Impact of Foreign Exchange Rates on Revenue Growth
For the benefit of our investors, Sterling Check Corp. (“we” or “us”) is providing additional information about the impact of foreign currency exchange rate fluctuations on organic revenue growth. As discussed in the prospectus, dated September 22, 2021, for the initial public offering of our common stock (the “prospectus”), for the twelve months ended June 30, 2021, 19% of our revenue was generated outside of the U.S., an increase from 17% for the year ended December 31, 2020 and an increase from 15% for the year ended December 31, 2019.
As discussed in the prospectus, revenues increased by 43.6%, or $90.8 million, from $207.9 million for the six months ended June 30, 2020 to $298.7 million for the six months ended June 30, 2021. Organic revenue growth in this period was $84.9 million, or 40.8%, and growth due to the impact of fluctuations in foreign currency exchange rates was $5.9 million, or 2.8%
Organic revenue growth is a “non-GAAP financial measure,” which is a financial measure that is not calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”). We calculate organic revenue growth by adjusting for any M&A activity that contributed revenue in the current period, which was not present in the prior period, and converting the current period revenue at foreign currency exchange rates consistent with the prior period. There was no impact of M&A activity on our revenue in the six months ended June 30, 2021 or in the six months ended June 30, 2020. Going forward, we plan to discuss the impact of fluctuations in foreign currency exchange rates on revenue in our earnings reporting process.
Organic revenue growth has limitations as an analytical tool, and you should not consider such a measure either in isolation or as substitutes for analyzing our results as reported under GAAP. In particular, organic revenue growth does not reflect M&A activity or the impact of foreign currency exchange rate fluctuations.