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It fails to meet revenue expectations and reports a net loss

  • Income: The reported amount was $169.4 million, lower than the estimated $186.67 million.

  • Net loss: It reported a net loss of $2.9 million, well below its estimated net profit of $31.47 million.

  • Adjusted net income: It achieved $24.8 million, contrasting with the GAAP net loss and exceeding analyst expectations for net income.

  • Adjusted EBITDA: It achieved $46.6 million, demonstrating operational efficiency despite the revenue shortfall.

  • Adjusted diluted EPS: The valuation was $0.17, lower than the estimate of $0.22 per share.

  • Cash flow: USD 38.3 million was generated from operating activities, demonstrating strong cash generating capacity.

  • Conductivity: Full-year 2024 revenue guidance of $750 million to $800 million and adjusted EPS of $0.88 to $0.98 were confirmed.

On May 9, 2024, First Advantage Corp (NASDAQ:FA), a leader in background screening and verification solutions, disclosed its financial results for the first quarter ended March 31, 2024 in an 8-K filing. The company reported a decline in revenue and a net loss, attributing significant costs to its ongoing acquisition of Sterling Check Corp.

First Advantage Corp (FA) Q1 2024 Results: Misses Revenue Expectations and Reports Net LossFirst Advantage Corp (FA) Q1 2024 Results: Excludes Revenue Expectations and Reports Net Loss

First Advantage Corp (FA) Q1 2024 Results: Excludes Revenue Expectations and Reports Net Loss

Informations about company

First Advantage Corp operates primarily through two segments: Americas and International. The company offers a range of technology solutions in the areas of control, verification, security and compliance. It generates most of its revenues in the Americas by providing services that help manage risk and facilitate talent hiring.

Financial result

The company reported revenue of $169.4 million for the first quarter of 2024, down 3.5% from $175.5 million in the same quarter last year, lower than the estimate of $186.67 million. Net loss was $2.9 million compared to net income of $1.9 million in the first quarter of 2023. This loss includes $11.1 million in costs related to the Sterling acquisition. Adjusted net income was $24.8 million and adjusted EBITDA was $46.6 million.

Strategic development and management commentary

CEO Scott Staples highlighted strategic initiatives including the adoption of generative artificial intelligence and machine learning and the development of new solutions such as RightID to prevent identity fraud. “We achieved first quarter financial results or above those we reported on our fourth quarter earnings call…,” Staples said. He also noted progress with the acquisition of Sterling to enhance its service offerings.

David Gamsey, executive vice president and chief financial officer, reaffirmed full-year 2024 guidance, expecting revenue of $750 million to $800 million and adjusted EBITDA of $228 million to $248 million. The guidance reflects expectations of stable macroeconomic conditions and a potential recovery towards the end of the year.

Financial condition and future prospects

As of March 31, 2024, First Advantage had $245.4 million in cash and equivalents and total debt of $564.7 million. During the quarter, the company generated operating cash flow of $38.3 million. The ongoing integration with Sterling is expected to drive future growth and operational synergies.

The company’s performance this quarter reflects challenges related to significant acquisition-related expenses impacting net earnings. However, confirmed guidance and strategic initiatives demonstrate management’s confidence in the company’s direction and operational stability.

Information for investors and analysts

First Advantage will host a conference call to discuss first quarter 2024 results and provide further details on its strategic initiatives and financial condition. The invitation aims to provide investors and analysts with insight into the company’s operations and future plans.

For detailed financial data and future updates, interested parties are encouraged to refer to white papers and announcements directly from First Advantage.

Read the full publication on earnings of PLN 8,000. (here) from First Advantage Corp for more details.

This article first appeared on GuruFocus.