First Advantage’s third quarter results were well received by the market, reflecting continued momentum despite a persistently flat hiring environment. Management attributed the company’s outperformance to strong execution in upsell, cross-sell, and new customer wins, particularly within retail and logistics segments, supported by the successful integration of Sterling. CEO Scott Staples emphasized that retention improved to 97% as the company’s technology and vertical expertise resonated with clients, while operational efficiencies and automation contributed to higher margins.

Is now the time to buy FA? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From First Advantage’s Q3 Earnings Call

• Ashish Sabadra (RBC Capital Markets) probed the sustainability of new logo and upsell momentum; CFO Steven Marks said Q4 contributions should match or exceed historical levels, with a robust late-stage pipeline.
• Andrew Steinerman (JPMorgan) asked about the risk of AI disintermediating traditional screening; CEO Scott Staples replied that AI is more likely to enhance their offerings, especially around identity verification, rather than replace them.
• Andrew Nicholas (William Blair) questioned whether guaranteed minimums in contracts will become standard; Staples said this approach will be expanded to new wins and renewals, supporting future revenue visibility.
• Ronan Kennedy (Barclays) followed up on macro headwinds and synergy timing; Marks stated that synergies should accrue steadily over the next year, with deleveraging on track and no major enterprise hiring slowdown observed.
• Jeffrey Silber (BMO) asked what is driving improved retention; Staples credited deep industry expertise, enhanced tech integration, and a customer-centric approach as key factors.

Catalysts in Upcoming Quarters

In the coming quarters, our team will closely monitor (1) the pace at which Digital Identity adoption translates into tangible upsell and retention gains, (2) the realization and impact of remaining Sterling integration synergies on margins and leverage, and (3) the consistency of hiring volumes across key verticals amid macro uncertainty. Additionally, how new contract structures with guaranteed minimums spread to other major clients will be an important signpost for business stability.

First Advantage currently trades at $13.35, up from $12.91 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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