Revenue of $76.5 million grows 7%
year-over-year driven by lending software solutions revenue of
$58.9 million, reflecting growth of 12% 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 third
quarter ended September 30, 2023.
“Q3 was another solid quarter of execution, and the strategic
key drivers of our business continue to yield consistent
performance,” said Nicolaas Vlok, chief executive officer of
MeridianLink. “We are continuously improving MeridianLink® One
through product innovation and value-added partner integrations. In
addition, we have a talented Go-to-Market team capturing strong
demand as financial institutions invest in enhancing the consumer
experience through improving their digital capabilities.”
Quarterly Financial Highlights:
- Revenue of $76.5 million, an increase of 7% year-over-year
- Lending software solutions revenue of $58.9 million, an
increase of 12% year-over-year
- Operating income of $5.6 million, or 7% of revenue, and
non-GAAP operating income of $14.0 million, or 18% of revenue
- Net loss of $(2.1) million, or (3)% of revenue, and adjusted
EBITDA of $29.8 million, or 39% of revenue
- Cash flows from operations of $21.3 million, or 28% of revenue,
and free cash flow of $18.8 million, or 25% of revenue
Business and Operating Highlights:
- MeridianLink® captured strong demand for MeridianLink One, as
demonstrated by an impressive roster of new logo and cross-sell
wins, including a solid bookings quarter in mortgage lending.
- The Company launched its new point-of-sale solution,
MeridianLink® Access, for MeridianLink® Consumer and MeridianLink®
Mortgage, to provide enhanced configurability and a more
personalized consumer experience.
- MeridianLink continued to innovate in the data and analytics
space by launching MeridianLink® Data Connect, a solution that
brings transactional data in-house for the customer to gain more
insightful reporting, and expanding MeridianLink® Insight, our
business intelligence tool, to integrate with MeridianLink® Engage
and MeridianLink® Collect.
- The Company integrated with a variety of leading partner
solutions such as Experian’s Verify™ and PowerCurve®, designed to
automate loan approvals and decisioning, as well as Cox
Automotive’s Dealertrack®, a comprehensive suite of indirect
lending solutions for the auto industry’s largest dealer-lender
network.
Business Outlook
Based on information as of today, November 1, 2023, the Company
issues fourth quarter financial guidance and reaffirms full year
2023 financial guidance as follows:
Fourth Quarter Fiscal 2023:
- Revenue is expected to be in the range of $73.0 million to
$77.0 million
- Adjusted EBITDA is expected to be in the range of $22.0 million
to $26.0 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 third
quarter results today, November 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 96695077.
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 Wednesday, November 8, 2023, by
dialing (877) 674-7070 from North America or the International
number of (416) 764-8692 with Playback Passcode 695077.
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 September 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 stock
repurchase program, including the execution and amount of
repurchases, 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
September 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
97,560
$
55,780
Accounts receivable, net
33,996
32,905
Prepaid expenses and other current
assets
12,640
9,447
Escrow deposit
—
30,000
Total current assets
144,196
128,132
Property and equipment, net
3,651
4,245
Right of use assets
1,407
2,185
Intangible assets, net
262,791
297,475
Deferred tax assets, net
18,201
13,939
Goodwill
609,333
608,657
Other assets
5,738
4,524
Total assets
$
1,045,317
$
1,059,157
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
4,847
$
1,249
Accrued liabilities
34,159
32,500
Deferred revenue
26,694
16,945
Current portion of long-term debt, net of
debt issuance costs
3,548
3,505
Total current liabilities
69,248
54,199
Long-term debt, net of debt issuance
costs
420,921
423,404
Long-term deferred revenue
692
1,141
Other long-term liabilities
690
1,322
Total liabilities
491,551
480,066
Commitments and contingencies
Stockholders’ Equity
Preferred stock, $0.001 par value;
50,000,000 shares authorized; zero shares issued and outstanding at
September 30, 2023 and December 31, 2022
—
—
Common stock, $0.001 par value;
600,000,000 shares authorized, 79,627,213 and 80,644,452 shares
issued and outstanding at September 30, 2023 and December 31, 2022,
respectively
130
128
Additional paid-in capital
644,854
621,396
Accumulated deficit
(91,218
)
(42,433
)
Total stockholders’ equity
553,766
579,091
Total liabilities and stockholders’
equity
$
1,045,317
$
1,059,157
Condensed Consolidated
Statements of Operations
(unaudited)
(in thousands, except share and
per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenues, net
$
76,488
$
71,754
$
229,038
$
217,495
Cost of revenues:
Subscription and services
22,488
23,812
69,973
68,292
Amortization of developed technology
4,524
4,003
13,488
11,287
Total cost of revenues
27,012
27,815
83,461
79,579
Gross profit
49,476
43,939
145,577
137,916
Operating expenses:
General and administrative
23,218
21,423
70,182
60,416
Research and development
11,248
11,518
36,814
30,414
Sales and marketing
9,441
6,311
26,212
16,519
Acquisition related costs
—
163
—
2,549
Restructuring related costs
—
—
3,621
—
Total operating expenses
43,907
39,415
136,829
109,898
Operating income
5,569
4,524
8,748
28,018
Other (income) expense, net:
Interest and other income
(1,342
)
(327
)
(2,596
)
(706
)
Interest expense
9,780
6,855
28,127
16,649
Total other expense, net
8,438
6,528
25,531
15,943
(Loss) income before (benefit from)
provision for income taxes
(2,869
)
(2,004
)
(16,783
)
12,075
(Benefit from) provision for income
taxes
(800
)
890
(3,818
)
5,318
Net (loss) income
$
(2,069
)
$
(2,894
)
$
(12,965
)
$
6,757
Net (loss) income per share:
Basic
$
(0.03
)
$
(0.04
)
$
(0.16
)
$
0.08
Diluted
$
(0.03
)
$
(0.04
)
$
(0.16
)
$
0.08
Weighted average common stock
outstanding:
Basic
81,073,915
80,659,320
80,883,310
80,353,399
Diluted
81,073,915
80,659,320
80,883,310
82,364,835
Net Revenues by Major
Source
(unaudited)
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Subscription fees
$
64,613
$
61,861
$
194,788
$
188,860
Professional services
8,706
7,293
26,143
21,070
Other
3,169
2,600
8,107
7,565
Total
$
76,488
$
71,754
$
229,038
$
217,495
Net Revenues by Solution
Type
(unaudited)
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Lending software solutions
$
58,949
$
52,414
$
172,728
$
153,249
Data verification software solutions
17,539
19,340
56,310
64,246
Total (1)
$
76,488
$
71,754
$
229,038
$
217,495
% Growth attributable to:
Lending software solutions
9
%
9
%
Data verification software
(3
)%
(4
)%
Total % growth
7
%
6
%
(1) % Revenue related to mortgage loan
market:
Lending software solutions
12
%
6
%
12
%
7
%
Data verification software
57
%
62
%
60
%
66
%
Total % revenue related to mortgage loan
market
22
%
21
%
24
%
24
%
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net (loss) income
$
(12,965
)
$
6,757
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
43,388
39,746
Provision for expected credit losses
627
—
Amortization of debt issuance costs
897
1,705
Share-based compensation expense
22,216
16,501
Loss on disposal of property and
equipment
—
164
Deferred income taxes
(4,507
)
5,193
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(1,726
)
(6,964
)
Prepaid expenses and other assets
(4,595
)
(2,480
)
Accounts payable
3,632
(450
)
Accrued liabilities
(782
)
(247
)
Deferred revenue
9,301
7,472
Net cash provided by operating
activities
55,486
67,235
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.
—
(23,138
)
Return (payment) of escrow deposit
30,000
(30,000
)
Funds payable in connection with former
business combination
1,219
—
Capitalized software additions
(7,004
)
(6,323
)
Purchases of property and equipment
(347
)
(889
)
Net cash provided by (used in) investing
activities
24,194
(60,350
)
Cash flows from financing
activities:
Repurchases of common stock
(35,660
)
(262
)
Proceeds from exercise of stock
options
1,633
186
Proceeds from employee stock purchase
plan
793
922
Taxes paid related to net share settlement
of restricted stock units
(1,403
)
(184
)
Principal payments of debt
(3,263
)
(2,175
)
Payment of Regulation A+ investor note
—
(3,265
)
Net cash used in financing activities
(37,900
)
(4,778
)
Net increase in cash and cash
equivalents
41,780
2,107
Cash and cash equivalents, beginning of
period
55,780
113,645
Cash and cash equivalents, end of
period
$
97,560
$
115,752
Supplemental disclosures of cash flow
information:
Cash paid for interest
$
27,498
$
14,852
Cash paid for income taxes
2,610
1,179
Non-cash investing and financing
activities:
Shares withheld with respect to net
settlement of restricted stock units
$
1,403
$
184
Purchase price allocation adjustment for
BeanStalk Networks acquisition
757
—
Purchases of property and equipment
included in accounts payable and accrued liabilities
611
2
Purchase price allocation adjustment
related to income tax effects for StreetShares acquisition
245
—
Share-based compensation expense
capitalized to software additions
219
255
Excise taxes payable included in
repurchases of common stock
162
—
Vesting of restricted stock awards and
restricted stock units
4
40
Regulation A+ investor note assumed in
business combination
—
3,265
Initial recognition of operating lease
liabilities
—
3,786
Initial recognition of operating lease
right-of-use assets
—
3,096
Reconciliation from GAAP to Non-GAAP Results
(unaudited)
(in thousands, except share and
per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Operating income
$
5,569
$
4,524
$
8,748
$
28,018
Add: Share-based compensation expense
8,322
7,253
22,879
16,501
Add: Employer payroll taxes on employee
stock transactions
150
182
598
329
Add: Restructuring related costs
—
—
3,621
—
Add: Sponsor and third-party acquisition
related costs
—
163
—
2,549
Non-GAAP operating income
$
14,041
$
12,122
$
35,846
$
47,397
Operating margin
7
%
6
%
4
%
13
%
Non-GAAP operating margin
18
%
17
%
16
%
22
%
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net (loss) income
$
(2,069
)
$
(2,894
)
$
(12,965
)
$
6,757
Add: Share-based compensation expense
8,322
7,253
22,879
16,501
Add: Employer payroll taxes on employee
stock transactions
150
182
598
329
Add: Restructuring related costs
—
—
3,621
—
Add: Sponsor and third-party acquisition
related costs
—
163
—
2,549
Add: Income tax effect on non-GAAP
items
2,033
1,824
6,503
4,651
Non-GAAP net income
$
8,436
$
6,528
$
20,636
$
30,787
Non-GAAP basic net income per share
$
0.10
$
0.08
$
0.26
$
0.38
Non-GAAP diluted net income per share
$
0.10
$
0.08
$
0.25
$
0.37
Weighted average shares used to compute
Non-GAAP basic net income per share
81,073,915
80,659,320
80,883,310
80,353,399
Weighted average shares used to compute
Non-GAAP diluted net income per share
83,716,804
82,543,631
83,331,901
82,364,835
Net (loss) income margin
(3
)%
(4
)%
(6
)%
3
%
Non-GAAP net income margin
11
%
9
%
9
%
14
%
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net (loss) income
$
(2,069
)
$
(2,894
)
$
(12,965
)
$
6,757
Interest expense
9,780
6,855
28,127
16,649
Taxes
(800
)
890
(3,818
)
5,318
Depreciation and amortization
14,433
13,370
43,388
39,746
Share-based compensation expense
8,322
7,253
22,879
16,501
Employer payroll taxes on employee stock
transactions
150
182
598
329
Restructuring related costs
—
—
3,621
—
Sponsor and third-party acquisition
related costs
—
163
—
2,549
Deferred revenue reduction from purchase
accounting for acquisitions prior to 2022
19
60
58
179
Adjusted EBITDA
$
29,835
$
25,879
$
81,888
$
88,028
Net (loss) income margin
(3
)%
(4
)%
(6
)%
3
%
Adjusted EBITDA margin
39
%
36
%
36
%
40
%
Reconciliation from GAAP to
Non-GAAP Results
(unaudited)
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Cost of revenue
$
27,012
$
27,815
$
83,461
$
79,579
Less: Share-based compensation expense
910
1,352
2,919
3,567
Less: Employer payroll taxes on employee
stock transactions
26
67
135
121
Less: Amortization of developed
technology
4,524
4,003
13,488
11,287
Non-GAAP cost of revenue
$
21,552
$
22,393
$
66,919
$
64,604
Cost of revenue as a % of revenue
35
%
39
%
36
%
37
%
Non-GAAP cost of revenue as a % of
revenue
28
%
31
%
29
%
30
%
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
General and administrative
$
23,218
$
21,423
$
70,182
$
60,416
Less: Share-based compensation expense
4,443
3,170
11,938
6,947
Less: Employer payroll taxes on employee
stock transactions
59
42
217
74
Less: Depreciation expense
490
577
1,480
1,718
Less: Amortization of intangibles
9,419
8,790
28,420
26,741
Non-GAAP general & administrative
$
8,807
$
8,844
$
28,127
$
24,936
General and administrative as a % of
revenue
30
%
30
%
31
%
28
%
Non-GAAP general and administrative as a %
of revenue
12
%
12
%
12
%
11
%
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Research and development
$
11,248
$
11,518
$
36,814
$
30,414
Less: Share-based compensation expense
1,709
2,092
5,368
4,457
Less: Employer payroll taxes on employee
stock transactions
38
56
163
97
Non-GAAP research and development
$
9,501
$
9,370
$
31,283
$
25,860
Research and development as a % of
revenue
15
%
16
%
16
%
14
%
Non-GAAP research and development as a %
of revenue
12
%
13
%
14
%
12
%
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Sales and marketing
$
9,441
$
6,311
$
26,212
$
16,519
Less: Share-based compensation expense
1,260
639
2,654
1,530
Less: Employer payroll taxes on employee
stock transactions
27
17
83
37
Non-GAAP sales and marketing
$
8,154
$
5,655
$
23,475
$
14,952
Sales and marketing as a % of revenue
12
%
9
%
11
%
8
%
Non-GAAP sales and marketing as a % of
revenue
11
%
8
%
10
%
7
%
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net cash provided by operating
activities
$
21,301
$
19,565
$
55,486
$
67,235
Less: Capitalized software
2,442
2,244
7,004
6,323
Less: Capital expenditures
42
409
347
889
Free cash flow
$
18,817
$
16,912
$
48,135
$
60,023
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101097349/en/
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Media@meridianlink.com
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332-6357 InvestorRelations@meridianlink.com
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