MeridianLink Announces Preliminary Unaudited Fourth Quarter Operating Results and Year-End Cash Position
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Insights
The announcement of MeridianLink's preliminary unaudited operating results for Q4 2023, along with the declaration of a stock repurchase program, is a significant event that warrants attention from investors and market analysts. The revenue figures, ranging between $73.5 million and $74.5 million, indicate the company's performance level during the quarter. However, the reported net income (loss) of approximately between $(40.0) million and $(20.0) million raises concerns. This suggests a substantial variance, which could be indicative of one-time charges or underlying operational challenges. The Adjusted EBITDA, estimated between $30.0 million and $31.0 million, is a critical metric for assessing the company's profitability, excluding non-cash expenses and certain non-recurring items. The cash and cash equivalents position of approximately $80.4 million provides insights into the company's liquidity and financial health.
The stock repurchase program, with an authorization to purchase up to $125.0 million of common stock, is a strategic move that could indicate the board's confidence in the company's valuation and future prospects. Stock repurchase programs often signal to the market that the company believes its stock is undervalued and it can also serve to increase earnings per share by reducing the number of shares outstanding. However, the effectiveness of such a program depends on the execution and market conditions. It is also important to note that these repurchases are discretionary and may not be fully realized if the company chooses to prioritize other uses of capital.
Investors should be aware that these preliminary results are subject to change upon the completion of the audit. Material adjustments could significantly alter the financial outlook presented. Thus, while these preliminary figures provide a snapshot of the company's performance, they should be interpreted with caution until the audited results are finalized.
MeridianLink's position as a leading provider of software platforms for financial institutions and consumer reporting agencies places it within a competitive and rapidly evolving industry. The preliminary financial results offer a glimpse into the company's market performance relative to industry trends, such as the increasing demand for digital financial solutions and regulatory compliance software. The discrepancy between the net income loss and the positive Adjusted EBITDA may reflect industry-specific challenges, such as investment in product development or market expansion costs, which are common as companies strive to maintain a competitive edge.
The decision to initiate a stock repurchase program should be analyzed in the context of the company's strategic objectives and the broader market sentiment. If executed during favorable market conditions, it can be a tool for value creation. However, the timing and scale of repurchases can also be influenced by broader economic factors, such as interest rate changes, which affect the cost of capital and investment decisions. The company's year-end cash position is a critical factor in this regard, as it suggests the company has sufficient liquidity to support the program without compromising its operational funding needs.
It is important for stakeholders to consider the potential impact of the repurchase program on the company's share price and ownership structure, as well as the implications for future capital allocation, particularly in light of the industry's need for continuous innovation and adaptation to changing regulatory landscapes.
The announcement includes a forward-looking statement regarding the possibility that the final operating results may differ from the preliminary estimates, which is a standard disclaimer for unaudited financial information. This highlights the legal obligation of the company to provide accurate and updated information to shareholders and the market. The finalization of audited financial results is subject to rigorous review by independent auditors, ensuring compliance with accounting standards and regulations.
The stock repurchase program is also subject to legal considerations, including securities laws and regulations that govern insider trading and market manipulation. The company must execute the repurchase in accordance with the rules set by the Securities and Exchange Commission (SEC), such as Rule 10b-18, which provides a safe harbor for companies to repurchase their shares without being deemed to manipulate the market. Additionally, the timing and amount of the repurchases can be affected by the company's insider trading policies and blackout periods, designed to prevent the misuse of material non-public information.
Investors and analysts should be cognizant of the legal framework within which these financial decisions are made, as non-compliance can lead to sanctions, fines and a loss of investor confidence. It is also advisable to monitor any disclosures in the company's Annual Report on Form 10-K for further details on the financial statements and the execution of the stock repurchase program.
Select Preliminary Unaudited Fourth Quarter 2023 Highlights
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Revenue of approximately between
$73.5 million $74.5 million -
Net income (loss) of approximately between
$(40.0) million $(20.0) million -
Adjusted EBITDA of approximately between
$30.0 million $31.0 million -
Cash and cash equivalents as of December 31, 2023, of approximately
$80.4 million
These financial results are only preliminary estimates, which are based only on financial information available to the Company’s management as of the date hereof and are subject to change. The Company is in the process of finalizing its audited financial results as of and for the year ended December 31, 2023. Upon completion of the Company’s independent auditor’s review of the results for the three months ended December 31, 2023, it is possible significant changes to such preliminary results may be necessary. Accordingly, it is possible that the Company’s final operating results will differ from these preliminary estimates, including as a result of review adjustments, and any resulting changes could be material. Complete financial statements as of and for the year ended December 31, 2023, will be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Stock Repurchase Program
Our Board of Directors has authorized a new stock repurchase program to acquire up to
About MeridianLink
MeridianLink® (NYSE: MLNK) powers digital lending and account opening for financial institutions and provides data verification solutions for consumer reporting agencies. MeridianLink’s scalable, cloud-based platforms help customers build deeper relationships with consumers through data-driven, personalized experiences across the entire lending life cycle.
MeridianLink enables customers to accelerate revenue growth, reduce risk, and exceed consumer expectations through seamless digital experiences. Its partner marketplace supports hundreds of integrations for tailored innovation. For more than 20 years, MeridianLink has prioritized the democratization of lending for consumers, businesses, and communities. Learn more at www.meridianlink.com.
Non-GAAP Financial Measures
To supplement the financial measures presented in accordance with generally accepted accounting principles, or GAAP, we provide certain non-GAAP financial measures, such as adjusted EBITDA. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Rather, we believe that these non-GAAP financial measures, when viewed in addition to and not in lieu of our reported GAAP financial results, provide investors with additional meaningful information to assess our financial performance and trends, enable comparison of financial results between periods, and allow for greater transparency with respect to key metrics utilized internally in analyzing and operating our business.
We define adjusted EBITDA as net income (loss) before interest expense, taxes, depreciation and amortization, share-based compensation expense, employer payroll taxes on employee stock transactions, restructuring related costs, sponsor and third-party acquisition related costs, and deferred revenue reductions from purchase accounting for acquisitions prior to the adoption of ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which we early adopted on January 1, 2022 on a prospective basis. Deferred revenue from acquisitions prior to the adoption of ASU 2021-08 was recognized on a straight line basis through December 31, 2023.
The reconciliation of net income (loss), the most directly comparable GAAP financial measure, to adjusted EBITDA for the three months ended December 31, 2023, is provided in the table below.
(in thousands) |
|
Three months ended December 31, 2023 |
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|
Low
|
|
High
|
|||||
Reconciliation of net income (loss) to adjusted EBITDA |
|
|
|
|
||||
Net income (loss) |
|
$ |
(40,000 |
) |
|
$ |
(20,000 |
) |
Interest expense |
|
|
9,700 |
|
|
|
10,000 |
|
Taxes(1) |
|
|
38,200 |
|
|
|
18,200 |
|
Depreciation and amortization |
|
|
14,100 |
|
|
|
14,400 |
|
Share-based compensation expense |
|
|
8,000 |
|
|
|
8,300 |
|
Employer payroll taxes on employee stock transactions |
|
|
— |
|
|
|
85 |
|
Restructuring related costs |
|
|
— |
|
|
|
— |
|
Acquisition related costs |
|
|
— |
|
|
|
— |
|
Deferred revenue reduction from purchase accounting for acquisitions prior to 2022 |
|
|
— |
|
|
|
15 |
|
Adjusted EBITDA |
|
$ |
30,000 |
|
|
$ |
31,000 |
|
(1) |
Reflects estimate for the range of the valuation allowance to be applied against the Company’s deferred tax assets in its provision for income taxes that will be recorded upon the completion of its results as of and for the three months ended December 31, 2023. The Company has identified certain potential non-cash charges to our deferred tax assets that may require it to record a valuation allowance as we complete our interim financial statements, and any resulting changes could be material and materially impact the Company’s reported net income (loss). |
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Forward-Looking Statements
This press release contains statements which are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, these statements can be identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions, although not all forward-looking statements contain these identifying words. Further, statements describing our strategy, outlook, guidance, plans, intentions, or goals are also forward-looking statements. These forward-looking statements reflect our predictions, expectations, or forecasts, including, but not limited to, statements regarding our preliminary unaudited fourth quarter financial results; our year-end cash position; and our stock repurchase program, including the execution and amount of repurchases. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, the completion of our audit, final adjustments, and other developments that may arise in the course of audit and review procedures and changes in market and economic condition, as well as those risks set forth in Item 1A. Risk Factors, or elsewhere, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, any updates in our Quarterly Reports on Form 10-Q filed for periods subsequent to such Form 10-K, and our other SEC filings. These forward-looking statements are based on reasonable assumptions as of the date hereof. The plans, intentions, or expectations disclosed in our forward-looking statements may not be achieved, and you should not rely upon forward-looking statements as predictions of future events. We undertake no obligation, other than as required by applicable law, to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
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Press Contact
Becky Frost
(714) 784-5839
Media@meridianlink.com
Investor Relations Contact
Gianna Rotellini
(714) 332-6357
InvestorRelations@meridianlink.com
Source: MeridianLink, Inc.
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