First Advantage Corporation reported its financial results for the third quarter and the first nine months of 2024, revealing a decline in revenue and profitability compared to the same periods in 2023. For the three months ended September 30, 2024, revenues totaled $199.1 million, a slight decrease of $1.2 million (0.6%) from $200.4 million in Q3 2023. For the nine months ended September 30, 2024, revenues were $553.1 million, down $8.1 million (1.4%) from $561.2 million in the prior year. The decrease in revenue was primarily attributed to a net decline of $9.3 million (4.7%) in existing customer revenues, influenced by macroeconomic factors affecting the hiring industry. However, new customer revenues and contributions from the acquisition of Infinite ID partially offset these declines.

Operating expenses increased significantly, with total operating expenses for Q3 2024 reaching $190.0 million, up from $177.2 million in Q3 2023. For the nine-month period, operating expenses rose to $534.8 million from $509.1 million. This increase was driven by higher selling, general, and administrative expenses, which surged by 52.4% in Q3 2024, largely due to professional service and legal fees related to the acquisition of Sterling Check Corp., as well as increased share-based compensation.

The company reported a net loss of $(8.9) million for Q3 2024, a stark contrast to a net income of $10.8 million in Q3 2023. For the nine months ended September 30, 2024, the net loss was $(9.9) million, compared to a net income of $22.5 million in the same period of 2023. Adjusted EBITDA for Q3 2024 was $64.0 million, down from $64.8 million in Q3 2023, while for the nine months, it decreased to $166.4 million from $169.3 million.

As of September 30, 2024, First Advantage had $307.4 million in cash and cash equivalents, an increase from $213.8 million at the end of 2023. The company’s total assets rose to $1.66 billion, while total equity increased to $920.7 million. Long-term debt remained relatively stable at $559.8 million.

Strategically, First Advantage completed the acquisition of Sterling Check Corp. on October 31, 2024, for approximately $2.2 billion, financed through cash and the issuance of new debt and common stock. This acquisition is expected to enhance the company’s service offerings and market position. Additionally, the company acquired Infinite ID in September 2023 for $41 million, expanding its portfolio of identity solutions.

Overall, First Advantage is navigating a challenging economic landscape while pursuing strategic growth through acquisitions, although recent financial results reflect the impact of macroeconomic conditions on its operations.