Revenue of $75.4 million grows 3%
year-over-year driven by lending software solutions revenue of
$55.8 million growing 8% year-over-year
MeridianLink, Inc. (NYSE: MLNK), a leading provider of modern
software platforms for financial institutions and consumer
reporting agencies, today announced financial results for the
second quarter ended June 30, 2023.
“We experienced strong demand for our software solutions in Q2,
with solid bookings momentum and successful services delivery, both
in-line with our strategic investment in our Go-To-Market engine
and Services capabilities,” said Nicolaas Vlok, chief executive
officer of MeridianLink. “Given the power of our configurable
digital lending platform, we see customers continuing to choose
MeridianLink® One to accelerate growth and best position their
businesses to win.”
Quarterly Financial Highlights:
- Revenue of $75.4 million, an increase of 3% year-over-year
- Lending software solutions revenue of $55.8 million, an
increase of 8% year-over-year
- Operating income of $1.5 million, or 2% of revenue, and
Non-GAAP operating income of $11.9 million, or 16% of revenue
- Net loss of $(5.2) million, or (7)% of revenue, and Adjusted
EBITDA of $27.1 million, or 36% of revenue
- Cash flows from operations of $61.1 million and free cash flow
of $51.4 million, in each case for the last twelve month
period
Business and Operating Highlights:
- Revenue of $75.4 million for the quarter included a one-time
$2.3 million reduction in revenue related to a commercial dispute
of a contract acquired through a past acquisition. Without this
reduction, MeridianLink’s quarterly revenue would have been $77.7
million, growing 6% year-over-year and in-line with our
guidance.
- MeridianLink propelled the cross-sell momentum of MeridianLink
One, signing fourteen MeridianLink® Consumer customers on to our
MeridianLink® Mortgage solution in the first half of the year.
- The Company announced the go-live of Space Coast Credit Union,
the third largest credit union in Florida, on MeridianLink®
Insight, our business intelligence tool. As a result, instant
approvals at Space Coast Credit Union increased by over 25% and
approximately 95% of all loan applications are now processed and
decided within one day.
- MeridianLink won its largest new logo platform customer in the
last twelve months with a credit union looking to supercharge
growth across their portfolio with the purchase of MeridianLink®
Consumer, Opening, Auto, Home Equity, and Business.
- The Company improved the innovative functionality of
MeridianLink One by enhancing its Advanced Decisioning
capabilities, adding a digital banking integration with
MeridianLink® Engage, and automating loan and account
cross-selling.
- MeridianLink added a partner integration with PortX to rapidly
integrate with other core providers, which accelerates our
customers’ end-to-end lending process, driving automation for the
lender and faster decisioning for the consumer.
Business Outlook
Based on information as of today, August 1, 2023, the Company
issues third quarter financial guidance and updates full year 2023
financial guidance as follows:
Third Quarter Fiscal 2023:
- Revenue is expected to be in the range of $76.0 million to
$78.0 million
- Adjusted EBITDA is expected to be in the range of $27.0 million
to $29.0 million
Full Year 2023:
- Revenue is expected to be in the range of $302.0 million to
$306.0 million
- Adjusted EBITDA is expected to be in the range of $104.0
million to $108.0 million
Conference Call Information
MeridianLink will hold a conference call to discuss our second
quarter results today, August 1, 2023, at 2:00 p.m. Pacific Time
(5:00 p.m. Eastern Time). The conference call can be accessed by
dialing (888) 259-6580 from North America toll-free or the
International number of (416) 764-8624 with Conference ID 93721775.
A live webcast of the conference call can be accessed from the
investor relations page of MeridianLink’s website at
ir.meridianlink.com. An archived replay of the webcast will be
available at the same website following the conclusion of the call.
A telephonic replay will be available until 8:59 p.m. Pacific Time
(11:59 p.m. Eastern Time) on Tuesday, August 8, 2023, by dialing
(877) 674-7070 from North America or the International number of
(416) 764-8692 with Playback Passcode 721775.
About MeridianLink
MeridianLink® (NYSE: MLNK), headquartered in Costa Mesa,
California, powers digital lending and account opening for
financial institutions and provides data verification solutions for
consumer reporting agencies. MeridianLink’s scalable, cloud-based
platforms help customers build deeper relationships with consumers
through data-driven, personalized experiences across the entire
lending life cycle.
MeridianLink enables customers to accelerate revenue growth,
reduce risk, and exceed consumer expectations through seamless
digital experiences. Its partner marketplace supports hundreds of
integrations for tailored innovation. For more than 20 years,
MeridianLink has prioritized the democratization of lending for
consumers, businesses, and communities. Learn more at
www.meridianlink.com.
Operational Measures Definitions
We reference bookings, which is an internal operational measure
of the business. Bookings is defined as the total of the minimum
annual contracted value for newly sold capabilities of our
software-as-a-service, or SaaS, products over a given time period,
inclusive of any corresponding vendor fees owed to Third
Parties.
Non-GAAP Financial Measures
To supplement the financial measures presented in accordance
with generally accepted accounting principles, or GAAP, we provide
certain non-GAAP financial measures, such as adjusted EBITDA and
adjusted EBITDA margin; non-GAAP operating income (loss); non-GAAP
net income (loss); non-GAAP cost of revenue; non-GAAP sales and
marketing expenses; non-GAAP research and development expenses;
non-GAAP general and administrative expenses; and free cash flow.
The presentation of these financial measures is not intended to be
considered in isolation or as a substitute for, or superior to,
financial information prepared and presented in accordance with
GAAP. Rather, we believe that these non-GAAP financial measures,
when viewed in addition to and not in lieu of our reported GAAP
financial results, provide investors with additional meaningful
information to assess our financial performance and trends, enable
comparison of financial results between periods, and allow for
greater transparency with respect to key metrics utilized
internally in analyzing and operating our business. The following
definitions are provided:
- Non-GAAP operating income (loss):
GAAP operating income (loss), excluding the impact of share-based
compensation, employer payroll taxes on employee stock
transactions, restructuring related costs, and sponsor and
third-party acquisition-related costs.
- Non-GAAP net income (loss): GAAP
net income (loss), excluding the impact of share-based
compensation, employer payroll taxes on employee stock
transactions, restructuring related costs, sponsor and third-party
acquisition-related costs, and the effect of income taxes on
non-GAAP items. The effects of income taxes on non-GAAP items
reflect a fixed long-term projected tax rate of 24%.
The Company employs a structural long-term
projected non-GAAP income tax rate of 24% for greater consistency
across reporting periods, eliminating effects of items not directly
related to the Company's operating structure that may vary in size
and frequency. This long-term projected non-GAAP income tax rate is
determined by analyzing a mix of historical and projected tax
filing positions, assumes no additional acquisitions during the
projection period, and takes into account various factors,
including the Company’s anticipated tax structure, its tax
positions in different jurisdictions, and current impacts from key
U.S. legislation where the Company operates. We will reevaluate
this tax rate, as necessary, for significant events such as
significant alterations in the U.S. tax environment, substantial
changes in the Company’s geographic earnings mix due to acquisition
activity, or other shifts in the Company’s strategy or business
operations.
- Adjusted EBITDA: net income (loss)
before interest expense, taxes, depreciation and amortization,
share-based compensation expense, employer payroll taxes on
employee stock transactions, restructuring related costs, sponsor
and third-party acquisition related costs, and deferred revenue
reductions from purchase accounting for acquisitions prior to the
adoption of ASU 2021-08, “Business Combinations (Topic 805):
Accounting for Contract Assets and Contract Liabilities from
Contracts with Customers,” which we early adopted on January 1,
2022 on a prospective basis. As of June 30, 2023, the remaining
deferred revenue from acquisitions prior to the adoption of ASU
2021-08 was less than $0.1 million, which will be recognized on a
straight line basis through December 31, 2023.
- Non-GAAP cost of revenue: GAAP
cost of revenue, excluding the impact of share-based compensation,
employer payroll taxes on employee stock transactions, and
amortization of developed technology.
- Non-GAAP operating expenses: GAAP
operating expenses, excluding the impact of share-based
compensation, employer payroll taxes on employee stock
transactions, and depreciation and amortization, as
applicable.
- Free cash flow: GAAP cash flow
from operating activities less GAAP purchases of property and
equipment (Capital Expenditures) and capitalized costs related to
developed technology (Capitalized Software).
Reconciliations to comparable GAAP financial measures are
available in the accompanying schedules, which are posted as part
of this earnings release on our website. No reconciliation is
provided with respect to certain forward-looking non-GAAP financial
measures as the GAAP measures are not accessible on a
forward-looking basis. We cannot reliably predict all necessary
components or their impact to reconcile such financial measures
without unreasonable effort. The events necessitating a non-GAAP
adjustment are inherently unpredictable and may have a significant
impact on our future GAAP financial results.
Forward-Looking Statements
This release contains, and our above-referenced conference call
and webcast will contain, statements which are not historical facts
and are considered forward-looking within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Generally, these
statements can be identified by the use of words such as
“anticipates,” “believes,” “estimates,” “expects,” “intends,”
“may,” “plans,” “projects,” “seeks,” “should,” “will,” and
variations of such words or similar expressions, although not all
forward-looking statements contain these identifying words.
Further, statements describing our strategy, outlook, guidance,
plans, intentions, or goals are also forward-looking statements.
These forward-looking statements reflect our predictions,
expectations, or forecasts, including, but not limited to,
statements regarding, and guidance with respect to, our strategy,
our future financial and operational performance, future economic
and market conditions, our strategic initiatives, including
anticipated benefits and integration of an acquisition, our
restructuring plan, including expected associated timing, benefits,
and costs, our ability to retain and attract customers and product
partners, potential losses related to any commercial disputes, our
development or delivery of new or enhanced solutions and
anticipated results of those solutions for our customers, our
ability to effectively implement, integrate, and service our
customers, our market size and growth opportunities, our
competitive positioning, projected costs, technological
capabilities and plans, and objectives of management. Actual
results may differ materially from those described in the
forward-looking statements and will be affected by a variety of
risks and factors that are beyond our control including, without
limitation, risks related to our business and industry, as well as
those set forth in Item 1A. Risk Factors, or elsewhere, in our
Annual Report on Form 10-K for the most recently ended fiscal year,
any updates in our Quarterly Reports on Form 10-Q filed for periods
subsequent to such Form 10-K, and our other SEC filings. These
forward-looking statements are based on reasonable assumptions as
of the date hereof. The plans, intentions, or expectations
disclosed in our forward-looking statements may not be achieved,
and you should not rely upon forward-looking statements as
predictions of future events. We undertake no obligation, other
than as required by applicable law, to update any forward-looking
statements, whether as a result of new information, future events,
or otherwise.
Condensed Consolidated Balance
Sheets
(unaudited)
(in thousands, except share and
per share data)
As of
June 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
108,872
$
55,780
Accounts receivable, net
35,104
32,905
Prepaid expenses and other current
assets
11,313
9,447
Escrow deposit
—
30,000
Total current assets
155,289
128,132
Property and equipment, net
3,491
4,245
Right of use assets
1,671
2,185
Intangible assets, net
274,208
297,475
Deferred tax assets, net
17,886
13,939
Goodwill
608,576
608,657
Other assets
5,003
4,524
Total assets
$
1,066,124
$
1,059,157
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
4,149
$
1,249
Accrued liabilities
30,783
32,500
Deferred revenue
26,302
16,945
Current portion of long-term debt, net of
debt issuance costs
3,545
3,505
Total current liabilities
64,779
54,199
Long-term debt, net of debt issuance
costs
421,808
423,404
Long-term deferred revenue
841
1,141
Other long-term liabilities
845
1,322
Total liabilities
488,273
480,066
Commitments and contingencies
Stockholders’ Equity
Preferred stock, $0.001 par value;
50,000,000 shares authorized; zero shares issued and outstanding at
June 30, 2023 and December 31, 2022
—
—
Common stock, $0.001 par value;
600,000,000 shares authorized, 81,167,660 and 80,644,452 shares
issued and outstanding at June 30, 2023 and December 31, 2022,
respectively
132
128
Additional paid-in capital
636,193
621,396
Accumulated deficit
(58,474
)
(42,433
)
Total stockholders’ equity
577,851
579,091
Total liabilities and stockholders’
equity
$
1,066,124
$
1,059,157
Condensed Consolidated
Statements of Operations
(unaudited)
(in thousands, except share and
per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues, net
$
75,415
$
72,987
$
152,550
$
145,741
Cost of revenues:
Subscription and services
23,984
23,376
47,485
44,480
Amortization of developed technology
4,510
3,850
8,964
7,284
Total cost of revenues
28,494
27,226
56,449
51,764
Gross profit
46,921
45,761
96,101
93,977
Operating expenses:
General and administrative
24,409
20,806
46,964
38,993
Research and development
11,754
10,487
25,566
18,896
Sales and marketing
8,558
5,465
16,771
10,208
Acquisition related costs
—
103
—
2,386
Restructuring related costs
717
—
3,621
—
Total operating expenses
45,438
36,861
92,922
70,483
Operating income
1,483
8,900
3,179
23,494
Other (income) expense, net:
Other income
(784
)
(216
)
(1,254
)
(379
)
Interest expense, net
9,316
5,436
18,347
9,794
Total other expense, net
8,532
5,220
17,093
9,415
(Loss) income before (benefit from)
provision for income taxes
(7,049
)
3,680
(13,914
)
14,079
(Benefit from) provision for income
taxes
(1,819
)
1,508
(3,018
)
4,428
Net (loss) income
$
(5,230
)
$
2,172
$
(10,896
)
$
9,651
Net (loss) income per share:
Basic
$
(0.06
)
$
0.03
$
(0.13
)
$
0.12
Diluted
$
(0.06
)
$
0.03
$
(0.13
)
$
0.12
Weighted average common stock
outstanding:
Basic
80,911,113
80,418,520
80,786,427
80,197,832
Diluted
80,911,113
82,223,181
80,786,427
82,251,322
Net Revenues by Major
Source
(unaudited)
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Subscription fees
$
63,770
$
63,529
$
130,175
$
126,998
Professional services
9,002
6,665
17,437
13,777
Other
2,643
2,793
4,938
4,966
Total
$
75,415
$
72,987
$
152,550
$
145,741
Net Revenues by Solution
Type
(unaudited)
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Lending software solutions
$
55,778
$
51,668
$
113,779
$
100,835
Data verification software solutions
19,637
21,319
38,771
44,906
Total (1)
$
75,415
$
72,987
$
152,550
$
145,741
% Growth attributable to:
Lending software solutions
6
%
9
%
Data verification software
(3
)%
(4
)%
Total % growth
3
%
5
%
(1) % Revenue related to mortgage loan
market:
Lending software solutions
13
%
7
%
12
%
7
%
Data verification software
61
%
64
%
61
%
67
%
Total % revenue related to mortgage loan
market
26
%
24
%
25
%
26
%
Condensed Consolidated
Statements of Cash Flows
(unaudited)
(in thousands)
Six Months Ended June
30,
2023
2022
Cash flows from operating
activities:
Net (loss) income
$
(10,896
)
$
9,651
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
28,955
26,376
Provision for expected credit losses
441
—
Amortization of debt issuance costs
669
1,429
Share-based compensation expense
13,893
9,247
Loss on disposal of fixed assets
—
135
Deferred income taxes
(4,192
)
4,025
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(2,640
)
(8,806
)
Prepaid expenses and other assets
(2,395
)
661
Accounts payable
2,955
(1,059
)
Accrued liabilities
(1,663
)
(2,065
)
Deferred revenue
9,058
8,076
Net cash provided by operating
activities
34,185
47,670
Cash flows from investing
activities:
Acquisition, net of cash acquired –
Beanstalk Networks L.L.C.
326
—
Acquisition, net of cash and restricted
cash acquired – StreetShares, Inc.
—
(23,059
)
Return (payment) of escrow deposit
30,000
(30,000
)
Capitalized software additions
(4,562
)
(4,079
)
Purchases of property and equipment
(305
)
(480
)
Net cash provided by (used in) investing
activities
25,459
(57,618
)
Cash flows from financing
activities:
Repurchases of common stock
(5,145
)
(193
)
Proceeds from exercise of stock
options
1,025
186
Proceeds from employee stock purchase
plan
793
922
Taxes paid related to net share settlement
of RSUs
(1,050
)
—
Principal payments of long-term debt
(2,175
)
(1,088
)
Payment of Regulation A+ investor note
—
(3,265
)
Net cash used in financing activities
(6,552
)
(3,438
)
Net increase (decrease) in cash and cash
equivalents
53,092
(13,386
)
Cash and cash equivalents, beginning of
period
55,780
113,645
Cash and cash equivalents, end of
period
$
108,872
$
100,259
Supplemental disclosures of cash flow
information:
Cash paid for interest
$
17,955
$
8,337
Cash paid for income taxes
2,577
762
Non-cash investing and financing
activities:
Share-based compensation expense
capitalized to software additions
$
136
$
188
Purchase price allocation adjustment
related to income tax effects for StreetShares acquisition
245
—
Vesting of RSAs and RSUs
5
38
Purchases of property and equipment
included in accounts payable and accrued expenses
3
93
Regulation A+ investor note assumed in
business combination
—
3,265
Initial recognition of operating lease
liability
—
3,372
Initial recognition of operating lease
right-of-use asset
—
2,627
Reconciliation from GAAP to
Non-GAAP Results
(unaudited)
(in thousands, except share and
per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Operating income
$
1,483
$
8,900
$
3,179
$
23,494
Add: Share-based compensation expense
9,367
5,439
14,556
9,247
Add: Employer payroll taxes on employee
stock transactions
322
3
448
148
Add: Restructuring related costs
717
—
3,621
—
Add: Sponsor and third-party acquisition
related costs
—
99
—
2,386
Non-GAAP operating income
$
11,889
$
14,441
$
21,804
$
35,275
Operating margin
2
%
12
%
2
%
16
%
Non-GAAP operating margin
16
%
20
%
14
%
24
%
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net (loss) income
$
(5,230
)
$
2,172
$
(10,896
)
$
9,651
Add: Share-based compensation expense
9,367
5,439
14,556
9,247
Add: Employer payroll taxes on employee
stock transactions
322
3
448
148
Add: Restructuring related costs
717
—
3,621
—
Add: Sponsor and third-party acquisition
related costs
—
99
—
2,386
Add: Income tax effect on non-GAAP
items
(2,497
)
(1,330
)
(4,470
)
(2,827
)
Non-GAAP net income
$
2,679
$
6,383
$
3,259
$
18,605
Non-GAAP basic net income per share
$
0.03
$
0.08
$
0.04
$
0.23
Non-GAAP diluted net income per share
0.03
0.08
0.04
0.23
Weighted average shares used to compute
Non-GAAP basic net income per share
80,911,113
80,418,520
80,786,427
80,197,832
Weighted average shares used to compute
Non-GAAP diluted net income per share
83,487,132
82,223,181
82,994,599
82,251,322
Net (loss) income margin
(7
)%
3
%
(7
)%
7
%
Non-GAAP net income margin
4
%
9
%
2
%
13
%
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net (loss) income
$
(5,230
)
$
2,172
$
(10,896
)
$
9,651
Interest expense
9,316
5,436
18,347
9,794
Taxes
(1,819
)
1,508
(3,018
)
4,428
Depreciation and amortization
14,424
13,472
28,955
26,376
Share-based compensation expense
9,367
5,439
14,556
9,247
Employer payroll taxes on employee stock
transactions
322
3
448
148
Restructuring related costs
717
—
3,621
—
Sponsor and third-party acquisition
related costs
—
99
—
2,386
Deferred revenue reduction from purchase
accounting for acquisitions prior to 2022
19
55
39
119
Adjusted EBITDA
$
27,116
$
28,184
$
52,052
$
62,149
Net (loss) income margin
(7
)%
3
%
(7
)%
7
%
Adjusted EBITDA margin
36
%
39
%
34
%
43
%
Reconciliation from GAAP to
Non-GAAP Results
(unaudited)
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Cost of revenue
$
28,494
$
27,226
$
56,449
$
51,764
Less: Share-based compensation expense
1,157
1,251
2,009
2,215
Less: Employer payroll taxes on employee
stock transactions
88
—
109
54
Less: Amortization of developed
technology
4,510
3,850
8,964
7,284
Non-GAAP cost of revenue
$
22,739
$
22,125
$
45,367
$
42,211
Cost of revenue as a % of revenue
38
%
37
%
37
%
36
%
Non-GAAP cost of revenue as a % of
revenue
30
%
30
%
30
%
29
%
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
General and administrative
$
24,409
$
20,806
$
46,964
$
38,993
Less: Share-based compensation expense
5,231
2,396
7,494
3,777
Less: Employer payroll taxes on employee
stock transactions
107
—
158
33
Less: Depreciation expense
495
580
990
1,141
Less: Amortization of intangibles
9,419
9,042
19,001
17,951
Non-GAAP general & administrative
$
9,157
$
8,788
$
19,321
$
16,091
General and administrative as a % of
revenue
32
%
29
%
31
%
27
%
Non-GAAP general and administrative as a %
of revenue
12
%
12
%
13
%
11
%
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Research and development
$
11,754
$
10,487
$
25,566
$
18,896
Less: Share-based compensation expense
1,875
1,288
3,658
2,365
Less: Employer payroll taxes on employee
stock transactions
97
1
125
40
Non-GAAP research and development
$
9,782
$
9,198
$
21,783
$
16,491
Research and development as a % of
revenue
16
%
14
%
17
%
13
%
Non-GAAP research and development as a %
of revenue
13
%
13
%
14
%
11
%
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Sales and marketing
$
8,558
$
5,465
$
16,771
$
10,208
Less: Share-based compensation expense
1,104
504
1,395
890
Less: Employer payroll taxes on employee
stock transactions
30
2
56
21
Non-GAAP sales and marketing
$
7,424
$
4,959
$
15,320
$
9,297
Sales and marketing as a % of revenue
11
%
7
%
11
%
7
%
Non-GAAP sales and marketing as a % of
revenue
10
%
7
%
10
%
6
%
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net cash provided by operating
activities
$
6,104
$
12,807
$
34,185
$
47,670
Less: Capitalized software
2,638
2,557
4,562
4,079
Less: Capital expenditures
171
61
305
480
Free cash flow
$
3,295
$
10,189
$
29,318
$
43,111
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230801230395/en/
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