MeridianLink, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Meridian Link second quarter 2024 earnings conference call. At this time, all lines are in a similarly mode. Following the presentation, we'll conduct a question and answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 8th. I would now like to turn the conference over to Gianna Rotolini. Please go ahead.

Good afternoon and welcome to MeridianLink's second quarter fiscal year 2024 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me today are MeridianLink's Chief Executive Officer, Nicholas Block, and President and Chief Financial Officer, Larry Katz. 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 statement. Please note that, other than revenue, all numbers in our remarks are on a non-GAAP basis, unless otherwise stated. A reconciliation to comparable GAAP metrics can be found in today's earnings presentation which is available on our investor relations website and as an exhibit to the form 8K furnished with the SEC just before this call. With that, let me turn the call over to Nicholas.

Thank you, Gianna. Good afternoon, everyone. Before speaking to our quarterly earnings, I want to start by commenting on our announcement earlier today that Chris Maloof, president of GoToMarket, has decided to leave the company to pursue another opportunity outside of our industry. I want to thank Chris for his contributions over these past five years. He's helped build a highly capable go-to market and product teams that I am confident will lead the next chapter of Meridian Link's growth. I wish Chris well in his next chapter. I'm excited to announce that Larry Katz, our CFO, has been named president of Meridian Link. Larry's deep experience in banking and consumer lending, as well as his years leading SaaS companies at scale, gives me great confidence in his ability to lead our commercial efforts. Larry has done an exceptional job integrating into our company, building confidence and trust with our team and our customers, and I'm excited to partner with him on our next leg of our journey. We also announced this morning that Elias Almeida will be joining in late August as Chief Financial Officer. Elias is a proven CFO, having served as CFO of Mitchell International, a provider of SaaS solutions to the automotive and insurance industry, and most recently at Vistage Worldwide, a subscription-based professional services business. Elias currently serves on the board of Auto Canada, Canada's largest automotive dealer group and public company. Elias and Larry work together in their careers at JPMorgan Chase, where they've gained deep understanding of our industry. Larry will continue to serve as chief financial officer until Elias' start date. I'm confident that with these changes, we continue to strengthen our management team with proven SaaS leaders who have deep industry knowledge and have operated successfully at scale. I'm excited to partner with both Larry and Elias in their new roles. With that, let's turn to our results. We delivered a strong second quarter against a continued challenging macro backdrop, achieving GAAP revenue of $78.7 million or 4% growth year-over-year and adjusted EBITDA of $31.8 million at a 40% EBITDA margin, meeting the high end of our guidance range for both metrics. Our free cash flow was $12.4 million. As a leading vertical SaaS company, we continue to successfully execute our land and expand strategy while also generating strong profitability. Once again, this quarter, GAAP revenue and adjusted EBITDA grew in the face of continued market headwinds, including multi-year lows in auto lending and generational lows in mortgage. Our performance highlights the resilience of our business model. The continued demand for MeridianLink won end-to-end lending platform and our disciplined execution. This demand comes from both new and existing customers who select MeridianLink to enable their digital progression journey to compete and win in this market. I'd like to take a moment to comment on recent industry trends that highlight our customers' continued push to digital. Our strategic partner, Jack Henry's, recent 2024 strategic priorities benchmark study showed that 97% of financial institutions plan to enhance lending solutions and 80% plan to increase technology spend within the next two years. Credit unions, in particular, are bullish on technology budgets as a necessary investment to compete for the consumer's debt wallet in an increasingly digital world. Based on a recent report published by digitalbankingreport.com, which offers insights on digital transformation trends in the banking industry, 19% of financial institutions plan to enable digital lending within one year. We too are seeing these trends in our strong sales activity as mid-market financial institutions continue to turn to Meridian Link as a trusted partner to execute their digital lending strategy. With that, I would like to speak to our continued success expanding share of wallet within our existing customer base. Cross-sell continues to drive demand as our customers invest to further automate their lending capabilities with Meridian Link One. This quarter, we continue to see momentum cross-selling consumer lending customers on MeridianLink Mortgage. This buying behavior highlights the trend we are seeing of customers leaning into digital mortgage transformation in anticipation of the market recovery. Among these cross-sell ones, a longstanding 3 billion AUM MeridianLink consumer lending customer adopted MeridianLink Mortgage, MeridianLink Mortgage Access, and their patented debt optimization solution. With full debt wallet visibility of its borrowers, this credit union's loan officers are now equipped to offer fast, personalized services and support. Due to the power of our platform, our customers can increase acceptance rates, boost cross-sell opportunities, and deepen client relationships, all of which drive engagement and revenue. This quarter, we also continue to win high-value new logo deals. For example, we won a $2 billion AUM bank who adopted our home equity and credit card modules through Meridian Link One. This was a big win as this customer previously had an on-premise home equity solution from a core provider and referred all credit card inquiries to their competitors. With Meridian Link One, the customer is now fully in the cloud and manages their own credit card program. Our platform generates immediate ROI upon go live. which made it an easy decision to go with Meridian Link to evolve their digital lending strategy. Next, I want to further spotlight the ROI that our customers can achieve by implementing our platform. In Q2, Three Rivers Federal Credit Union went live with both Meridian Link access and opening and cut down loan application times from two days to approximately two hours. With these efficiencies, Three Rivers has improved the member experience while increasing completed application rates. This is a significant achievement in today's challenging lending market and the further proof point that automation through MeridianLink One delivers strong returns. This quarter, we also enhanced our product capabilities through a new integration between MeridianLink Insight, our business intelligence solution, and MeridianLink Collect, our collections product. With this new connectivity to Insight, customers can now access advanced analytics to run their businesses, including a new payment propensity index powered by AI that incorporates the probability of payment on delinquent loans. This is a great example of the differentiated capabilities Meridian Link offers, built on our deep experience and knowledge of our end market. Finally, we announced a partnership with Conductive a leader in providing missing permission data to meet underwriting guidelines. Through a pre-configured integration with Meridian Link One, our shared customers leverage AI for alternative decisioning, which allows them to approve more loans and serve more consumers quickly. For example, due to this new integration, Everwise Credit Union has seen lenders achieve up to 47% lift in approval rates without increasing expected losses. With our extensive partner network available through the Meridian LinkOne platform, we are able to rapidly bring to market the most innovative capabilities that enhance customer lending processes. Overall, these Q2 highlights reflect our continued success as the most trusted financial services technology platform for our customers. From automating their lending processes across different lines of business to adopting innovative capabilities such as AI, to improve efficiency and customer experience. With over 25 years of in-depth expertise, we continue to differentiate ourselves as a leading vertical SaaS provider in the lending software industry. With that, I'll turn the call over to Larry to take us through the financials and guidance.