Background screening provider First Advantage (NASDAQ: FA) reported Q1 CY2026 results topping the market’s revenue expectations, with sales up 8.6% year on year to $385.2 million. The company expects the full year’s revenue to be around $1.66 billion, close to analysts’ estimates. Its non-GAAP profit of $0.26 per share was 25.2% above analysts’ consensus estimates.

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“Continuing our positive momentum from 2025, we generated exceptional financial results in the first quarter, with year-over-year revenue growth of 8.6%. Our sales engine is clearly humming. Our verticalized go-to-market strategy and diversified customer base, with our focus on enterprise customers, have enabled us to consistently outpace broader hiring market trends. We are seeing positive momentum across key verticals including retail & e-commerce, transportation & logistics, and gig economy, and are continuing to deliver upsell, cross-sell, and new logo wins through our innovative solutions, while also maintaining our high customer retention rate of 97%. Spanning across the employee lifecycle, our comprehensive solutions, including Digital Identity, continue to resonate with customers and open up meaningful growth opportunities,” said Scott Staples, Chief Executive Officer.

Company Overview

Processing over 200 million screens annually across more than 200 countries and territories, First Advantage (NASDAQ: FA) provides employment background screening, identity verification, and compliance solutions to help companies manage hiring risks.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $1.61 billion in revenue over the past 12 months, First Advantage is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, First Advantage’s 24.8% annualized revenue growth over the last five years was incredible. This shows it had high demand, a useful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. First Advantage’s annualized revenue growth of 45.5% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, First Advantage reported year-on-year revenue growth of 8.6%, and its $385.2 million of revenue exceeded Wall Street’s estimates by 3.5%.

Looking ahead, sell-side analysts expect revenue to grow 5.1% over the next 12 months, a deceleration versus the last two years. Still, this projection is above average for the sector and implies the market is baking in some success for its newer products and services.

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Adjusted Operating Margin

First Advantage’s adjusted operating margin has been trending up over the last 12 months and averaged 12.8% over the last five years. Its solid profitability for a business services business shows it’s an efficient company that manages its expenses effectively.

Analyzing the trend in its profitability, First Advantage’s adjusted operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, First Advantage generated an adjusted operating margin profit margin of 9.9%, up 1.3 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

First Advantage’s full-year EPS grew at a weak 1.6% compounded annual growth rate over the last four years, worse than the broader business services sector.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

First Advantage’s EPS grew at an unimpressive 7.4% compounded annual growth rate over the last two years, lower than its 45.5% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Diving into the nuances of First Advantage’s earnings can give us a better understanding of its performance. A two-year view shows First Advantage has diluted its shareholders, growing its share count by 21.8%. This has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q1, First Advantage reported adjusted EPS of $0.26, up from $0.17 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects First Advantage’s full-year EPS of $1.13 to grow 11.9%.

Key Takeaways from First Advantage’s Q1 Results

It was good to see First Advantage beat analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $12.80 immediately after reporting.

Is First Advantage an attractive investment opportunity right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).