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MeridianLink (MLNK)
NYSE:MLNK
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MeridianLink
(NYSE:MLNK)
61Neutral
Positive Factors
Cross-Selling Strategy
Cross-selling via the MeridianLink One platform remains a key growth initiative, with the typical customer using about 4.5 of 14 modules.
Investor Returns
MeridianLink executed approximately $31 million in share repurchases during Q3, totaling about $106 million returned to shareholders year-to-date.
Profitability
While revenue growth has been sluggish, profitability has improved significantly; adjusted EBITDA margins were 41% in 2024, and the midpoint of 2025 guidance implies about 41% margins.
Negative Factors
Customer Downsells
A customer downsell of $6mn is creating a 220bps growth headwind in 2025.
Interest Rates Impact
Expectations of higher-for-longer interest rates likely will push out its revenue growth recovery story until 2026.
Revenue Growth Challenges
MeridianLink's top-line growth continues to be pressured by lower consumer lending activity and mortgage origination volume.
MeridianLink (MLNK) vs. S&P 500 (SPY)
Market Cap
$1.42B
Dividend YieldN/A
Average Volume (3M)238.45K
Price to Earnings (P/E)―
Beta (1Y)1.27
Revenue Growth4.18%
EPS Growth27.11%
CountryUS
Employees682
SectorTechnology
Sector Strength43
IndustrySoftware - Application
Share Statistics
EPS (TTM)-0.39
Shares Outstanding76,626,180
10 Day Avg. Volume182,658
30 Day Avg. Volume238,453
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.62
Price to Cash Flow (P/CF)26.50
P/FCF Ratio17.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$20.25Price Target Upside9.28% Upside
Rating ConsensusHold
Number of Analyst Covering7
MeridianLink Business Overview & Revenue Model
Company DescriptionMeridianLink, Inc., a software and services company, provides software solutions for banks, credit unions, mortgage lenders, specialty lending providers, and consumer reporting agencies in the United States. The company offers MeridianLink Consumer, a consumer lending and account opening platform; MeridianLink Opening, an online account opening software that unifies deposit account opening and funding for various channels and products; and MeridianLink DecisionLender, a loan origination software (LOS) for finance companies. It also provides MeridianLink Engage, an end-to-end consumer lending, account, and card marketing automation solution; MeridianLink Mortgage, a SaaS cloud-based end-to-end loan origination software; MeridianLink Collect, a cloud-based debt collection software; and Mortgage Credit Link, a web-based order fulfillment hub. In addition, the company provides solutions, including end-to-end platform, loan origination system, mortgage loan origination system, deposit account opening, data and reporting, collections, and consulting and analysis. MeridianLink, Inc. was founded in 1998 and is headquartered in Costa Mesa, California.
How the Company Makes MoneyMeridianLink generates revenue through a subscription-based model, where financial institutions and other clients pay recurring fees to access their cloud-based software solutions. The company offers various modules and features that clients can choose from, allowing for tailored solutions that meet specific needs. Additionally, MeridianLink benefits from implementation and integration fees when onboarding new clients. The company also engages in strategic partnerships and collaborations within the financial technology sector to expand its offerings and reach, further contributing to its revenue streams. By continuously updating and enhancing its solutions, MeridianLink maintains client engagement and loyalty, ensuring a steady revenue flow from its existing customer base.
MeridianLink Financial Statement Overview
Summary
MeridianLink demonstrates strong revenue growth and cash flow generation, crucial for sustainability and growth. However, persistent net losses and high operating costs pose risks to profitability. The reduction in debt and improvement in equity position are positive, but maintaining profitability remains critical.Income Statement
MeridianLink has demonstrated consistent revenue growth from $199.34M in 2020 to $316.30M in 2024, a positive trend for a software company. However, the company struggles with profitability, as evidenced by negative net income in recent years. The gross profit margin remains robust, averaging around 65%, but the net profit margin is negative due to high operating costs. The EBIT and EBITDA margins have weakened over time, indicating pressure on operational efficiency.65
Positive
Balance Sheet
The company's balance sheet shows a favorable equity ratio of approximately 44% in 2024, indicating a balanced capital structure. However, there has been a significant reduction in stockholders' equity over the years, from a negative equity position in 2020 to a positive but declining equity in subsequent years. The substantial reduction in total debt from $519.83M in 2020 to $3.68M in 2024 is a positive development, improving the debt-to-equity ratio significantly.58
Neutral
Cash Flow
MeridianLink's cash flow statement reflects a healthy operating cash flow, which has grown from $68.06M in 2020 to $77.80M in 2024, indicating strong cash generation capabilities. The free cash flow has also shown growth, suggesting efficient capital management. The free cash flow to net income ratio indicates that the company is generating cash despite reporting net losses, a positive sign for liquidity.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 316.30M | 303.62M | 288.05M | 267.68M | 199.34M | Gross Profit |
| 207.77M | 195.13M | 181.72M | 178.05M | 140.99M | EBIT |
| 4.64M | 15.53M | 28.59M | 37.66M | 45.59M | EBITDA |
| 67.81M | 77.39M | 83.63M | 78.21M | 85.83M | Net Income Common Stockholders |
| -29.77M | -42.54M | 1.29M | -10.00M | 9.15M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 92.77M | 80.44M | 55.78M | 113.64M | 37.74M | Total Assets |
| 961.33M | 996.25M | 1.06B | 1.03B | 963.71M | Total Debt |
| 3.68M | 424.82M | 426.91M | 427.51M | 519.83M | Net Debt |
| -89.09M | 344.38M | 371.13M | 313.87M | 482.09M | Total Liabilities |
| 533.84M | 488.00M | 480.07M | 469.62M | 670.22M | Stockholders Equity |
| 427.49M | 508.25M | 579.09M | 596.54M | -30.34M |
| Cash Flow | Free Cash Flow | |||
| 77.44M | 57.77M | 65.22M | 84.09M | 60.72M | Operating Cash Flow |
| 77.80M | 67.96M | 74.59M | 89.83M | 68.06M | Investing Cash Flow |
| -7.46M | 20.13M | -124.33M | -126.30M | -115.39M | Financing Cash Flow |
| -58.02M | -63.44M | -8.12M | 110.23M | -9.98M |
MeridianLink Technical Analysis
Negative
18.53
Price Trends
19.25
Negative
20.59
Negative
21.32
Negative
Market Momentum
-0.11
Positive
44.95
Neutral
20.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MLNK, the sentiment is Negative. The current price of 18.53 is below the 20-day moving average (MA) of 19.32, below the 50-day MA of 19.25, and below the 200-day MA of 21.32, indicating a bearish trend. The MACD of -0.11 indicates Positive momentum. The RSI at 44.95 is Neutral, neither overbought nor oversold. The STOCH value of 20.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MLNK.
MeridianLink Risk Analysis
MeridianLink disclosed 55 risk factors in its most recent earnings report. MeridianLink reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
MeridianLink Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $62.12B | 119.43 | 6.15% | ― | 16.94% | -62.24% | |
75 Outperform | $10.47B | 48.10 | 20.49% | ― | 15.96% | 31.76% | |
66 Neutral | $3.04B | 22.07 | 45.56% | ― | 10.74% | 200.08% | |
64 Neutral | $3.35B | ― | -1.71% | ― | 13.19% | 72.80% | |
61 Neutral | $1.42B | ― | -6.36% | ― | 4.18% | 27.11% | |
57 Neutral | $20.89B | 10.40 | -13.99% | 2.52% | 4.47% | -23.34% | |
54 Neutral | $686.82M | ― | -35.18% | ― | -4.50% | 65.41% |
* Technology Sector Average
Performance Comparison
MLNK
MeridianLink
18.76
0.27
1.46%
WDAY
Workday
234.53
-37.13
-13.67%
PCTY
Paylocity
189.83
23.36
14.03%
BL
BlackLine
49.13
-13.39
-21.42%
NCNO
nCino
28.12
-6.61
-19.03%
ETWO
E2open Parent Holdings
2.01
-2.12
-51.33%
MeridianLink Earnings Call Summary
Earnings Call Date: Mar 6, 2025 | % Change Since: 0.54% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong performance in terms of revenue growth and profitability, with significant achievements in record bookings and innovative product launches. However, challenges such as a major customer downsizing and declining mortgage lending revenue were noted. Despite these challenges, the overall sentiment leans towards positive due to the strong operational and financial results.Highlights
Strong Revenue Growth
MeridianLink recorded revenue in excess of $79 million for Q4 2024, representing a 7% growth year over year.
High Adjusted EBITDA Margin
The company achieved an adjusted EBITDA of $33.4 million, reflecting a 42% adjusted EBITDA margin, exceeding the high end of the guidance range.
Record Bookings and Subscription Activations
The sales team delivered the second consecutive year of record bookings. Subscription revenue activations, or ACV Release, achieved a high watermark.
Innovative Product Launches
Introduced a new share of wallet add-on product for cross-selling, resulting in up to 9% conversion rates in campaigns.
Strategic Partnerships and Expansions
Partnership with Score Navigator and Zest AI enhances decisioning capabilities and consumer credit management.
Lowlights
Large Customer Downsizing
A large data verification customer downsized, reducing annual revenue by approximately $6 million and impacting total revenue growth by about 220 basis points.
Decline in Mortgage Lending Software
Mortgage lending software solutions declined by 7% year over year due to customer downsell and churn.
Elevated G&A Expenses
General and administrative expenses increased by 36% year over year, reflecting investments to position the company for scale.
Company Guidance
In the earnings call for MeridianLink, Inc.'s fourth quarter and fiscal year 2024, the company provided guidance for 2025, emphasizing a focus on annual rather than quarterly updates. The company reported a strong performance in 2024 with revenue exceeding $79 million, marking a 7% year-over-year growth. The adjusted EBITDA was over $33 million, representing a 42% margin. MeridianLink is optimistic about 2025, projecting total GAAP revenue between $326 million and $334 million, indicating a 3% to 6% increase from 2024. The company plans to continue investing in sales and marketing, product development, and infrastructure to drive growth. It anticipates a 7% growth in consumer lending, driven by steady ACV releases, despite challenges in the macroeconomic environment. The company also highlighted a strategic shift to provide quarterly updates to an annual guidance, ceasing to give guidance for the following quarter, to better align with a long-term value creation approach.MeridianLink Corporate Events
Stock BuybackBusiness Operations and StrategyFinancial Disclosures
MeridianLink Sees Revenue Growth Amidst Challenging Environment
Neutral
Nov 7, 2024
MeridianLink reported a 5% year-over-year increase in third-quarter revenue to $80.4 million, driven by a 7% growth in its lending software solutions. Despite a net loss of $7.1 million, the company showcased strong cash flows and returned $31.3 million to shareholders through stock repurchases. The company’s digital lending platform, MeridianLink® One, supports its growth strategy amid a challenging macro environment, with projections for continued revenue and EBITDA growth for the full year 2024.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.