MeridianLink, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Region Link's second quarter 2023 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 today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Gianna Rotellini. Gianna, please go ahead.

Good afternoon and welcome to Meridian Link's second quarter fiscal year 2023 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me today are Meridian Link's Chief Executive Officer, Nicholas Floss, Chief Financial Officer, Sean Blitchock, and President, Go-To-Market, Chris Malouf. 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 today, 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 Nicholas.

Thank you, Gianna. Good afternoon, everyone. Thank you all for joining us for our second quarter 2023 earnings call. I want to thank the entire MeridianLink team for delivering another solid quarter in the midst of the current macroeconomic backdrop. We continue to see healthy demand for the MeridianLink One platform, demonstrated by the business highlights in the quarter. There are a few key areas that led to our results. we are continuously improving our platform capabilities through product innovation and value-added partner integrations. And for another quarter, the powerful capabilities of the Meridian Link One platform continue to drive new logo and cross-sell momentum. Our GAAP revenue grew 3% year-over-year to $75.4 million at an adjusted EBITDA margin of 36%, which is below the second quarter guidance range on revenue, and at the bottom end of the range on EBITDA. This was due to a $2.3 million reduction in revenue related to a commercial dispute of a contract acquired through a past acquisition. Sean will provide more details on this shortly. Adjusted for this reduction, Meridian Link performed in line with our guidance at $77.7 million and grew 6% year-over-year at an adjusted EBITDA margin of 38%. This demonstrates another quarter of consistent growth and solid operating performance, which is a great achievement in the face of the current environment. On that note, I'd like to take a moment to touch on the macro trends that are impacting our business. We continue to be in times of change and are witnessing the economy trying to find a more natural state. Consumer spending has remained reasonably healthy, however, we continue to see pressure on lending volumes as anticipated. While we have seen positive signals on economic trends recently, interest rate levels are ultimately what drives our transaction-based business model. While there is economic uncertainty, we are continuing to focus on what we can control, executing well on our scaling initiatives and selling through the headwinds. On a positive note, We continue to experience strong demand for our software solutions, finishing another quarter with solid bookings momentum and successful services delivery, both in line with our strategic investments in our go-to-market engine and services capabilities. It is the credit unions and community banks that we have seen remain resilient because of their innovative mindset and use of technology to quickly adapt to the evolving consumer lending needs that exist today. As the leading provider of a modern digital lending platform, we see customers continuing to choose MeridianLink One to best position their business to do exactly that. One. The health of our pipeline reinforces this view. Irrespective of the economic cycle, the market is undergoing increased digitalization, and we believe MeridianLink is at its forefront. Whether it's more competition, consolidation, or regulation, We expect that there will be pressure on financial institutions to automate their lending processes. In each of these scenarios, the search and digital transactions will accrue to our benefit because of our volume-based business model and the fact that we serve the mid-market. As we wait for markets to normalize, we remain laser-focused on Meridian Link being the most trusted financial services technology platform. engaging with our customers to best position their businesses for resilient growth. Whether that be through a one-stop shop for their lending needs or premier customer service, our goal is to optimize the success of our customers. We continue to realize our growth through their success. In a few minutes, Sean will speak about our Q2 financial performance and provide 2023 third quarter and full year guidance. Before that, I would like to give several updates on our three areas of growth acceleration that field our performance. First, engaging more deeply with customers. Second, expanding the capabilities of the platform. And third, empowering customers to grow more quickly and better serve their communities. Let's start with a few highlights that demonstrate the success we have had engaging with our customers across the organizations. As I touched on briefly, Booking's momentum was resilient in the second quarter, with the majority driven by cross-sell and up-sell. This is a great proof point of how we have deepened our engagement with customers. Our teams are focused on working with them to optimize their use of Meridian Link One by increasing their module penetration. Let's look at a couple cross-sell wins in the quarter that demonstrate our success. We signed 14 consumer lending customers onto our mortgage lending solution in the first half of the year. This is the perfect cross-sell use case of MeridianLink One, as different buyers within the same organization come together and make a strategic decision to provide better digital lending capabilities on a singular platform to their clients. We see this as a fantastic signal that our platform strategy is working. Our sales and services teams partnered together to cross-sell the capabilities of the MeridianLink One platform to an existing indirect lending customer. While the initial engagement was focused on direct auto lending, the customer also selected home equity lending and Insight, our business intelligence tool, to gain visibility across the platform, improve workflow efficiencies, and scale their lending solution. As is often the case, When the customer engaged with Meridian Link for one module, they quickly saw the value and adopted multiple modules to help accelerate growth. We also deepened our partnership with an existing Meridian Link one customer who turned to our team to deploy a more automated collections module. By improving workflow efficiencies, the customer spends less time recovering late payments and more time maintaining positive client relationships. This points to our platform's focus on helping customers navigate the financial journey of their clients by providing an end-to-end digital solution. In Q2, we also engaged with over 1,100 customers and partners for three days at our in-person user forum, breaking last year's record of attendance. The event led directly to significant pipeline creation for new logo, cross-sell, and partner integrations. It also provided an opportunity to recognize 10 valued customers for their strategic thinking, innovation, and effective use of the Meridian Link One platform with the first-ever ARC Awards. As a last point on our engagement efforts in the quarter, we made great progress in our services delivery capabilities. Since year one, our year-over-year services revenue growth has doubled. Demonstrating the success of the structural changes we have made to increase productivity, a strong services quarter sets us up well for future growth. Our customers remain the focal point of everything we do, and our ongoing engagement across the customer-centric areas of the organization reflect this commitment. As we serve more customers with greater efficiency, we accelerate growth for the business. Turning to our second area of growth acceleration, expanding the capabilities of the platform through product innovation and our partner network. Critical to our sales motion, we are focused on creating value through the connective capabilities of Meridian Link One. First, we enhance our platform's advanced decisioning capabilities to use a wider variety of customizable attributes in the loan decisioning process. With this automated logic, our customers price loans more effectively, increasing borrower satisfaction. Customers can now move beyond traditional scoring methodologies and expand their reach to more credit-worthy consumers faster while driving profitability. In addition, we automated the loan and account cross-selling workflows on the MeridianLink One platform, removing the need for the loan officer to intervene manually. It's now effortless for our customers to increase cross-sell volumes as they deepen their visibility of demand with their use of the platform. We released a digital banking API for Meridian Link Engage, our marketing automation solution that enables customers to present personalized offers through online and mobile platforms. This expands the customer's ability to reach target consumers through their preferred digital channel, ultimately increasing conversion rates. Ending on partner marketplace wins, we had a very successful quarter enabling partners, and we want to highlight one. In the quarter, we added an integration with PortX, a financial infrastructure and integration technology company. By combining the Meridian Link One platform with PortX's integration capabilities, we can rapidly integrate with other core providers. This accelerates our customers' end-to-end lending process, driving automation for the lender and faster decisioning for the consumer. By expanding the platform's capabilities to create a seamless and personalized borrower experience, customers can now capture and retain more demand for their lending solutions, in turn increasing revenues for Meridian Link. Turning to our third area of focus, 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. Let's review a few go-to-market highlights in the quarter where the customer chose MeridianLink to empower their growth journey. For one, we were excited to announce the go-live of Space Coast Credit Union, the third largest credit union in Florida, on MeridianLink Insight, our business intelligence tool. As a result, Instant approvals increased by over 25%, and approximately 95% of all loan applications are now processed and decided within one day. Spaceco's growth and improved member experience is a testament to their expanded use of the MeridianLink One platform. In addition, we achieved numerous high-value platform sale wins this quarter. As we evolved our go-to-market motion to sell MeridianLink One, customers are increasingly seeing the benefits of signing up with a trusted partner that enables them to offer multiple differentiated lending capabilities. For example, we won our largest new logo deal in the last year with a customer looking to transform their infrastructure into a growth driver. As part of the sales process, our consulting team engaged with a customer to accelerate growth across their portfolio of Meridian Link consumer, opening, auto, HELOC, and business modules. Another customer chose the MeridianLink One platform for its consumer, home equity, and business lending capabilities. We won the deal based on our ability to automate the decisioning process and improve operational efficiencies across the lending workflow. These improvements streamline the client experience from application to funding, sharpening the competitive edge our customers need in the market. I want to close where I began and thank the team. Their focus on customer success is a driving reason that Meridian Link continues to deliver consistent growth and healthy profitability levels. We benefit from having a high-quality, resilient customer base dedicated to contributing greater value to their clients through a connected and integrated borrower experience. At Meridian Link, providing a seamless, innovative digital lending platform that enables our customers to deliver on that promise is central to everything we do. Facing the continued uncertainty through the remainder of the year, we are staying highly focused on executing our strategic initiatives. We will continue engaging with customers to meet and exceed their digital lending needs, in part by providing excellent customer support and innovating to expand our platform capabilities. Our flywheel starts with empowering our customers to grow as they automate the lending process and deepen visibility of demand with their use of Meridian Link One. We strive to be the most trusted financial services technology platform that positions our customers to succeed. With that, I will now turn the call over to Sean to talk about our financial results and guidance.