First Advantage's Q2 2025: Navigating Contradictions in Growth Assumptions, International Performance, and GenAI Impact

Base growth assumptions and market perceptions, international growth performance, economic uncertainty and market conditions, digital identity progress and revenue metrics, and GenAI impact on hiring are the key contradictions discussed in First Advantage's latest 2025Q2 earnings call.



Revenue Performance and Growth Algorithms:
- First Advantage reported revenue of $391 million for Q2 2025, up 1.5% year-on-year on a pro forma basis.
- The growth was driven by strong sales engine performance and increased scale, particularly in upsell, cross-sell, and new logo initiatives, which contributed to a 9% revenue growth in the quarter.

Synergy Realization and Profitability Improvements:
- The company achieved $18 million of synergy realization in Q2 2025, with a total of $47 million realized since the acquisition.
- This contributed to improved adjusted EBITDA margins of 29.2%, a 270 basis point improvement from the prior year, and increased adjusted diluted EPS by 29%.

International and Vertical Market Dynamics:
- International business saw 7.2% growth in Q2, with particular strength in Australia and the U.K.
- The transportation vertical was resilient despite some macro-related slowing, leveraging upsell and cross-sell initiatives, while retail and e-commerce faced a decline in order volumes.

Client Retention and Strategic Focus:
- The company maintained a high retention rate of over 96%, reflecting strong customer-centric focus.
- This retention was supported by the integration of Sterling's services and products, enhancing customer experiences and expanding product offerings, such as the CLICK, CHAT, CALL customer care solution.