EX-99.1 2 exhibit991-q22023earningsr.htm EX-99.1 Document

Exhibit 99.1
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MeridianLink® Reports Second Quarter 2023 Results
Revenue of $75.4 million grows 3% year-over-year driven by lending software solutions revenue of $55.8 million growing 8% year-over-year

COSTA MESA, Calif., August 1, 2023 — 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, 2023.
“We experienced strong demand for our software solutions in Q2, with solid bookings momentum and successful services delivery, both in-line with our strategic investment in our Go-To-Market engine and Services capabilities,” said Nicolaas Vlok, chief executive officer of MeridianLink. “Given the power of our configurable digital lending platform, we see customers continuing to choose MeridianLink® One to accelerate growth and best position their businesses to win.”

Quarterly Financial Highlights:
•Revenue of $75.4 million, an increase of 3% year-over-year
•Lending software solutions revenue of $55.8 million, an increase of 8% year-over-year
•Operating income of $1.5 million, or 2% of revenue, and Non-GAAP operating income of $11.9 million, or 16% of revenue    
•Net loss of $(5.2) million, or (7)% of revenue, and Adjusted EBITDA of $27.1 million, or 36% of revenue
•Cash flows from operations of $61.1 million and free cash flow of $51.4 million, in each case for the last twelve month period

Business and Operating Highlights:
•Revenue of $75.4 million for the quarter included a one-time $2.3 million reduction in revenue related to a commercial dispute of a contract acquired through a past acquisition. Without this reduction, MeridianLink’s quarterly revenue would have been $77.7 million, growing 6% year-over-year and in-line with our guidance.
•MeridianLink propelled the cross-sell momentum of MeridianLink One, signing fourteen MeridianLink® Consumer customers on to our MeridianLink® Mortgage solution in the first half of the year.
•The Company announced the go-live of Space Coast Credit Union, the third largest credit union in Florida, on MeridianLink® Insight, our business intelligence tool. As a result, instant approvals at Space Coast Credit Union increased by over 25% and approximately 95% of all loan applications are now processed and decided within one day.
•MeridianLink won its largest new logo platform customer in the last twelve months with a credit union looking to supercharge growth across their portfolio with the purchase of MeridianLink® Consumer, Opening, Auto, Home Equity, and Business.
•The Company improved the innovative functionality of MeridianLink One by enhancing its Advanced Decisioning capabilities, adding a digital banking integration with MeridianLink® Engage, and automating loan and account cross-selling.
•MeridianLink added a partner integration with PortX to rapidly integrate with other core providers, which accelerates our customers’ end-to-end lending process, driving automation for the lender and faster decisioning for the consumer.

Business Outlook
Based on information as of today, August 1, 2023, the Company issues third quarter financial guidance and updates full year 2023 financial guidance as follows:

Third Quarter Fiscal 2023:
•Revenue is expected to be in the range of $76.0 million to $78.0 million
•Adjusted EBITDA is expected to be in the range of $27.0 million to $29.0 million

Full Year 2023:
•Revenue is expected to be in the range of $302.0 million to $306.0 million
•Adjusted EBITDA is expected to be in the range of $104.0 million to $108.0 million



Conference Call Information
MeridianLink will hold a conference call to discuss our second quarter results today, August 1, 2023, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call can be accessed by dialing (888) 259-6580 from North America toll-free or the International number of (416) 764-8624 with Conference ID 93721775. 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, August 8, 2023, by dialing (877) 674-7070 from North America or the International number of (416) 764-8692 with Playback Passcode 721775.
For More Information:

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

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

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.

Operational Measures Definitions
We reference bookings, which is an internal operational measure of the business. Bookings is defined as the total of the minimum annual contracted value for newly sold capabilities of our software-as-a-service, or SaaS, products over a given time period, inclusive of any corresponding vendor fees owed to Third Parties.

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 June 30, 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 and market conditions, our strategic initiatives, including anticipated benefits and integration of an acquisition, our restructuring plan, including expected associated timing, benefits, and costs, our ability to retain and attract customers and product partners, potential losses related to any commercial disputes, 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
June 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$108,872$55,780
Accounts receivable, net35,10432,905
Prepaid expenses and other current assets11,3139,447
Escrow deposit—30,000
Total current assets155,289128,132
Property and equipment, net3,4914,245
Right of use assets1,6712,185
Intangible assets, net274,208297,475
Deferred tax assets, net17,88613,939
Goodwill608,576608,657
Other assets5,0034,524
Total assets$1,066,124 $1,059,157
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $4,149$1,249
Accrued liabilities30,78332,500
Deferred revenue26,30216,945
Current portion of long-term debt, net of debt issuance costs3,5453,505
Total current liabilities64,77954,199
Long-term debt, net of debt issuance costs421,808423,404
Long-term deferred revenue8411,141
Other long-term liabilities8451,322
Total liabilities488,273480,066
Commitments and contingencies
Stockholders’ Equity
Preferred stock, $0.001 par value; 50,000,000 shares authorized; zero shares issued and outstanding at June 30, 2023 and December 31, 2022——
Common stock, $0.001 par value; 600,000,000 shares authorized, 81,167,660 and 80,644,452 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively132128
Additional paid-in capital636,193621,396
Accumulated deficit(58,474)(42,433)
Total stockholders’ equity577,851579,091
Total liabilities and stockholders’ equity$1,066,124$1,059,157



Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except share and per share data)

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Revenues, net$75,415 $72,987 $152,550 $145,741 
Cost of revenues:
Subscription and services23,984 23,376 47,485 44,480 
Amortization of developed technology4,510 3,850 8,964 7,284 
Total cost of revenues28,494 27,226 56,449 51,764 
Gross profit46,921 45,761 96,101 93,977 
Operating expenses:
General and administrative24,409 20,806 46,964 38,993 
Research and development11,754 10,487 25,566 18,896 
Sales and marketing8,558 5,465 16,771 10,208 
Acquisition related costs— 103 — 2,386 
Restructuring related costs717 — 3,621 — 
Total operating expenses45,438 36,861 92,922 70,483 
Operating income1,483 8,900 3,179 23,494 
Other (income) expense, net:
Other income(784)(216)(1,254)(379)
Interest expense, net9,316 5,436 18,347 9,794 
Total other expense, net8,532 5,220 17,093 9,415 
(Loss) income before (benefit from) provision for income taxes(7,049)3,680 (13,914)14,079 
(Benefit from) provision for income taxes(1,819)1,508 (3,018)4,428 
Net (loss) income$(5,230)$2,172 $(10,896)$9,651 
Net (loss) income per share:
Basic$(0.06)$0.03 $(0.13)$0.12 
Diluted$(0.06)$0.03 $(0.13)$0.12 
Weighted average common stock outstanding:
Basic80,911,113 80,418,520 80,786,427 80,197,832 
Diluted80,911,113 82,223,181 80,786,427 82,251,322 



Net Revenues by Major Source
(unaudited)
(in thousands)

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Subscription fees$63,770$63,529$130,175$126,998
Professional services9,0026,66517,43713,777
Other2,6432,7934,9384,966
Total$75,415$72,987$152,550$145,741

Net Revenues by Solution Type
(unaudited)
(in thousands)

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Lending software solutions$55,778$51,668$113,779$100,835
Data verification software solutions19,63721,31938,77144,906
Total (1)
$75,415$72,987$152,550$145,741
% Growth attributable to:

Lending software solutions
6%9%
Data verification software
(3)%(4)%
Total % growth
3%5%

(1) % Revenue related to mortgage loan market:

Lending software solutions13%7%12%7%
Data verification software61%64%61%67%
Total % revenue related to mortgage loan market26%24%25%26%



Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)

Six Months Ended June 30,
20232022
Cash flows from operating activities:
Net (loss) income$(10,896)$9,651
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization28,95526,376
Provision for expected credit losses441—
Amortization of debt issuance costs6691,429
Share-based compensation expense13,8939,247
Loss on disposal of fixed assets—135
Deferred income taxes(4,192)4,025
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable(2,640)(8,806)
Prepaid expenses and other assets(2,395)661
Accounts payable2,955(1,059)
Accrued liabilities(1,663)(2,065)
Deferred revenue9,0588,076
Net cash provided by operating activities34,18547,670
Cash flows from investing activities:
Acquisition, net of cash acquired – Beanstalk Networks L.L.C.326—
Acquisition, net of cash and restricted cash acquired – StreetShares, Inc.—(23,059)
Return (payment) of escrow deposit30,000(30,000)
Capitalized software additions(4,562)(4,079)
Purchases of property and equipment(305)(480)
Net cash provided by (used in) investing activities25,459(57,618)
Cash flows from financing activities:
Repurchases of common stock(5,145)(193)
Proceeds from exercise of stock options1,025186
Proceeds from employee stock purchase plan793922
Taxes paid related to net share settlement of RSUs(1,050)—
Principal payments of long-term debt(2,175)(1,088)
Payment of Regulation A+ investor note—(3,265)
Net cash used in financing activities(6,552)(3,438)
Net increase (decrease) in cash and cash equivalents53,092(13,386)
Cash and cash equivalents, beginning of period55,780113,645
Cash and cash equivalents, end of period$108,872$100,259
Supplemental disclosures of cash flow information:
Cash paid for interest$17,955$8,337
Cash paid for income taxes2,577762
Non-cash investing and financing activities:
Share-based compensation expense capitalized to software additions$136$188
Purchase price allocation adjustment related to income tax effects for StreetShares acquisition245—
Vesting of RSAs and RSUs538
Purchases of property and equipment included in accounts payable and accrued expenses393
Regulation A+ investor note assumed in business combination—3,265
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 June 30,Six Months Ended June 30,
2023202220232022
Operating income$1,483$8,900$3,179$23,494
Add: Share-based compensation expense9,3675,43914,5569,247
Add: Employer payroll taxes on employee stock transactions3223448148
Add: Restructuring related costs717—3,621—
Add: Sponsor and third-party acquisition related costs—99—2,386
Non-GAAP operating income$11,889$14,441$21,804$35,275
Operating margin2%12%2%16%
Non-GAAP operating margin
16%20%14%24%
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Net (loss) income $(5,230)$2,172$(10,896)$9,651
Add: Share-based compensation expense9,3675,43914,5569,247
Add: Employer payroll taxes on employee stock transactions3223448148
Add: Restructuring related costs717—3,621—
Add: Sponsor and third-party acquisition related costs—99—2,386
Add: Income tax effect on non-GAAP items(2,497)(1,330)(4,470)(2,827)
Non-GAAP net income $2,679$6,383$3,259$18,605
Non-GAAP basic net income per share$0.03$0.08$0.04$0.23
Non-GAAP diluted net income per share0.030.080.040.23
Weighted average shares used to compute Non-GAAP basic net income per share
80,911,11380,418,52080,786,42780,197,832
Weighted average shares used to compute Non-GAAP diluted net income per share83,487,13282,223,18182,994,599 82,251,322
Net (loss) income margin(7)%3%(7)%7%
Non-GAAP net income margin4%9%2%13%
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Net (loss) income$(5,230)$2,172$(10,896)$9,651
Interest expense
9,3165,43618,3479,794
Taxes
(1,819)1,508(3,018)4,428
Depreciation and amortization
14,42413,47228,95526,376
Share-based compensation expense9,3675,43914,5569,247
Employer payroll taxes on employee stock transactions3223448148
Restructuring related costs717—3,621—
Sponsor and third-party acquisition related costs
—99—2,386
Deferred revenue reduction from purchase accounting for acquisitions prior to 2022195539119
Adjusted EBITDA$27,116$28,184$52,052$62,149
Net (loss) income margin(7)%3%(7)%7%
Adjusted EBITDA margin36%39%34%43%



Reconciliation from GAAP to Non-GAAP Results
(unaudited)
(in thousands)
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Cost of revenue$28,494$27,226$56,449$51,764
Less: Share-based compensation expense1,1571,2512,0092,215
Less: Employer payroll taxes on employee stock transactions88—10954
Less: Amortization of developed technology4,5103,8508,9647,284
Non-GAAP cost of revenue$22,739$22,125$45,367$42,211
Cost of revenue as a % of revenue38%37%37%36%
Non-GAAP cost of revenue as a % of revenue30%30%30%29%
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
General and administrative$24,409$20,806$46,964$38,993
Less: Share-based compensation expense5,2312,3967,4943,777
Less: Employer payroll taxes on employee stock transactions107—15833
Less: Depreciation expense4955809901,141
Less: Amortization of intangibles9,4199,04219,00117,951
Non-GAAP general & administrative$9,157$8,788$19,321$16,091
General and administrative as a % of revenue32%29%31%27%
Non-GAAP general and administrative as a % of revenue12%12%13%11%
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Research and development$11,754$10,487$25,566$18,896
Less: Share-based compensation expense1,8751,2883,6582,365
Less: Employer payroll taxes on employee stock transactions97112540
Non-GAAP research and development$9,782$9,198$21,783$16,491
Research and development as a % of revenue16%14%17%13%
Non-GAAP research and development as a % of revenue13%13%14%11%

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Sales and marketing$8,558$5,465$16,771$10,208
Less: Share-based compensation expense1,1045041,395890
Less: Employer payroll taxes on employee stock transactions3025621
Non-GAAP sales and marketing$7,424$4,959$15,320$9,297
Sales and marketing as a % of revenue11%7%11%7%
Non-GAAP sales and marketing as a % of revenue10%7%10%6%


Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Net cash provided by operating activities$6,104$12,807$34,185$47,670
Less: Capitalized software2,6382,5574,5624,079
Less: Capital expenditures 17161305480
Free cash flow$3,295$10,189$29,318$43,111