MeridianLink® Reports First Quarter 2023 Results
Revenues of $77.1 Millions grow 6% year-over-year
COSTA MESA (California), May 02, 2023–(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, 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. The cross-sell capability and configurable platform are in high demand to create seamless lending experiences. Due to this ongoing demand, revenue increased 6% to $77.1m, and revenue from lending software solutions grew 18% to $58.0m, accounting for 75%. We believe that this performance was a great achievement, and it would not have been possible without the dedication of our entire MeridianLink team.”
Quarterly financial highlights:
-
Revenue of $77.1 millions, an increase by 6% over the previous year
-
Operating income is $1.7 million or 2% of revenues and non-GAAP operating profit is $9.9 millions or 13%.
-
A net loss of (5.7) million dollars, or 7% of revenue. Adjusted EBITDA is $24.9 million dollars, or 32% revenue.
-
Cash flows from operating of $67.8 millions and free cash flow $58.3million for the last 12 month period
Business and Operational Highlights
-
MeridianLink welcomes Suresh Balasubramanian to the role of Chief Marketing Officer, and Dean Germeyer to that of Chief Customer Officer. This added leadership expertise will help us capture more market share and better engage with our customers in our support, service, and customer success teams.
-
The Company announced yet another impressive list of 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. Customers can easily capture more deposit opportunities with personalized, relevant communications and frictionless accounts opening.
Business Outlook
According to information available as of May 2, 2023 the Company updates its financial guidance for 2023 and issues second-quarter financial guidance.
Second Quarter Fiscal Year 2023
Full Year 2023
Conference Call Information
MeridianLink will host a conference to discuss its first quarter results on May 2, 2023 at 2:00 pm Pacific Time (5:00 pm Eastern Time). You can access the conference call by dialing either (888) 396-8149 from North America, toll-free, or (416) 764 8646 for participants local 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. A replay of the webcast is available at the website immediately following the conclusion. There will be a telephonic playback available on Thursday, May 9th, 2023 until 8:59 PM Pacific Time (11,59 PM Eastern Time). The Playback Passcode is 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 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230502006064/en/
Contacts
Press Contact
Becky Frost
(714) 784-5839
[email protected]
Investor Relations Contact
Erik Schneider
(714) 332-6357
[email protected]