0001645070-24-000075 | 10-Q | XBRL Viewer

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Allowance for credit losses	$ 2,933	$ 2,816
Preferred stock, par value (in USD per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	100,000,000	100,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	105,320,343	99,966,158
Common stock, shares outstanding (in shares)	97,811,676	93,194,403
Common stock held in treasury (in shares)	7,508,667	6,771,755

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the periods presented were as follows:


(in thousands)
Goodwill as of December 31, 2023	$	879,408
Acquisition of Vault	24,203

Foreign currency translation adjustment	(749)
Goodwill as of March 31, 2024	$	902,862

Intangible Assets

Intangible assets, net consisted of the following for the periods presented:


	March 31, 2024						December 31, 2023
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer lists	$	571,582	$	(383,343)	$	188,239	$	533,204	$	(375,107)	$	158,097
Trademarks	79,205		(45,188)		34,017		77,860		(43,815)		34,045
Non-compete agreements	3,971		(2,939)		1,032		3,979		(2,869)		1,110
Technology	274,883		(238,207)		36,676		266,194		(233,996)		32,198
Domain names	10,118		(5,524)		4,594		10,118		(5,356)		4,762
	$	939,759	$	(675,201)	$	264,558	$	891,355	$	(661,143)	$	230,212

Included within technology is $31.0 million and $30.2 million of internal-use software, net of accumulated amortization, as of March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024, $7.1 million of technology assets have not yet been put in service.

The Company capitalized $4.9 million of costs to develop internal-use software included in technology during the three months ended March 31, 2024 (consisting of internal costs of $3.9 million and external costs of $1.0 million). The Company capitalized $4.1 million of costs to develop internal-use software included in technology during the three months ended March 31, 2023 (consisting of internal costs of $3.4 million and external costs of $0.7 million).

For the three months ended March 31, 2024, the Company recorded no write-down of capitalized software. For the three months ended March 31, 2023, the Company recorded a write-down related to the impairment of capitalized software in the amount of $0.1 million.

Amortization expense was $14.9 million and $14.1 million for the three months ended March 31, 2024 and 2023, respectively.

Except for the customer lists, which are amortized utilizing an accelerated method, all other intangible assets are amortized on a straight-line basis, which approximates the pattern in which economic benefits are consumed. Estimated amortization expense as of March 31, 2024 is as follows for each of the next five years:


(in thousands)
Year Ending December 31,
Remainder of fiscal year 2024	$	44,563
2025	50,671
2026	42,044
2027	31,520
2028	25,842
Thereafter	69,918
	$	264,558

Leases - Schedule of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Components of total lease costs
Operating lease expense	$ 761	$ 1,379
Sublease income	(388)	(222)
Total net lease costs	$ 373	$ 1,157

Derivative Instruments and Hedging Activities

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Cash Flow Hedges

For derivatives designated and that qualify as cash flow hedges for accounting purposes, the unrealized gain or loss on the derivative is initially recorded in accumulated OCI, reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item.

Interest Rate Swap Hedges

To reduce exposure to variability in expected future cash outflows on variable rate debt attributable to the changes in the applicable interest rates under the 2022 Credit Agreement, the Company entered into interest rate swaps to economically offset a portion of this risk.

As of March 31, 2024, the Company had the following outstanding interest rate swap derivatives that were used to hedge its interest rate risks:

Product

Number of Instruments

Effective Date

Maturity Date

Current Notional(1)

Interest Rate Swap

February 28, 2023

November 29, 2027

$300.0 million USD

_________________________

(1)The notional value steps down from $300.0 million to $150.0 million on February 27, 2026.

All financial derivative instruments are carried at their fair value on the balance sheet. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the unaudited condensed consolidated balance sheets as of the dates presented:

Asset Derivatives

March 31, 2024

December 31, 2023

(in thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate swaps

Other current assets

1,952

Other current assets

1,187

Liability Derivatives

March 31, 2024

December 31, 2023

(in thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate swaps

Other liabilities

2,061

Other liabilities

5,357

The tables below present the effect of cash flow hedge accounting on accumulated OCI for the periods presented:


	Three Months Ended March 31,					Three Months Ended March 31,
(in thousands)	2024		2023			2024		2023
Derivatives designated as hedging instruments:	Amount of Gain or (Loss) Recognized in OCI on Derivative				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income


Interest rate swaps	$	4,879	$	(6,877)	Interest expense	$	818	$	97

The table below presents the effect of the Company’s cash flow hedge accounting on the unaudited condensed consolidated statements of operations and comprehensive loss for the periods presented:


	Three Months Ended March 31,
	2024		2023
(in thousands)	Interest Expense
Total amounts of income and expense line items in which the effects of cash flow hedges are recorded	$	10,312	$	8,608
Gain or (loss) on cash flow hedging relationships
Interest rate swaps:
Amount of gain or (loss) reclassified from accumulated OCI into income	$	818	$	97

Amounts reported in accumulated OCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. Based on current interest rates, during the next twelve months, the Company estimates that an additional $2.0 million net gain will be reclassified from accumulated OCI as a decrease to interest expense. No gain or loss was reclassified from accumulated OCI into earnings as a result of forecasted transactions that failed to occur during the periods presented.

Fair Value of Financial Instruments - Schedule of Assets and Liabilities that are Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Liabilities
Contingent consideration	$ 9,739	$ 2,989
Interest rate swaps
Assets
Interest rate swaps	1,952	1,187
Liabilities
Interest rate swaps	2,061	5,357
Money Market Funds
Assets
Cash equivalents from money market funds	13,600	11,593
Level 1
Liabilities
Contingent consideration	0	0
Level 1 \| Interest rate swaps
Assets
Interest rate swaps	0	0
Liabilities
Interest rate swaps	0	0
Level 1 \| Money Market Funds
Assets
Cash equivalents from money market funds	13,600	11,593
Level 2
Liabilities
Contingent consideration	0	0
Level 2 \| Interest rate swaps
Assets
Interest rate swaps	1,952	1,187
Liabilities
Interest rate swaps	2,061	5,357
Level 2 \| Money Market Funds
Assets
Cash equivalents from money market funds	0	0
Level 3
Liabilities
Contingent consideration	9,739	2,989
Level 3 \| Interest rate swaps
Assets
Interest rate swaps	0	0
Liabilities
Interest rate swaps	0	0
Level 3 \| Money Market Funds
Assets
Cash equivalents from money market funds	$ 0	$ 0

Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of fiscal year 2024	$ 44,563
2025	50,671
2026	42,044
2027	31,520
2028	25,842
Thereafter	69,918
Net	$ 264,558	$ 230,212

Leases - Schedule of Right-of-Use Assets and Lease Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Leases [Abstract]
Right-of-use asset	$ 5,872	$ 6,452
Operating leases liability, current portion	3,879	4,219
Long-term operating leases liability, net of current portion	6,606	7,278
Total operating leases liability	$ 10,485	$ 11,497
Weighted average remaining lease term in years - operating leases	3 years 7 months 6 days	3 years 8 months 12 days
Weighted average discount rate - operating leases	4.89%	4.92%

Derivative Instruments and Hedging Activities - Schedule of Company's Outstanding Derivatives (Details) - Interest rate swaps $ in Millions	Feb. 27, 2026 USD ($)	Mar. 31, 2024 USD ($) instrument
Derivative [Line Items]
Number of Instruments \| instrument		4
Current Notional		$ 300.0
Forecast
Derivative [Line Items]
Current Notional	$ 150.0

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Mar. 31, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Leases - Schedule of Remaining Lease Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Leases [Abstract]
Remainder of fiscal year 2024	$ 3,687
2025	2,380
2026	2,117
2027	2,149
2028	1,028
Thereafter	85
Total future minimum lease payments	11,446
Less: imputed interest	(961)
Total	$ 10,485	$ 11,497

Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2024

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses on the unaudited condensed consolidated balance sheets as of the periods presented consisted of the following:


(in thousands)	March 31, 2024		December 31, 2023
Accrued compensation	$	16,499	$	20,495
Accrued cost of revenues	30,155		25,548
Accrued interest	1,238		321
Other accrued expenses	25,713		17,623
Total accrued expenses	$	73,605	$	63,987

Property and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

Schedule of Property Plant and Equipment, net


(in thousands)	March 31, 2024		December 31, 2023
Furniture and fixtures	$	1,211	$	1,317
Computers and equipment	39,876		39,251
Leasehold improvements	1,879		2,067
	42,966		42,635
Less: Accumulated depreciation	(35,637)		(34,940)
Total property and equipment, net	$	7,329	$	7,695

Net (Loss) Income Per Share (Tables)

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Net Income (Loss) Per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net (loss) income per share attributable to common stockholders for the periods presented:


	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2024		2023
Numerator:
Net (loss) income attributable to stockholders	$	(7,955)	$	591


Denominator:
Weighted average number of shares outstanding—basic	90,274,094		92,877,506
Weighted average additional shares assuming conversion of potential common shares	—		2,472,836
Weighted average common shares outstanding—diluted	90,274,094		95,350,342
Net (loss) income per share attributable to stockholders, basic	$	(0.09)	$	0.01
Net (loss) income per share attributable to stockholders, diluted	$	(0.09)	$	0.01

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table summarizes the weighted average potentially dilutive securities that were excluded from the computation of diluted net (loss) income per share because their effect would have been anti-dilutive for the periods presented:


	Three Months Ended March 31,
	2024	2023
Stock options	12,106,717	12,136,464
Restricted stock	3,950,029	5,160,978
Restricted stock units	114,348	59,895

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or that would be paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. An asset or liability’s level in the hierarchy is based on the lowest level of input that is significant to the fair value measurement. The three levels of inputs used to measure fair value are as follows:


Level 1						Quoted prices in active markets for identical assets and liabilities.
Level 2						Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3						Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flows methodologies and similar techniques that use significant unobservable inputs.

The Company considers the recorded value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses to approximate the fair value of the respective assets and liabilities as of March 31, 2024 and December 31, 2023 based upon the short-term nature of such assets and liabilities (Level 1). See Note 9, “Debt” for discussion of the fair value of the Company’s debt.

Interest rate swaps are measured at fair value on a recurring basis in the Company’s financial statements and are considered Level 2 financial instruments. Interest rate swaps are measured based on quoted prices for similar financial instruments and other observable inputs recognized. The currency forward agreements are typically cash settled in U.S. dollars for their fair value at or close to their settlement date.

Contingent consideration related to acquisitions is considered a Level 3 financial instrument. As of March 31, 2024, the fair value of contingent consideration related to the January 2, 2024 acquisition of Vault, the March 1, 2023 acquisition of A-Check and the November 30, 2021 acquisition of EBI. As of December 31, 2023, the fair value of contingent consideration related to the March 1, 2023 acquisition of A-Check and the November 30, 2021 acquisition of EBI. The contingent consideration consists of estimated future payments related to the Company’s acquisitions, based on metrics such as revenue retention and referral revenue. The fair value is determined using various assumptions and estimates, including revenue and customer projections to forecast a range of outcomes for the contingent consideration. The Company reassesses the estimated fair value of the contingent consideration at the end of each reporting period based on the information available at the time. Changes in the significant unobservable inputs used may result in a significantly higher or lower fair value measurement. Changes in fair value of contingent consideration are recorded in selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive loss.

The following tables present 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 the periods presented:


	March 31, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents from money market funds	$	13,600	$	—	$	—	$	13,600
Interest rate swaps	$	—	$	1,952	$	—	$	1,952
Liabilities
Interest rate swaps	—		2,061		—		2,061
Contingent consideration	—		—		9,739		9,739


	December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents from money market funds	11,593		—		—		11,593
Interest rate swaps	—		1,187		—		1,187
Liabilities
Interest rate swaps	—		5,357		—		5,357
Contingent consideration	$	—	$	—	$	2,989	$	2,989

The following table summarizes the change in fair value of the Level 3 liabilities with significant unobservable inputs for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024		2023
Fair value of contingent consideration, beginning of period	$	2,989	$	1,219
Acquired liabilities	2,750		4,706
Cash payments	—		—
Change in fair value of contingent consideration, net(1)	4,000		(305)
Fair value of contingent consideration, end of period(2)	$	9,739	$	5,620

_________________________

(1)During the three months ended March 31, 2024, the Company recorded a $4.0 million increase in the fair value of the contingent consideration, in accordance with the purchase agreement with EBI. Refer to Note 2. Summary of Significant Accounting Policies” for further information regarding this out-of-period adjustment.

(2)Recorded in Other current liabilities on the condensed consolidated balance sheets.

During the three months ended March 31, 2024 and 2023, the Company did not re-measure any financial assets or liabilities at fair value on a nonrecurring basis. There were no transfers between levels during the periods presented.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Derivative Instruments and Hedging Activities - Schedule of Fair Value of Derivative Financial Instruments (Details) - Derivatives designated as hedging instruments: - Interest rate swaps - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Derivative [Line Items]
Asset Derivatives	$ 1,952	$ 1,187
Liability Derivatives	$ 2,061	$ 5,357

Net (Loss) Income Per Share - Schedule of Basic and Diluted Net Income (Loss) Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Numerator:
Net (loss) income attributable to stockholders	$ (7,955)	$ 591
Denominator:
Weighted average number of shares outstanding, basic (in shares)	90,274,094	92,877,506
Weighted average additional shares assuming conversion of potential common shares (in shares)	0	2,472,836
Weighted average shares of common stock outstanding - diluted (in shares)	90,274,094	95,350,342
Net (loss) income per share attributable to stockholders, basic (in USD per share)	$ (0.09)	$ 0.01
Net (loss) income per share attributable to stockholders, diluted (in USD per share)	$ (0.09)	$ 0.01

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
REVENUES	$ 185,999	$ 179,274
OPERATING EXPENSES:
Cost of revenues (exclusive of depreciation and amortization below)	104,041	94,754
Corporate technology and production systems	13,214	11,952
Selling, general and administrative	59,890	47,451
Depreciation and amortization	15,770	15,122
Impairments and disposals of long-lived assets	168	106
Total operating expenses	193,083	169,385
OPERATING (LOSS) INCOME	(7,084)	9,889
OTHER EXPENSE (INCOME):
Interest expense, net	10,312	8,608
Other income	(423)	(412)
Total other expense, net	9,889	8,196
(LOSS) INCOME BEFORE INCOME TAXES	(16,973)	1,693
Income tax (benefit) provision	(9,018)	1,102
NET (LOSS) INCOME	(7,955)	591
Unrealized gain (loss) on hedged transactions, net of tax expense (benefit) of $1,041 and $(1,815), respectively	3,020	(5,159)
Foreign currency translation adjustments, net of tax expense of $0 and $0, respectively	(2,251)	682
Total other comprehensive income (loss)	769	(4,477)
COMPREHENSIVE LOSS	$ (7,186)	$ (3,886)
Net (loss) income per share attributable to stockholders
Basic (in USD per share)	$ (0.09)	$ 0.01
Diluted (in USD per share)	$ (0.09)	$ 0.01
Weighted average number of shares outstanding
Basic (in shares)	90,274,094	92,877,506
Diluted (in shares)	90,274,094	95,350,342

Revenue (Tables)

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

The following tables set forth total revenue by type of service for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024		2023
Screening services	$	183,019	$	176,871
Other services	2,980		2,403
Total revenue	$	185,999	$	179,274

Schedule of Total Revenue by Geographic Area

The following table sets forth total revenue by geographic area in which the revenues and invoicing are recorded for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024		2023
United States	$	159,827	$	149,742
All other countries	26,172		29,532
Total revenue	$	185,999	$	179,274

Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 939,759	$ 891,355
Accumulated Amortization	(675,201)	(661,143)
Net	264,558	230,212
Customer lists
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	571,582	533,204
Accumulated Amortization	(383,343)	(375,107)
Net	188,239	158,097
Trademarks
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	79,205	77,860
Accumulated Amortization	(45,188)	(43,815)
Net	34,017	34,045
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	3,971	3,979
Accumulated Amortization	(2,939)	(2,869)
Net	1,032	1,110
Technology
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	274,883	266,194
Accumulated Amortization	(238,207)	(233,996)
Net	36,676	32,198
Domain names
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	10,118	10,118
Accumulated Amortization	(5,524)	(5,356)
Net	$ 4,594	$ 4,762

Accrued Expenses

3 Months Ended

Mar. 31, 2024

Payables and Accruals [Abstract]

Accrued Expenses

Accrued expenses on the unaudited condensed consolidated balance sheets as of the periods presented consisted of the following:


(in thousands)	March 31, 2024		December 31, 2023
Accrued compensation	$	16,499	$	20,495
Accrued cost of revenues	30,155		25,548
Accrued interest	1,238		321
Other accrued expenses	25,713		17,623
Total accrued expenses	$	73,605	$	63,987

Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities that are Measured at Fair Value on a Recurring Basis


	March 31, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents from money market funds	$	13,600	$	—	$	—	$	13,600
Interest rate swaps	$	—	$	1,952	$	—	$	1,952
Liabilities
Interest rate swaps	—		2,061		—		2,061
Contingent consideration	—		—		9,739		9,739


	December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents from money market funds	11,593		—		—		11,593
Interest rate swaps	—		1,187		—		1,187
Liabilities
Interest rate swaps	—		5,357		—		5,357
Contingent consideration	$	—	$	—	$	2,989	$	2,989

Schedule of Fair Value of the Level 3 Liabilities with Significant Unobservable Inputs

The following table summarizes the change in fair value of the Level 3 liabilities with significant unobservable inputs for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024		2023
Fair value of contingent consideration, beginning of period	$	2,989	$	1,219
Acquired liabilities	2,750		4,706
Cash payments	—		—
Change in fair value of contingent consideration, net(1)	4,000		(305)
Fair value of contingent consideration, end of period(2)	$	9,739	$	5,620

_________________________

(2)Recorded in Other current liabilities on the condensed consolidated balance sheets.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$ (7,955)	$ 591
Adjustments to reconcile net (loss) income net cash provided by operations
Depreciation and amortization	15,770	15,122
Deferred income taxes	(14,306)	209
Stock-based compensation	9,342	8,043
Impairments and disposals of long-lived assets	168	106
Provision for bad debts	240	244
Amortization of financing fees	269	269
Amortization of debt discount	204	194
Deferred rent	(428)	39
Unrealized translation gain on investment in foreign subsidiaries	18	135
Change in fair value of contingent consideration, net	4,000	0
Interest rate swap settlements	0	23
Changes in operating assets and liabilities, net of acquisitions
Accounts receivable	(7,285)	(3,414)
Insurance receivable	41	0
Prepaid expenses	(1,276)	2,844
Other assets	(1,200)	(2,534)
Accounts payable	7,149	3,716
Litigation settlement obligation	(55)	315
Accrued expenses	6,723	(12,256)
Other liabilities	(7,745)	(2,364)
Net cash provided by operations	3,674	11,282
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(673)	(140)
Purchases of intangible assets and capitalized software	(4,947)	(4,120)
Acquisitions, net of cash acquired	(70,479)	(48,802)
Proceeds from disposition of property and equipment	0	7
Net cash used in investing activities	(76,099)	(53,055)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of employee stock options	53,629	0
Proceeds from employee stock purchase plan	695	0
Repurchases of common stock	(6,832)	(7,711)
Payments of long-term debt	(3,750)	(1,875)
Borrowings on revolving credit facility	65,000	0
Payment of contingent consideration for acquisition	0	(305)
Net cash provided by (used in) financing activities	85,667	(10,378)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(487)	20
NET CHANGE IN CASH AND CASH EQUIVALENTS	12,755	(52,131)
Beginning of period	54,224	103,095	$ 103,095
Cash and cash equivalents at end of period	66,979	50,964	$ 54,224
Cash paid during the period for
Interest, net of capitalized amounts of $129 and $90 for the three months ended March 31, 2024 and 2023, respectively	9,102	11,602
Income taxes	9,542	2,978
Noncash investing activities
Purchases of property and equipment in accounts payable and accrued expenses	469	69
Noncash purchase price of business combinations	2,750	4,821
Stock options
CASH FLOWS FROM FINANCING ACTIVITIES
Cash paid for tax withholding	(19,172)	0
Restricted stock
CASH FLOWS FROM FINANCING ACTIVITIES
Cash paid for tax withholding	$ (3,903)	$ (487)

Acquisitions - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	9 Months Ended
	Dec. 31, 2023	Mar. 31, 2024	Jan. 02, 2024	Mar. 31, 2023
Other current assets
Goodwill	$ 879,408	$ 902,862
Vault
Consideration
Cash			$ 2,907
Other current assets
Accounts receivable			8,514
Other current assets			583
Property and equipment			38
Intangible assets			44,500
Total assets acquired			56,542
Accounts payable and accrued expenses			4,609
Total liabilities assumed			4,609
Total identifiable net assets			51,933
Goodwill			24,203
Total consideration			$ 76,136
Socrates Limited And A-Check
Consideration
Cash	11,935			$ 11,935
Other current assets
Accounts receivable	4,276			4,279
Other current assets	1,252			805
Property and equipment	176			177
Intangible assets	30,873			32,141
Other long-term assets	6			6
Total assets acquired	48,518			49,343
Accounts payable and accrued expenses	1,250			1,156
Other current liabilities	1,219			1,291
Deferred tax liability	7,225			8,388
Other liabilities	790			2
Total liabilities assumed	10,484			10,837
Total identifiable net assets	38,034			38,506
Goodwill	28,118			27,352
Total consideration	66,152			$ 65,858
Purchase Price Adjustments
Accounts receivable	(3)
Other current assets	447
Property and equipment	(1)
Intangible assets	(1,268)
Total assets acquired	(825)
Accounts payable and accrued expenses	94
Other current liabilities	(72)
Deferred tax liability	(1,163)
Other liabilities	788
Total liabilities assumed	(353)
Total identifiable net assets	(472)
Goodwill	766
Total consideration	$ 294

Equity	3 Months Ended
Equity	Mar. 31, 2024
Stockholders' Equity Note [Abstract]
Equity	Equity Under the Company’s Amended and Restated Certificate of Incorporation, a total of 1,100,000,000 shares of all classes of stock are authorized, divided as follows: (i)1,000,000,000 shares of common stock, par value $0.01 per share (“common stock”); and (ii)100,000,000 shares of undesignated preferred stock, par value $0.01 per share (“preferred stock”). Each share of common stock is entitled to one vote on all matters on which holders of common stock are entitled to vote generally. Holders of common stock are entitled to be paid ratably any dividends as may be declared by the Board of Directors (in its sole discretion), subject to any preferential dividend rights of outstanding preferred stock (if any). No dividends have been declared or paid on the Company’s common stock through March 31, 2024. The Board of Directors is authorized to direct the issuance of the undesignated preferred stock in one or more series and to fix the designation of such series, the powers (including voting powers), preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, of such series of preferred stock and the number of shares of such series. On November 23, 2022, the Company’s board of directors authorized the repurchase of up to $100.0 million of the Company’s shares of common stock through December 31, 2024. The share repurchase program is being executed on a discretionary basis through open market repurchases, private transactions, or other transactions, including through block trades and Rule 10b-18 and Rule 10b5-1 trading plans. The Company is not obligated to repurchase any specific number of shares, and the timing and amount of any share repurchases will be subject to several factors including share price, trading volume, market conditions and capital allocation priorities. The share repurchase program may be suspended, terminated or modified without notice at any time. For the three months ended March 31, 2024, the Company repurchased 494,157 shares of its common stock for $6.8 million, inclusive of commissions and taxes. On June 7, 2023, the Company entered into an Underwriting Agreement with Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC as representatives of the several underwriters named therein (the “Underwriters”) and the selling stockholders (the “Selling Stockholders”), relating to the sale by the Selling Stockholders of 8,000,000 shares of common stock, par value $0.01 per share, of the Company (the “Secondary Public Offering”). In connection with the Secondary Public Offering, the Selling Stockholders granted the Underwriters a 30-day option to purchase up to an additional 1,200,000 shares of common stock of the Company, of which 1,145,486 shares were purchased. The Company did not sell any shares in the Secondary Public Offering and did not receive any proceeds from the sale of shares being sold by the Selling Stockholders in the Secondary Public Offering. In addition, the Company entered into an agreement with Broad Street Principal Investments, L.L.C. (“BSPI”), one of the Selling Stockholders, dated June 5, 2023, pursuant to which the Company repurchased from BSPI an aggregate of 1,000,000 shares of common stock of the Company for a total of $11.7 million pursuant to the Company’s share repurchase program at a price per share equal to the price paid by the Underwriters in the Secondary Public Offering.

- Definition

The entire disclosure for equity.

+ References

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+ Details

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Schedule of Allowance for Expected Credit Losses

The following table summarizes changes in the allowance for expected credit losses for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024		2023
Balance as of beginning of period	$	2,816	$	2,304

Additions	204		244
Write-offs, net of recoveries	(82)		(78)
Foreign currency translation adjustment	(5)		3
Balance as of end of period	$	2,933	$	2,473

Schedule of Corporate Technology and Production Systems Expense

The following table sets forth expenses included in each category of corporate technology and production systems for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024		2023
Corporate information technology	$	4,826	$	5,267
Development of platform and product initiatives	5,560		4,414
Production support and maintenance	2,828		2,271
Total production systems	8,388		6,685
Total corporate technology and production systems	$	13,214	$	11,952

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Tax expense (benefit)	$ (9,018)	$ 1,102
Effective tax rate	53.10%	65.10%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2024
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The computation of the provision for or benefit from income taxes for interim periods is determined by applying the estimated annual effective tax rate to year-to-date income before tax and adjusting for discrete tax items recorded in the period, if any. The Company recorded a tax benefit of $9.0 million for the three months ended March 31, 2024 and a tax expense of $1.1 million for the three months ended March 31, 2023, which resulted in an effective tax rate of 53.1% and 65.1%, respectively. For the three months ended March 31, 2024 and 2023, the effective rate differs from the statutory rate mainly due to a jurisdictional mix of earnings and permanent items including the impact of stock-based compensation.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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+ Details

Description of Business	3 Months Ended
Description of Business	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	Description of Business Sterling Check Corp. (the “Company”), a Delaware corporation headquartered in Independence, Ohio, is a global provider of technology-enabled background and identity verification services. The Company provides the foundation of trust and safety its clients need to create effective environments for their most essential resource—people. The Company offers a comprehensive hiring and risk management solution that begins with identity verification, followed by criminal background screening, credential verification, drug and health screening, employee onboarding document processing and ongoing risk monitoring. As of March 31, 2024, the Company is 51% owned by an investment group consisting of entities advised by or affiliated with The Goldman Sachs Group, Inc. (“Goldman Sachs”) and Caisse de dépôt et placement du Québec (“CDPQ” and, together with Goldman Sachs, our “Sponsor”). CDPQ owns its equity interest in the Company indirectly through a limited partnership controlled by Goldman Sachs. Merger with First Advantage On February 28, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with First Advantage Corporation, a Delaware corporation (“First Advantage”), and Starter Merger Sub, Inc., a Delaware corporation and an indirect wholly-owned subsidiary of First Advantage (“Merger Sub”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation in the Merger and becoming an indirect wholly-owned subsidiary of First Advantage. The respective boards of directors of the Company and First Advantage unanimously approved the Merger Agreement, and the board of directors of the Company recommended that the Company’s stockholders adopt the Merger Agreement. On February 28, 2024, following the execution of the Merger Agreement, certain entities advised by or affiliated with Goldman Sachs & Co. LLC and holding a majority of the issued and outstanding shares of the Company’s common stock (together, the “Specified Stockholders’) delivered a written consent to adopt the Merger Agreement and to approve the transactions contemplated thereby, including the Merger, and on April 26, 2024 these stockholders delivered a written consent readopting the Merger Agreement and adopting the ratification by the board of directors of the Company of the execution and delivery of the Merger Agreement. The Merger was approved on behalf of all stockholders of the Company, and no further vote of Company stockholders will be required. Refer to the audited consolidated financial statements as of December 31, 2023 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2024, specifically Note 20, “Subsequent Events,” for more detailed information on the Merger.

Leases

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Leases

The Company leases real estate and equipment for use in its operations. The Company has 17 operating leases with remaining lease terms ranging from 1 to 58 months as of March 31, 2024.

The components of lease expense for the periods presented are as follows:


	Three Months Ended March 31,
(in thousands)	2024		2023
Components of total lease costs
Operating lease expense	$	761	$	1,379
Sublease income	(388)		(222)
Total net lease costs	$	373	$	1,157

Information related to the Company’s right-of-use assets and lease liabilities for the periods presented is as follows:


(dollars in thousands)	March 31, 2024		December 31, 2023
Operating leases
Operating leases right-of-use asset	$	5,872	$	6,452

Operating leases liability, current portion	$	3,879	$	4,219
Long-term operating leases liability, net of current portion	6,606		7,278
Total operating leases liability	$	10,485	$	11,497


Weighted average remaining lease term in years - operating leases	3.6		3.7
Weighted average discount rate - operating leases	4.89	%	4.92	%

Total remaining lease payments under the Company’s operating leases (excluding short term leases) for the periods presented are as follows:


(in thousands)	March 31, 2024
Remainder of fiscal year 2024	$	3,687
2025	2,380
2026	2,117
2027	2,149
2028	1,028
Thereafter	85
Total future minimum lease payments	$	11,446
Less: imputed interest	(961)
Total	$	10,485

Stock-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-based compensation expense is recognized in cost of revenues, corporate technology and production systems, and selling, general and administrative expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss as follows:


	Three Months Ended March 31,
(in thousands)	2024		2023
Stock-based compensation expense
Cost of revenues	$	359	$	428
Corporate technology and production systems	819		612
Selling, general and administrative	8,164		7,003
Total stock-based compensation expense	$	9,342	$	8,043

Prior to the IPO, all share-based awards were issued to employees under the Company’s 2015 Long-Term Equity Incentive Plan (the “2015 Plan”). Upon the adoption of the Sterling Check Corp. 2021 Omnibus Incentive Plan (the “2021 Equity Plan”) on August 4, 2021 and as of September 22, 2021, all newly granted share-based awards have been issued under the 2021 Equity Plan.

As of March 31, 2024, the Company had approximately $93.3 million of unrecognized pre-tax non-cash stock-based compensation expense related to awards granted under the 2021 Equity Plan, consisting of approximately $18.8 million related to non-qualified stock options (“NQSOs”), $73.6 million related to restricted stock, and approximately $0.9 million related to restricted stock units (“RSUs”), all of which the Company expects to recognize over a weighted average period of 2.3 years.

2015 Long-Term Equity Incentive Plan

Pursuant to the Company’s 2015 Plan, the Company granted performance-based stock options (“PSOs”) and service-based vesting stock options (“SVOs”). On August 4, 2021, the Company amended each option outstanding under the 2015 Plan to (i) accelerate vesting upon an initial public offering and (ii) permit each option to be exercised following termination for any reason for the period set forth in the applicable award agreement or, if longer, an extended post-termination exercise period that would end on the date that is six months following the second anniversary of the effective date of the initial public offering, provided that if such date falls during a blackout period, the post-termination exercise period will be extended until the date that is thirty days after the commencement of the Company’s next open trading window.

The table below provides a summary of SVOs and PSOs currently outstanding under the 2015 Plan for the three months ended March 31, 2024:


	Outstanding SVOs						Outstanding PSOs
	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value		Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
(in thousands, except shares and per share amounts)
Balances as of December 31, 2023	5,635,742	$	9.60	3.68	$	24,349	3,036,930	$	10.05	2.14	$	11,732
Granted	—	—					—	—
Forfeited / Expired	(17,970)	9.68			112		—	—
Exercised	(1,555,977)	9.63			8,503		(1,841,326)	10.30			10,482
Balances as of March 31, 2024(1)	4,061,795	$	9.59	4.33	$	26,373	1,195,604	$	9.68	4.85	$	7,648

_________________________

(1) All SVOs and PSOs are exercisable as of March 31, 2024.

2021 Omnibus Incentive Plan

On August 4, 2021, the Company’s board of directors adopted, and on August 13, 2021 the Company’s stockholders approved, the 2021 Equity Plan. Equity awards under the 2021 Equity Plan are intended to retain and motivate the Company’s officers and employees, consultants and non-employee directors and to promote the success of the Company’s business by providing such participating individuals with a proprietary interest in the performance of the Company. The 2021 Equity Plan will terminate on the tenth anniversary thereof, unless earlier terminated by the board of directors. Under the 2021 Equity Plan, the following types of awards can be granted to an eligible individual (as defined by the plan and to the extent permitted by applicable law): incentive stock options (“ISOs”) and NQSOs; stock appreciation rights (“SARs”); restricted stock; RSUs; performance awards; cash-based awards and other share-based awards. Upon its adoption, the 2021 Equity Plan provided that up to 9,433,000 shares may be issued pursuant to awards granted under the 2021 Equity Plan (the “Share Limit”); provided, that, the Share Limit shall be automatically increased 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) 5% of the total number of shares outstanding on the last day of the immediately preceding calendar year, and (y) such number of shares as determined by the board of directors, and no more than 9,433,000 shares may be issued upon the exercise of ISOs. As of March 31, 2024, 12,154,861 shares were available for issuance pursuant to future granted awards under the 2021 Equity Plan.

Stock Options

Options issued under the 2021 Equity Plan generally vest on various schedules over one to four-year periods on the anniversary of the grant date, subject to continued employment with the Company through the applicable vesting date. Options issued under the 2021 Equity Plan generally expire ten years after the grant date.

The table below provides a summary of stock option activity under the 2021 Equity Plan for the three months ended March 31, 2024:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2023	4,558,199	$	21.14	8.06	$	904
Granted	—	—
Forfeited / Expired	(11,724)	23.00
Exercised	—	—
Outstanding as of March 31, 2024	4,546,475	$	21.09	7.79	$	2,629
Exercisable as of March 31, 2024	1,974,043	$	22.01	7.63	$	593

Of the $53.6 million of proceeds from the exercise of employee stock options less $19.2 million of cash paid for tax withholding on those exercises included on the unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2024, $0.5 million relates to options exercised prior to, but settled during the three months ended March 31, 2024. As of December 31, 2023, these options were unsettled, but exercised, and were included in the additional paid-in capital balance as of December 31, 2023.

Restricted Stock

Restricted stock issued under the 2021 Equity Plan in connection with the Company’s initial public offering vests 50% on the second anniversary of the grant date and 25% on each of the third and fourth anniversaries of the grant date, subject to continued employment with the Company through the applicable vesting date. Other restricted stock grants issued under the 2021 Equity Plan vest on various schedules over one to four-year periods on the anniversary of the grant date, subject to the continued employment with the Company through the applicable vesting date. Holders of restricted stock are entitled to all rights of a common stockholder of the Company and are subject to restrictions on transfer.

The table below provides a summary of restricted stock activity under the 2021 Equity Plan for the three months ended March 31, 2024:


	Number of Shares	Weighted Average Fair Value (per share)
Unvested as of December 31, 2023	3,796,203	$	16.40
Granted	1,958,874	15.92
Forfeited / Cancelled	(74,354)	17.45
Vested	(591,611)	10.92
Unvested as of March 31, 2024	5,089,112	$	16.39

Restricted Stock Units

Restricted stock units issued under the 2021 Equity Plan in connection with the Company’s initial public offering vest 50% on the second anniversary of the grant date and 25% on each of the third and fourth anniversaries of the grant date, subject to continued employment with the Company through the applicable vesting date. Additional grants of RSUs vest on various schedules over a one to four-year period on the anniversary of the grant date, subject to the continued employment with the Company through the applicable vesting date. Upon vesting, employees will receive shares of common stock in settlement of the units.

The table below provides a summary of RSU activity under the 2021 Equity Plan for the three months ended March 31, 2024:


	Number of Shares	Weighted Average Fair Value (per share)
Unvested as of December 31, 2023	120,555	$	15.82
Granted	6,347	15.92
Forfeited / Cancelled	(18,925)	13.30
Vested	(5,268)	9.82
Unvested as of March 31, 2024	102,709	$	16.33

Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan (the “ESPP”) was launched on July 1, 2023. The ESPP allowed eligible employees to voluntarily make after-tax contributions of up to 15% of such employee’s cash compensation for the purchase of the Company’s stock. Consecutive offering periods of six months in duration were established, with the first one commencing on July 1, 2023. During each offering period, such contributions accumulated and applied to purchase shares at the end of the offering period. The purchase price for shares purchased in the initial offering period were, and for subsequent offering periods were not be less than, 85% of the lesser of the closing price of the shares on the first day of the offering period or the last day of the offering period. During the three months ended March 31, 2024, the amount the Company recorded for stock-based compensation expense associated with the ESPP was immaterial. The ESPP was suspended on February 29, 2024 as part of the Merger discussed in Note 1, “Description of Business.”

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued compensation	$ 16,499	$ 20,495
Accrued cost of revenues	30,155	25,548
Accrued interest	1,238	321
Other accrued expenses	25,713	17,623
Total accrued expenses	$ 73,605	$ 63,987

Derivative Instruments and Hedging Activities - Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) (Details) - Derivatives designated as hedging instruments: - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Interest expense
Derivative [Line Items]
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income	$ 818	$ 97
Interest rate swaps
Derivative [Line Items]
Amount of Gain or (Loss) Recognized in OCI on Derivative	$ 4,879	$ (6,877)

Related Party Transactions (Details) - USD ($) $ in Thousands		3 Months Ended
	Feb. 28, 2024	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Related Party Transaction [Line Items]
Revenues		$ 185,999	$ 179,274
Accounts receivable		157,392		$ 142,179
Interest rate swaps
Related Party Transaction [Line Items]
Notional value		300,000
Goldman Sachs
Related Party Transaction [Line Items]
Revenues		1,100	1,100
Accounts receivable		900		700
Merger fees	$ 30,000
Goldman Sachs \| J. Aron & Company LLC
Related Party Transaction [Line Items]
Accounts receivable		100		100
Goldman Sachs \| J. Aron & Company LLC \| Interest rate swaps
Related Party Transaction [Line Items]
Notional value		75,000
Stockholders
Related Party Transaction [Line Items]
Revenues		100	$ 100
Accounts receivable		$ 100		$ 100

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479941/924-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-4

+ Details

Acquisitions

3 Months Ended

Mar. 31, 2024

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Vault Acquisition

On January 2, 2024, the Company acquired the equity interests of Vault Workforce Screening (“Vault”), a U.S. clinic management platform, bringing a network of 17,000 clinics and a flexible service model to enhance our existing drug and health services. The purchase price for the Vault acquisition totaled approximately $76.1 million, was funded with $65.0 million of proceeds from the Revolving Credit Facility and available cash on hand and includes initial contingent consideration of $2.8 million recorded at fair value.

The Company incurred approximately $0.1 million of transaction expenses related to the Vault acquisition during the three months ended March 31, 2024.

The preliminary allocation of the purchase price is based on the fair value of assets acquired and liabilities assumed as of the applicable acquisition date. The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed (in thousands):


Consideration
Cash	$	2,907
Accounts receivable	8,514
Other current assets	583
Property and equipment	38
Intangible assets	44,500
Total assets acquired	$	56,542
Accounts payable and accrued expenses	4,609
Total liabilities assumed	$	4,609
Total identifiable net assets	51,933
Goodwill	24,203
Total consideration	$	76,136

Goodwill recognized is primarily attributable to assembled workforce and expected synergies and is tax deductible in future years. Intangible assets acquired consist largely of customer lists in the amount of $39.0 million to be amortized over 12 years. The remaining intangible assets include trade names and developed technology, which will be amortized over two years and seven years, respectively.

As the acquisition of Vault occurred on January 2, 2024, Vault’s results have been fully consolidated in our unaudited condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2024. Our revenues for the three months ended March 31, 2024 include $13.3 million of revenues attributable to Vault. The following unaudited pro forma results for the three months ended March 31, 2023 show the effect on the Company’s revenues as if the acquisition of Vault had occurred on January 1, 2023. The pro forma results presented are the result of combining the revenues of the Company with the revenues of Vault for the three months ended March 31, 2023:


(in thousands)	Three Months Ended March 31, 2023
Revenues	$	195,638

Pro forma net operating results are not presented as they were determined to not be material to the total net operating results of the Company. The Company did not have any material, non-recurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue. The pro forma information is presented for illustrative purposes only and may not be indicative of the future results or results of operations that would have actually occurred had the acquisition of Vault occurred as presented. Further, the above pro forma amounts do not consider any potential synergies that may result from the transaction. In addition, future results may vary significantly from the results reflected in such pro forma information.

Socrates and A-Check Acquisitions

On January 4, 2023, the Company acquired all of the outstanding shares of Socrates Limited and its affiliates (“Socrates”), a screening company in Latin America, pursuant to a share purchase agreement. The Socrates acquisition expands the Company’s global presence into Latin America to serve the rapidly growing regional hiring needs of both multi-national and local clients. On March 1, 2023, the Company acquired all of the outstanding shares of A-Check Global (“A-Check”), a U.S.-based employment screening organization, pursuant to a share purchase agreement. The A-Check acquisition provides the Company access to a high quality, enterprise-focused customer base diversified across verticals including healthcare and telecom. The aggregate adjusted purchase price for the acquisitions totaled approximately $66.2 million, of which $49.5 million was funded with available cash on hand and is subject to certain closing adjustments specified in the share purchase agreements and includes initial contingent consideration related to the A-Check acquisition of $4.7 million recorded at fair value. The contingent consideration was determined based on actual future results. The initial fair value of the contingent consideration consisted of $2.6 million for an earn-out payable one year after the acquisition based upon revenue retention and a $2.1 million payable throughout the second and third year following the acquisition based on revenue retention and referral revenue. The Company recorded an allocation of the purchase price to assets

acquired and liabilities assumed based on their estimated fair values as of their respective purchase dates. Additionally, in connection with the Socrates acquisition, $5.0 million is payable to certain senior employees two years after the acquisition date , based on certain retention requirements.

The Company incurred approximately $0.2 million and $2.7 million of transaction expenses related to these acquisitions during the three months ended March 31, 2024 and March 31, 2023, respectively.

The allocation of the purchase price is based on the fair value of assets acquired and liabilities assumed as of the applicable acquisition date. The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed:


	Preliminary Purchase Price Allocation				Final Purchase Price Allocation
(in thousands)	March 31, 2023		Purchase Price Adjustments		December 31, 2023
Consideration
Cash	$	11,935	$	—	$	11,935
Other current assets
Accounts receivable	4,279		(3)		4,276
Other current assets	805		447		1,252
Property and equipment	177		(1)		176
Intangible assets	32,141		(1,268)		30,873
Other long-term assets	6		—		6
Total assets acquired	$	49,343	$	(825)	$	48,518
Accounts payable and accrued expenses	1,156		94		1,250
Other current liabilities	1,291		(72)		1,219
Deferred tax liability	8,388		(1,163)		7,225
Other liabilities	2		788		790
Total liabilities assumed	$	10,837	$	(353)	$	10,484
Total identifiable net assets	38,506		(472)		38,034
Goodwill	27,352		766		28,118
Total consideration	$	65,858	$	294	$	66,152

Goodwill recognized is primarily attributable to assembled workforce and expected synergies and is not tax deductible in future years. Intangible assets acquired consist largely of customer lists in the amount of $28.0 million to be amortized over 15 years. The remaining intangible assets include trade names, developed technology and a non-compete agreement, which will be amortized over two years, eight years, and five years, respectively.

The acquisitions are not material to the Company's financial position as of March 31, 2024 or results of operations for the three months ended March 31, 2024, and therefore, pro forma operating results and other disclosures for the acquisitions are not presented.

EBI Acquisition

On November 30, 2021, the Company acquired all of the outstanding shares of EBI for a purchase price of $67.8 million, consisting of $66.3 million of cash and $1.5 million of contingent consideration recorded at fair value. As of December 31, 2022, the purchase price was reduced by $0.3 million reflecting the final determination of the post-closing adjustment of the purchase price in accordance with the purchase agreement with EBI, resulting in an adjusted purchase price of $67.5 million. The receivable related to this adjustment was collected in February 2023.

During the three months ended March 31, 2024, the Company recorded a $4.0 million out-of-period increase in the fair value of the contingent consideration, in accordance with the purchase agreement with EBI. Refer to “Note 2. Summary of Significant Accounting Policies” for further information regarding this out-of-period adjustment.

Summary of Significant Accounting Policies - Schedule of Accounts Receivable, Allowance for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	$ 2,816	$ 2,304
Additions	204	244
Write-offs, net of recoveries	(82)	(78)
Foreign currency translation adjustment	(5)	3
Balance at end of period	$ 2,933	$ 2,473

Leases - Additional Information (Details)	Mar. 31, 2024 lease
Lessee, Lease, Description [Line Items]
Number of operating leases	17
Minimum
Lessee, Lease, Description [Line Items]
Remaining operating lease term	1 month
Maximum
Lessee, Lease, Description [Line Items]
Remaining operating lease term	58 months

Derivative Instruments and Hedging Activities - Impact Of The Companies Derivative Financial Instruments On The Consolidated Statement Of Operations And Comprehensive Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Derivative [Line Items]
Total amounts of income and expense line items in which the effects of cash flow hedges are recorded	$ 10,312	$ 8,608
Derivatives designated as hedging instruments: \| Interest expense
Derivative [Line Items]
Amount of gain or (loss) reclassified from accumulated OCI into income	818	97
Derivatives designated as hedging instruments: \| Cash Flow Hedging
Derivative [Line Items]
Total amounts of income and expense line items in which the effects of cash flow hedges are recorded	10,312	8,608
Derivatives designated as hedging instruments: \| Cash Flow Hedging \| Interest rate swaps \| Interest expense
Derivative [Line Items]
Amount of gain or (loss) reclassified from accumulated OCI into income	$ 818	$ 97

Derivative Instruments and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Company's Outstanding Derivatives

As of March 31, 2024, the Company had the following outstanding interest rate swap derivatives that were used to hedge its interest rate risks:

Product

Number of Instruments

Effective Date

Maturity Date

Current Notional(1)

Interest Rate Swap

February 28, 2023

November 29, 2027

$300.0 million USD

_________________________

(1)The notional value steps down from $300.0 million to $150.0 million on February 27, 2026.

Schedule of Fair Value of Derivative Financial Instruments

Asset Derivatives

March 31, 2024

December 31, 2023

(in thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate swaps

Other current assets

1,952

Other current assets

1,187

Liability Derivatives

March 31, 2024

December 31, 2023

(in thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate swaps

Other liabilities

2,061

Other liabilities

5,357

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)

The tables below present the effect of cash flow hedge accounting on accumulated OCI for the periods presented:


	Three Months Ended March 31,					Three Months Ended March 31,
(in thousands)	2024		2023			2024		2023
Derivatives designated as hedging instruments:	Amount of Gain or (Loss) Recognized in OCI on Derivative				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income


Interest rate swaps	$	4,879	$	(6,877)	Interest expense	$	818	$	97

Schedule of Consolidated Statements of Operations and Comprehensive (Loss) Income

The table below presents the effect of the Company’s cash flow hedge accounting on the unaudited condensed consolidated statements of operations and comprehensive loss for the periods presented:


	Three Months Ended March 31,
	2024		2023
(in thousands)	Interest Expense
Total amounts of income and expense line items in which the effects of cash flow hedges are recorded	$	10,312	$	8,608
Gain or (loss) on cash flow hedging relationships
Interest rate swaps:
Amount of gain or (loss) reclassified from accumulated OCI into income	$	818	$	97

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References + Details

Acquisitions - Additional Information (Details) clinic in Thousands					3 Months Ended		9 Months Ended	13 Months Ended
	Jan. 02, 2024 USD ($) clinic	Mar. 01, 2023 USD ($)	Dec. 31, 2022 USD ($)	Nov. 30, 2021 USD ($)	Mar. 31, 2024 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Vault
Business Acquisition [Line Items]
Purchase price	$ 76,100,000
Contingent consideration	2,800,000
Transaction expenses					$ 100,000
Revenues attributable to acquiree					13,300,000
Vault \| Customer lists
Business Acquisition [Line Items]
Finite lived assets acquired	$ 39,000,000
Useful life of assets acquired	12 years
Vault \| Trade Names
Business Acquisition [Line Items]
Useful life of assets acquired	2 years
Vault \| Developed Technology
Business Acquisition [Line Items]
Useful life of assets acquired	7 years
Vault \| Revolving Credit Facility
Business Acquisition [Line Items]
Proceeds from lines of credit	$ 65,000,000
Vault \| Office
Business Acquisition [Line Items]
Number of clinics acquired \| clinic	17
Socrates Limited And A-Check
Business Acquisition [Line Items]
Purchase price		$ 66,200,000
Transaction expenses					200,000	$ 2,700,000
Cash purchase price		49,500,000
Tax deductible goodwill		0
Total consideration, purchase price adjustment							$ (294,000)
Socrates Limited And A-Check \| Customer lists
Business Acquisition [Line Items]
Finite lived assets acquired		$ 28,000,000
Useful life of assets acquired		15 years
Socrates Limited And A-Check \| Trade Names
Business Acquisition [Line Items]
Useful life of assets acquired		2 years
Socrates Limited And A-Check \| Developed Technology
Business Acquisition [Line Items]
Useful life of assets acquired		8 years
Socrates Limited And A-Check \| Non-compete agreements
Business Acquisition [Line Items]
Useful life of assets acquired		5 years
A-Check
Business Acquisition [Line Items]
Contingent consideration		$ 4,700,000
Current portion of contingent consideration		$ 2,600,000
Contingent consideration period		1 year
Noncurrent portion of contingent consideration		$ 2,100,000
Socrates
Business Acquisition [Line Items]
Retention requirements payable		$ 5,000,000
Period of retention requirements payable		2 years
EBI
Business Acquisition [Line Items]
Purchase price			$ 67,500,000	$ 67,800,000
Contingent consideration				1,500,000
Cash purchase price				$ 66,300,000
Total consideration, purchase price adjustment								$ (300,000)
EBI \| Revision of Prior Period, Error Correction, Adjustment
Business Acquisition [Line Items]
Contingent consideration					$ 4,000,000		$ 4,000,000

Summary of Significant Accounting Policies (Policies)	3 Months Ended
Summary of Significant Accounting Policies (Policies)	Mar. 31, 2024
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation and Consolidation 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 accounts of the Company and its wholly-owned subsidiaries. These unaudited condensed consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments including those of a normal recurring nature necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2023 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2024.
Consolidation	All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that can affect the reported amount of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Significant estimates include the impairment of long-lived assets, goodwill impairment, derivative instruments and hedging activities, and the determination of the fair value of acquired assets and liabilities. The Company believes that the estimates used in the preparation of these unaudited condensed consolidated financial statements are reasonable; however, actual results could differ materially from these estimates.
Risks And Uncertainties	Risks and Uncertainties The Company operates in an industry that is subject to intense competition, government regulation and rapid technological change. The Company’s operations are subject to significant risk and uncertainties including financial, operational, technological, regulatory, foreign operations, and other risks.
Segment Information	Segment Information The Company has one operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.
Cash and Cash Equivalents	Cash and Cash Equivalents Cash and cash equivalents of $67.0 million and $54.2 million as of March 31, 2024 and December 31, 2023, respectively, include money market instruments with maturities of three months or less. The Company maintained cash outside the U.S. as of March 31, 2024 of $23.4 million with the largest deposits being held in Australia and India, with balances of $6.7 million and $4.0 million, respectively. Cash outside the U.S. was $19.3 million as of December 31, 2023, with the largest deposits being held in Australia and India, with balances of $6.2 million and $3.2 million, respectively.
Foreign Currency	Foreign Currency Assets and liabilities of operations having non-USD functional currencies are translated at period-end exchange rates, and income statement accounts are translated at weighted average exchange rates for the period. Gains or losses resulting from translating foreign currency financial statements, net of any related tax effects, are reflected in accumulated other comprehensive income or loss (“OCI”), a separate component of stockholders’ equity on the unaudited condensed consolidated balance sheets. Gains or losses resulting from foreign currency transactions incurred in currencies other than the local functional currency are included in other income in the unaudited condensed consolidated statements of operations and comprehensive loss.
Accounts Receivable and Allowance for Credit Losses	Accounts Receivable and Allowance for Credit Losses Accounts receivable balances consist of trade receivables that are recorded at the invoiced amount, net of allowances for expected credit losses and for potential sales credits and reserves. Sales credits and reserves were $0.7 million and $1.2 million as of March 31, 2024 and December 31, 2023, respectively. The Company maintains an allowance for expected credit losses in order to record accounts receivable at their net realizable value. Inherent in the assessment of the allowance for expected credit losses are certain judgments and estimates relating to, among other things, the Company’s customers’ access to capital, customers’ willingness and ability to pay, general economic conditions and the ongoing relationship with customers. Allowances have been recorded for receivables believed to be uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices. The allowance for expected credit losses is determined by analyzing the Company’s historical write-offs, the current aging of receivables, the financial condition of customers and the general economic climate. Adjustments to the allowance may be required in future periods depending on how such potential issues are resolved or if the financial condition of the Company’s customers were to deteriorate resulting in an impairment of their ability to make payments. The Company has not historically had material write-offs due to uncollectible accounts receivable.
Corporate Technology and Production Systems	Corporate Technology and Production Systems Corporate technology and production systems includes costs related to maintaining the Company’s corporate information technology infrastructure and non-capitalizable costs to develop and maintain its production systems. Corporate information technology consists of salaries and benefits of personnel (including stock-based compensation expense) supporting internal operations such as information technology support and the maintenance of information security and business continuity functions. Also included are third-party costs including cloud computing costs that support the Company’s corporate internal systems, software licensing and maintenance, telecommunications and other technology infrastructure costs. Production systems costs consist of non-capitalizable personnel costs including contractor costs incurred for the development of platform and product initiatives and production support and maintenance. Platform and product initiatives facilitate the development of the Company’s technology platform and the launch of new screening products. Production support and maintenance includes costs to support and maintain the technology underlying the Company’s existing screening products and to enhance the ease of use of the Company’s cloud applications. Certain personnel costs related to new products and features are capitalized and amortized to depreciation and amortization. Included within corporate technology and production systems are non-capitalizable production system and corporate information technology expenses related to Project Ignite, a three-phase strategic investment initiative. Phase one of Project Ignite modernized client and candidate experiences and is complete. Phase two of Project Ignite focused on decommissioning the Company’s on-premises data centers and migrating the Company’s production systems and corporate information technological infrastructure to a managed service provider in the cloud. During the first half of 2021, the Company completed phase two initiatives related to the migration of its production and fulfillment systems to the cloud, and as a result, approximately 98% of revenue is processed through platforms hosted in the cloud. The Company incurred expenses related to phase two to complete the decommissioning of on-premises data centers for internal corporate technology infrastructure and migration to the cloud which was completed as of September 30, 2022. Phase three of Project Ignite was decommissioning of the platforms purchased over the prior ten years and the migration of the clients to one global platform. This third and final phase, which was completed in the first quarter of 2023, unified clients onto a single global platform. The Company’s core platform now processes approximately 77% of its global revenue.
Recently Issued Accounting Pronouncements Not Yet Adopted	Recently Issued Accounting Pronouncements Not Yet Effective In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvement to Reportable Segment Disclosures (“ASU 2023-07”) to enhance disclosures about a public entity's reportable segments and more detailed information about a reportable segment's expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the impact that ASU 2023-07 will have on the financial statement disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures (“ASU 2023-09”), that improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. For public business entities, such as the Company, the standard is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the impact that ASU 2023-09 will have on the financial statement disclosures.

Net (Loss) Income Per Share

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Net (Loss) Income Per Share

The following table sets forth the computation of basic and diluted net (loss) income per share attributable to common stockholders for the periods presented:


	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2024		2023
Numerator:
Net (loss) income attributable to stockholders	$	(7,955)	$	591


Denominator:
Weighted average number of shares outstanding—basic	90,274,094		92,877,506
Weighted average additional shares assuming conversion of potential common shares	—		2,472,836
Weighted average common shares outstanding—diluted	90,274,094		95,350,342
Net (loss) income per share attributable to stockholders, basic	$	(0.09)	$	0.01
Net (loss) income per share attributable to stockholders, diluted	$	(0.09)	$	0.01


	Three Months Ended March 31,
	2024	2023
Stock options	12,106,717	12,136,464
Restricted stock	3,950,029	5,160,978
Restricted stock units	114,348	59,895

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Merger Related In connection with entering into the Merger Agreement, on February 28, 2024, the Company entered into a support agreement (the “Support Agreement”), by and among the Company, First Advantage and the Specified Stockholders. The Support Agreement will automatically terminate if the Merger Agreement is terminated in accordance with its terms. In connection with the Support Agreement and acting as a financial advisor to the Company, Goldman Sachs will receive a fee of up to $30.0 million for such services provided in connection with the Merger, of which $20.0 million is payable upon the completion of the Merger and an additional $10.0 million of which is payable at the sole discretion of the Company in connection with the completion of the Merger. Citigroup Global Markets Inc. also acted as financial advisor to the Company in connection with the Merger and will receive a fee of up to $20.0 million for such services, of which $5.0 million is payable in connection with delivery of the fairness opinion and $5.0 million of which is payable upon completion of the Merger, and an additional $10.0 million that is payable at the sole discretion of the Company upon completion of the Merger. The $5.0 million in connection with the delivery of the fairness opinion has been recorded during the three months ended March 31, 2024.The fairness opinion was delivered during the three months ended March 31, 2024 and the associated $5.0 million fee is recorded in selling, general and administrative expense in the unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024. The Merger Agreement contains other termination rights for either or each of First Advantage and the Company, including, among others, by either party if the consummation of the Merger does not occur on or before 11:59 p.m., New York City time, on February 28, 2025 (the “Initial Outside Date”), subject to an extension of six months at First Advantage’s election (the “Extended Outside Date”) if on the Initial Outside Date all of the closing conditions except those relating to antitrust approvals have been satisfied or waived. Upon termination of the Merger Agreement under certain specified circumstances, including by the Company to enter into a definitive agreement with respect to a superior proposal in accordance with the terms of the Merger Agreement, the Company will be required to pay First Advantage a termination fee in the amount of $66.3 million. Upon termination of the Merger Agreement by either party because certain required antitrust approvals are not obtained (i) by the Initial Outside Date, First Advantage will be required to pay the Company a termination fee of $60 million or (ii) by the Extended Outside Date, First Advantage will be required to pay the Company a termination fee of $90 million. In addition, if First Advantage fails to consummate the Merger within five business days after all of the required conditions have been satisfied and the Company terminates the Merger Agreement as a result thereof, First Advantage will be required to pay the Company a termination fee of $100 million. Litigation The Company is party to both class actions and individual actions in the ordinary course of business. The matters typically allege violations of the Fair Credit Reporting Act (“FCRA”), as well as other claims. In addition, from time to time, the Company receives inquiries from regulatory bodies regarding its business. The Company accrues for the cost of resolving matters where it can be determined that a loss is both estimable and probable. Certain matters are in litigation and an estimate of the outcome and potential losses, if any, cannot be determined. Certain of these matters are covered by the Company’s insurance policies, subject to policy terms, including retentions. The Company does not believe that the resolution of current matters will result in a material adverse effect on the financial position, results of operations, or cash flows of the Company. As of March 31, 2024, the Company had a legal settlement obligation of $5.2 million and an offsetting insurance receivable of $2.9 million for the settlement of legal matters. As of December 31, 2023, the Company had a legal settlement obligation of $5.3 million and an offsetting insurance receivable of $2.9 million for the settlement of legal matters. Net legal settlement expense recorded in selling, general and administrative expense in the unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023 totaled $0.2 million and $0.1 million, respectively.

Fair Value of Financial Instruments - Schedule of Fair Value of the Level 3 Liabilities with Significant Unobservable Inputs (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Change in fair value of contingent consideration, net	$ 4,000	$ 0
Contingent Consideration
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value of contingent consideration, beginning of period	2,989	1,219
Acquired liabilities	2,750	4,706
Cash payments	0	0
Change in fair value of contingent consideration, net	4,000	(305)
Fair value of contingent consideration, end of period	$ 9,739	$ 5,620

Property and Equipment, Net

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

Property and Equipment, Net


(in thousands)	March 31, 2024		December 31, 2023
Furniture and fixtures	$	1,211	$	1,317
Computers and equipment	39,876		39,251
Leasehold improvements	1,879		2,067
	42,966		42,635
Less: Accumulated depreciation	(35,637)		(34,940)
Total property and equipment, net	$	7,329	$	7,695

Depreciation expense on property and equipment was $0.9 million and $1.0 million during the three months ended March 31, 2024 and 2023, respectively. Write down of abandoned property and equipment no longer in use was $0.2 million and less than $0.1 million during the three months ended March 31, 2024 and 2023, respectively.

Stock-Based Compensation - Schedule of Share-based Payment Arrangement, Option, Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
2015 Plan \| SVOs
Number of Shares
Balance at beginning of period (in shares)	5,635,742
Granted (in shares)	0
Forfeited / Expired (in shares)	(17,970)
Exercised (in shares)	(1,555,977)
Balance at end of period (in shares)	4,061,795	5,635,742
Weighted Average Exercise Price
Balance at beginning of period (in USD per share)	$ 9.60
Granted (in USD per share)	0
Forfeited / Expired (in USD per share)	9.68
Exercised (in USD per share)	9.63
Balance at end of period (in USD per share)	$ 9.59	$ 9.60
Weighted Average Remaining Contractual Life (years)
Weighted average contractual term of options outstanding	4 years 3 months 29 days	3 years 8 months 4 days
Aggregate Intrinsic Value
Balance at beginning of period	$ 24,349
Forfeited / Expired	112
Exercised	8,503
Balance at beginning of period	$ 26,373	$ 24,349
2015 Plan \| PSOs
Number of Shares
Balance at beginning of period (in shares)	3,036,930
Granted (in shares)	0
Forfeited / Expired (in shares)	0
Exercised (in shares)	(1,841,326)
Balance at end of period (in shares)	1,195,604	3,036,930
Weighted Average Exercise Price
Balance at beginning of period (in USD per share)	$ 10.05
Granted (in USD per share)	0
Forfeited / Expired (in USD per share)	0
Exercised (in USD per share)	10.30
Balance at end of period (in USD per share)	$ 9.68	$ 10.05
Weighted Average Remaining Contractual Life (years)
Weighted average contractual term of options outstanding	4 years 10 months 6 days	2 years 1 month 20 days
Aggregate Intrinsic Value
Balance at beginning of period	$ 11,732
Exercised	10,482
Balance at beginning of period	$ 7,648	$ 11,732
2021 Equity Plan
Number of Shares
Balance at beginning of period (in shares)	4,558,199
Granted (in shares)	0
Forfeited / Expired (in shares)	(11,724)
Exercised (in shares)	0
Balance at end of period (in shares)	4,546,475	4,558,199
Number of shares exercisable (in shares)	1,974,043
Weighted Average Exercise Price
Balance at beginning of period (in USD per share)	$ 21.14
Granted (in USD per share)	0
Forfeited / Expired (in USD per share)	23.00
Exercised (in USD per share)	0
Balance at end of period (in USD per share)	21.09	$ 21.14
Weighted average exercise price of options exercisable (in USD per share)	$ 22.01
Weighted Average Remaining Contractual Life (years)
Weighted average contractual term of options outstanding	7 years 9 months 14 days	8 years 21 days
Weighted average contractual term of options exercisable	7 years 7 months 17 days
Aggregate Intrinsic Value
Balance at beginning of period	$ 904
Balance at beginning of period	2,629	$ 904
Aggregate intrinsic value of options exercisable	$ 593

Derivative Instruments and Hedging Activities - Additional Information (Details)	3 Months Ended
	Mar. 31, 2024 USD ($)
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Cash flow hedge gain (loss) to be reclassified within 12 months	$ 2,000,000
Gain (loss) on discontinuation of cash flow hedge due to forecasted transaction probable of not occurring, net	$ 0

Equity (Details)				3 Months Ended
Equity (Details)	Jun. 30, 2023 USD ($) shares	Jun. 12, 2023 $ / shares shares	Jun. 05, 2023 USD ($) shares	Mar. 31, 2024 USD ($) vote $ / shares shares	Mar. 31, 2023 USD ($) shares	Dec. 31, 2023 $ / shares shares	Nov. 23, 2022 USD ($)	Sep. 10, 2021 $ / shares shares
Class of Stock [Line Items]
Total shares authorized (in shares)								1,100,000,000
Common stock, shares authorized (in shares)				1,000,000,000		1,000,000,000		1,000,000,000
Common stock, par value (in USD per share) \| $ / shares				$ 0.01		$ 0.01		$ 0.01
Preferred stock, shares authorized (in shares)				100,000,000		100,000,000		100,000,000
Preferred stock, par value (in USD per share) \| $ / shares				$ 0.01		$ 0.01		$ 0.01
Number of votes entitled to each share of common stock \| vote				1
Dividends declared (in USD per share) \| $ / shares				$ 0
Authorized common stock repurchase amount \| $							$ 100,000,000
Common stock repurchased (in shares)				494,157
Value of common stock repurchased inclusive of commissions and taxes \| $				$ 6,832,000	$ 7,712,000
Common Shares Held in Treasury
Class of Stock [Line Items]
Common stock repurchased (in shares)				494,157	493,926
Value of common stock repurchased inclusive of commissions and taxes \| $				$ 6,832,000	$ 7,712,000
BSPI \| Common Shares Held in Treasury
Class of Stock [Line Items]
Common stock repurchased (in shares)			1,000,000
Value of common stock repurchased inclusive of commissions and taxes \| $			$ 11,700,000
Secondary Public Offering \| Underwriters
Class of Stock [Line Items]
Number of shares issued in transaction (in shares)	0
Proceeds from sale of stock \| $	$ 0
Secondary Public Offering \| Selling Stockholders
Class of Stock [Line Items]
Common stock, par value (in USD per share) \| $ / shares		$ 0.01
Number of shares issued in transaction (in shares)		8,000,000
Over-Allotment Option \| Selling Stockholders \| Underwriters
Class of Stock [Line Items]
Number of shares issued in transaction (in shares)	1,145,486
Period for option to purchase additional shares	30 days
Over-Allotment Option \| Selling Stockholders \| Underwriters \| Maximum
Class of Stock [Line Items]
Number of shares issued in transaction (in shares)	1,200,000

Description of Business (Details)	Mar. 31, 2024
Sterling Check Corp.
Organization, Consolidation and Presentation of Financial Statements [Line Items]
Ownership percentage	51.00%

Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the periods presented were as follows:


(in thousands)
Goodwill as of December 31, 2023	$	879,408
Acquisition of Vault	24,203

Foreign currency translation adjustment	(749)
Goodwill as of March 31, 2024	$	902,862

Summary of Intangible Assets

Intangible assets, net consisted of the following for the periods presented:


	March 31, 2024						December 31, 2023
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer lists	$	571,582	$	(383,343)	$	188,239	$	533,204	$	(375,107)	$	158,097
Trademarks	79,205		(45,188)		34,017		77,860		(43,815)		34,045
Non-compete agreements	3,971		(2,939)		1,032		3,979		(2,869)		1,110
Technology	274,883		(238,207)		36,676		266,194		(233,996)		32,198
Domain names	10,118		(5,524)		4,594		10,118		(5,356)		4,762
	$	939,759	$	(675,201)	$	264,558	$	891,355	$	(661,143)	$	230,212

Schedule of Estimated Future Amortization Expense

Estimated amortization expense as of March 31, 2024 is as follows for each of the next five years:


(in thousands)
Year Ending December 31,
Remainder of fiscal year 2024	$	44,563
2025	50,671
2026	42,044
2027	31,520
2028	25,842
Thereafter	69,918
	$	264,558

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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+ Details

Net (Loss) Income Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	12,106,717	12,136,464
Restricted stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	3,950,029	5,160,978
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	114,348	59,895

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Statement of Cash Flows [Abstract]
Interest, capitalized amounts	$ 129	$ 90

Recent Accounting Standards Updates	3 Months Ended
Recent Accounting Standards Updates	Mar. 31, 2024
Accounting Changes and Error Corrections [Abstract]
Recent Accounting Standards Updates	Recent Accounting Standards Updates The Company qualifies as an emerging growth company under the Jumpstart Our Business Startups Act (the “JOBS Act”). The JOBS Act permits extended transition periods for complying with new or revised accounting standards affecting public companies. The Company has elected to use the extended transition periods and is adopting new or revised accounting standards on the FASB’s non-public company timeline. As such, the Company’s financial statements may not be comparable to financial statements of public entities that comply with new or revised accounting standards on a non-delayed basis. The Company will cease to be an emerging growth company upon the earliest of (a) the last day of the fiscal year in which it has total annual gross revenues of $1.235 billion or more; (b) the last day of its fiscal year following the fifth anniversary of the date of its initial public offering (“IPO”); (c) the date on which it has issued more than $1.0 billion in nonconvertible debt during the previous three years; or (d) the date on which it is deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur as of the last day of a fiscal year in which the market value of its common stock held by non-affiliates equals or exceeds $700 million as of the last business day of the second fiscal quarter of such fiscal year, which threshold was not exceeded as of June 30, 2023. Recently Issued Accounting Pronouncements Not Yet Effective In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvement to Reportable Segment Disclosures (“ASU 2023-07”) to enhance disclosures about a public entity's reportable segments and more detailed information about a reportable segment's expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the impact that ASU 2023-07 will have on the financial statement disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures (“ASU 2023-09”), that improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. For public business entities, such as the Company, the standard is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the impact that ASU 2023-09 will have on the financial statement disclosures.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

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-URI https://asc.fasb.org//1943274/2147482833/825-10-65-6

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+ Details

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Common Shares Held in Treasury	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Dec. 31, 2022		96,717,883
Beginning balance at Dec. 31, 2022	$ 736,646	$ 76	$ 942,789	$ (14,859)	$ (186,448)	$ (4,912)
Beginning balance (in shares) at Dec. 31, 2022				1,047,237
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock (in shares)		4,567
Repurchases of common stock (in shares)		493,926		493,926
Repurchases of common stock	(7,712)			$ (7,712)
Shares withheld to cover restricted share vesting tax (in shares)		37,128		37,128
Shares withheld to cover restricted share vesting tax	(487)			$ (487)
Issuance of restricted shares, net of forfeitures (in shares)		1,894,310
Issuance of restricted shares, net of forfeitures	0	$ 19	(19)
Stock-based compensation	8,043		8,043
Net (loss) income	591				591
Unrealized gain (loss) on hedged transactions, net of tax	(5,159)					(5,159)
Foreign currency translation adjustment, net of tax	682					682
Ending Balance (in shares) at Mar. 31, 2023		98,085,706
Ending Balance at Mar. 31, 2023	732,604	$ 95	950,813	$ (23,058)	(185,857)	(9,389)
Ending balance (in shares) at Mar. 31, 2023				1,578,291
Beginning balance (in shares) at Dec. 31, 2022		96,717,883
Beginning balance at Dec. 31, 2022	$ 736,646	$ 76	942,789	$ (14,859)	(186,448)	(4,912)
Beginning balance (in shares) at Dec. 31, 2022				1,047,237
Ending Balance (in shares) at Dec. 31, 2023	93,194,403	93,194,403
Ending Balance at Dec. 31, 2023	$ 701,944	$ 98	983,283	$ (88,918)	(186,564)	(5,955)
Ending balance (in shares) at Dec. 31, 2023	6,771,755			6,771,755
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock (in shares)		2,111
Repurchases of common stock (in shares)	494,157	494,157		494,157
Repurchases of common stock	$ (6,832)			$ (6,832)
Exercise of employee stock options, net of shares exchanged for payment and tax withholding (in shares)		3,397,303
Exercise of employee stock options, net of shares exchanged for payment and tax withholding	33,952	$ 34	33,918
Issuance of common stock under the 2021 Employee Stock Purchase Plan (in shares)		64,983
Issuance of common stock under the 2021 Employee Stock Purchase Plan	695	$ 5	690
Shares withheld to cover restricted share vesting tax (in shares)		242,755		242,755
Shares withheld to cover restricted share vesting tax	(3,903)			$ (3,903)
Issuance of restricted shares, net of forfeitures (in shares)		1,889,788
Issuance of restricted shares, net of forfeitures	0	$ 19	(19)
Stock-based compensation	9,342		9,342
Net (loss) income	(7,955)				(7,955)
Unrealized gain (loss) on hedged transactions, net of tax	3,020					3,020
Foreign currency translation adjustment, net of tax	$ (2,251)					(2,251)
Ending Balance (in shares) at Mar. 31, 2024	97,811,676	97,811,676
Ending Balance at Mar. 31, 2024	$ 728,012	$ 156	$ 1,027,214	$ (99,653)	$ (194,519)	$ (5,186)
Ending balance (in shares) at Mar. 31, 2024	7,508,667			7,508,667

Revenue

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Revenue

Performance Obligations

Substantially all of the Company’s revenues are recognized at a point in time as results from services are provided through a screening report and the customer takes control of the product when the report is completed. Accordingly, revenue is generally recognized at the point in time when the customer receives and can use the report.

For revenue arrangements containing multiple products or services, the Company accounts for the individual products or services as separate performance obligations if they are distinct, the product or service is separately identifiable from other terms in the contract, and if a customer can benefit from it on its own or with other resources that are readily available to the customer. If these criteria are not met, the promised products or services are accounted for as a combined performance obligation. The Company allocates the contract price to each performance obligation based on the standalone selling prices of each distinct product or service in the contract.

Disaggregation of Revenues

The following tables set forth total revenue by type of service for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024		2023
Screening services	$	183,019	$	176,871
Other services	2,980		2,403
Total revenue	$	185,999	$	179,274

The following table sets forth total revenue by geographic area in which the revenues and invoicing are recorded for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024		2023
United States	$	159,827	$	149,742
All other countries	26,172		29,532
Total revenue	$	185,999	$	179,274

Other than the U.S., no single country accounted for more than 10% of the Company’s total revenues during the three months ended March 31, 2024 and 2023. Substantially all of the Company’s long-lived assets were located in the U.S. as of March 31, 2024 and December 31, 2023.

Contract Assets and Liabilities

The incremental costs of obtaining a contract with a customer are recognized as an asset if the benefit of such costs is expected to be longer than one year, with a majority of contracts being multi-year. Incremental costs include commissions to the sales force and are amortized over three years, as management estimates that this corresponds to the period over which a customer benefits from the contract. As of March 31, 2024 and December 31, 2023, $3.4 million of deferred commissions are included in other current assets on the unaudited condensed consolidated balance sheets and approximately $2.6 million and $2.7 million, respectively, of deferred commissions are included in other noncurrent assets, net on the unaudited condensed consolidated balance sheets.

The Company did not have any material contract liabilities as of March 31, 2024 and December 31, 2023.

Concentrations

For the three months ended March 31, 2024 and 2023, no single customer accounted for more than 10% of the Company’s revenue. No single customer had an accounts receivable balance greater than 10% of total accounts receivable as of March 31, 2024 and December 31, 2023.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

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+ Details

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net income	$ (7,955)	$ 591

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Debt (Tables)

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Schedule of Long-term Debt

The table below sets forth the Company’s long-term debt as presented in the unaudited condensed consolidated balance sheets for the periods presented:


(in thousands)	March 31, 2024		December 31, 2023
Current portion of long-term debt
Term Loans	$	15,000	$	15,000
Total current portion of long-term debt	$	15,000	$	15,000
Long-term debt
Term Loans, due November 29, 2027 (7.68% and 7.71% at March 31, 2024 and December 31, 2023, respectively)	273,750		277,500
Revolving Credit Facility	270,494		205,494
Unamortized discount and debt issuance costs	(3,002)		(3,206)
Total long-term debt, net	$	541,242	$	479,788

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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+ Details

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Stock-Based Compensation Expense


	Three Months Ended March 31,
(in thousands)	2024		2023
Stock-based compensation expense
Cost of revenues	$	359	$	428
Corporate technology and production systems	819		612
Selling, general and administrative	8,164		7,003
Total stock-based compensation expense	$	9,342	$	8,043

Schedule of Share-based Payment Arrangement, Option, Activity

The table below provides a summary of SVOs and PSOs currently outstanding under the 2015 Plan for the three months ended March 31, 2024:


	Outstanding SVOs						Outstanding PSOs
	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value		Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
(in thousands, except shares and per share amounts)
Balances as of December 31, 2023	5,635,742	$	9.60	3.68	$	24,349	3,036,930	$	10.05	2.14	$	11,732
Granted	—	—					—	—
Forfeited / Expired	(17,970)	9.68			112		—	—
Exercised	(1,555,977)	9.63			8,503		(1,841,326)	10.30			10,482
Balances as of March 31, 2024(1)	4,061,795	$	9.59	4.33	$	26,373	1,195,604	$	9.68	4.85	$	7,648

_________________________

(1) All SVOs and PSOs are exercisable as of March 31, 2024.

The table below provides a summary of stock option activity under the 2021 Equity Plan for the three months ended March 31, 2024:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2023	4,558,199	$	21.14	8.06	$	904
Granted	—	—
Forfeited / Expired	(11,724)	23.00
Exercised	—	—
Outstanding as of March 31, 2024	4,546,475	$	21.09	7.79	$	2,629
Exercisable as of March 31, 2024	1,974,043	$	22.01	7.63	$	593

Schedule of Restricted Stock Activity

The table below provides a summary of restricted stock activity under the 2021 Equity Plan for the three months ended March 31, 2024:


	Number of Shares	Weighted Average Fair Value (per share)
Unvested as of December 31, 2023	3,796,203	$	16.40
Granted	1,958,874	15.92
Forfeited / Cancelled	(74,354)	17.45
Vested	(591,611)	10.92
Unvested as of March 31, 2024	5,089,112	$	16.39

The table below provides a summary of RSU activity under the 2021 Equity Plan for the three months ended March 31, 2024:


	Number of Shares	Weighted Average Fair Value (per share)
Unvested as of December 31, 2023	120,555	$	15.82
Granted	6,347	15.92
Forfeited / Cancelled	(18,925)	13.30
Vested	(5,268)	9.82
Unvested as of March 31, 2024	102,709	$	16.33

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Tax expense (benefit) on unrealized gain (loss) on hedged transactions	$ 1,041	$ (1,815)
Tax expense on foreign currency translation adjustments	$ 0	$ 0

Acquisitions (Tables)

3 Months Ended

Mar. 31, 2024

Business Combination and Asset Acquisition [Abstract]

Schedule of Recognized Identified 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	$	2,907
Accounts receivable	8,514
Other current assets	583
Property and equipment	38
Intangible assets	44,500
Total assets acquired	$	56,542
Accounts payable and accrued expenses	4,609
Total liabilities assumed	$	4,609
Total identifiable net assets	51,933
Goodwill	24,203
Total consideration	$	76,136

The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed:


	Preliminary Purchase Price Allocation				Final Purchase Price Allocation
(in thousands)	March 31, 2023		Purchase Price Adjustments		December 31, 2023
Consideration
Cash	$	11,935	$	—	$	11,935
Other current assets
Accounts receivable	4,279		(3)		4,276
Other current assets	805		447		1,252
Property and equipment	177		(1)		176
Intangible assets	32,141		(1,268)		30,873
Other long-term assets	6		—		6
Total assets acquired	$	49,343	$	(825)	$	48,518
Accounts payable and accrued expenses	1,156		94		1,250
Other current liabilities	1,291		(72)		1,219
Deferred tax liability	8,388		(1,163)		7,225
Other liabilities	2		788		790
Total liabilities assumed	$	10,837	$	(353)	$	10,484
Total identifiable net assets	38,506		(472)		38,034
Goodwill	27,352		766		28,118
Total consideration	$	65,858	$	294	$	66,152

Schedule of Pro Forma Results

The pro forma results presented are the result of combining the revenues of the Company with the revenues of Vault for the three months ended March 31, 2023:


(in thousands)	Three Months Ended March 31, 2023
Revenues	$	195,638

Debt

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Debt

On November 29, 2022, Sterling Infosystems, Inc. (the “Borrower”), a Delaware corporation and a subsidiary of the Company, entered into a credit agreement (the “2022 Credit Agreement”) by and among the Borrower, as borrower, Sterling Intermediate Corp., KeyBank National Association, as administrative agent (the “Administrative Agent”), certain guarantors party thereto and the lenders party thereto.

The 2022 Credit Agreement provides for aggregate principal borrowings of $700.0 million, comprised of $300.0 million aggregate principal amount of term loans (the “Term Loans”) and a $400.0 million revolving credit facility (the “Revolving Credit Facility”). The Term Loans and the Revolving Credit Facility mature on November 29, 2027.

The table below sets forth the Company’s long-term debt as presented in the unaudited condensed consolidated balance sheets for the periods presented:


(in thousands)	March 31, 2024		December 31, 2023
Current portion of long-term debt
Term Loans	$	15,000	$	15,000
Total current portion of long-term debt	$	15,000	$	15,000
Long-term debt
Term Loans, due November 29, 2027 (7.68% and 7.71% at March 31, 2024 and December 31, 2023, respectively)	273,750		277,500
Revolving Credit Facility	270,494		205,494
Unamortized discount and debt issuance costs	(3,002)		(3,206)
Total long-term debt, net	$	541,242	$	479,788

The estimated fair value of the Company’s 2022 Credit Agreement was $548.8 million and $484.1 million as of March 31, 2024 and December 31, 2023, respectively. These fair values were determined based on quoted prices in markets with similar instruments that are less active (Level 2 inputs as defined below) as an observable price of the 2022 Credit Agreement or similar liabilities is not readily available.

The Company was in compliance with all financial covenants under its 2022 Credit Agreement as of March 31, 2024.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current portion of long-term debt
Total current portion of long-term debt	$ 15,000	$ 15,000
Long-term debt
Unamortized discount and debt issuance costs	(3,002)	(3,206)
Total long-term debt, net	541,242	479,788
Line of Credit \| Secured Debt \| Term Loans
Current portion of long-term debt
Total current portion of long-term debt	15,000	15,000
Long-term debt
Long-term debt, gross	$ 273,750	$ 277,500
Interest rates	7.68%	7.71%
Line of Credit \| Revolving Credit Facility
Long-term debt
Long-term debt, gross	$ 270,494	$ 205,494

Debt - Additional Information (Details) - Line of Credit - USD ($)	Mar. 31, 2024	Dec. 31, 2023	Nov. 29, 2022
Debt Instrument [Line Items]
Aggregate principal borrowings			$ 700,000,000
Level 2
Debt Instrument [Line Items]
Estimated fair value	$ 548,800,000	$ 484,100,000
Secured Debt \| Term Loans
Debt Instrument [Line Items]
Aggregate principal borrowings			300,000,000
Revolving Credit Facility
Debt Instrument [Line Items]
Aggregate principal borrowings			$ 400,000,000

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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+ Details

Stock-Based Compensation - Schedule of Restricted Stock Activity (Details) - 2021 Equity Plan	3 Months Ended
	Mar. 31, 2024 $ / shares shares
Restricted stock
Number of Shares
Balance at beginning of period (in shares) \| shares	3,796,203
Granted (in shares) \| shares	1,958,874
Forfeited / cancelled (in shares) \| shares	(74,354)
Vested (in shares) \| shares	(591,611)
Balance at end of period (in shares) \| shares	5,089,112
Weighted Average Fair Value (per share)
Balance at beginning of period (in USD per share) \| $ / shares	$ 16.40
Granted (in USD per share) \| $ / shares	15.92
Forfeited / cancelled (in USD per share) \| $ / shares	17.45
Vested (in USD per share) \| $ / shares	10.92
Balance at end of period (in USD per share) \| $ / shares	$ 16.39
Restricted stock units
Number of Shares
Balance at beginning of period (in shares) \| shares	120,555
Granted (in shares) \| shares	6,347
Forfeited / cancelled (in shares) \| shares	(18,925)
Vested (in shares) \| shares	(5,268)
Balance at end of period (in shares) \| shares	102,709
Weighted Average Fair Value (per share)
Balance at beginning of period (in USD per share) \| $ / shares	$ 15.82
Granted (in USD per share) \| $ / shares	15.92
Forfeited / cancelled (in USD per share) \| $ / shares	13.30
Vested (in USD per share) \| $ / shares	9.82
Balance at end of period (in USD per share) \| $ / shares	$ 16.33

Stock-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands			3 Months Ended
	Jul. 01, 2023	Aug. 04, 2021	Mar. 31, 2024	Mar. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense			$ 93,300
Weighted average period of recognition			2 years 3 months 18 days
Proceeds from exercise of employee stock options			$ 53,629	$ 0
2015 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Post-termination exercise period		6 months
Extended post-termination exercise period		30 days
2021 Equity Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation by share based award expiration term		10 years
Share-based compensation arrangement by share-based payment award, shares issued in period (in shares)		9,433,000
Percentage of outstanding stock maximum		5.00%
Share based compensation by share based award number of shares authorized for issuance (in shares)		9,433,000
Share based compensation by share based award number of shares available for issuance (in shares)			12,154,861
NQSOs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense related to options			$ 18,800
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense related to restricted stock			73,600
Cash paid for tax withholding on exercise of employee stock options			$ 3,903	487
Restricted stock \| 2021 Equity Plan \| Share-based Payment Arrangement, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period			2 years
Share based compensation by share based award vesting percentage		50.00%
Restricted stock \| 2021 Equity Plan \| Share-based Payment Arrangement, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period			3 years
Share based compensation by share based award vesting percentage		25.00%
Restricted stock \| 2021 Equity Plan \| Share-based Payment Arrangement, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period		4 years
Share based compensation by share based award vesting percentage		25.00%
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense related to restricted stock			$ 900
Restricted stock units \| 2021 Equity Plan \| Share-based Payment Arrangement, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period			2 years
Share based compensation by share based award vesting percentage			50.00%
Restricted stock units \| 2021 Equity Plan \| Share-based Payment Arrangement, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period			3 years
Share based compensation by share based award vesting percentage			25.00%
Restricted stock units \| 2021 Equity Plan \| Share-based Payment Arrangement, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period			4 years
Share based compensation by share based award vesting percentage			25.00%
Restricted stock units \| 2021 Equity Plan \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period			1 year
Restricted stock units \| 2021 Equity Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period			4 years
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cash paid for tax withholding on exercise of employee stock options			$ 19,172	$ 0
Proceeds from the issuance of common stock			$ 500
Stock Options \| 2021 Equity Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation by share based award expiration term			10 years
Stock Options \| 2021 Equity Plan \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period			1 year
Stock Options \| 2021 Equity Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period			4 years
Other Restricted Stock \| 2021 Equity Plan \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period		1 year
Other Restricted Stock \| 2021 Equity Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting period		4 years
Employee Stock \| ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, maximum employee subscription rate	15.00%
Share-based compensation arrangement by share based payment award, offering period	6 months
Share-based compensation arrangement by share based payment award, purchase price of common stock, percent			85.00%

Summary of Significant Accounting Policies - Additional information (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2024 USD ($) Segment	Mar. 31, 2023 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Nov. 30, 2021 USD ($)	Jun. 30, 2021
Accounting Policies [Line Items]
Selling, general and administrative	$ 59,890	$ 47,451
Other current liabilities	17,832		$ 11,839
Net income	(7,955)	591
Liabilities	723,014		661,499
Income tax benefit	$ 9,018	(1,102)
Number of operating segments \| Segment	1
Number of reportable segments \| Segment	1
Cash and cash equivalents	$ 66,979		54,224
Cumulative translation adjustment gain (loss)	(5,100)		(2,900)
Sales credits and reserves	700		1,200
Allowance for expected credit losses	2,933	$ 2,473	2,816	$ 2,304
Percentage of cloud-hosted platform revenue processed						98.00%
Percentage of core platform revenue processed		77.00%
Outside US
Accounting Policies [Line Items]
Cash	23,400		19,300
AUSTRALIA
Accounting Policies [Line Items]
Cash	6,700		6,200
INDIA
Accounting Policies [Line Items]
Cash	4,000		3,200
EBI
Accounting Policies [Line Items]
Contingent consideration					$ 1,500
Revision of Prior Period, Error Correction, Adjustment
Accounting Policies [Line Items]
Selling, general and administrative	4,000
Other current liabilities	4,000
Net income			(2,000)	(2,000)
Liabilities			4,000	$ 2,000
Income tax benefit	700
Revision of Prior Period, Error Correction, Adjustment \| EBI
Accounting Policies [Line Items]
Contingent consideration	$ 4,000		$ 4,000

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

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 accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

These unaudited condensed consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments including those of a normal recurring nature necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2023 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2024.

Out-of-Period Adjustments

The unaudited condensed consolidated financial statements for the three months ended March 31, 2024 include an adjustment of $4.0 million to increase selling, general and administrative expense and other current liabilities to correct for an error identified by management during the preparation of the unaudited condensed consolidated financial statements. The Company identified that the fair value of the contingent consideration related to the acquisition of Employment Background Investigations, Inc. (“EBI”) was understated by $4.0 million as of December 31, 2023. This out-of-period adjustment represents a correction of an understatement of expenses and an overstatement of net income of $2.0 million in each of the years ended December 31, 2023 and 2022 and an understatement of the related liabilities of $4.0 million and $2.0 million as of December 31, 2023 and 2022, respectively. In addition, the unaudited condensed consolidated financial statements for the three months ended March 31, 2024 include an adjustment of $0.7 million to increase the income tax benefit to correct for an error identified by management. This out-of-period adjustment represents a correction of an overstatement of the income tax provision for the year ended December 31, 2023.The Company evaluated the impact of these errors and out-of-period adjustments and concluded they are not material to any previously issued interim or annual consolidated financial statements and the adjustments are not expected to be material to the consolidated financial statements for the year ending December 31, 2024.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that can affect the reported amount of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Significant estimates include the impairment of long-lived assets, goodwill impairment, derivative instruments and hedging activities, and the determination of the fair value of acquired assets and liabilities. The Company believes that the estimates used in the preparation of these unaudited condensed consolidated financial statements are reasonable; however, actual results could differ materially from these estimates.

Risks and Uncertainties

The Company operates in an industry that is subject to intense competition, government regulation and rapid technological change. The Company’s operations are subject to significant risk and uncertainties including financial, operational, technological, regulatory, foreign operations, and other risks.

Segment Information

The Company has one operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.

Cash and Cash Equivalents

Cash and cash equivalents of $67.0 million and $54.2 million as of March 31, 2024 and December 31, 2023, respectively, include money market instruments with maturities of three months or less. The Company maintained cash outside the U.S. as of March 31, 2024 of $23.4 million with the largest deposits being held in Australia and India, with balances of $6.7 million and $4.0 million, respectively. Cash outside the U.S. was $19.3 million as of December 31, 2023, with the largest deposits being held in Australia and India, with balances of $6.2 million and $3.2 million, respectively.

Foreign Currency

Assets and liabilities of operations having non-USD functional currencies are translated at period-end exchange rates, and income statement accounts are translated at weighted average exchange rates for the period. Gains or losses resulting from translating foreign currency financial statements, net of any related tax effects, are reflected in accumulated other comprehensive income or loss (“OCI”), a separate component of stockholders’ equity on the unaudited condensed consolidated balance sheets. Gains or losses resulting from foreign currency transactions incurred in currencies other than the local functional currency are included in other income in the unaudited condensed consolidated statements of operations and comprehensive loss. The cumulative translation adjustment resulted in losses of $5.1 million and $2.9 million as of March 31, 2024 and December 31, 2023, respectively.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable balances consist of trade receivables that are recorded at the invoiced amount, net of allowances for expected credit losses and for potential sales credits and reserves. Sales credits and reserves were $0.7 million and $1.2 million as of March 31, 2024 and December 31, 2023, respectively.

The Company maintains an allowance for expected credit losses in order to record accounts receivable at their net realizable value. Inherent in the assessment of the allowance for expected credit losses are certain judgments and estimates relating to, among other things, the Company’s customers’ access to capital, customers’ willingness and ability to pay, general economic conditions and the ongoing relationship with customers. Allowances have been recorded for receivables believed to be uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices. The allowance for expected credit losses is determined by analyzing the Company’s historical write-offs, the current aging of receivables, the financial condition of customers and the general economic climate. Adjustments to the allowance may be required in future periods depending on how such potential issues are resolved or if the financial condition of the Company’s customers were to deteriorate resulting in an impairment of their ability to make payments. The Company has not historically had material write-offs due to uncollectible accounts receivable.

Allowances for expected credit losses were $2.9 million and $2.8 million as of March 31, 2024 and December 31, 2023, respectively. The following table summarizes changes in the allowance for expected credit losses for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024		2023
Balance as of beginning of period	$	2,816	$	2,304

Additions	204		244
Write-offs, net of recoveries	(82)		(78)
Foreign currency translation adjustment	(5)		3
Balance as of end of period	$	2,933	$	2,473

Corporate Technology and Production Systems

Corporate technology and production systems includes costs related to maintaining the Company’s corporate information technology infrastructure and non-capitalizable costs to develop and maintain its production systems.

The following table sets forth expenses included in each category of corporate technology and production systems for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024		2023
Corporate information technology	$	4,826	$	5,267
Development of platform and product initiatives	5,560		4,414
Production support and maintenance	2,828		2,271
Total production systems	8,388		6,685
Total corporate technology and production systems	$	13,214	$	11,952

Corporate information technology consists of salaries and benefits of personnel (including stock-based compensation expense) supporting internal operations such as information technology support and the maintenance of information security and business continuity functions. Also included are third-party costs including cloud computing costs that support the Company’s corporate internal systems, software licensing and maintenance, telecommunications and other technology infrastructure costs.

Production systems costs consist of non-capitalizable personnel costs including contractor costs incurred for the development of platform and product initiatives and production support and maintenance. Platform and product initiatives facilitate the development of the Company’s technology platform and the launch of new screening products. Production support and maintenance includes costs to support and maintain the technology underlying the Company’s existing screening products and to enhance the ease of use of the Company’s cloud applications. Certain personnel costs related to new products and features are capitalized and amortized to depreciation and amortization.

Included within corporate technology and production systems are non-capitalizable production system and corporate information technology expenses related to Project Ignite, a three-phase strategic investment initiative. Phase one of Project Ignite modernized client and candidate experiences and is complete. Phase two of Project Ignite focused on decommissioning the Company’s on-premises data centers and migrating the Company’s production systems and corporate information technological infrastructure to a managed service provider in the cloud. During the first half of 2021, the Company completed phase two initiatives related to the migration of its production and fulfillment systems to the cloud, and as a result, approximately 98% of revenue is processed through platforms hosted in the cloud. The Company incurred expenses related to phase two to complete the decommissioning of on-premises data centers for internal corporate technology infrastructure and migration to the cloud which was completed as of September 30, 2022. Phase three of Project Ignite was decommissioning of the platforms purchased over the prior ten years and the migration of the clients to one global platform. This third and final phase, which was completed in the first quarter of 2023, unified clients onto a single global platform. The Company’s core platform now processes approximately 77% of its global revenue.

Related Party Transactions	3 Months Ended
Related Party Transactions	Mar. 31, 2024
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions Goldman Sachs and some of its affiliates, each an affiliate of our Sponsor, are clients of the Company and the Company had sales to Goldman Sachs and some of its affiliates in the amount of $1.1 million and $1.1 million for the three months ended March 31, 2024 and 2023, respectively. Outstanding accounts receivable from Goldman Sachs as of March 31, 2024 and December 31, 2023 were $0.9 million and $0.7 million, respectively. Additionally, the Company is currently a party to a $75.0 million notional value interest rate swap through November 29, 2027 with J. Aron & Company LLC, a wholly-owned subsidiary of Goldman Sachs. Outstanding accounts receivable from swap with J. Aaron & Company LLC were less than $0.1 million as of March 31, 2024 and December 31, 2023. In connection with entering into the Merger Agreement, on February 28, 2024, the Company entered into a Support Agreement by and among the Company, First Advantage and the Specified Stockholders. In connection with the Support Agreement and acting as a financial advisor to the Company, Goldman Sachs will receive a fee of up to $30.0 million for such services provided in connection with the Merger payable upon completion of the Merger. Refer to “Note 13. Commitments and Contingencies” for further information regarding these fees. An affiliate of certain stockholders that, to the Company’s knowledge, collectively own greater than 10% of the Company’s outstanding shares of common stock (the “Stockholders”) is a client of the Company, and the Company had sales to an affiliate of the Stockholders in the amount of less than $0.1 million for the three months ended March 31, 2024 and 2023, respectively. Outstanding accounts receivable from an affiliate of the Stockholders were less than $0.1 million as of March 31, 2024 and December 31, 2023.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(e))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
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-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

+ Details

Cover Page - shares	3 Months Ended
Cover Page - shares	Mar. 31, 2024	May 02, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	001-40829
Entity Registrant Name	Sterling Check Corp.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	37-1784336
Entity Address, Address Line One	6150 Oak Tree Boulevard
Entity Address, Address Line Two	Suite 490
Entity Address, City or Town	Independence
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	44131
City Area Code	800
Local Phone Number	853-3228
Title of 12(b) Security	Common stock, $0.01 par value
Trading Symbol	STER
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		97,751,383
Amendment Flag	false
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001645070

Property and Equipment, net - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 42,966	$ 42,635
Less: Accumulated depreciation	(35,637)	(34,940)
Total property and equipment, net	7,329	7,695
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,211	1,317
Computers and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	39,876	39,251
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,879	$ 2,067

Revenue - Additional Information (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Revenue from Contract with Customer [Abstract]
Deferred commissions, amortization period	3 years
Deferred commissions, current	$ 3.4	$ 3.4
Deferred commissions, non-current	$ 2.6	$ 2.7

Stock-Based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 9,342	$ 8,043
Cost of revenues
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	359	428
Corporate technology and production systems
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	819	612
Selling, general and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 8,164	$ 7,003

Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Disaggregation of Revenue [Line Items]
Total revenue	$ 185,999	$ 179,274
Screening services
Disaggregation of Revenue [Line Items]
Total revenue	183,019	176,871
Other services
Disaggregation of Revenue [Line Items]
Total revenue	$ 2,980	$ 2,403

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

+ References

+ Details

Property and Equipment, Net - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 0.9	$ 1.0
Write down of abandoned property and equipment no longer in use	$ 0.2	$ 0.1

Revenue - Schedule of Total Revenue by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Disaggregation of Revenue [Line Items]
Total revenue	$ 185,999	$ 179,274
United States
Disaggregation of Revenue [Line Items]
Total revenue	159,827	149,742
All other countries
Disaggregation of Revenue [Line Items]
Total revenue	$ 26,172	$ 29,532

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

+ References

+ Details

Goodwill and Intangible Assets - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Indefinite-lived Intangible Assets [Line Items]
Net intangibles	$ 264,558,000		$ 230,212,000
Capitalized computer software, impairments	0	$ 100,000
Amortization of intangible assets	14,900,000	14,100,000
Software and Software Development Costs
Indefinite-lived Intangible Assets [Line Items]
Net intangibles	31,000,000		30,200,000
Capitalized computer software, additions	4,900,000	4,100,000
Software and Software Development Costs \| Internal Cost
Indefinite-lived Intangible Assets [Line Items]
Capitalized computer software, additions	3,900,000	3,400,000
Software and Software Development Costs \| External Cost
Indefinite-lived Intangible Assets [Line Items]
Capitalized computer software, additions	1,000,000	$ 700,000
Technology
Indefinite-lived Intangible Assets [Line Items]
Net intangibles	36,676,000		$ 32,198,000
Finite lived intangible assets, not yet in service	$ 7,100,000

Acquisitions - Pro Forma (Details) $ in Thousands	3 Months Ended
Acquisitions - Pro Forma (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Vault
Business Acquisition [Line Items]
Revenues	$ 195,638

Commitments and Contingencies (Details) - USD ($) $ in Thousands		3 Months Ended
	Feb. 28, 2024	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Loss Contingencies [Line Items]
Possible extension period for consummation of the Merger	6 months
Possible termination fee	$ 66,300
Litigation settlement obligation		$ 5,224		$ 5,279
Insurance receivable		2,900		$ 2,900
Net legal settlement expense		200	$ 100
First Advantage
Loss Contingencies [Line Items]
Required business days to consummate Merger after satisfaction of conditions	5 days
First Advantage \| Maximum
Loss Contingencies [Line Items]
Possible termination fee	$ 100,000
First Advantage \| Initial Outside Date
Loss Contingencies [Line Items]
Possible termination fee	60,000
First Advantage \| Extended Outside Date
Loss Contingencies [Line Items]
Possible termination fee	90,000
Goldman Sachs
Loss Contingencies [Line Items]
Merger fees	30,000
Goldman Sachs \| Payable Upon Completion Of Merger
Loss Contingencies [Line Items]
Merger fees	20,000
Goldman Sachs \| Payable At Sole Discretion Of The Company
Loss Contingencies [Line Items]
Merger fees	10,000
Citigroup Global Markets Inc
Loss Contingencies [Line Items]
Merger fees	20,000
Citigroup Global Markets Inc \| Payable Upon Completion Of Merger
Loss Contingencies [Line Items]
Merger fees	5,000
Citigroup Global Markets Inc \| Payable At Sole Discretion Of The Company
Loss Contingencies [Line Items]
Merger fees	10,000
Citigroup Global Markets Inc \| Payable In Connection With Delivery Of The Fairness Option
Loss Contingencies [Line Items]
Merger fees	$ 5,000
Citigroup Global Markets Inc \| Payable In Connection With Delivery Of The Fairness Option \| Selling, general and administrative
Loss Contingencies [Line Items]
Merger fees		$ 5,000

Summary of Significant Accounting Policies - Summary of Corporate Technology and Production Systems Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Accounting Policies [Abstract]
Corporate information technology	$ 4,826	$ 5,267
Development of platform and product initiatives	5,560	4,414
Production support and maintenance	2,828	2,271
Total production systems	8,388	6,685
Total corporate technology and production systems	$ 13,214	$ 11,952

Leases (Tables)

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Schedule of Lease Expense

The components of lease expense for the periods presented are as follows:


	Three Months Ended March 31,
(in thousands)	2024		2023
Components of total lease costs
Operating lease expense	$	761	$	1,379
Sublease income	(388)		(222)
Total net lease costs	$	373	$	1,157

Schedule of Right-of-Use Assets and Lease Liabilities

Information related to the Company’s right-of-use assets and lease liabilities for the periods presented is as follows:


(dollars in thousands)	March 31, 2024		December 31, 2023
Operating leases
Operating leases right-of-use asset	$	5,872	$	6,452

Operating leases liability, current portion	$	3,879	$	4,219
Long-term operating leases liability, net of current portion	6,606		7,278
Total operating leases liability	$	10,485	$	11,497


Weighted average remaining lease term in years - operating leases	3.6		3.7
Weighted average discount rate - operating leases	4.89	%	4.92	%

Schedule of Remaining Lease Payments

Total remaining lease payments under the Company’s operating leases (excluding short term leases) for the periods presented are as follows:


(in thousands)	March 31, 2024
Remainder of fiscal year 2024	$	3,687
2025	2,380
2026	2,117
2027	2,149
2028	1,028
Thereafter	85
Total future minimum lease payments	$	11,446
Less: imputed interest	(961)
Total	$	10,485

Goodwill and Intangible Assets - Schedule of Changes in Carrying Amount of Goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 879,408
Acquisition of Vault	24,203
Foreign currency translation adjustment	(749)
Goodwill, ending balance	$ 902,862

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
CURRENT ASSETS:
Cash and cash equivalents	$ 66,979	$ 54,224
Accounts receivable (net of allowance for credit losses of $2,933 and $2,816 at March 31, 2024 and December 31, 2023, respectively)	157,392	142,179
Insurance receivable	2,895	2,937
Prepaid expenses	11,382	9,651
Other current assets	17,276	15,800
Total current assets	255,924	224,791
Property and equipment, net	7,329	7,695
Goodwill	902,862	879,408
Intangible assets, net	264,558	230,212
Deferred tax assets	4,748	4,818
Operating leases right-of-use asset	5,872	6,452
Other noncurrent assets, net	9,733	10,067
TOTAL ASSETS	1,451,026	1,363,443
CURRENT LIABILITIES:
Accounts payable	47,486	38,879
Litigation settlement obligation	5,224	5,279
Accrued expenses	73,605	63,987
Current portion of long-term debt	15,000	15,000
Operating leases liability, current portion	3,879	4,219
Income tax payable, current portion	3,523	8,933
Other current liabilities	17,832	11,839
Total current liabilities	166,549	148,136
Long-term debt, net	541,242	479,788
Deferred tax liabilities	900	14,239
Long-term operating leases liability, net of current portion	6,606	7,278
Other liabilities	7,717	12,058
Total liabilities	723,014	661,499
COMMITMENTS AND CONTINGENCIES (NOTE 13)
STOCKHOLDERS’ EQUITY:
Preferred stock ($0.00 par value; 100,000 shares authorized; no shares issued or outstanding)	0	0
Common stock ($0.00 par value; 1,000,000 shares authorized; 105,320 shares issued and 97,812 shares outstanding at March 31, 2024; 99,966 shares issued and 93,194 shares outstanding at December 31, 2023)	156	98
Additional paid-in capital	1,027,214	983,283
Common stock held in treasury (7,509 and 6,772 shares at March 31, 2024 and December 31, 2023, respectively)	(99,653)	(88,918)
Accumulated deficit	(194,519)	(186,564)
Accumulated other comprehensive loss	(5,186)	(5,955)
Total stockholders’ equity	728,012	701,944
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 1,451,026	$ 1,363,443