Fourth quarter revenue of $70.6 million grows
10% 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
fourth quarter and fiscal year ended December 31, 2022.
“Our solid fourth quarter performance highlights the strength of
our multi-product platform, MeridianLink® One,” said Nicolaas Vlok,
chief executive officer of MeridianLink. “More financial
institutions are taking advantage of bundling MeridianLink
offerings to create seamless digital lending experiences. With
that, our revenue grew 10% year-over-year to $70.6 million with 33%
adjusted EBITDA margins. Lending software solutions revenue grew
26% year-over-year to $55.0 million, now accounting for 78% of
total revenue. I’d like to thank the team for their ongoing
dedication and innovation.”
Quarterly Financial Highlights:
- Revenue of $70.6 million, an increase of 10%
year-over-year
- Operating income of $0.6 million, or 1% of revenue and Non-GAAP
operating profit of $8.5 million, or 12% of revenue
- Net loss of $(5.5) million, or (8)% of revenue, and Adjusted
EBITDA of $23.2 million, or 33% of revenue
- Cash flow from operations of $7.4 million and free cash flow of
$5.2 million
2022 Fiscal Year Financial Highlights:
- Revenue of $288.0 million, an increase of 8%
year-over-year
- Operating income of $28.6 million, or 10% of revenue and
Non-GAAP operating profit of $55.9 million, or 19% of revenue
- Net income of $1.3 million, or 0.4% of revenue, and Adjusted
EBITDA of $111.2 million, or 39% of revenue
- Cash flow from operations of $74.6 million and free cash flow
of $65.2 million
Business and Operating Highlights:
- MeridianLink finished the quarter with record software
bookings, both for Q4 and in company history.
- In the quarter, MeridianLink signed ten existing MeridianLink®
Consumer customers on the MeridianLink® Mortgage solution,
demonstrating the powerful cross-sell capabilities of the
MeridianLink® One platform.
- In support of our strategic investment to accelerate services,
fuel Go-to-Market, and enhance product innovation, we restructured
our operations team and cost profile to serve more customers with
greater efficiency in 2023.
- The Company completed enhancements to our marketing automation
solution, MeridianLink® Engage. These new features save time in
launching targeted, personalized marketing campaigns, often
resulting in triple-digit ROI for the customer.
- Building on the innovative functionality acquired through the
StreetShares® Atlas Platform®, the Company completed our business
lending offering, MeridianLink® Business, to optimize the business
lending process in a digital environment.
- Through the Company’s extensive Partner Marketplace, we
announced new integrations to partners such as Equifax®, Ferretly,
and FirstClose, which help differentiate our lending and data
verification customers in the market.
- MeridianLink secured another strong roster of new logo
customers as a result of our lending capabilities that best serve
customers in our mid-market sweet spot, enabling a more
frictionless lending process and empowering customer growth.
Business Outlook
Based on information as of today, March 1, 2023, the Company
issues first quarter financial guidance and initiates full year
2023 financial guidance as follows:
First Quarter Fiscal 2023:
- Revenue is expected to be in the range of $72.0 million to
$75.0 million
- Adjusted EBITDA is expected to be in the range of $23.0 million
to $26.0 million
Full Year 2023:
- Revenue is expected to be in the range of $304.0 million to
$310.0 million
- Adjusted EBITDA is expected to be in the range of $109.0
million to $115.0 million
Conference Call Information
MeridianLink will hold a conference call to discuss our fourth
quarter and fiscal year results today, March 1, 2023, at 2:00 p.m.
Pacific Time (5:00 p.m. Eastern Time). The conference call can be
accessed by dialing (888) 396-8049 from North America toll-free or
the Participant Local number of (416) 764-8646 with Conference ID
05813207. 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 approximately 3:00 p.m.
Pacific Time (5:00 p.m. Eastern Time) on Wednesday, March 8, 2023,
at (877) 674-7070 from North America or (416) 764-8692 as a
Participant Local with Playback Passcode 813207.
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:
- Adjusted EBITDA: net income (loss) before interest expense,
taxes, depreciation and amortization, share-based compensation
expense, employer payroll taxes on employee stock transactions,
certain expenses associated with our IPO, sponsor and third-party
acquisition related costs, losses resulting from early repayment of
debt, lease termination charges, and deferred revenue reductions
from purchase accounting for acquisitions prior to 2022
- Non-GAAP operating income (loss): GAAP operating income (loss),
excluding the impact of share-based compensation, employer payroll
taxes on employee stock transactions, 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, and sponsor and third-party
acquisition-related costs
- 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
- 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
conditions, our strategic initiatives, including anticipated
benefits and integration of an acquisition, our restructuring plan,
including expected associated timing, benefits, and costs, the
potential benefits of our migration to the public cloud, our stock
repurchase program, including the execution and amount of
repurchases, our development or delivery of new or enhanced
solutions, 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
(in thousands, except share and
per share data)
As of
December 31, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
55,780
$
113,645
Accounts receivable, net of allowance for
doubtful accounts
32,905
24,913
Prepaid expenses and other current
assets
9,447
9,398
Escrow deposit
30,000
—
Total current assets
128,132
147,956
Property and equipment, net
4,245
5,989
Right of use assets
2,185
—
Intangible assets, net
297,475
298,597
Deferred tax assets, net
13,939
4,286
Goodwill
608,657
564,799
Other assets
4,524
4,266
Total assets
$
1,059,157
$
1,025,893
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
1,249
$
2,335
Accrued liabilities
32,500
24,667
Deferred revenue
16,945
14,707
Current portion of long-term debt, net of
debt issuance costs
3,505
2,139
Total current liabilities
54,199
43,848
Long-term debt, net of debt issuance
costs
423,404
425,371
Long-term deferred revenue
1,141
—
Deferred rent
—
396
Other long-term liabilities
1,322
—
Total liabilities
480,066
469,615
Commitments and contingencies
Stockholders’ Equity
Preferred stock, $0.001 par value;
50,000,000 shares authorized; zero shares issued and outstanding at
December 31, 2022 and 2021
—
—
Common stock, $0.001 par value;
600,000,000 shares authorized, 80,644,452 and 79,734,984 shares
issued and outstanding at December 31, 2022 and 2021,
respectively
128
88
Additional paid-in capital
621,396
596,542
Accumulated deficit
(42,433
)
(40,352
)
Total stockholders’ equity
579,091
556,278
Total liabilities and stockholders’
equity
$
1,059,157
$
1,025,893
Condensed Consolidated
Statements of Operations
(in thousands, except share/unit
and per share/unit data)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Revenues, net
$
70,551
$
64,024
$
288,046
$
267,676
Cost of revenues:
Subscription and services
22,486
19,025
90,778
77,103
Amortization of developed technology
4,266
3,329
15,553
12,519
Total cost of revenues
26,752
22,354
106,331
89,622
Gross profit
43,799
41,670
181,715
178,054
Operating expenses:
General and administrative
22,233
21,057
82,649
85,160
Research and development
12,178
8,529
42,592
36,336
Sales and marketing
7,139
4,305
23,658
18,122
Acquisition related costs
1,679
—
4,228
781
Total operating expenses
43,229
33,891
153,127
140,399
Operating income
570
7,779
28,588
37,655
Other (income) expense, net:
Other income
(357
)
(10
)
(1,063
)
(49
)
Interest expense, net
7,578
5,542
24,227
32,615
Loss on debt repayment and
extinguishment
—
5,593
—
9,944
Total other expense, net
7,221
11,125
23,164
42,510
Income (loss) before provision for income
taxes
(6,651
)
(3,346
)
5,424
(4,855
)
Provision for (benefit from) income
taxes
(1,188
)
(133
)
4,130
5,141
Net income (loss)
(5,463
)
(3,213
)
1,294
(9,996
)
Class A preferred return
—
—
—
(20,944
)
Net income (loss) attributable to common
stockholders
$
(5,463
)
$
(3,213
)
$
1,294
$
(30,940
)
Net income (loss) per share:
Basic
$
(0.07
)
$
(0.04
)
$
0.02
$
(0.48
)
Diluted
(0.07
)
(0.04
)
0.02
(0.48
)
Weighted average common stock
outstanding:
Basic
80,749,744
79,596,418
80,454,356
63,813,770
Diluted
80,749,744
79,596,418
82,403,679
63,813,770
Net Revenues by Major
Source
(unaudited)
(in thousands)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Subscription fees
$
60,004
$
55,757
$
248,864
$
235,489
Professional services
8,250
5,895
29,320
22,707
Other
2,297
2,372
9,862
9,480
Total
$
70,551
$
64,024
$
288,046
$
267,676
Net Revenues by Solution
Type
(unaudited)
(in thousands)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Lending software solutions
$
55,041
$
43,759
$
208,290
$
176,793
Data verification software solutions
15,510
20,265
79,756
90,883
Total (1)
$
70,551
$
64,024
$
288,046
$
267,676
% Growth attributable to:
Lending software solutions
18
%
12
%
Data verification software
(7
)%
(4
)%
Total % growth
10
%
8
%
(1) % Revenue related to mortgage loan
market:
Lending software solutions
10
%
9
%
8
%
9
%
Data verification software
59
%
68
%
64
%
70
%
Total % revenue related to mortgage loan
market
21
%
27
%
23
%
30
%
Condensed Consolidated
Statements of Cash Flows
(in thousands)
Year Ended December
31,
2022
2021
Cash flows from operating
activities:
Net income (loss)
$
1,294
$
(9,996
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
53,982
50,453
Amortization of debt issuance costs
2,760
3,413
Share-based compensation expense
22,761
30,736
Loss on disposal of fixed assets
678
524
Loss on sublease liability
—
405
Loss on debt repayment and
extinguishment
—
9,944
Gain on change in fair value of
earnout
(162
)
—
Other adjustments
—
(18
)
Deferred income taxes
1,905
4,926
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(7,005
)
1,619
Prepaid expenses and other assets
297
(5,726
)
Accounts payable
(1,564
)
117
Accrued liabilities
(2,281
)
(302
)
Deferred revenue
1,922
3,834
Deferred rent
—
(94
)
Net cash provided by operating
activities
74,587
89,835
Cash flows from investing
activities:
Acquisition, net of cash acquired –
Beanstalk Networks L.L.C.
(61,830
)
—
Acquisition, net of cash and restricted
cash acquired – StreetShares, Inc.
(23,137
)
—
Acquisition, net of cash and restricted
cash acquired – Saylent Technologies, Inc.
—
(35,945
)
Acquisition, net of cash acquired –
TazWorks, LLC
—
(84,605
)
Escrow deposit
(30,000
)
—
Capitalized software additions
(8,228
)
(4,906
)
Purchases of property and equipment
(1,136
)
(843
)
Net cash used in investing activities
(124,331
)
(126,299
)
Cash flows from financing
activities:
Repurchases of common stock
(3,375
)
—
Repurchases of Class A Units
—
(54
)
Repurchases of Class B Units
—
(1,887
)
Proceeds from initial public offering, net
of underwriters’ discounts and commissions
—
247,307
Proceeds from exercise of stock
options
211
1,714
Payment due to effect of corporate
conversion
—
(6
)
Proceeds from employee stock purchase
plan
1,777
—
Taxes paid related to net share settlement
of RSUs
(206
)
—
Proceeds from long-term debt
—
535,000
Principal payments of long-term debt
(3,263
)
(631,255
)
Payment of Regulation A+ investor note
(3,265
)
—
Payments of debt issuance costs
—
(7,207
)
Payments of Class A cumulative preferred
return
—
(12
)
Payments of deferred offering costs
—
(4,790
)
Payment to sellers of Saylent
Technologies, Inc.
—
(775
)
Payment to sellers of Teledata
Communications, Inc
—
(2,142
)
Holdback payment to sellers of
MeridianLink
—
(25,665
)
Net cash (used in) provided by financing
activities
(8,121
)
110,228
Net (decrease) increase in cash, cash
equivalents and restricted cash
(57,865
)
73,764
Cash, cash equivalents and restricted
cash, beginning of period
113,645
39,881
Cash, cash equivalents and restricted
cash, end of period
$
55,780
$
113,645
Condensed Consolidated
Statements of Cash Flows
(in thousands)
Year Ended December
31,
2022
2021
Supplemental disclosures of cash flow
information:
Cash paid for interest
$
21,348
$
29,242
Cash paid for income taxes
1,343
306
Non-cash investing and financing
activities:
Regulation A+ investor note assumed in
business combination
$
3,265
$
—
Initial recognition of operating lease
liability
3,791
—
Initial recognition of operating lease
right-of-use asset
3,047
—
Share-based compensation expense
capitalized to software additions
311
111
Shares withheld with respect to net
settlement of RSUs
206
—
Effect of corporate conversion
—
319,868
Related party receivable net against
holdback payment to prior shareholders
—
4,335
Deferred offering costs in prepaid
expenses and other current assets as of December 31, 2020
offsetting payments of deferred offering costs
—
423
Vesting of RSAs and RSUs
40
94
Debt issuance costs included in accrued
expenses
—
90
Purchases of property and equipment
included in accounts payable and accrued expenses
72
81
Reconciliation from GAAP to
Non-GAAP Results
(unaudited)
(in thousands, except share/unit
and per share/unit data)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Operating income
$
570
$
7,779
$
28,588
$
37,655
Add: Share-based compensation expense
6,260
3,901
22,761
30,736
Add: Employer payroll taxes on employee
stock transactions
20
16
350
95
Add: Sponsor and third-party acquisition
related costs
1,679
25
4,228
2,348
Non-GAAP operating income
$
8,529
$
11,721
$
55,927
$
70,834
Non-GAAP operating margin
12
%
18
%
19
%
26
%
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Net income (loss)
$
(5,463
)
$
(3,213
)
$
1,294
$
(9,996
)
Add: Share-based compensation expense
6,260
3,901
22,761
30,736
Add: Employer payroll taxes on employee
stock transactions
20
16
350
95
Add: Sponsor and third-party acquisition
related costs
1,679
25
4,228
2,348
Non-GAAP net income
$
2,496
$
729
$
28,633
$
23,183
Non-GAAP basic net income per share
$
0.03
$
0.01
$
0.36
$
0.36
Non-GAAP diluted net income per share
0.03
0.01
0.35
0.35
Weighted average shares used to compute
Non-GAAP basic net income per share
80,749,744
79,596,418
80,454,356
63,813,770
Weighted average shares used to compute
Non-GAAP diluted net income per share
82,413,712
82,358,079
82,403,679
67,130,479
Non-GAAP net income margin
4
%
1
%
10
%
9
%
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Net income (loss)
$
(5,463
)
$
(3,213
)
$
1,294
$
(9,996
)
Interest expense
7,578
5,542
24,227
32,615
Taxes
(1,188
)
(133
)
4,130
5,141
Depreciation and amortization
14,234
12,799
53,982
50,453
Share-based compensation expense
6,260
3,901
22,761
30,736
Employer payroll taxes on employee stock
transactions
20
16
350
95
Expenses associated with IPO
—
—
—
424
Sponsor and third-party acquisition
related costs
1,679
25
4,228
2,348
Loss on debt prepayment
—
5,593
—
9,944
Deferred revenue reduction from purchase
accounting for acquisitions prior to 2022
51
109
227
733
Lease termination charges
—
—
—
879
Adjusted EBITDA
$
23,171
$
24,639
$
111,199
$
123,372
Adjusted EBITDA margin
33
%
38
%
39
%
46
%
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Cost of revenue
$
26,752
$
22,354
$
106,331
$
89,622
Less: Share-based compensation expense
1,063
1,017
4,630
6,478
Less: Employer payroll taxes on employee
stock transactions
6
—
127
3
Less: Amortization of developed
technology
4,266
3,329
15,553
12,519
Non-GAAP cost of revenue
$
21,417
$
18,008
$
86,021
$
70,622
As a % of revenue
30
%
28
%
30
%
26
%
Reconciliation from GAAP to
Non-GAAP Results
(unaudited)
(in thousands)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
General & administrative
$
22,233
$
21,057
$
82,649
$
85,160
Less: Share-based compensation expense
2,552
1,694
9,499
14,558
Less: Employer payroll taxes on employee
stock transactions
6
14
81
73
Less: Depreciation expense
599
560
2,319
2,303
Less: Amortization of intangibles
9,369
8,910
36,110
35,631
Non-GAAP general & administrative
$
9,707
$
9,879
$
34,640
$
32,595
As a % of revenue
14
%
15
%
12
%
12
%
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Research and development
$
12,178
$
8,529
$
42,592
$
36,336
Less: Share-based compensation expense
2,014
1,095
6,472
7,453
Less: Employer payroll taxes on employee
stock transactions
6
—
102
8
Non-GAAP research and development
$
10,158
$
7,434
$
36,018
$
28,875
As a % of revenue
14
%
12
%
13
%
11
%
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Sales and marketing
$
7,139
$
4,305
$
23,658
$
18,122
Less: Share-based compensation expense
631
95
2,160
2,247
Less: Employer payroll taxes on employee
stock transactions
2
2
40
11
Non-GAAP sales and marketing
$
6,506
$
4,208
$
21,458
$
15,864
As a % of revenue
9
%
7
%
7
%
6
%
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Net cash provided by operating
activities
$
7,352
$
20,823
$
74,587
$
89,835
Less: Capitalized software
1,905
1,316
8,228
4,906
Less: Capital expenditures
247
151
1,136
843
Free cash flow
$
5,200
$
19,356
$
65,223
$
84,086
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230301005781/en/
Press Contact Becky Frost (714) 784-5839
becky.frost@meridianlink.com
Investor Relations Contact Erik Schneider (714) 332-6357
InvestorRelations@meridianlink.com
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