MeridianLink(US:MLNK)2021-11-07 13:26Financial Data and Key Metrics Changes - Third quarter GAAP revenue was $67.4 million, up 29% year-over-year, with adjusted EBITDA margins at 46% [8][28] - Operating loss was $8.8 million, but non-GAAP operating income was $17.1 million, and adjusted EBITDA was $30.1 million [27][28] - Gross margin in Q3 was 60%, adjusted for stock-based compensation it was 73% [31] Business Line Data and Key Metrics Changes - Lending software solutions revenues accounted for approximately two-thirds of total revenue, growing 34% year-over-year, while data verification software solutions increased 20% year-over-year [30] - Revenues from the mortgage loan market generated 29% of overall revenues, with 9% of lending software solutions revenues and 70% of data verification software solution revenues tied to mortgage-focused products [31] Market Data and Key Metrics Changes - The company added a Federal Reserve top 100 commercial bank with more than $20 billion in assets, indicating expansion beyond typical client size [20] - The mortgage-related percentage of revenue in Q4 is expected to be in the low 20%s, down from 29% in Q3, reflecting a shift towards faster-growing areas [38] Company Strategy and Development Direction - The company focuses on four strategic growth initiatives: innovation, cross-sell, expanding target market, and monetizing the partner network [11] - Continued investment in sales and marketing and R&D efforts to drive organic growth acceleration, with a significant increase in spending compared to the previous year [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the health of the business and the demand for products, describing it as unprecedented [103] - The company is well-positioned to capitalize on digitalization trends in consumer lending, with expectations for strong growth despite market headwinds [70][103] Other Important Information - The company completed its IPO in Q3 and used $200 million of IPO proceeds to pay down debt, significantly reducing interest expenses [33] - The integration of Saylent is progressing well, with the development of a new marketing automation beta product [23] Q&A Session Summary Question: Focus on consumer specialty lending in the top 100 bank - Management highlighted the importance of their configurable approach and the success in the mid-market while also pursuing larger clients [42][44] Question: Mortgage percentage of lending and data revenue - Management acknowledged the expected decline in mortgage-related revenue but emphasized continued growth in consumer lending [46][47] Question: Insights on the Partner Marketplace and ancillary services - Management noted increased interest in fraud prevention solutions and the importance of partnerships in enhancing service offerings [54] Question: Visibility on growth sustaining into 2022 - Management confirmed no changes to growth trends and expectations for continued double-digit growth from new logos and cross-sell opportunities [64] Question: Update on M&A opportunities - Management indicated a discerning approach to acquisitions, focusing on strategic fit and value creation [78] Question: Incremental sales and marketing investments - Management plans to maintain the current investment mix while expanding specific market segments [82] Question: Competitive landscape and digitalization - Management believes the company has a strong competitive position and will continue to invest in digitalization and analytics [85] Question: Data verification components and fraud prevention - Management emphasized the growing importance of fraud prevention in the digital lending landscape [88]