MeridianLink(MLNK) - 2024 Q3 - Quarterly Results

Financial Performance - Third quarter revenue reached $80.4 million, a 5% increase year-over-year, driven by lending software solutions revenue of $63.0 million, which grew by 7% year-over-year[1][2] - Operating income was $2.6 million, representing 3% of revenue, while non-GAAP operating income was $18.0 million, or 22% of revenue[2] - The company reported a net loss of $(7.1) million, or (9)% of revenue, with adjusted EBITDA of $33.8 million, equating to 42% of revenue[2] - Cash flows from operations totaled $20.6 million, or 26% of revenue, and free cash flow was $18.7 million, or 23% of revenue[2] - Total revenues for the three months ended September 30, 2024, were $80,369 thousand, representing a 3.9% increase from $76,488 thousand in the same period of 2023[22] - Subscription fees contributed $67,344 thousand in Q3 2024, up from $64,613 thousand in Q3 2023, indicating a growth of 4.3%[23] - Gross profit for the three months ended September 30, 2024, was $52,719 thousand, compared to $49,476 thousand in Q3 2023, reflecting a 4.5% increase[22] - Operating income decreased to $2,559 thousand in Q3 2024 from $5,569 thousand in Q3 2023, a decline of 54.0%[22] - Net loss for the three months ended September 30, 2024, was $7,051 thousand, compared to a net loss of $2,069 thousand in Q3 2023, representing a significant increase in losses[22] - The company reported a net loss of $22,027,000 for the nine months ended September 30, 2024, compared to a net loss of $12,965,000 for the same period in 2023, representing an increase in losses of 70.5%[26] Cash Flow and Liquidity - MeridianLink returned $31.3 million to stockholders through the repurchase of 1.4 million shares[2] - The company reported a net cash provided by operating activities of $63,989,000 for the nine months ended September 30, 2024, compared to $55,486,000 in 2023, an increase of 15.4%[26] - Cash and cash equivalents increased to $82,266 thousand as of September 30, 2024, from $80,441 thousand as of December 31, 2023, a growth of 2.3%[21] - The company’s cash and cash equivalents at the end of the period were $82,266,000, down from $97,560,000 at the end of the previous year, a decrease of 15.6%[26] - Net cash provided by operating activities was $20,595 million in Q3 2024, slightly down from $21,301 million in Q3 2023, with free cash flow at $18,735 million, compared to $18,817 million in the prior year[35] Future Guidance - Fourth quarter revenue guidance is projected to be between $76.0 million and $80.0 million, with adjusted EBITDA expected between $29.5 million and $32.5 million[4] - Full year 2024 revenue is anticipated to be in the range of $313.0 million to $317.0 million, with adjusted EBITDA expected between $127.0 million and $130.0 million[4] Strategic Initiatives - The company successfully launched Broadway Bank on its MeridianLink® Mortgage platform, reducing loan processing time by up to six days[3] - MeridianLink's land and expand strategy is driving demand for its digital lending solutions in a competitive market[3] - The company completed a secondary public offering of 6 million shares, enhancing liquidity and attracting new investors[3] Expenses and Cost Management - Research and development expenses for the three months ended September 30, 2024, were $10,019,000, a decrease from $11,248,000 in 2023, representing a decline of 10.9%[31] - General and administrative expenses for Q3 2024 totaled $29,649 million, up from $23,218 million in Q3 2023, with general and administrative as a percentage of revenue increasing to 37% from 30%[33] - Sales and marketing expenses reached $10,492 million in Q3 2024, compared to $9,441 million in Q3 2023, with sales and marketing as a percentage of revenue at 13%, up from 12%[34] - Share-based compensation expense increased to $34,690,000 for the nine months ended September 30, 2024, from $22,879,000 in 2023, an increase of 51.6%[28] - Cost of revenue for Q3 2024 was $27,650 million, a slight increase from $27,012 million in Q3 2023, with a cost of revenue as a percentage of revenue at 34% compared to 35% in the previous year[32] - Non-GAAP cost of revenue for Q3 2024 was $21,483 million, representing 27% of revenue, consistent with the previous year[32] - Non-GAAP general and administrative expenses for Q3 2024 were $19,687 million, reflecting a significant increase from $11,938 million in Q3 2023[33] - Non-GAAP sales and marketing expenses were $8,571 million in Q3 2024, compared to $8,154 million in Q3 2023, maintaining a non-GAAP sales and marketing percentage of 11%[34] Balance Sheet Highlights - Total current assets increased to $133,443 thousand as of September 30, 2024, from $124,427 thousand as of December 31, 2023, a growth of 7.3%[21] - Total liabilities rose to $549,621 thousand as of September 30, 2024, compared to $488,004 thousand as of December 31, 2023, an increase of 12.6%[21] - Total stockholders' equity decreased to $418,322 thousand as of September 30, 2024, from $508,247 thousand as of December 31, 2023, a decline of 17.7%[21] Performance Metrics - The adjusted EBITDA margin for the nine months ended September 30, 2024, was 41%, compared to 36% in 2023, indicating an improvement of 5 percentage points[29] - The percentage of revenue related to the mortgage loan market for lending software solutions was 10% in Q3 2024, down from 12% in Q3 2023[25] - Non-GAAP operating income for the nine months ended September 30, 2024, was $49,872,000, compared to $35,846,000 in 2023, reflecting an increase of 39.1%[27] - The company’s adjusted EBITDA for the nine months ended September 30, 2024, was $97,352,000, up from $81,888,000 in 2023, marking a growth of 19.0%[29] - The overall performance indicates a focus on managing costs while maintaining revenue growth, with strategic investments in sales and marketing[32][33][34][35]