MeridianLink, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Meridian Link's fourth quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that this 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 fourth 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 Blitchock, 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 in 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 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 our Investor Relations website. With that, let me turn the call over to Nicholas.

Thanks, Eric, and good afternoon, everyone. Thank you for joining us today. 2022 was another successful year for the company. We executed well and closed the year strong with record software bookings, both for Q4 and in Meridian Link's history. The powerful capabilities of our Meridian Link One platform drove new logo and cross-sell momentum. as we signed an embrace of 10 existing Meridian Link consumer customers to our Meridian Link mortgage solution during Q4. We are proud of the many achievements from the quarter and year and are thrilled to see the consistent performance of the business. Meridian Link exceeded guidance in Q4, with GAAP revenue up 10% year-over-year to $70.6 million and 33% adjusted EBITDA margins. We continue to see notable strength in the consumer lending side of our business, up 23% year-over-year in the fourth quarter. Our business model remains resilient, and our customer base continues to thrive. Today's lenders are more focused than ever on the need to digitally transform and offer frictionless lending experiences to their clients. We're proud of the fact that customers of our Meridian Link consumer platform are achieving nearly 20% faster loan portfolio growth than their competitors. We've achieved healthy sales activity through the year that we expect to continue across 2023 as customers strive to improve their client experience as well as seek business efficiencies in an uncertain environment. We continue to pay close attention to external conditions and market expectations but want to be clear that so far this year, we have not seen slowing in deal timelines, order deduction, and pipeline numbers. We remain laser focused on delighting our customers, expanding capabilities across our platforms, and ensuring our customers can efficiently serve more consumers, capturing more wallet share, and outpacing the competition. In a few minutes, Sean will speak about our Q4 and full-year financial performance. and provide 2023 first quarter and full year guidance. Before that, I will give several updates on our three areas of growth acceleration. 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. In Q4, we have refocused our company mission, vision, and values to strengthen the culture of Meridian Link and catalyze the cascade of our objectives and key results throughout the business. Our mission to be the most trusted financial services technology platform speaks to our deep experience in the space and our relentless focus on creating better experiences for our customers' clients. Our vision to power life's important financial moments ensures our customers stand out amongst competitors by efficiently offering the best experiences for borrowers. Our values and objectives now represent how we are scaling our organization to meet customer needs in a digital era focused on fast, frictionless interactions with consumers. Our values also reinforce that customers are at the heart of everything we do. From a focus on daily improvement being stronger together, delivering on our commitments, and driving customer success, which in turn is our success. With those values in mind, we have completed a restructuring exercise that right-sized our cost profile and realigned our resources with a focus on customer-centric areas of the organization. This further enables near and long-term customer success. Cost savings as a result of this restructuring will help fund the investment and scaling initiatives, accelerating services, fueling go-to-market, and enhancing product innovation, all areas of growth that we will review today. Sean will go into the financial implications momentarily, but I want to emphasize how committed we are to practicing cost discipline in the face of an uncertain environment while continuing to invest to meet our customers' needs. Part of this realignment also includes changes to our organizational structure. For one, we announced the retirement of our chief operating officer and the transition of several responsibilities to other members of our senior leadership team. Before I speak more about our organizational changes, I want to wish Alan well in his retirement. We have had the opportunity to work together several times over the last 20 years. and he was one of the first people brought in by Tomo Bravo as Meridian Link transitioned into its second stage of growth. Alan's leadership laid a foundation that we will build upon for years to come as we drive faster growth going forward. We also announced the creation of a new role, Chief Customer Officer, to lead our support, services, and customer success teams and accelerate productivity and engagement across the board. We've also streamlined both leadership and their teams across the business with the aim to reduce operational complexity. In summary, this recalibration of our organization and cost profile positions Meridian Link to be laser-focused on strategic initiatives and serving more customers with greater efficiency in 2023. Turning to the go-to-market updates and wins for the fourth quarter, the foundation we set over the last year to build and operate an efficient and high-performing go-to-market engine continues to drive innovation, sales, and growth. We are investing across the board in sales and marketing leadership and implemented team structures that contributed to the most robust pipeline we have seen to date. As I mentioned, we hit record software bookings and propelled the cross-sell momentum of MeridianLink One, signing 10 consumer lending customers to our mortgage lending solution. We see these as fantastic signals that our platform strategy and go-to-market is working. In addition, our cross-sell and up-sell motion is a tremendous opportunity for MeridianLink, representing 60% of the bookings in the fourth quarter. We also continue to win new customers in the market, another key component of our growth algorithm. And finally, we are excited to add Suresh Balasubramanian to our executive leadership team as Meridian Link's new chief marketing officer. With the added benefit of a spacious software experience and focus on demand generation, we will bolster our ability to capture more share in the market. Moving to high-value deals, we landed eight deals in the quarter that demonstrate the ongoing demand for our multi-product platform, Meridian Link One. Around two-thirds of these deals were driven by new customers with the remainder driven by cross-sell and up-sell opportunities. This is just the beginning of customers capturing the benefits of Meridian Link One. The platform breaks down the silos that separate lending lines of business in the market, and as a result, our customers can make optimal lending decisions and integrate with the key functions and necessary data to accelerate growth. Our Meridian Link One offering also enables the power of platform bundling by better addressing consumer needs with connected solutions across the entire debt wallet. One case in point came from a credit union that's been serving its members for over 20 years. With more than 50,000 members and $1 billion in assets under management, the organization was looking for a digital lending platform to support the varied needs of its community. The credit union selected MeridianLink One, leveraging MeridianLink business in tandem with MeridianLink opening and consumers. This is a great example of how our platform was designed to capture more volume faster, resulting in more revenue for both the customer and Meridian Link. To conclude, we had a solid finish to the year and remained bullish on our pipeline health in 2023, which we expect will only improve as we have recalibrated the business to fuel the customer engagement necessary for our next phase of growth. Moving on to our second area of focus, expansion. 2022 was a monumental year for expanding our platform's capabilities as we have completed the transition of our solutions from hosted environments to the public cloud. This is a prime example of how we have been investing heavily for the last few years to expand the innovative functionality of the Meridian Link One platform, bringing increased security, speed and scalability to our customer base. Since executing on the cloud transition a full quarter early in Q3, we have continued to make significant improvements to our technology to ensure it is scaling for customer needs. Not only does the cloud allow a faster lending process for the customer, but it also provides a faster build process for us internally. We have been heavily focused on accelerating product build times deploying features and functionality faster across our platform. Finally, through the public cloud infrastructure, we are able to complete our standard security testing more efficiently. The cloud transition is just one example of our commitment to product innovation, which has been a pillar of our success since inception and remains a driver of expanding our platform's capabilities to add value to customers today. In the fourth quarter, we completed enhancements to our marketing automation solution, Meridian Link Engage. These new features save valuable time in launching targeted marketing campaigns, in many cases resulting in triple-digit ROI for the lender. We also recently launched our integrated business lending offering, Meridian Link Business, building on the innovative functionality acquired through the StreetShares Atlas platform to address mid-market business lending needs. This new offering enables advanced decisioning capabilities through a lightweight digital lending solution that is up and running in 90 days or less. To further expand our business intelligence tool, Meridian Link Insight, we began piloting a new scorecard with customers in the fourth quarter. The scorecard provides customers with relative performance metrics against peers, unlocking the power of data to drive more competitive business decisions. Depending on the platform's capabilities, as seen in each of these examples, we aim to attract new customers and drive cross-selling, which together drive more volumes and revenue for Meridian Link. Finally, Meridian Link empowers customers to compete, grow, and succeed in the markets in which they participate. We have a track record of enabling customers to win more clients and capture a greater share of their client's debt wallet. We do this by providing best-in-class capabilities powered by our solutions and integrations through our partner marketplace. Part of MeridiLink's value proposition is derived from having built an extensive network of hundreds of partners that help accelerate and differentiate customers in the digital lending process. I'd like to talk about a few of the new integrations and increased capabilities from this channel that we have announced in the fourth quarter. First, MeridianLink One is now integrated with the work number from Equifax, a partnership that provides a centralized commercial repository of income and employment data. Lending customers can now instantly leverage verifications, providing a more timely, well-informed lending process. This integration expands availability of the work number from MeridianLink Mortgage customers to also those on MeridianLink Consumer a streamlined lending experience across the MeridianLink One platform. Another partner highlight comes from the data verification part of the business. In the fourth quarter, we expanded our background screening capabilities for our CRA customers through an integration with leading social media background screening provider, Feridli. This partnership gives TaskWorks customers the ability to screen social media powered by AI all from within the TaskWorks platform. It demonstrates our continued expansion of capabilities within our data verification offerings through market-leading technology partners. And finally, as the nation saw increasing consumer interest in home equity lending, we announced an integration with First Close, a leading fintech provider of data and workflow solutions for mortgage and home equity lenders. According to First Close, by leveraging their one equity solution, Meridian Link consumer and decision lender customers can experience total time savings of over 75%, with 35% increases in online applications and 25% improvements in pull-through. These stats are proof points that our partnerships improve consumer experiences and therefore empower customer growth. Transitioning from how our partner integrations add to the customer's growth journey, I would now like to highlight examples of customers selecting Meridian Link as the key catalyst for improving functionality and taking share on the market. In the fourth quarter, we closed the deal with a $1 billion credit union customer, taking the opportunity from a well-known competitor with a global footprint. We won the sales process as a result of our indirect lending capabilities. strong customer references, and product roadmap that aligned well with the customer's lending growth strategy. Another new logo win from the quarter was a bank customer interested in Meridian Link entry opening and consumer products. After demoing the solution, the customer was blown away with the ease of use for their clients, which aligned with their main goal to break into the younger demographic and grow volumes. This one demonstrates the flexibility of our offering to move down market, empowering smaller players with the best capabilities of the largest institutions. To end on a one that shows our ability to empower growth through product innovation, we signed an $8 billion credit union on our new advanced decisioning features that enables touchless lending. In this case, the customer is targeting over 70% auto-decision applications, a level well above where most competitors perform in the market today. Higher automation results in faster funding and more revenue for the customer. Before I conclude, I'm very excited to welcome Mark Sachleben to the MeridianLink board of directors. As our board chair remarked, Mark's experience guiding innovative technology companies through impressive growth milestones combined with his financial expertise makes him a perfect addition to our team as we continue our organizational transformation. I now want to emphasize again how Meridian Link continues to deliver consistent and healthy profitability levels through a year of investing in our strategic initiatives. We benefit from having a high-quality, resilient customer base whose mission to create the best borrower experience is directly aligned with ours. We have a track record of intentional capital allocation, investing organically and inorganically in areas that provide value to customers and shareholders. In the face of uncertain macroeconomic conditions in 2023, we will continue executing well on what we can control as we did in 2022, staying highly focused on the three areas of growth that I laid out today. We will continue engaging with customers to meet and exceed their digital lending needs, in part by prioritizing investments that expand our platform capabilities and revenue opportunity. Our flywheel starts with empowering our customers to compete and better serve their clients and communities. I'm confident in our ability to drive this momentum forward, kicking off the next phase of growth for Meridian Link. With that, I will now turn the call over to Sean to talk about our financial results and guidance.