Posted by MeridianLink | August 9, 2022

MeridianLink Reports Second Quarter 2022 Results

Revenue of $73.0 million grows 7% 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, 2022.

“We saw a strong second quarter of 2022, once again exceeding market expectations, with GAAP revenue up 7% year-over-year to $73.0 million, lending software solutions revenue up 14% year-over-year to $51.7 million and 39% adjusted EBITDA margins,” said Nicolaas Vlok, chief executive officer of MeridianLink. “I remain confident in the ability of our business to continue delivering growth with strong profitability.”

Quarterly Financial Highlights:

  • Revenue of $73.0 million, an increase of 7% year-over-year
  • Operating income of $8.9 million, or 12% of revenue and Non-GAAP operating profit of $14.4 million, or 20% of revenue
  • Adjusted EBITDA of $28.2 million, or 39% of revenue
  • Cash flow from operations of $87.6 million, and Free Cash Flow of $80.1 million for the last twelve month period

Business and Operating Highlights:

  • MeridianLink completed the migration of the MeridianLink Mortgage lending module to the cloud. As we migrate more of our products to a cloud-native environment, we are strengthening the MeridianLink One platform, which now includes Mortgage, multiple Consumer modules, and our unified Point of Sale solution.
  • MeridianLink’s market-leading Home Equity lending capabilities were selected by a top-15 national mortgage lender to facilitate their launch into this new category of lending. This selection was based on our solution’s unique depth and breadth of functionality and our ability to facilitate a swift market entry and serve higher value customers.
  • As part of the Company’s growth-focused alignment, we welcomed Sean Blitchok as our new Chief Financial Officer and transitioned Chris Maloof to a newly created role as President of Go To Market. With this additional expertise and operating experience on the team, we have increased the organization’s capacity to execute on strategic initiatives.

Business Outlook

Based on information as of today, August 9, 2022, the Company issues third quarter financial guidance and updates full year 2022 financial guidance as follows:

Third Quarter Fiscal 2022:

  • Revenue is expected to be in the range of $73.0 million to $75.0 million  
  • Adjusted EBITDA is expected to be in the range of $25.0 million to $27.0 million

Full Year 2022:

  • Revenue is expected to be in the range of $289.0 million to $293.0 million  
  • Adjusted EBITDA is expected to be in the range of $112.0 million to $116.0 million

Conference Call Information

MeridianLink will hold a conference call to discuss our second quarter results today, August 9, 2022, 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 the United States and Canada toll-free or the Participant Local number of (416) 764-8646 with Conference ID 87855235. A live webcast of the conference call can be accessed from the investor relations page of MeridianLink’s website at ir.meridianlink.com. An archived replay of the webcast will be available at the same website following the conclusion of the call. A telephonic replay will be available until approximately 8:59 p.m. Pacific Time (11:59 p.m. Eastern Time) on Tuesday, August 16, 2022, at (877) 674-7070 from the United States and Canada or (416) 764-8692 as a Participant Local with Conference ID 855235.

For More Information:

Press Contact

Becky Frost
(714) 784-5839
[email protected]

Investor Relations Contact

Erik Schneider
(714) 332-6357
[email protected]

About MeridianLink

MeridianLink® (NYSE: MLNK) is a leading provider of cloud-based software solutions for financial institutions, including banks, credit unions, mortgage lenders, specialty lending providers and consumer reporting agencies. Headquartered in Costa Mesa, California, MeridianLink provides services to more than 1,900 customers, including a majority of the financial institutions on Forbes’ 2021 lists of America’s Best Credit Unions and Banks. Further information can be found 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:

  • Adjusted EBITDA: net income (loss) before interest expense, taxes, depreciation, amortization, share-based compensation expense, employer payroll taxes on employee stock transactions, certain expenses associated with our IPO, sponsor and third-party acquisition related costs, losses resulting from early repayment of debt, lease termination charges, and deferred revenue reductions from purchase accounting
  • Non-GAAP operating income: GAAP income (loss) from operations, excluding the impact of share-based compensation, employer payroll taxes on employee stock transactions, and sponsor and third-party acquisition-related costs
  • Non-GAAP net income: GAAP net income (loss), excluding the impact of share-based compensation, employer payroll taxes on employee stock transactions, and sponsor and third-party acquisition-related costs
  • Non-GAAP cost of revenue: GAAP cost of revenue, excluding the impact of share-based compensation, employer payroll taxes on employee stock transactions, and amortization of developed technology
  • Non-GAAP operating expenses: GAAP operating expenses, excluding the impact of share-based compensation and employer payroll taxes on employee stock transactions
  • Free cash flow: GAAP cash flow from operating activities plus 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 future financial and operational performance, our strategic initiatives, including anticipated benefits and integration of an acquisition, our stock repurchase program, including the execution and amount of repurchases, our development or delivery of new or enhanced solutions, our market size and growth opportunities, and our competitive positioning. 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 year ended December 31, 2021, any updates in our Quarterly Reports on Form 10-Q filed for periods subsequent to such Form 10-K, and our other SEC filings. Any forward-looking statement contained herein or provided on the related conference call is based on reasonable assumptions as of the date hereof. You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation, other than as required by applicable law, to update any forward-looking statements, whether as a result of new information, future events, or otherwise.


Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
    
AssetsJune 30,
2022
(unaudited)
 December 31,
2021
Current assets:   
Cash and cash equivalents$100,259 $113,645
Accounts receivable, net of allowance for doubtful accounts33,876 24,913
Prepaid expenses and other current assets9,402 9,398
Escrow deposit30,000 
Total current assets173,537 147,956
Property and equipment, net5,330 5,989
Right of use assets2,562 
Intangible assets, net293,430 298,597
Deferred tax assets, net10,818 4,286
Goodwill569,129 564,799
Other assets4,153 4,266
Total assets$1,058,959 $1,025,893
    
Liabilities and Stockholders’ Equity
   
Current liabilities:   
Accounts payable$1,563 $2,335
Accrued liabilities28,020 24,667
Deferred revenue23,259 14,707
Current portion of long-term debt, net of debt issuance costs3,362 2,139
Total current liabilities56,204 43,848
Long-term debt, net of debt issuance costs424,439 425,371
Long-term deferred revenue378 
Deferred rent 396
Other long-term liabilities1,621 
Total liabilities482,642 469,615
Commitments and contingencies (Note 5)   
Stockholders’ Equity   
Preferred stock, $0.001 par value; 50,000,000 shares authorized; zero shares issued and outstanding at June 30, 2022 and December 31, 2021 
Common stock, $0.001 par value; 600,000,000 shares authorized, 80,475,781 and 79,734,984 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively126 88
Additional paid-in capital607,085 596,542
Accumulated deficit(30,894) (40,352)
Total stockholders’ equity567,317 556,278
Total liabilities and stockholders’ equity$1,058,959 $1,025,893
    
Condensed Consolidated Statements of Operations (unaudited)
(in thousands, except share/unit and per share/unit data)
   Three months ended June 30,  Six months ended June 30,
 2022
2021
2022  2021 
Revenues, net$72,987 $68,474 $145,741  $136,285 
Cost of revenues:         
Subscription and services23,376 17,997 44,480  34,611 
Amortization of developed technology3,850 3,109 7,284  5,971 
Total cost of revenues27,226 21,106 51,764  40,582 
Gross profit45,761 47,368 93,977  95,703 
Operating expenses:         
General and administrative20,806 16,591 38,993  34,186 
Research and development10,487 7,288 18,896  14,274 
Sales and marketing5,465 4,224 10,208  7,823 
Acquisition related costs103 31 2,386  781 
Total operating expenses36,861 28,134 70,483  57,064 
Operating income8,900 19,234 23,494  38,639 
Other (income) expense, net:         
Other income(216) (10) (379)  (30) 
Interest expense, net5,436 9,846 9,794  19,908 
Total other expense, net5,220 9,836 9,415  19,878 
Income before provision for income taxes3,680 9,398 14,079  18,761 
          
Provision for income taxes1,508 1,966 4,428  4,098 
Net income$2,172 $7,432 $9,651  $14,663 
          
Class A preferred return (9,232)   (18,165) 
Net income (loss) attributable to common stockholders2,172 (1,800) 9,651  (3,502) 
          
New income (loss) per share:         
              Basic$0.03 $(0.03) $0.12  $(0.07) 
             Diluted$0.03 $(0.03) $0.12  $(0.07) 
Weighted average common stock outstanding:         
             Basic80,418,520 52,015,526 80,197,832  51,843,086 
             Diluted82,223,181 52,015,526 82,251,322  51,843,086 
Net Revenues by Major Source
(unaudited)

(in thousands)
 Three Months ended June 30,Six Months ended June 30,
 2022 2021 2022 2021
Subscription fees$63,529 $60,427 $126,998 $120,743
Professional services6,665 5,615 13,777 11,106
Other2,793 2,432 4,966 4,436
Total$72,987 $68,474 $145,741 $136,285
Net Revenues by Solution Type
(unaudited)

(in thousands)
 Three months ended June 30,Six months ended June 30,
 2022
2021
20222021
Lending Software Solutions$51,668 $45,243 $100,835 $88,377
Data Verification Software Solutions21,319 23,231 44,906 47,908
Total(1)$72,987 $68,474 $145,741 $136,285
% Growth attributable to:       
Lending software solutions9%   9%  
Data Verification Software Contribution(3)%   (2)%  
Total % Growth7%   7%  
        
(1)% Revenue related to mortgage loan market:       
Lending software solutions7% 9% 7% 10%
Data verification software64% 71% 67% 72%
Total % revenue related to mortgage loan market24% 30% 26% 32%
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
    
 Six Months Ended June 30,
 2022 2021
Cash flows from operating activities:   
Net income$9,651 $14,663
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization26,376 24,957
Provision for doubtful accounts 89
Amortization of debt issuance costs 89
Share-based compensation expense1,429 1,817
Loss on disposal of fixed assets135 207
Loss on sublease liability 405
Gain on change in fair value of earnout 
Other adjustments (16)
Deferred income taxes4,025 3,842
Changes in operating assets and liabilities:   
Accounts receivable(8,806) (2,641)
Prepaid expenses and other assets(661) (1,774)
Accounts payable(1,059) (39)
Accrued liabilities(2,065) (3,081)
Deferred revenue8,076 10,221
Deferred rent (49)
Net cash provided by operating activities$47,670 $49,909
    
Cash flows from investing activities:   
Acquisition, net of cash acquired – TazWorks, LLC (85,421)
Acquisition, net of cash and restricted cash acquired – Saylent Technologies, Inc. (35,957)
Acquisition, net of cash and restricted cash acquired – StreetShares, Inc.(23,059) 
Escrow deposit
(30,000) 
Capitalized software additions(4,079) (2,216)
Purchases of property and equipment(480) (553)
Net cash used in investing activities(57,618) (124,147)
    
Cash flows from financing activities:   
Repurchases of common stock(193) 
Repurchases of Class A Units (54)
Repurchases of Class B Units (1,887)
Proceeds from exercise of stock options186 
Proceeds from employee stock purchase plan922 
Proceeds from long-term debt 100,000
Principal payments of long-term debt(1,088) (2,590)
Payment of Regulation A+ investor note(3,265) 
Payments of debt issuance costs 1,970
Payments of Class A cumulative preferred return (12)
Payments of deferred offering costs (2,008)
Holdback payment to sellers of MeridianLink (25,665)
Net cash provided by (used in) financing activities(3,438) 65,814
Net increase in cash, cash equivalents and restricted cash(13,386) (8,424)
Cash, cash equivalents and restricted cash, beginning of period113,645 39,881
Cash, cash equivalents and restricted cash, end of period$100,259 $31,457
Reconciliation of cash, cash equivalents, and restricted cash   
Cash and cash equivalents$100,259 $29,236
Restricted cash $2,221
Cash, cash equivalents, and restricted cash$100,259 $31,457
Supplemental disclosures of cash flow information:   
Cash paid for interest$ 8,337 $18,078
Cash paid for income taxes762 212
Non-cash investing and financing activities:   
Regulation A+ investor note assumed in business combination$3,265 
Initial recognition of operating lease liability3,372 
Initial recognition of operating lease right-of-use asset2,627 
Share-based compensation expense capitalized to software additions188 
Purchases of property and equipment included in accounts payable and accrued expenses93 56
Vesting of restricted stock awards and RSUs38 
Related party receivable net against holdback payment to prior shareholders 4,335
Paycheck Protection Program (“PPP”) Loan forgiven, reclassified from long- and short-term debt to payable 2,142
Deferred offering costs included in accounts payable and accrued expenses 347
Vesting of Class B Units 47
    
Reconciliation from GAAP to Non-GAAP Results
(unaudited)

(in thousands, except share/unit and per share/unit data)
 Three Months Ended June 30, Six Months Ended June 30,
 2022 2021 2022 2021
        
Operating Income$8,900 $19,234 $23,494 $38,639
Add: Share-based compensation expense5,439 665 9,247 1,308
Add: Employer payroll taxes on employee stock transactions3  148 
Add: Sponsor and third-party acquisition related costs99 741 2,386 2,114
Non-GAAP operating income14,441 20,640 35,275 42,061
Non-GAAP operating margin20% 30% 24% 31%
        
        
 Three Months Ended June 30, Six Months Ended June 30,
 2022 2021 2022 2021
        
Net income2,172 7,432 9,651 14,663
Add: share-based compensation expense5,439 665 9,247 1,308
Add: Employer payroll taxes on employee stock transactions3  148 
Add: sponsor and third-party acquisition related costs99 741 2,386 2,114
Non-GAAP net income7,713 8,838 21,432 18,085
Non-GAAP basic net income per share0.10 0.17 0.27 0.35
Non-GAAP diluted net income per share0.09 0.16 0.26 0.32
Weighted average shares used to compute Non-GAAP basic net income per share80,418,520 52,015,526 80,197,832 51,843,086
Weighted average shares used to compute Non-GAAP diluted net income per share82,223,181 56,756,604 82,251,322 56,584,164
Non-GAAP net income margin11% 13% 15% 13%
        
        
 Three Months Ended June 30, Six Months Ended June 30,
 2022 2021 2022 2021
        
Net income$2,172 $7,432 $9,651 $14,663
Interest expense5,436 9,846 9,794 19,908
Taxes1,508 1,966 4,428 4,098
Depreciation and amortization13,472 12,606 26,376 24,957
Share-based compensation expense5,439 665 9,247 1,308
Employer payroll taxes on employee stock transactions3  148 
Expenses associated with IPO   194
Sponsor and third-party acquisition related costs99 741 2,386 2,114
Deferred revenue reduction from purchase accounting for acquisitions prior to 202255 178 119 502
Adjusted EBITDA$28,184 $33,434 $62,149 $67,744
Adjusted EBITDA Margin39% 49% 43% 50%
        
        
 Three Months Ended June 30, Six Months Ended June 30,
 2022 2021 2022 2021
        
Cost of revenue$27,226 $21,106 $51,764 $40,582
Less: Share-based compensation expense1,251 93 2,215 165
Less: Employer payroll taxes on employee stock transactions  54 
Less: amortization of developed technology3,850 3,109 7,284 5,971
Non-GAAP cost of revenue22,125 17,904 42,211 34,446
As a % of revenue30% 26% 29% 25%
        
        
Reconciliation from GAAP to Non-GAAP Results
(unaudited)

(in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
 2022 2021 2022 2021
        
General & administrative$20,806 $16,591 $38,993 $34,186
Less: Share-based compensation expense2,396 353 3,777 706
Less: Employer payroll taxes on employee stock transactions  33 
Less: depreciation expense580 588 1,141 1,171
Less: amortization of intangibles9,042 8,909 17,951 17,815
Non-GAAP general & administrative8,788 6,741 16,091 14,494
As a % of revenue12% 10% 11% 11%
        
 Three Months Ended June 30, Six Months Ended June 30,
 2022 2021 2022 2021
        
Research and development$10,487 $7,288 $18,896 $14,274
Less: share-based compensation expense1,288 82 2,365 164
Less: Employer payroll taxes on employee stock transactions1  40 
Non-GAAP research and development9,198 7,206 16,491 14,110
As a % of revenue13% 11% 11% 10%
 Three Months Ended June 30, Six Months Ended June 30,
 2022 2021 2022 2021
        
Sales and marketing$5,465 $4,224 $10,208 $7,823
Less: share-based compensation expense504 137 890 273
Less: Employer payroll taxes on employee stock transactions2  21 
Non-GAAP sales and marketing4,959 4,087 9,297 7,550
As a % of revenue7% 6% 6% 6%
        
 Three Months Ended June 30, Six Months Ended June 30,
 2022 2021 2022 2021
        
Net cash provided by operating activities$12,807 $21,212 $47,670 $49,909
Less: Capital expenditures(61) (308) (480) (553)
Less: Capitalized software(2,557) (1,412) (4,079) (2,216)
Free cash flow$10,189 $19,492 $43,111 $47,140

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