MeridianLink(MLNK) - 2025 Q1 - Quarterly Results

MeridianLink First Quarter 2025 Results Management Commentary Executives expressed satisfaction with Q1 results, highlighting strong bookings, accelerated demand for mortgage solutions, and the upcoming CEO transition to Larry Katz effective October 1, 2025 - Larry Katz, MeridianLink's President, will succeed Nicolaas Vlok as Chief Executive Officer effective October 1, 2025, with Mr. Vlok continuing to serve on the Board of Directors[2] - The company experienced solid bookings driven by an increased mix of larger deals, continued cross-sell momentum, and accelerated demand for mortgage lending solutions[3] - Outgoing CEO Nicolaas Vlok highlighted significant business growth, with revenue expanding from approximately $150 million in 2019 to a guided midpoint of $330 million for 2025[3] Quarterly Financial Highlights MeridianLink reported Q1 2025 total revenue of $81.5 million (5% YoY growth), driven by lending software, with strong cash flow from operations at $42.4 million and a GAAP net loss of $(4.7) million Q1 2025 Financial Highlights | Metric | Value | Growth/Margin | | :--- | :--- | :--- | | Total Revenue | $81.5 million | 5% YoY | | Lending Software Solutions Revenue | $67.1 million | 10% YoY | | Operating Income | $3.6 million | 4% of revenue | | Non-GAAP Operating Income | $19.1 million | 23% of revenue | | Net Loss | $(4.7) million | (6)% of revenue | | Adjusted EBITDA | $34.8 million | 43% of revenue | | Cash Flow from Operations | $42.4 million | 52% of revenue | | Free Cash Flow | $40.6 million | 50% of revenue | Business and Operating Highlights The company appointed Troy Coggiola as its new Chief Strategy Officer to drive product innovation and partnerships, achieved strong bookings through its land-and-expand strategy, and enhanced MeridianLink One to streamline deposit account applications - Troy Coggiola was appointed as the new Chief Strategy Officer on April 21, 2025, to help meet customer needs through product innovation, partnerships, and acquisitions[7] - Achieved solid bookings momentum, highlighted by continued strength in cross-sells and fifteen mortgage lending deals with new and existing customers[7] - Enhanced MeridianLink One to reduce secondary deposit account opening time by approximately 70% for returning consumers[7] Business Outlook MeridianLink reaffirmed its full-year 2025 financial guidance as of May 12, 2025, expecting total revenue between $326.0 million and $334.0 million and Adjusted EBITDA between $131.5 million and $137.5 million Full Year 2025 Financial Guidance | Metric | Guidance Range | | :--- | :--- | | Revenue | $326.0 million to $334.0 million | | Adjusted EBITDA | $131.5 million to $137.5 million | Definitions and Disclosures This section defines key operational metrics like 'Bookings' and 'ACV', details the composition of non-GAAP financial measures, and provides a standard forward-looking statements disclaimer outlining potential risks and uncertainties - Defines 'Bookings' as the minimum annual contracted value (ACV) of newly sold SaaS products and professional services orders[14] - Non-GAAP measures like Adjusted EBITDA, Non-GAAP operating income, and Free Cash Flow are used to supplement GAAP results by excluding items such as share-based compensation and acquisition-related costs[16][19] - The report contains forward-looking statements regarding strategy, financial guidance, and operational performance, which are subject to risks and uncertainties[22] Financial Statements Condensed Consolidated Balance Sheets As of March 31, 2025, MeridianLink's total assets stood at $987.0 million, an increase from $961.3 million at the end of 2024, primarily due to a rise in cash to $128.9 million, with total liabilities increasing to $555.0 million Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $986,958 | $961,333 | | Cash | $128,895 | $92,765 | | Goodwill | $610,063 | $610,063 | | Total Liabilities | $555,021 | $533,840 | | Long-term debt, net | $463,989 | $464,922 | | Total Stockholders' Equity | $431,937 | $427,493 | Condensed Consolidated Statements of Operations For the three months ended March 31, 2025, revenues grew 5% year-over-year to $81.5 million, with gross profit increasing to $53.8 million, resulting in a net loss of $(4.7) million or $(0.06) per share Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues, net | $81,488 | $77,816 | | Gross profit | $53,765 | $51,743 | | Operating income | $3,565 | $3,352 | | Net loss | $(4,685) | $(5,306) | | Net loss per share, basic & diluted | $(0.06) | $(0.07) | Revenue Breakdown In Q1 2025, lending software solutions revenue grew 10% to $67.1 million, while data verification software solutions revenue declined 15% to $14.4 million, with subscription fees as the primary driver at $68.7 million Net Revenues by Major Source (in thousands) | Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Subscription fees | $68,745 | $65,912 | | Professional services | $8,666 | $9,010 | | Other | $4,077 | $2,894 | | Total | $81,488 | $77,816 | Net Revenues by Solution Type (in thousands) | Solution Type | Q1 2025 | Q1 2024 | % Growth | | :--- | :--- | :--- | :--- | | Lending software solutions | $67,069 | $60,903 | 10% | | Data verification software solutions | $14,419 | $16,913 | (15)% | | Total | $81,488 | $77,816 | 5% | Percent Revenue Related to the Mortgage Loan Market | Solution Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Lending software solutions | 10% | 11% | | Data verification software | 49% | 57% | | Total % revenue | 17% | 21% | Condensed Consolidated Statements of Cash Flows The company generated $42.4 million in net cash from operating activities in Q1 2025, a significant increase from $29.0 million in Q1 2024, resulting in free cash flow of $40.6 million and an increased cash balance of $128.9 million Statement of Cash Flows Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $42,350 | $29,038 | | Net cash used in investing activities | $(1,716) | $(1,929) | | Net cash used in financing activities | $(4,504) | $(45,265) | | Net increase (decrease) in cash | $36,130 | $(18,156) | | Cash and cash equivalents, end of period | $128,895 | $62,285 | Reconciliation of GAAP to Non-GAAP Results Reconciliation of Key Profitability Metrics This section reconciles GAAP figures to non-GAAP metrics by adjusting for items like share-based compensation and amortization, showing Non-GAAP operating income of $19.1 million (23% margin), Non-GAAP net income of $7.1 million, and Adjusted EBITDA of $34.8 million (43% margin) Reconciliation of Operating Income (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Operating income | $3,565 | $3,352 | | Non-GAAP operating income | $19,080 | $16,290 | | Non-GAAP operating margin | 23% | 21% | Reconciliation of Net Income (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Net loss | $(4,685) | $(5,306) | | Non-GAAP net income | $7,106 | $4,527 | | Non-GAAP diluted net income per share | $0.09 | $0.06 | Reconciliation to Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Net loss | $(4,685) | $(5,306) | | Adjusted EBITDA | $34,845 | $31,770 | | Adjusted EBITDA margin | 43% | 41% | Reconciliation of Costs and Expenses After adjusting for items like share-based compensation and amortization, Non-GAAP cost of revenue was $21.0 million or 26% of revenue, with Non-GAAP operating expenses detailed across G&A, R&D, and Sales & Marketing, demonstrating consistent cost management Reconciliation of Cost of Revenue (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Cost of revenue | $27,723 | $26,073 | | Non-GAAP cost of revenue | $21,045 | $20,514 | | Non-GAAP cost of revenue as a % of revenue | 26% | 26% | Reconciliation of Operating Expenses (as a % of revenue) | Expense Category | Non-GAAP % of Revenue (Q1 2025) | Non-GAAP % of Revenue (Q1 2024) | | :--- | :--- | :--- | | General & administrative | 12% | 12% | | Research and development | 10% | 10% | | Sales and marketing | 11% | 12% | Reconciliation of Free Cash Flow Free cash flow for Q1 2025 was $40.6 million, calculated by subtracting capitalized software and capital expenditures from net cash provided by operating activities, representing a strong 50% free cash flow margin Reconciliation of Free Cash Flow (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $42,350 | $29,038 | | Less: Capitalized software | $1,620 | $1,837 | | Less: Capital expenditures | $96 | $92 | | Free cash flow | $40,634 | $27,109 | | Free cash flow as a % of revenue | 50% | 35% |