First Advantage Holdings Inc. (FA) said its digital identity business is driving growth as the market expands, according to comments made at the Barclays 11th Annual Global Credit Data & Analytics Forum on Thursday.
Shares of the Chandler, Arizona-based company traded near $20.68, giving a six-month return of about 78%. The stock has a price-to-earnings ratio of roughly 143 times and a market capitalization of $3.53 billion, according to InvestingPro data.
For the second quarter, revenue grew 15% year-over-year. Base growth accelerated to 6.7%, with underlying base growth excluding customer initiatives estimated at 3.0% to 3.5%. Combined new-customer, upsell and cross-sell growth reached 12.5%. Adjusted EBITDA margin came in at 28.6%, ahead of expectations. Operating cash flow was about $75 million.
Enterprise new-logo bookings rose to 20 in the period from 17 a year earlier. Customer retention held between 96% and 97%.
Management estimated the total addressable market for digital identity at about $10 billion. Post-acquisition of Sterling, First Advantage holds roughly 25% to 30% share in its core screening market, leaving 70% to 75% as untapped opportunity, the company said.
First Advantage processes more than 200 million screens annually and maintains more than 1 billion proprietary criminal, employment and education records. Criminal-background-check automation reached 70% to 75% touchless processing. The firm has established more than 100 integrations with leading applicant-tracking and human-capital-management platforms and operates in 200 countries and territories, with specific momentum noted in the United Kingdom, EMEA, Australia and India.
On the balance sheet, leverage stood at 3.7 times. The company said it repaid $166 million of debt following the Sterling acquisition and intends to work toward a long-term leverage range of 2.0 to 3.0 times.
Under a $100 million share-repurchase authorization, First Advantage bought back nearly $40 million of stock at an average price below $12. Analysts forecast earnings of $1.29 per share for fiscal 2026.
Management reiterated a long-term adjusted EBITDA margin target of 31% to 32%.
