MeridianLink, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Meridian Links third quarter 2022 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Eric Schneider. Eric, please go ahead.

Good afternoon and welcome to MeridianLink's third quarter fiscal year 2022 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me are MeridianLink's Chief Executive Officer, Nicholas Bloch, Chief Financial Officer, Sean Blachock, and President Go-To-Market, Chris Maloof. Before we begin, I'd like to remind you that today's conference call will include forward-looking statements. based on the company's current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, and our actual results may differ materially. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's earnings release and the other reports and filings we file from time to time with the Securities and Exchange Commission. All of our statements are made based on information available to us as of today, and, except as required by law, we assume no obligation to update any such statements. During the call, we will also refer to both GAAP and non-GAAP financial measures. You can find the reconciliation of our GAAP to non-GAAP measures included in our press release, which is posted to the Investor Relations section of our website. With that, let me turn the call over to Nick Austin.

Thank you, Eric. Good afternoon, and thank you all for joining us. I am pleased with our performance in light of challenging macroeconomic conditions. We believe our third quarter results demonstrate the resilience of our business model, and we remain confident in our long-term growth opportunities. We delivered solid results while advancing our strategic initiatives during the quarter. MeridianLink completed Q3 with GAAP revenue of $71.8 million. up 7% year-over-year, and 36% adjusted EBITDA margins. Our consumer lending business remains strong, growing at 21% year-over-year, led by ongoing strength in personal and other non-vehicle loan types. We have experienced the fastest and largest relative increase in mortgage interest rates in history and currently see rates at a two-decade high. A consequence of these higher rates is lower mortgage application and lending activity, which drove mortgage-related revenue down to 21% of total revenue in the quarter. Sean will walk through our Q3 financial performance in more detail, but first I will focus on the key highlights of our business and where we are investing for the future. We see opportunities in current conditions. Given that deposit-taking financial institutions have higher net interest margins to take, we expect demand for our consumer lending business to remain strong as customers and prospects seek ways to more effectively engage with their customers across the entire array of loan types. We can see this momentum in our pipeline and successful bookings. Additionally, we continue to invest to capture a disproportionate share of our $10 billion TAM, while maintaining best in class margins. In particular, we believe the opportunity exists now to create a differentiated alternative to the current mortgage lending software market leader by providing more advanced, more open, and more customer-friendly capabilities. This is why we announced today the acquisition of OpenClose, a leader in mortgage lending technology with a particular focus on supporting depository institutions. We will discuss this more in detail in a little bit. As we have outlined, we have three ongoing areas of specific focus to drive accelerated growth. First, engaging more deeply with our customers. Second, expanding the capabilities of our platform. And third, empowering our customers to grow more quickly and better serve their communities. Our top priority is engaging with our customers and prospects to ensure we can best serve our markets. These conversations are an integral part of our go-to-market motion, and we proactively facilitate them on an ongoing basis. This is why we continue to invest in customer success as one of our priorities, and we are seeing the benefits as customers are increasingly turning to MeridianLink to provide their full consumer lending experience. A few recent ones include a longstanding credit union customer of our ML consumer modules with over 33,000 members decided to modernize their mortgage processes. They extended their footprint by adding Meridian Link Mortgage to take advantage of our patented depth optimization technology while benefiting from the increased synergies of a deeper integration and embedded cross-selling functionality. In another example, One of the larger transactions in the quarter was with an existing decision lender customer. As you know, we gained this leading indirect lending functionality as part of the TCI acquisition. This customer sought a new solution for direct consumer lending and account opening. Our multi-channel functionality and integration won the day. These are just a couple of the many wins in the quarter. We continue to see that meaningful engagement with our customers provides both immediate and long-term value to the market. We have been investing heavily for the last few years to expand our platform's capabilities with innovative functionality. As a prime example, we have been moving our solutions from hosted environments to the public cloud while updating the user experience to reflect modern design and workflow. We unveiled MeridianLink One in 2021 as our cloud-based multi-product platform spanning the digital consumer lending journey from account opening through marketing, loan origination, and decisioning. MeridianLink One breaks down the silos that originally separated the parts of our business and reflected the division we often see in the market. We are proud to announce a quarter ahead of schedule the completed migration of the original MeridianLink One functionality entirely to the public cloud. We are excited to bring the cloud benefits of increased security, speed, and scalability of deployment to our customers sooner than expected. By expanding our platform's capabilities, we attract new logos and drive cross-selling, which together drive more volume and revenue for MeridianLink. Finally, MeridianLink empowers our customers to compete, grow, and succeed in each market in which they participate. We have a track record of enabling our customers to win more clients and capture a greater share of their client's wallet by providing best-in-class functionality, flexibility, and automation. While some of our customers are early in their digital transformation, others are looking to optimize their client's journey to enable a touchless learning experience. In Q3, we saw both accelerating software module delivery to customers and increased uptake of the services and functions to more deeply automate lending processes. In particular, services revenue hit a new high watermark as software projects delivered in the quarter were 50% higher than in Q1 of this year. And we delivered an integration with MX Technologies to provide for a more highly automated account opening process as our customers continue to see strong new account growth. Now, I want to turn to our announced acquisition of OpenClose. I've had the opportunity to spend a good deal of time with the leadership team, and I'm thrilled to be joining forces with such a knowledgeable and customer-focused group. With our complementary product strengths and customer basis, we expect current customers of both organizations to benefit from the combination in the short and long term. I know I have said this before, but I want to emphasize this point. The diversity of our business and strong unit economics enable sustained investment in critical growth and scale initiatives across the economic cycle. The open-close acquisition and integration will create a premier solution that will increase our win rate and drive cross-sell motion within the depository market. To conclude, Q3 was another strong quarter for Meridian Link. We accomplished several milestones and remain focused on engaging with customers, to help prioritize investments that expand our platform capabilities and revenue opportunity. MeridianLink is a customer-focused business, and our flywheel starts with a focus on empowering our customers to compete and better serve their clients and communities. We invest to serve our customers' needs, which generate more revenue for us as those investments drive better solutions for their clients. Before turning the call over to Sean, I would like to recognize the MeridianLink team for achieving the Great Place to Work certification for the third year in a row. This award spotlights the culture and community at MeridianLink, positioning us well for future success. Now, Sean will review our financial results and guidance, including near-term expectations for open-close.