Good afternoon, everyone, and welcome to the 2026 Wolfe FinTech Forum. Scott Wurtzel covering business and information services here at Wolfe. Happy to be joined by Steven Marks and Joelle Smith from First Advantage. Steven, maybe if you want to start off, you know, there could be some in the room that are maybe unfamiliar with the company. If you wanna just maybe start off by giving a quick overview, it'd be great.
Yeah, great. Thanks for having us as usual, and great conference. First Advantage is a global software and data company who specializes in helping our customers navigate the complex world of human capital risk, where maybe a few years ago we would have sat here and said, "Oh, we're a leading global background screener." The business has transformed beyond just traditional background screening and drug testing, and now helps our customers navigate risks around identity verification, the whole Know Your People concept of making sure that a company knows who their employees, contractors, gig workers, things like that, who they are, that they're the right people for their organization.
Frankly, we live in an ever complex world when it comes to risk, and helping our customers navigate that across the globe. At scale, you know, we do this for large enterprise customers. We consider enterprise to be half a million dollars or more in annual revenue. We do that for 80,000 customers. We screen across 200, you know, territories and countries. Last year alone, we did 205 million, you know, screening events. And really have helped our customers navigate what is now a changing landscape. As technology evolves, the risks evolve, and we've been helping our customers stay there with a very direct Know Your People concept.
Got it. It's helpful overview. Then if, you know, if we go back, you know, a couple of weeks ago when you guys reported Q4 earnings, like the results had come in better than expected, and you know, really, I think the big highlight was some of the strong growth contribution you saw on the upsell/cross-sell side of things. Wondering if you could discuss, you know, some of the highlights of the most recent quarter, and then maybe also talk about some of the assumptions underpinning your guidance for 2026.
Yeah, I'll give you the math answers, and I'll let Joelle, 'cause her team's responsible for it, take credit.
Yeah.
for the wins. Certainly, I mean, look, we grew, and we've got a great, you know, long-standing revenue growth algorithm that, you know, our growth levers aren't just relying on base growth and retention, but generating incremental growth from new logo and upsell/cross-sell. Q4 was a blowout stellar quarter for that regard. We've been talking all of 2025 about a couple or three larger wins we had earlier in the year that just, you know, we knew it was gonna happen, perfect storm of events. They all hit full ramp and full go live in Q4. New logo and upsell/cross-sell combined were 17% in Q4, which is just astronomical growth. That's how we got to, you know, 12% consolidated growth for the quarter, which is a great quarter.
Obviously, we get some rollover from that into 2026. It'll be at a little bit more normalized level. I mean, we were really thrilled to see that not only did all three of those ramp at the same time, one of them is in the retail space, so Q4 is peak seasonality for them. Frankly, in a couple of our newer wins, I think this is just a kind of a resounding vote of confidence in our platforms, the new customers actually held screening volume back from the legacy provider, their previous provider, waited till they were on board with First Advantage. We had a little bit of an extra uptick in revenue that'll normalize out over the course of 2026.
We certainly see ourselves in 2026 powered by the success of our go-to-market team being at or above the high end of our historical averages, our long-term averages for new logo and upsell/cross-sell, which traditionally has probably been 8%-9% growth, probably pushing towards, you know, upwards of that 9%-10% realm.
Got it. No, that's helpful. Then, Joelle, maybe you wanna take this one. Like just before we get into some of the numbers, strategy questions, just wondering if you can talk about sort of the state of, you know, sort of the screening identity monitoring market as it is today. You know, besides maybe the acquisition of Sterling obviously being a big kind of transformational change for the company, I mean, what are some of the major changes you've seen, you know, in the market, if any, in recent years?
Yeah, absolutely. Steven kinda talked about this a little bit, Scott, but when you look at the traditional kind of screening market, it was a point in time kind of before somebody gets a job. We've seen this change across the landscape of our customer base, where they're really focused on risk holistically of what's coming into the organization, who is starting first day of the organization, and then who's staying with the organization. That's really where the advent of this identity verification has come into play.
You probably have seen some of the news articles, but there's been an elevation prompted by AI of bad actors essentially that have been out there falsifying identities creating false resumes, and doing things basically to get a job within an organization that would allow them to get credentials and exfiltrate data from the organization and sell it on the dark web. When you think about all the great things AI does, there are some things that, you know, AI is not doing very well.
We have created a product suite, on top of the background screening services that we already provide that allows our customers to check identity, do background checks, and enable a persistent check across the life cycle of that employee that allows them, the customers, to feel, or to have a better view into the risk, profile that they're bringing into the organization or that they already have in the organization. That's a big dynamic change for background screening. It's not a point in time anymore. It really is an evolution of kind of a multi-pronged approach. The nice part is the investments that we've made in our product and our technology are allowing us to be that orchestration layer across the life cycle.
We have some interesting things happening with AI, but we also are able, and have a unique position with our customers, to be able to help them through that situation.
Got it. That's helpful. Then Steven, you know, I guess we're over a year out, almost even 18 months out from the closing of the Sterling acquisition, which was a big transformational deal for the company. When you sort of look back here, I mean, what has been the most, you know, positive change, you know, from the deal that you've noticed in terms of, you know, the business as it is now versus, you know, before before the deal had happened?
Yeah. Well, I think there's obviously some of the normal M&A benefits. We've got great people. We've got a bigger scale. We've obviously yielded the synergy benefit that's, you know, generating good cash flow and EBITDA margins now. I think when you look at 2025, there were some other really, you know, kind of key benefits just to how our business is structured that came into light. Our diversification of our verticals probably being first and foremost. You know, you think about 2025, and early in the year we had Liberation Day and the tariff noise. Our retail segment was, I would say for about a quarter or so, had some slower hiring going on as they were trying to navigate that. If this was just traditional old First Advantage pre-acquisition, that was our largest vertical. That would've been a problem.
Our second largest vertical. That would've been a real problem for us. Our diversification certainly supported that. Back half of the year, likewise, you know, healthcare had a little slowdown as government shutdowns really caused some Medicare, Medicaid funding issues that temporarily brought down some of the healthcare segment. Sterling standalone would've been in trouble that way. I think the diversification of our, of our customer base, of our product suite, of our geographic distribution, has really helped us just give a level of stability. Then you take that with all of the standard acquisition benefits of we had. You know, we have the best people. We have, you know, our choice of best platform.
We took that best athlete approach in a number of areas and have a healthier overall P&L, and now you can see the benefits of that coming through cash flow now. Feel like we're in a much better place organizationally. I think from a market standpoint, we are the clear category leader. We've now differentiated ourselves, not just in our revenue numbers and our size of our P&L, but our ability to invest in product. All those things that Joelle just talked about, you know, require investment. Given the fact that we have the scale, what we can invest on those and kind of amortize that across the 80,000 customers, if you will, we're able to invest in proprietary data. We're able to invest in AI initiatives and digital identity and international growth.
I think just the overall scale and capabilities of the business, and then the stability that our diversification give us is kind of reigning supreme at the moment.
Got it. Joelle, I mean, Steven touched on this a little bit when talking about the recent quarter, but, you know, we have seen the company outperform, you know, on new logos and upsell/cross-sell. I mean, what has been sort of the main driver of that, and then, you know, how sustainable is, you know, that level of elevated growth that we've seen in recent quarters?
Yeah. There's a couple of different factors, but one of the biggest ones is our customers prioritizing risk above all else. If you had kind of asked our customers, enterprises are always a little different than SMB, but speed to hire would've been the number one thing. Now it's risk. We actually just completed a research study, 89% of the 5,000 folks that we talked to are saying that they are going to add identifiers and package density is what we call, but basically attributes to their packages to be able to measure more risk. Because risk is creating brand reputation risk. You know, it's reputation risk. It's creating insider threat risk. It's creating a lot of things inside of the organization that really weren't front and center a number of years ago.
When you look at the size of deals that we're able to close, we've been able to increase the ACV. We've been able to increase the package density across our customer base, which is leading to that really lovely cross-sell/upsell number that we saw in Q4. We don't see that slowing down. We have been hearing that from our customers. The digital identity is a really interesting phenomenon because not only is it creating risk inside the organization, it's actually creating a conversation inside of our customers that isn't just directly related to the HR department. We're now talking to the CISO, we're now talking to the CEO in many instances because they have had evidence of a bad actor getting hired into the organization, or there has been some type of data exfiltration because of an HR policy.
We're seeing those conversations shift from, "Okay, how many people did we hire, and what was the cost of background screening?" to, "What risk do we have inside of our organization, and how do we manage that more effectively and prevent it from happening?" That's helping us to elevate the conversation, expand the size of the deal, and elevate, obviously, our relationship with our customers.
Got it.
Scott, just to bridge the last two questions, I think the other kind of go-to-market success that's come out of the acquisition is our retention levels. You know, we went into an acquisition. You do one in our space, you expect elevated levels of customer loss just because inevitably you're going to, you know, the perception is you're gonna screw something up about their customer experience. The fact that, you know, we're, again, we're almost a year and a half past, and attrition hasn't actually gone up. It's gone down. Retention is up. After one of these acquisitions, I think that's a combination of the success of how we've done our integration, as well as to Joelle's point, some of the differentiation we're able to create from whether it's products, whether it's the customer experience, whether it's just keeping the stability of the platforms.
To me, that's almost the most resounding, you know, A-plus scorecard you can give is that your existing customers stayed at a rate higher than they did before the acquisition.
Yeah. No, that makes sense. You know, it sounds like obviously there's been a lot of demand and, you know, the product suite is broadening, which is helping with deal size. You know, I feel like, you know, kind of quarter after quarter, it sounds like we're seeing, you know, large deal after large deal. I think even most recently, you know, you talked about a new logo that could be a top five customer over time. Has there been any change to, like, the go-to-market approach at all that is also like leading to this success, especially with these larger deals?
I mean, yeah, I mean, brought two large companies together, right? Took the best of both. One historically was really good at large enterprise. The other one was really good at, like, the mid-enterprise. Brought them together, took the best of both, so that helps. The verticalized go-to-market, those three deals that you talked about, Scott, are actually in three different verticals. One was in healthcare, the other one was in retail and gig, and then the other one was in financial services. We have dedicated sales teams to each of these verticals, and they're able to speak the language. They're able to talk to these customers the way that things mean the most to them. We're able to specifically talk about products that will address their specific needs inside of those verticals.
That just helps us elevate win rate. It helps us to elevate the conversations, you know, with our customers. It's the verticalized go-to-market, but also bringing the best of both of those companies together is really helping us win on both sides.
Got it. You know, Steven, while, you know, the new logo upsell/cross-sell obviously has been a big positive for, you know, the kinda growth algorithm, you know, base has continued to be, you know, slightly negative and sounds like, you know, based on your guidance and what you talked about, it seems like you're expecting another year of slightly negative base in 2026. Can you maybe talk about what, you know, you're seeing and hearing from clients with respect to hiring volumes, you know, for this year relative to last?
Environment, we're hearing a lot of positive commentary from customers that very rarely, if ever, are we hearing them saying that 2026 is gonna be worse than 2025. We wanna have a little bit of a conservative posture because as we've seen maybe the last, I don't know, 20, 14, 15 months, Washington policy can kinda shift around on what the focus is, and that can temporarily impact base in a few verticals here and there. We think it's a pretty conservative view that gives us where the risk isn't really based, nor is it really the opportunity. There is a lot of opportunity around a lot of the go-to-market success. We've got a lot of rollover wins from 2025 that'll help power 2026.
We've got a great pipeline that we feel really optimistic about and really bullish on for about driving second half of the year growth. When you think about the guidance range, yeah, you know, base being at the higher end versus the lower end of that 0% to -2% certainly helps. The biggest factor is the go-to-market execution and the onboarding of these new wins, and the incremental growth that will drive. We still feel really good about retention being in that 96%-97% window. It's also just helpful for our business just as a planning and resource management to be in this base environment where we don't have these large swings. We've seen the verticals all start to coordinate together and contract. They don't have that wide dispersion of events anymore.
The fact that now we've got, you know, six months in a row, if you will, a flat base really sets us up for a much better stable year of growth.
Got it. That makes sense. You know, moving on, I guess, to margins. You know, your guidance is calling for EBITDA margins to improve, you know, sequentially as we move throughout the year. Just wondering if you can talk about the drivers of, you know, margin expansion for the year ahead, you know, between, you know, operating leverage across the business. Also I know there's, you know, you still have some room on your synergy targets as well. Just maybe talk through some of those, different moving parts.
Yeah. A lot of moving factors, right? I mean, for the year, we've got margins roughly expanding, call it 50 basis points, just using some simple math. You know, we've got. I mean, you know, from a, from. You know, the pacing in year, a lot of that's driven by earlier low seasonality. You know, those coming right off the holidays are always our kinda lowest point of the year, and we accelerate, you know, with some hiring from whether it's college graduates, whether it's spring seasonal hiring in retail, obviously peaking towards the end of the year. It's flattened out a lot. Another benefit from the acquisition, by the way.
Overall, you know, from a margin standpoint, you know, we've got a couple of these newer deals that we've talked about that created some mixed differential, meaning when you have a driver network or when you have a healthcare network, they have to go out and get driver records, which it's a pass-through cost, but it does come at a little higher price point. When you have to go do all of the drug and physical testing for certain types of healthcare networks, again, it's pass-through cost, so it doesn't hurt our net dollar margins. It does dilute the percentages. We've got a flat basis for that now in the back half of the year. We'll have that driver kind of evening out. Then you're right from synergies.
We've got some rollover synergies that'll be there the first part of the year. We still have, you know, a package of synergies. We're prioritizing growth in the first part of the year, so we wanna accelerate some growth opportunities. A lot of the products Joelle's talked about are gonna drive some of those. Our customers are telling us what they need, which is great, 'cause then you know when you build it, they'll buy it. In the back part of the year, we certainly have a little bit more to go on synergies, primarily in the cost of sales realm. You know, making sure that we've harmonized the fulfillment workflows, how we acquire the data between kind of the different fulfillment methodologies, how we process that data, how we report it back out.
We still feel really good about getting to the $65-$80 million of synergies, which is ±$15-$20 million off of where we finished the year. Still a lot of room to drive incremental margin. That'll obviously benefit if, you know, if we action that in the second half of the year, you'll see even more of those margin gains in 2027.
Got it. Joelle, you know, you talked a little bit about identity earlier.
Mm-hmm.
you know, remains, I think, one of the more exciting and white space opportunities for the company and the industry as a whole. Wondering if you can talk a little bit more about how, you know, you're attacking the, you know, the digital identity opportunity and the current demand that you're seeing from customers right now?
Yeah, absolutely. I mean, we can't talk to a customer or prospect without it coming up. The fact that we were kind of first to market with this product suite a number of years ago is really helping us now because, you know, we get the inbounds coming in, but then we also have, you know, some outbound conversations with our customers. It's really interesting kind of what's changing with identity is, there's a point in time solution that some of these identity providers can do where you will basically check facial recognition. You check, you know, some of the signals on the phone and verify is it that person. The evolution of.
It's funny 'cause, like, digital identity, we just started talking about less than a year ago, and there's already an evolution of it. One of the things that's working really well for us is we're able to pair the identity signals together with the background screening information so that we can tell our customers that the person that they hired and went through our background screen is the same person that started on day one. For instance, somebody needs an I-9 with the first day that they're started. The person that checked the background check is the same person that starts for the I-9, which is important for a lot of the immigration laws and some of the fines that are coming up with some of that, so we're able to help them in that.
There's this new evolution of what we call persistent identity, where our customers wanna know at every step of the post-hire stage, it's still that same person. We're seeing this happen within like the last mile driver, you know, group, so the gig space, delivery drivers, transportation. It's really interesting because they are actually requiring anybody who's delivering anything to a household to do a selfie check-in in the morning to make sure they are still the same person that was screened because there's this evolution of people farming out jobs where they, you know, basically have one profile on a platform. They're basically saying, you know, to their cousins, their brothers, their uncles, their friends, "Go make all of these deliveries." They're doing that.
It's obviously creating a lot of pain for our customers and a lot of risk for their organization. We had a customer who went from at one point in time, and now six months later, we're doing 24 million selfie identity checks for them, you know, post-hire because that is their example because they have to do that home delivery. It's really interesting how that's changing, and we're uniquely positioned because of the platform we have, because of the investments we've made in our product, and because of the size and scale of our organization to be able to hit every and help every vertical. We're very excited about it.
Yeah. No, it's definitely one that we will be watching for sure. Then, you know, I think the other topic that comes up obviously is AI, right?
Mm-hmm.
You know, whether it's the risks, the opportunities. I mean, how would you describe First Advantage's AI moat and, you know, the data advantages that the company has?
Yeah, absolutely. We absolutely see AI as an enabler, not a disruptor, for our business. One, we operate in a heavily regulated market, right? Hiring people, you need to be able to have permissible purpose. You need to follow FCRA. There's HIPAA. There's every, you know, GDPR. There's a lot of that around there. We also see the positive for AI in that we can use it to help ourselves because we do have over 1 billion proprietary records. We've been using AI since 2021 through machine learning algorithms. In 2024, we started with the GenAI. There's a lot of orchestration we have inside our own organization to make us more effective.
As far as the moat that we have, I think it's important for folks to understand that there's not a single dataset that you can go out and get to run a check to make sure somebody can get hired. You just can't do it. Every county in the United States is different. Every state, every federal agency across the globe, they all have different rules and regulations. Acquiring the data is challenging. It's also behind paywalls. Even though it's government data, you have to pay for it. If you're going to try to be a startup to go do that, you need to have a pretty heavy capital investment to be able to go do that.
You also need to know all the rules and regulations of those thousands of courts and entities to be able to even use that data, and that's just for checking criminal. You talk about drug testing, and then you talk about all the other brick-and-mortar requirements where somebody needs to go to a lab and get checked and tested and all of that. It's not as straightforward as I think everybody would like to think it is. Because we have a platform, we have all of the regulatory compliance built in, there's a really nice moat that we have, and it's all under the foundation of our proprietary data. We use that to train the models.
We use that to train ourselves and to make really good decisions, or help our customers make really good decisions because a human has to make the decision. That is the law. There are five states out there that have already made laws around AI, and there's 25 more. A human has to decide to hire a human. There's really no way around that. By enabling our products to help those humans make those decisions and then follow the rules and regs required to make those decisions, make sure they're auditable and also defensible legally, that's really what gives us the moat.
Yeah. That makes a ton of sense. You know, Steven, if we move on to capital allocation, just wondering if you can talk about, you know, the top priorities for the company and how you're thinking about, you know, debt pay downs and reducing leverage versus buying back stocks sort of at this juncture right now.
Yeah. Obviously, probably a different conversation today than it was 60 days ago. You know, certainly, you know, coming off the acquisition, our priority was deleveraging, right? We've done a really good job about taking the initial financing from the deal. I've already paid down over $95 million worth of that acquisition financing, and we'll continue to do so. You know, we just paid down $25 million a couple weeks ago. We'll continue that pace, you know, and depending on free cash flow and adjusting that up or down. Obviously, we weren't talking, you know, share repurchases, you know, 6 or 8 months ago or even 60 or 80 days ago.
Obviously with the stock market and valuations reacting to some of the AI news, I imagine looked at that as just a good corporate finance decision that, you know, the stock price is undervalued. We could generate incremental EPS. We have put a portion of our capital towards a buyback program. We got $100 million authorization from our board. We're putting that to work obviously in pieces. We're not a company that has ever over-rotated one way or the other on capital allocation. We're luckily at a point in our integration and with cash flow that we can actually do a lot of those things at once.
You know, simultaneously we're paying down debt, we're buying back shares, we're organically investing in our business to fund incremental growth, to accelerate growth. In doing that all with a still a very meaningful balance of cash on our balance sheet, availability under all of our borrowing mechanisms to make sure that we can fund all the opportunity, but we're doing it all in a really prudent manner that doesn't sacrifice one over the other. Look, if the markets get a little bit more rational and the price normalizes out, obviously we'll pull down the lever on repurchases, we'll pay down more debt and we'll make more investment. We're open to doing all of those things and maximizing and being opportunistic on maximizing shareholder value.
Yeah, that makes sense. Before we get into the last few questions, just wanted to see if there's any questions from the audience. All right. Well, I wanted to go back to maybe on margins and, you know, with the synergies you were talking about, you know, potentially looking at sort of like, you know, cost of data acquisition and delivering. I mean, I'm wondering if you can maybe, Steven, talk just about some of the levers that you can pull there, in terms of, you know, the synergies you can realize on the data acquisition side.
Yeah. Well, the thing to keep in mind about a lot of the data acquisition costs is a lot of those get passed through to the customer. That's where the synergies come through is less on, you know, the New York court and what they charge the same amount to everyone. It's a government source. A lot of the remaining cost savings and margin benefit goes, what do we do with once we've acquired the data? How, to Joelle's point, leveraging AI on optimizing and making it more efficient on how we process that data. How do we categorize the data? How do we prep it for that human decision? You know, we've been very successful in automation over the years. I've been here for 10 years.
You know, what started as RPA became machine learning, became AI. It's just an evolution of where we're at, and the synergies are just continuing to work through the remaining workflows, consolidating practice across the platforms, but also, you know, automating what can be automated, leveraging, you know, bulk data where we can leverage bulk data. And then there are some incremental opportunities for the private data to negotiate better, to get some better scale, things like that. Look, we still have, as I mentioned before, $15-$20 million of go-get. A lot of that will come out of cost of sales, but not all of it is necessarily on those data acquisition pass-through costs.
I mean, as much as we do wanna save our customers money and make us more cost competitive and things like that doesn't cost us money. Our main focus is taking the cost out of what we do with the data and how we fulfill it. Things like our automation initiatives in our customer care, we call it Click.Chat.Call, where we put AI and GenAI in place there. We've been able to yield roughly 20%-30% headcount savings, rolling that out for the entire organization. We have a lot of opportunities around all of those things, plus, you know, additional levers that we can pull, whether that be price, whether that be a few other areas, that will optimize margins both over the short run and long run.
Yeah. That makes sense. Joelle, you know, we talked about obviously identity is a big theme that's emerging. AI is a big theme that's emerging. I mean, is there any other, you know, kind of big overarching, you know, theme or industry dynamic that's either occurring right now or something, you know, you guys are thinking about in the future that you're excited about, you know, for the company?
Yeah. I mean, I think it's just this risk, you know. Unfortunately, the world doesn't seem to be getting less complex, and we also are just continuing to see a rise in risk across kind of the corporate enterprise. That always is something that we wanna kinda keep the forefront of what we're thinking about and what we're investing in. We really do consider ourselves kind of the company to really bring that trust across our customer base, and especially at the enterprise level, 'cause that really is where we play. Anything that helps us address that risk that our customers are seeing kind of currently. I, you know, I don't think AI is done with what it's causing.
Again, there's so many great things about it, but I do think there are a number of organizations and, you know, even in various states across the world that are just finding new and different ways to kind of get into where, you know, some of our customers have to protect themselves against. I do see an evolution of our product suite, where we have to continue to increase that package density to solve for some of the things that are actively happening and some of the things that are gonna continue to happen, as we see this kind of world change a few times over here.
I think that also helps us to continue to stay sticky with our customers and be really relevant to what they need to run their business.
The evolution isn't just in AI creating new risks, it's also certain of our underlying markets becoming more mature. You know, gig is an area that a few years ago was very immature, for lack of a better term, right? They were all startup. They were all just do it as fast and quick and cheap, and who cares? These are all mature, you know, multi-billion-dollar, large, you know, Fortune 500 size companies who are starting to take it seriously. Likewise, globally, right? There's a lot of opportunity for global expansion. These what used to be considered third-world markets are becoming second and first world, and having to start to behave by the same rules of, you know, the U.S., the U.K., Australia. As those markets mature, our value proposition just resonates even stronger.
that's why we see a ton of growth coming, you know, whether it's the emerging technologies or it's what used to be emerging markets.
Mm.
giving us, you know, a longer run of growth opportunities that weren't there three, four, five years ago.
Yeah, that makes sense. I guess just to wrap it up here, Steven, you know, if we were to be back here 12 months from now and discussing what a successful year it was for First Advantage, I mean, what would you point to as being maybe the top 3 things you would have achieved throughout 2026 to make it successful?
Yeah. Well, it's probably more than three, but certainly the things we can control. I think the continued go-to-market success is first and foremost. I think that the momentum that we've created in 2025, the combined value proposition, the pipeline generation, you've seen our ability to turn that into actual growth opportunity. I think that's first and foremost is continuing to drive growth, and we've set up initiatives around investing to accelerate that growth. We've obviously got a great rollover base to carry through there. We've got new products and demands. I think first and foremost, it's keeping that momentum and accelerating that momentum in the go-to-market. Number two is probably a little less sexy on the synergy side.
It's just making sure that we're executing that on the right game plan and continuing to yield the margin benefits and all of the upside from you know our original theory on the acquisition. Third is probably more just cash flow generation. I think we've been really good. You know, we gave out an initial guide for 2025. We're able to handsomely beat that. Sure, the tax law helped us out a little bit, but being able to take control of the Sterling balance sheet, being able to just manage working capital and you know limit add back expenses, I think there's a lot of momentum into 2026 as we continue to deleverage.
Yeah, everyone's back to paying full U.S. taxes again, but we can certainly grow over that, have $160 million-$190 million of free cash flow expected and feel really good about that. Look, the crazy part is you talk about those three things and it's almost like what we've taken for granted. Like 96%-97% customer retention we don't even talk about as a priority because, you know, we've just come to expect it out of Joelle's team. That we're gonna retain customers at that level and things like that we just are taking for granted.
I think certainly those are some of the core areas that if we execute on go-to-market success, if we execute on synergies and generate cash flow, I think we'll have considered a really successful year, and we'll have really positioned ourselves for a, you know, well versus guidance of course, but I think for long-term growth versus the model we gave out in our investor day last year and just, you know, setting ourselves up for the future.
Awesome. Well, Steven and Joelle, thank you very much. Really appreciate the time.
Scott, thanks for having us.