term, operating expenses as a percentage of total revenues will gradually decline graduallyas inwe scale the future as our business growsand andadvance our operating efficiency and automation initiatives continue to advance.initiatives.

Interest expense, net: Relates primarily to our debt service costs, the interest-related unrealized gains and losses of our interest rate derivative instruments and, to a lesser extent, the interest on our finance lease obligations and the amortization of deferred financing costs. Additionally, interest expense, net includes interest income earnings on our cash and cash equivalent balances held in interest-bearing accounts. We also earn interest income on our short-term investments which are fixed-time deposits having a maturity date within twelve months.

Provision for income taxes consists of U.S. domestic and foreign corporate income taxes related to earnings from our sale of services,earnings, with applicable statutory tax rates that differvarying by jurisdiction. Our effective tax rate may be affected by many other factors including changes in tax laws, regulationsregulations, or statutory rates, regulatory guidance, or new administrative interpretations of existingjudicial lawsdecisions, or regulations,and shifts in the allocationproportion of income earned throughoutin jurisdictions with differing statutory tax rates. As our business continues to expand globally, the world,distribution of pretax income across domestic and foreign jurisdictions may fluctuate, resulting in volatility in our effective tax rate. Additionally, the effective tax rate may also be affected by the availability of tax credits and incentives, nondeductible expenses, changes in overallvaluation levelsallowances, and the resolution of uncertain tax positions. These factors, individually or collectively, may cause our provision for income beforetaxes tax.and effective tax rate to differ materially from period to period.

a $4.5 million increase in Legacy First Advantage personnel expenses as a result of increased share-based compensation expense and additional investments made to enhance our product, solutions, and technology platform; andand, a $1.6 million increase in professional service fees.

The following discussion and analysis of First Advantage Corporation’s financial condition and results of operations is provided as a supplement to the condensed consolidated financial statements for the three and six months ended MarchJune 31,30, 2026, and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2025, our “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.2025 (the “2025 Annual Report”), filed with the Securities and Exchange Commission (the “SEC”).

For additional information on these and other factors that could cause First Advantage’s actual results to differ materially from expected results, please see our 2025 Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”),Report, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Form 10-Q, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.

We generated revenues of $385.2$448.8 million for the three months ended MarchJune 31,30, 2026, as compared to $354.6$390.6 million for the three months ended MarchJune 31,30, 2025 and generated revenues of $834.0 million for the six months ended June 30, 2026, as compared to $745.2 million for the six months ended June 30, 2025. Approximately 86%88% of our revenues for the three months ended MarchJune 31,30, 2026 was generated in the United States, while the remaining 14%12% was generated abroad. Approximately 87% of our revenues for the six months ended June 30, 2026 was generated in the United States, while the remaining 13% was generated abroad. Other than the United States, no single country accounted for 10% or more of our total revenues for the three and six months ended MarchJune 31,30, 2026. Please refer to “Results of Operations” for further details.

First Advantage International. The First Advantage International segment pertains to our Legacy First Advantage business and provides services similar to our Americas segment in regions outside of the Americas. We primarily deliver our solutions across multiple industry verticals in the Europe, India, and Asia Pacific.

We experience seasonality with respect to certain industries due to fluctuations in hiring volumes and other economic activity. For example, pre-onboarding revenues generated from our customers in the retail and transportation industries are historically highest during the months of October and November, leading up to the U.S. holiday season and lowest in December and at the beginning of the new year, following the U.S. holiday hiring season. Certain customers across various industries also historically increase their hiring throughout the second quarter of the year as winter concludes, and the school year ends, giving rise to student and graduate hiring, and increased commercial activity tied to outdoor activities. As a result, we have a mostly balanced revenue distribution across the second, third, and fourth quarters each year and a seasonal low in the first quarter. We expect that changes in consumer behavior, labor market conditions, technological innovation, and broader macroeconomic factors may impact future seasonality, but we are unable to predict these potential shifts and their impact to our business.

Macroeconomic conditions during the yearperiod have continued to be volatile. While parts of the global economy have demonstrated resilience,resiliency and growth, employers continue to operate in an environment partially characterized by elevateduncertain interest rates, inflationary pressure driven in part by higher energy and transportation costs, and uneven hiring activity across industries and geographies. Recent geopolitical developments, including ongoing conflictconflicts in the Middle East and resulting disruptions to global energy markets, have contributed to renewed inflation concerns, higher operating costs for many businesses, and increased uncertainty in planning and investment decisions. In addition, continued uncertainty surrounding global trade and tariff policies, shifting supply‑chain strategies, and evolving regulatory and compliance requirements have contributed to cautious employer behavior, particularly among customers with international operations or exposure to cyclical end markets.

Heightened geopolitical tensions, regional conflicts, and policy uncertainty have increased variability in customer hiring plans and workforce strategies. These conditions have resulted in slower decision‑making, increased cost scrutiny, and greater focus on operational efficiency, including the pace and scale of new hiring initiatives. If the economic uncertainty is sustained or increases, we may experience a negative impact on new business generation, customer renewals andrenewals, overall demand levels, sales and marketing efforts, revenues growth rates, customer deployments, customer collections, product development, or other financial metrics. Any of these factors could harm our business, financial condition, and operating results. Our ability to grow our business will also depend on the long-term strength, diversity, and durability of the verticals that we focus on and rely upon to drive our revenues.

Despite these macroeconomic changes,conditions, we areremain confident in the overall long-term health of our business, the strength of our product offerings, and our ability to continue to execute on our strategy and help our customers hire with confidence and manage risk across the entire employee lifecycle. Our continued focus on delivering innovative solutions that enhance workplace safety and address evolving compliance requirements as well as our diversified customer base have contributed to the stability of our business and long-term financial performance.

For additional information, see our “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”).Report.

Comparison of Results of Operations for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025

Revenues were $385.2$448.8 million for the three months ended MarchJune 31,30, 2026, compared to $354.6$390.6 million for the three months ended MarchJune 31,30, 2025. Revenues for the three months ended MarchJune 31,30, 2026 increased by $30.6$58.1 million, or 8.6%,14.9%, compared to the three months ended MarchJune 31,30, 2025.

a net increase of $15.4$41.6 million, or 4.4%10.6% from existing customer revenues, primarily driven by continued strength from upselling and cross-selling initiatives as well as increased volumes from existing customers, which were offset by the impact of of lost accounts; and revenues of $15.2$16.6 million, or 4.3%,4.2%, from new customers, primarily attributable to our First Advantage Americas and Sterling segments.

Cost of services was $211.4$244.8 million for the three months ended MarchJune 31,30, 2026, compared to $192.6$207.8 million for the three months ended MarchJune 31,30, 2025. Cost of services for the three months ended MarchJune 31,30, 2026 increased by $18.8$36.9 million, or 9.8%,17.8%, compared to the three months ended MarchJune 31,30, 2025.

Cost of services as a percentage of revenues was 54.9%54.5% for the three months ended MarchJune 31,30, 2026, compared to 54.3%53.2% for the three months ended MarchJune 31,30, 2025. The cost of services percentage of revenues for the firstsecond quarter of 2026 was impacted by product and customer mix and increases in third party costs.

Product and technology expense was $24.6$27.3 million for the three months ended MarchJune 31,30, 2026, compared to $27.2$25.7 million for the three months ended MarchJune 31,30, 2025. Product and technology expense for the three months ended MarchJune 31,30, 2026 decreasedincreased by $2.6$1.6 million, or 9.4%,6.2%, compared to the three months ended MarchJune 31,30, 2025.

The increase in product and technology expense was primarily due to a $2.0$2.8 million decreaseincrease in softwarepersonnel expenses asand asoftware result of integration effortscosts related to thecontinued acquisitioninvestments ofin Sterling;our products, solutions and technology platforms. The increase was offset by a $0.7$1.3 million decrease in professional services costs from non-recurring integration activities incurred in the prior year.

Selling, general, and administrative expense was $53.5$57.8 million for the three months ended MarchJune 31,30, 2026, compared to $65.6$57.5 million for the three months ended MarchJune 31,30, 2025. Selling, general, and administrative expense for the three months ended MarchJune 31,30, 2026 decreasedincreased by $12.1$0.3 million, or 18.5%,0.6%, compared to the three months ended MarchJune 31,30, 2025.

a $4.2$4.9 million decrease in share-based compensation expense, primarily due to Sterling equity awards converted to First Advantage equity awards in connection with the October 2024 acquisition becoming fully vested; and a $3.4 million decrease in bonus expense, primarily driven by lower cash compensation related to Sterling equity awards converted to cash awards in connection with the October 2024 acquisition becoming fully vested.

These decreases were partially offset by a $5.2 million loss on the sale of assets related to an adjacent product during the threesix months ended MarchJune 31,30, 2026, which did not constitute a sale of a business or discontinued operations.

Depreciation and amortization was $62.2$124.1 million for the threesix months ended MarchJune 31,30, 2026, compared to $61.7$123.6 million for the threesix months ended MarchJune 31,30, 2025. Depreciation and amortization for the threesix months ended MarchJune 31,30, 2026 increased by $0.5 million, or 0.8%,0.4%, compared to the threesix months ended MarchJune 31,30, 20252025, primarilyremaining duerelatively toflat assets placed in service since March 31, 2025.year-over-year.

Interest expense, net was $29.8$31.6 million for the three months ended MarchJune 31,30, 2026, compared to $46.6$44.8 million for the three months ended MarchJune 31,30, 2025. Interest expense, net for the three months ended MarchJune 31,30, 2026 decreased by $16.7$13.2 million or 35.9%,29.4%, compared to the three months ended MarchJune 31,30, 2025.

Loss on extinguishment of debt for the three and six months ended MarchJune 31,30, 2026 relates to the write-off of unamortized deferred financing costs as a result of voluntary principal repayments of $25.0 million and $50.0 million during the three and six months ended June 30, 2026, respectively, on the Company’s outstanding term loan facility.

Our provision (benefit) for income taxes was $1.1$8.1 million for the three months ended MarchJune 31,30, 2026, compared to $2.2$(7.6) million for the three months ended MarchJune 31,30, 2025. Our provision for income taxes for the three months ended MarchJune 31,30, 2026 decreasedincreased by $1.1$15.8 million, compared to the three months ended MarchJune 31,30, 2025.

The decreaseincrease in ourthe provision for income taxes was primarily due to thehigher jurisdictional mix ofpre-tax earnings and lower non-deductible share-based compensation during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025.2025, during which the Company reported a pre-tax loss.

NetOur provision (benefit) for income (loss)taxes was $2.2$9.3 million for the threesix months ended MarchJune 31,30, 2026, compared to $(41.25.4) million for the threesix months ended MarchJune 31,30, 2025. NetOur provision for income taxes for the threesix months ended MarchJune 31,30, 2026 increased by $43.4$14.7 millionmillion, compared to the threesix months ended MarchJune 31,30, 2025.

Net income (loss) margin was 0.6%$16.9 million for the three months ended MarchJune 31,30, 2026, compared to (11.6)%$0.3 million for the three months ended MarchJune 31,30, 2025. The improvement in our netNet income marginfor wasthe primarilythree attributablemonths ended June 30, 2026 increased by $16.6 million compared to increasedthe revenues,three ourmonths abilityended toJune leverage30, operational efficiencies to control overall expenses, and lower interest expense.2025.

Adjusted EBITDA was $105.3$128.5 million for the three months ended MarchJune 31,30, 2026 and represented an Adjusted EBITDA Margin of 27.3%.28.6%. Adjusted EBITDA was $92.1$113.9 million for the three months ended MarchJune 31,30, 2025 and represented an Adjusted EBITDA Margin of 26.0%.29.2%. Adjusted EBITDA for the three months ended MarchJune 31,30, 2026 increased by $13.2$14.6 million, or 14.3%,12.8%, compared to the three months ended MarchJune 31,30, 2025. Growth in Adjusted EBITDA was driven primarily fromby revenues growth attributed tofrom new and existing customerscustomers, partially offset by continued investments in our products, solutions and margintechnology expansionplatforms, attributedand tochanges costin efficiencies.revenue and customer mix.

Share-based compensation for the three and six months ended MarchJune 31,30, 2026 and 2025 includes approximately $0.6$0.1 million and $1.9$0.6 million, respectively, of incrementally recognized expense associated with the May 2023 modification of the vesting terms of outstanding unvested and unearned performance-based options, restricted stock units, and restricted stock awards. Share-based compensation for the three and six months ended June 30, 2025 includes approximately $1.8 million and $3.8 million, respectively, of incrementally recognized expense associated with the May 2023 modification of the vesting terms of outstanding unvested and unearned performance-based options, restricted stock units, and restricted stock awards.

Represents charges incurred related to acquisitions and similar transactions, primarily consisting of change in control-related costs, professional service fees, and other third-party costs. Transaction and acquisition related charges for the three and six months ended MarchJune 31,30, 2026 and 2025 include approximately $0.2$0.3 million and $3.8$0.5 million, respectively, of expense associated with the Sterling Acquisition. Transaction and acquisition related charges for the three and six months ended June 30, 2025 include approximately $2.3 million and $6.1 million, respectively, of expense associated with the Sterling Acquisition.

Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to nonrecurring legal exposures, foreign currency (gains) losses, (gains) losses on the sale of assets, and other non-recurring items. Integration, restructuring, and other charges for the three and six months ended MarchJune 31,30, 2026 and 2025 include approximately $1.4$2.2 million and $7.8$3.6 million, respectively, of expense associated with the integration of Sterling. Integration, restructuring, and other charges for the three and six months ended June 30, 2025 include approximately $3.7 million and $11.6 million, respectively, of expense associated with the integration of Sterling.

Adjusted Net Income was $45.1$61.4 million for the three months ended MarchJune 31,30, 2026, compared to $30.5$47.0 million for the three months ended MarchJune 31,30, 2025. Adjusted Net Income for the three months ended MarchJune 31,30, 2026 increased by $14.6$14.5 million, or 48.0%30.8% compared to the three months ended MarchJune 31,30, 2025.

Adjusted Diluted Earnings Per Share was $0.26$0.35 for the three months ended MarchJune 31,30, 2026, compared to $0.17$0.27 for the three months ended MarchJune 31,30, 2025. Adjusted Diluted Earnings Per Share for the three months ended MarchJune 31,30, 2026 increased by $0.09,$0.08, or 52.9%29.6% compared to the three months ended MarchJune 31,30, 2025.