MeridianLink Reports First Quarter 2022 Results


Revenue of $72.8 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 first quarter ended March 31, 2022. Additionally, MeridianLink’s Board of Directors has approved a stock repurchase program with authorization to purchase up to $75 million of common stock.

“We saw a strong start to 2022, once again exceeding guidance in Q1, with GAAP revenue up 7% year-over-year to $72.8 million, lending software solutions revenue up 14% year-over-year to $49.2 million and 47% adjusted EBITDA margins,” said Nicolaas Vlok, chief executive officer of MeridianLink. “We are seeing positive returns on our continued investments in our products and our people. In addition, we are increasing the pace of deployments going live on our platforms, while broadening our capabilities to deliver incremental value to our customers. The ongoing strong performance of our business enables us to continue to invest in value-creating projects, while opportunistically returning cash to stockholders.”

Quarterly Financial Highlights:

  • Revenue of $72.8 million, an increase of 7% year-over-year
  • Operating income of $14.6 million, or 20% of revenue and Non-GAAP operating profit of $20.8 million, or 29% of revenue
  • Adjusted EBITDA of $34.0 million, or 47% of revenue
  • Cash flow from operations of $34.9 million, and Free Cash Flow of $32.9 million

Business and Operating Highlights:

  • MeridianLink completed the previously announced acquisition of StreetShares® on April 1, 2022, to enhance our ability to provide digital small business lending services to our customers.
  • The Company is building a strong sales pipelines for MeridianLink Engage on the basis of triple-digit realized ROI for early adopters.
  • MeridianLink released the next phase of its consumer debt optimization functionality, expanding the loan types that can be offered through these unique capabilities.
  • The Company welcomed Liz Rieveley to our executive leadership team as MeridianLink’s new Chief People Officer. We expect to see acceleration in a number of people initiatives with the addition of Liz’s energy and proven leadership.

Stock Repurchase Program

Our board of directors has authorized a new stock repurchase program to acquire up to $75 million of the Company’s common stock. The program is effective immediately. Stock repurchases are subject to the Company’s discretion based on various factors, including market conditions.

Business Outlook

Based on information as of today, May 12, 2022, the Company issues second quarter financial guidance and updates full year 2022 financial guidance as follows:

Second Quarter Fiscal 2022:

  • Revenue is expected to be in the range of $71.5 million to $73.5 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 first quarter results today, May 12, 2022, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call can be accessed by dialing (877) 284-4396 from the United States and Canada or (873) 415-0298 internationally with conference ID 1295945. 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 Thursday, May 19, 2022, at (800) 585-8367 from the United States and Canada or (416) 621-4642 internationally with conference ID 1295945.

For More Information:

Press Contacts

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

Investor Relations Contact

Erik Schneider
(714) 332-6357
InvestorRelations@meridianlink.com

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, 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/unit and per share/unit data)

       

Assets

March 31,
2022

(unaudited)

 

December 31,
2021

Current assets:

     

Cash and cash equivalents

$146,746

 

$113,645

Accounts receivable, net of allowance for doubtful accounts

32,160

 

24,913

Prepaid expenses and other current assets

10,010

 

9,398

Total current assets

188,916

 

147,956

Property and equipment, net

5,613

 

5,989

Right of use assets

2,311

 

Intangible assets, net

287,854

 

298,597

Deferred tax assets, net

1,608

 

4,286

Goodwill

564,799

 

564,799

Other assets

4,089

 

4,266

Total assets

$1,055,190  

$1,025,893

       

Liabilities and Stockholders' Equity

     

Current liabilities:

     

Accounts payable

$2,555

 

$2,335

Accrued liabilities

25,872

 

24,667

Deferred revenue

29,293

 

14,707

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

3,256

 

2,139

Total current liabilities

60,976

 

43,848

Long-term debt, net of debt issuance costs

424,712

 

425,371

Deferred rent

 

396

Other long-term liabilties

1,647

 

Total liabilities

487,335

 

469,615

Commitments and contingencies

     

Stockholders’ Equity

     
Preferred stock, $0.001 par value; 50,000,000 shares authorized; zero shares issued and outstanding at March 31, 2022 and December 31, 2021

 

Common stock, $0.001 par value; 600,000,000 shares authorized, 80,325,231 and 79,734,984 shares issued and outstanding at March 31, 2022 and December 31, 2021 respectively

120  

88

Additional paid-in capital

600,608

 

596,542

Accumulated deficit

(32,873)

 

(40,352)

Total stockholders’ equity

567,855  

556,278

Total liabilities and stockholders’ equity

$1,055,190

 

$1,025,893

       
 

Condensed Consolidated Statements of Operations

(unaudited)
(in thousands, except share/unit and per share/unit data)

 

Three months ended March 31,

 

2022

 

 

2021

 

Revenues, net

$72,754

   

$67,811

 

Cost of revenues:

         

Subscription and services

21,104

   

16,614

 

Amortization of developed technology

3,434

   

2,862

 

Total cost of revenues

24,538

   

19,476

 

Gross profit

48,216    

48,335

 

Operating expenses:

         

General and administrative

18,187

   

17,595

 

Research and development

8,409

   

6,986

 

Sales and marketing

4,743

   

3,599

 

Acquisition related costs

2,283

   

750

 

Total operating expenses

33,622

   

28,930

 

Operating income

14,594

   

19,405

 

Other (income) expense, net:

         

Other income

(163)

   

(20)

 

Interest expense, net

4,358

   

10,062

 

Total other expense, net

4,195

   

10,042

 

Income before provision for income taxes

10,399

   

9,363

 
           

Provision for income taxes

2,920

   

2,132

 

Net income (loss)

7,479

   

7,231

 
           

Class A preferred return

   

(8,932)

 

Net income (loss) attributable to common stockholders

(7,479)

   

(1,701)

 
           
New income (loss) per share:          

              Basic

$0.09

   

(0.03)

 

             Diluted

0.09

   

(0.03)

 

Weighted average common stock outstanding

 

   

 

 

             Basic

79,974,071

   

51,551,231

 

             Diluted

82,228,936

   

51,551,231

 
 

Net Revenues by Major Source
(unaudited)

(in thousands)

 

Three Months ended March 31,

 

2022

 

2021

Subscription fees

$63,469

 

$60,316

Professional services

7,112

 

5,491

Other

2,173

 

2,004

Total

72,754

 

67,811

Net Revenues by Solution Type
(unaudited)

(in thousands)

 

Three months ended March 31,

 

2022

 

2021

Lending Software Solutions

$49,167

 

$43,134

Data Verification Software Solutions

23,587

 

24,677

Total(1)

$72,754

 

$67,811

% Growth attributable to:

     

Lending software solutions

9%

 

 

Data Verification Software Contribution

(2)%

 

 

Total % Growth

7%

 

 

       

(1)% Revenue related to mortgage loan market:

     

Lending software solutions

7%

 

9%

Data verification software

70%

 

70%

Total % revenue related to mortgage loan market

28%

 

30%

 

Condensed Consolidated Statements of Cash Flows

(unaudited)
(in thousands)

       
 

Three Months Ended March 31,

 

2022

 

2021

Cash flows from operating activities:

     

Net income

$7,479

 

$7,231

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

     

Depreciation and amortization

12,905

 

12,351

Amortization of debt issuance costs

484

 

1,072

Share-based compensation expense

3,808

 

643

Loss on disposal of fixed assets

135

 

76

Loss on sublease liability

-

 

384

Deferred income taxes

2,679

 

2,064

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(7,248)

 

(8,958)

Prepaid expenses and other assets

(460)

 

(1,637)

Accounts payable

301

 

195

Accrued liabilities

194

 

107

Deferred revenue

14,586

 

15,195

Deferred rent

-

 

(26)

Net cash provided by operating activities

$34,863

 

$28,697

       

Cash flows from investing activities:

     

Acquisition, net of cash acquired – TazWorks, LLC

-

 

(85,646)

Capitalized software additions

(1,522)

 

(804)

Purchases of property and equipment

(419)

 

(245)

Net cash used in investing activities

1,941  

86,695

       

Cash flows from financing activities:

 

 

 

Repurchases of Class A Units

-

 

(54)

Repurchases of Class B Units

-

 

(1,887)

Proceeds from exercise of stock options

179

 

-

Proceeds from long-term debt

-

 

100,000

Principal payments of long-term debt

-

 

(1,295)

Payments of debt issuance costs

-

 

(1,970)

Payments of Class A cumulative preferred return

-

 

(12)

Payments of deferred offering costs

-

 

(1,013)

Net cash provided by financing activities

179

 

93,769

Net increase in cash, cash equivalents and restricted cash

33,101  

35,771

Cash, cash equivalents and restricted cash, beginning of period

113,645

 

39,881

Cash, cash equivalents and restricted cash, end of period

$146,746

 

$75,652

Reconciliation of cash, cash equivalents, and restricted cash

     

Cash and cash equivalents

$146,746

 

$73,510

Restricted cash

-

 

$2,142

Cash, cash equivalents, and restricted cash

$146,746

 

$75,652

Supplemental disclosures of cash flow information:

     

Cash paid for interest

$ 3,869

 

8,973

Cash paid for income taxes

44

 

11

Non-cash investing and financing activities:

     

Initial recognition of operating lease liability

$ 3,372

 

-

Initial recognition of operating lease right-of-use asset

2,627

 

-

Share-based compensation expense capitalized to software additions

79

 

-

Vesting of restricted stock awards and RSUs

32

 

-

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

-

 

13

Deferred offering costs included in accounts payable and accrued expenses

-

 

222

Vesting of Class B Units

-

 

38

       
 

Reconciliation from GAAP to Non-GAAP Results
(unaudited)

(in thousands, except share/unit and per share/unit data)

 

   
 

Three months ended March 31,

 
 

2022

 

2021

 

         

Operating Income

$14,594

 

$19,405

 

Add: Share-based compensation expense

3,808

 

643

 

Add: Employer payroll taxes on employee stock transactions

145

 

 

Add: sponsor and third-party acquisition related costs

2,288

 

1,373

 

Non-GAAP operating income

$ 20,835

 

21,421

 

Non-GAAP operating margin

29%

 

32%

 
         

 

       
 

Three months ended March 31,

 
 

2022

 

2021

 

         

Net income

$ 7,479

 

$ 7,231

 

Add: Share-based compensation expense

3,808

 

643

 

Add: Employer payroll taxes on employee stock transactions

145

 

 

Add: Sponsor and third-party acquisition related costs

2,288

 

1,373

 

Non-GAAP net income

$ 13,720

 

$ 9,247

 

Non-GAAP basic net income per share

0.17

  0.18  

Non-GAAP diluted net income per share

0.17

 

0.17  

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

79,974,071  

51,551,231

 

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

82,228,936

 

54,238,306

 

Non-GAAP net income margin

19%

 

14%

 
         

 

       
 

Three months ended March 31,

 
 

2022

 

2021

 

         

Net income

$7,479

 

$7,231

 

Interest expense

4,358

 

10,062

 

Taxes

2,920

  2,132  

Depreciation and amortization

12,905

 

12,351

 

Share-based compensation expense

3,808

 

643

 

Employer payroll taxes on employee stock transactions

145

 

 

Expenses associated with IPO

 

194

 

Sponsor and third-party acquisition related costs

2,288

 

1,373

 

Deferred revenue reduction from purchase accounting

62

 

324

 

Adjusted EBITDA

$33,965

 

$34,310

 

Adjusted EBITDA Margin

47%

 

51%

 
         

 

       
 

Three months ended March 31,

 
 

2022

 

2021

 

         

Cost of revenue

$24,538

 

$19,476

 

Less: Share-based compensation expense

965

 

72

 

Less: Employer payroll taxes on employee stock transactions

54  

 

Less: Amortization of developed technology

3,434

 

2,862

 

Non-GAAP cost of revenue

20,085

 

16,542

 

As a % of revenue

28%

 

24%

 
         

 

       
 

Three months ended March 31,

 
 

2022

 

2021

 

         

General & administrative

$ 18,187  

$ 17,595

 

Less: Share-based compensation expense

1,381

 

353

 

Less: Employer payroll taxes on employee stock transactions

32

 

 

Less: depreciation expense

561

 

583

 

Less: amortization of intangibles

8,910

 

8,906

 

Non-GAAP general & administrative

7,303

  7,753  

As a % of revenue

10%

 

11%

 

 

       
 

Three months ended March 31,

 
 

2022

 

2021

 

         

Research and development

$8,409

 

$6,986

 

Less: share-based compensation expense

1,077

 

82

 

Less: Employer payroll taxes on employee stock transactions

40

 

 

Non-GAAP research and development

7,292

 

6,904

 

As a % of revenue

10%

 

10%

 
 

Three months ended March 31,

 
 

2022

 

2021

 

         

Sales and marketing

$4,743

  3,599  

Less: share-based compensation expense

385

 

136

 

Less: Employer payroll taxes on employee stock transactions

19

 

 

Non-GAAP sales and marketing

4,339  

3,463

 

As a % of revenue

6%

 

5%

 
         
 

Three months ended March 31,

 
 

2022

 

2021

 

         

Net cash provided by operating activities

$34,863

 

$28,697

 

Less: Capital expenditures

419

 

245

 

Less: Capitalized software

1,522  

804

 

Free cash flow

$32,922

 

$27,648