MLNK MeridianLink Inc

Revenue of $77.1 million grows 6% 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 first quarter ended March 31, 2023.

“Our solid first quarter revenue performance highlights the continued strength of our multi-product platform, MeridianLink® One,” said Nicolaas Vlok, chief executive officer of MeridianLink. “There is strong demand for the cross-sell power and configurability of the platform to create seamless digital lending experiences. With that ongoing demand, our revenue grew 6% year-over-year to $77.1 million, and lending software solutions revenue grew 18% year-over-year to $58.0 million, now accounting for 75% of total revenue. Given the macro backdrop, we believe this performance is a fantastic achievement that could not have been done without the dedication of the entire MeridianLink team.”

Quarterly Financial Highlights:

• Revenue of $77.1 million, an increase of 6% year-over-year
• Operating income of $1.7 million, or 2% of revenue and Non-GAAP operating income of $9.9 million, or 13% of revenue
• Net loss of $(5.7) million, or (7)% of revenue, and Adjusted EBITDA of $24.9 million, or 32% of revenue
• Cash flows from operations of $67.8 million and free cash flow of $58.3 million for the last twelve month period

Business and Operating Highlights:

• MeridianLink welcomed Suresh Balasubramanian as our new Chief Marketing Officer and Dean Germeyer as our new Chief Customer Officer. With this added leadership expertise, we are bolstering our ability to capture more share in the market and engage more deeply with customers across our support, services, and customer success teams.
• The Company announced another strong roster of new logo and cross-sell wins. A financial holding company chose MeridianLink One to configure the multiple lending needs of its sub banks on a unified platform; FedChoice Federal Credit Union added MeridianLink® Insight to make faster, well-informed business decisions to improve its member experience; and a global fintech partner leveraged MeridianLink® Consumer to quickly launch its credit card offering at scale.
• MeridianLink enhanced our MeridianLink® Collect integration with SWBC to provide a more automated, modern collections strategy to customers in the midst of demanding financial conditions.
• In response to evolving customer needs, MeridianLink launched a new comprehensive deposit growth solution through the integration of MeridianLink® Engage and MeridianLink® Opening. With relevant, personalized communications and frictionless account opening, customers can quickly capture more deposit opportunities.

Business Outlook

Based on information as of today, May 2, 2023, the Company issues second quarter financial guidance and updates full year 2023 financial guidance as follows:

Second Quarter Fiscal 2023:

• Revenue is expected to be in the range of $76.0 million to $79.0 million
• Adjusted EBITDA is expected to be in the range of $27.0 million to $30.0 million

Full Year 2023:

• Revenue is expected to be in the range of $307.0 million to $313.0 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 first quarter results today, May 2, 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 13121811. 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, May 9, 2023, at (877) 674-7070 from North America or (416) 764-8692 as a Participant Local with Playback Passcode 121811.

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.

Non-GAAP Financial Measures

To supplement the financial measures presented in accordance with generally accepted accounting principles, or GAAP, we provide certain non-GAAP financial measures, such as adjusted EBITDA and adjusted EBITDA margin; non-GAAP operating income (loss); non-GAAP net income (loss); non-GAAP cost of revenue; non-GAAP sales and marketing expenses; non-GAAP research and development expenses; non-GAAP general and administrative expenses; and free cash flow. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Rather, we believe that these non-GAAP financial measures, when viewed in addition to and not in lieu of our reported GAAP financial results, provide investors with additional meaningful information to assess our financial performance and trends, enable comparison of financial results between periods, and allow for greater transparency with respect to key metrics utilized internally in analyzing and operating our business. The following definitions are provided:

• Non-GAAP operating income (loss): GAAP operating income (loss), excluding the impact of share-based compensation, employer payroll taxes on employee stock transactions, restructuring related costs, and sponsor and third-party acquisition-related costs.
• Non-GAAP net income (loss): GAAP net income (loss), excluding the impact of share-based compensation, employer payroll taxes on employee stock transactions, restructuring related costs sponsor and third-party acquisition-related costs, and the effect of income taxes on non-GAAP items. The effects of income taxes on non-GAAP items reflect a fixed long-term projected tax rate of 24%. The Company employs a structural long-term projected non-GAAP income tax rate of 24% for greater consistency across reporting periods, eliminating effects of items not directly related to the Company's operating structure that may vary in size and frequency. This long-term projected non-GAAP income tax rate is determined by analyzing a mix of historical and projected tax filing positions, assumes no additional acquisitions during the projection period, and takes into account various factors, including the Company’s anticipated tax structure, its tax positions in different jurisdictions, and current impacts from key U.S. legislation where the Company operates. We will reevaluate this tax rate, as necessary, for significant events such as significant alterations in the U.S. tax environment, substantial changes in the Company’s geographic earnings mix due to acquisition activity, or other shifts in the Company’s strategy or business operations.
• Adjusted EBITDA: net income (loss) before interest expense, taxes, depreciation and amortization, share-based compensation expense, employer payroll taxes on employee stock transactions, restructuring related costs, sponsor and third-party acquisition related costs, and deferred revenue reductions from purchase accounting for acquisitions prior to the adoption of ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which we early adopted on January 1, 2022 on a prospective basis. As of March 31, 2023, the remaining deferred revenue from acquisitions prior to the adoption of ASU 2021-08 was less than $0.1 million, which will be recognized on a straight line basis through December 31, 2023.
• Non-GAAP cost of revenue: GAAP cost of revenue, excluding the impact of share-based compensation, employer payroll taxes on employee stock transactions, and amortization of developed technology.
• Non-GAAP operating expenses: GAAP operating expenses, excluding the impact of share-based compensation, employer payroll taxes on employee stock transactions, and depreciation and amortization, as applicable.
• Free cash flow: GAAP cash flow from operating activities less GAAP purchases of property and equipment (Capital Expenditures) and capitalized costs related to developed technology (Capitalized Software).

Reconciliations to comparable GAAP financial measures are available in the accompanying schedules, which are posted as part of this earnings release on our website. No reconciliation is provided with respect to certain forward-looking non-GAAP financial measures as the GAAP measures are not accessible on a forward-looking basis. We cannot reliably predict all necessary components or their impact to reconcile such financial measures without unreasonable effort. The events necessitating a non-GAAP adjustment are inherently unpredictable and may have a significant impact on our future GAAP financial results.

Forward-Looking Statements

This release contains, and our above-referenced conference call and webcast will contain, statements which are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, these statements can be identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions, although not all forward-looking statements contain these identifying words. Further, statements describing our strategy, outlook, guidance, plans, intentions, or goals are also forward-looking statements. These forward-looking statements reflect our predictions, expectations, or forecasts, including, but not limited to, statements regarding, and guidance with respect to, our strategy, our future financial and operational performance, future economic conditions, our strategic initiatives, including anticipated benefits and integration of an acquisition, our restructuring plan, including expected associated timing, benefits, and costs, our development or delivery of new or enhanced solutions and anticipated results of those solutions for 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

 

March 31, 2023

 

December 31, 2022

 

 

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

77,796

 

 

$

55,780

 

Accounts receivable, net

 

37,401

 

 

 

32,905

 

Prepaid expenses and other current assets

 

10,798

 

 

 

9,447

 

Escrow deposit

 

30,000

 

 

 

30,000

 

Total current assets

 

155,995

 

 

 

128,132

 

Property and equipment, net

 

3,891

 

 

 

4,245

 

Right of use assets

 

1,929

 

 

 

2,185

 

Intangible assets, net

 

285,412

 

 

 

297,475

 

Deferred tax assets, net

 

14,893

 

 

 

13,939

 

Goodwill

 

608,902

 

 

 

608,657

 

Other assets

 

4,784

 

 

 

4,524

 

Total assets

$

1,075,806

 

 

$

1,059,157

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

3,986

 

 

$

1,249

 

Accrued liabilities

 

34,102

 

 

 

32,500

 

Deferred revenue

 

34,090

 

 

 

16,945

 

Current portion of long-term debt, net of debt issuance costs

 

3,506

 

 

 

3,505

 

Total current liabilities

 

75,684

 

 

 

54,199

 

Long-term debt, net of debt issuance costs

 

422,526

 

 

 

423,404

 

Long-term deferred revenue

 

992

 

 

 

1,141

 

Other long-term liabilities

 

1,165

 

 

 

1,322

 

Total liabilities

 

500,367

 

 

 

480,066

 

Commitments and contingencies (Note 5)

 

 

 

Stockholders’ Equity

 

 

 

Preferred stock, $0.001 par value; 50,000,000 shares authorized; zero shares issued and outstanding at March 31, 2023 and December 31, 2022

 

—

 

 

 

—

 

Common stock, $0.001 par value; 600,000,000 shares authorized, 80,636,894 and 80,644,452 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

132

 

 

 

128

 

Additional paid-in capital

 

626,905

 

 

 

621,396

 

Accumulated deficit

 

(51,598

)

 

 

(42,433

)

Total stockholders’ equity

 

575,439

 

 

 

579,091

 

Total liabilities and stockholders’ equity

$

1,075,806

 

 

$

1,059,157

 

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share data)

 

 

Three Months Ended March 31,

 

2023

 

2022

Revenues, net

$

77,135

 

 

$

72,754

 

Cost of revenues:

 

 

 

Subscription and services

 

23,501

 

 

 

21,104

 

Amortization of developed technology

 

4,454

 

 

 

3,434

 

Total cost of revenues

 

27,955

 

 

 

24,538

 

Gross profit

 

49,180

 

 

 

48,216

 

Operating expenses:

 

 

 

General and administrative

 

22,555

 

 

 

18,187

 

Research and development

 

13,812

 

 

 

8,409

 

Sales and marketing

 

8,213

 

 

 

4,743

 

Acquisition related costs

 

—

 

 

 

2,283

 

Restructuring related costs

 

2,904

 

 

 

—

 

Total operating expenses

 

47,484

 

 

 

33,622

 

Operating (loss) income

 

1,696

 

 

 

14,594

 

Other (income) expense, net:

 

 

 

Other income

 

(470

)

 

 

(163

)

Interest expense, net

 

9,031

 

 

 

4,358

 

Total other expense, net

 

8,561

 

 

 

4,195

 

(Loss) income before (benefit from) provision for income taxes

 

(6,865

)

 

 

10,399

 

 

 

 

 

(Benefit from) provision for income taxes

 

(1,199

)

 

 

2,920

 

Net (loss) income

$

(5,666

)

 

$

7,479

 

 

 

 

 

Net (loss) income per share:

 

 

 

Basic

$

(0.07

)

 

$

0.09

 

Diluted

$

(0.07

)

 

$

0.09

 

Weighted average common stock outstanding:

 

 

 

Basic

 

80,659,978

 

 

 

79,974,071

 

Diluted

 

80,659,978

 

 

 

82,228,936

 

Net Revenues by Major Source

(unaudited)

(in thousands)

 

 

Three Months Ended March 31,

 

2023

 

2022

Subscription fees

$

66,405

 

$

63,469

Professional services

 

8,435

 

 

 

7,112

 

Other

 

2,295

 

 

 

2,173

 

Total

$

77,135

 

 

$

72,754

 

Net Revenues by Solution Type

(unaudited)

(in thousands)

 

 

Three Months Ended March 31,

 

2023

 

2022

Lending software solutions

$

58,001

 

 

$

49,167

 

Data verification software solutions

 

19,134

 

 

 

23,587

 

Total (1)

$

77,135

 

 

$

72,754

 

% Growth attributable to:

 

 

 

Lending software solutions

 

12

%

 

 

Data verification software

 

(6

)%

 

 

Total % growth

 

6

%

 

 

 

 

 

 

(1) % Revenue related to mortgage loan market:

 

 

 

Lending software solutions

 

11

%

 

 

7

%

Data verification software

 

61

%

 

 

70

%

Total % revenue related to mortgage loan market

 

24

%

 

 

28

%

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

 

Three Months Ended March 31,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net (loss) income

$

(5,666

)

 

$

7,479

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

14,531

 

 

 

12,905

 

Provision for expected credit losses

 

532

 

 

 

—

 

Amortization of debt issuance costs

 

235

 

 

 

484

 

Share-based compensation expense

 

4,891

 

 

 

3,808

 

Loss on disposal of fixed assets

 

—

 

 

 

135

 

Deferred income taxes

 

(1,198

)

 

 

2,679

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

Accounts receivable

 

(5,028

)

 

 

(7,248

)

Prepaid expenses and other assets

 

(1,636

)

 

 

(460

)

Accounts payable

 

2,717

 

 

 

301

 

Accrued liabilities

 

1,706

 

 

 

194

 

Deferred revenue

 

16,997

 

 

 

14,586

 

Net cash provided by operating activities

 

28,081

 

 

 

34,863

 

Cash flows from investing activities:

 

 

 

Capitalized software additions

 

(1,924

)

 

 

(1,522

)

Purchases of property and equipment

 

(134

)

 

 

(419

)

Net cash used in investing activities

 

(2,058

)

 

 

(1,941

)

Cash flows from financing activities:

 

 

 

Repurchases of common stock

 

(3,490

)

 

 

—

 

Proceeds from exercise of stock options

 

594

 

 

 

179

 

Taxes paid related to net share settlement of RSUs

 

(24

)

 

 

—

 

Principal payments of long-term debt

 

(1,087

)

 

 

—

 

Net cash (used in) provided by financing activities

 

(4,007

)

 

 

179

 

Net increase in cash and cash equivalents

 

22,016

 

 

 

33,101

 

Cash and cash equivalents, beginning of period

 

55,780

 

 

 

113,645

 

Cash and cash equivalents, end of period

$

77,796

 

 

$

146,746

 

 

Supplemental disclosures of cash flow information:

 

 

 

Cash paid for interest

$

9,019

 

 

$

3,869

 

Cash paid for income taxes

 

50

 

 

 

44

 

Non-cash investing and financing activities:

 

 

 

Purchase price allocation adjustment related to income tax effects for StreetShares acquisition

$

245

 

 

$

—

 

Purchases of property and equipment included in accounts payable and accrued expenses

 

79

 

 

 

—

 

Share-based compensation expense capitalized to software additions

 

48

 

 

 

79

 

Excise taxes payable included in repurchases of common stock

 

9

 

 

 

—

 

Vesting of RSAs and RSUs

 

4

 

 

 

32

 

Initial recognition of operating lease liability

 

—

 

 

 

3,372

 

Initial recognition of operating lease right-of-use asset

 

—

 

 

 

2,627

 

Reconciliation from GAAP to Non-GAAP Results

(unaudited)

(in thousands, except share and per share data)

 

 

Three Months Ended March 31,

 

2023

 

2022

 

 

 

 

Operating income

$

1,696

 

 

$

14,594

 

Add: Share-based compensation expense

 

5,190

 

 

 

3,808

 

Add: Employer payroll taxes on employee stock transactions

 

126

 

 

 

145

 

Add: Restructuring related costs

 

2,904

 

 

 

—

 

Add: Sponsor and third-party acquisition related costs

 

—

 

 

 

2,288

 

Non-GAAP operating income

$

9,916

 

 

$

20,835

 

Operating margin

 

2

%

 

 

20

%

Non-GAAP operating margin

 

13

%

 

 

29

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2023

 

2022

 

 

 

 

Net (loss) income

$

(5,666

)

 

$

7,479

 

Add: Share-based compensation expense

 

5,190

 

 

 

3,808

 

Add: Employer payroll taxes on employee stock transactions

 

126

 

 

 

145

 

Add: Restructuring related costs

 

2,904

 

 

 

—

 

Add: Sponsor and third-party acquisition related costs

 

—

 

 

 

2,288

 

Add: Income tax effect on non-GAAP items

 

(1,973

)

 

 

(1,498

)

Non-GAAP net (loss) income

$

581

 

 

$

12,222

 

Non-GAAP basic net (loss) income per share

$

0.01

 

 

$

0.15

 

Non-GAAP diluted net (loss) income per share

 

0.01

 

 

 

0.15

 

Weighted average shares used to compute Non-GAAP basic net income per share

 

80,659,978

 

 

 

79,974,071

 

Weighted average shares used to compute Non-GAAP diluted net income per share

 

82,538,596

 

 

 

82,228,936

 

Net (loss) income margin

 

(7

)%

 

 

10

%

Non-GAAP net income margin

 

1

%

 

 

17

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2023

 

2022

 

 

 

 

Net (loss) income

$

(5,666

)

 

$

7,479

 

Interest expense

 

9,031

 

 

 

4,358

 

Taxes

 

(1,199

)

 

 

2,920

 

Depreciation and amortization

 

14,531

 

 

 

12,905

 

Share-based compensation expense

 

5,190

 

 

 

3,808

 

Employer payroll taxes on employee stock transactions

 

126

 

 

 

145

 

Restructuring related costs

 

2,904

 

 

 

—

 

Sponsor and third-party acquisition related costs

 

—

 

 

 

2,288

 

Deferred revenue reduction from purchase accounting for acquisitions prior to 2022

 

20

 

 

 

62

 

Adjusted EBITDA

$

24,937

 

 

$

33,965

 

Net (loss) income margin

 

(7

)%

 

 

10

%

Adjusted EBITDA margin

 

32

%

 

 

47

%

Reconciliation from GAAP to Non-GAAP Results

(unaudited)

(in thousands)

 

 

Three Months Ended March 31,

 

2023

 

2022

 

 

 

 

Cost of revenue

$

27,955

 

 

$

24,538

 

Less: Share-based compensation expense

 

853

 

 

 

965

 

Less: Employer payroll taxes on employee stock transactions

 

22

 

 

 

54

 

Less: Amortization of developed technology

 

4,454

 

 

 

3,434

 

Non-GAAP cost of revenue

$

22,626

 

 

$

20,085

 

Cost of revenue as a % of revenue

 

36

%

 

 

34

%

Non-GAAP cost of revenue as a % of revenue

 

29

%

 

 

28

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2023

 

2022

 

 

 

 

General and administrative

$

22,555

 

 

$

18,187

 

Less: Share-based compensation expense

 

2,264

 

 

 

1,381

 

Less: Employer payroll taxes on employee stock transactions

 

51

 

 

 

32

 

Less: Depreciation expense

 

495

 

 

 

561

 

Less: Amortization of intangibles

 

9,582

 

 

 

8,910

 

Non-GAAP general & administrative

$

10,163

 

 

$

7,303

 

General and administrative as a % of revenue

 

29

%

 

 

25

%

Non-GAAP general and administrative as a % of revenue

 

13

%

 

 

10

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2023

 

2022

 

 

 

 

Research and development

$

13,812

 

 

$

8,409

 

Less: Share-based compensation expense

 

1,783

 

 

 

1,077

 

Less: Employer payroll taxes on employee stock transactions

 

27

 

 

 

40

 

Non-GAAP research and development

$

12,002

 

 

$

7,292

 

Research and development as a % of revenue

 

18

%

 

 

12

%

Non-GAAP research and development as a % of revenue

 

16

%

 

 

10

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2023

 

2022

 

 

 

 

Sales and marketing

$

8,213

 

 

$

4,743

 

Less: Share-based compensation expense

 

290

 

 

 

385

 

Less: Employer payroll taxes on employee stock transactions

 

26

 

 

 

19

 

Non-GAAP sales and marketing

$

7,897

 

 

$

4,339

 

Sales and marketing as a % of revenue

 

11

%

 

 

7

%

Non-GAAP sales and marketing as a % of revenue

 

10

%

 

 

6

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2023

 

2022

 

 

 

 

Net cash provided by operating activities

$

28,081

 

 

$

34,863

 

Less: Capitalized software

 

1,924

 

 

 

1,522

 

Less: Capital expenditures

 

134

 

 

 

419

 

Free cash flow

$

26,023

 

 

$

32,922

 

 

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Press Contact Becky Frost (714) 784-5839 becky.frost@meridianlink.com

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