First Advantage (NASDAQ:FA) Reports Bullish Q2 CY2026

Background screening provider First Advantage (NASDAQ:FA) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 14.9% year on year to $448.8 million. The company’s full-year revenue guidance of $1.69 billion at the midpoint came in 1% above analysts’ estimates. Its non-GAAP profit of $0.35 per share was 22.7% above analysts’ consensus estimates.

Is now the time to buy First Advantage? Find out by accessing our full research report, it’s free.

“Our outstanding second quarter performance, highlighted by 15% year-over-year revenue growth and exceptional per share earnings growth, demonstrated the strength of our AI-driven proprietary technology platform and our continued go-to-market momentum. In addition to our team’s excellent execution, our results benefited from sustained momentum driven by our recent large contract wins and continued improvement in base revenue performance. We further showcased the agility, flexibility, and scalability of our operations by seamlessly absorbing increased volumes and continuing to enable our customers to hire with speed and confidence,” 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

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $1.66 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 22.6% 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 48.2% 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 14.9%, and its $448.8 million of revenue exceeded Wall Street’s estimates by 8.2%.

Looking ahead, sell-side analysts expect revenue to grow 3.9% over the next 12 months, a deceleration versus the last two years. This projection doesn’t excite us and suggests its products and services will see some demand headwinds.

ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you’re unstoppable.

These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE.

Adjusted Operating Margin

First Advantage’s adjusted operating margin has been trending up over the last 12 months and averaged 13% over the last five years. Its solid profitability for a business services business shows it manages its expenses efficiently and benefits from operating leverage as it scales.

Analyzing the trend in its profitability, First Advantage’s adjusted operating margin might have 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 13.9%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

First Advantage’s full-year EPS grew at a weak 3.4% 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 a solid 12.9% compounded annual growth rate over the last two years. This performance was better than most business services businesses.

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 18.8%. 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 Q2, First Advantage reported adjusted EPS of $0.35, up from $0.27 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 to grow 9.7% from $1.21 to $1.33.

Key Takeaways from First Advantage’s Q2 Results

It was good to see First Advantage beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock remained flat at $20.55 immediately following the results.

So should you invest in First Advantage right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).