Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries MeridianLink Reports Second Quarter 2024 Results By: MeridianLink, Inc. via Business Wire August 08, 2024 at 16:05 PM EDT Second quarter revenue of $78.7 million grows 4% year-over-year driven by lending software solutions revenue of $61.6 million, reflecting growth of 11% 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, 2024. “Our second quarter performance highlights the resilience of our business model, continued demand for MeridianLink® One, and our disciplined execution as a leading vertical SaaS company,” said Nicolaas Vlok, chief executive officer of MeridianLink®. “Our lending software solutions continue to perform well in the face of macroeconomic headwinds due to the power of our platform. New and existing customers continue to partner with MeridianLink to execute a digital lending strategy that wins in the market.” Quarterly Financial Highlights: Revenue of $78.7 million, an increase of 4% year-over-year Lending software solutions revenue of $61.6 million, an increase of 11% year-over-year Operating loss of $(1.1) million, or (1)% of revenue, and non-GAAP operating income of $15.5 million, or 20% of revenue Net loss of $(9.7) million, or (12)% of revenue, and adjusted EBITDA of $31.8 million, or 40% of revenue Cash flows from operations of $14.4 million, or 18% of revenue, and free cash flow of $12.4 million, or 16% of revenue MeridianLink returned $29.9 million to stockholders via 1.6 million of stock repurchases Business and Operating Highlights: MeridianLink named Larry Katz President of the Company and will welcome Elias Olmeta as our new Chief Financial Officer on August 26, 2024. Mr. Katz will continue to serve as Chief Financial Officer until Mr. Olmeta starts. With these leadership changes, we are enhancing our industry expertise and aligning our customer-facing organization to further scale the business. New and existing customers chose MeridianLink One to enhance their lending solutions, including a MeridianLink® Consumer customer who adopted MeridianLink® Mortgage, Mortgage Access, and our Debt Optimization solution. MeridianLink announced 3Rivers Federal Credit Union’s successful go-live on MeridianLink® Access and Opening, resulting in a significant decrease in loan application times. We enhanced our product capabilities through a new integration between MeridianLink® Insight and Collect that provides customers with advanced analytics to run their businesses, including a new payment propensity index. To offer our customers innovative AI capabilities, we partnered with Conductiv, a leader in providing missing, permissioned data to meet underwriting guidelines, helping customers achieve up to a 47% increase in approval rates without increasing losses. Business Outlook Based on information as of today, August 8, 2024, the Company issues third quarter financial guidance and updates full year 2024 financial guidance as follows: Third Quarter Fiscal 2024: Revenue is expected to be in the range of $78.0 to $81.0 Adjusted EBITDA is expected to be in the range of $30.0 to $33.0 Full Year 2024: Revenue is expected to be in the range of $312.0 to $318.0 Adjusted EBITDA is expected to be in the range of $123.0 to $128.0 Conference Call Information MeridianLink will hold a conference call to discuss its second quarter results today, August 8, 2024, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call can be accessed by dialing (800) 549-8228 from North America toll-free or the International number of (289) 819-1520 with Conference ID 49245. 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 Thursday, August 15, 2024, by dialing (888) 660-6264 from North America or the International number of (289) 819-1325 with Playback Passcode 49245. MeridianLink uses its investor relations website (https://ir.meridianlink.com), press releases, SEC filings, public conference calls and webcasts, blog posts on its website, as well as its social media channels, such as its LinkedIn page (www.linkedin.com/company/meridianlink), X (formerly Twitter) feed (@meridianlink), and Facebook page (www.facebook.com/MeridianLink/), as a means of disclosing material information and for complying with its disclosure obligations under Regulation FD. Information contained on or accessible through the websites is not incorporated by reference into this release, and links for these websites are inactive textual references only. About MeridianLink MeridianLink® (NYSE: MLNK) empowers financial institutions and consumer reporting agencies to drive efficient growth. MeridianLink’s cloud-based digital lending, account opening, background screening, and data verification software solutions leverage shared intelligence from a unified data platform, MeridianLink® One, to enable customers of all sizes to identify growth opportunities, effectively scale up, and support compliance efforts, all while powering an enhanced experience for staff and consumers alike. For more than 25 years, MeridianLink has prioritized the democratization of lending for consumers, businesses, and communities. Learn more at www.meridianlink.com. 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, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, 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, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, and the effect of income taxes, including the partial valuation allowance, 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 or include the impact from the partial deferred tax asset valuation allowance, 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, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, 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. Deferred revenue from acquisitions prior to the adoption of ASU 2021-08 was 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, expenses associated with our secondary offering, expenses related to debt modification, expenses related to debt modification, charges in connection with litigation unrelated to our core business, 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, our leadership transition and plans, our stock repurchase programs, including the execution and amount of repurchases, the status of litigation matters, including expected or contemplated settlements, associated timing, and estimated fees and expenses, our ability to retain and attract customers and product partners, the benefit to us and our customers of integrations with our product partners, 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, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 93,009 $ 80,441 Accounts receivable, net 35,924 32,412 Prepaid expenses and other current assets 11,323 11,574 Total current assets 140,256 124,427 Property and equipment, net 2,664 3,337 Right of use assets, net 806 1,140 Intangible assets, net 226,525 251,060 Goodwill 610,063 610,063 Other assets 6,622 6,224 Total assets $ 986,936 $ 996,251 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 6,035 $ 4,405 Accrued liabilities 30,608 30,673 Deferred revenue 28,337 17,224 Current portion of debt, net of debt issuance costs 3,768 3,542 Total current liabilities 68,748 55,844 Debt, net of debt issuance costs 467,073 420,004 Deferred tax liabilities, net 10,928 10,823 Long-term deferred revenue 261 792 Other long-term liabilities 390 541 Total liabilities $ 547,400 $ 488,004 Commitments and contingencies Stockholders’ Equity: Preferred stock, $0.001 par value; 50,000,000 shares authorized; zero shares issued and outstanding at June 30, 2024 and December 31, 2023 — — Common stock, $0.001 par value; 600,000,000 shares authorized, 75,773,928 and 78,447,701 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 126 129 Additional paid-in capital 675,191 654,634 Accumulated deficit (235,781 ) (146,516 ) Total stockholders’ equity 439,536 508,247 Total liabilities and stockholders’ equity $ 986,936 $ 996,251 Condensed Consolidated Statements of Operations (unaudited) (in thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues, net $ 78,676 $ 75,415 $ 156,492 $ 152,550 Cost of revenues: Subscription and services 23,373 23,984 44,717 47,485 Amortization of developed technology 4,803 4,510 9,532 8,964 Total cost of revenues 28,176 28,494 54,249 56,449 Gross profit 50,500 46,921 102,243 96,101 Operating expenses: General and administrative 29,237 24,409 54,416 46,964 Research and development 9,905 11,754 19,390 25,566 Sales and marketing 11,467 8,558 22,003 16,771 Restructuring related costs 988 717 4,179 3,621 Total operating expenses 51,597 45,438 99,988 92,922 Operating (loss) income (1,097 ) 1,483 2,255 3,179 Other (income) expense, net: Interest and other income (1,636 ) (784 ) (2,592 ) (1,254 ) Interest expense 9,797 9,316 19,379 18,347 Total other expense, net 8,161 8,532 16,787 17,093 Loss before income taxes (9,258 ) (7,049 ) (14,532 ) (13,914 ) Provision for (benefit from) income taxes 412 (1,819 ) 444 (3,018 ) Net loss $ (9,670 ) $ (5,230 ) $ (14,976 ) $ (10,896 ) Net loss per share: Basic $ (0.13 ) $ (0.06 ) $ (0.19 ) $ (0.13 ) Diluted $ (0.13 ) $ (0.06 ) $ (0.19 ) $ (0.13 ) Weighted average common stock outstanding: Basic 76,527,803 80,911,113 76,923,824 80,786,427 Diluted 76,527,803 80,911,113 76,923,824 80,786,427 Net Revenues by Major Source (unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Subscription fees $ 65,946 $ 63,770 $ 131,858 $ 130,175 Professional services 9,559 9,002 18,569 17,437 Other 3,171 2,643 6,065 4,938 Total $ 78,676 $ 75,415 $ 156,492 $ 152,550 Net Revenues by Solution Type (unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Lending software solutions $ 61,644 $ 55,778 $ 122,547 $ 113,779 Data verification software solutions 17,032 19,637 33,945 38,771 Total $ 78,676 $ 75,415 $ 156,492 $ 152,550 % Growth attributable to: Lending software solutions 8 % 6 % Data verification software (4 )% (3 )% Total % growth 4 % 3 % ___________ Percent Revenue Related to the Mortgage Loan Market (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Lending software solutions 10% 13% 11% 12% Data verification software 55% 61% 56% 61% Total % revenue related to mortgage loan market 20% 26% 20% 25% Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Six Months Ended June 30, 2024 2023 Cash flows from operating activities: Net loss $ (14,976 ) $ (10,896 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 29,096 28,955 Provision for expected credit losses 561 441 Amortization of debt issuance costs 464 669 Share-based compensation expense 20,429 13,893 Deferred income taxes 105 (4,192 ) Loss on disposal of property and equipment 6 — Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (4,073 ) (2,640 ) Prepaid expenses and other assets (197 ) (2,395 ) Accounts payable 1,675 2,955 Accrued liabilities (277 ) (1,663 ) Deferred revenue 10,581 9,058 Net cash provided by operating activities 43,394 34,185 Cash flows from investing activities: Capitalized software additions (3,684 ) (4,562 ) Purchases of property and equipment (152 ) (305 ) Return of escrow deposit — 30,000 Acquisition, net of cash acquired – Beanstalk Networks LLC — 326 Net cash (used in) provided by investing activities (3,836 ) 25,459 Cash flows from financing activities: Repurchases of common stock (73,788 ) (5,145 ) Proceeds from exercise of stock options 722 1,025 Proceeds from employee stock purchase plan 944 793 Taxes paid related to net share settlement of restricted stock units (1,676 ) (1,050 ) Principal payments of debt (2,278 ) (2,175 ) Payments of deferred offering costs (74 ) — Proceeds from debt 50,000 — Payments of debt issuance costs (840 ) — Net cash used in financing activities (26,990 ) (6,552 ) Net increase in cash and cash equivalents 12,568 53,092 Cash and cash equivalents, beginning of period 80,441 55,780 Cash and cash equivalents, end of period $ 93,009 $ 108,872 Supplemental disclosures of cash flow information: Cash paid for interest $ 18,893 $ 17,955 Cash paid for income taxes 433 2,577 Non-cash investing and financing activities: Shares withheld with respect to net settlement of restricted stock units 1,676 — Excise taxes payable included in repurchases of common stock 505 — Share-based compensation expense included in capitalized software additions 138 136 Purchase price allocation adjustment related to income tax effects for StreetShares acquisition — 245 Purchases of property and equipment included in accounts payable and accrued liabilities — 3 Vesting of restricted stock awards and restricted stock units 1 5 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, 2024 2023 2024 2023 Operating (loss) income $ (1,097 ) $ 1,483 $ 2,255 $ 3,179 Add: Share-based compensation expense 12,500 9,367 20,436 14,556 Add: Employer payroll taxes on employee stock transactions 508 322 930 448 Add: Expenses associated with public offering 308 — 1,698 — Add: Litigation-related charges 1,864 — 1,864 — Add: Expenses related to debt modification 473 — 473 — Add: Restructuring related costs(2) 988 717 4,179 3,621 Non-GAAP operating income $ 15,544 $ 11,889 $ 31,835 $ 21,804 Operating margin (1 )% 2 % 1 % 2 % Non-GAAP operating margin 20 % 16 % 20 % 14 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net loss $ (9,670 ) $ (5,230 ) $ (14,976 ) $ (10,896 ) Add: Share-based compensation expense 12,500 9,367 20,436 14,556 Add: Employer payroll taxes on employee stock transactions 508 322 930 448 Add: Expenses associated with public offering 308 — 1,698 — Add: Litigation-related charges 1,864 — 1,864 — Add: Expenses related to debt modification 473 — 473 — Add: Restructuring related costs(2) 988 717 4,179 3,621 Subtract: Income tax effect on non-GAAP items (3,994 ) (2,497 ) (7,099 ) (4,470 ) Non-GAAP net income $ 2,977 $ 2,679 $ 7,505 $ 3,259 Non-GAAP basic net income per share $ 0.04 $ 0.03 $ 0.10 $ 0.04 Non-GAAP diluted net income per share $ 0.04 $ 0.03 $ 0.09 $ 0.04 Weighted average shares used to compute Non-GAAP basic net income per share 76,527,803 80,911,113 76,923,824 80,786,427 Weighted average shares used to compute Non-GAAP diluted net 79,291,173 83,487,132 80,020,336 82,994,599 Net loss margin (12 )% (7 )% (10 )% (7 )% Non-GAAP net income margin 4 % 4 % 5 % 2 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net loss $ (9,670 ) $ (5,230 ) $ (14,976 ) $ (10,896 ) Interest expense 9,797 9,316 19,379 18,347 Taxes 412 (1,819 ) 444 (3,018 ) Depreciation and amortization 14,573 14,424 29,096 28,955 Share-based compensation expense 12,500 9,367 20,436 14,556 Employer payroll taxes on employee stock transactions 508 322 930 448 Expenses associated with public offering 308 — 1,698 — Litigation-related charges(1) 1,864 — 1,864 — Expenses related to debt modification 473 — 473 — Restructuring related costs(2) 988 717 4,179 3,621 Deferred revenue reduction from purchase accounting for acquisitions prior to 2022 — 19 — 39 Adjusted EBITDA $ 31,753 $ 27,116 $ 63,523 $ 52,052 Net loss margin (12 )% (7 )% (10 )% (7 )% Adjusted EBITDA margin 40 % 36 % 41 % 34 % (1) Litigation-related charges pertains to litigation settlements and related legal fees. During the three months ended June 30, 2024, $1.5 million relates to estimated settlements of class action lawsuits and $0.4 million relates to third-party legal fees directly related to the settlements. (2) Restructuring related costs for the three months ended June 30, 2024 and 2023 are inclusive of net acceleration (forfeitures) of share-based compensation associated with restructuring in the amount of $0.1 million and ($0.4 million), respectively, and for the six months ended June 30, 2024 and 2023 $0.0 million and ($0.7 million), respectively. Reconciliation from GAAP to Non-GAAP Results (unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Cost of revenue $ 28,176 $ 28,494 $ 54,249 $ 56,449 Less: Share-based compensation expense 1,363 1,157 2,145 2,009 Less: Employer payroll taxes on employee stock transactions 97 88 144 109 Less: Amortization of developed technology 4,803 4,510 9,532 8,964 Non-GAAP cost of revenue $ 21,913 $ 22,739 $ 42,428 $ 45,367 Cost of revenue as a % of revenue 36 % 38 % 35 % 37 % Non-GAAP cost of revenue as a % of revenue 28 % 30 % 27 % 30 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 General and administrative $ 29,237 $ 24,409 $ 54,416 $ 46,964 Less: Share-based compensation expense 6,792 5,231 11,185 7,494 Less: Employer payroll taxes on employee stock transactions 206 107 343 158 Less: Expenses associated with public offering 308 — 1,698 — Less: Litigation-related charges 1,864 — 1,864 — Less: Expenses related to debt modification 473 — 473 — Less: Depreciation expense 363 495 739 990 Less: Amortization of intangibles 9,407 9,419 18,825 19,001 Non-GAAP general & administrative $ 9,824 $ 9,157 $ 19,289 $ 19,321 General and administrative as a % of revenue 37 % 32 % 35 % 31 % Non-GAAP general and administrative as a % of revenue 12 % 12 % 12 % 13 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Research and development $ 9,905 $ 11,754 $ 19,390 $ 25,566 Less: Share-based compensation expense 2,531 1,875 4,033 3,658 Less: Employer payroll taxes on employee stock transactions 125 97 246 125 Non-GAAP research and development $ 7,249 $ 9,782 $ 15,111 $ 21,783 Research and development as a % of revenue 13 % 16 % 12 % 17 % Non-GAAP research and development as a % of revenue 9 % 13 % 10 % 14 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Sales and marketing $ 11,467 $ 8,558 $ 22,003 $ 16,771 Less: Share-based compensation expense 1,814 1,104 3,073 1,395 Less: Employer payroll taxes on employee stock transactions 80 30 197 56 Non-GAAP sales and marketing $ 9,573 $ 7,424 $ 18,733 $ 15,320 Sales and marketing as a % of revenue 15 % 11 % 14 % 11 % Non-GAAP sales and marketing as a % of revenue 12 % 10 % 12 % 10 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net cash provided by operating activities $ 14,356 $ 6,104 $ 43,394 $ 34,185 Less: Capitalized software 1,847 2,638 3,684 4,562 Less: Capital expenditures 60 171 152 305 Free cash flow $ 12,449 $ 3,295 $ 39,558 $ 29,318 Net cash provided by operating actives as a % of revenue 18 % 8 % 28 % 22 % Free cash flow as a % of revenue 16 % 4 % 25 % 19 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240808766635/en/Contacts Press Contact Sydney Wishnow (508) 808-9060 meridianlinkPR@clyde.us Investor Relations Contact Gianna Rotellini (714) 332-6357 InvestorRelations@meridianlink.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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MeridianLink Reports Second Quarter 2024 Results By: MeridianLink, Inc. via Business Wire August 08, 2024 at 16:05 PM EDT Second quarter revenue of $78.7 million grows 4% year-over-year driven by lending software solutions revenue of $61.6 million, reflecting growth of 11% 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, 2024. “Our second quarter performance highlights the resilience of our business model, continued demand for MeridianLink® One, and our disciplined execution as a leading vertical SaaS company,” said Nicolaas Vlok, chief executive officer of MeridianLink®. “Our lending software solutions continue to perform well in the face of macroeconomic headwinds due to the power of our platform. New and existing customers continue to partner with MeridianLink to execute a digital lending strategy that wins in the market.” Quarterly Financial Highlights: Revenue of $78.7 million, an increase of 4% year-over-year Lending software solutions revenue of $61.6 million, an increase of 11% year-over-year Operating loss of $(1.1) million, or (1)% of revenue, and non-GAAP operating income of $15.5 million, or 20% of revenue Net loss of $(9.7) million, or (12)% of revenue, and adjusted EBITDA of $31.8 million, or 40% of revenue Cash flows from operations of $14.4 million, or 18% of revenue, and free cash flow of $12.4 million, or 16% of revenue MeridianLink returned $29.9 million to stockholders via 1.6 million of stock repurchases Business and Operating Highlights: MeridianLink named Larry Katz President of the Company and will welcome Elias Olmeta as our new Chief Financial Officer on August 26, 2024. Mr. Katz will continue to serve as Chief Financial Officer until Mr. Olmeta starts. With these leadership changes, we are enhancing our industry expertise and aligning our customer-facing organization to further scale the business. New and existing customers chose MeridianLink One to enhance their lending solutions, including a MeridianLink® Consumer customer who adopted MeridianLink® Mortgage, Mortgage Access, and our Debt Optimization solution. MeridianLink announced 3Rivers Federal Credit Union’s successful go-live on MeridianLink® Access and Opening, resulting in a significant decrease in loan application times. We enhanced our product capabilities through a new integration between MeridianLink® Insight and Collect that provides customers with advanced analytics to run their businesses, including a new payment propensity index. To offer our customers innovative AI capabilities, we partnered with Conductiv, a leader in providing missing, permissioned data to meet underwriting guidelines, helping customers achieve up to a 47% increase in approval rates without increasing losses. Business Outlook Based on information as of today, August 8, 2024, the Company issues third quarter financial guidance and updates full year 2024 financial guidance as follows: Third Quarter Fiscal 2024: Revenue is expected to be in the range of $78.0 to $81.0 Adjusted EBITDA is expected to be in the range of $30.0 to $33.0 Full Year 2024: Revenue is expected to be in the range of $312.0 to $318.0 Adjusted EBITDA is expected to be in the range of $123.0 to $128.0 Conference Call Information MeridianLink will hold a conference call to discuss its second quarter results today, August 8, 2024, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call can be accessed by dialing (800) 549-8228 from North America toll-free or the International number of (289) 819-1520 with Conference ID 49245. 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 Thursday, August 15, 2024, by dialing (888) 660-6264 from North America or the International number of (289) 819-1325 with Playback Passcode 49245. MeridianLink uses its investor relations website (https://ir.meridianlink.com), press releases, SEC filings, public conference calls and webcasts, blog posts on its website, as well as its social media channels, such as its LinkedIn page (www.linkedin.com/company/meridianlink), X (formerly Twitter) feed (@meridianlink), and Facebook page (www.facebook.com/MeridianLink/), as a means of disclosing material information and for complying with its disclosure obligations under Regulation FD. Information contained on or accessible through the websites is not incorporated by reference into this release, and links for these websites are inactive textual references only. About MeridianLink MeridianLink® (NYSE: MLNK) empowers financial institutions and consumer reporting agencies to drive efficient growth. MeridianLink’s cloud-based digital lending, account opening, background screening, and data verification software solutions leverage shared intelligence from a unified data platform, MeridianLink® One, to enable customers of all sizes to identify growth opportunities, effectively scale up, and support compliance efforts, all while powering an enhanced experience for staff and consumers alike. For more than 25 years, MeridianLink has prioritized the democratization of lending for consumers, businesses, and communities. Learn more at www.meridianlink.com. 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, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, 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, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, and the effect of income taxes, including the partial valuation allowance, 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 or include the impact from the partial deferred tax asset valuation allowance, 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, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, 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. Deferred revenue from acquisitions prior to the adoption of ASU 2021-08 was 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, expenses associated with our secondary offering, expenses related to debt modification, expenses related to debt modification, charges in connection with litigation unrelated to our core business, 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, our leadership transition and plans, our stock repurchase programs, including the execution and amount of repurchases, the status of litigation matters, including expected or contemplated settlements, associated timing, and estimated fees and expenses, our ability to retain and attract customers and product partners, the benefit to us and our customers of integrations with our product partners, 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, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 93,009 $ 80,441 Accounts receivable, net 35,924 32,412 Prepaid expenses and other current assets 11,323 11,574 Total current assets 140,256 124,427 Property and equipment, net 2,664 3,337 Right of use assets, net 806 1,140 Intangible assets, net 226,525 251,060 Goodwill 610,063 610,063 Other assets 6,622 6,224 Total assets $ 986,936 $ 996,251 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 6,035 $ 4,405 Accrued liabilities 30,608 30,673 Deferred revenue 28,337 17,224 Current portion of debt, net of debt issuance costs 3,768 3,542 Total current liabilities 68,748 55,844 Debt, net of debt issuance costs 467,073 420,004 Deferred tax liabilities, net 10,928 10,823 Long-term deferred revenue 261 792 Other long-term liabilities 390 541 Total liabilities $ 547,400 $ 488,004 Commitments and contingencies Stockholders’ Equity: Preferred stock, $0.001 par value; 50,000,000 shares authorized; zero shares issued and outstanding at June 30, 2024 and December 31, 2023 — — Common stock, $0.001 par value; 600,000,000 shares authorized, 75,773,928 and 78,447,701 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 126 129 Additional paid-in capital 675,191 654,634 Accumulated deficit (235,781 ) (146,516 ) Total stockholders’ equity 439,536 508,247 Total liabilities and stockholders’ equity $ 986,936 $ 996,251 Condensed Consolidated Statements of Operations (unaudited) (in thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues, net $ 78,676 $ 75,415 $ 156,492 $ 152,550 Cost of revenues: Subscription and services 23,373 23,984 44,717 47,485 Amortization of developed technology 4,803 4,510 9,532 8,964 Total cost of revenues 28,176 28,494 54,249 56,449 Gross profit 50,500 46,921 102,243 96,101 Operating expenses: General and administrative 29,237 24,409 54,416 46,964 Research and development 9,905 11,754 19,390 25,566 Sales and marketing 11,467 8,558 22,003 16,771 Restructuring related costs 988 717 4,179 3,621 Total operating expenses 51,597 45,438 99,988 92,922 Operating (loss) income (1,097 ) 1,483 2,255 3,179 Other (income) expense, net: Interest and other income (1,636 ) (784 ) (2,592 ) (1,254 ) Interest expense 9,797 9,316 19,379 18,347 Total other expense, net 8,161 8,532 16,787 17,093 Loss before income taxes (9,258 ) (7,049 ) (14,532 ) (13,914 ) Provision for (benefit from) income taxes 412 (1,819 ) 444 (3,018 ) Net loss $ (9,670 ) $ (5,230 ) $ (14,976 ) $ (10,896 ) Net loss per share: Basic $ (0.13 ) $ (0.06 ) $ (0.19 ) $ (0.13 ) Diluted $ (0.13 ) $ (0.06 ) $ (0.19 ) $ (0.13 ) Weighted average common stock outstanding: Basic 76,527,803 80,911,113 76,923,824 80,786,427 Diluted 76,527,803 80,911,113 76,923,824 80,786,427 Net Revenues by Major Source (unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Subscription fees $ 65,946 $ 63,770 $ 131,858 $ 130,175 Professional services 9,559 9,002 18,569 17,437 Other 3,171 2,643 6,065 4,938 Total $ 78,676 $ 75,415 $ 156,492 $ 152,550 Net Revenues by Solution Type (unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Lending software solutions $ 61,644 $ 55,778 $ 122,547 $ 113,779 Data verification software solutions 17,032 19,637 33,945 38,771 Total $ 78,676 $ 75,415 $ 156,492 $ 152,550 % Growth attributable to: Lending software solutions 8 % 6 % Data verification software (4 )% (3 )% Total % growth 4 % 3 % ___________ Percent Revenue Related to the Mortgage Loan Market (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Lending software solutions 10% 13% 11% 12% Data verification software 55% 61% 56% 61% Total % revenue related to mortgage loan market 20% 26% 20% 25% Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Six Months Ended June 30, 2024 2023 Cash flows from operating activities: Net loss $ (14,976 ) $ (10,896 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 29,096 28,955 Provision for expected credit losses 561 441 Amortization of debt issuance costs 464 669 Share-based compensation expense 20,429 13,893 Deferred income taxes 105 (4,192 ) Loss on disposal of property and equipment 6 — Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (4,073 ) (2,640 ) Prepaid expenses and other assets (197 ) (2,395 ) Accounts payable 1,675 2,955 Accrued liabilities (277 ) (1,663 ) Deferred revenue 10,581 9,058 Net cash provided by operating activities 43,394 34,185 Cash flows from investing activities: Capitalized software additions (3,684 ) (4,562 ) Purchases of property and equipment (152 ) (305 ) Return of escrow deposit — 30,000 Acquisition, net of cash acquired – Beanstalk Networks LLC — 326 Net cash (used in) provided by investing activities (3,836 ) 25,459 Cash flows from financing activities: Repurchases of common stock (73,788 ) (5,145 ) Proceeds from exercise of stock options 722 1,025 Proceeds from employee stock purchase plan 944 793 Taxes paid related to net share settlement of restricted stock units (1,676 ) (1,050 ) Principal payments of debt (2,278 ) (2,175 ) Payments of deferred offering costs (74 ) — Proceeds from debt 50,000 — Payments of debt issuance costs (840 ) — Net cash used in financing activities (26,990 ) (6,552 ) Net increase in cash and cash equivalents 12,568 53,092 Cash and cash equivalents, beginning of period 80,441 55,780 Cash and cash equivalents, end of period $ 93,009 $ 108,872 Supplemental disclosures of cash flow information: Cash paid for interest $ 18,893 $ 17,955 Cash paid for income taxes 433 2,577 Non-cash investing and financing activities: Shares withheld with respect to net settlement of restricted stock units 1,676 — Excise taxes payable included in repurchases of common stock 505 — Share-based compensation expense included in capitalized software additions 138 136 Purchase price allocation adjustment related to income tax effects for StreetShares acquisition — 245 Purchases of property and equipment included in accounts payable and accrued liabilities — 3 Vesting of restricted stock awards and restricted stock units 1 5 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, 2024 2023 2024 2023 Operating (loss) income $ (1,097 ) $ 1,483 $ 2,255 $ 3,179 Add: Share-based compensation expense 12,500 9,367 20,436 14,556 Add: Employer payroll taxes on employee stock transactions 508 322 930 448 Add: Expenses associated with public offering 308 — 1,698 — Add: Litigation-related charges 1,864 — 1,864 — Add: Expenses related to debt modification 473 — 473 — Add: Restructuring related costs(2) 988 717 4,179 3,621 Non-GAAP operating income $ 15,544 $ 11,889 $ 31,835 $ 21,804 Operating margin (1 )% 2 % 1 % 2 % Non-GAAP operating margin 20 % 16 % 20 % 14 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net loss $ (9,670 ) $ (5,230 ) $ (14,976 ) $ (10,896 ) Add: Share-based compensation expense 12,500 9,367 20,436 14,556 Add: Employer payroll taxes on employee stock transactions 508 322 930 448 Add: Expenses associated with public offering 308 — 1,698 — Add: Litigation-related charges 1,864 — 1,864 — Add: Expenses related to debt modification 473 — 473 — Add: Restructuring related costs(2) 988 717 4,179 3,621 Subtract: Income tax effect on non-GAAP items (3,994 ) (2,497 ) (7,099 ) (4,470 ) Non-GAAP net income $ 2,977 $ 2,679 $ 7,505 $ 3,259 Non-GAAP basic net income per share $ 0.04 $ 0.03 $ 0.10 $ 0.04 Non-GAAP diluted net income per share $ 0.04 $ 0.03 $ 0.09 $ 0.04 Weighted average shares used to compute Non-GAAP basic net income per share 76,527,803 80,911,113 76,923,824 80,786,427 Weighted average shares used to compute Non-GAAP diluted net 79,291,173 83,487,132 80,020,336 82,994,599 Net loss margin (12 )% (7 )% (10 )% (7 )% Non-GAAP net income margin 4 % 4 % 5 % 2 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net loss $ (9,670 ) $ (5,230 ) $ (14,976 ) $ (10,896 ) Interest expense 9,797 9,316 19,379 18,347 Taxes 412 (1,819 ) 444 (3,018 ) Depreciation and amortization 14,573 14,424 29,096 28,955 Share-based compensation expense 12,500 9,367 20,436 14,556 Employer payroll taxes on employee stock transactions 508 322 930 448 Expenses associated with public offering 308 — 1,698 — Litigation-related charges(1) 1,864 — 1,864 — Expenses related to debt modification 473 — 473 — Restructuring related costs(2) 988 717 4,179 3,621 Deferred revenue reduction from purchase accounting for acquisitions prior to 2022 — 19 — 39 Adjusted EBITDA $ 31,753 $ 27,116 $ 63,523 $ 52,052 Net loss margin (12 )% (7 )% (10 )% (7 )% Adjusted EBITDA margin 40 % 36 % 41 % 34 % (1) Litigation-related charges pertains to litigation settlements and related legal fees. During the three months ended June 30, 2024, $1.5 million relates to estimated settlements of class action lawsuits and $0.4 million relates to third-party legal fees directly related to the settlements. (2) Restructuring related costs for the three months ended June 30, 2024 and 2023 are inclusive of net acceleration (forfeitures) of share-based compensation associated with restructuring in the amount of $0.1 million and ($0.4 million), respectively, and for the six months ended June 30, 2024 and 2023 $0.0 million and ($0.7 million), respectively. Reconciliation from GAAP to Non-GAAP Results (unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Cost of revenue $ 28,176 $ 28,494 $ 54,249 $ 56,449 Less: Share-based compensation expense 1,363 1,157 2,145 2,009 Less: Employer payroll taxes on employee stock transactions 97 88 144 109 Less: Amortization of developed technology 4,803 4,510 9,532 8,964 Non-GAAP cost of revenue $ 21,913 $ 22,739 $ 42,428 $ 45,367 Cost of revenue as a % of revenue 36 % 38 % 35 % 37 % Non-GAAP cost of revenue as a % of revenue 28 % 30 % 27 % 30 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 General and administrative $ 29,237 $ 24,409 $ 54,416 $ 46,964 Less: Share-based compensation expense 6,792 5,231 11,185 7,494 Less: Employer payroll taxes on employee stock transactions 206 107 343 158 Less: Expenses associated with public offering 308 — 1,698 — Less: Litigation-related charges 1,864 — 1,864 — Less: Expenses related to debt modification 473 — 473 — Less: Depreciation expense 363 495 739 990 Less: Amortization of intangibles 9,407 9,419 18,825 19,001 Non-GAAP general & administrative $ 9,824 $ 9,157 $ 19,289 $ 19,321 General and administrative as a % of revenue 37 % 32 % 35 % 31 % Non-GAAP general and administrative as a % of revenue 12 % 12 % 12 % 13 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Research and development $ 9,905 $ 11,754 $ 19,390 $ 25,566 Less: Share-based compensation expense 2,531 1,875 4,033 3,658 Less: Employer payroll taxes on employee stock transactions 125 97 246 125 Non-GAAP research and development $ 7,249 $ 9,782 $ 15,111 $ 21,783 Research and development as a % of revenue 13 % 16 % 12 % 17 % Non-GAAP research and development as a % of revenue 9 % 13 % 10 % 14 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Sales and marketing $ 11,467 $ 8,558 $ 22,003 $ 16,771 Less: Share-based compensation expense 1,814 1,104 3,073 1,395 Less: Employer payroll taxes on employee stock transactions 80 30 197 56 Non-GAAP sales and marketing $ 9,573 $ 7,424 $ 18,733 $ 15,320 Sales and marketing as a % of revenue 15 % 11 % 14 % 11 % Non-GAAP sales and marketing as a % of revenue 12 % 10 % 12 % 10 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net cash provided by operating activities $ 14,356 $ 6,104 $ 43,394 $ 34,185 Less: Capitalized software 1,847 2,638 3,684 4,562 Less: Capital expenditures 60 171 152 305 Free cash flow $ 12,449 $ 3,295 $ 39,558 $ 29,318 Net cash provided by operating actives as a % of revenue 18 % 8 % 28 % 22 % Free cash flow as a % of revenue 16 % 4 % 25 % 19 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240808766635/en/Contacts Press Contact Sydney Wishnow (508) 808-9060 meridianlinkPR@clyde.us Investor Relations Contact Gianna Rotellini (714) 332-6357 InvestorRelations@meridianlink.com
Second quarter revenue of $78.7 million grows 4% year-over-year driven by lending software solutions revenue of $61.6 million, reflecting growth of 11% 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, 2024. “Our second quarter performance highlights the resilience of our business model, continued demand for MeridianLink® One, and our disciplined execution as a leading vertical SaaS company,” said Nicolaas Vlok, chief executive officer of MeridianLink®. “Our lending software solutions continue to perform well in the face of macroeconomic headwinds due to the power of our platform. New and existing customers continue to partner with MeridianLink to execute a digital lending strategy that wins in the market.” Quarterly Financial Highlights: Revenue of $78.7 million, an increase of 4% year-over-year Lending software solutions revenue of $61.6 million, an increase of 11% year-over-year Operating loss of $(1.1) million, or (1)% of revenue, and non-GAAP operating income of $15.5 million, or 20% of revenue Net loss of $(9.7) million, or (12)% of revenue, and adjusted EBITDA of $31.8 million, or 40% of revenue Cash flows from operations of $14.4 million, or 18% of revenue, and free cash flow of $12.4 million, or 16% of revenue MeridianLink returned $29.9 million to stockholders via 1.6 million of stock repurchases Business and Operating Highlights: MeridianLink named Larry Katz President of the Company and will welcome Elias Olmeta as our new Chief Financial Officer on August 26, 2024. Mr. Katz will continue to serve as Chief Financial Officer until Mr. Olmeta starts. With these leadership changes, we are enhancing our industry expertise and aligning our customer-facing organization to further scale the business. New and existing customers chose MeridianLink One to enhance their lending solutions, including a MeridianLink® Consumer customer who adopted MeridianLink® Mortgage, Mortgage Access, and our Debt Optimization solution. MeridianLink announced 3Rivers Federal Credit Union’s successful go-live on MeridianLink® Access and Opening, resulting in a significant decrease in loan application times. We enhanced our product capabilities through a new integration between MeridianLink® Insight and Collect that provides customers with advanced analytics to run their businesses, including a new payment propensity index. To offer our customers innovative AI capabilities, we partnered with Conductiv, a leader in providing missing, permissioned data to meet underwriting guidelines, helping customers achieve up to a 47% increase in approval rates without increasing losses. Business Outlook Based on information as of today, August 8, 2024, the Company issues third quarter financial guidance and updates full year 2024 financial guidance as follows: Third Quarter Fiscal 2024: Revenue is expected to be in the range of $78.0 to $81.0 Adjusted EBITDA is expected to be in the range of $30.0 to $33.0 Full Year 2024: Revenue is expected to be in the range of $312.0 to $318.0 Adjusted EBITDA is expected to be in the range of $123.0 to $128.0 Conference Call Information MeridianLink will hold a conference call to discuss its second quarter results today, August 8, 2024, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call can be accessed by dialing (800) 549-8228 from North America toll-free or the International number of (289) 819-1520 with Conference ID 49245. 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 Thursday, August 15, 2024, by dialing (888) 660-6264 from North America or the International number of (289) 819-1325 with Playback Passcode 49245. MeridianLink uses its investor relations website (https://ir.meridianlink.com), press releases, SEC filings, public conference calls and webcasts, blog posts on its website, as well as its social media channels, such as its LinkedIn page (www.linkedin.com/company/meridianlink), X (formerly Twitter) feed (@meridianlink), and Facebook page (www.facebook.com/MeridianLink/), as a means of disclosing material information and for complying with its disclosure obligations under Regulation FD. Information contained on or accessible through the websites is not incorporated by reference into this release, and links for these websites are inactive textual references only. About MeridianLink MeridianLink® (NYSE: MLNK) empowers financial institutions and consumer reporting agencies to drive efficient growth. MeridianLink’s cloud-based digital lending, account opening, background screening, and data verification software solutions leverage shared intelligence from a unified data platform, MeridianLink® One, to enable customers of all sizes to identify growth opportunities, effectively scale up, and support compliance efforts, all while powering an enhanced experience for staff and consumers alike. For more than 25 years, MeridianLink has prioritized the democratization of lending for consumers, businesses, and communities. Learn more at www.meridianlink.com. 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, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, 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, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, and the effect of income taxes, including the partial valuation allowance, 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 or include the impact from the partial deferred tax asset valuation allowance, 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, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, 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. Deferred revenue from acquisitions prior to the adoption of ASU 2021-08 was 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, expenses associated with our secondary offering, expenses related to debt modification, expenses related to debt modification, charges in connection with litigation unrelated to our core business, 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, our leadership transition and plans, our stock repurchase programs, including the execution and amount of repurchases, the status of litigation matters, including expected or contemplated settlements, associated timing, and estimated fees and expenses, our ability to retain and attract customers and product partners, the benefit to us and our customers of integrations with our product partners, 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, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 93,009 $ 80,441 Accounts receivable, net 35,924 32,412 Prepaid expenses and other current assets 11,323 11,574 Total current assets 140,256 124,427 Property and equipment, net 2,664 3,337 Right of use assets, net 806 1,140 Intangible assets, net 226,525 251,060 Goodwill 610,063 610,063 Other assets 6,622 6,224 Total assets $ 986,936 $ 996,251 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 6,035 $ 4,405 Accrued liabilities 30,608 30,673 Deferred revenue 28,337 17,224 Current portion of debt, net of debt issuance costs 3,768 3,542 Total current liabilities 68,748 55,844 Debt, net of debt issuance costs 467,073 420,004 Deferred tax liabilities, net 10,928 10,823 Long-term deferred revenue 261 792 Other long-term liabilities 390 541 Total liabilities $ 547,400 $ 488,004 Commitments and contingencies Stockholders’ Equity: Preferred stock, $0.001 par value; 50,000,000 shares authorized; zero shares issued and outstanding at June 30, 2024 and December 31, 2023 — — Common stock, $0.001 par value; 600,000,000 shares authorized, 75,773,928 and 78,447,701 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 126 129 Additional paid-in capital 675,191 654,634 Accumulated deficit (235,781 ) (146,516 ) Total stockholders’ equity 439,536 508,247 Total liabilities and stockholders’ equity $ 986,936 $ 996,251 Condensed Consolidated Statements of Operations (unaudited) (in thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues, net $ 78,676 $ 75,415 $ 156,492 $ 152,550 Cost of revenues: Subscription and services 23,373 23,984 44,717 47,485 Amortization of developed technology 4,803 4,510 9,532 8,964 Total cost of revenues 28,176 28,494 54,249 56,449 Gross profit 50,500 46,921 102,243 96,101 Operating expenses: General and administrative 29,237 24,409 54,416 46,964 Research and development 9,905 11,754 19,390 25,566 Sales and marketing 11,467 8,558 22,003 16,771 Restructuring related costs 988 717 4,179 3,621 Total operating expenses 51,597 45,438 99,988 92,922 Operating (loss) income (1,097 ) 1,483 2,255 3,179 Other (income) expense, net: Interest and other income (1,636 ) (784 ) (2,592 ) (1,254 ) Interest expense 9,797 9,316 19,379 18,347 Total other expense, net 8,161 8,532 16,787 17,093 Loss before income taxes (9,258 ) (7,049 ) (14,532 ) (13,914 ) Provision for (benefit from) income taxes 412 (1,819 ) 444 (3,018 ) Net loss $ (9,670 ) $ (5,230 ) $ (14,976 ) $ (10,896 ) Net loss per share: Basic $ (0.13 ) $ (0.06 ) $ (0.19 ) $ (0.13 ) Diluted $ (0.13 ) $ (0.06 ) $ (0.19 ) $ (0.13 ) Weighted average common stock outstanding: Basic 76,527,803 80,911,113 76,923,824 80,786,427 Diluted 76,527,803 80,911,113 76,923,824 80,786,427 Net Revenues by Major Source (unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Subscription fees $ 65,946 $ 63,770 $ 131,858 $ 130,175 Professional services 9,559 9,002 18,569 17,437 Other 3,171 2,643 6,065 4,938 Total $ 78,676 $ 75,415 $ 156,492 $ 152,550 Net Revenues by Solution Type (unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Lending software solutions $ 61,644 $ 55,778 $ 122,547 $ 113,779 Data verification software solutions 17,032 19,637 33,945 38,771 Total $ 78,676 $ 75,415 $ 156,492 $ 152,550 % Growth attributable to: Lending software solutions 8 % 6 % Data verification software (4 )% (3 )% Total % growth 4 % 3 % ___________ Percent Revenue Related to the Mortgage Loan Market (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Lending software solutions 10% 13% 11% 12% Data verification software 55% 61% 56% 61% Total % revenue related to mortgage loan market 20% 26% 20% 25% Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Six Months Ended June 30, 2024 2023 Cash flows from operating activities: Net loss $ (14,976 ) $ (10,896 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 29,096 28,955 Provision for expected credit losses 561 441 Amortization of debt issuance costs 464 669 Share-based compensation expense 20,429 13,893 Deferred income taxes 105 (4,192 ) Loss on disposal of property and equipment 6 — Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (4,073 ) (2,640 ) Prepaid expenses and other assets (197 ) (2,395 ) Accounts payable 1,675 2,955 Accrued liabilities (277 ) (1,663 ) Deferred revenue 10,581 9,058 Net cash provided by operating activities 43,394 34,185 Cash flows from investing activities: Capitalized software additions (3,684 ) (4,562 ) Purchases of property and equipment (152 ) (305 ) Return of escrow deposit — 30,000 Acquisition, net of cash acquired – Beanstalk Networks LLC — 326 Net cash (used in) provided by investing activities (3,836 ) 25,459 Cash flows from financing activities: Repurchases of common stock (73,788 ) (5,145 ) Proceeds from exercise of stock options 722 1,025 Proceeds from employee stock purchase plan 944 793 Taxes paid related to net share settlement of restricted stock units (1,676 ) (1,050 ) Principal payments of debt (2,278 ) (2,175 ) Payments of deferred offering costs (74 ) — Proceeds from debt 50,000 — Payments of debt issuance costs (840 ) — Net cash used in financing activities (26,990 ) (6,552 ) Net increase in cash and cash equivalents 12,568 53,092 Cash and cash equivalents, beginning of period 80,441 55,780 Cash and cash equivalents, end of period $ 93,009 $ 108,872 Supplemental disclosures of cash flow information: Cash paid for interest $ 18,893 $ 17,955 Cash paid for income taxes 433 2,577 Non-cash investing and financing activities: Shares withheld with respect to net settlement of restricted stock units 1,676 — Excise taxes payable included in repurchases of common stock 505 — Share-based compensation expense included in capitalized software additions 138 136 Purchase price allocation adjustment related to income tax effects for StreetShares acquisition — 245 Purchases of property and equipment included in accounts payable and accrued liabilities — 3 Vesting of restricted stock awards and restricted stock units 1 5 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, 2024 2023 2024 2023 Operating (loss) income $ (1,097 ) $ 1,483 $ 2,255 $ 3,179 Add: Share-based compensation expense 12,500 9,367 20,436 14,556 Add: Employer payroll taxes on employee stock transactions 508 322 930 448 Add: Expenses associated with public offering 308 — 1,698 — Add: Litigation-related charges 1,864 — 1,864 — Add: Expenses related to debt modification 473 — 473 — Add: Restructuring related costs(2) 988 717 4,179 3,621 Non-GAAP operating income $ 15,544 $ 11,889 $ 31,835 $ 21,804 Operating margin (1 )% 2 % 1 % 2 % Non-GAAP operating margin 20 % 16 % 20 % 14 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net loss $ (9,670 ) $ (5,230 ) $ (14,976 ) $ (10,896 ) Add: Share-based compensation expense 12,500 9,367 20,436 14,556 Add: Employer payroll taxes on employee stock transactions 508 322 930 448 Add: Expenses associated with public offering 308 — 1,698 — Add: Litigation-related charges 1,864 — 1,864 — Add: Expenses related to debt modification 473 — 473 — Add: Restructuring related costs(2) 988 717 4,179 3,621 Subtract: Income tax effect on non-GAAP items (3,994 ) (2,497 ) (7,099 ) (4,470 ) Non-GAAP net income $ 2,977 $ 2,679 $ 7,505 $ 3,259 Non-GAAP basic net income per share $ 0.04 $ 0.03 $ 0.10 $ 0.04 Non-GAAP diluted net income per share $ 0.04 $ 0.03 $ 0.09 $ 0.04 Weighted average shares used to compute Non-GAAP basic net income per share 76,527,803 80,911,113 76,923,824 80,786,427 Weighted average shares used to compute Non-GAAP diluted net 79,291,173 83,487,132 80,020,336 82,994,599 Net loss margin (12 )% (7 )% (10 )% (7 )% Non-GAAP net income margin 4 % 4 % 5 % 2 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net loss $ (9,670 ) $ (5,230 ) $ (14,976 ) $ (10,896 ) Interest expense 9,797 9,316 19,379 18,347 Taxes 412 (1,819 ) 444 (3,018 ) Depreciation and amortization 14,573 14,424 29,096 28,955 Share-based compensation expense 12,500 9,367 20,436 14,556 Employer payroll taxes on employee stock transactions 508 322 930 448 Expenses associated with public offering 308 — 1,698 — Litigation-related charges(1) 1,864 — 1,864 — Expenses related to debt modification 473 — 473 — Restructuring related costs(2) 988 717 4,179 3,621 Deferred revenue reduction from purchase accounting for acquisitions prior to 2022 — 19 — 39 Adjusted EBITDA $ 31,753 $ 27,116 $ 63,523 $ 52,052 Net loss margin (12 )% (7 )% (10 )% (7 )% Adjusted EBITDA margin 40 % 36 % 41 % 34 % (1) Litigation-related charges pertains to litigation settlements and related legal fees. During the three months ended June 30, 2024, $1.5 million relates to estimated settlements of class action lawsuits and $0.4 million relates to third-party legal fees directly related to the settlements. (2) Restructuring related costs for the three months ended June 30, 2024 and 2023 are inclusive of net acceleration (forfeitures) of share-based compensation associated with restructuring in the amount of $0.1 million and ($0.4 million), respectively, and for the six months ended June 30, 2024 and 2023 $0.0 million and ($0.7 million), respectively. Reconciliation from GAAP to Non-GAAP Results (unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Cost of revenue $ 28,176 $ 28,494 $ 54,249 $ 56,449 Less: Share-based compensation expense 1,363 1,157 2,145 2,009 Less: Employer payroll taxes on employee stock transactions 97 88 144 109 Less: Amortization of developed technology 4,803 4,510 9,532 8,964 Non-GAAP cost of revenue $ 21,913 $ 22,739 $ 42,428 $ 45,367 Cost of revenue as a % of revenue 36 % 38 % 35 % 37 % Non-GAAP cost of revenue as a % of revenue 28 % 30 % 27 % 30 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 General and administrative $ 29,237 $ 24,409 $ 54,416 $ 46,964 Less: Share-based compensation expense 6,792 5,231 11,185 7,494 Less: Employer payroll taxes on employee stock transactions 206 107 343 158 Less: Expenses associated with public offering 308 — 1,698 — Less: Litigation-related charges 1,864 — 1,864 — Less: Expenses related to debt modification 473 — 473 — Less: Depreciation expense 363 495 739 990 Less: Amortization of intangibles 9,407 9,419 18,825 19,001 Non-GAAP general & administrative $ 9,824 $ 9,157 $ 19,289 $ 19,321 General and administrative as a % of revenue 37 % 32 % 35 % 31 % Non-GAAP general and administrative as a % of revenue 12 % 12 % 12 % 13 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Research and development $ 9,905 $ 11,754 $ 19,390 $ 25,566 Less: Share-based compensation expense 2,531 1,875 4,033 3,658 Less: Employer payroll taxes on employee stock transactions 125 97 246 125 Non-GAAP research and development $ 7,249 $ 9,782 $ 15,111 $ 21,783 Research and development as a % of revenue 13 % 16 % 12 % 17 % Non-GAAP research and development as a % of revenue 9 % 13 % 10 % 14 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Sales and marketing $ 11,467 $ 8,558 $ 22,003 $ 16,771 Less: Share-based compensation expense 1,814 1,104 3,073 1,395 Less: Employer payroll taxes on employee stock transactions 80 30 197 56 Non-GAAP sales and marketing $ 9,573 $ 7,424 $ 18,733 $ 15,320 Sales and marketing as a % of revenue 15 % 11 % 14 % 11 % Non-GAAP sales and marketing as a % of revenue 12 % 10 % 12 % 10 % Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net cash provided by operating activities $ 14,356 $ 6,104 $ 43,394 $ 34,185 Less: Capitalized software 1,847 2,638 3,684 4,562 Less: Capital expenditures 60 171 152 305 Free cash flow $ 12,449 $ 3,295 $ 39,558 $ 29,318 Net cash provided by operating actives as a % of revenue 18 % 8 % 28 % 22 % Free cash flow as a % of revenue 16 % 4 % 25 % 19 % View source version on businesswire.com: https://www.businesswire.com/news/home/20240808766635/en/
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