Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 06, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Document Period End Date | Sep. 30, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | First Advantage Corporation | |
Entity Central Index Key | 0001210677 | |
Entity Tax Identification Number | 84-3884690 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity File Number | 001-31666 | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 1 Concourse Parkway NE | |
Entity Address, Address Line Two | Suite 200 | |
Entity Address, City or Town | Atlanta | |
Entity Address, Country | GA | |
Entity Address, Postal Zip Code | 30328 | |
City Area Code | 888 | |
Local Phone Number | 314-9761 | |
Trading Symbol | FA | |
Entity Common Stock, Shares Outstanding | 145,120,007 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 164,874 | $ 391,655 |
Restricted cash | 133 | 141 |
Short-term investments | 2,167 | 1,956 |
Accounts receivable (net of allowance for doubtful accounts of $1,265 and $1,348 September 30, 2023 and December 31, 2022, respectively) | 156,912 | 143,811 |
Prepaid expenses and other current assets | 19,335 | 25,407 |
Income tax receivable | 5,893 | 3,225 |
Total current assets | 349,314 | 566,195 |
Property and equipment, net | 89,673 | 113,529 |
Goodwill | 820,970 | 793,080 |
Trade name, net | 65,690 | 71,162 |
Customer lists, net | 291,559 | 326,014 |
Deferred tax asset, net | 3,188 | 2,422 |
Other assets | 9,053 | 13,423 |
TOTAL ASSETS | 1,629,447 | 1,885,825 |
CURRENT LIABILITIES | ||
Accounts payable | 55,954 | 54,947 |
Accrued compensation | 15,954 | 22,702 |
Accrued liabilities | 16,502 | 16,400 |
Current portion of operating lease liability | 4,733 | 4,957 |
Income tax payable | 480 | 724 |
Deferred revenues | 1,159 | 1,056 |
Total current liabilities | 94,782 | 100,786 |
Long-term debt (net of deferred financing costs of $6,835 and $8,075 at September 30, 2023 and December 31, 2022, respectively) | 558,012 | 556,649 |
Deferred tax liability, net | 82,215 | 90,556 |
Operating lease liability, less current portion | 3,847 | 7,879 |
Other liabilities | 2,591 | 3,337 |
Total liabilities | 741,447 | 759,207 |
COMMITMENTS AND CONTINGENCIES | ||
EQUITY | ||
Common stock - $0.001 par value; 1,000,000,000 shares authorized, 145,217,657 and 148,732,603 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | 145 | 149 |
Additional paid-in-capital | 972,063 | 1,176,163 |
Accumulated deficit | (61,354) | (27,363) |
Accumulated other comprehensive loss | (22,854) | (22,331) |
Total equity | 888,000 | 1,126,618 |
TOTAL LIABILITIES AND EQUITY | $ 1,629,447 | $ 1,885,825 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts Receivable (net of allowance for doubtful accounts) | $ 1,571 | $ 1,348 |
Long term debt (net of deferred financing costs) | $ 6,712 | $ 8,075 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 145,217,657 | 148,732,603 |
Common stock, shares outstanding | 145,217,657 | 148,732,603 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
REVENUES | $ 200,364 | $ 205,986 | $ 561,199 | $ 597,428 |
OPERATING EXPENSES: | ||||
Cost of services (exclusive of depreciation and amortization below) | 101,410 | 104,300 | 285,468 | 301,023 |
Product and technology expense | 13,107 | 13,250 | 38,374 | 39,969 |
Selling, general, and administrative expense | 30,217 | 28,034 | 88,881 | 87,715 |
Depreciation and amortization | 32,419 | 34,744 | 96,341 | 103,185 |
Total operating expenses | 177,153 | 180,328 | 509,064 | 531,892 |
INCOME FROM OPERATIONS | 23,211 | 25,658 | 52,135 | 65,536 |
OTHER EXPENSE, NET: | ||||
Interest expense, net | 7,557 | 1,740 | 20,125 | 4,002 |
Total other expense, net | 7,557 | 1,740 | 20,125 | 4,002 |
INCOME BEFORE PROVISION FOR INCOME TAXES | 15,654 | 23,918 | 32,010 | 61,534 |
Provision for income taxes | 4,881 | 6,709 | 9,530 | 17,076 |
NET INCOME | 10,773 | 17,209 | 22,480 | 44,458 |
Foreign currency translation (loss) income | (1,610) | (10,253) | (523) | (23,089) |
COMPREHENSIVE INCOME | 9,163 | 6,956 | 21,957 | 21,369 |
Net Income (Loss) | $ 10,773 | $ 17,209 | $ 22,480 | $ 44,458 |
Basic net income per share | $ 0.08 | $ 0.11 | $ 0.16 | $ 0.29 |
Diluted net income per share | $ 0.07 | $ 0.11 | $ 0.15 | $ 0.29 |
Weighted average number of shares outstanding - basic | 143,231,707 | 150,930,340 | 144,392,463 | 150,740,418 |
Weighted average number of shares outstanding - diluted | 144,733,357 | 152,357,307 | 146,392,996 | 152,375,112 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 22,480 | $ 44,458 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 96,341 | 103,185 |
Amortization of deferred financing costs | 1,362 | 1,347 |
Bad debt expense (recovery) | 134 | (6) |
Deferred taxes | (8,723) | 5,536 |
Share-based compensation | 10,449 | 5,824 |
Loss on foreign currency exchange rates | 26 | 115 |
Loss on disposal of fixed assets and impairment of ROU assets | 1,724 | 197 |
Change in fair value of interest rate swaps | (2,201) | (11,376) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (12,162) | 3,063 |
Prepaid expenses and other assets | 8,661 | 700 |
Accounts payable | 531 | 165 |
Accrued compensation and accrued liabilities | (8,389) | (9,337) |
Deferred revenues | 87 | (116) |
Operating lease liabilities | (1,134) | (773) |
Other liabilities | (198) | 1,055 |
Income taxes receivable and payable, net | (2,908) | (1,195) |
Net cash provided by operating activities | 106,080 | 142,842 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Acquisitions of businesses, net of cash acquired | (41,122) | (19,044) |
Purchases of property and equipment | (1,798) | (6,034) |
Capitalized software development costs | (18,781) | (16,320) |
Other investing activities | (231) | 872 |
Net cash used in investing activities | (61,932) | (40,526) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Cash dividends paid | (217,683) | 0 |
Share repurchases | (55,917) | (2,248) |
Payments on finance lease obligations | (97) | (673) |
Payments on deferred purchase agreements | (703) | (704) |
Proceeds from issuance of common stock under share-based compensation plans | 4,089 | 3,090 |
Net settlement of share-based compensation plan awards | (254) | (292) |
Net cash used in financing activities | (270,565) | (827) |
Effect of exchange rate on cash, cash equivalents, and restricted cash | (372) | (3,879) |
(Decrease) increase in cash, cash equivalents, and restricted cash | (226,789) | 97,610 |
Cash, cash equivalents, and restricted cash at beginning of period | 391,796 | 292,790 |
Cash, cash equivalents, and restricted cash at end of period | 165,007 | 390,400 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash paid for income taxes, net of refunds received | 21,006 | 11,321 |
Cash paid for interest | 33,787 | 17,640 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Property and equipment acquired on account | 25 | 105 |
Excise taxes on share repurchases incurred but not paid | 558 | 0 |
Dividends declared but not paid | $ 701 | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Changes in Stockholder's Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-In-Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] |
Balance, beginning at Dec. 31, 2021 | $ 1,132,238 | $ 153 | $ 1,165,163 | $ (31,441) | $ (1,637) |
Share-based compensation | 1,859 | 1,859 | |||
Proceeds from issuance of common stock under share-based compensation plans | 547 | 0 | 547 | ||
Foreign currency translation | (1,517) | (1,517) | |||
Net income | 13,013 | 13,013 | |||
Balance, ending at Mar. 31, 2022 | 1,146,140 | 153 | 1,167,569 | (18,428) | (3,154) |
Balance, beginning at Dec. 31, 2021 | 1,132,238 | 153 | 1,165,163 | (31,441) | (1,637) |
Payments for Repurchase of Equity | 2,248 | ||||
Foreign currency translation | (23,089) | ||||
Net income | 44,458 | ||||
Balance, ending at Sep. 30, 2022 | 1,159,983 | 153 | 1,173,787 | 10,769 | (24,726) |
Balance, beginning at Mar. 31, 2022 | 1,146,140 | 153 | 1,167,569 | (18,428) | (3,154) |
Share-based compensation | 1,943 | 1,943 | |||
Proceeds from issuance of common stock under share-based compensation plans | 723 | 0 | 723 | ||
Common stock withheld for tax obligations on restricted stock unit and option settlement | (98) | (98) | |||
Foreign currency translation | (11,319) | (11,319) | |||
Net income | 14,236 | 14,236 | |||
Balance, ending at Jun. 30, 2022 | 1,151,625 | 153 | 1,170,137 | (4,192) | (14,473) |
Share-based compensation | 2,022 | 2,022 | |||
Repurchases of common stock | 2,248 | 0 | (2,248) | ||
Proceeds from issuance of common stock under share-based compensation plans | 1,820 | 0 | 1,820 | ||
Common stock withheld for tax obligations on restricted stock unit and option settlement | (192) | 0 | (192) | ||
Foreign currency translation | (10,253) | (10,253) | |||
Net income | 17,209 | 17,209 | |||
Balance, ending at Sep. 30, 2022 | 1,159,983 | 153 | 1,173,787 | 10,769 | (24,726) |
Balance, beginning at Dec. 31, 2022 | 1,126,618 | 149 | 1,176,163 | (27,363) | (22,331) |
Share-based compensation | 2,058 | 2,058 | |||
Repurchases of common stock | 25,517 | (2) | (25,515) | ||
Proceeds from issuance of common stock under share-based compensation plans | 1,399 | 0 | 1,399 | ||
Common stock withheld for tax obligations on restricted stock unit and option settlement | (25) | 0 | (25) | ||
Foreign currency translation | 869 | 869 | |||
Net income | 1,925 | 1,925 | |||
Balance, ending at Mar. 31, 2023 | 1,107,327 | 147 | 1,179,595 | (50,953) | (21,462) |
Balance, beginning at Dec. 31, 2022 | 1,126,618 | 149 | 1,176,163 | (27,363) | (22,331) |
Payments for Repurchase of Equity | 55,917 | ||||
Foreign currency translation | (523) | ||||
Net income | 22,480 | ||||
Balance, ending at Sep. 30, 2023 | 888,000 | 145 | 972,063 | (61,354) | (22,854) |
Balance, beginning at Mar. 31, 2023 | 1,107,327 | 147 | 1,179,595 | (50,953) | (21,462) |
Share-based compensation | 3,601 | 3,601 | |||
Repurchases of common stock | 27,339 | (2) | (27,337) | ||
Proceeds from issuance of common stock under share-based compensation plans | 705 | 0 | 705 | ||
Common stock withheld for tax obligations on restricted stock unit and option settlement | (186) | 0 | (186) | ||
Foreign currency translation | 218 | 218 | |||
Net income | 9,782 | 9,782 | |||
Balance, ending at Jun. 30, 2023 | 1,094,108 | 145 | 1,183,715 | (68,508) | (21,244) |
Share-based compensation | (4,790) | (4,790) | |||
Repurchases of common stock | 3,619 | 0 | (3,619) | ||
Cash dividends declared, $1.50 per share | (218,384) | (218,384) | |||
Proceeds from issuance of common stock under share-based compensation plans | 1,985 | 0 | 1,985 | ||
Common stock withheld for tax obligations on restricted stock unit and option settlement | (43) | 0 | (43) | ||
Foreign currency translation | (1,610) | 1,610 | |||
Net income | 10,773 | 10,773 | |||
Balance, ending at Sep. 30, 2023 | $ 888,000 | $ 145 | $ 972,063 | $ (61,354) | $ (22,854) |
Statement - Condensed Consolida
Statement - Condensed Consolidated Statement of Changes in Stockholder's Equity (Unaudited) (Parenthetical) | 3 Months Ended |
Sep. 30, 2023 $ / shares | |
Cash dividends declared | $ 1.5 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net Income (Loss) | $ 10,773 | $ 9,782 | $ 1,925 | $ 17,209 | $ 14,236 | $ 13,013 | $ 22,480 | $ 44,458 |
Insider Trading Arrangements
Insider Trading Arrangements | 9 Months Ended |
Sep. 30, 2023 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | During the three months ended September 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K), except as described in the table below. Trading Arrangement Director/Officer Name Title Date of Adoption/Termination Rule 10b5-1 (1) Non-Rule 10b5-1 Scheduled Expiration Date of Rule 10b5-1 Trading Plan (2) Aggregate Number of Securities to Be Purchased or Sold James L. Clark Director Adopted August 14, 2023 X August 9, 2024 Sale of up to 7,703 shares of common stock in multiple transactions Joseph Jaeger President, Americas Terminated August 14, 2023 X December 29, 2023 Sale of up to 45,500 shares of common stock in multiple transactions Joseph Jaeger President, Americas Adopted August 14, 2023 X August 23, 2024 Sale of up to 40,000 shares of common stock in multiple transactions (1) Intended to satisfy the affirmative defense of Rule 10b5-1(c). (2) A trading plan may also expire on such earlier date that all transactions under the trading plan are completed. |
James L. Clark | |
Trading Arrangements, by Individual | |
Name | James L. Clark |
Title | Director |
Rule 10b5-1 Arrangement Adopted | true |
Non-Rule 10b5-1 Arrangement Adopted | false |
Adoption Date | August 14, 2023 |
Aggregate Available | 7,703 |
Joseph Jaeger | |
Trading Arrangements, by Individual | |
Name | Joseph Jaeger |
Title | President, Americas |
Rule 10b5-1 Arrangement Terminated | true |
Non-Rule 10b5-1 Arrangement Terminated | false |
Termination Date | August 14, 2023 |
Aggregate Available | 45,500 |
Joseph Jaeger1 [Member] | |
Trading Arrangements, by Individual | |
Name | Joseph Jaeger |
Title | President, Americas |
Rule 10b5-1 Arrangement Adopted | true |
Non-Rule 10b5-1 Arrangement Adopted | false |
Adoption Date | August 14, 2023 |
Aggregate Available | 40,000 |
Organization, Nature of Busines
Organization, Nature of Business, and Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Nature of Business, and Basis of Presentation | Note 1. Organization, Nature of Business, and Basis of Presentation First Advantage Corporation, a Delaware corporation, was formed on November 15, 2019. Hereafter, First Advantage Corporation and its subsidiaries will collectively be referred to as the “Company”. The Company derives its revenues from a variety of background check and compliance services performed across all phases of the workforce lifecycle from pre-onboarding services to post-onboarding and ongoing monitoring services, covering employees, contractors, contingent workers, tenants, and drivers. We generally classify our service offerings into three categories: pre-onboarding, post-onboarding, and adjacent products. Pre-onboarding services are comprised of an extensive array of products and solutions that customers typically utilize to enhance their evaluation process and support compliance from the time a job or other application is submitted to a successful applicant’s onboarding date. This includes searches such as criminal background checks, drug / health screenings, extended workforce screening, biometrics and identity checks, education / workforce verification, driver records and compliance, healthcare credentials, and executive screening. Post-onboarding services are comprised of continuous monitoring and re-screening solutions which are important tools to help keep their end customers, workforces, and other stakeholders safer, more productive, and more compliant. Our post-monitoring solutions include criminal records, healthcare sanctions, motor vehicle records, social media, and global sanctions screening continuously or at regular intervals selected by our customers. Adjacent products include products that complement our pre-onboarding and post-onboarding products and solutions. This includes fleet / vehicle compliance, hiring tax credits and incentives, resident / tenant screening, employment eligibility, and investigative research. Basis of Presentation —The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The Company includes the results of operations of acquired companies prospectively from the date of acquisition. The condensed consolidated financial statements included herein are unaudited, but in the opinion of management, such financial statements include all adjustments, consisting of normal recurring adjustments, necessary to summarize fairly the Company’s financial position, results of operations, and cash flows for the interim periods presented. The interim results reported in these condensed consolidated financial statements should not be taken as indicative of results that may be expected for future interim periods or the full year. For a more comprehensive understanding of the Company and its condensed consolidated financial statements, these interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The Company has historically experienced seasonality with respect to certain customer industries as a result of fluctuations in hiring volumes and other economic activities. Generally, the Company’s highest revenues have historically occurred between October and November of each year, driven by many customers’ pre-holiday season hiring initiatives. Use of Estimates — The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Changes in these estimates and assumptions may have a material impact on the condensed consolidated financial statements and accompanying notes. Significant estimates, judgments, and assumptions, include, but are not limited to, the determination of the fair value and useful lives of assets acquired and liabilities assumed through business combinations, revenue recognition, capitalized software, and income tax liabilities and assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Fair Value of Financial Instruments — Certain financial assets and liabilities are reported at fair value in the accompanying consolidated balance sheets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement . ASC 820 establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation techniques required by ASC 820 are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: Level 1 — Quoted prices for identical instruments in active markets. Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 — Significant inputs to the valuation model are unobservable (supported by little or no market activities). These inputs may be used with internally developed methodologies that reflect the Company’s best estimate of fair value from a market participant. The fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, rather than the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The carrying amounts of cash and cash equivalents, short-term investments, receivables, and accounts payable approximate fair value due to the short-term maturities of these financial instruments (Level 1). The fair values and carrying values of the Company’s long-term debt are disclosed in Note 6. The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of September 30, 2023 (in thousands): Level 1 Level 2 Level 3 Assets Interest rate collars $ — $ 4,917 $ — Interest rate swap $ — $ 982 $ — Other intangible assets are subject to nonrecurring fair value measurement as the result of business acquisitions. The fair values of these assets were estimated using the present value of expected future cash flows through unobservable inputs (Level 3) . Business Combinations — The Company records business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations . Under the acquisition method of accounting, identifiable assets acquired and liabilities assumed are recorded at their acquisition-date fair values. The excess of the purchase price over the estimated fair value is recorded as goodwill. Changes in the estimated fair values of net assets recorded for acquisitions prior to the finalization of more detailed analysis, but not to exceed one year from the date of acquisition, will adjust the amount of the purchase price allocable to goodwill. Measurement period adjustments are reflected in the period in which they occur. In valuing the trade names, customer lists, and software developed for internal use, the Company utilizes variations of the income approach, which relies on historical financial and qualitative information, as well as assumptions and estimates for projected financial information. The Company considers the income approach the most appropriate valuation technique because the inherent value of these assets is their ability to generate current and future income. Projected financial information is subject to risk if estimates are incorrect. The most significant estimate relates to projected revenues and profitability. If the projected revenues and profitability used in the valuation calculations are not met, then the asset could be impaired. Impairment of Long-Lived Assets — The Company regularly evaluates whether events and circumstances have occurred that indicate the carrying amount of property and equipment, ROU assets, and finite-life intangible assets may not be recoverable or that indicate useful lives warrant revision. The Company determined that triggering events occurred for certain leases exited during the nine months ended September 30, 2023 which required an impairment review of certain ROU assets. Based on the results of the analysis, the Company recorded non-cash impairment charges of $ 1.8 million related to office space exited during the nine months ended September 30, 2023 . Write down of abandoned property and equipment no longer in use was $ 0.3 million for the nine months ended September 30, 2023 . Concentrations of Credit Risk — Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. Cash is deposited with major financial institutions and, at times, such balances with each financial institution may be in excess of insured limits. The Company has not experienced, and does not anticipate, any losses with respect to its cash deposits. Accounts receivable represent credit granted to customers for services provided. The Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral on accounts receivable. The Company had one customer which represented approximately 11 % of its consolidated revenues during both the three and nine months ended September 30, 2023 . The Company had one customer which represented approximately 10 % of its consolidated revenues during the three months ended September 30, 2022 . The Company did no t have any customers which represented 10 % or more of consolidated revenues during the nine months ended September 30, 2022 . Additionally, the Company did no t have any customers which represented 10 % or more of consolidated accounts receivable, net for any period presented. Foreign Currency — The functional currency of all of the Company’s foreign subsidiaries is the applicable local currency. The translation of the applicable foreign currencies into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenues and expense accounts using average exchange rates prevailing during the fiscal year. Adjustments resulting from the translation of foreign currency financial statements are accumulated net of tax in a separate component of equity. Currency translation loss included in accumulated other comprehensive income (loss) was approximately $( 1.6 ) million and $( 10.3 ) million for the three months ended September 30, 2023 and 2022, respectively. Currency translation loss included in accumulated other comprehensive income (loss) was approximately $( 0.5 ) million and $( 23.1 ) million for the nine months ended September 30, 2023 and 2022, respectively. Gains or losses resulting from foreign currency transactions are included in the accompanying condensed consolidated statements of operations and comprehensive income, except for those relating to intercompany transactions of a long-term investment nature, which are captured in a separate component of equity as accumulated other comprehensive income (loss). Currency transaction income included in the accompanying condensed consolidated statements of operations and comprehensive income was approximately $ 0.1 million and $ 1.1 million for the three months ended September 30, 2023 and 2022, respectively. Currency transaction (loss) income included in the accompanying condensed consolidated statements of operations and comprehensive income was approximately $( 0.2 ) million and $ 2.4 million for the nine months ended September 30, 2023 and 2022 , respectively. Recent Accounting Pronouncements — There were no accounting pronouncements issued during the nine months ended September 30, 2023 that are expected to have a material impact on the condensed consolidated financial statements. Recently Adopted Accounting Pronouncements — In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Prior to the issuance of this guidance, contract assets and contract liabilities were recognized by the acquirer at fair value on the acquisition date. This guidance is effective for annual reporting periods beginning after December 15, 2022 including interim periods therein. Adoption of this standard on January 1, 2023 did not have a material impact on the condensed consolidated financial statements. However, if the Company acquires material customer contracts in the future, this standard will impact the accounting for those arrangements which may have a material effect on future results. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and in January 2021 issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope . These ASUs provide temporary optional expedients and exceptions to existing guidance on contract modifications and hedge accounting to facilitate the market transition from existing reference rates, such as the London Inter-bank Offered Rate (“LIBOR”), to alternate reference rates, such as the Secured Overnight Financing Rate (“SOFR”). These standards were effective upon issuance and allowed application to contract changes as early as January 1, 2020. Adoption of this standard in June 2023 did not have a material impact on the condensed consolidated financial statements. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2023 | |
Business Combinations [Abstract] | |
Acquisitions | Note 3. Acquisitions On September 1, 2023, the Company acquired 100 % of the equity interest of a digital identity solutions company headquartered in New York, for $ 41.0 million. The acquired company operates under the trade name Infinite ID. The acquisition expands the Company’s network and portfolio of identity solutions in the United States. The acquired company was determined to constitute a business and the Company was deemed to be the acquirer under ASC 805. As a result, the Company has recorded the related purchase accounting as of September 1, 2023. The allocation of the purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date. The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed (in thousands): Consideration Cash purchase price $ 41,000 Other transaction adjustments 122 Total fair value of consideration transferred $ 41,122 Current assets $ 1,368 Property and equipment, including software developed for internal use 5,959 Customer lists 6,500 Other assets 236 Total liabilities ( 1,041 ) Total identifiable net assets $ 13,022 Goodwill $ 28,100 Goodwill recognized is not expected to be deductible for tax purposes. Results of operation have been included in the condensed consolidated financial statements of the Company’s Americas segment since the date of acquisition. As of the date these condensed consolidated financial statements were issued, the purchase accounting related to this acquisition was incomplete as the valuation of certain working capital balances, intangible assets, deferred taxes, and certain customary transaction adjustments were not yet finalized. The Company has reflected the provisional amounts in these condensed consolidated financial statements. As such, the above balances may be adjusted in a future period as the valuation is finalized and these adjustments may be material to the condensed consolidated financial statements. |
Property and Equipment, net
Property and Equipment, net | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Note 4. Property and Equipment, net Property and equipment, net as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands): September 30, 2023 December 31, 2022 Furniture and equipment $ 26,494 $ 23,422 Capitalized software for internal use, acquired by business combination 232,505 227,405 Capitalized software for internal use, developed internally or otherwise purchased 79,544 60,187 Leasehold improvements 2,422 2,957 Total property and equipment 340,965 313,971 Less: accumulated depreciation and amortization ( 251,292 ) ( 200,442 ) Property and equipment, net $ 89,673 $ 113,529 Depreciation and amortization expense of property and equipment was approximately $ 16.9 million and $ 17.7 million for the three months ended September 30, 2023 and 2022, respectively. Depreciation and amortization expense of property and equipment was approximately $ 50.0 million and $ 51.9 million for the nine months ended September 30, 2023 and 2022 , respectively. |
Goodwill, Trade Name, and Custo
Goodwill, Trade Name, and Customer Lists | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Trade Name, and Customer Lists | Note 5. Goodwill, Trade Name, and Customer Lists The changes in the carrying amount of goodwill for the nine months ended September 30, 2023 by reportable segment were as follows (in thousands): Americas International Total Balance – December 31, 2022 $ 677,171 $ 115,909 $ 793,080 Acquisition 28,100 — 28,100 Foreign currency translation 87 ( 297 ) ( 210 ) Balance – September 30, 2023 $ 705,358 $ 115,612 $ 820,970 The following summarizes the gross carrying value and accumulated amortization for the Company’s trade name and customer lists as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 Gross Accumulated Net Useful Life Trade name $ 93,880 $ ( 28,190 ) $ 65,690 20 years Customer lists 522,063 ( 230,504 ) 291,559 13 - 14 years Total $ 615,943 $ ( 258,694 ) $ 357,249 December 31, 2022 Gross Accumulated Net Useful Life Trade name $ 93,959 $ ( 22,797 ) $ 71,162 20 years Customer lists 515,762 ( 189,748 ) 326,014 13 - 14 years Total $ 609,721 $ ( 212,545 ) $ 397,176 Amortization expense of trade name and customer lists was approximately $ 15.5 million and $ 17.0 million for the three months ended September 30, 2023 and 2022, respectively. Amortization expense of trade name and customer lists was approximately $ 46.3 million and $ 51.3 million for the nine months ended September 30, 2023 and 2022 , respectively. Trade name and customer lists are amortized on an accelerated basis based upon their estimated useful life. |
Long-term Debt
Long-term Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Note 6. Long-term Debt The fair value of the Company’s long-term debt obligation approximated its book value as of September 30, 2023 and December 31, 2022 and consisted of the following (in thousands): September 30, 2023 December 31, 2022 First Lien Credit Facility $ 564,724 $ 564,724 Less: Deferred financing costs ( 6,712 ) ( 8,075 ) Long-term debt, net $ 558,012 $ 556,649 The Company is a party to a First Lien Credit Agreement with its banking group (“Credit Agreement”), which provides for a term loan of $ 766.6 million due January 31, 2027 carrying an interest rate of 2.75 % to 3.00 %, based on the first lien ratio, plus LIBOR (“First Lien Credit Facility”) and a $ 100.0 million revolving credit facility due July 31, 2026 (“Revolver”). In June 2023, the Credit Agreement was amended to transition the reference rate from LIBOR to SOFR (the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York), with the addition of an applicable margin. The Credit Agreement is collateralized by substantially all assets and capital stock owned by direct and indirect domestic subsidiaries and are governed by certain restrictive covenants including limitations on indebtedness, liens, and other corporate actions such as investments and acquisitions. In the event the Company’s outstanding indebtedness under the Revolver exceeds 35% of the aggregate principal amount of the revolving commitments then in effect, it is required to maintain a consolidated first lien leverage ratio no greater than 7.75 to 1.00 . As of September 30, 2023 , there were no outstanding borrowings under the Revolver and $ 564.7 million outstanding under the First Lien Credit Facility. As the Company had no outstanding amounts under the Revolver, it was not subject to the consolidated first lien leverage ratio covenant. The Company was compliant with all other covenants under the agreement as of September 30, 2023 . |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Note 7. Derivatives To reduce exposure to variability in expected future cash outflows on variable rate debt attributable to the changes in one-month LIBOR, the Company has historically entered into interest rate derivative instruments to economically offset a portion of this risk and may do so in the future. In June 2023, the Company transitioned the reference rate for its interest rate derivative agreements from one-month LIBOR to one-month SOFR. As of September 30, 2023, the Company had the following outstanding derivatives that were not designated as a hedge in qualifying hedging relationships: Product Effective Date Maturity Date Notional Rate Interest rate collars (a) June 30, 2023 February 29, 2024 $ 300.0 million 0.48 % floor/ 1.47 % cap Interest rate swap (b) June 30, 2023 February 28, 2026 $ 100.0 million 4.32 % (a) In conjunction with the June 2023 transition of the reference rate from LIBOR to SOFR, the cap rate was reduced from 1.50 % to 1.47 %. (b) In conjunction with the June 2023 transition of the reference rate from LIBOR to SOFR, the fixed rate was reduced from 4.36 % to 4.32 %. Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements; however, the Company has not elected to apply hedge accounting for these instruments. The following is a summary of location and fair value of the financial positions recorded related to the derivative instruments (in thousands): Fair Value Derivatives not designated Balance Sheet Location As of As of Interest rate collars Prepaid expenses and other current assets $ 4,917 $ 11,570 Interest rate swap Prepaid expenses and other current assets $ 982 $ — The following is a summary of location and amount of gains recorded related to the derivative instruments (in thousands): Gain Three Months Ended September 30, Nine Months Ended September 30, Derivatives not designated Income Statement Location 2023 2022 2023 2022 Interest rate collars Interest expense, net $ 109 $ 3,998 $ 878 $ 11,376 Interest rate swap Interest expense, net $ 857 $ — $ 1,323 $ — |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8. Income Taxes The Company’s income tax expense and balance sheet accounts reflect the results of the Company and its subsidiaries. For the three and nine months ended September 30, 2023, the Company estimated the annual effective tax rate based on projected income for the full year and recorded a quarterly tax provision in accordance with the annual effective tax rate and adjusted for discrete tax items in the period. The effective income tax rate for the three and nine months ended September 30, 2023 was 31.2 % and 29.8 % , respectively. The Company’s effective income tax rate for the three and nine months ended September 30, 2023 was higher than the U.S. federal statutory rate of 21 % primarily due to the Global Intangible Low-Taxed Income (“GILTI”) inclusion, nondeductible share-based compensation, and U.S. state income taxes. The effective income tax rate for the three and nine months ended September 30, 2022 was 28.1 % and 27.8 % , respectively. The Company’s effective income tax rate for the three and nine months ended September 30, 2022 was higher than the U.S. federal statutory rate of 21 % primarily due to the GILTI inclusion, nondeductible share-based compensation, and U.S. state income taxes. |
Revenues
Revenues | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Note 9. Revenues Substantially all of the Company’s revenues are recognized at a point in time when the orders are completed and the completed reports are reported, or otherwise made available. For revenues delivered over time, the output method is utilized to measure the value to the customer based on the transfer to date of the services promised, with no rights of return once consumed. In these cases, revenues on transactional contracts with a defined price but an undefined quantity is recognized utilizing the right to invoice expedient resulting in revenues being recognized when the service is provided and becomes billable. Additionally, under this practical expedient, the Company is not required to estimate the transaction price. The Company considers negotiated and anticipated incentives and estimated adjustments, including historical collections experience, when recording revenues. The Company’s contracts with customers generally include standard commercial payment terms acceptable in each region, and do not include any financing components. The Company does not have any significant obligations for refunds, warranties, or similar obligations. The Company records revenues net of sales taxes. Contract balances are generated when the revenues recognized in a given period varies from billing. A contract asset is created when the Company performs a service for a customer and recognizes more revenues than what has been billed. The contract asset balance was $ 7.0 million and $ 6.5 million as of September 30, 2023 and December 31, 2022, respectively, and is included in accounts receivable, net in the accompanying condensed consolidated balance sheets. A contract liability is created when the Company transfers a good or service to a customer and recognizes less than what has been billed. The Company recognizes these contract liabilities as deferred revenues when the Company has an obligation to perform services for a customer in the future and has already received consideration from the customer. The contract liability balance was $ 1.2 million and $ 1.1 million as of September 30, 2023 and December 31, 2022, respectively, and is included in deferred revenues in the accompanying condensed consolidated balance sheets. An immaterial amount of revenues was recognized in the current period related to the beginning balance of deferred revenues. For additional disclosures about the disaggregation of our revenues see Note 15, “Reportable Segments.” |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | Note 10. Share-based Compensation Share-based compensation expense is recognized in cost of services, product and technology expense, and selling, general, and administrative expense, in the accompanying condensed consolidated statements of operations and comprehensive income as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Share-based compensation expense Cost of services $ 330 $ 292 $ 918 $ 842 Product and technology expense 640 402 1,665 918 Selling, general, and administrative expense 3,820 1,328 7,866 4,064 Total share-based compensation expense $ 4,790 $ 2,022 $ 10,449 $ 5,824 Prior to the IPO, all share-based awards were issued by Fastball Holdco, L.P., the Company’s previous parent company, under individual grant agreements and the partnership agreement of such parent company (collectively the “2020 Equity Plan”). In connection with the IPO, the Company adopted the 2021 Omnibus Incentive Plan (as amended by the First Amendment, dated as of May 10, 2023, the “2021 Equity Plan”). In May 2023, the Company’s Board of Directors approved a modification of the vesting terms of outstanding unvested and unearned performance-based options, restricted stock units, and restricted stock (collectively, “Performance Awards”) previously issued under its equity plans. The modification, effective May 10, 2023, allowed for unvested and unearned Performance Awards outstanding as of the date of the modification, to vest based on time on the fourth, fifth, and sixth anniversaries of the relevant vesting commencement date, as set forth in each grant agreement (the “Vesting Commencement Date”), while preserving the eligibility to vest upon the Company’s investors receiving a targeted money-on-money return, subject to continued service. As of the modification date, unrecognized pre-tax non-cash compensation expense related to the Performance Awards, after accounting for the modification, was $ 28.8 million. The Company expects to recognize pre-tax non-cash compensation expense related to the modification of Performance Awards prospectively from the date of modification, on a straight-line basis, over a weighted average period of 1.9 years. The fair value of the modified restricted stock units and restricted stock was estimated using the closing stock price on the date of modification. The fair value of the modified stock options was estimated on the date of modification using the Black-Scholes option-pricing model with the following weighted average assumptions: Options Expected stock price volatility 37.43 % Risk-free interest rate 3.40 % Expected term (in years) 4.67 Fair-value of the underlying unit $ 12.61 In connection with the Company’s declared dividend in August 2023, the exercise price of outstanding stock option awards and stock purchases under the Company’s employee stock purchase plan (“ESPP”) was reduced by $ 1.50 , in accordance with the non-discretionary anti-dilution provisions of the equity and stock purchase plans. Historical exercise prices noted in the below tables have not been adjusted. 2020 Equity Plan Awards issued under the 2020 Equity Plan consist of options. No awards were issued under the plan during the nine months ended September 30, 2023. A summary of the stock option activity for the nine months ended September 30, 2023 is as follows: Options Weighted Average Weighted Average Remaining Contractual Term Aggregate Intrinsic Value December 31, 2022 Grants outstanding 2,843,342 $ 6.66 Grants exercised ( 357,772 ) $ 6.13 Grants cancelled/forfeited ( 533,715 ) $ 6.68 September 30, 2023 Grants outstanding 1,951,855 $ 5.15 6.4 Years $ 16.9 million September 30, 2023 Grants vested 539,767 $ 5.12 6.2 Years $ 4.7 million September 30, 2023 Grants unvested 1,412,088 $ 5.16 2021 Equity Plan The 2021 Equity Plan is intended to provide a means through which to attract and retain key personnel and to provide a means whereby our directors, officers, employees, consultants, and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, thereby strengthening their commitment to our welfare and aligning their interests with those of our stockholders. The 2021 Equity Plan provides for the grant of awards of stock options, stock appreciation rights, restricted shares, restricted stock units, and other equity-based or cash-based awards as determined by the Company’s Compensation Committee. The 2021 Equity Plan initially had a total of 17,525,000 shares of common stock reserved. The number of reserved shares automatically increases on the first day of each calendar year commencing on January 1, 2022 and ending on January 1, 2030, in an amount equal to the lesser of (x) 2.5% of the total number of shares of common stock outstanding on the last day of the immediately preceding calendar year and (y) a number of shares as determined by the Board of Directors. As of September 30, 2023, 16,873,494 shares were available for issuance under the 2021 Equity Plan. Stock Options A summary of the stock option activity for the nine months ended September 30, 2023 is as follows: Options Weighted Average Weighted Average Remaining Contractual Term Aggregate Intrinsic Value December 31, 2022 Grants outstanding 4,311,662 $ 15.24 Grants issued 384,994 $ 11.96 Grants cancelled/forfeited ( 87,038 ) $ 15.54 September 30, 2023 Grants outstanding 4,609,618 $ 13.57 8.0 Years $ 2.1 million September 30, 2023 Grants vested 1,548,685 $ 13.64 7.9 Years $ 0.5 million September 30, 2023 Grants unvested 3,060,933 $ 13.53 The fair value for stock options granted for the nine months ended September 30, 2023 was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: Options Expected stock price volatility 35.48 % Risk-free interest rate 3.64 % Expected term (in years) 6.25 Fair-value of the underlying unit $ 11.96 Restricted Stock Units A summary of the restricted stock units (“RSU”) activity for the nine months ended September 30, 2023 is as follows: Shares Weighted Average December 31, 2022 Nonvested RSUs 472,332 $ 16.00 Granted 152,346 $ 13.31 Vested ( 113,441 ) $ 14.76 Forfeited ( 27,208 ) $ 16.00 September 30, 2023 Nonvested RSUs 484,029 $ 15.45 Restricted Stock A summary of the restricted stock activity for the nine months ended September 30, 2023 is as follows: Shares Weighted Average December 31, 2022 Nonvested restricted stock 2,281,300 $ 3.85 Vested ( 326,670 ) $ 3.85 September 30, 2023 Nonvested restricted stock 1,954,630 $ 8.50 As of September 30, 2023, the Company had approximately $ 41.1 million of unrecognized pre-tax non-cash compensation expense, comprised of approximately $ 15.7 million related to restricted stock, $ 6.2 million related to RSUs, and approximately $ 19.2 million related to stock options, which the Company expects to recognize over a weighted average period of 1.4 years. 2021 Employee Stock Purchase Plan The Company adopted the First Advantage Corporation 2021 Employee Stock Purchase Plan (“ESPP”) that allows eligible employees to voluntarily make after-tax contributions of up to 15 % of such employee’s cash compensation to acquire Company stock during designated offering periods. During each offering period, there is one six-month purchase period. During the holding period, ESPP purchased shares are not eligible for sale or broker transfer. The Company recorded an associated expense of approximately $ 0.2 million and $ 0.1 million for the three months ended September 30, 2023 and 2022, respectively. The Company recorded an associated expense of approximately $ 0.7 million and $ 0.3 million for the nine months ended September 30, 2023 and 2022 , respectively. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Equity | Note 11. Equity Preferred Stock As of September 30, 2023 and December 31, 2022 , 250,000,000 shares of Preferred Stock were authorized, and no Preferred Stock was issued or outstanding. Share Repurchase Program On August 2, 2022, the Company’s Board of Directors authorized the repurchase of up to $ 50.0 million of the Company’s common stock over the 12-month period ending August 2, 2023 (the “Repurchase Program”). On November 8, 2022, the Company’s Board of Directors authorized an increase to the total available amount under its Repurchase Program to $ 150.0 million and extended the program through December 31, 2023. On February 28, 2023, the Company’s Board of Directors authorized an increase to the total available amount under its Repurchase Program to $ 200.0 million. On September 14, 2023, the Company announced that its Board of Directors approved a one-year extension of its share repurchase authorization, extending the previously authorized $ 200.0 million program through December 31, 2024. Stock repurchases may be effected through open market repurchases at prevailing market prices, including through the use of block trades and trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, privately-negotiated transactions, through other transactions in accordance with applicable securities laws, or a combination of these methods on such terms and in such amounts as the Company deems appropriate and will be funded from available capital. The Company is not obligated to repurchase any specific number of shares, and the timing, manner, value, and actual number of shares repurchased will depend on a variety of factors, including the Company’s stock price and liquidity requirements, other business considerations and general market and economic conditions. No shares will be purchased from SLP Fastball Aggregator, L.P. and its affiliates. The Company may discontinue or modify purchases without notice at any time. A summary of the stock repurchase activity under the Repurchase Program, is summarized as follows (in thousands, except share and per share amounts): Three Months Nine Months Shares repurchased 244,782 4,140,519 Average price per share $ 14.63 $ 13.50 Costs recorded to accumulated deficit Total repurchase costs $ 3,577 $ 55,829 Additional associated costs 42 642 Total costs recorded to accumulated deficit $ 3,619 $ 56,471 As of September 30, 2023, the remaining authorized value of shares available to be repurchased under this program was approximately $ 83.6 million . Repurchased shares of common stock are retired. The par value of repurchased shares is deducted from common stock and the excess repurchase price over par value is reflected as a reduction to accumulated deficit. Additional associated costs include the related brokerage commissions and excise taxes on share repurchases. Dividend On August 8, 2023 , the Company’s Board of Directors declared a one-time special cash dividend of $ 1.50 per share to stockholders of record at the close of business on August 21, 2023 . An aggregate cash dividend of $ 217.7 million was paid on August 31, 2023. Dividends accrued for unvested RSUs are contingent and payable upon vesting of the underlying award. The Company recorded liabilities of $ 0.3 million and $ 0.4 million in accrued liabilities and other liabilities, respectively, in the accompanying condensed consolidated balance sheets as of September 30, 2023 . |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12. Commitments and Contingencies There have been no material changes to the Company’s contractual obligations as compared to December 31, 2022. The Company is involved in litigation from time to time in the ordinary course of business. At times, the Company, given the nature of its background screening business, could become subject to lawsuits, or potential class action lawsuits, in multiple jurisdictions, related to claims brought primarily by consumers or individuals who were the subject of its screening services. For all pending matters, the Company believes it has meritorious defenses and intends to defend vigorously or otherwise seek indemnification from other parties as appropriate. However, the Company has recorded a liability of $ 4.6 million and $ 4.4 million at September 30, 2023 and December 31, 2022, respectively, for matters that it believes a loss is both probable and estimable. This is included in accrued liabilities in the accompanying condensed consolidated balance sheets. The Company will continue to evaluate information as it becomes known and will record an estimate for losses at the time when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 13. Related Party Transactions The Company had no material related party transactions. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Note 14. Net Income Per Share Basic weighted-average shares outstanding excludes nonvested restricted stock. Diluted weighted average shares outstanding is similar to basic weighted-average shares outstanding, except that the weighted-average number of shares is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common share had been issued, including the dilutive impact of nonvested restricted stock. Basic and diluted net income per share was calculated as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Basic net income per share $ 0.08 $ 0.11 $ 0.16 $ 0.29 Diluted net income per share $ 0.07 $ 0.11 $ 0.15 $ 0.29 Numerator: Net income (in thousands) $ 10,773 $ 17,209 $ 22,480 $ 44,458 Denominator: Weighted average number of shares outstanding - basic 143,231,707 150,930,340 144,392,463 150,740,418 Add stock options to purchase shares and restricted stock units 1,501,650 1,426,967 2,000,533 1,634,694 Weighted average number of shares outstanding - diluted 144,733,357 152,357,307 146,392,996 152,375,112 For the three months ended September 30, 2023 and 2022, 4,739,037 and 2,918,315 stock options and RSUs were excluded from the calculation of diluted net income per share, respectively, because their effects were anti-dilutive. For the nine months ended September 30, 2023 and 2022, 4,754,689 and 2,614,866 stock options and RSUs were excluded from the calculation of diluted net income per share, respectively, because their effects were anti-dilutive. |
Reportable Segments
Reportable Segments | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Reportable Segments | Note 15. Reportable Segments We have two reportable segments, Americas and International. Our chief operating decision maker (“CODM”) uses the profit measure of Adjusted EBITDA, on both a consolidated and a segment basis, to allocate resources and assess performance of our businesses. We use Adjusted EBITDA as our profit measure because it eliminates the impact of certain items that we do not consider indicative of operating performance, which is useful to compare operating results between periods. Our Board of Directors and executive management team also use Adjusted EBITDA as a compensation measure for both segment and corporate management under our incentive compensation plans. Adjusted EBITDA is also a measure frequently used by securities analysts, investors, and other interested parties in their evaluation of the operating performance of companies similar to ours. We define Adjusted EBITDA as net income 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 exclude the impact of share-based compensation because it is a non-cash expense and we believe that excluding this item provides meaningful supplemental information regarding performance and ongoing cash generation potential. We exclude loss on extinguishment of debt, transaction and acquisition related charges, integration and restructuring charges, and other charges because such expenses are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis. The segment financial information below aligns with how we report information to our CODM to assess operating performance and how the Company manages the business. Corporate costs are generally allocated to the segments based upon estimated revenue levels and other assumptions that management considers reasonable. The CODM does not review the Company’s assets by segment; therefore, such information is not presented. The accounting policies of the segments are the same as described in Note 2, “Summary of Significant Accounting Policies” and Note 9, “Revenues.” The following is a description of our two reportable segments: Americas. This segment performs a variety of background check and compliance services across all phases of the workforce lifecycle from pre-onboarding services to post-onboarding and ongoing monitoring services, covering employees, contractors, contingent workers, tenants, and drivers. We generally classify our service offerings into three categories: pre-onboarding, post-onboarding, and adjacent products. We deliver our solutions across multiple vertical industries in the United States, Canada, and Latin America markets. International. The International segment provides services similar to our Americas segment in regions outside of the Americas. We primarily deliver our solutions across multiple vertical industries in the Europe, India, and Asia Pacific markets. A reconciliation of Segment Adjusted EBITDA to net income for the three and nine months ended September 30, 2023 and 2022 is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Adjusted EBITDA Americas $ 60,188 $ 57,205 $ 157,168 $ 156,978 International 4,603 6,983 12,154 21,644 Total $ 64,791 $ 64,188 $ 169,322 $ 178,622 Adjustments to reconcile to net income: Interest expense, net 7,557 1,740 20,125 4,002 Provision for income taxes 4,881 6,709 9,530 17,076 Depreciation and amortization 32,419 34,744 96,341 103,185 Share-based compensation 4,790 2,022 10,449 5,824 Transaction and acquisition-related charges (a) 1,571 1,908 3,832 4,585 Integration, restructuring, and other charges (b) 2,800 ( 144 ) 6,565 ( 508 ) Net income $ 10,773 $ 17,209 $ 22,480 $ 44,458 (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. Also includes incremental professional service fees incurred related to the initial public offering and subsequent one-time compliance efforts. The three and nine months ended September 30, 2023 and 2022 include a transaction bonus expense related to one of the Company’s 2021 acquisitions. (b) Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to nonrecurring legal exposures, foreign currency (gains) losses, and (gains) losses on the sale of assets. Geographic Information The Company bases revenues by geographic region in which the revenues and invoicing are recorded. Other than the United States, no single country accounted for 10 % or more of our total revenues during these periods. The following summarizes revenues by geographical region (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues Americas $ 176,046 $ 176,091 $ 490,784 $ 506,770 International 25,805 31,628 74,766 96,413 Eliminations ( 1,487 ) ( 1,733 ) ( 4,351 ) ( 5,755 ) Total revenues $ 200,364 $ 205,986 $ 561,199 $ 597,428 The following table sets forth net long-lived assets by geographic area (in thousands): September 30, 2023 December 31, 2022 Long-lived assets, net United States, country of domicile $ 1,104,924 $ 1,134,201 All other countries 169,062 180,258 Total long-lived assets, net $ 1,273,986 $ 1,314,459 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation —The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The Company includes the results of operations of acquired companies prospectively from the date of acquisition. The condensed consolidated financial statements included herein are unaudited, but in the opinion of management, such financial statements include all adjustments, consisting of normal recurring adjustments, necessary to summarize fairly the Company’s financial position, results of operations, and cash flows for the interim periods presented. The interim results reported in these condensed consolidated financial statements should not be taken as indicative of results that may be expected for future interim periods or the full year. For a more comprehensive understanding of the Company and its condensed consolidated financial statements, these interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The Company has historically experienced seasonality with respect to certain customer industries as a result of fluctuations in hiring volumes and other economic activities. Generally, the Company’s highest revenues have historically occurred between October and November of each year, driven by many customers’ pre-holiday season hiring initiatives. |
Use of Estimates | Use of Estimates — The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Changes in these estimates and assumptions may have a material impact on the condensed consolidated financial statements and accompanying notes. Significant estimates, judgments, and assumptions, include, but are not limited to, the determination of the fair value and useful lives of assets acquired and liabilities assumed through business combinations, revenue recognition, capitalized software, and income tax liabilities and assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments — Certain financial assets and liabilities are reported at fair value in the accompanying consolidated balance sheets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement . ASC 820 establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation techniques required by ASC 820 are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: Level 1 — Quoted prices for identical instruments in active markets. Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 — Significant inputs to the valuation model are unobservable (supported by little or no market activities). These inputs may be used with internally developed methodologies that reflect the Company’s best estimate of fair value from a market participant. The fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, rather than the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The carrying amounts of cash and cash equivalents, short-term investments, receivables, and accounts payable approximate fair value due to the short-term maturities of these financial instruments (Level 1). The fair values and carrying values of the Company’s long-term debt are disclosed in Note 6. The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of September 30, 2023 (in thousands): Level 1 Level 2 Level 3 Assets Interest rate collars $ — $ 4,917 $ — Interest rate swap $ — $ 982 $ — Other intangible assets are subject to nonrecurring fair value measurement as the result of business acquisitions. The fair values of these assets were estimated using the present value of expected future cash flows through unobservable inputs (Level 3) |
Business Combinations | Business Combinations — The Company records business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations . Under the acquisition method of accounting, identifiable assets acquired and liabilities assumed are recorded at their acquisition-date fair values. The excess of the purchase price over the estimated fair value is recorded as goodwill. Changes in the estimated fair values of net assets recorded for acquisitions prior to the finalization of more detailed analysis, but not to exceed one year from the date of acquisition, will adjust the amount of the purchase price allocable to goodwill. Measurement period adjustments are reflected in the period in which they occur. In valuing the trade names, customer lists, and software developed for internal use, the Company utilizes variations of the income approach, which relies on historical financial and qualitative information, as well as assumptions and estimates for projected financial information. The Company considers the income approach the most appropriate valuation technique because the inherent value of these assets is their ability to generate current and future income. Projected financial information is subject to risk if estimates are incorrect. The most significant estimate relates to projected revenues and profitability. If the projected revenues and profitability used in the valuation calculations are not met, then the asset could be impaired. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets — The Company regularly evaluates whether events and circumstances have occurred that indicate the carrying amount of property and equipment, ROU assets, and finite-life intangible assets may not be recoverable or that indicate useful lives warrant revision. The Company determined that triggering events occurred for certain leases exited during the nine months ended September 30, 2023 which required an impairment review of certain ROU assets. Based on the results of the analysis, the Company recorded non-cash impairment charges of $ 1.8 million related to office space exited during the nine months ended September 30, 2023 . Write down of abandoned property and equipment no longer in use was $ 0.3 million for the nine months ended September 30, 2023 . |
Concentrations of Credit Risk | Concentrations of Credit Risk — Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. Cash is deposited with major financial institutions and, at times, such balances with each financial institution may be in excess of insured limits. The Company has not experienced, and does not anticipate, any losses with respect to its cash deposits. Accounts receivable represent credit granted to customers for services provided. The Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral on accounts receivable. The Company had one customer which represented approximately 11 % of its consolidated revenues during both the three and nine months ended September 30, 2023 . The Company had one customer which represented approximately 10 % of its consolidated revenues during the three months ended September 30, 2022 . The Company did no t have any customers which represented 10 % or more of consolidated revenues during the nine months ended September 30, 2022 . Additionally, the Company did no t have any customers which represented 10 % or more of consolidated accounts receivable, net for any period presented. |
Foreign Currency | Foreign Currency — The functional currency of all of the Company’s foreign subsidiaries is the applicable local currency. The translation of the applicable foreign currencies into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenues and expense accounts using average exchange rates prevailing during the fiscal year. Adjustments resulting from the translation of foreign currency financial statements are accumulated net of tax in a separate component of equity. Currency translation loss included in accumulated other comprehensive income (loss) was approximately $( 1.6 ) million and $( 10.3 ) million for the three months ended September 30, 2023 and 2022, respectively. Currency translation loss included in accumulated other comprehensive income (loss) was approximately $( 0.5 ) million and $( 23.1 ) million for the nine months ended September 30, 2023 and 2022, respectively. Gains or losses resulting from foreign currency transactions are included in the accompanying condensed consolidated statements of operations and comprehensive income, except for those relating to intercompany transactions of a long-term investment nature, which are captured in a separate component of equity as accumulated other comprehensive income (loss). Currency transaction income included in the accompanying condensed consolidated statements of operations and comprehensive income was approximately $ 0.1 million and $ 1.1 million for the three months ended September 30, 2023 and 2022, respectively. Currency transaction (loss) income included in the accompanying condensed consolidated statements of operations and comprehensive income was approximately $( 0.2 ) million and $ 2.4 million for the nine months ended September 30, 2023 and 2022 , respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements — There were no accounting pronouncements issued during the nine months ended September 30, 2023 that are expected to have a material impact on the condensed consolidated financial statements. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements — In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Prior to the issuance of this guidance, contract assets and contract liabilities were recognized by the acquirer at fair value on the acquisition date. This guidance is effective for annual reporting periods beginning after December 15, 2022 including interim periods therein. Adoption of this standard on January 1, 2023 did not have a material impact on the condensed consolidated financial statements. However, if the Company acquires material customer contracts in the future, this standard will impact the accounting for those arrangements which may have a material effect on future results. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and in January 2021 issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope . These ASUs provide temporary optional expedients and exceptions to existing guidance on contract modifications and hedge accounting to facilitate the market transition from existing reference rates, such as the London Inter-bank Offered Rate (“LIBOR”), to alternate reference rates, such as the Secured Overnight Financing Rate (“SOFR”). These standards were effective upon issuance and allowed application to contract changes as early as January 1, 2020. Adoption of this standard in June 2023 did not have a material impact on the condensed consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of September 30, 2023 (in thousands): Level 1 Level 2 Level 3 Assets Interest rate collars $ — $ 4,917 $ — Interest rate swap $ — $ 982 $ — |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Consideration Paid and Amounts Recognized for Assets Acquired and Liabilities Assumed | The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed (in thousands): Consideration Cash purchase price $ 41,000 Other transaction adjustments 122 Total fair value of consideration transferred $ 41,122 Current assets $ 1,368 Property and equipment, including software developed for internal use 5,959 Customer lists 6,500 Other assets 236 Total liabilities ( 1,041 ) Total identifiable net assets $ 13,022 Goodwill $ 28,100 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment, net | Property and equipment, net as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands): September 30, 2023 December 31, 2022 Furniture and equipment $ 26,494 $ 23,422 Capitalized software for internal use, acquired by business combination 232,505 227,405 Capitalized software for internal use, developed internally or otherwise purchased 79,544 60,187 Leasehold improvements 2,422 2,957 Total property and equipment 340,965 313,971 Less: accumulated depreciation and amortization ( 251,292 ) ( 200,442 ) Property and equipment, net $ 89,673 $ 113,529 |
Goodwill, Trade Name, and Cus_2
Goodwill, Trade Name, and Customer Lists (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the nine months ended September 30, 2023 by reportable segment were as follows (in thousands): Americas International Total Balance – December 31, 2022 $ 677,171 $ 115,909 $ 793,080 Acquisition 28,100 — 28,100 Foreign currency translation 87 ( 297 ) ( 210 ) Balance – September 30, 2023 $ 705,358 $ 115,612 $ 820,970 |
Summary of Gross Carrying Value and Accumulated Amortization of Finite-Lived Intangible Assets | The following summarizes the gross carrying value and accumulated amortization for the Company’s trade name and customer lists as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 Gross Accumulated Net Useful Life Trade name $ 93,880 $ ( 28,190 ) $ 65,690 20 years Customer lists 522,063 ( 230,504 ) 291,559 13 - 14 years Total $ 615,943 $ ( 258,694 ) $ 357,249 December 31, 2022 Gross Accumulated Net Useful Life Trade name $ 93,959 $ ( 22,797 ) $ 71,162 20 years Customer lists 515,762 ( 189,748 ) 326,014 13 - 14 years Total $ 609,721 $ ( 212,545 ) $ 397,176 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Fair Value of Company’s Long-term Debt Obligations | The fair value of the Company’s long-term debt obligation approximated its book value as of September 30, 2023 and December 31, 2022 and consisted of the following (in thousands): September 30, 2023 December 31, 2022 First Lien Credit Facility $ 564,724 $ 564,724 Less: Deferred financing costs ( 6,712 ) ( 8,075 ) Long-term debt, net $ 558,012 $ 556,649 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of outstanding derivatives that were not designated as a hedge in qualifying hedging relationships | As of September 30, 2023, the Company had the following outstanding derivatives that were not designated as a hedge in qualifying hedging relationships: Product Effective Date Maturity Date Notional Rate Interest rate collars (a) June 30, 2023 February 29, 2024 $ 300.0 million 0.48 % floor/ 1.47 % cap Interest rate swap (b) June 30, 2023 February 28, 2026 $ 100.0 million 4.32 % (a) In conjunction with the June 2023 transition of the reference rate from LIBOR to SOFR, the cap rate was reduced from 1.50 % to 1.47 %. (b) In conjunction with the June 2023 transition of the reference rate from LIBOR to SOFR, the fixed rate was reduced from 4.36 % to 4.32 %. |
Summary of Location and Fair Value of Financial Position and Location of Derivative Instruments | The following is a summary of location and fair value of the financial positions recorded related to the derivative instruments (in thousands): Fair Value Derivatives not designated Balance Sheet Location As of As of Interest rate collars Prepaid expenses and other current assets $ 4,917 $ 11,570 Interest rate swap Prepaid expenses and other current assets $ 982 $ — The following is a summary of location and amount of gains recorded related to the derivative instruments (in thousands): Gain Three Months Ended September 30, Nine Months Ended September 30, Derivatives not designated Income Statement Location 2023 2022 2023 2022 Interest rate collars Interest expense, net $ 109 $ 3,998 $ 878 $ 11,376 Interest rate swap Interest expense, net $ 857 $ — $ 1,323 $ — |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Summary of Recognition of Share-Based Compensation related to Employees | Share-based compensation expense is recognized in cost of services, product and technology expense, and selling, general, and administrative expense, in the accompanying condensed consolidated statements of operations and comprehensive income as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Share-based compensation expense Cost of services $ 330 $ 292 $ 918 $ 842 Product and technology expense 640 402 1,665 918 Selling, general, and administrative expense 3,820 1,328 7,866 4,064 Total share-based compensation expense $ 4,790 $ 2,022 $ 10,449 $ 5,824 Prior to the IPO, all share-based awards were issued by Fastball Holdco, L.P., the Company’s previous parent company, under individual grant agreements and the partnership agreement of such parent company (collectively the “2020 Equity Plan”). In connection with the IPO, the Company adopted the 2021 Omnibus Incentive Plan (as amended by the First Amendment, dated as of May 10, 2023, the “2021 Equity Plan”). |
Summary of outstanding stock option grants issued | A summary of the stock option activity for the nine months ended September 30, 2023 is as follows: Options Weighted Average Weighted Average Remaining Contractual Term Aggregate Intrinsic Value December 31, 2022 Grants outstanding 2,843,342 $ 6.66 Grants exercised ( 357,772 ) $ 6.13 Grants cancelled/forfeited ( 533,715 ) $ 6.68 September 30, 2023 Grants outstanding 1,951,855 $ 5.15 6.4 Years $ 16.9 million September 30, 2023 Grants vested 539,767 $ 5.12 6.2 Years $ 4.7 million September 30, 2023 Grants unvested 1,412,088 $ 5.16 |
Summary of Assumptions Applied to Establish Fair Value of Options Granted Using Black-Scholes Option Pricing Model | The fair value of the modified stock options was estimated on the date of modification using the Black-Scholes option-pricing model with the following weighted average assumptions: Options Expected stock price volatility 37.43 % Risk-free interest rate 3.40 % Expected term (in years) 4.67 Fair-value of the underlying unit $ 12.61 |
2021 Equity Plan [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Summary of Assumptions Applied to Establish Fair Value of Options Granted Using Black-Scholes Option Pricing Model | The fair value for stock options granted for the nine months ended September 30, 2023 was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: Options Expected stock price volatility 35.48 % Risk-free interest rate 3.64 % Expected term (in years) 6.25 Fair-value of the underlying unit $ 11.96 |
Summary of Option Unit Activity | A summary of the stock option activity for the nine months ended September 30, 2023 is as follows: Options Weighted Average Weighted Average Remaining Contractual Term Aggregate Intrinsic Value December 31, 2022 Grants outstanding 4,311,662 $ 15.24 Grants issued 384,994 $ 11.96 Grants cancelled/forfeited ( 87,038 ) $ 15.54 September 30, 2023 Grants outstanding 4,609,618 $ 13.57 8.0 Years $ 2.1 million September 30, 2023 Grants vested 1,548,685 $ 13.64 7.9 Years $ 0.5 million September 30, 2023 Grants unvested 3,060,933 $ 13.53 |
Summary of the RSU activity | A summary of the restricted stock units (“RSU”) activity for the nine months ended September 30, 2023 is as follows: Shares Weighted Average December 31, 2022 Nonvested RSUs 472,332 $ 16.00 Granted 152,346 $ 13.31 Vested ( 113,441 ) $ 14.76 Forfeited ( 27,208 ) $ 16.00 September 30, 2023 Nonvested RSUs 484,029 $ 15.45 |
2021 Equity Plan [Member] | Restricted Stock [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Summary of Restricted Stock Activity | A summary of the restricted stock activity for the nine months ended September 30, 2023 is as follows: Shares Weighted Average December 31, 2022 Nonvested restricted stock 2,281,300 $ 3.85 Vested ( 326,670 ) $ 3.85 September 30, 2023 Nonvested restricted stock 1,954,630 $ 8.50 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Schedule of Share Repurchase Activity | A summary of the stock repurchase activity under the Repurchase Program, is summarized as follows (in thousands, except share and per share amounts): Three Months Nine Months Shares repurchased 244,782 4,140,519 Average price per share $ 14.63 $ 13.50 Costs recorded to accumulated deficit Total repurchase costs $ 3,577 $ 55,829 Additional associated costs 42 642 Total costs recorded to accumulated deficit $ 3,619 $ 56,471 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Net Income Per Share | Basic and diluted net income per share was calculated as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Basic net income per share $ 0.08 $ 0.11 $ 0.16 $ 0.29 Diluted net income per share $ 0.07 $ 0.11 $ 0.15 $ 0.29 Numerator: Net income (in thousands) $ 10,773 $ 17,209 $ 22,480 $ 44,458 Denominator: Weighted average number of shares outstanding - basic 143,231,707 150,930,340 144,392,463 150,740,418 Add stock options to purchase shares and restricted stock units 1,501,650 1,426,967 2,000,533 1,634,694 Weighted average number of shares outstanding - diluted 144,733,357 152,357,307 146,392,996 152,375,112 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Adjusted EBITDA Reconciled to Net Income | A reconciliation of Segment Adjusted EBITDA to net income for the three and nine months ended September 30, 2023 and 2022 is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Adjusted EBITDA Americas $ 60,188 $ 57,205 $ 157,168 $ 156,978 International 4,603 6,983 12,154 21,644 Total $ 64,791 $ 64,188 $ 169,322 $ 178,622 Adjustments to reconcile to net income: Interest expense, net 7,557 1,740 20,125 4,002 Provision for income taxes 4,881 6,709 9,530 17,076 Depreciation and amortization 32,419 34,744 96,341 103,185 Share-based compensation 4,790 2,022 10,449 5,824 Transaction and acquisition-related charges (a) 1,571 1,908 3,832 4,585 Integration, restructuring, and other charges (b) 2,800 ( 144 ) 6,565 ( 508 ) Net income $ 10,773 $ 17,209 $ 22,480 $ 44,458 (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. Also includes incremental professional service fees incurred related to the initial public offering and subsequent one-time compliance efforts. The three and nine months ended September 30, 2023 and 2022 include a transaction bonus expense related to one of the Company’s 2021 acquisitions. (b) Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to nonrecurring legal exposures, foreign currency (gains) losses, and (gains) losses on the sale of assets. |
Schedule of Revenues by Geographic Region | The following summarizes revenues by geographical region (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues Americas $ 176,046 $ 176,091 $ 490,784 $ 506,770 International 25,805 31,628 74,766 96,413 Eliminations ( 1,487 ) ( 1,733 ) ( 4,351 ) ( 5,755 ) Total revenues $ 200,364 $ 205,986 $ 561,199 $ 597,428 |
Summary of Long Lived Assets by Geographical Area | The following table sets forth net long-lived assets by geographic area (in thousands): September 30, 2023 December 31, 2022 Long-lived assets, net United States, country of domicile $ 1,104,924 $ 1,134,201 All other countries 169,062 180,258 Total long-lived assets, net $ 1,273,986 $ 1,314,459 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Level 1 [Member] | Interest Rate Collars [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Fair value of net assets and liabilities | $ 0 |
Level 1 [Member] | Interest Rate Swaps [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Fair value of net assets and liabilities | 0 |
Level 2 [Member] | Interest Rate Collars [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Fair value of net assets and liabilities | 0 |
Level 2 [Member] | Interest Rate Swaps [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Fair value of net assets and liabilities | 982 |
Level 3 [Member] | Interest Rate Collars [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Fair value of net assets and liabilities | 0 |
Level 3 [Member] | Interest Rate Swaps [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Fair value of net assets and liabilities | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) Customer | Sep. 30, 2022 USD ($) Customer | Sep. 30, 2023 USD ($) Customer | Sep. 30, 2022 USD ($) Customer | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Write down of abandoned property and equipment | $ 300 | |||
Non cash impairment charges | 1,800 | |||
Gain (loss) on foreign currency exchange rates | $ (26) | $ (115) | ||
No Customers [Member] | Customer Concentration Risk [Member] | Accounts Receivable | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Number Of Customers | Customer | 0 | 0 | 0 | 0 |
Concentration risk, percentage | 10% | 10% | 10% | 10% |
No Customers [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Number Of Customers | Customer | 0 | |||
Concentration risk, percentage | 10% | 10% | ||
One Customer [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Number Of Customers | Customer | 1 | 1 | 1 | |
Concentration risk, percentage | 11% | 11% | ||
Other Comprehensive Income (Loss) [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Gain (loss) on foreign currency exchange rates | $ 1,600 | $ (10,300) | $ 500 | $ (23,100) |
Operations and Comprehensive Income (Loss) [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Gain (loss) on foreign currency exchange rates | $ 100 | $ 1,100 | $ (200) | $ 2,400 |
Acquisitions (Additional Inform
Acquisitions (Additional Information) (Details) - Infinite ID $ in Thousands | 1 Months Ended | 9 Months Ended |
Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||
Business acquisition, Percentage acquired | 100% | 100% |
Cash purchase price | $ 41,000 | $ 41,000 |
Acquisitions - Summary of Consi
Acquisitions - Summary of Consideration Paid and Amounts Recognized for Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Consideration | |||
Cash purchase price | $ 41,122 | $ 19,044 | |
Infinite ID | |||
Consideration | |||
Goodwill | $ 28,100 | 28,100 | |
Total fair value of consideration transferred | 41,122 | ||
Payments to Acquire Businesses, Gross | 41,000 | 41,000 | |
Other transaction adjustments | 122 | ||
Total identifiable net assets | 13,022 | 13,022 | |
Current assets | 1,368 | 1,368 | |
Property and equipment, including software developed for internal use | 5,959 | 5,959 | |
Customer lists | 6,500 | 6,500 | |
Other Assets | 236 | 236 | |
Total liabilities | $ 1,041 | $ 1,041 |
Property and Equipment, net - S
Property and Equipment, net - Summary of Property and Equipment, net (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property Plant And Equipment [Line Items] | ||
Total property and equipment | $ 340,965 | $ 313,971 |
Less: accumulated depreciation and amortization | (251,292) | (200,442) |
Property and equipment, net | 89,673 | 113,529 |
Furniture and equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 26,494 | 23,422 |
Capitalized software for internal use, acquired by business combination [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 232,505 | 227,405 |
Capitalized software for internal use, developed internally or otherwise purchased [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | 79,544 | 60,187 |
Leasehold improvements [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment | $ 2,422 | $ 2,957 |
Property and Equipment, net- Ad
Property and Equipment, net- Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization expense | $ 16.9 | $ 17.7 | $ 50 | $ 51.9 |
Goodwill, Trade Name, and Cus_3
Goodwill, Trade Name, and Customer Lists - Schedule of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Goodwill [Line Items] | |
Balance - December 31, 2022 | $ 793,080 |
Acquisition | 0 |
Foreign currency translation | (210) |
Balance - September 30, 2023 | 820,970 |
Americas | |
Goodwill [Line Items] | |
Balance - December 31, 2022 | 677,171 |
Acquisition | 0 |
Foreign currency translation | 87 |
Balance - September 30, 2023 | 705,358 |
International | |
Goodwill [Line Items] | |
Balance - December 31, 2022 | 115,909 |
Acquisition | 0 |
Foreign currency translation | (297) |
Balance - September 30, 2023 | $ 115,612 |
Goodwill, Trade Name, and Cus_4
Goodwill, Trade Name, and Customer Lists - Summary of Gross Carrying Value and Accumulated Amortization of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 615,943 | $ 609,721 |
Accumulated Amortization | (258,694) | (212,545) |
Net Carrying Value | 357,249 | 397,176 |
Trade Name [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 93,880 | 93,959 |
Accumulated Amortization | (28,190) | (22,797) |
Net Carrying Value | $ 65,690 | $ 71,162 |
Useful Life (in years) | 20 years | 20 years |
Customer Lists [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 522,063 | $ 515,762 |
Accumulated Amortization | (230,504) | (189,748) |
Net Carrying Value | $ 291,559 | $ 326,014 |
Customer Lists [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (in years) | 13 years | 13 years |
Customer Lists [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Life (in years) | 14 years | 14 years |
Goodwill, Trade Name, and Cus_5
Goodwill, Trade Name, and Customer Lists - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 15.5 | $ 17 | $ 46.3 | $ 51.3 |
Long-term Debt - Fair Value of
Long-term Debt - Fair Value of Company's Long-term Debt Obligation (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Less: Deferred financing costs | $ (6,712) | $ (8,075) |
Long-term debt, net | 558,012 | 556,649 |
First Lien Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 564,724 | $ 564,724 |
Long-term Debt - Additional Inf
Long-term Debt - Additional Information (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Debt Instrument [Line Items] | |
Description of borrowing capacity not subject to net leverage ratio covenant | In the event the Company’s outstanding indebtedness under the Revolver exceeds 35% of the aggregate principal amount of the revolving commitments then in effect, it is required to maintain a consolidated first lien leverage ratio no greater than 7.75 to 1.00. |
Minimum [Member] | |
Debt Instrument [Line Items] | |
Debt instrument, net leverage ratio | 7.75 |
Maximum [Member] | |
Debt Instrument [Line Items] | |
Debt instrument, net leverage ratio | 1 |
Revolver [Member] | |
Debt Instrument [Line Items] | |
Maturity Date | Jul. 31, 2026 |
Outstanding borrowing under revolver | $ 0 |
Maximum borrowing capacity under successor revolver | 100 |
Term Loan due January 31, 2027 [Member] | |
Debt Instrument [Line Items] | |
Carrying amount of the amount outstanding under the facility | 564.7 |
Term loan at time of issuance | $ 766.6 |
Maturity Date | Jan. 31, 2027 |
Term Loan due January 31, 2027 [Member] | LIBOR [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Interest rate | 2.75% |
Term Loan due January 31, 2027 [Member] | LIBOR [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Interest rate | 3% |
Derivatives - Summary of outsta
Derivatives - Summary of outstanding derivatives that were not designated as a hedge in qualifying hedging relationships (Details) - Derivatives Not Designated as Hedging Instruments [Member] $ in Millions | 9 Months Ended | |
Sep. 30, 2023 USD ($) | ||
Interest Rate Collar [Member] | ||
Derivative [Line Items] | ||
Effective Date | Jun. 30, 2023 | [1] |
Maturity Date | Feb. 29, 2024 | [1] |
Notional | $ 300 | [1] |
Derivative, floor interest rate | 0.48% | [1] |
Derivative, cap interest rate | 1.47% | [1] |
Interest Rate Swaps [Member] | ||
Derivative [Line Items] | ||
Effective Date | Jun. 30, 2023 | [2] |
Maturity Date | Feb. 28, 2026 | [2] |
Notional | $ 100 | [2] |
Derivative, swap interest rate | 4.32% | [2] |
[1] In conjunction with the June 2023 transition of the reference rate from LIBOR to SOFR, the cap rate was reduced from 1.50 % to 1.47 %. In conjunction with the June 2023 transition of the reference rate from LIBOR to SOFR, the fixed rate was reduced from 4.36 % to 4.32 %. |
Derivatives - Summary of outs_2
Derivatives - Summary of outstanding derivatives that were not designated as a hedge in qualifying hedging relationships (Parenthetical) (Details) | Jun. 30, 2023 |
SOFR [Member] | Interest Rate Swaps [Member] | |
Derivative [Line Items] | |
Derivative, swap interest rate | 4.32% |
SOFR [Member] | Interest Rate Collar [Member] | |
Derivative [Line Items] | |
Derivative, cap interest rate | 1.47% |
LIBOR [Member] | Interest Rate Swaps [Member] | |
Derivative [Line Items] | |
Derivative, swap interest rate | 4.36% |
LIBOR [Member] | Interest Rate Collar [Member] | |
Derivative [Line Items] | |
Derivative, cap interest rate | 1.50% |
Derivatives - Summary of Locati
Derivatives - Summary of Location and Fair Value of Financial Position and Location of Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Derivative [Line Items] | |||||
Derivative, Gain, Statement of Income or Comprehensive Income [Extensible Enumeration] | Interest expense (income), net | Interest expense (income), net | Interest expense (income), net | Interest expense (income), net | |
Derivatives Not Designated as Hedging Instruments [Member] | Interest Rate Swaps [Member] | |||||
Derivative [Line Items] | |||||
Gain | $ (857) | $ 0 | $ 1,323 | $ 0 | |
Derivatives Not Designated as Hedging Instruments [Member] | Interest Rate Swaps [Member] | Prepaid Expenses and Other Current Assets [Member] | |||||
Derivative [Line Items] | |||||
Fair Value | 982 | 982 | $ 0 | ||
Derivatives Not Designated as Hedging Instruments [Member] | Interest Rate Collar [Member] | |||||
Derivative [Line Items] | |||||
Gain | (109) | $ 3,998 | (878) | $ 11,376 | |
Derivatives Not Designated as Hedging Instruments [Member] | Interest Rate Collar [Member] | Prepaid Expenses and Other Current Assets [Member] | |||||
Derivative [Line Items] | |||||
Fair Value | $ 0 | $ 0 | $ 11,570 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 31.20% | 28.10% | 29.80% | 27.80% |
U.S. Federal statutory income tax rate | 21% | 21% | 21% | 21% |
Revenues - Additional Informati
Revenues - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Contract asset balance | $ 7 | $ 6.5 |
Contract liability balance | $ 1.2 | $ 1.1 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
May 10, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2021 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Unrecognized pre-tax noncash compensation | $ 41.1 | $ 41.1 | ||||
ESPP percentage | 15% | |||||
Weighted Average Remaining Contractual Term, Grants Vested | 1 year 4 months 24 days | |||||
Impact of Divided to stock option awards and ESPP purchases | $ 1.5 | $ 1.5 | ||||
Employee stock purchase plan expenses | $ 0.2 | $ 0.1 | $ 0.7 | $ 0.3 | ||
Number of units, issued | 0 | |||||
2021 Equity Plan [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Common stock, reserved for future issuance | 17,525,000 | |||||
Share available for issuance | 16,873,494 | 16,873,494 | ||||
Employee Stock Option | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Unrecognized pre-tax noncash compensation | $ 19.2 | $ 19.2 | ||||
Restricted Stock Agreements [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Unrecognized pre-tax noncash compensation | 15.7 | 15.7 | ||||
Restricted Stock Units [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Unrecognized pre-tax noncash compensation | $ 6.2 | $ 6.2 | ||||
Performance Awards [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Unrecognized pre-tax noncash compensation | $ 28.8 | |||||
Weighted Average Remaining Contractual Term, Grants Vested | 1 year 10 months 24 days |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Recognition of Share-Based Compensation related to Employees (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Allocated share based compensation expense | $ 4,790 | $ 2,022 | $ 10,449 | $ 5,824 |
Cost of Services [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Allocated share based compensation expense | 330 | 292 | 918 | 842 |
Product and Technology Expense [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Allocated share based compensation expense | 640 | 402 | 1,665 | 918 |
Selling, General and Administrative Expenses [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Allocated share based compensation expense | $ 3,820 | $ 1,328 | $ 7,866 | $ 4,064 |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary of the Option Unit Activity (Details) | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Weighted Average Remaining Contractual Term, Grants Vested | 1 year 4 months 24 days |
2021 Equity Plan [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of units, grant outstanding beginning balance | shares | 4,311,662 |
Number of units, granted | shares | 384,994 |
Number of grants, forfeited | shares | (87,038) |
Number of units, grant outstanding ending balance | shares | 4,609,618 |
Number of grants, vested | shares | 1,548,685 |
Number of grants, unvested | shares | 3,060,933 |
Weighted average exercise price, grant outstanding beginning balance | $ / shares | $ 15.24 |
Weighted average exercise price, grants issued | $ / shares | 11.96 |
Weighted average exercise price, forefeited | $ / shares | 15.54 |
Weighted average exercise price, grant outstanding ending balance | $ / shares | 13.57 |
Weighted average exercise price, grants vested | $ / shares | 13.64 |
Weighted average exercise price, grants unvested | $ / shares | $ 13.53 |
Weighted Average Remaining Contractual Term, Grants Outstanding | 8 years |
Weighted Average Remaining Contractual Term, Grants Vested | 7 years 10 months 24 days |
Aggregate Intrinsic Value, grants outstanding | $ | $ 2,100,000 |
Aggregate Intrinsic Value, grants vested | $ | $ 500 |
First Advantage Corporation [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of units, grant outstanding beginning balance | shares | 2,843,342 |
Number of grants, exercised | shares | (357,772) |
Number of grants, forfeited | shares | (533,715) |
Number of units, grant outstanding ending balance | shares | 1,951,855 |
Number of grants, vested | shares | 539,767 |
Number of grants, unvested | shares | 1,412,088 |
Weighted average exercise price, grant outstanding beginning balance | $ / shares | $ 6.66 |
Weighted average exercise price, grants issued | $ / shares | 6.13 |
Weighted average exercise price, forefeited | $ / shares | 6.68 |
Weighted average exercise price, grant outstanding ending balance | $ / shares | 5.15 |
Weighted average exercise price, grants vested | $ / shares | 5.12 |
Weighted average exercise price, grants unvested | $ / shares | $ 5.16 |
Weighted Average Remaining Contractual Term, Grants Outstanding | 6 years 4 months 24 days |
Weighted Average Remaining Contractual Term, Grants Vested | 6 years 2 months 12 days |
Aggregate Intrinsic Value, grants outstanding | $ | $ 16,900,000 |
Aggregate Intrinsic Value, grants vested | $ | $ 4,700,000 |
Share-Based Compensation - Su_3
Share-Based Compensation - Summary of Assumptions Applied to Establish Fair Value of Options Granted Using Black-Scholes Option Pricing Model (Details) - $ / shares | 9 Months Ended | |
May 10, 2023 | Sep. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected stock price volatility | 37.43% | |
Risk- Free Interest Rate | 3.40% | |
Expected Term (in years) | 4 years 8 months 1 day | |
Estimated fair value of the underlying unit | $ 12.61 | |
2021 Equity Plan [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected stock price volatility | 35.48% | |
Risk- Free Interest Rate | 3.64% | |
Expected Term (in years) | 6 years 3 months | |
Estimated fair value of the underlying unit | $ 11.96 |
Share-Based Compensation - Su_4
Share-Based Compensation - Summary of the RSU Activity (Details) - 2021 Equity Plan [Member] | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Restricted Stock Units [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of units, outstanding beginning balance | shares | 472,332 |
Number of units, granted | shares | 152,346 |
Number of units, vested | shares | (113,441) |
Number of units, forfeited | shares | (27,208) |
Number of units, outstanding ending balance | shares | 484,029 |
Weighted Average Grant Date Fair Value, beginning value | $ / shares | $ 16 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 13.31 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 14.76 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 16 |
Weighted Average Grant Date Fair Value, Ending balance | $ / shares | $ 15.45 |
Restricted Stock [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of units, outstanding beginning balance | shares | 2,281,300 |
Number of units, vested | shares | (326,670) |
Number of units, outstanding ending balance | shares | 1,954,630 |
Weighted Average Grant Date Fair Value, beginning value | $ / shares | $ 3.85 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 3.85 |
Weighted Average Grant Date Fair Value, Ending balance | $ / shares | $ 8.5 |
Equity - Additional Information
Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | |||||||
Aug. 08, 2023 | Aug. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 14, 2023 | Feb. 28, 2023 | Dec. 31, 2022 | Nov. 08, 2022 | Aug. 02, 2022 | |
Class Of Stock [Line Items] | |||||||||
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 | |||||||
Common stock, shares issued | 145,217,657 | 148,732,603 | |||||||
Common stock, shares outstanding | 145,217,657 | 148,732,603 | |||||||
Common stock, par value | $ 0.001 | $ 0.001 | |||||||
Preferred stock, shares authorized | 250,000,000 | 250,000,000 | |||||||
Preferred stock, shares issued | 0 | 0 | |||||||
Preferred stock, shares outstanding | 0 | 0 | |||||||
Accrued liabilities | $ 16,502 | $ 16,400 | |||||||
Other liabilities | 2,591 | $ 3,337 | |||||||
Cash dividends paid | 217,683 | $ 0 | |||||||
Dividend Declared [Member] | |||||||||
Class Of Stock [Line Items] | |||||||||
Accrued liabilities | 300 | ||||||||
Other liabilities | 400 | ||||||||
Cash dividends paid | $ 217,700 | ||||||||
Dividend, declare date | Aug. 08, 2023 | ||||||||
Cash dividend declared, per share | $ 1.5 | ||||||||
Dividend, record date | Aug. 21, 2023 | ||||||||
Share Repurchase Program [Member] | |||||||||
Class Of Stock [Line Items] | |||||||||
Authorized stock repurchase program, Initial | $ 200,000 | $ 200,000 | $ 150,000 | $ 50,000 | |||||
Remaining Authorized Repurchase Amount | $ 83,600 |
Equity - Schedule of Share Repu
Equity - Schedule of Share Repurchase Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Shares repurchased | ||
Shares repurchased | 244,782 | 4,140,519 |
Average price per share | $ 14.63 | $ 13.5 |
Costs recorded to accumulated deficit | ||
Total repurchase costs | $ 3,577 | $ 55,829 |
Additional associated costs | 42 | 642 |
Share Repurchase Cost Recorded To Accumulated Defecit, Total | $ 3,619 | $ 56,471 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
Indemnity liability | $ 4.6 | $ 4.4 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Related Party Transaction [Line Items] | |
Related party transactions | $ 0 |
Net Income Per Share - Addition
Net Income Per Share - Additional Information (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 4,739,037 | 2,918,315 | 4,754,689 | 2,614,866 |
Net Income Per Share - Summary
Net Income Per Share - Summary of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Abstract] | ||||||||
Basic net income per share | $ 0.08 | $ 0.11 | $ 0.16 | $ 0.29 | ||||
Diluted net income per share | $ 0.07 | $ 0.11 | $ 0.15 | $ 0.29 | ||||
Numerator: | ||||||||
Net income | $ 10,773 | $ 9,782 | $ 1,925 | $ 17,209 | $ 14,236 | $ 13,013 | $ 22,480 | $ 44,458 |
Denominator: | ||||||||
Weighted average number of shares outstanding - basic | 143,231,707 | 150,930,340 | 144,392,463 | 150,740,418 | ||||
Add stock options to purchase shares and restricted stock units | 1,501,650 | 1,426,967 | 2,000,533 | 1,634,694 | ||||
Weighted average number of shares outstanding - diluted | 144,733,357 | 152,357,307 | 146,392,996 | 152,375,112 |
Reportable Segments - Schedule
Reportable Segments - Schedule of Adjusted EBITDA Reconciled to Net Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Segment Reporting Information [Line Items] | |||||||||
Interest expense, net | $ (7,557) | $ (1,740) | $ (20,125) | $ (4,002) | |||||
Provision for income taxes | 4,881 | 6,709 | 9,530 | 17,076 | |||||
Depreciation and amortization | 32,419 | 34,744 | 96,341 | 103,185 | |||||
Shares based compensation | 4,790 | 2,022 | 10,449 | 5,824 | |||||
Net income | 10,773 | $ 9,782 | $ 1,925 | 17,209 | $ 14,236 | $ 13,013 | 22,480 | 44,458 | |
Total Segments | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Total Adjusted EBITDA | 64,791 | 64,188 | 169,322 | 178,622 | |||||
Interest expense, net | 7,557 | 1,740 | 20,125 | 4,002 | |||||
Provision for income taxes | 4,881 | 6,709 | 9,530 | 17,076 | |||||
Depreciation and amortization | 32,419 | 34,744 | 96,341 | 103,185 | |||||
Shares based compensation | 4,790 | 2,022 | 10,449 | 5,824 | |||||
Transaction and acquisition-related charges | [1] | 1,571 | 1,908 | 3,832 | 4,585 | ||||
Integration, restructuring, and other charges | [2] | 2,800 | (144) | 6,565 | (508) | ||||
Net income | 10,773 | 17,209 | 22,480 | 44,458 | |||||
Americas | Total Segments | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Total Adjusted EBITDA | 60,188 | 57,205 | 157,168 | 156,978 | |||||
International | Total Segments | |||||||||
Segment Reporting Information [Line Items] | |||||||||
Total Adjusted EBITDA | $ 4,603 | $ 6,983 | $ 12,154 | $ 21,644 | |||||
[1] 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. Also includes incremental professional service fees incurred related to the initial public offering and subsequent one-time compliance efforts. The three and nine months ended September 30, 2023 and 2022 include a transaction bonus expense related to one of the Company’s 2021 acquisitions. Represents charges from organizational restructuring and integration activities, non-cash, and other charges primarily related to nonrecurring legal exposures, foreign currency (gains) losses, and (gains) losses on the sale of assets. |
Reportable Segments - Schedul_2
Reportable Segments - Schedule of Revenues by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total revenues | $ 200,364 | $ 205,986 | $ 561,199 | $ 597,428 |
Eliminations | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total revenues | (1,487) | (1,733) | (4,351) | (5,755) |
Americas | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total revenues | 176,046 | 176,091 | 490,784 | 506,770 |
International | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Total revenues | $ 25,805 | $ 31,628 | $ 74,766 | $ 96,413 |
Reportable Segments - Summary o
Reportable Segments - Summary of Long Lived Assets by Geographical Area (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Operating Segments | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets, net | $ 1,273,986 | $ 1,314,459 |
United States, country of domicile | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets, net | 1,104,924 | 1,134,201 |
All Other Countries | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived assets, net | $ 169,062 | $ 180,258 |
Reportable Segments - Additiona
Reportable Segments - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 Country | Sep. 30, 2022 Country | Sep. 30, 2023 Segment Country | Sep. 30, 2022 Country Segment | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | Segment | 2 | 2 | ||
Non-US [Member] | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, number of customers | Country | 0 | 0 | 0 | 0 |
Non-US [Member] | Revenue Benchmark | Geographic Concentration Risk | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of sales | 10% | 10% | 10% | 10% |
Subsequent Events (Additional I
Subsequent Events (Additional Information) (Details) - Dividend Declared | Aug. 08, 2023 $ / shares |
Subsequent Event [Line Items] | |
Cash dividend declared, per share | $ 1.5 |
Dividend, declare date | Aug. 08, 2023 |
Dividend, record date | Aug. 21, 2023 |