Press release

CORRECTING and REPLACING MeridianLink Reports Second Quarter 2021 Results

0
Sponsored by Businesswire

In the release dated September 7, 2021, in the table “Net Revenues by Solution Type,” for the period “Three months ended June 30, 2020,” the figure for “Lending Software Solutions Contribution” should read: 12% (instead of 7%). The figure for “Total % Mortgage Loan Market Contribution” should read: 39% (instead of 37%).

The updated release reads:

MERIDIANLINK REPORTS SECOND QUARTER 2021 RESULTS

Revenue of $68.5 million grows 38% year-over-year

MeridianLink, Inc. (NYSE: MLNK), a cloud-based technology company that enables banks, credit unions, mortgage lenders, specialty lending providers, and consumer reporting agencies (CRAs) to streamline loan decision making and origination, and credit reporting and background screening workflows, today announced financial results for the second quarter ended June 30, 2021.

“MeridianLink delivered strong performance throughout our business in Q2,” said Nicolaas Vlok, chief executive officer of MeridianLink. “We have great momentum in the business as MeridianLink continues to help financial institutions and CRAs bring equity to lending, placing power in consumers’ hands through our lending and data verification platforms. I couldn’t be prouder of these results which showcase both our robust organic growth and best-in-class margins.”

“Given our leadership position in the market, our operational execution and the positive market dynamics, we are confident in our growth trajectory. As financial institutions respond to customer demands for more integrated digital banking, lending, and data verification experiences, we are ideally positioned to help new and existing customers meet evolving consumer needs through our dynamic platform. As a result of this, I am even more optimistic about the opportunity ahead of us.”

Financial Highlights:

  • Revenue of $68.5 million, an increase of 38% year-over-year
  • Operating profit of $19.2 million, or 28% of revenue
  • Adjusted EBITDA of $33.4 million, or 49% of revenue
  • Cash flow from operations of $21.2 million, and Free Cash Flow of $19.5 million

Initial Public Offering:

  • MeridianLink completed its initial public offering on July 28, 2021, for net proceeds of $241.5 million, after deducting underwriters’ discounts
  • A portion of the net proceeds were used to repay $75.0 million of borrowings outstanding under our first lien credit agreement and all borrowings outstanding under our second lien credit agreement of $125.0 million

Business and Operating Highlights:

  • The 2021 Virtual User Forum took place in May and had a total of 80 sessions over three days. There were more than 2,100 unique attendees and over 13,000 cumulative attendees for all sessions to engage with and learn more about MeridianLink’s Lending offerings
  • The organization completed the acquisition of Saylent on April 1st. Saylent contributes key data and marketing capabilities to the MeridianLink One platform, which will continue to be enhanced and integrated
  • The company had another strong quarter of new logo wins, including key signings in specialty lending, continued bank and credit union expansion, and also several new customers for MerdianLink’s Data Verification Solutions

Business Outlook

Based on information as of today, September 7, 2021, the Company issues the following financial guidance.

Third Quarter Fiscal 2021:

  • Revenue is expected to be in the range of $62.9 million to $63.5 million
  • Adjusted EBITDA is expected to be in the range of $25.0 million to $25.6 million

Full Year 2021:

  • Revenue is expected to be in the range of $256.7 million to $257.9 million
  • Adjusted EBITDA is expected to be in the range of $112.3 million to $113.5 million

Conference Call Information

MeridianLink will hold a conference call to discuss our second quarter 2021 results today, September 7, 2021, 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 4917618. 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, September 14, 2021, at (800) 585-8367 from the United States and Canada or (416) 621-4642 internationally with conference ID 4917618.

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’ 2020 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; non-GAAP net income; 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 before interest expense, taxes, depreciation, amortization, unit-based compensation expense, certain expenses associated with our IPO, and sponsor and third-party acquisition-related costs, and deferred revenue reduction from purchase accounting
  • Non-GAAP operating income: GAAP income from operations, excluding the impact of stock-based compensation, employer taxes specific to equity compensation awards, and sponsor and third-party acquisition-related costs
  • Non-GAAP net income: GAAP net income, excluding the impact of stock-based compensation, employer taxes specific to equity compensation awards, and sponsor and third-party acquisition-related costs
  • Non-GAAP cost of revenue: GAAP cost of revenue, excluding the impact of stock-based compensation, employer taxes specific to equity compensation awards, and amortization of developed technology
  • Non-GAAP operating expenses: GAAP operating expenses, excluding the impact of stock-based compensation and employer taxes specific to equity compensation awards
  • 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 and Section 21E of the Securities Exchange Act. 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2021. Any forward-looking statement contained herein or provided on the related conference call is based on reasonable assumptions as of the date hereof. 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 Sheet

(unaudited)

(in thousands, except unit and per unit data)

 

June 30,

 

December 31,

2021

 

2020

Assets

Current assets:

Cash and cash equivalents

$29,236

$37,739

Restricted cash

2,221

2,142

Accounts receivable, net of allowance for doubtful accounts

29,086

22,358

Prepaid expenses and other current assets

9,322

5,812

Related party receivable from sellers of MeridianLink

4,123

Total current assets

69,865

72,174

Property and equipment, net

7,105

7,600

Intangible assets, net

320,162

328,032

Deferred tax assets, net

5,121

9,484

Goodwill

565,054

542,965

Other assets

3,043

3,450

Total assets

$970,350

$963,705

 

Liabilities and Members’ Deficit

Current liabilities:

Accounts payable

$2,400

$2,257

Accrued liabilities

21,730

21,070

Deferred revenue

21,094

10,873

TazWorks, LLC purchase liability

85,646

Related party liability due to sellers of MeridianLink

30,000

Payable due to sellers of Teledata Communications, Inc.

2,142

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

1,757

2,955

Total current liabilities

49,123

152,801

Long-term debt, net of debt issuance costs

613,095

516,877

Deferred rent

456

543

Other long-term liabilities

127

Total liabilities

662,801

670,221

Commitments and contingencies

Class A units, no par value, unlimited units authorized, 319,859 and 319,913 units issued and outstanding as of June 30, 2021 and December 31, 2020, respectively; liquidation preference of $420,706 and $402,607 as of June 30, 2021 and December 31, 2020, respectively

319,859

319,913

Members’ Deficit

Class B units, no par value, unlimited units authorized, 52,112,904 and 51,492,805 units issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

9

Additional paid-in capital

3,368

3,909

Accumulated deficit

(15,687)

(30,338)

Total members’ deficit

(12,310)

(26,429)

Total liabilities, preferred units, and members’ deficit

$970,350

$963,705

 

Consolidated Statements of Operations

(unaudited)

(in thousands, except unit and per unit data)

 

Three months ended June 30,

Six months ended June 30,

2021

 

2020

 

2021

 

2020

 

Revenues, net

$68,474

$49,535

$136,285

$93,153

Cost of revenues:

Subscription and services

17,997

12,114

34,611

23,249

Amortization of developed technology

3,109

2,131

5,971

4,204

Total cost of revenues

21,106

14,245

40,582

27,453

Gross profit

47,368

35,290

95,703

65,700

Operating expenses:

General and administrative

16,622

13,693

34,967

27,318

Research and development

7,288

4,726

14,274

9,033

Sales and marketing

4,224

2,177

7,823

4,201

Total operating expenses

28,134

20,596

57,064

40,552

Operating income

19,234

14,694

38,639

25,148

Other (income) expense, net:

Other income

(10)

(23)

(30)

(24)

Interest expense, net

9,846

8,517

19,908

17,374

Total other expense, net

9,836

8,494

19,878

17,350

Income before provision for income taxes

9,398

6,200

18,761

7,798

 

Provision for income taxes

1,966

1,304

4,098

1,576

Net income

$7,432

$4,896

$14,663

$6,222

 

Class A preferred return

(9,232)

(8,462)

(18,165)

(16,747)

Net loss attributable to Class B unitholders

($1,800)

($3,566)

($3,502)

($10,525)

 

Weighted average units outstanding – basic and diluted

52,015,526

51,248,738

51,843,086

51,024,837

Loss per common unit – basic and diluted

($0.03)

($0.07)

($0.07)

($0.21)

 
 

Net Revenues by Major Source

(unaudited)

(in thousands)

 

 

Three months ended June 30,

Six months ended June 30,

2021

 

2020

 

2021

 

2020

Subscription fees

$60,427

$44,000

$120,743

$82,771

Professional services

5,615

3,651

11,106

7,400

Other

2,432

1,884

4,436

2,982

Total

$68,474

$49,535

$136,285

$93,153

 

Net Revenues by Solution Type

(unaudited)

(in thousands)

 

 

Three months ended June 30,

Six months ended June 30,

2021

 

2020

 

2021

 

2020

Lending Software Solutions

$45,243

$32,799

$88,377

$63,338

Data Verification Software Solutions

23,231

16,736

47,908

29,815

Total

$68,474

$49,535

$136,285

$93,153

% Growth

TCI and TazWorks Contribution

24%

24%

Lending Software Solutions Contribution

13%

14%

Data Verification Software Contribution

1%

8%

Total % Growth

38%

46%

 

% Mortgage Loan Market Contribution

Lending Software Solutions Contribution

8%

12%

10%

11%

Data Verification Software Contribution

71%

94%

72%

92%

Total % Mortgage Loan Market Contribution

30%

39%

32%

37%

 
 

 

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

Six months ended June 30,

2021

2020

 

Cash flows from operating activities:

Net income

$14,663

$6,222

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

Depreciation and amortization

24,957

19,458

Provision for doubtful accounts

89

300

Amortization of debt issuance costs

1,817

349

Unit-based compensation expense

1,308

1,313

Loss on disposal of fixed assets

207

72

Loss on sublease liability

405

Deferred income taxes

3,842

1,522

Other adjustments

(16)

 

 

 

 

 

Changes in operating assets and liabilities:

Accounts receivable

(2,641)

(5,777)

Prepaid expenses and other assets

(1,774)

(1,030)

Accounts payable

(39)

972

Accrued liabilities

(3,081)

(339)

Deferred revenue

10,221

7,286

Deferred rent

(49)

(31)

Net cash provided by operating activities

49,909

30,317

Cash flows from investing activities:

Acquisitions, net of cash acquired – TazWorks, LLC

(85,421)

Acquisitions, net of cash acquired – Saylent Technologies, Inc

(35,957)

Capitalized software additions

(2,216)

(1,428)

Purchases of property and equipment

(553)

(2,829)

Net cash used in investing activities

(124,147)

(4,257)

Cash flows from financing activities:

Repurchases of Class A Units

(54)

(900)

Repurchases of Class B Units

(1,887)

(1,420)

Proceeds from long-term debt

100,000

Principal payments of long-term debt

(2,590)

(2,078)

Payments of debt issuance costs

(1,970)

Payments of financing obligation due to related party

(40)

Payments of Class A cumulative preferred return

(12)

(135)

Payments of deferred offering costs

(2,008)

Holdback payment to prior shareholders, net related party receivable

(25,665)

Net cash provided by (used in) financing activities

65,814

(4,573)

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

(8,424)

21,487

Cash, cash equivalents and restricted cash, beginning of period

39,881

97,770

Cash, cash equivalents and restricted cash end of period

$31,457

$119,257

Reconciliation of cash, cash equivalents, and restricted cash

 

Cash and cash equivalents

$29,236

$119,257

Restricted cash

2,221

Cash, cash equivalents, and restricted cash

$31,457

$119,257

Supplemental disclosures of cash flow information:

 

Cash paid for interest

$18,078

$17,258

Cash paid for income taxes

212

69

Non-cash investing and financing activities:

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

$56

$146

Deferred offering costs included in accounts payable and accrued expenses

327

Vesting of Class B Units

47

53

Paycheck Protection Program (“PPP”) Loan forgiven, reclassified from long- and short-term debt to payable due to sellers of Teledata Communications, Inc

2,142

 

 

 

 

 

 

Related party receivable net against holdback payment to prior shareholders

4,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation from GAAP to Non-GAAP Results

(unaudited)

(in thousands, except per unit amounts)

 

Three months ended June 30,

Six months ended June 30,

2021

2020

2021

2020

 

Operating Income

$19,234

$14,694

$38,639

$25,148

Add: stock-based compensation expense

665

673

1,308

1,313

Add: sponsor and third-party acquisition related costs

741

500

2,114

1,000

Non-GAAP operating income

20,640

15,867

42,061

27,461

Non-GAAP operating margin

30%

32%

31%

29%

 

 

 

Three months ended June 30,

Six months ended June 30,

2021

 

2020

 

2021

 

2020

 

Net income (loss)

$7,432

$4,896

$14,663

$6,222

Add: stock-based compensation expense

665

673

1,308

1,313

Add: sponsor and third-party acquisition related costs

741

500

2,114

1,000

Non-GAAP net income

8,838

6,069

18,085

8,535

Non-GAAP basic net income per Class B unit

0.17

0.12

0.35

0.17

Non-GAAP diluted net income per Class B unit

0.16

 

0.11

 

0.32

 

0.15

Weighted average Class B units used to compute basic net loss per unit attributable to Class B unitholders

52,015,526

51,248,738

51,843,086

51,024,837

Weighted average Class B units used to compute diluted net loss per unit attributable to Class B unitholders

56,756,604

 

57,192,530

 

56,584,164

 

56,968,629

Non-GAAP net income margin

13%

12%

13%

9%

 

 

 

Three months ended June 30,

Six months ended June 30,

2021

2020

2021

2020

 

Net income (loss)

$7,432

$4,896

$14,663

$6,222

Interest expense

9,846

8,517

19,908

17,374

Taxes

1,966

1,304

4,098

1,576

Depreciation and amortization

12,606

9,763

24,957

19,458

Unit-based compensation expense

665

673

1,308

1,313

Expenses associated with IPO

194

Sponsor and third-party acquisition related costs

741

500

2,114

1,000

Deferred revenue reduction from purchase accounting

178

171

502

347

Adjusted EBITDA

$33,434

$25,824

$67,744

$47,290

Adjusted EBITDA Margin

49%

52%

50%

51%

 

 

 

Three months ended June 30,

Six months ended June 30,

2021

2020

2021

2020

 

Cost of revenue

$21,106

$14,245

$40,582

$27,453

Less: stock-based compensation expense

93

28

165

55

Less: amortization of developed technology

3,109

2,131

5,971

4,204

Non-GAAP cost of revenue

17,904

12,086

34,446

23,194

As a % of revenue

26%

24%

25%

25%

 

 

 

Three months ended June 30,

Six months ended June 30,

2021

2020

2021

2020

 

Sales and marketing

$4,224

$2,177

$7,823

$4,201

Less: stock-based compensation expense

137

72

273

141

Non-GAAP sales and marketing

4,087

2,105

7,550

4,060

As a % of revenue

6%

4%

6%

4%

 

 

Three months ended June 30,

Six months ended June 30,

2021

 

2020

 

2021

 

2020

 

Research and development

$7,288

$4,726

$14,274

$9,033

Less: stock-based compensation expense

82

88

164

159

Non-GAAP research and development

7,206

4,638

14,110

8,874

As a % of revenue

11%

9%

10%

10%

 

 

 

Three months ended June 30,

Six months ended June 30,

2021

 

2020

 

2021

 

2020

 

General & administrative

$16,622

$13,693

$34,967

$27,318

Less: stock-based compensation expense

353

485

706

958

Less: depreciation expense

588

589

1,171

1,169

Less: amortization of intangibles

8,909

7,043

17,815

14,085

Non-GAAP general & administrative

6,772

5,576

15,275

11,106

As a % of revenue

10%

11%

11%

12%

 

 

 

Three months ended June 30,

Six months ended June 30,

2021

 

2020

 

2021

 

2020

 

Net cash provided by operating activities

$21,212

$11,744

$49,909

$30,317

Less: Capital expenditures

308

1,159

553

2,829

Less: Capitalized software

1,412

738

2,216

1,428

Free cash flow

$19,492

$9,847

$47,140

$26,060