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8-K
False000121067700012106772026-11-052026-11-05

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 5, 2026

 

 

First Advantage Corporation

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-31666

84-3884690

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

1 Concourse Parkway NE

Suite 200

 

Atlanta, Georgia

 

30328

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (678) 868-4151

 

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common Stock, $0.001 par value per share

 

FA

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐

 

Item 2.02. Results of Operations and Financial Condition.

On November 5, 2026, First Advantage Corporation issued a press release announcing its financial results for the quarter ended September 30, 2026. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

The information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated by specific reference in any such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.

 

Description

99.1

 

Press Release of First Advantage Corporation dated November 5, 2026.

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

FIRST ADVANTAGE CORPORATION

 

 

 

 

Date:

November 5, 2026

By:

/s/ Steven Marks

 

 

 

Name: Steven Marks
Title: Executive Vice President & Chief Financial Officer

 
EX-99.1

 

Exhibit 99.1

https://cdn.kscope.io/69d09718777e006033a077bc8232ab3b-img219211210_0.gif


 

First Advantage Reports Third Quarter 2026 Results

Delivers Double-Digit Revenue Growth and Raises Full Year 2026 Guidance

Third Quarter 2026 Highlights1

•
Revenues of $465.8 million (13.8% growth year-over-year)
•
Net income of $20.5 million (4.4% margin); Diluted net income per share of $0.12
•
Adjusted EBITDA of $136.5 million (29.3% margin)
•
Adjusted Net Income of $67.3 million; Adjusted Diluted Earnings Per Share of $0.38
•
Cash Flows from Operations of $63.8 million

Acquisition of Data Diver Technologies

•
Announced today the acquisition of Data Diver Technologies, LLC (“Data Diver Technologies”), a data platform leveraging AI and automation

Raising Full Year 2026 Guidance

•
Raising full year 2026 guidance ranges to Revenues of $1.720 billion to $1.745 billion, Adjusted EBITDA of $488 million to $498 million, Adjusted Net Income of $227 million to $232 million, and Adjusted Diluted Earnings Per Share of $1.30 to $1.332

ATLANTA, November 5, 2026 – First Advantage Corporation (NASDAQ: FA), a global software and data company, today announced financial results for the third quarter ended September 30, 2026.

Key Financials

(Amounts in millions, except per share data and percentages)

 

 

Three Months Ended September 30,

 

2026

 

 

2025

 

 

Change

 

Revenues

$

465.8

 

 

$

409.2

 

 

 

13.8

%

Net income

$

20.5

 

 

$

2.6

 

 

NM

 

Net income margin

 

4.4

%

 

 

0.6

%

 

NA

 

Diluted net income per share

$

0.12

 

 

$

0.01

 

 

NM

 

Adjusted EBITDA1

$

136.5

 

 

$

118.5

 

 

 

15.2

%

Adjusted EBITDA Margin1

 

29.3

%

 

 

29.0

%

 

NA

 

Adjusted Net Income1

$

67.3

 

 

$

52.3

 

 

 

28.6

%

Adjusted Diluted Earnings Per Share1

$

0.38

 

 

$

0.30

 

 

 

26.7

%

1 Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share are non-GAAP measures. Please see the end of this earnings release for definitions and schedules with reconciliations of these measures to their most directly comparable respective GAAP measures.

Note: "NA" indicates not applicable information; "NM" indicates not meaningful information.

 

 

“We delivered another quarter of outstanding performance, highlighted by nearly 14% revenue growth, increasing margins, strong cash flow, and robust earnings per share growth. Our results reflected sustained positive momentum across our revenue growth algorithm, with continued excellent base growth, solid new logo contribution, successful upsell and cross-sell activity, and consistently high retention. We continue to see broad-based growth across our diverse, balanced verticals, with strong performance from nearly every vertical in our Americas business. Our AI-enabled products continue to be key differentiators as we help our customers mitigate human capital risks and prevent fraud. Our go-to-market momentum and pipeline remain strong as we approach 2027,” said Scott Staples, Chief Executive Officer.

“On October 31, we celebrated the two-year anniversary of closing the Sterling acquisition. We are executing well and realizing benefits far exceeding our original expectations. Today, we are a larger, stronger, and more diversified company, offering customers a broader portfolio of best-of-breed technologies and products backed by greater scale and innovation capabilities. As a result, we have strengthened our market position, expanded our growth opportunities, and enhanced our ability to create long-term value for shareholders,” Staples added.

Acquisition of Data Diver Technologies

“In addition, today we are excited to announce our acquisition of Data Diver Technologies, a data platform leveraging AI and automation that collects, aggregates, retains, and delivers high-volume criminal and court records, further supporting our strategy of delivering fast, accurate, and automated screening results for our customers. This acquisition aligns squarely with our focus on investing in data and technology assets to help our customers make decisions faster and mitigate risk, while enhancing our proprietary data and automation capabilities and creating new opportunities to expand our solutions and drive product innovation. This acquisition represents another important step in advancing our FA 5.0 growth strategy,” Staples concluded.

The related press release is available on First Advantage’s investor relations website.

Raising Full Year 2026 Guidance

“This quarter, we continued to progress on our synergy program for the Sterling acquisition and expect to finish the year near or at the top end of our run rate synergy target range, underscoring the ongoing success of our integration efforts. Looking forward, our focus is on driving continued operational efficiencies, supporting product innovation, and translating the benefits of the combination into sustained growth, margin expansion, and cash flow generation. While deleveraging remains a high priority for capital allocation, as evidenced by our $45 million debt prepayment during the quarter, our consistent cash flow provides us flexibility for disciplined, strategic capital deployment, including the Data Diver Technologies acquisition, to complement our organic growth objectives and drive incremental shareholder returns,” said Steven Marks, Chief Financial Officer. “We remain confident in our ability to deliver consistent profitable growth. Based on our strong performance through the first three quarters of the year and our expectations for the fourth quarter, we are raising our guidance ranges for the full year, with the low end of our updated guidance ranges now exceeding the high end of our prior guidance ranges across every metric.”

The following table summarizes our updated full year 2026 guidance.

Updated Guidance

As of November 5, 2026

Prior Guidance

As of August 6, 2026

Revenues

$1,720 million – $1,745 million

$1,670 million – $1,710 million

Adjusted EBITDA2

$488 million – $498 million

$472 million – $486 million

Adjusted Net Income2

$227 million – $232 million

$214 million – $225 million

Adjusted Diluted Earnings Per Share2

$1.30 – $1.33

$1.23 – $1.29

2 A reconciliation of the foregoing guidance for the non-GAAP metrics of Adjusted EBITDA and Adjusted Net Income to GAAP net income and Adjusted Diluted Earnings Per Share to GAAP diluted net income per share cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a material impact on its future GAAP financial results.

Actual results may differ materially from First Advantage’s full year 2026 guidance as a result of, among other things, the factors described under “Forward-Looking Statements” below.

 

 

Conference Call and Webcast Information

First Advantage will host a conference call to review its third quarter 2026 results today, November 5, 2026, at 8:30 a.m. ET.

To participate in the conference call, please dial 800-579-2543 (domestic) or 785-424-1789 (international) approximately ten minutes before the 8:30 a.m. ET start. Please mention to the operator that you are dialing in for the First Advantage third quarter 2026 earnings call or provide the conference code FA3Q26. The call will also be webcast live on the Company’s investor relations website at https://investors.fadv.com under the “News & Events” and then “Events & Presentations” section, where related presentation materials will be posted prior to the conference call.

Following the conference call, a replay of the webcast will be available on the Company’s investor relations website, https://investors.fadv.com. Alternatively, the live webcast and subsequent replay will be available at https://event.on24.com/wcc/r/5508610/155836F5FA3B3D924EF9669941EDE522.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. These forward-looking statements relate to matters such as our industry, business strategy, goals, and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources, and other financial and operating information. In some cases, you can identify these forward-looking statements by the use of words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” “target,” “guidance,” the negative version of these words, or similar terms and phrases.

These forward-looking statements are subject to various risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Such risks and uncertainties include, but are not limited to, the following:

•
adverse changes in external events beyond our control, including our customers’ onboarding volumes, economic drivers which are sensitive to macroeconomic cycles, such as interest rate volatility and inflation, geopolitical unrest, global trade disputes, uncertainty in financial markets, and changes in tax laws;
•
our operations in a highly regulated industry and the fact that we are subject to numerous and evolving laws and regulations, including with respect to personal data, data security, and artificial intelligence ("AI");
•
failure to identify attractive acquisition targets and strategic partnerships, successfully complete proposed business combination transactions or realize the expected benefits of such transactions;
•
our inability to identify and successfully implement our growth strategies on a timely basis or at all;
•
potential harm to our business, brand, and reputation as a result of security breaches, cyber-attacks, social, ethical, and legal issues relating to the use of new and evolving technologies, employee or other internal misconduct, computer viruses, or the mishandling of personal data;
•
operating in a penetrated and competitive market;
•
our reliance on third-party data providers;
•
our sales to government entities and higher-tier contractors to governmental customers which involve unique competitive, procurement, budget, administrative and contractual risks;
•
due to the sensitive and privacy-driven nature of our products and solutions, we could face liability and legal or regulatory proceedings, which could be costly and time-consuming to defend and may not be fully covered by insurance;
•
our international business exposes us to a number of risks;
•
real or perceived errors, failures, or bugs in our products could adversely affect our business, results of operations, financial condition, and growth prospects;

 

 

•
failure to comply with anti-corruption, economic and trade sanctions, and anti-money laundering laws and regulations;
•
disruptions at our Operation Centers of Excellence and other operational sites;
•
our contracts with our customers, which do not guarantee exclusivity or contracted volumes;
•
the timing, manner and volume of repurchases of common stock pursuant to our share repurchase program;
•
disruptions, outages, or other errors with our technology and network infrastructure, including our data centers, servers, and third-party cloud and internet providers and our migration to the cloud;
•
the continued integration of our platforms and solutions with human resource providers such as applicant tracking systems and human capital management systems as well as our relationships with such human resource providers;
•
risks relating to public opinion, which may be magnified by incidents or adverse publicity concerning our industry or operations;
•
our reliance on third-party vendors to carry out certain portions of our operations;
•
our dependence on the service of our key executives and other employees, and our ability to find and retain qualified employees;
•
our ability to obtain, maintain, protect and enforce our intellectual property and other proprietary information;
•
our ability to maintain, protect, and enforce the confidentiality of our trade secrets;
•
the use of open-source software in our applications;
•
seasonality in our operations from quarter to quarter;
•
our indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, and prevent us from meeting our obligations; and
•
Silver Lake’s significant ownership of our common stock and the potential conflict of its interest with ours or those of our stockholders.

For additional information on these and other factors that could cause First Advantage’s actual results to differ materially from expected results, please see our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in our filings with the SEC, which are or will be accessible on the SEC’s website at www.sec.gov. The forward-looking statements included in this press release are made only as of the date of this press release, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.

 

 

Non-GAAP Financial Information

This press release contains “non-GAAP financial measures” that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Specifically, we make use of the non-GAAP financial measures “Adjusted EBITDA,” “Adjusted EBITDA Margin,” “Adjusted Net Income,” and “Adjusted Diluted Earnings Per Share.”

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share have been presented in this press release as supplemental measures of financial performance that are not required by or presented in accordance with GAAP because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes these non-GAAP measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation, and to compare our performance against that of peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted Earnings Per Share are not recognized terms under GAAP and should not be considered as an alternative to net income as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP.

We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation, and amortization, and as further adjusted for loss on extinguishment of debt, share-based compensation, transaction and acquisition-related charges, integration and restructuring charges, and other non-cash charges. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenues. We define Adjusted Net Income for a particular period as net income before taxes adjusted for debt-related costs, acquisition-related depreciation and amortization, share-based compensation, transaction and acquisition-related charges, integration and restructuring charges, and other non-cash charges, to which we then apply the related effective tax rate. We define Adjusted Diluted Earnings Per Share as Adjusted Net Income divided by adjusted weighted average number of shares outstanding—diluted.

For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures, see the reconciliations included at the end of this press release.

The presentations of these measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.

Other Presentation Conventions

Certain monetary amounts, percentages, and other figures have been subject to rounding adjustments. Percentage amounts have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts may vary from those obtained by performing the same calculations using the figures in our press release. Certain other amounts that appear in this press release may not sum due to rounding.

 

 

About First Advantage

First Advantage (NASDAQ: FA) is a global software and data company. We provide comprehensive, end-to-end identity solutions, criminal background screening, credential verifications, drug and health screening, and continuous risk monitoring. Combining AI-powered proprietary technology platforms with proprietary data, primary source data, and third-party data, we help organizations hire with confidence and manage risk across the entire employee lifecycle. With over 80,000 customers worldwide – including approximately two-thirds of the Fortune 100 – we deliver fast, comprehensive, and reliable solutions for employers, their candidates, and their employees. We conduct more than 200 million screens annually across over 200 countries and territories, supported by our verticalized go-to-market strategy, decades of experience, and proprietary databases containing over 1 billion records. For more information, please visit our website at https://fadv.com/.

Investor Contact

Stephanie Gorman

Vice President, Investor Relations

Investors@fadv.com

(678) 868-4151

 

 

Condensed Financial Statements

First Advantage Corporation

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and par value amounts)

 

September 30, 2026

 

 

December 31, 2025

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

240,902

 

 

$

239,998

 

Restricted cash

 

 

112

 

 

 

86

 

Accounts receivable (net of allowance for doubtful accounts of $7,413 and $8,084 at September 30, 2026 and December 31, 2025, respectively)

 

 

350,264

 

 

 

297,281

 

Prepaid expenses and other current assets

 

 

30,327

 

 

 

15,323

 

Income tax receivable

 

 

5,031

 

 

 

9,010

 

Total current assets

 

 

626,636

 

 

 

561,698

 

Property and equipment, net

 

 

219,245

 

 

 

250,865

 

Goodwill

 

 

2,136,569

 

 

 

2,143,604

 

Intangible assets, net

 

 

747,090

 

 

 

857,111

 

Deferred tax asset, net

 

 

4,698

 

 

 

4,183

 

Other assets

 

 

14,421

 

 

 

16,341

 

TOTAL ASSETS

 

$

3,748,659

 

 

$

3,833,802

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

 

$

138,012

 

 

$

109,888

 

Accrued compensation

 

 

67,067

 

 

 

60,537

 

Accrued liabilities

 

 

41,576

 

 

 

49,140

 

Current portion of operating lease liability

 

 

3,570

 

 

 

3,568

 

Income tax payable

 

 

1,216

 

 

 

2,298

 

Deferred revenues

 

 

4,767

 

 

 

5,028

 

Total current liabilities

 

 

256,208

 

 

 

230,459

 

Long-term debt (net of deferred financing costs of $28,680 and $34,498 at September 30, 2026 and December 31, 2025, respectively)

 

 

1,990,857

 

 

 

2,080,039

 

Deferred tax liability, net

 

 

159,721

 

 

 

190,255

 

Operating lease liability, less current portion

 

 

5,193

 

 

 

5,525

 

Other liabilities

 

 

12,023

 

 

 

13,972

 

Total liabilities

 

 

2,424,002

 

 

 

2,520,250

 

EQUITY

 

 

 

 

 

 

Common stock - $0.001 par value; 1,000,000,000 shares authorized, 171,983,905 and 174,190,461 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively

 

 

172

 

 

 

174

 

Additional paid-in-capital

 

 

1,549,664

 

 

 

1,528,315

 

Accumulated deficit

 

 

(193,822

)

 

 

(194,632

)

Accumulated other comprehensive loss

 

 

(31,357

)

 

 

(20,305

)

Total equity

 

 

1,324,657

 

 

 

1,313,552

 

TOTAL LIABILITIES AND EQUITY

 

$

3,748,659

 

 

$

3,833,802

 

 

 

 

First Advantage Corporation

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

 

 

Three Months Ended September 30,

 

(in thousands, except share and per share amounts)

 

2026

 

 

2025

 

REVENUES

 

$

465,776

 

 

$

409,151

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

Cost of services (exclusive of depreciation and amortization below)

 

 

253,925

 

 

 

222,039

 

Product and technology expense

 

 

27,295

 

 

 

25,136

 

Selling, general, and administrative expense

 

 

57,582

 

 

 

57,459

 

Depreciation and amortization

 

 

66,866

 

 

 

62,274

 

Total operating expenses

 

 

405,668

 

 

 

366,908

 

INCOME FROM OPERATIONS

 

 

60,108

 

 

 

42,243

 

 

 

 

 

 

 

OTHER EXPENSE, NET:

 

 

 

 

 

 

Interest expense, net

 

 

30,438

 

 

 

40,041

 

Loss on extinguishment of debt

 

 

615

 

 

 

407

 

Total other expense, net

 

 

31,053

 

 

 

40,448

 

INCOME BEFORE PROVISION FOR INCOME TAXES

 

 

29,055

 

 

 

1,795

 

Provision (benefit) for income taxes

 

 

8,566

 

 

 

(798

)

NET INCOME

 

$

20,489

 

 

$

2,593

 

 

 

 

 

 

 

Foreign currency translation income (loss)

 

 

1,754

 

 

 

(6,950

)

COMPREHENSIVE INCOME (LOSS)

 

$

22,243

 

 

$

(4,357

)

 

 

 

 

 

 

NET INCOME

 

$

20,489

 

 

$

2,593

 

Basic net income per share

 

$

0.12

 

 

$

0.01

 

Diluted net income per share

 

$

0.12

 

 

$

0.01

 

Weighted average number of shares outstanding - basic

 

 

171,865,517

 

 

 

173,561,778

 

Weighted average number of shares outstanding - diluted

 

 

175,435,437

 

 

 

175,549,342

 

 

 

 

First Advantage Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

Nine Months Ended September 30,

 

(in thousands)

 

2026

 

 

2025

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income (loss)

 

$

39,571

 

 

$

(38,293

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

190,949

 

 

 

185,846

 

Loss on extinguishment of debt

 

 

1,348

 

 

 

661

 

Amortization of deferred financing costs

 

 

4,470

 

 

 

4,773

 

Bad debt expense (recovery)

 

 

1,294

 

 

 

(1

)

Deferred taxes

 

 

(31,066

)

 

 

(28,342

)

Share-based compensation

 

 

14,746

 

 

 

19,430

 

Loss on disposal and impairment of long-lived assets

 

 

7,031

 

 

 

1,720

 

Change in fair value of interest rate swaps

 

 

(11,811

)

 

 

5,607

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(55,456

)

 

 

(23,123

)

Prepaid expenses and other assets

 

 

(8,689

)

 

 

7,181

 

Accounts payable

 

 

29,328

 

 

 

4,008

 

Accrued compensation and accrued liabilities

 

 

5,122

 

 

 

(5,218

)

Deferred revenues

 

 

(234

)

 

 

639

 

Operating lease liabilities

 

 

193

 

 

 

(132

)

Other liabilities

 

 

(2,710

)

 

 

(1,293

)

Income taxes receivable and payable, net

 

 

2,742

 

 

 

(4,278

)

Net cash provided by operating activities

 

 

186,828

 

 

 

129,185

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Capitalized software development costs

 

 

(47,579

)

 

 

(34,536

)

Purchases of property and equipment

 

 

(11,058

)

 

 

(2,847

)

Other investing activities

 

 

2,028

 

 

 

87

 

Net cash used in investing activities

 

 

(56,609

)

 

 

(37,296

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Repayments of First Lien Credit Facility

 

 

(95,000

)

 

 

(45,462

)

Share repurchases

 

 

(38,381

)

 

 

—

 

Proceeds from issuance of common stock under share-based compensation plans

 

 

8,161

 

 

 

3,691

 

Net settlement of share-based compensation plan awards

 

 

(1,556

)

 

 

(3,145

)

Other financing activities

 

 

(97

)

 

 

(111

)

Net cash used in financing activities

 

 

(126,873

)

 

 

(45,027

)

Effect of exchange rate on cash, cash equivalents, and restricted cash

 

 

(2,416

)

 

 

587

 

Increase in cash, cash equivalents, and restricted cash

 

 

930

 

 

 

47,449

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

240,084

 

 

 

169,483

 

Cash, cash equivalents, and restricted cash at end of period

 

$

241,014

 

 

$

216,932

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

Cash paid for income taxes, net of refunds received

 

$

46,707

 

 

$

27,884

 

Cash paid for interest

 

$

103,906

 

 

$

124,493

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

Property and equipment acquired on account

 

$

2,131

 

 

$

1,558

 

Excise taxes on share repurchases incurred but not paid

 

$

383

 

 

$

—

 

 

 

 

Reconciliation of Consolidated Non-GAAP Financial Measures

 

 

Three Months Ended September 30,

 

(in thousands, except percentages)

 

2026

 

 

2025

 

Net income

 

$

20,489

 

 

$

2,593

 

Interest expense, net

 

 

30,438

 

 

 

40,041

 

Provision (benefit) for income taxes

 

 

8,566

 

 

 

(798

)

Depreciation and amortization

 

 

66,866

 

 

 

62,274

 

Loss on extinguishment of debt

 

 

615

 

 

 

407

 

Share-based compensation

 

 

5,076

 

 

 

5,721

 

Transaction and acquisition-related charges(a)

 

 

713

 

 

 

1,585

 

Integration, restructuring, and other charges(b)

 

 

3,753

 

 

 

6,677

 

Adjusted EBITDA

 

$

136,516

 

 

$

118,500

 

Revenues

 

 

465,776

 

 

 

409,151

 

Net income margin

 

 

4.4

%

 

 

0.6

%

Adjusted EBITDA Margin

 

 

29.3

%

 

 

29.0

%

 

(a)
Represents charges incurred related to acquisitions and similar transactions, primarily consisting of change in control-related costs, professional service fees, and other third-party costs. Transaction and acquisition related charges for the three months ended September 30, 2026 and 2025, include approximately $0.1 million and $1.4 million, respectively, of expense associated with the Sterling Acquisition.
(b)
Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to nonrecurring legal exposures, foreign currency (gains) losses, (gains) losses on the sale of assets, impairment of capitalized software and other non-recurring items. Integration, restructuring, and other charges for the three months ended September 30, 2026 and 2025, include approximately $1.3 million and $3.8 million, respectively, of expense associated with the integration of Sterling. The three months ended September 30, 2025 also include approximately $1.5 million of expenses related to debt refinancing activities, as well as capitalized software impairment charges of approximately $1.2 million.

 

 

Reconciliation of Consolidated Non-GAAP Financial Measures (continued)

 

 

Three Months Ended September 30,

 

(in thousands)

 

2026

 

 

2025

 

Net income

 

$

20,489

 

 

$

2,593

 

Provision (benefit) for income taxes

 

 

8,566

 

 

 

(798

)

Income before provision for income taxes

 

 

29,055

 

 

 

1,795

 

Debt-related charges(a)

 

 

(1,825

)

 

 

2,585

 

Acquisition-related depreciation and amortization(b)

 

 

53,791

 

 

 

51,516

 

Share-based compensation

 

 

5,076

 

 

 

5,721

 

Transaction and acquisition-related charges(c)

 

 

713

 

 

 

1,585

 

Integration, restructuring, and other charges(d)

 

 

3,753

 

 

 

6,677

 

Adjusted Net Income before income tax effect

 

 

90,563

 

 

 

69,879

 

Less: Adjusted income taxes(e)

 

 

23,297

 

 

 

17,567

 

Adjusted Net Income

 

$

67,266

 

 

$

52,312

 

 

 

 

Three Months Ended September 30,

 

 

 

2026

 

 

2025

 

Diluted net income per share

 

$

0.12

 

 

$

0.01

 

Adjusted Net Income adjustments per share

 

 

 

 

 

 

Provision (benefit) for income taxes

 

 

0.05

 

 

 

(0.00

)

Debt-related charges(a)

 

 

(0.01

)

 

 

0.01

 

Acquisition-related depreciation and amortization(b)

 

 

0.31

 

 

 

0.29

 

Share-based compensation

 

 

0.03

 

 

 

0.03

 

Transaction and acquisition related charges(c)

 

 

0.00

 

 

 

0.01

 

Integration, restructuring, and other charges(d)

 

 

0.02

 

 

 

0.04

 

Adjusted income taxes(e)

 

 

(0.13

)

 

 

(0.10

)

Adjusted Diluted Earnings Per Share (Non-GAAP)

 

$

0.38

 

 

$

0.30

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding used in computation of Adjusted Diluted Earnings Per Share:

 

 

 

 

 

 

Weighted average number of shares outstanding—diluted (GAAP and Non-GAAP)

 

 

175,435,437

 

 

 

175,549,342

 
(a)
Represents the loss on extinguishment and non-cash interest expense associated with the amortization of debt issuance costs related to the refinancing of the Company’s First Lien Credit Facility. This adjustment also includes the impact of changes in fair value of interest rate swaps, which represents the difference between unrealized fair value gains or losses and actual cash payments and receipts on the interest rate swaps.
(b)
Represents the depreciation and amortization expense related to incremental intangible and developed technology assets recorded due to the application of ASC 805, Business Combinations. As a result, the purchase accounting related depreciation and amortization expense will recur in future periods until the related assets are fully depreciated or amortized, and the related purchase accounting assets may contribute to revenue generation.
(c)
Represents charges incurred related to acquisitions and similar transactions, primarily consisting of change in control-related costs, professional service fees, and other third-party costs. Transaction and acquisition related charges for the three months ended September 30, 2026 and 2025, include approximately $0.1 million and $1.4 million, respectively, of expense associated with the Sterling Acquisition.
(d)
Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to nonrecurring legal exposures, foreign currency (gains) losses, (gains) losses on the sale of assets, impairment of capitalized software and other non-recurring items. Integration, restructuring, and other charges for the three months ended September 30, 2026 and 2025, include approximately $1.3 million and $3.8 million, respectively, of expense associated with the integration of Sterling. The three months ended September 30, 2025 also include approximately $1.5 million of expenses related to debt refinancing activities, as well as capitalized software impairment charges of approximately $1.2 million.
(e)
Effective tax rates of approximately 25.7% and 25.1% have been used to compute Adjusted Net Income and Adjusted Diluted Earnings Per Share for the three months ended September 30, 2026 and 2025, respectively.