MeridianLink Reports Third Quarter 2024 Results

Third quarter revenue of $80.4 million grows 5% year-over-year driven by lending software solutions revenue of $63.0 million, reflecting growth of 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 third quarter ended September 30, 2024.

“Our solid third quarter performance highlights our disciplined execution as a leading vertical SaaS company and proven ability to deliver durable growth,” said Nicolaas Vlok, chief executive officer of MeridianLink®. “While our performance is muted by the current macro environment, we have skilled teams that deliver an end-to-end, digital lending platform through MeridianLink® One and value-added partner integrations that continue to drive performance.”

Quarterly Financial Highlights:

• Revenue of $80.4 million, an increase of 5% year-over-year
• Lending software solutions revenue of $63.0 million, an increase of 7% year-over-year
• Operating income of $2.6 million, or 3% of revenue, and non-GAAP operating income of $18.0 million, or 22% of revenue
• Net loss of $(7.1) million, or (9)% of revenue, and adjusted EBITDA of $33.8 million, or 42% of revenue
• Cash flows from operations of $20.6 million, or 26% of revenue, and free cash flow of $18.7 million, or 23% of revenue
• MeridianLink returned $31.3 million to stockholders via 1.4 million of stock repurchases

Business and Operating Highlights:

• MeridianLink’s land and expand strategy generated solid demand from customers leaning into their digital progression, choosing both mortgage and consumer lending solutions to outcompete for consumers in an increasingly digital market.
• We announced the successful go-live of Broadway Bank, one of the largest privately-owned banks in Texas with more than $5.5 billion in assets, on MeridianLink® Mortgage, resulting in a decrease in their loan processing time by up to six days.
• In the quarter, we completed a secondary public offering of 6 million shares of common stock held by certain funds managed by Thoma Bravo, increasing our public float and providing greater liquidity for our stock, as well as attracting new investors.

Business Outlook

Based on information as of today, November 7, 2024, the Company issues fourth quarter financial guidance and updates full year 2024 financial guidance as follows:

Fourth Quarter Fiscal 2024:

• Revenue is expected to be in the range of $76.0 million to $80.0 million
• Adjusted EBITDA is expected to be in the range of $29.5 million to $32.5 million

Full Year 2024:

• Revenue is expected to be in the range of $313.0 million to $317.0 million
• Adjusted EBITDA is expected to be in the range of $127.0 million to $130.0 million

Conference Call Information

MeridianLink will hold a conference call to discuss its third quarter results today, November 7, 2024, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call can be accessed by dialing [phone] from North America toll-free or the International number of [phone] with Conference ID 58111. 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 Thursday, November 14, 2024, by dialing [phone] from North America or the International number of [phone] with Playback Passcode 58111.

MeridianLink uses its investor relations website (https://ir.meridianlink.com), press releases, SEC filings, public conference calls and webcasts, blog posts on its website, as well as its social media channels, such as its LinkedIn page (www.linkedin.com/company/meridianlink), X (formerly Twitter) feed (@meridianlink), and Facebook page (www.facebook.com/MeridianLink/), as a means of disclosing material information and for complying with its disclosure obligations under Regulation FD. Information contained on or accessible through the websites is not incorporated by reference into this release, and links for these websites are inactive textual references only.

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.

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, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, and expenses for services performed by a third party consultant relating to efforts to remediate our material weakness.

• Non-GAAP net income (loss): GAAP net income (loss), excluding the impact of share-based compensation, employer payroll taxes on employee stock transactions, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, expenses for services performed by a third party consultant relating to efforts to remediate our material weakness, and the effect of income taxes, including the partial valuation allowance, 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 or include the impact from the partial deferred tax asset valuation allowance, 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, expenses associated with our secondary offering, restructuring related costs, expenses related to debt modification, charges in connection with litigation unrelated to our core business, expenses for services performed by a third party consultant relating to efforts to remediate our material weakness, 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. Deferred revenue from acquisitions prior to the adoption of ASU 2021-08 was 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, expenses associated with our secondary offering, expenses related to debt modification, charges in connection with litigation unrelated to our core business, expenses for services performed by a third party consultant relating to efforts to remediate our material weakness, 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, our leadership transition and plans, our stock repurchase programs, including the execution and amount of repurchases, the status of litigation matters, including expected or contemplated settlements, associated timing, and estimated fees and expenses, our ability to retain and attract customers and product partners, the benefit to us and our customers of integrations with our product partners, 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

 

September 30, 2024

 

December 31, 2023

 

 

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

82,266

 

 

$

80,441

 

Accounts receivable, net

 

38,868

 

 

 

32,412

 

Prepaid expenses and other current assets

 

12,309

 

 

 

11,574

 

Total current assets

 

133,443

 

 

 

124,427

 

Property and equipment, net

 

2,362

 

 

 

3,337

 

Right of use assets, net

 

639

 

 

 

1,140

 

Intangible assets, net

 

214,125

 

 

 

251,060

 

Goodwill

 

610,063

 

 

 

610,063

 

Other assets

 

7,311

 

 

 

6,224

 

Total assets

$

967,943

 

 

$

996,251

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

6,165

 

 

$

4,405

 

Accrued liabilities

 

31,914

 

 

 

30,673

 

Deferred revenue

 

29,767

 

 

 

17,224

 

Current portion of debt, net of debt issuance costs

 

3,773

 

 

 

3,542

 

Total current liabilities

 

71,619

 

 

 

55,844

 

Debt, net of debt issuance costs

 

466,137

 

 

 

420,004

 

Deferred tax liabilities, net

 

11,369

 

 

 

10,823

 

Long-term deferred revenue

 

160

 

 

 

792

 

Other long-term liabilities

 

336

 

 

 

541

 

Total liabilities

$

549,621

 

 

$

488,004

 

Commitments and contingencies

 

 

 

Stockholders’ Equity:

 

 

 

Preferred stock, $0.001 par value; 50,000,000 shares authorized; zero shares issued and outstanding at September 30, 2024 and December 31, 2023

 

—

 

 

 

—

 

Common stock, $0.001 par value; 600,000,000 shares authorized, 75,107,642 and 78,447,701 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

 

126

 

 

 

129

 

Additional paid-in capital

 

692,285

 

 

 

654,634

 

Accumulated deficit

 

(274,089

)

 

 

(146,516

)

Total stockholders’ equity

 

418,322

 

 

 

508,247

 

Total liabilities and stockholders’ equity

$

967,943

 

 

$

996,251

 

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share data)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenues, net

$

80,369

 

 

$

76,488

 

 

$

236,861

 

 

$

229,038

 

Cost of revenues:

 

 

 

 

 

 

 

Subscription and services

 

22,790

 

 

 

22,488

 

 

 

67,507

 

 

 

69,973

 

Amortization of developed technology

 

4,860

 

 

 

4,524

 

 

 

14,392

 

 

 

13,488

 

Total cost of revenues

 

27,650

 

 

 

27,012

 

 

 

81,899

 

 

 

83,461

 

Gross profit

 

52,719

 

 

 

49,476

 

 

 

154,962

 

 

 

145,577

 

Operating expenses:

 

 

 

 

 

 

 

General and administrative

 

29,649

 

 

 

23,218

 

 

 

84,065

 

 

 

70,182

 

Research and development

 

10,019

 

 

 

11,248

 

 

 

29,409

 

 

 

36,814

 

Sales and marketing

 

10,492

 

 

 

9,441

 

 

 

32,495

 

 

 

26,212

 

Restructuring related costs

 

—

 

 

 

—

 

 

 

4,179

 

 

 

3,621

 

Total operating expenses

 

50,160

 

 

 

43,907

 

 

 

150,148

 

 

 

136,829

 

Operating income

 

2,559

 

 

 

5,569

 

 

 

4,814

 

 

 

8,748

 

Other (income) expense, net:

 

 

 

 

 

 

 

Interest and other income

 

(1,371

)

 

 

(1,342

)

 

 

(3,963

)

 

 

(2,596

)

Interest expense

 

10,165

 

 

 

9,780

 

 

 

29,544

 

 

 

28,127

 

Total other expense, net

 

8,794

 

 

 

8,438

 

 

 

25,581

 

 

 

25,531

 

Loss before income taxes

 

(6,235

)

 

 

(2,869

)

 

 

(20,767

)

 

 

(16,783

)

Provision for (benefit from) income taxes

 

816

 

 

 

(800

)

 

 

1,260

 

 

 

(3,818

)

Net loss

$

(7,051

)

 

$

(2,069

)

 

$

(22,027

)

 

$

(12,965

)

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

Basic

$

(0.09

)

 

$

(0.03

)

 

$

(0.29

)

 

$

(0.16

)

Diluted

$

(0.09

)

 

$

(0.03

)

 

$

(0.29

)

 

$

(0.16

)

Weighted average common stock outstanding:

 

 

 

 

 

 

 

Basic

 

75,631,670

 

 

 

81,073,915

 

 

 

76,495,022

 

 

 

80,883,310

 

Diluted

 

75,631,670

 

 

 

81,073,915

 

 

 

76,495,022

 

 

 

80,883,310

 

Net Revenues by Major Source

(unaudited)

(in thousands)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Subscription fees

$

67,344

 

$

64,613

 

$

199,202

 

$

194,788

Professional services

 

10,146

 

 

8,706

 

 

28,715

 

 

26,143

Other

 

2,879

 

 

3,169

 

 

8,944

 

 

8,107

Total

$

80,369

 

$

76,488

 

$

236,861

 

$

229,038

Net Revenues by Solution Type

(unaudited)

(in thousands)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Lending software solutions

$

63,005

 

 

$

58,949

 

$

185,552

 

 

$

172,728

Data verification software solutions

 

17,364

 

 

 

17,539

 

 

51,309

 

 

 

56,310

Total

$

80,369

 

 

$

76,488

 

$

236,861

 

 

$

229,038

% Growth attributable to:

 

 

 

 

 

 

 

Lending software solutions

 

5

%

 

 

 

 

5

%

 

 

Data verification software

 

—

%

 

 

 

 

(2

)%

 

 

Total % growth

 

5

%

 

 

 

 

3

%

 

 

___________

 

 

 

 

 

 

 

Percent Revenue Related to the Mortgage Loan Market

(unaudited)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Lending software solutions

10

%

 

12

%

 

11

%

 

12

%

Data verification software

56

%

 

57

%

 

56

%

 

60

%

Total % revenue related to mortgage loan market

20

%

 

22

%

 

20

%

 

24

%

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

Cash flows from operating activities:

 

 

 

Net loss

$

(22,027

)

 

$

(12,965

)

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

 

 

 

Depreciation and amortization

 

43,689

 

 

 

43,388

 

Provision for expected credit losses

 

604

 

 

 

627

 

Amortization of debt issuance costs

 

747

 

 

 

897

 

Share-based compensation expense

 

34,683

 

 

 

22,216

 

Deferred income taxes

 

546

 

 

 

(4,507

)

Loss on disposal of property and equipment

 

90

 

 

 

—

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

Accounts receivable

 

(7,060

)

 

 

(1,726

)

Prepaid expenses and other assets

 

(1,896

)

 

 

(4,595

)

Accounts payable

 

1,758

 

 

 

3,632

 

Accrued liabilities

 

944

 

 

 

(782

)

Deferred revenue

 

11,911

 

 

 

9,301

 

Net cash provided by operating activities

 

63,989

 

 

 

55,486

 

Cash flows from investing activities:

 

 

 

Capitalized software additions

 

(5,483

)

 

 

(7,004

)

Purchases of property and equipment

 

(213

)

 

 

(347

)

Return of escrow deposit

 

—

 

 

 

30,000

 

Funds received in connection with former business combination

 

—

 

 

 

1,219

 

Acquisition, net of cash acquired – Beanstalk Networks LLC

 

—

 

 

 

326

 

Net cash (used in) provided by investing activities

 

(5,696

)

 

 

24,194

 

Cash flows from financing activities:

 

 

 

Repurchases of common stock

 

(104,847

)

 

 

(35,660

)

Proceeds from exercise of stock options

 

4,728

 

 

 

1,633

 

Proceeds from employee stock purchase plan

 

944

 

 

 

793

 

Taxes paid related to net share settlement of restricted stock units

 

(2,910

)

 

 

(1,403

)

Principal payments of debt

 

(3,468

)

 

 

(3,263

)

Payments of deferred offering costs

 

(75

)

 

 

—

 

Proceeds from debt

 

50,000

 

 

 

—

 

Payments of debt issuance costs

 

(840

)

 

 

—

 

Net cash used in financing activities

 

(56,468

)

 

 

(37,900

)

Net increase in cash and cash equivalents

 

1,825

 

 

 

41,780

 

Cash and cash equivalents, beginning of period

 

80,441

 

 

 

55,780

 

Cash and cash equivalents, end of period

$

82,266

 

 

$

97,560

 

Supplemental disclosures of cash flow information:

 

 

 

Cash paid for interest

$

28,988

 

$

27,498

Cash paid for income taxes

 

455

 

 

2,610

Non-cash investing and financing activities:

 

 

 

Shares withheld with respect to net settlement of restricted stock units

 

2,910

 

 

1,403

Purchase price allocation adjustment for Beanstalk Networks LLC acquisition

 

—

 

 

757

Excise taxes payable included in repurchases of common stock

 

704

 

 

162

Share-based compensation expense included in capitalized software additions

 

206

 

 

219

Purchase price allocation adjustment related to income tax effects for StreetShares acquisition

 

—

 

 

245

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

 

46

 

 

611

Vesting of restricted stock awards and restricted stock units

 

2

 

 

4

Reconciliation from GAAP to Non-GAAP Results

(unaudited)

(in thousands, except share and per share data)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Operating income

$

2,559

 

 

$

5,569

 

 

$

4,814

 

 

$

8,748

 

Add: Share-based compensation expense

 

14,254

 

 

 

8,322

 

 

 

34,690

 

 

 

22,879

 

Add: Employer payroll taxes on employee stock transactions

 

301

 

 

 

150

 

 

 

1,231

 

 

 

598

 

Add: Expenses associated with public offering

 

416

 

 

 

—

 

 

 

2,114

 

 

 

—

 

Add: Litigation-related charges(1)

 

—

 

 

 

—

 

 

 

1,864

 

 

 

—

 

Add: Expenses related to debt modification

 

—

 

 

 

—

 

 

 

473

 

 

 

—

 

Add: Restructuring related costs(2)

 

—

 

 

 

—

 

 

 

4,179

 

 

 

3,621

 

Add: Expenses associated with material weakness remediation(3)

 

507

 

 

 

—

 

 

 

507

 

 

 

—

 

Non-GAAP operating income

$

18,037

 

 

$

14,041

 

 

$

49,872

 

 

$

35,846

 

Operating margin

 

3

%

 

 

7

%

 

 

2

%

 

 

4

%

Non-GAAP operating margin

 

22

%

 

 

18

%

 

 

21

%

 

 

16

%

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net loss

$

(7,051

)

 

$

(2,069

)

 

$

(22,027

)

 

$

(12,965

)

Add: Share-based compensation expense

 

14,254

 

 

 

8,322

 

 

 

34,690

 

 

 

22,879

 

Add: Employer payroll taxes on employee stock transactions

 

301

 

 

 

150

 

 

 

1,231

 

 

 

598

 

Add: Expenses associated with public offering

 

416

 

 

 

—

 

 

 

2,114

 

 

 

—

 

Add: Litigation-related charges(1)

 

(172

)

 

 

—

 

 

 

1,692

 

 

 

—

 

Add: Expenses related to debt modification

 

—

 

 

 

—

 

 

 

473

 

 

 

—

 

Add: Restructuring related costs(2)

 

—

 

 

 

—

 

 

 

4,179

 

 

 

3,621

 

Add: Expenses associated with material weakness remediation(3)

 

507

 

 

 

—

 

 

 

507

 

 

 

—

 

Subtract: Income tax effect on non-GAAP items(4)

 

(3,673

)

 

 

(2,033

)

 

 

(10,773

)

 

 

(6,504

)

Non-GAAP net income(4)

$

4,582

 

 

$

4,370

 

 

$

12,086

 

 

$

7,629

 

Non-GAAP basic net income per share

$

0.06

 

 

$

0.05

 

 

$

0.16

 

 

$

0.09

 

Non-GAAP diluted net income per share

$

0.06

 

 

$

0.05

 

 

$

0.15

 

 

$

0.09

 

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

 

75,631,670

 

 

 

81,073,915

 

 

 

76,495,022

 

 

 

80,883,310

 

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

 

79,373,207

 

 

 

83,716,804

 

 

 

79,961,158

 

 

 

83,331,901

 

Net loss margin

 

(9

)%

 

 

(3

)%

 

 

(9

)%

 

 

(6

)%

Non-GAAP net income margin

 

6

%

 

 

6

%

 

 

5

%

 

 

3

%

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net loss

$

(7,051

)

 

$

(2,069

)

 

$

(22,027

)

 

$

(12,965

)

Interest expense

 

10,165

 

 

 

9,780

 

 

 

29,544

 

 

 

28,127

 

Taxes

 

816

 

 

 

(800

)

 

 

1,260

 

 

 

(3,818

)

Depreciation and amortization

 

14,593

 

 

 

14,433

 

 

 

43,689

 

 

 

43,388

 

Share-based compensation expense

 

14,254

 

 

 

8,322

 

 

 

34,690

 

 

 

22,879

 

Employer payroll taxes on employee stock transactions

 

301

 

 

 

150

 

 

 

1,231

 

 

 

598

 

Expenses associated with public offering

 

416

 

 

 

—

 

 

 

2,114

 

 

 

—

 

Litigation-related charges(1)

 

(172

)

 

 

—

 

 

 

1,692

 

 

 

—

 

Expenses related to debt modification

 

—

 

 

 

—

 

 

 

473

 

 

 

—

 

Restructuring related costs(2)

 

—

 

 

 

—

 

 

 

4,179

 

 

 

3,621

 

Expenses associated with material weakness remediation(3)

 

507

 

 

 

—

 

 

 

507

 

 

 

—

 

Deferred revenue reduction from purchase accounting for acquisitions prior to 2022

 

—

 

 

 

19

 

 

 

—

 

 

 

58

 

Adjusted EBITDA

$

33,829

 

 

$

29,835

 

 

$

97,352

 

 

$

81,888

 

Net loss margin

 

(9

)%

 

 

(3

)%

 

 

(9

)%

 

 

(6

)%

Adjusted EBITDA margin

 

42

%

 

 

39

%

 

 

41

%

 

 

36

%

(1) Litigation-related charges pertains to litigation settlements and related legal fees. During the nine months ended September 30, 2024, we incurred $1.5 million related to estimated settlements of class action lawsuits and $0.4 million related to third-party legal fees directly related to the settlements. During the three months ended September 30, 2024, we recognized $0.2 million gain on a favorable litigation settlement. The gain was recognized in interest and other income on our condensed consolidated statements of operations.

(2) Restructuring related costs for the nine months ended September 30, 2024 and 2023 are inclusive of net acceleration (forfeitures) of share-based compensation associated with restructuring in the amount of $0.0 million and ($0.7 million), respectively.

(3) Expenses for services performed by a third party consultant related to efforts to remediate our previously identified material weakness.

(4) The amounts presented for the periods ended September 30, 2023 in our reconciliation of net loss to Non-GAAP net income are corrected from our previously disclosed Non-GAAP net income for those periods. The previously disclosed income tax effects on non-GAAP items for the periods ended September 30, 2023 were inadvertently expressed as positive numbers, where such figures should have been expressed as negative numbers.

Reconciliation from GAAP to Non-GAAP Results

(unaudited)

(in thousands)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Cost of revenue

$

27,650

 

 

$

27,012

 

 

$

81,899

 

 

$

83,461

 

Less: Share-based compensation expense

 

1,252

 

 

 

910

 

 

 

3,397

 

 

 

2,919

 

Less: Employer payroll taxes on employee stock transactions

 

55

 

 

 

26

 

 

 

200

 

 

 

135

 

Less: Amortization of developed technology

 

4,860

 

 

 

4,524

 

 

 

14,392

 

 

 

13,488

 

Non-GAAP cost of revenue

$

21,483

 

 

$

21,552

 

 

$

63,910

 

 

$

66,919

 

Cost of revenue as a % of revenue

 

34

%

 

 

35

%

 

 

35

%

 

 

36

%

Non-GAAP cost of revenue as a % of revenue

 

27

%

 

 

28

%

 

 

27

%

 

 

29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

General and administrative

$

29,649

 

 

$

23,218

 

 

$

84,065

 

 

$

70,182

 

Less: Share-based compensation expense

 

8,502

 

 

 

4,443

 

 

 

19,687

 

 

 

11,938

 

Less: Employer payroll taxes on employee stock transactions

 

118

 

 

 

59

 

 

 

460

 

 

 

217

 

Less: Expenses associated with public offering

 

416

 

 

 

—

 

 

 

2,114

 

 

 

—

 

Less: Litigation-related charges

 

—

 

 

 

—

 

 

 

1,864

 

 

 

—

 

Less: Expenses related to debt modification

 

—

 

 

 

—

 

 

 

473

 

 

 

—

 

Less: Expenses associated with material weakness remediation

 

507

 

 

 

—

 

 

 

507

 

 

 

—

 

Less: Depreciation expense

 

326

 

 

 

490

 

 

 

1,065

 

 

 

1,480

 

Less: Amortization of intangibles

 

9,407

 

 

 

9,419

 

 

 

28,232

 

 

 

28,420

 

Non-GAAP general & administrative

$

10,373

 

 

$

8,807

 

 

$

29,663

 

 

$

28,127

 

General and administrative as a % of revenue

 

37

%

 

 

30

%

 

 

35

%

 

 

31

%

Non-GAAP general and administrative as a % of revenue

 

13

%

 

 

12

%

 

 

13

%

 

 

12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Research and development

$

10,019

 

 

$

11,248

 

 

$

29,409

 

 

$

36,814

 

Less: Share-based compensation expense

 

2,630

 

 

 

1,709

 

 

 

6,663

 

 

 

5,368

 

Less: Employer payroll taxes on employee stock transactions

 

77

 

 

 

38

 

 

 

323

 

 

 

163

 

Non-GAAP research and development

$

7,312

 

 

$

9,501

 

 

$

22,423

 

 

$

31,283

 

Research and development as a % of revenue

 

12

%

 

 

15

%

 

 

12

%

 

 

16

%

Non-GAAP research and development as a % of revenue

 

9

%

 

 

12

%

 

 

9

%

 

 

14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Sales and marketing

$

10,492

 

 

$

9,441

 

 

$

32,495

 

 

$

26,212

 

Less: Share-based compensation expense

 

1,870

 

 

 

1,260

 

 

 

4,943

 

 

 

2,654

 

Less: Employer payroll taxes on employee stock transactions

 

51

 

 

 

27

 

 

 

248

 

 

 

83

 

Non-GAAP sales and marketing

$

8,571

 

 

$

8,154

 

 

$

27,304

 

 

$

23,475

 

Sales and marketing as a % of revenue

 

13

%

 

 

12

%

 

 

14

%

 

 

11

%

Non-GAAP sales and marketing as a % of revenue

 

11

%

 

 

11

%

 

 

12

%

 

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net cash provided by operating activities

$

20,595

 

 

$

21,301

 

 

$

63,989

 

 

$

55,486

 

Less: Capitalized software

 

1,799

 

 

 

2,442

 

 

 

5,483

 

 

 

7,004

 

Less: Capital expenditures

 

61

 

 

 

42

 

 

 

213

 

 

 

347

 

Free cash flow

$

18,735

 

 

$

18,817

 

 

$

58,293

 

 

$

48,135

 

Net cash provided by operating actives as a % of revenue

 

26

%

 

 

28

%

 

 

27

%

 

 

24

%

Free cash flow as a % of revenue

 

23

%

 

 

25

%

 

 

25

%

 

 

21

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241107209695/en/

For More Information:

Press Contact Sydney Wishnow [phone] [e-mail]

Investor Relations Contact Gianna Rotellini [phone] [e-mail]