MeridianLink(MLNK) - 2024 Q2 - Quarterly Report

Revenue and Financial Performance - The company reported that approximately 70% of revenue for the full-year 2023 is attributable to lending activities, highlighting the importance of lending for financial institutions [115]. - Subscription fee revenues for Q2 2024 were $78.676 million, up from$75.415 million in Q2 2023, representing a growth of 3.4% [149]. - Revenues for the three months ended June 30, 2024, increased to $78,676 thousand, a 4$75,415 thousand in the same period of 2023 [151]. - Revenues for the six months ended June 30, 2024, rose to $156,492 thousand, reflecting a 3$152,550 thousand in the prior year [151]. - Gross profit for the three months ended June 30, 2024, was $50,500 thousand, an 8$46,921 thousand in 2023 [156]. - Gross profit for the six months ended June 30, 2024, reached $102,243 thousand, a 6$96,101 thousand in the same period last year [156]. - The net loss for Q2 2024 was $9.670 million, compared to a net loss of$5.230 million in Q2 2023, representing an increase in loss of 85.5% [149]. - Adjusted EBITDA for Q2 2024 was $31.75 million, up 17.9$27.12 million in Q2 2023 [188]. Expenses and Cost Management - Total operating expenses for Q2 2024 were $51.597 million, compared to$45.438 million in Q2 2023, reflecting an increase of 13.4% [149]. - General and administrative expenses for Q2 2024 were $29.237 million, up from$24.409 million in Q2 2023, an increase of 19.5% [149]. - Research and development expenses for Q2 2024 were $9.905 million, down from$11.754 million in Q2 2023, a decrease of 15.8% [149]. - Sales and marketing expenses increased to $11.467 million in Q2 2024 from$8.558 million in Q2 2023, a rise of 34.5% [149]. - The total share-based compensation expense for the first half of 2024 was $20.429 million, compared to$13.893 million in the same period of 2023, an increase of 47.3% [150]. - Interest expense increased to $9.80 million in Q2 2024 from$9.32 million in Q2 2023, reflecting a rise of 5.0% [188]. - Share-based compensation expense rose to $12.50 million in Q2 2024, compared to$9.37 million in Q2 2023, an increase of 33.0% [188]. - Restructuring-related costs for Q2 2024 were $0.99 million, up from$0.72 million in Q2 2023, indicating a rise of 37.5% [188]. Strategic Initiatives and Market Focus - The company has identified significant untapped market potential in loan origination and digital banking, focusing on customer acquisition and revenue growth as financial institutions adopt online lending practices [114]. - The company aims to strengthen customer relationships through high-quality implementations and support services, which are critical for customer retention and incremental sales opportunities [119]. - The company has made several strategic acquisitions to enhance its capabilities, including the acquisition of Beanstalk Networks LLC in November 2022, which improved its mortgage lending technology [117]. - The company plans to expand its sales and marketing activities, anticipating an increase in expenses in absolute dollars [143]. Financing and Capital Management - The company completed a secondary offering on February 9, 2024, selling 6,906,015 shares at an offering price of $19.00 per share, with no proceeds received by the company from this sale [126]. - The company amended its credit agreement in May 2024, lowering the interest rate on its term loan from 3.26$50 million [122]. - The company increased the aggregate principal amount of the term loan by $50.0 million in May 2024, generating net proceeds of approximately$48.7 million after financing fees [169]. - The company continues to monitor its financing requirements and may pursue refinancing opportunities to reduce interest rates and extend maturities [171]. - The company has filed a shelf registration statement effective January 8, 2024, allowing for offerings up to $500.0 million [169]. Cash Flow and Liquidity - Cash and cash equivalents as of June 30, 2024, were$93.0 million, with an unused capacity under the revolving line of credit of $50.0 million [170]. - Net cash provided by operating activities increased by$9.2 million, or 27%, for the six months ended June 30, 2024, compared to the same period in 2023 [174]. - Cash used in investing activities decreased by $29.3 million, or 115$20.4 million, or 312%, for the six months ended June 30, 2024, compared to the same period in 2023 [178]. Restructuring and Realignment - The company incurred restructuring charges of $4.2 million related to its 2024 Realignment Plan, which included a workforce reduction of approximately 12$988 thousand, a 38% increase from $717 thousand in 2023 [164]. - The company incurred$1.86 million in litigation-related charges during Q2 2024, with no comparable charges in Q2 2023 [188]. Tax and Deferred Revenue - Provision for income taxes was $0.4 million for the three months ended June 30, 2024, compared to a benefit from income taxes of$1.8 million for the same period in 2023, representing a change of $2.2 million [167]. - The company reported a total of$19 million in deferred revenue reduction from purchase accounting for acquisitions prior to 2022 in Q2 2023 [188]. Accounting and Compliance - The company early adopted ASU 2021-08 on January 1, 2022, affecting the accounting for contract assets and liabilities [188]. - There were no significant changes in market risk exposures since December 31, 2023 [189].