MeridianLink, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Meridian Link's fourth 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 fourth 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 Block, 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 discussion of the risks, uncertainties, and other factors that could affect our future financial results and business, please refer to the disclosure in today's earnings release and the periodic 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 Nicholas.

Thank you, Gianna. Good afternoon, everyone. It's great having all of you join us today. 2023 was another successful year for Meridian Link. We executed well on our strategic initiative set in the beginning of the year that were designed to serve our customers with greater efficiency. As a result, we generated strong demand, finishing the full year with software bookings exceeding the record we set in 2022. and we made great progress releasing ATV from our new logo and cross-sell wins. We also had a fantastic year of innovation, with multiple product launches and partnerships to strengthen the capabilities of MeridianLink One. With the dedication and expertise of the entire MeridianLink team, we continue to deliver on our commitments to our customers and stockholders. Turning to our results for the fourth quarter, our GAAP revenue grew 6% year over year, to 74.6 million, with an adjusted EBITDA margin of 42%, exceeding the top end of our EBITDA guidance. Our performance in the quarter demonstrates our ability to execute in key strategic areas of the business that accelerate growth while also demonstrating cost discipline. It remains our goal to help customers navigate an evolving operating environment and outcompete for consumers by providing a personalized, frictionless lending experience. With that, let's move to our Q4 updates on the three areas of growth acceleration that are anchored to our platform strategy. 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. Starting with customer engagement, our go-to-market team achieved another strong booking scorer with multiple high-value platform wins. The foundation we have set over the last two years to build and operate an efficient and high-performing go-to-market engine continues to drive growth. As I mentioned, we had record software bookings for the year, which was fueled by the cross-sell momentum of Meridian Link 1. In Q4, we signed nine consumer lending customers to our mortgage lending solutions. This is an excellent signal that our platform strategy and go to market is working. Next, we wanted to highlight a couple of high value deals that we landed in the quarter that demonstrates the ongoing demand for MeridianLink One. The majority of our high value deals are often with new customers signing on multiple modules, understanding the value of connected solutions that cater to nearly all consumer lending needs. For example, One of our more significant ones at just under $500,000 in ARR was a $1.4 billion AUM customer who signed on four Meridian Link consumer modules and our new point of sale solution that launched last quarter, Meridian Link Access. The customer chose Meridian Link One to link through a digital channel, achieve greater automation, and improve efficiency in decisioning and cross-selling. Another high value one at just under $300,000 in ARR was with a 300 million AUM customer who selected Meridian Link Home Equity and indirect lending based on the decisioning capabilities of Meridian Link One. This customer also chose our enhanced implementation services, which involves close collaboration to achieve specific results such as loan volume growth and increased productivity. This is a great example of how the MeridianLink team is dedicated to engaging with customers from the initial sale through implementation to accelerate growth. On that point, I would like to provide an update on the strategic investments we have made in talent and process improvements in our services organization over the last year. First, we are making progress releasing ACV. In Q4, Total SAS ACV release was the highest in the year. Second, we are becoming more efficient in releasing ACV. This progress is clear in our adjusted gross margin expansion in Q4, which was more than 400 basis points higher year over year. Last, we look forward to one of the biggest opportunities for engagement at our MeridianLink live forum at the end of April in Nashville. We can't wait to showcase our in-depth capabilities that help customers achieve their digital transformation goals. Most importantly, MeridianLink Live will create valuable moments of engagement and feedback that we can use to enrich our strategy and create additional value for customers and stockholders. These are just a few examples of how we engage more deeply with customers to accelerate growth for the business on the corner. Looking to 2024, Our go-to-market team is hyper-focused on engaging with more prospects, from new logo to cross-sell, and our services team remains committed to bringing customers live faster. Moving to our second area of growth acceleration, expanding the capabilities of the platform through product innovation and partner integrations. Critical to our sales motion, we are focused on fine-tuning MeridianLink One to drive our customers' digital lending strategy. Over the last few years, we have invested in R&D to achieve significant technological strides, such as migrating to the public cloud and integrating multiple acquisitions. While we have accomplished these development goals, innovation is an ongoing commitment that keeps us in our market-leading position, and we remain focused on increasing the value of the platform for customers. Now let's review how we expanded our capabilities in Q4. We integrated MeridianLink Engage with MeridianLink Collect to automatically identify and cater to pre-delinquent accounts. Through this functionality, our customers can work with consumers to optimize the debt wallet and avoid delinquency. In today's digital environment, consumers largely prefer handling banking and collection tasks through user-friendly technology instead of in-person interactions. This new integration is a great example of how the end-to-end capabilities of MeridianLink One cater to the evolving lending needs of the consumer. We also enhanced our existing integration with Zest.ai, a leader in automated underwriting to provide multiple custom credit scores for decisioning and MeridianLink consumer loans. With more custom score options, our customers can increase their cross-sell opportunities. In addition to the automation and insights available through the MeridianLink One infrastructure, we leverage AI from our partner network to automate the lending process for customers. Ending on an expansion within our data verification software solutions, we scaled our employment screening and background verification capabilities by partnering with Workato, the leading enterprise automation platform. Through Workato, we can accelerate the addition of new applicant tracking systems or ATS integrations to capture new employers for our CRA customers to service. With more ATS integrations, the more volume and revenue we can process through our platform. Before moving to our next focus area, I'd like to provide an update on the traction that our MeridianLink Access launch has achieved so far. In 2023, We signed more than 40 customers in total on Meridian Link access and Meridian Link mortgage access. This is an outstanding achievement by our go-to-market and product teams and is a great example of how we are innovating to generate more demand for the company. Our product and partner updates in Q4 are just a few ways we are continuously improving the borrower experience to help customers capture and retain more demand for their lending solutions. in turn increasing revenues for Meridian Link. Finally, our third area of focus for growth acceleration is centered around our ability to empower customers to compete, grow, and succeed in the markets in which they participate. We've been successful in empowering our customers to capture a greater share of their clients' debt wallet through Meridian Link One. This highlights a critical component of our platform strategy. the ability to increase the module penetration with our existing customer base, which ultimately increases the LTV of the customer. Starting with strong cross-sell wins in the quarter, an existing Meridian Link consumer customer with three modules added a fourth module, Meridian Link Access, and enabled dealer-track e-contracting through our partner marketplace, both announced in Q3. With lending capabilities designed for configurability and automation, the customer improves the digital journey for the consumer. In this example, our sales team worked with a customer on a renewal that empowered long-term growth by capitalizing on our roadmap, further increasing the value of the customer for Meridian Link. We also signed an existing Meridian Link consumer and opening customer onto our collect and engage solutions to expand the use of Meridian Link 1. This customer's main focus was on finding connected lending solutions fit for serving a growing demand environment. This points directly to our value proposition of providing customers with a platform designed for scaling through digitalization tailwinds. Let me end on a successful go-live story. We recently announced A-plus Federal Credit Union, an existing Meridian Link consumer and mortgage customer with over 190,000 members and more than 2 billion in assets under management, going live on MeridianLink Consulting, Engage and Insight. Over time, AplusFCU has gone from using six disparate loan origination platforms to now only using MeridianLink One. Through our platform's advanced decision capabilities, A-plus Federal Credit Union doubled their instant approval rate on consumer loans. This is a prime MeridianLink One success story, where a customer further optimizes the lending process to approve loans faster and remove workflow inefficiencies, improving the member experience as a result. Before handing the call over to Sean, I want to emphasize that MeridianLink delivered consistent top-line growth and expanding profitability levels through a year of restructuring and strategic investing to support future scaling. We have a track record of intentional capital allocation, investing organically and inorganically in areas that provide value to customers and stockholders. To set the stage for 2024, we have made strategic investments that we expect will propel the company forward. We are focusing on what's in our control, which includes accelerating ACV release and generating demand. We've also worked to tee up a strong customer success strategy to empower the customer growth journey through Meridian Link One. Thanks again to the team. Their focus on empowering our customer success is the driving reason that Meridian Link continues to deliver strong performance. I'm looking forward to seeing what we can accomplish together this year. For that, I will now turn the call over to Sean to talk about our financial results and guidance.