Slide 1: Q3 2023 Earnings Presentation
Q3 2023 EARNINGS PRESENTATION November 9, 2023
Slide 2: Forward-Looking Statements; Non-GAAP Financial Information
FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, our operations and financial performance. For
Slide 3: Company Overview & Q3 2023 Highlights
COMPANY OVERVIEW & Q3 2023 HIGHLIGHTS Scott Staples Chief Executive Officer
Slide 4: Company Snapshot & Highlights
COMPANY OUR CUSTOMERS SNAPSHOT & HIGHLIGHTS 33K 100M+ 50%+ 97% 13 Year Customers Screens of Fortune 100 Gross Retention Average Tenure and ~33% Fortune 5001 Rate for Top 100 Customers LEADING GLOBAL PROVIDER OF EMPLOYMENT BACKGROUND SCREENING AND VERIFICATION SOLUTIONS OUR TECHNOLOGY OUR MARKET 1 93
Slide 5: Q3 2023 Key Business Highlights
Q3 2023 Investing in AI, Technology, Data, and Automation • Enables innovative, faster, and easier solutions for customers and applicants KEY BUSINESS • Fuels long-term profitable growth and Adjusted EBITDA Margin expansion HIGHLIGHTS • Enhances customer value proposition and drives sustainable comp
Slide 6: Financial Results & Outlook
FINANCIAL RESULTS & OUTLOOK David Gamsey EVP, Chief Financial Officer
Slide 7: Q3 2023 Financial Results
Q3 2023 FINANCIAL RESULTS ($ in millions, except per share data and percentages) REVENUES ADJUSTED EBITDA AND MARGIN 1 ADJUSTED DILUTED EARNINGS PER SHARE 1 $206.0 $200.4 $0.28 $64.2 $64.8 $0.26 -2.7% +0.9% +7.7% -3.0% 32.3% Constant 31.2% Currency Basis 1 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3
Slide 8: Long-Term Revenue Growth Target Supported by Historical Growth Algorithm
LONG-TERM REVENUE GROWTH TARGET SUPPORTED BY HISTORICAL PERFORMANCE OF GROWTH ALGORITHM Existing Customers New Customers • Fragmented industry Key Organic • $13B Total Addressable Market • Leading value proposition Growth Drivers: • Significant whitespace • New product launches • Track record of sha
Slide 9: Revenue Growth Algorithm Performance
REVENUE GROWTH ALGORITHM PERFORMANCE (Year-over-year revenue performance) Q4 ‘22 Q1 ‘23 Q2 ‘23 Q3 ‘23 Upsell / Cross Sell 4% 5% 4% 4% New Logos 4% 4% 5% 5% Attrition (2%) (3%) (3%) (3%) Base Growth (8%) (13%) (13%) (9%) Q4 ‘22 Q1 ‘23 Q2 ‘23 Q3 ‘23 3-Year Historical LTM CAGR: Organic Revenue 17% 17%
Slide 10: Consistent Track Record of Industry Leading Adjusted EBITDA Margins
CONSISTENT TRACK RECORD OF INDUSTRY LEADING ADJUSTED EBITDA MARGINS ($ in millions) Adjusted EBITDA and Margin 1,2 3-Year LTM AEBITDA CAGR 21.4% $69.4 $70.3 $63.9 $64.2 $64.8 $60.8 $56.3 $56.0 $53.6 $48.6 $43.3 $44.6 $36.6 $31.7 $27.2 33.2% 33.1% 32.2% 32.7% 32.3% 31.6% 31.2% 30.1% 30.2% 30.2% 28.5%
Slide 11: Balance Sheet Strength Provides Flexibility
BALANCE SHEET STRENGTH PROVIDES FLEXIBILITY CLEAR AND CONSISTENT CAPITAL SIGNIFICANT CASH FLOW MODEST NET LEVERAGE ALLOCATION PRIORITIES GENERATION • Cash flow from operations declined year-over- • Net leverage2 of 1.7x at 9/30/23 Continue to Invest in Organic Growth year primarily due to higher cas
Slide 12: Reaffirming Full Year 2023 Guidance
REAFFIRMING FULL YEAR 2023 GUIDANCE • Expect results at low end of guidance ranges given current hiring environment and expectations that existing macroeconomic conditions and similar labor market trends will continue through the end of fiscal year 2023 • Guidance ranges have not been adjusted upwar
Slide 13: Closing Remarks
CLOSING REMARKS Scott Staples Chief Executive Officer
Slide 14: Key Strategic Focus Areas Driving Growth & Industry Leadership
KEY STRATEGIC FOCUS AREAS DRIVING GROWTH & INDUSTRY LEADERSHIP Verticalized Go-To-Market 14 Purposeful Strategy Flexible Cost Growth Through Structure to M&A Enhance Margins Accelerate Sustainability Organic Embedded in Growth Our Culture 14
Slide 15: Investment Highlights
INVESTMENT HIGHLIGHTS 1 A global leader in a large, fragmented, and growing market Diversified enterprise-focused customer base across attractive industry 2 verticals with focus on high volume hiring Digital technology, automation, and machine learning enabling 3 customers to hire smarter and onboar
Slide 16: Appendix
APPENDIX Supplemental Materials and Reconciliations to GAAP Measures
Slide 17: FY 2022 Revenue Breakdown by Vertical
FY 2022 REVENUE BREAKDOWN BY VERTICAL Technology Transportation Small Business 3% 22% 4% Manufacturing and Other Industrials 7% High Volume Business and 11% Hiring Retail and Professional Services Focused 20% E-Commerce Verticals 12% 4% 12% Financial 5% Services Healthcare Hospitality General Staffi
Slide 18: Purposeful Growth Through M&A
PURPOSEFUL GROWTH THROUGH M&A 2021 2022 2023 U.K. Screening Business of U.K. U.S. Latin America U.S. U.S. (September 2023) $7.6M $39.4M $2.1M $19.8M $41.0M purchase price purchase price purchase price purchase price purchase price Geographic Vertical Geographic Product Suite Vertical Capabilities an
Slide 19: Dedicated to Our Sustainability Efforts
DEDICATED TO OUR SUSTAINABILITY EFFORTS Our commitments to advancing sustainability Our commitments are through to advancing a lens ofare sustainability enhancing through astakeholder value lens of enhancing while continuing to be avalue stakeholder responsible corporate while continuing citizen, to
Slide 20: Long-Term Organic Growth Targets
LONG-TERM ORGANIC GROWTH TARGETS 1 Long-Term Organic Targets Key Drivers • Proven growth formula – Existing customer base growth – Upsell / cross-sell to existing customers – New customer wins Revenues Growth 8 – 10% – Net of existing customer attrition • Performance track record • Identified market
Slide 21: Adjusted EBITDA
ADJUSTED EBITDA Predecessor Successor Period Ended Period Ended For the Quarters Ended LTM Jan 31, 2020 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 Dec 31, 2020 Mar 31, 2021 Jun 30, 2021 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 S
Slide 22: Adjusted EBITDA (Q1 2020 Pro Forma for Silver Lake Transaction)
ADJUSTED EBITDA (Q1 2020 Pro Forma for Silver Lake Transaction) Pro Forma Predecessor Successor Adjustments for the Period Ended Period Ended Three Pro Forma Three Jan 31, 2020 Mar 31, 2020 Months Ended Months Ended (in thousands) Q1 Q1 Mar 31, 2020 Mar 31, 2020 Net (loss) income $ (36,530) $ (21,81
Slide 23: Constant Currency Revenues and Adjusted EBITDA
CONSTANT CURRENCY REVENUES CONSTANT CURRENCY ADJUSTED EBITDA (a) Constant currency revenue is calculated by translating current period amounts using prior-year period exchange rates. (a) Constant currency Adjusted EBITDA is calculated by translating current period amounts using prior-year period exc
Slide 24: Adjusted Net Income and Adjusted Diluted Earnings Per Share
ADJUSTED NET INCOME ADJUSTED DILUTED EARNINGS PER SHARE (a) Represents non-cash interest expense related to the amortization of debt issuance costs for the Company’s First Lien Credit Facility. Beginning in 2022, this adjustment also includes the impact of the change in fair value of interest rate s