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Share Name | Share Symbol | Market | Type |
---|---|---|---|
MeridianLink Inc | NYSE:MLNK | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 17.62 | 0 | 01:00:00 |
Fourth quarter revenue of $74.6 million grows 6% year-over-year driven by lending software solutions revenue of $59.5 million, reflecting growth of 8% 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, 2023.
“2023 was a solid year of execution, driven by robust demand and many innovative product and partner expansions,” said Nicolaas Vlok, chief executive officer of MeridianLink. “Our strong fourth quarter performance demonstrates our ability to execute in key strategic areas of the business that accelerate growth while also demonstrating cost discipline, which we see as a great achievement in the face of challenging macroeconomic conditions. I am proud of our team and am confident in our dedication to increasing the value of MeridianLink® One for our customers and stockholders.”
Quarterly Financial Highlights:
2023 Fiscal Year Financial Highlights:
Business and Operating Highlights:
Business Outlook
Based on information as of today, March 5, 2024, the Company issues first quarter financial guidance and initiates full year 2024 financial guidance as follows:
First Quarter Fiscal 2024:
Full Year 2024:
Conference Call Information
MeridianLink will hold a conference call to discuss its fourth quarter results today, March 5, 2024, 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 63977161. 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, March 12, 2024, by dialing (877) 674-7070 from North America or the International number of (416) 764-8692 with Playback Passcode 977161.
About MeridianLink
MeridianLink® (NYSE: MLNK) empowers financial institutions and consumer reporting agencies to drive efficient growth. MeridianLink’s cloud-based digital lending, account opening, background screening, and data verification software solutions leverage shared intelligence from a unified data platform, MeridianLink® One, to enable customers of all sizes to identify growth opportunities, effectively scale up, and support compliance efforts, all while powering an enhanced experience for staff and consumers alike.
For more than 25 years, MeridianLink has prioritized the democratization of lending for consumers, businesses, and communities. Learn more at www.meridianlink.com.
Internal Controls
While we are still completing our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023, we expect to report a material weakness in internal control over financial reporting in our Annual Report on Form 10-K as of December 31, 2023. We have identified multiple control deficiencies that aggregate to a material weakness related to the design and operating effectiveness of controls over revenue as of December 31, 2023. This was primarily caused by insufficient controls over the set-up of customer contracts for billing and maintaining complete contract support that were not operating effectively. We can confirm that there has been no restatement of prior period financial statements and no change to our previously released financial results as a result of these control deficiencies.
Remediation efforts are currently underway, which include designing and implementing additional review processes, enhanced procedures, and controls, including with respect to customer contracts, as well as system improvements and implementations, staffing and training.
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:
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 stock repurchase program, including the execution and amount of repurchases, our restructuring and realignment plans, including expected associated timing, benefits, and costs, a potential material weakness in our internal control over financial reporting, including the sufficiency and timing of our remediation efforts relating thereto, our ability to retain and attract customers and product partners, the benefit to us and our customers of integrations with our 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.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share data)
As of December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
80,441
$
55,780
Accounts receivable, net
32,412
32,905
Prepaid expenses and other current assets
11,574
9,447
Escrow deposit
—
30,000
Total current assets
124,427
128,132
Property and equipment, net
3,337
4,245
Right of use assets, net
1,140
2,185
Intangible assets, net
251,060
297,475
Deferred tax assets, net
—
13,939
Goodwill
610,063
608,657
Other assets
6,224
4,524
Total assets
$
996,251
$
1,059,157
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
4,405
$
1,249
Accrued liabilities
30,673
32,500
Deferred revenue
17,224
16,945
Current portion of debt, net of debt issuance costs
3,542
3,505
Total current liabilities
55,844
54,199
Debt, net of debt issuance costs
420,004
423,404
Deferred tax liabilities, net
10,823
—
Long-term deferred revenue
792
1,141
Other long-term liabilities
541
1,322
Total liabilities
488,004
480,066
Commitments and contingencies
Stockholders’ Equity
Preferred stock, $0.001 par value; 50,000,000 shares authorized; zero shares issued and outstanding at December 31, 2023 and 2022
—
—
Common stock, $0.001 par value; 600,000,000 shares authorized, 78,447,701 and 80,644,452 shares issued and outstanding at December 31, 2023 and 2022, respectively
129
128
Additional paid-in capital
654,634
621,396
Accumulated deficit
(146,516
)
(42,433
)
Total stockholders’ equity
508,247
579,091
Total liabilities and stockholders’ equity
$
996,251
$
1,059,157
Consolidated Statements of Operations
(unaudited)
(in thousands, except share and per share data)
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Revenues, net
$
74,579
$
70,551
$
303,617
$
288,046
Cost of revenues:
Subscription and services
20,389
22,486
90,362
90,778
Amortization of developed technology
4,641
4,266
18,129
15,553
Total cost of revenues
25,030
26,752
108,491
106,331
Gross profit
49,549
43,799
195,126
181,715
Operating expenses:
General and administrative
22,481
22,233
92,663
82,649
Research and development
10,703
12,178
47,517
42,592
Sales and marketing
9,580
7,139
35,792
23,658
Restructuring related costs
—
—
3,621
—
Acquisition related costs
—
1,679
—
4,228
Total operating expenses
42,764
43,229
179,593
153,127
Operating income
6,785
570
15,533
28,588
Other (income) expense, net:
Interest and other income
(1,433
)
(357
)
(4,029
)
(1,063
)
Interest expense
10,031
7,578
38,158
24,227
Total other expense, net
8,598
7,221
34,129
23,164
(Loss) income before income taxes
(1,813
)
(6,651
)
(18,596
)
5,424
Provision for income taxes
27,761
(1,188
)
23,943
4,130
Net (loss) income
$
(29,574
)
$
(5,463
)
$
(42,539
)
$
1,294
Net (loss) income per share:
Basic
$
(0.38
)
$
(0.07
)
$
(0.53
)
$
0.02
Diluted
$
(0.38
)
$
(0.07
)
$
(0.53
)
$
0.02
Weighted average common stock outstanding:
Basic
78,767,040
80,749,744
80,349,895
80,454,356
Diluted
78,767,040
80,749,744
80,349,895
82,403,679
Net Revenues by Major Source
(unaudited)
(in thousands)
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Subscription fees
$
61,999
$
60,004
$
256,787
$
248,864
Professional services
10,107
8,250
36,250
29,320
Other
2,473
2,297
10,580
9,862
Total
$
74,579
$
70,551
$
303,617
$
288,046
Net Revenues by Solution Type
(unaudited)
(in thousands)
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Lending software solutions
$
59,471
$
55,041
$
232,199
$
208,290
Data verification software solutions
15,108
15,510
71,418
79,756
Total (1)
$
74,579
$
70,551
$
303,617
$
288,046
% Growth attributable to:
Lending software solutions
6
%
8
%
Data verification software
(1
)%
(3
)%
Total % growth
6
%
5
%
___________
(1) Percent revenue related to the mortgage loan market:
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Lending software solutions
13
%
10
%
12
%
8
%
Data verification software
56
%
59
%
59
%
64
%
Total % revenue related to mortgage loan market
22
%
21
%
23
%
23
%
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Year Ended December 31,
2023
2022
Cash flows from operating activities:
Net (loss) income
$
(42,539
)
$
1,294
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization
57,829
53,982
Provision for expected credit losses
930
—
Amortization of debt issuance costs
1,085
2,760
Share-based compensation expense
30,550
22,761
Deferred income taxes
23,630
1,905
Loss on disposal of property and equipment
—
678
Gain on change in fair value of earnout
—
(162
)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
(443
)
(7,005
)
Prepaid expenses and other assets
(3,665
)
297
Accounts payable
3,170
(1,564
)
Accrued liabilities
(2,514
)
(2,281
)
Deferred revenue
(69
)
1,922
Net cash provided by operating activities
67,964
74,587
Cash flows from investing activities:
Capitalized software additions
(9,250
)
(8,228
)
Purchases of property and equipment
(943
)
(1,136
)
Return (payment) of escrow deposit
30,000
(30,000
)
Funds received in connection with former business combination
1,219
—
Funds paid in connection with former business combination
(1,219
)
—
Acquisition, net of cash acquired – Beanstalk Networks LLC
326
(61,830
)
Acquisition, net of cash and restricted cash acquired – StreetShares, Inc.
—
(23,137
)
Net cash provided by (used in) investing activities
20,133
(124,331
)
Cash flows from financing activities:
Repurchases of common stock
(61,171
)
(3,375
)
Proceeds from exercise of stock options
2,373
211
Proceeds from employee stock purchase plan
1,679
1,777
Taxes paid related to net share settlement of restricted stock units
(1,667
)
(206
)
Principal payments of debt
(4,350
)
(3,263
)
Payments of deferred offering costs
(300
)
—
Payment of Regulation A+ investor note
—
(3,265
)
Net cash used in financing activities
(63,436
)
(8,121
)
Net increase (decrease) in cash and cash equivalents
24,661
(57,865
)
Cash and cash equivalents, beginning of period
55,780
113,645
Cash and cash equivalents, end of period
$
80,441
$
55,780
Supplemental disclosures of cash flow information:
Cash paid for interest
$
37,018
$
21,348
Cash paid for income taxes
2,522
1,343
Non-cash investing and financing activities:
Shares withheld with respect to net settlement of restricted stock units
1,667
206
Purchase price allocation adjustment for Beanstalk Networks LLC acquisition
274
—
Excise taxes payable included in repurchases of common stock
377
—
Share-based compensation expense capitalized to software additions
303
311
Purchase price allocation adjustment related to income tax effects for StreetShares acquisition
1,132
—
Purchases of property and equipment included in accounts payable and accrued liabilities
80
72
Costs related to shelf registration on Form S-3 included in accrued liabilities
75
—
Vesting of restricted stock awards and restricted stock units
5
40
Regulation A+ investor note assumed in business combination
—
3,265
Initial recognition of operating lease liabilities
—
3,791
Initial recognition of operating lease right-of-use assets
—
3,047
Reconciliation from GAAP to Non-GAAP Results
(unaudited)
(in thousands, except share and per share data)
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Operating income
$
6,785
$
570
$
15,533
$
28,588
Add: Share-based compensation expense
8,335
6,260
31,213
22,761
Add: Employer payroll taxes on employee stock transactions
89
20
687
350
Add: Restructuring related costs(2)
—
—
3,621
—
Add: Sponsor and third-party acquisition related costs
—
1,679
—
4,228
Non-GAAP operating income
$
15,209
$
8,529
$
51,054
$
55,927
Operating margin
9
%
1
%
5
%
10
%
Non-GAAP operating margin
20
%
12
%
17
%
19
%
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Net (loss) income
$
(29,574
)
$
(5,463
)
$
(42,539
)
$
1,294
Add: Share-based compensation expense
8,335
6,260
31,213
22,761
Add: Employer payroll taxes on employee stock transactions
89
20
687
350
Add: Restructuring related costs(2)
—
—
3,621
—
Add: Sponsor and third-party acquisition related costs
—
1,679
—
4,228
Subtract: Income tax effect on non-GAAP items
(2,022
)
(1,910
)
(8,525
)
(6,561
)
Non-GAAP net (loss) income
$
(23,172
)
$
586
$
(15,543
)
$
22,072
Non-GAAP basic net (loss) income per share
$
(0.29
)
$
0.01
$
(0.19
)
$
0.27
Non-GAAP diluted net (loss) income per share
$
(0.29
)
$
0.01
$
(0.19
)
$
0.27
Weighted average shares used to compute Non-GAAP basic net (loss) income per share
78,767,040
80,749,744
80,349,895
80,454,356
Weighted average shares used to compute Non-GAAP diluted net (loss) income per share
78,767,040
82,413,712
80,349,895
82,403,679
Net (loss) income margin
(40
)%
(8
)%
(14
)%
—
%
Non-GAAP net (loss) income margin
(31
)%
1
%
(5
)%
8
%
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Net (loss) income
$
(29,574
)
$
(5,463
)
$
(42,539
)
$
1,294
Interest expense
10,031
7,578
38,158
24,227
Taxes(1)
27,761
(1,188
)
23,943
4,130
Depreciation and amortization
14,441
14,234
57,829
53,982
Share-based compensation expense
8,335
6,260
31,213
22,761
Employer payroll taxes on employee stock transactions
89
20
687
350
Restructuring related costs(2)
—
—
3,621
—
Acquisition related costs
—
1,679
—
4,228
Deferred revenue reduction from purchase accounting for acquisitions prior to 2022
19
51
78
227
Adjusted EBITDA
$
31,102
$
23,171
$
112,990
$
111,199
Net (loss) income margin
(40
)%
(8
)%
(14
)%
—
%
Adjusted EBITDA margin
42
%
33
%
37
%
39
%
(1) Taxes reflects a one-time non-cash tax expense of $29.4 million recorded during the quarter ended December 31, 2023, for the recognition of a partial valuation allowance on certain deferred tax assets.
(2) Restructuring related costs are inclusive of $663 thousand of stock-based compensation forfeitures recorded associated with restructuring.
Reconciliation from GAAP to Non-GAAP Results
(unaudited)
(in thousands)
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Cost of revenue
$
25,030
$
26,752
$
108,491
$
106,331
Less: Share-based compensation expense
930
1,063
3,848
4,630
Less: Employer payroll taxes on employee stock transactions
21
6
157
127
Less: Amortization of developed technology
4,641
4,266
18,129
15,553
Non-GAAP cost of revenue
$
19,438
$
21,417
$
86,357
$
86,021
Cost of revenue as a % of revenue
34
%
38
%
36
%
37
%
Non-GAAP cost of revenue as a % of revenue
26
%
30
%
28
%
30
%
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
General and administrative
$
22,481
$
22,233
$
92,663
$
82,649
Less: Share-based compensation expense
4,519
2,552
16,456
9,499
Less: Employer payroll taxes on employee stock transactions
30
6
246
81
Less: Depreciation expense
381
599
1,860
2,319
Less: Amortization of intangibles
9,419
9,369
37,840
36,110
Non-GAAP general & administrative
$
8,132
$
9,707
$
36,261
$
34,640
General and administrative as a % of revenue
30
%
32
%
31
%
29
%
Non-GAAP general and administrative as a % of revenue
11
%
14
%
12
%
12
%
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Research and development
$
10,703
$
12,178
$
47,517
$
42,592
Less: Share-based compensation expense
1,692
2,014
7,060
6,472
Less: Employer payroll taxes on employee stock transactions
26
6
189
102
Non-GAAP research and development
$
8,985
$
10,158
$
40,268
$
36,018
Research and development as a % of revenue
14
%
17
%
16
%
15
%
Non-GAAP research and development as a % of revenue
12
%
14
%
13
%
13
%
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Sales and marketing
$
9,580
$
7,139
$
35,792
$
23,658
Less: Share-based compensation expense
1,194
631
3,849
2,160
Less: Employer payroll taxes on employee stock transactions
12
2
95
40
Non-GAAP sales and marketing
$
8,374
$
6,506
$
31,848
$
21,458
Sales and marketing as a % of revenue
13
%
10
%
12
%
8
%
Non-GAAP sales and marketing as a % of revenue
11
%
9
%
10
%
7
%
Three Months Ended December 31,
Year Ended December 31,
2023
2022
2023
2022
Net cash provided by operating activities
$
12,478
$
7,352
$
67,964
$
74,587
Less: Capitalized software
2,246
1,905
9,250
8,228
Less: Capital expenditures
596
247
943
1,136
Free cash flow
$
9,636
$
5,200
$
57,771
$
65,223
View source version on businesswire.com: https://www.businesswire.com/news/home/20240305574206/en/
Press Contact Becky Frost (714) 784-5839 Media@meridianlink.com
Investor Relations Contact Gianna Rotellini (714) 332-6357 InvestorRelations@meridianlink.com
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