yes, the faces are overexposed for sure. No, it doesn't necessarily mean that there is anything wrong with your flash.
There can be several reasons why they are overexposed:
1) The metering: You can try to change to center-weighted or spot and make sure it meters on their faces.
2) Exposure bias: Do you have your camera at a positive exposure bias? In my experience, most Nikons benefit from a negative exposure bias -0.3 or -0.7. However, that is a nuance...it will not explain this level of over-exposure.
3) Do you have flash-compensation ON, on your flash itself perhaps? I.e. a power-ration over 1?
Good luck with the diagnostics!