MeridianLink Reports Fourth Quarter and Fiscal Year 2021 Results


Revenue of $64.0 million grows 19% 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 fourth quarter and fiscal year ended December 31, 2021.

“2021 was a momentous year for the company, and we are immensely proud of our track record of proven results, including 19% year-over-year revenue growth and 38% adjusted EBITDA margins for Q4,” said Nicolaas Vlok, chief executive officer of MeridianLink. “Our solid performance in Q4 and throughout the year highlights the trust that financial institutions and consumer reporting agencies place in our solutions as a key driver of their growth acceleration and rapid digitalization. We are in the right place at the right time to help new and existing customers fuel future growth, and I am confident that the coming year will bring many more opportunities.”

Quarterly Financial Highlights:

  • Revenue of $64.0 million, an increase of 19% year-over-year
  • Operating income of $7.8 million, or 12% of revenue and Non-GAAP operating profit of $11.7 million, or 18% of revenue
  • Adjusted EBITDA of $24.6 million, or 38% of revenue
  • Cash flow from operations of $20.8 million, and Free Cash Flow of $19.4 million

Business and Operating Highlights:

  • The company exceeded guidance again in Q4, with GAAP Revenue up 19% year-over-year to $64.0 million and 38% Adjusted EBITDA margins
  • MeridianLink saw strong momentum in the fourth quarter on the consumer side of the business, up 23% year-over-year, with growth driven, in part, by the reinvestment of the mortgage-related upside into the consumer business over the last several quarters
  • The company launched MeridianLink Engage, a unique and comprehensive end-to-end consumer lending, account, and card marketing automation solution, in beta in Q4 and expanded to general availability in January 2022

Business Outlook

Based on information as of today, March 10, 2022, the Company issues first quarter financial guidance and initiates full year 2022 financial guidance as follows:

First Quarter Fiscal 2022:

  • Revenue is expected to be in the range of $68.3 million to $69.3 million
  • Adjusted EBITDA is expected to be in the range of $26.5 million to $27.5 million

Full Year 2022:

  • Revenue is expected to be in the range of $288.0 million to $292.0 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 fourth quarter and fiscal year 2021 results today, March 10, 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 4345428. 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, March 17, 2022, at (800) 585-8367 from the United States and Canada or (416) 621-4642 internationally with conference ID 4345428.

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, 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 under the caption “Risk Factors” in our final prospectus filed on July 28, 2021, and our other SEC filings. Additional information will also be 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 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.


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

       

Assets

December 31,
2021

 

December 31,
2020

Current assets:

     

Cash and cash equivalents

$113,645

 

$37,739

Restricted cash

 

2,142

Accounts receivable, net of allowance for doubtful accounts

24,913

 

22,358

Prepaid expenses and other current assets

9,398

 

5,812

Related party receivable from sellers of MeridianLink

 

4,123

Total current assets

147,956

 

72,174

Property and equipment, net

5,989

 

7,600

Intangible assets, net

298,597

 

328,032

Deferred tax assets, net

4,286

 

9,484

Goodwill

564,799

 

542,965

Other assets

4,266

 

3,450

Total assets

$1,025,893

 

$963,705

       

Liabilities, Preferred Units, and Stockholders’ Equity/Members’ Deficit

     

Current liabilities:

     

Accounts payable

$2,335

 

$2,257

Accrued liabilities

24,667

 

21,070

Deferred revenue

14,707

 

10,873

TazWorks, LLC purchase liability

 

85,646

Related party liability due to sellers of MeridianLink

 

30,000

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

2,139

 

2,955

Total current liabilities

43,848

 

152,801

Long-term debt, net of debt issuance costs

425,371

 

516,877

Deferred rent

396

 

543

Total liabilities

469,615

 

670,221

Commitments and contingencies

     

Class A preferred units, no par value; unlimited units authorized, 319,913 units issued and outstanding at December 31, 2020; liquidation preference of $402,607 at December 31, 2020

 

319,913

Stockholders’ Equity/Members’ Deficit

     

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

 

Common stock, $0.001 par value; 600,000,000 shares authorized, 79,734,984 shares issued and outstanding at December 31, 2021

88

 

Class B common units, no par value; unlimited units authorized, 51,492,805 units issued and outstanding at December 31, 2020

 

Additional paid-in capital

596,542

 

3,909

Accumulated deficit

(40,352)

 

(30,338)

Total stockholders’ equity/members’ deficit

556,278

 

(26,429)

Total liabilities, preferred units, and stockholders’ equity/members’ deficit

$1,025,893

 

$963,705

       
 

Consolidated Statements of Operations
(in thousands, except share/unit and per share/unit data)

 

Three months ended December 31,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

Revenues, net

$64,024

 

$53,933

 

$267,676

 

$199,340

Cost of revenues:

             

Subscription and services

19,025

 

13,571

 

77,103

 

49,480

Amortization of developed technology

3,329

 

2,457

 

12,519

 

8,874

Total cost of revenues

22,354

 

16,028

 

89,622

 

58,354

Gross profit

41,670

 

37,905

 

178,054

 

140,986

Operating expenses:

             

General and administrative

21,057

 

14,347

 

85,160

 

54,640

Research and development

8,529

 

5,109

 

36,336

 

18,691

Sales and marketing

4,305

 

2,866

 

18,122

 

9,371

Loss on termination of financing obligation due to related party

 

5,755

 

 

5,755

Impairment of trademarks

 

5,362

 

 

5,362

Acquisition related costs

 

1,579

 

781

 

1,579

Total operating expenses

33,891

 

35,018

 

140,399

 

95,398

Operating income

7,779

 

2,887

 

37,655

 

45,588

Other (income) expense, net:

             

Other income

(10)

 

(24)

 

(49)

 

(41)

Interest expense, net

5,542

 

8,653

 

32,615

 

34,686

Loss on debt repayment and extinguishment

5,593

 

 

9,944

 

Total other expense, net

11,125

 

8,629

 

42,510

 

34,645

Income (loss) before provision for income taxes

(3,346)

 

(5,742)

 

(4,855)

 

10,943

               

Provision for (benefit from) income taxes

(133)

 

(1,653)

 

5,141

 

1,792

Net income (loss)

(3,213)

 

(4,089)

 

(9,996)

 

9,151

               

Class A preferred return

 

(8,931)

 

(20,944)

 

(34,411)

Net loss attributable to common stockholders

(3,213)

 

(13,020)

 

(30,940)

 

(25,260)

               

Weighted average common stock outstanding – basic and diluted

79,596,418

 

51,393,573

 

63,813,770

 

51,153,041

Net loss per share – basic and diluted

(0.04)

 

(0.25)

 

(0.48)

 

(0.49)

 

Net Revenues by Major Source
(unaudited)

(in thousands)

 

Three months ended December 31,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

Subscription fees

$55,757

 

$47,460

 

$235,489

 

$177,039

Professional services

5,895

 

4,914

 

22,707

 

16,301

Other

2,372

 

1,559

 

9,480

 

6,000

Total

64,024

 

53,933

 

267,676

 

199,340

 

Net Revenues by Solution Type
(unaudited)

(in thousands)

 

Three months ended December 31,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

               

Lending Software Solutions

$43,759

 

$37,054

 

$176,793

 

$133,754

Data Verification Software Solutions

20,265

 

16,879

 

90,883

 

65,586

Total(1)

$64,024

 

$53,933

 

$267,676

 

$199,340

% Growth attributable to:

             

TCI and TazWorks

13%

     

21%

   

Lending software solutions

9%

     

12%

   

Data Verification Software Contribution

(3)%

     

1%

   

Total % Growth

19%

     

34%

   
               

(1)% Revenue related to mortgage loan market:

             

Lending software solutions

9%

 

12%

 

9%

 

12%

Data verification software

68%

 

94%

 

70%

 

93%

Total % revenue related to mortgage loan market

27%

 

38%

 

30%

 

39%

 

Consolidated Statements of Cash Flows
(in thousands)

       
 

Year Ended December 31,

Assets

2021

 

2020

Cash flows from operating activities:

     

Net income (loss)

$(9,996)

 

$9,151

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

     

Depreciation and amortization

50,453

 

40,199

Amortization of debt issuance costs

3,413

 

1,758

Share-based compensation expense

30,736

 

2,841

Loss on disposal of fixed assets and termination of financing obligation

524

 

5,823

Impairment of trademarks

-

 

5,362

Loss on sublease liability

405

 

-

Loss on debt repayment and extinguishment

9,944

 

-

Other adjustments

(18)

 

-

Deferred income taxes

4,926

 

1,555

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

1,619

 

(3,184)

Prepaid expenses and other assets

(5,726)

 

(2,058)

Accounts payable

117

 

1,536

Accrued liabilities

(302)

 

2,650

Deferred revenue

3,834

 

1,923

Deferred rent

(94)

 

(77)

Net cash provided by operating activities

$89,835

 

$67,479

       

Cash flows from investing activities:

     

Acquisition, net of cash acquired – Teledata Communications, Inc.

-

 

(103,055)

Acquisition, net of cash acquired – TazWorks, LLC

(84,605)

 

-

Acquisition, net of cash and restricted cash acquired – Saylent Technologies, Inc.

(35,945)

 

-

Capitalized software additions

(4,906)

 

(3,196)

Purchases of property and equipment

(843)

 

(4,141)

Net cash used in investing activities

$(126,299)

 

$(115,392)

       

Cash flows from financing activities:

 

 

 

Repurchases of Class A Units

(54)

 

(907)

Repurchases of Class B Units

(1,887)

 

(2,167)

Proceeds from initial public offering, net of underwriters’ discounts and commissions

247,307

 

-

Proceeds from exercise of stock options

1,714

 

-

Payment due to effect of corporate conversion

(6)

 

-

Proceeds from long-term debt

535,000

 

-

Principal payments of long-term debt

(631,255)

 

(4,156)

Payments of debt issuance costs

(7,207)

 

-

Payments of financing obligation due to related party

-

 

(2,187)

Payments of Class A cumulative preferred return

(12)

 

(136)

Payments of deferred offering costs

(4,790)

 

(423)

Payment to sellers of Saylent Technologies, Inc.

(775)

 

-

Payment to sellers of Teledata Communications, Inc

(2,142)

 

-

Holdback payment to sellers of MeridianLink

(25,665)

 

-

Net cash provided by (used in) financing activities

110,228

 

(9,976)

Net increase (decrease) in cash, cash equivalents and restricted cash

73,764

 

(57,889)

Cash, cash equivalents and restricted cash, beginning of period

39,881

 

97,770

Cash, cash equivalents and restricted cash, end of period

$113,645

 

$39,881

Reconciliation of cash, cash equivalents, and restricted cash

     

Cash and cash equivalents

$113,645

 

$37,739

Restricted cash

-

 

$2,142

Cash, cash equivalents, and restricted cash

$113,645

 

$39,881

Supplemental disclosures of cash flow information:

     

Cash paid for interest

29,242

 

33,179

Cash paid for income taxes

306

 

137

Non-cash investing and financing activities:

     

Effect of corporate conversion

319,868

 

-

Related party receivable net against holdback payment to prior shareholders

4,335

 

-

Deferred offering costs in prepaid expenses and other current assets at December 31, 2020 offsetting payments of deferred offering costs

423

 

-

Share-based compensation expense capitalized to software additions

111

 

-

Vesting of restricted stock awards and RSUs

94

 

-

Debt issuance costs included in accrued expenses

90

 

-

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

81

 

98

Payable to seller in connection with acquisition of TazWorks

-

 

85,646

Deferred offering costs included in accounts payable and accrued expenses

-

 

572

Vesting of Class B Units

-

 

74

       
 

Reconciliation from GAAP to Non-GAAP Results
(unaudited)

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

(unaudited)

 

             
 

Three months ended December 31,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

               

Operating Income (loss)

$7,779

 

$2,887

 

$37,655

 

$45,588

Add: Share-based compensation expense

3,901

 

783

 

30,736

 

2,841

Add: Employer payroll taxes on employee stock transactions

16

 

 

95

 

Add: sponsor and third-party acquisition related costs

25

 

2,079

 

2,348

 

3,579

Non-GAAP operating income

11,721

 

5,749

 

70,834

 

52,008

Non-GAAP operating margin

18%

 

11%

 

26%

 

26%

               

 

             
 

Three months ended December 31,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

               

Net income (loss)

(3,213)

 

(4,089)

 

(9,996)

 

9,151

Add: share-based compensation expense

3,901

 

783

 

30,736

 

2,841

Add: Employer payroll taxes on employee stock transactions

16

 

 

95

 

Add: sponsor and third-party acquisition related costs

25

 

2,079

 

2,348

 

3,579

Non-GAAP net income (loss)

729

 

(1,227)

 

23,183

 

15,571

Non-GAAP basic net income (loss) per share

0.01

 

(0.02)

 

0.36

 

0.30

Non-GAAP diluted net income (loss) per share

0.01

 

(0.02)

 

0.35

 

0.29

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

79,596,418

 

51,393,573

 

63,813,770

 

51,153,041

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

82,358,079

 

54,080,648

 

67,130,479

 

53,840,116

Non-GAAP net income (loss) margin

1%

 

(2)%

 

9%

 

8%

               

 

             
 

Three months ended December 31,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

               

Net income (loss)

$(3,213)

 

$(4,089)

 

$(9,996)

 

$9,151

Interest expense

5,542

 

8,653

 

32,615

 

34,686

Taxes

(133)

 

(1,653)

 

5,141

 

1,792

Depreciation and amortization

12,799

 

10,670

 

50,453

 

40,199

Share-based compensation expense

3,901

 

783

 

30,736

 

2,841

Employer payroll taxes on employee stock transactions

16

 

 

95

 

Expenses associated with IPO

 

395

 

424

 

395

Sponsor and third-party acquisition related costs

25

 

2,079

 

2,348

 

3,579

Loss on debt repayment

5,593

 

 

9,944

 

Deferred revenue reduction from purchase accounting

109

 

334

 

733

 

851

Impairment of trademarks

 

5,362

 

 

5,362

Lease termination charges

 

5,755

 

879

 

5,755

Adjusted EBITDA

$24,639

 

$28,289

 

$123,372

 

$104,611

Adjusted EBITDA Margin

38%

 

52%

 

46%

 

52%

               

 

             
 

Three months ended December 31,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

               

Cost of revenue

$22,354

 

$16,028

 

$89,622

 

$58,354

Less: Share-based compensation expense

1,017

 

71

 

6,478

 

180

Less: Employer payroll taxes on employee stock transactions

 

 

3

 

Less: amortization of developed technology

3,329

 

2,457

 

12,519

 

8,874

Non-GAAP cost of revenue

18,008

 

13,500

 

70,622

 

49,300

As a % of revenue

28%

 

25%

 

26%

 

25%

               

 

             
 

Three months ended December 31,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

               

General & administrative

$21,057

 

$14,347

 

$85,160

 

$54,640

Less: Share-based compensation expense

1,694

 

498

 

14,558

 

1,952

Less: Employer payroll taxes on employee stock transactions

14

 

 

73

 

Less: depreciation expense

560

 

531

 

2,303

 

2,515

Less: amortization of intangibles

8,910

 

7,682

 

35,631

 

28,810

Non-GAAP general & administrative

9,879

 

5,636

 

32,595

 

21,363

As a % of revenue

15%

 

10%

 

12%

 

11%

 

             
 

Three months ended December 31,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

               

Research and development

$8,529

 

$5,109

 

$36,336

 

$18,691

Less: share-based compensation expense

1,095

 

92

 

7,453

 

339

Less: Employer payroll taxes on employee stock transactions

 

 

8

 

Non-GAAP research and development

7,434

 

5,017

 

28,875

 

18,352

As a % of revenue

12%

 

9%

 

11%

 

9%

 

Three months ended December 31,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

               

Sales and marketing

$4,305

 

$2,866

 

$18,122

 

$9,371

Less: share-based compensation expense

95

 

122

 

2,247

 

370

Less: Employer payroll taxes on employee stock transactions

2

 

 

11

 

Non-GAAP sales and marketing

4,208

 

2,744

 

15,864

 

9,001

As a % of revenue

7%

 

5%

 

6%

 

5%

               
 

Three months ended December 31,

 

Year ended December 31,

 

2021

 

2020

 

2021

 

2020

               

Net cash provided by operating activities

$20,823

 

$12,298

 

$89,835

 

$67,479

Less: Capital expenditures

151

 

738

 

843

 

4,141

Less: Capitalized software

1,316

 

1,033

 

4,906

 

3,196

Free cash flow

$19,356

 

$10,527

 

$84,086

 

$60,142