MeridianLink Reports First Quarter 2024 Results

Published

First quarter revenue of $77.8 million grows 1% year-over-year driven by lending software solutions revenue of $60.9 million, reflecting growth of 5% year-over-year

COSTA MESA, Calif.--(BUSINESS WIRE)-- 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, 2024.

“Our solid first quarter results highlight the team’s ability to continue executing on our strategy to empower customers to out compete with MeridianLink® One,” said Nicolaas Vlok, chief executive officer of MeridianLink®. “In the face of challenging lending conditions, we are well-positioned to capitalize on the opportunities that lie ahead with the solid foundation we have strategically invested in, bolstered by a healthy balance sheet and sound capital allocation strategy.”

Quarterly Financial Highlights:

  • Revenue of $77.8 million, an increase of 1% year-over-year
  • Lending software solutions revenue of $60.9 million, an increase of 5% year-over-year
  • Operating income of $3.4 million, or 4% of revenue, and non-GAAP operating income of $16.3 million, or 21% of revenue
  • Net loss of $(5.3) million, or (7)% of revenue, and adjusted EBITDA of $31.8 million, or 41% of revenue
  • Cash flows from operations of $29.0 million, or 37% of revenue, and free cash flow of $27.1 million, or 35% of revenue

Business and Operating Highlights:

  • MeridianLink welcomed Larry Katz as its new chief financial officer, bringing extensive financial expertise and strategic leadership to help drive the Company’s financial performance and create value for customers and stockholders.
  • We generated solid demand for the MeridianLink One platform, enabling new and existing customers to better meet the evolving needs of clients in both consumer and mortgage lending and capture a greater share of their debt wallet.
  • MeridianLink announced Space Coast Credit Union’s successful go-live on its Advanced Decisioning capabilities, resulting in the instant decisioning of 13% more loans overall, and a 53% increase in the decisioning of applications for credit tiers over 660.
  • To promote data-driven decision-making, we launched MeridianLink® Insight Lite, our new interactive data analytics and reporting tool that enhances reporting functionality for MeridianLink® Consumer and Opening customers.

Business Outlook

Based on information as of today, May 7, 2024, the Company issues second quarter financial guidance and updates full year 2024 financial guidance as follows:

Second Quarter Fiscal 2024:

  • 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 $29.0 million to $32.0 million

Full Year 2024:

  • Revenue is expected to be in the range of $311.0 million to $319.0 million
  • Adjusted EBITDA is expected to be in the range of $123.0 million to $130.0 million

Conference Call Information

MeridianLink will hold a conference call to discuss its first quarter results today, May 7, 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 16153. A live webcast of the conference call can be accessed from the investor relations page of MeridianLink’s website at ir.meridianlink.com. An archived replay of the webcast will be available at the same website following the conclusion of the call. A telephonic replay will be available until 8:59 p.m. Pacific Time (11:59 p.m. Eastern Time) on Tuesday, May 14, 2024, by dialing (888) 660-6264 from North America or the International number of (289) 819-1325 with Playback Passcode 16153.

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 initial public offering and secondary offering, 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, expenses associated with our initial public offering and secondary offering, restructuring related costs, sponsor and third-party acquisition-related costs, 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 initial public offering and secondary offering, 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. 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 initial public offering and secondary offering, 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 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

 

March 31, 2024

 

December 31, 2023

 

 

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

62,285

 

 

$

80,441

 

Accounts receivable, net

 

36,623

 

 

 

32,412

 

Prepaid expenses and other current assets

 

12,238

 

 

 

11,574

 

Total current assets

 

111,146

 

 

 

124,427

 

Property and equipment, net

 

3,011

 

 

 

3,337

 

Right of use assets, net

 

967

 

 

 

1,140

 

Intangible assets, net

 

238,818

 

 

 

251,060

 

Goodwill

 

610,063

 

 

 

610,063

 

Other assets

 

6,495

 

 

 

6,224

 

Total assets

$

970,500

 

 

$

996,251

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

4,135

 

 

$

4,405

 

Accrued liabilities

 

28,369

 

 

 

30,673

 

Deferred revenue

 

37,683

 

 

 

17,224

 

Current portion of debt, net of debt issuance costs

 

3,543

 

 

 

3,542

 

Total current liabilities

 

73,730

 

 

 

55,844

 

Debt, net of debt issuance costs

 

419,102

 

 

 

420,004

 

Deferred tax liabilities, net

 

10,639

 

 

 

10,823

 

Long-term deferred revenue

 

257

 

 

 

792

 

Other long-term liabilities

 

439

 

 

 

541

 

Total liabilities

$

504,167

 

 

$

488,004

 

Commitments and contingencies

 

 

 

Stockholders’ Equity:

 

 

 

Preferred stock, $0.001 par value; 50,000,000 shares authorized; zero shares issued and outstanding at March 31, 2024 and December 31, 2023

 

 

 

 

 

Common stock, $0.001 par value; 600,000,000 shares authorized, 76,338,829 and 78,447,701 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

127

 

 

 

129

 

Additional paid-in capital

 

662,403

 

 

 

654,634

 

Accumulated deficit

 

(196,197

)

 

 

(146,516

)

Total stockholders’ equity

 

466,333

 

 

 

508,247

 

Total liabilities and stockholders’ equity

$

970,500

 

 

$

996,251

 

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share data)

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

 

Revenues, net

$

77,816

 

 

$

77,135

 

Cost of revenues:

 

 

 

Subscription and services

 

21,344

 

 

 

23,501

 

Amortization of developed technology

 

4,729

 

 

 

4,454

 

Total cost of revenues

 

26,073

 

 

 

27,955

 

Gross profit

 

51,743

 

 

 

49,180

 

Operating expenses:

 

 

 

General and administrative

 

25,179

 

 

 

22,555

 

Research and development

 

9,485

 

 

 

13,812

 

Sales and marketing

 

10,536

 

 

 

8,213

 

Restructuring related costs

 

3,191

 

 

 

2,904

 

Total operating expenses

 

48,391

 

 

 

47,484

 

Operating income

 

3,352

 

 

 

1,696

 

Other (income) expense, net:

 

 

 

Interest and other income

 

(956

)

 

 

(470

)

Interest expense

 

9,582

 

 

 

9,031

 

Total other expense, net

 

8,626

 

 

 

8,561

 

Loss before income taxes

 

(5,274

)

 

 

(6,865

)

Provision for (benefit from) income taxes

 

32

 

 

 

(1,199

)

Net loss

$

(5,306

)

 

$

(5,666

)

 

 

 

 

Net loss per share:

 

 

 

Basic

$

(0.07

)

 

$

(0.07

)

Diluted

$

(0.07

)

 

$

(0.07

)

Weighted average common stock outstanding:

 

 

 

Basic

 

77,335,072

 

 

 

80,659,978

 

Diluted

 

77,335,072

 

 

 

80,659,978

 

Net Revenues by Major Source

(unaudited)

(in thousands)

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

Subscription fees

$

65,912

 

$

66,405

Professional services

 

9,010

 

 

8,435

Other

 

2,894

 

 

2,295

Total

$

77,816

 

$

77,135

Net Revenues by Solution Type

(unaudited)

(in thousands)

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

Lending software solutions

$

60,903

 

 

$

58,001

Data verification software solutions

 

16,913

 

 

 

19,134

Total

$

77,816

 

 

$

77,135

% Growth attributable to:

 

 

 

Lending software solutions

 

4

%

 

 

Data verification software

 

(3

)%

 

 

Total % growth

 

1

%

 

 

___________

 

 

 

Percent Revenue Related to the Mortgage Loan Market

(unaudited)

 

 

Three Months Ended March 31,

 

2024

 

2023

Lending software solutions

11 %

 

11 %

Data verification software

58 %

 

61 %

Total % revenue related to mortgage loan market

21 %

 

24 %

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

 

Cash flows from operating activities:

 

 

 

Net loss

$

(5,306

)

 

$

(5,666

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

14,524

 

 

 

14,531

 

Provision for expected credit losses

 

234

 

 

 

532

 

Amortization of debt issuance costs

 

212

 

 

 

235

 

Share-based compensation expense

 

7,803

 

 

 

4,891

 

Deferred income taxes

 

(184

)

 

 

(1,198

)

Loss on disposal of property and equipment

 

6

 

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

Accounts receivable

 

(4,444

)

 

 

(5,028

)

Prepaid expenses and other assets

 

(960

)

 

 

(1,636

)

Accounts payable

 

(270

)

 

 

2,717

 

Accrued liabilities

 

(2,501

)

 

 

1,706

 

Deferred revenue

 

19,924

 

 

 

16,997

 

Net cash provided by operating activities

 

29,038

 

 

 

28,081

 

Cash flows from investing activities:

 

 

 

Capitalized software additions

 

(1,837

)

 

 

(1,924

)

Purchases of property and equipment

 

(92

)

 

 

(134

)

Net cash used in investing activities

 

(1,929

)

 

 

(2,058

)

Cash flows from financing activities:

 

 

 

Repurchases of common stock

 

(44,000

)

 

 

(3,490

)

Proceeds from exercise of stock options

 

191

 

 

 

594

 

Taxes paid related to net share settlement of restricted stock units

 

(294

)

 

 

(24

)

Principal payments of debt

 

(1,088

)

 

 

(1,087

)

Payments of deferred offering costs

 

(74

)

 

 

 

Net cash used in financing activities

 

(45,265

)

 

 

(4,007

)

Net (decrease) increase in cash and cash equivalents

 

(18,156

)

 

 

22,016

 

Cash and cash equivalents, beginning of period

 

80,441

 

 

 

55,780

 

Cash and cash equivalents, end of period

$

62,285

 

 

$

77,796

 

Supplemental disclosures of cash flow information:

 

 

 

Cash paid for interest

$

9,365

 

$

9,019

Cash paid for income taxes

 

32

 

 

50

Non-cash investing and financing activities:

 

 

 

Shares withheld with respect to net settlement of restricted stock units

 

294

 

 

24

Excise taxes payable included in repurchases of common stock

 

377

 

 

9

Share-based compensation expense capitalized to software additions

 

69

 

 

48

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

 

44

 

 

79

Vesting of restricted stock awards and restricted stock units

 

 

 

4

Reconciliation from GAAP to Non-GAAP Results

(unaudited)

(in thousands, except share and per share data)

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

 

Operating income

$

3,352

 

 

$

1,696

 

Add: Share-based compensation expense

 

7,936

 

 

 

5,190

 

Add: Employer payroll taxes on employee stock transactions

 

422

 

 

 

126

 

Add: Expenses associated with public offering

 

1,389

 

 

 

 

Add: Restructuring related costs(1)

 

3,191

 

 

 

2,904

 

Non-GAAP operating income

$

16,290

 

 

$

9,916

 

Operating margin

 

4

%

 

 

2

%

Non-GAAP operating margin

 

21

%

 

 

13

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

 

Net loss

$

(5,306

)

 

$

(5,666

)

Add: Share-based compensation expense

 

7,936

 

 

 

5,190

 

Add: Employer payroll taxes on employee stock transactions

 

422

 

 

 

126

 

Add: Expenses associated with public offering

 

1,389

 

 

 

 

Add: Restructuring related costs(1)

 

3,191

 

 

 

2,904

 

Subtract: Income tax effect on non-GAAP items

 

(3,105

)

 

 

(1,973

)

Non-GAAP net income

$

4,527

 

 

$

581

 

Non-GAAP basic net income per share

$

0.06

 

 

$

0.01

 

Non-GAAP diluted net income per share

$

0.06

 

 

$

0.01

 

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

 

77,335,072

 

 

 

80,659,978

 

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

 

80,479,008

 

 

 

82,538,596

 

Net loss margin

 

(7

)%

 

 

(7

)%

Non-GAAP net income margin

 

6

%

 

 

1

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

 

Net loss

$

(5,306

)

 

$

(5,666

)

Interest expense

 

9,582

 

 

 

9,031

 

Taxes

 

32

 

 

 

(1,199

)

Depreciation and amortization

 

14,524

 

 

 

14,531

 

Share-based compensation expense

 

7,936

 

 

 

5,190

 

Employer payroll taxes on employee stock transactions

 

422

 

 

 

126

 

Expenses associated with public offering

 

1,389

 

 

 

 

Restructuring related costs(1)

 

3,191

 

 

 

2,904

 

Deferred revenue reduction from purchase accounting for acquisitions prior to 2022

 

 

 

 

20

 

Adjusted EBITDA

$

31,770

 

 

$

24,937

 

Net loss margin

 

(7

)%

 

 

(7

)%

Adjusted EBITDA margin

 

41

%

 

 

32

%

(1) Restructuring related costs for the three months ended March 31, 2024 and 2023 are inclusive of $133 thousand and $299 thousand, respectively, of stock-based compensation forfeitures recorded associated with restructuring.

Reconciliation from GAAP to Non-GAAP Results

(unaudited)

(in thousands)

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

 

Cost of revenue

$

26,073

 

 

$

27,955

 

Less: Share-based compensation expense

 

782

 

 

 

853

 

Less: Employer payroll taxes on employee stock transactions

 

48

 

 

 

22

 

Less: Amortization of developed technology

 

4,729

 

 

 

4,454

 

Non-GAAP cost of revenue

$

20,514

 

 

$

22,626

 

Cost of revenue as a % of revenue

 

34

%

 

 

36

%

Non-GAAP cost of revenue as a % of revenue

 

26

%

 

 

29

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

 

General and administrative

$

25,179

 

 

$

22,555

 

Less: Share-based compensation expense

 

4,393

 

 

 

2,264

 

Less: Employer payroll taxes on employee stock transactions

 

136

 

 

 

51

 

Less: Expenses associated with public offering

 

1,389

 

 

 

 

Less: Depreciation expense

 

376

 

 

 

495

 

Less: Amortization of intangibles

 

9,419

 

 

 

9,582

 

Non-GAAP general & administrative

$

9,466

 

 

$

10,163

 

General and administrative as a % of revenue

 

32

%

 

 

29

%

Non-GAAP general and administrative as a % of revenue

 

12

%

 

 

13

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

 

Research and development

$

9,485

 

 

$

13,812

 

Less: Share-based compensation expense

 

1,502

 

 

 

1,783

 

Less: Employer payroll taxes on employee stock transactions

 

121

 

 

 

27

 

Non-GAAP research and development

$

7,862

 

 

$

12,002

 

Research and development as a % of revenue

 

12

%

 

 

18

%

Non-GAAP research and development as a % of revenue

 

10

%

 

 

16

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

 

Sales and marketing

$

10,536

 

 

$

8,213

 

Less: Share-based compensation expense

 

1,259

 

 

 

290

 

Less: Employer payroll taxes on employee stock transactions

 

117

 

 

 

26

 

Non-GAAP sales and marketing

$

9,160

 

 

$

7,897

 

Sales and marketing as a % of revenue

 

14

%

 

 

11

%

Non-GAAP sales and marketing as a % of revenue

 

12

%

 

 

10

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2024

 

 

 

2023

 

Net cash provided by operating activities

$

29,038

 

 

$

28,081

 

Less: Capitalized software

 

1,837

 

 

 

1,924

 

Less: Capital expenditures

 

92

 

 

 

134

 

Free cash flow

$

27,109

 

 

$

26,023

 

 

 

 

 

 

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

Investor Relations Contact Gianna Rotellini (714) 332-6357 InvestorRelations@meridianlink.com

Source: MeridianLink, Inc.

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