Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MeridianLink Inc (NYSE:MLNK) achieved a revenue of $80.4 million, marking a 5% growth year over year, which was in line with the high end of their guidance.
• The company reported an adjusted EBITDA of $33.8 million, representing a 42% EBITDA margin, exceeding the high end of their guidance.
• MeridianLink Inc (NYSE:MLNK) returned $31.3 million of capital to shareholders through stock buybacks at attractive valuations.
• The company continues to see strong cross-sell momentum, particularly in mortgage and consumer lending solutions, highlighting the effectiveness of their land and expand strategy.
• MeridianLink Inc (NYSE:MLNK) has strengthened its leadership team with the promotion of Larry to President and the onboarding of a new CFO, both of whom have deep industry knowledge and experience.

Negative Points

• Community banks and credit unions continue to face deposit constraints, with loan-to-deposit ratios remaining at elevated levels.
• Affordability of used cars remains a challenge due to high prices and elevated financing rates, impacting consumer lending.
• The mortgage market is not expected to see a robust recovery in the short or medium term due to high mortgage rates and macroeconomic uncertainty.
• MeridianLink Inc (NYSE:MLNK) experienced a 9% decline in other revenue and a 1% decline in data verification software solutions revenue year over year.
• The company anticipates continued macroeconomic headwinds, including constrained liquidity for financial institutions and low auto affordability, which may impact future performance.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Sign with OLO.

Q: Can you provide more details on the ACV release contributing to revenue growth? A: Larry, President: The ACV release is driven by bookings and services delivery. Growth in this period was not due to process changes but rather stable delivery times and bookings growth.

Q: What is the outlook for mortgage headwinds and any impact from recent election results? A: Nicholas, CEO: We are experiencing generational lows in mortgage volume and do not anticipate a quick return to normal. Mortgage rates need to drop below 5% for a meaningful impact, which we expect to take quarters.

Q: In a normalized environment, what revenue growth can be expected? A: Elias, CFO: In a normalized environment, we expect revenue growth in the mid-teens, consistent with our long-term guidance, as volumes pick up and headwinds diminish.

Q: What factors are driving success in cross-sell, and have customer priorities shifted? A: Larry, President: Cross-sell is driven by our platform's breadth. Key areas include expanding consumer solutions, mortgage cross-sell, and data analytics modules, which enable personalized offers and debt optimization.

Q: Do you see potential for increased M&A activity among financial institutions, and how might it impact your customer base? A: Nicholas, CEO: We expect more M&A activity as rates decrease, benefiting us since our customers are typically larger institutions that are consolidators in the market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.