Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by and welcome to MeridianLink's Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' 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. ahead. go please Gianna,

Gianna Rotellini

welcome second and XXXX fiscal earnings call. to afternoon quarter MeridianLink's year Good

discussing announced Maloof. me the release be and Vlok; will We results Sean Officer, the Chief Officer, Blitchok; closed Chief MeridianLink's Financial issued Go-To-Market, in market today. are With Chris today President, Executive Nicolaas after press our

of expectations. will statements, based number on Before we remind risks to to forward-looking like significant statements you that subject company's and include results current These uncertainties begin, I'd today's forward-looking are conference our call differ may and the a actual materially.

to of could other with business, the in Exchange and For factors a the results the earnings financial today's our reports and and discussion Securities refer disclosure time to that time Commission. affect filings and future we release please from file

All update made statements of no and on except to we available such required any are statements. obligation today, information assume us by law, as as to of our based

During measures. to the call today, and non-GAAP refer GAAP both we will also financial

can Investor You release, to of posted non-GAAP to our is which our GAAP the included our in section measures press of website. the Relations find reconciliation

With me to over Nicolaas. that, turn let the call

Nicolaas Vlok

earnings Good our you us Thank afternoon, second Gianna. all joining quarter for you, Thank everyone. XXXX call. for

team want macroeconomic midst solid of I backdrop. for the entire thank to quarter the MeridianLink current another delivering in the

our that to highlights the continue quarter. We led One MeridianLink There key to see healthy in the business areas a the demonstrated by demand platform, for are few results.

drive and and momentum. partner quarter, powerful MeridianLink the are continue One the continuously platform another new for cross-sell We integrations, capabilities and product logo our through to value-added improving capabilities of innovation platform

a of EBITDA the on acquired provide reduction of second below shortly. to acquisition. million range revenue a a to range dispute through the revenue this quarter which of $XX.X million due will at more $X.X Our in GAAP details contract revenue commercial is related X% This grew and past was on XX%, end and EBITDA. Sean an on the guidance adjusted bottom to margin year-over-year

$XX.X consistent performed Adjusted of face operating growth grew for MeridianLink achievement of this great the year-over-year current X% of reduction, XX%. a at adjusted margin another environment. the in with and is This quarter in demonstrates and solid our million which performance, and guidance line EBITDA

take On I'd trends business. touch moment to that note, like that to the a impacting macro on our are

We continue on however, find the healthy, economy of a witnessing spending and natural Consumer be to as see to state. in times lending trying continue are to more has pressure remained anticipated. volumes change reasonably we

on business levels trends While drives are our rate what seen economic we recently, signals interest positive ultimately transaction-based have model.

to While there our control, demand a delivery positive is initiatives solutions, well momentum quarter software for we economic on bookings can note, continuing and to successful scaling on are focus experience through the executing headwinds. we selling another with our date. continue finishing with It uncertainty, and mindset banks line solid strong strategic On innovative in of to Services lending we exist adapt of what services because the to technology Go-To-Market we credit in investments that our and have remain evolving our the use that and community is resilient consumer needs and both seen the quickly to unions Engine capabilities.

view. best of our platform, modern provider health continuing reinforces The business see choose lending a that. As position exactly we One MeridianLink the do of leading to customers to to pipeline digital this their

will the we on volume-based because model be mid-market. In the their to business and automate lending we its to of institutions serve and pressure accrue that the fact of at these transactions MeridianLink increased benefit, that consolidation, of the there scenarios, each surge processes. will digital in our our we or undergoing is more the Whether it's market digitalization is financial regulation, expect cycle, believe Irrespective economic forefront. competition,

on be most position laser-focused a As optimize Whether customers. being the that trusted platform, we growth. businesses goal with services lending their wait technology financial best service, customer our or our resilient success the MeridianLink to for the through is engaging customers of for normalize, shop remain one-stop markets we premium our needs their to for

their continue We realize success. to our growth through

a In full will our guidance. performance QX Sean minutes, few third and XXXX quarter speak provide financial and about year

that, Before that performance. areas our give to would growth I on like several acceleration of our three updates fueled

deeply customers. First, engaging with more

to Second, more expanding And empowering serve their third, the better platform. of and grow customers the capabilities quickly communities.

had the demonstrate that with organization. highlights few across a with have customers our engaging success start Let's we the

This momentum upsell. As driven our great by we proof briefly, bookings with majority in engagement point is on the with quarter of deepened customers. I resilient a touched cross-sell how was second and the have

One are teams MeridianLink focused optimize their of module their by use to penetration. on Our working increasing them with

and case a in the first half of cross-sell our demonstrate is as is organizations cross-sell different together This in a signal look that that provide single wins XX couple better the use on working. fantastic the at lending onto clients. year. make solution their platform a to see the as buyers come Let's We decision We of our signed within customers consumer this success. One, our perfect to MeridianLink digital mortgage quarter same lending the lending of a capabilities strategic platform strategy

cross-sell existing to and an teams sales platform lending Our capabilities services one indirect partner of the to MeridianLink customer. together the

selected across business engagement on a lending initial insight, solutions. customer the direct improved to scale lending their tool, platform, lending, and the efficiencies, also intelligence equity workflow and gain focused was home While auto the visibility

module, when customer and case, the accelerate the they help multiple often adopted saw is One engage quickly modules to value the MeridianLink with As growth.

our to the and who automated module. their the our customer time existing end-to-end positive workflow more maintaining payments an on efficiencies, improving an our customers points By of platforms providing We client recovering collections This relationships. spends MeridianLink also more time by less a customer, deepened to clients late digital partnership journey deploy navigate solution. focus One team to turned helping financial with

the The three last days our at event for new innovation, user cross-sell, provided partner the directly use partners opportunity integrations. and creation effective In ARC and led recognize logo, pipeline It breaking forum, thinking, to to for their significant attendance. with QX, of also record with and an engaged customers of MeridianLink first-ever customers of value One Awards. over we XX in-person platform, strategic X,XXX also for year's

efforts strong the made the quarter our have As our point progress for made revenue delivery growth. quarter, we increase QX, growth us well last up sets in in services in future changes engagement productivity. demonstrating year-over-year Since structural great the our the has services A services doubled, we success to of capabilities.

across our commitment. of Our customers remain the engagement focal the ongoing the areas everything we do reflect and this customer-centric point of organization

efficiency, accelerate growth with business. the greater As for we customers we serve more

are Turning acceleration, the on the through and network. our growth innovation second of sales capabilities capabilities area our our partner to connective the of of value motion, product One. we expanding platform to MeridianLink creating focused Critical through

wider attributes First, use in process. decisioning the of we enhanced customizable capabilities Decisioning loan our a variety to platform's Advanced

With effectively, scoring price loans creditworthy expand methodologies logic, driving this move and Customers consumers beyond to automated faster our their satisfaction. increasing while more traditional customers borrower reach profitability. more can now

of deepen effortless platform, In addition, the on their platform. to we officer workflows increase use cross-sell as demand automated they the It's One the volumes manually. to loan intervene loan and our the visibility of removing customers versus for now account the for need cross-selling MeridianLink

reach digital through personalized expands mobile offers the preferred Engage, consumers to platforms. increasing the solution through for ultimately present digital API released This banking to MeridianLink automation online ability customer's target that channel, conversion our customers and marketing rates. their We enables

and PortX, integration partner successful decisioning integration PortX's quarter, with In with capabilities, automation integrate one. One lender, marketplace we the we other consumer. accelerates and combining end-to-end very our technology and we the with on an process, the partners wins, the a want driving customer's can providers. MeridianLink added for Ending This had integration core company. platform rapidly infrastructure a lending we enabling quarter for to By faster highlight financial

can the borrower expanding seamless in revenues to for capture retain platform's personalized demand solutions, more customers a their By lending increasing now and for and MeridianLink. turn create capabilities experience,

Turning focus, participate. in grow, of markets succeed which the compete, to customers our third to in MeridianLink and they empowers area

debt more of record their client's customers greater We have win a capture share track to and of clients enabling wallet. a

a few customer Go-To-Market MeridianLink highlights review the empower quarter in where growth the Let's chose journey. the to

to union third Insight, excited the tool. were announce go-live the Union, Space credit intelligence Credit we Florida business our MeridianLink Coast One, on largest in For of

of instant over by and increased approvals result, day. and XX% applications XX% loan our one a all approximately As decided within and process

member is testament improved experience expanded the to MeridianLink a and growth of Coast's platform. their use Space One

high-value sale In achieved wins addition, platform this we numerous quarter.

signing MeridianLink with up capabilities. As customers differentiated partner we that of to offer Go-To-Market a motion seeing evolved the multiple to trusted enables our benefits increasingly them are lending sell One,

we won looking to a growth in example, customer with last logo a the deal new into their infrastructure transform year driver. largest For our

across their HELOC modules. of sales engaged the of with customer Consumer, the to growth team opening our and As consulting part accelerate MeridianLink process, business auto, portfolio

for customers deal platform Another consumer, customer the efficiencies decisioning application One sharpening business the to lending market. in edge our process workflow. to automate based its client on the funding, need These lending and across ability home improvements capabilities. operational and chose improve the the streamline experience equity, from We MeridianLink won the competitive our

integrated their connected continues a where close resilient reason to MeridianLink team. benefit greater base having levels. borrower profitability to the high-quality that customer Their deliver clients growth focus experience. want to customer success on dedicated We to consistent I healthy began and from contributing driving is value I through and and a thank

platform on that is customers highly the we MeridianLink focused Facing enables continued At promise innovative strategic that through of are uncertainty a of lending to the our everything center initiatives. providing digital on the the we year, do. our seamless staying executing deliver remainder

customers platform in by innovating their with customer exceed engaging our providing capabilities. to excellent to meet and needs, support digital continue will We and lending part expand

and with our MeridianLink deepened to platform the that to flywheel financial as the We use of empowering strive One. services they to automate customers demand technology grow positions of Our be lending our starts visibility most with their succeed. trusted customers process

guidance. over I that, Sean about to turn results financial to call the and our talk now will With

Sean Blitchok

Thank you, Nicolaas.

this in, diving like team's to my Before echo to the for a accomplishments quarter. I'd moment appreciation take

for our We're in continue demonstrate of customer that, of the business across success. objectives we progress in midst great business the organization. empower execute and Our our operating period well to a highlights against and transformation the

about our how those I spoke trends review been Nicolaas the front. will business. the and stage quarter achievements set further the macro on the impacting have in

headwinds. continues to have We business model a macroeconomic through perform that

and minimums non-mortgage contracted We our continue majority are volume customers the their above commitments. by growth of see lending to insulated our

that the inverted business As play, that me confidence a headwinds. unprecedented liquidity forward. the great number anticipated, a see by the in there continue driven and curve factors at Despite macroeconomic dynamics deceleration give to we going of in yield growth are

through have customers that industry-leading First, enables the we to an economic perform solution cycle.

anticipated normalization which Second, platform, third, a for indications the we One quarter-after-quarter the for tailwind early the will of we MeridianLink demand And seeing capture business. be the economy. of are strong

we With to be volumes that, upside expect total platform. across there growth our lending as recover an that will the

build While we phase invest next MeridianLink's is for growth. this continue happening, countercyclically to strategically the recovery foundation of to and

second Now year-over-year, quarter X% to let's guidance $XX.X financial performance. year-over-year range review which second total We X% X% our our was below growth. up revenue generated of quarter million, of

Nicolaas StreetShares. to due revenue As to we million in reseller the commercial our with that reduction mentioned, a $X.X this of acquired a from dispute related was acquisition

the have we business over past satisfied to our made despite the negotiations call further After accordingly, this right contractual account we believe obligation. having for quarter,

it around to $XX.X of operating line in margin size, guidance the impact, million, adjusted the performance end at with as not in in of MeridianLink the guidance business. this growing line immaterial top performed with X% While XX% indicative I our EBITDA range. or true year-over-year, of the our one-time revenue the transparency our provide Adjusted want of reduction, nature was and for is revenue

processes. the do made We processes acquisitions. in our onetime M&A to and to dedicated not any in and support dispute systems full great improving progress our I'm for and quarter company's further from anticipate CFO, We have M&A-related As items reshaping accounting past this accounted our the financial business.

allocation million price. of escrow receipt company. the we right fuel to revenue reduction, to resulted will escrow in and the the of our Despite capital, release $XX at the our adding for the customers which value obligation This back completed the strategic StreetShares transaction,

go-to scale continue we digitalization as the to our institutions be and organically for market. will and financial become partner strive a $X in We billion-plus all believe that MeridianLink inorganically, for business can we to

our breakdown. Now revenue software at let's look solutions

grew of driver solutions, software year-over-year. and revenue non-mortgage $X.X year-over-year. the revenue Mortgage-related in XX% software remaining non-mortgage inclusive for at grew X% lending within our the reduction, from As solutions million revenue Adjusted lending X% contributed XX% lending of accounted of OpenClose total. primary the lending the revenue

XX% grew and accounted in at lending revenue revenue software total both software lending the nearly revenue Combining and XX% million reduction, of X% year-over-year. grew total $X.X at mortgage for for year-over-year non-mortgage, revenue total Adjusted

to and revenue decrease declined verification for revenue, was total in nearly solutions. XX% XX% This X% accounted of data mortgage-related verification total XX% year-over-year. data by solutions, represents Turning of software a software driven revenue which

mortgage, Staying to in decline on to the take that QX. like trough volumes the topic a appears acknowledge have hit I'd of a our and minute in mortgage

XX% and This is quarter, total revenue, XX% we mortgage-related up this improvement MeridianLink from of of continuation revenue which generated a last was the year year. overall have witnessed sequential

of be capabilities win. As MeridianLink the to strategy depository fit-for-purpose offensive, to believe on the enable recover, we've to our because to on more to consumer taking customers outperform market of One, focused the mortgage lending lending market begins customers. share, platform cross-selling the providing are scaled staying that mortgage we we use solutions and We our our increasing continue

XX% demand by customers from MeridianLink other lending which process, proposition. depository our business of brings consumer the to customers frictionless experience. continues primarily our right for lending the to consumer's capabilities. me improving grow, provide The value existing end-to-end to One This back led a enables is

they to their a especially One, environment. the more By optimize their bank loans modules, credit trusted the priority, union to different in consumer. to or wallet, debt a As sign ability gain MeridianLink rate fully a high-interest customer turning using can on top-of-mind consumers cross-sell

Adjusted margin Moving was to for profitability, QX compensation, accounting margin was GAAP in stock-based gross XX%. XX%. gross

the the second non-GAAP to operating year, a our on year-over-year on GAAP of quarter and compared quarter, on Before a on the expenses. quarter X% increased to year. G&A of basis performance R&D break the basis. XX% XX% basis operating last to Compared I'd turning GAAP a to last basis in non-GAAP and second increase in down X% like a increased

second by increased XX% basis on expenses primarily of The GAAP increased last was a compared quarter and sales our marketing and marketing and headcount the non-GAAP costs. a XX%, increased compensation driven basis, On operating growth while across year. non-GAAP sales to additional

that selectively to continue customer-centric accelerate growth. We areas invest talent our business the supports that in of

million margin, Now overall On negative XX%. $XX.X operating income was was was and net adjusted million, a turning was GAAP an representing basis, margin EBITDA $X.X $X.X or operating loss adjusted to our million $XX.X million. non-GAAP a our X% income and operating performance. EBITDA GAAP of negative

an $X.X line margin $XX.X was performance operating revenue million business, with the one-time the end adjusted adjusted back reduction, of guide. EBITDA Highlighting in of of top adding the of the EBITDA true million XX%, and our

We flow in margin, cash cash ending flow Now million balance cash escrow cash was last the million million turning the to the period sheet $XXX.X from XX-month and first $XX.X and cash by with free of second cash the and StreetShares the XX% In end the of driven margin. in equivalents, release. quarter, operating flow increase quarter, statement. cash ended or million free XX% was second or $XX.X the unrestricted flow an quarter $XX.X flow

protection customers in and capital our provides to the pivot XXXX. for year us period to and for build update our allocation for I'll enabling value cash guidance strategic this while now MeridianLink's for guidance generation of QX ongoing shareholders. of uncertainty full

guiding to Association. recovery a see We've beginning second and mortgage-related been a sources revenue Mortgage in such industry the our Bankers half are volumes as in and rebound through to

year forecast. current a delayed the to of beginning However, this at happening pace, compare if forecast recovery we is

one-time range. customers, for reduction have in to we is this While and guidance release, accelerating in recovery enough been and substantial mortgage cross-sell lower us delayed ACV increasing adding new revenue our volumes the StreetShares

year-over-year the be change million million, total X% an $XX of estimated million to is for This $XX the in revenue represents X%. same period For to compared estimated XXXX. to between third quarter, $XX.X expected and

million expect year estimated $XXX X% million in revenue For an to compared the XXXX. to period $XXX be same XXXX, we total full million between the increase and $XXX X% year-over-year. to for of represents This

quarter to expect the of revenue, XXXX, approximately XXXX. we the third For compared the revenue market mortgage-related mortgage XX% the third quarter contribute for for to XX% of of

result of level the As of in we to year. mortgage delay market, the through recovery the expect continue the this a

drivers color verification of revenue, comparables mortgage-related the in To around continued in given guide our revenue implies tough total impact the XXXX. a data provide revenue growth decline the more in

of OpenClose, lending revenue. in XXXX, verification ending drag we inclusion mortgage-related the more total with our year revenue data than expect the will in With mid-single-digit offset the growth

side, Understanding last non-mortgage expect we year. these continue to momentum the will compared slower a post-pandemic continue pace off data we to On to hiring. verification at lending expect revenue consumer a screening result in be as of coming year-over-year headwinds flat XXXX, just employment in dynamics, market the

customers auto industry to uplift are to used used weighted year. expect sources, our in prices of according in the an As car half and volumes back softening appear we the be lending, towards

guide. adjusted be representing expected at margins to adjusted non-GAAP to and million, turning EBITDA third the $XX estimated quarter Now XX% On EBITDA the $XX EBITDA million between is a approximately basis adjusted midpoint. of

we our approximately EBITDA to $XXX the For full $XXX the representing range at XXXX, adjusted million, be of between and XX% million year margins adjusted midpoint. EBITDA expect

continued Our reflects to that the growth adjusted EBITDA guide do meaningfully discipline contribute not in acceleration. operating areas

accelerate year, improved great each investments have foundation growth. progress and investments seeing our last made platform next we're to enabled Services that phase strategic areas in of of capabilities, and we've delivery, MeridianLink's build These the expect Over the year. these next engine, our Go-To-Market fueled momentum for to

I'd like team to well market out a on quarter-after-quarter. execute MeridianLink has is what proven through we that can believe end consistently volatility.

resilient the best is base lending capabilities customer clients. focused serve who have in needed investing also to a on We their

being with experience ours. partner success well trusted Those aligned as their underpin values the improving and of a values our shared customers. Our as borrower

the as normalization. technology be trusted to accelerated digitalization continue platform, delivering financial our embraces market eventual We the mission most will and on services

questions to and happy Chris, I it to Nicolaas, are your operator. the turn of I'll that over and take With all

Operator

Ladies and the Thank ahead. question now session. we Koji gentlemen, Instructions] from of of And Please Bank America. [Operator your the from first you. line go begin question-and-answer comes will Ikeda

Koji Ikeda

so the guys, me. for taking couple much thanks from Hi, questions. A

first and one, help XX remarks, piece really kind of in about meaningful of the just little so net software lending I you the about how look here understand prepared that straight customer for quarter, walk a is X,XXX talked should there new that declined us the bit help at the and customers organic when we through show it the medium customers, a but customers, you to the does the you here the metrics algorithm over dynamics term, So thinking thinking new that growth in solutions second - customers guys the about can can supplement, just medium down growth financial be formula know term? we us over the net and new

Sean Blitchok

Sean. Koji, hi, Thank it's the Yes, question. you for

think of the algorithm, a the it's and but I couple interesting changed customer I things has there's necessarily about changed. say dynamic count has the wouldn't

go the focused that, customers consumer-only mortgage, last so been more we're seen seeing cross-sell and couple lot we've and quarters consumer on important. success we've of in into motion that's what example, for a is So the so in

customer seeing are offset but that business, also we're our of all by We primarily growth seeing new across mortgage.

So if IMBs months call in heavily mortgage, it to weighted has ago, space, shifted. you were that we year towards and think a XX% XX% depository, about XX completely flashback this ago,

who in our consolidation model in in so are lot lot of XX-XX as bankruptcy, way. of count. a you to we're know financial total that distress, customer customers the seeing very space, and market shifting there's are we're a well, in the offset So There other a

space component with up okay think with the the and the than we're given of but cross-sell dynamics. now speak true, we're okay - market think I the growth holds that, is overall that I that logo, right more algorithm still taking is new So overall we

Koji Ikeda

seeing just mentioned when in it, seen seeing that's the we've your mortgage Sean, we side, revisions prepared a have here. recovery are causing been is specifically but from consumer for also upward so, recovery, loan you that play the And a remarks, question, delayed is follow-up what seeing is delay here a that you delayed How I And the side, then you're auto look why the bullish what end delay? at forecast are the pretty the you better consumer that the super Got we've you that out? seen what have guess it the maybe a or data on about long seen? market more helpful. delayed

Sean Blitchok

guided no, to that consumer, we we the the So so, growth last year. we saw question see same answer first, the when initially

has think the X% and but as as has been forecast well if guided sources, forward when that combined - they an there look QX. initially to the year been the continually and have decline in MBA - I other the with and at recovery, mortgage you rolled there primarily, QX we recovery and data so

slow. faster And for and that's largely we had had QX QX, and in predicted just into going starting we QX, the a recovery anticipated really, and decline QX QX and really

we - remember if XX% correctly modeled around now, from growth QX not MBA, numbers for the initially X% in that's the the it's QX had So I and that negative

the while the So it's with will we at we and can up not we do see in just we in QX, recovery, see half. to feel pace continue keep second recovery that

Koji Ikeda

Thank questions. it. the for so much. you taking Got Thanks

Sean Blitchok

Thank you, Koji.

Operator

your you. from Bob from comes go the Napoli Blair. of And next Please William line ahead. Thank question

Bob Napoli

growth little right the but rate quarter Thank here, your non-mortgage with sorry, just what declined deceleration decelerated I'm [technical the I guidance and the mortgage. you. like into that's guidance, am built this I confused that significantly is looks It the I'm missing? in by or difficulty] it a think

Sean Blitchok

Non-mortgage I'm Considering have confusing, not what is into - grow in sure will so as half specifically get - and total second grew a for to high-single-digits, X% non-mortgage QX. the in we'd Bob. the,

Bob Napoli

how guess X% I you from the digits? to go high-single Okay.

Sean Blitchok

personal digits, has Just a well. and in We're credit of low as modeling seeing continued - kind strength, is we're very auto. healthy moderate been is what acceleration loans cards single account growth, opening I mean

a been story consumer is - good in us. positive in for So - was a total QX - again has QX

rates, in but anticipated the QX. not, what we of QX FY and same in saw 'XX of in more we the expect that. We growth Certainly terms

year. for not of come the of consumers the since beginning have guide off our We

Bob Napoli

backlog? I the you initiative some big but And how on onboarding know you progressed of you give have and the backlog, accelerate backlog, how the color accelerate was know on onboarding. to on overall the referenced is backlog Okay. trended I can accelerating,

Nicolaas Vlok

this is been going well. Bob, really It's Nicolaas.

If delivery look few by that quarters showing team. one progress made XX%, and results the It's of over Service's had our for Dean of last quarters. you stronger the at growth is quarter, clearly the our

seeing We progress seen and backlog. release means over are made good QX we've the ACV impacting we which accelerated QX,

So, pretty the progress that pleased with and Services. in results

in Now release with turn after client delivered we've it's keep clients, mind, they cycle so project and and live, that, once XX has ramp so keep made client the for live a to roughly after as we delivered. months ACV ramping continue has or projects been the

from pleased made with the there. pretty progress So that perspective,

Bob Napoli

I long-term? one, margins, right about one you. the Thank think think XXXX, the about to level long-term, we what is the to for If growth in the really we sneak right and about, as rate just what about as MeridianLink is 'XX, think EBITDA could the just, last think

Nicolaas Vlok

strategy stronger We and important So about been back it's we for I year grow saying, the overall. and step a we've our at to our pace. think - think initiatives strategic can last

base I'm increased So and guide and the not for and alleviating the the to think guide of been get so The - growth our will 'XX, that think about that installed more but the macroeconomic not strategy the to when appear direction whole talk FY company increase XXXX whole to rebound. we has be right conditions XXXX I but in now, - XXXX guiding guide. represented I would think to we'll I be

effect So rebound our when of we of the volume happens, kind that channels. the through get

would expect higher rate XXXX. in I So, a growth

Bob Napoli

very you Great. it. much. Thank Appreciate

Nicolaas Vlok

Appreciate Bob. Thanks, it.

Operator

BTIG. Thank of your you. line next Matt And from ahead. go from question VanVliet comes Please the

Matt VanVliet

like bound we've do back question. last seen you consumer, of the of like there's where obviously, upper this have higher. over maybe times to go we negatively - for guess of the towards Thanks to quarters, afternoon. rates several I good interest guess responding lot not the high, but over company, feel you been when history there's a an elasticity Hi, continuing movement have look I the taking if quite where rates

how So, how additional the that if impact areas? various there we any should are hikes, think about, rate consumer could

Sean Blitchok

Sean. Matt, Hi,

it's So great a question.

non-growth look consumer last data, our one back was the the it at XXXX-XXXX was blip a If in we quarter. saw you for that time and

think both but for It's have is consumer the I old for grow. to remember rate to and X% a think, it mortgage I most I'm The grows. consumer interest to enough important things that us, not be much pretty matter single not dire a deal. rates big for of of So when how factor environment were

where to do, a example the don't the we're I So, the think for was there - I even cushion decides between consumer. if mortgage a or the again, what now see. the spread Fed mortgage well, in enough the the as we'll mortgage that Fed the raise rates either and where process Fed provides will - themselves Fed rate rates I with do normalization become think, normalized undergoing will but rates will more

see a little deceleration terms we're a going the in leveling think, of going I forward. off bit to of

that You out my bit. asked I've over bit a got little about so consumer, helped I hopefully think a but little skis,

Matt VanVliet

go Thank great. And ahead... then you. That's so,

Nicolaas Vlok

as is, the add of type still is consumers but well where Yes, Sean's checking that savings from question to and spending spending, are accounts. it's still maybe to from, something there coming

levels data probably bank late of pre-pandemic. kind If than in you been is the that's started QX to seeing look at XX% so. it's are now XX% What and accounts consistent a is - we or pre-pandemic process shows about more

and are one And what the this highest of levels in higher some be we There rates seeing much at time being lending an that continued the given with is, engaging flow, doing there's stage of of we rejected. cash in in of the level using or expectation five are happening purchases normalization. of consumer is the and is numbers point this years to not at happening as going it's I tightening credit seeing certainly that credit tightening rejections loans and of think loan a so. they're some And

year is the And out, us softer, and look reflected being we of kind 'XX volumes and that, Sean that you and into data MBA discussed through out pushing recovery in the of kept living pushed guide of MBA. mortgage their expecting with around mortgage back that's has reflective opinion, the the pushing at if in it guide. on my specifically, our half

Matt VanVliet

- like Okay, kind already cross-sell, customers have very there? the us can terms a whether it's the what give forward the of outlook? then on to runway base? maybe success what And a you loan just update talked about installed in the of penetrated a side how a there, customers, largest how kind share snapshot for of mix growing us has sense powder most some bigger is customer consumer average that of of so you picture of of of lending mortgage, helpful. of out And you your sense maybe is much now any the dry kind is give Looks number number versus or then, the total the in maybe on that kind types, long that upsell, of can in of terms the

Chris Maloof

investment call Chris. in to to early cross-sell, success our to as that gave that last that in within now indication a of ability seeing on the tied back contained our Thank go last we're this go-to-market quarter's a earnings. Yes, year Really upswing continued we to cross-sell. what we I'd the is trend like and made having trajectory, you. is and along all drive we're derivative

motion we're it's products, this around. our the up building but of all really part, mortgage cross-sell You brought that

And only up early suite can M&A in seeing, is type one to showing we and of it are realm, buy that there an benefiting within and we products products, brought bring the the we're new that where build clients can our way that in successful, particularly product you what two, integrate different, than into we're then is where traction now because our situation a equals mortgage plus see that's different they where the financial in environment more where institution. motion one buyers from

- the on capabilities come. remain I So to bullish track I record there and our remain

history together have come consumer time largely back the and a cross-sell last questions even we're aspects that when over in your now from the benefit mortgage Now it of in our stages and bear. we're meaningfully the final decade I organization perspective as you separate, the started, XX seeing go our - of and mortgage early your mean, as, brought MeridianLink we if follow-on penetration of the years spent all motion. divisions a that to to well ago and were that from as them

Matt VanVliet

Great. Thank you.

Nicolaas Vlok

think already something And that one last we alone successful. you if to just on, so we're comment only cross-sell, Matt, be QX proving not focused out it's in about are saw mid-single-digit cross-sell, from growth we

Matt VanVliet

it. Appreciate Great.

Operator

your And of Research. the Scott question comes go Wurtzel Please from ahead. you. Thank from line next Wolfe

Scott Wurtzel

for taking thanks good guys, questions. Hi, my and afternoon,

to of auto, loans, one consumer relative quarter between The wondering whether how can maybe this if performed it's by personal performance you side, clients credit the with parse first out the of card, loan type you your some on those expectations? sort your lending saw and

Sean Blitchok

as consumer forecasted. I Sorry, learned talked was as I haven't earlier, the Scott, Sean. bit anticipated it first I'll but overall the how unmute little think I is for hit button. make growth comment to a about

would little in in a If model. the an you growth good but strong a account - we half in so good loans, loan And non-asset-based offset bit and the cards types, look as be including headwind would but to in us call I out types, expect different growth really and strong a at two. bit, Vehicle opening, ones loans. think that little so those very turn was that all for around personal other of loan just

Scott Wurtzel

guide, guide were you helpful. continuing slowdown like on lending invest on that Thanks. I kind down how margins? Got we was revenue, maybe impacting And flowed updated EBITDA, down kind a in your if you're guide volumes the see just and it, revenue to into of understand margins, it but - further potentially and through a the the expense got it. That's to just future are to follow-up at preserve then levers guys looks looking some for wondering maybe flex of growth, on could of

Sean Blitchok

Yes, so that's correct.

We we're two doing - at are - mean things once. I

story. in the company growth, we restructuring of the think the rightsizing, We're important but part well. are as investing I also

customer-facing, to that the So, business customer-engaging, spend parts of our, accelerate a we've diverted towards lot piece. of

has and headcount profile from are perspective. margin overall Our we come a down keeping pace so,

see relook to structure right or where our now. don't that impact picture either to at where a we line, it's we paint revenue something but cost bottom could have I going the does

is I think EBITDA think on this we very and thought the - pace. within guide, carefully I about

to sure. continue we'll so, to are business, operate pull. the there levers There levers, always And are

continue There otherwise. are until levers path we're comfortable where management forward, correctly with customer, something We now. that we're team, believe that I think team and the that going a as at around purchase down the so, right we have we'll right positioned

Scott Wurtzel

Got thanks, it. helpful, guys. That's

Operator

question Please And the Raymond Alex from Thank Sklar your you. line from ahead. go next James. of comes

Alex Sklar

the Thanks. place Nicolaas, some that lending, auto got of are relates with of just you've those more to wanted you as And actually a are ready to about bunch the auto-decisioning spoke in it in I to I the your in prepared of can - that partnerships touchless consumer talk base decisioning know but remarks. to full do the you into idea with what you think lending workflows, percent now assisting enabling types process? implement processes? you that, dig

Nicolaas Vlok

there. Hi,

do that. customers seeing is using and auto-decisioning the is are that module a can enhanced We've released clients who enriched. it's with developed shown are and a started has that is have interest more integrating paying introducing asking ability and volumes for larger customers also incubated to that think dealing fast-growing our group third-party is attention and you is customers of and more auto datasets argue higher we to customers artificially in. What that an kind of I score decisioning

third less it's the it's that ready. don't have question But substantial a if touch do you, tell I it's would you playbook ready, to ready in in couple but And and fast-growing I expectation - years, a than don't that is and a that's subsection. probably order those be a business. But would if say meaningful, decisioning I my a hard say is probably of would answer, you lending would one your

customer miss out loan. the your will on engaging and You closing with

are others in of touchless here who their view that the Union bigger multiples with Space that improved of the about Coast Credit it, on in engaging they technology will to in it's going rehab. future. and the is, our are same meaningfully one we and and implemented Some we was my initiatives larger invest foreseeable will spoke focused our customers of But be our working very have customers and order and decisioning probably

Alex Sklar

from you follow-up great help, And earlier, answer conservative it how quarter year, but contribute about I just you year, questions mortgage to the start the had it said forecast I That's would can couple the to second the we've the seen the half of the think to was XX% appreciate industry of color. walk maybe your just just total mortgage and revenue other why but on of Sean for want only its drop Koji of given want be second of year. revenue there, off outlook can of contribution the mortgage, down should rest and a of in And you XX% think kind I versus levels? this bridge revenue the terms quarter. of to

Sean Blitchok

rest do say not, I it's there which I a as well. think is in a net, I XX% off just drag seen other the the down. I part so XX.X%, of continued mortgage, it business's MCL, from and important. is the MCL is component. lending is the when but think we the there - say it's And walk so of We've of drops -- Yes, and mean combination growth I

easy a those numbers as pretty think get just percent total to to. I of So, are

numbers, $X.X of lending out to guide talk and combination If DBS. of the and you a both revenue talking million about it's of about mortgage we're coming want

fast the to for know the especially lending but is the I mean delayed not in well. us going solutions talk we and detail - enough have reason. we call more, recover, recovery the So, MCL primary as it's a later, that's just, it's really really just I around recovery can happen to

keep And we in we that's story about good skews growth it growth don't growth, say in too, as QX part mortgage I - when which digits, for to the mind in in definitely, it the but it well. double the OpenClose, of saw that that example, the talk being want number,

OpenClose we so in and perform how as look half going at the two it's And to acquisition have well. to

Alex Sklar

Okay, thanks for there. the color

Operator

from the line next comes from And ahead. your go question Andrew Schmidt Citi. of Please Thank you.

Andrew Schmidt

wood the making in of lot Hi, net guys, in thanks growth in side kind momentum of maturity, at the feel where seeing dig do and reasons, appreciate new. detail cross-sell cross-sell chop, or the lot, where Obviously, but lot to in it's just comfortable a the wanted for a question drive of taking with fruit, market to there, on terms versus things there's sales more I net more to the here. bearing to my all questions new just of there like whether that on you investments like you're net resources. needed new guys. there that, Thanks cycle, are the other is we're investment the a

Chris Maloof

to after question. This those dynamics are, mortgage biggest so as Chris. banks, The used you is for mortgage Thank were play new classified independent team in predominantly two logos. the go all you're seeing our

is is though that argue of not clients at into that Sean platform, facing Their mortgage as stronger. those value scenario, the logos. one Now up one then, retention is almost in reflecting would that's that's element aspect. power into is the our directly long-term seeing staying which difficulties you as we cross-sell It's where in is I directed some brought depositories, capabilities team - exclusively banks impacting What the the that new well. higher. well, are so of are - the independent And broader seeing are other numbers some tied

Sean Blitchok

new and the we to do not to Yes, used that Andrew, say it's in invested in key haven't word It's logo. you think that. I cycle, important on

who team leader on logo focused new place, is a logo. have a with very new We good in

dynamic road. pipeline I is build but mortgage even offsetting to cycle road, healthy the and just as down there so new logo down we'll payoff the a we think do far is logos logos mean very start see with think the the new see, don't the right new now, is And I narrative. that for added the an of I that a of -

Andrew Schmidt

take so another non-mortgage consumer I'll it. couple Got times, you, I know asked shot I a the ask Sean. half Maybe it's it. Chris. back at Thank the you, LOS, Thank been pickup about could piece. in

expectations And then there, re-acceleration of or new but I is it's of also implementation there there it a I've of base follow-up, Just to cross-sell primarily purely kind or of start. is volume the terms in say driving in place terms the shouldn't drivers that? that's good net or

Sean Blitchok

not particularly we do honest, to though primarily consumer further - pick that think simply seeing the mean, driven and volume by - QX, volumes auto. around volumes pickup. it's even And will and still components quite by growth the of in it's simply, I up in about be talked we've

Andrew Schmidt

Got it.

the of feel Okay, What I confidence just And consistent what that. that directionally seeing, thank you do is question pickup with guess for to you're in - then you I so follow-up the guess is - of Thanks - we've in like like obvious kind that last that. what's is I of the visibility think terms or do job derisked done forecasting on but question the this pick-up a good you volumes? a far, in feel lot. is just

Sean Blitchok

I'm until I'm always confident Andrew, not. forecast our in

our a is headlines used, good our headlines around inventory, - multiple have of use XX-XX seeing good new we data base being around - primary, So we most sources, Cox the on so well, you're and split has roughly Cox. as positive. I is use on the an as minus X% downstream used that number impact very think sales for year-over-year example, used new But sales, for is we think that from

we and better that we than that. anticipated think have do we So that can

And the forecast relates and confident I the it sources loan forecast half-two is am types. would are say, to data I considered different in in so as being all what the

Andrew Schmidt

very I Got the you it. Sean, much, commentary. appreciate Thank

Sean Blitchok

Yes.

Operator

Thank you. from of Stifel. And from line Lane question comes Please go next ahead. Parker your the

Parker Lane

and the far think today, more AI hoping as industry partnerships and can to more is platform bit interesting guys. you during was guys here. a about providers what the announced at interest the embracing thanks, hear time I a the few problems as ask where little one in AI Hi, thrown and I'll in automation. you quarter, of with where be Nicolaas,

Chris Maloof

the scores. for specifically the up around Chris. Yes, pick decisioning decisioning AI Today, thanks we're seeing industry This question. or in this is greatest around in

our its been partners around to lending. and That's that due customers potential and cross to has work hesitancy we bridge. there fair our adoption in impacts Now something some the with help them

the Going specifically at industries and service engaging accelerate forward, application could consumers with member where call to think all how ways center. AI the you representatives is in across are a areas lot looking in online has I have this, person of

already on our card behavior, recommendations solutions usage, within to all how that based highest drive makes well as product on that our provide behavior, take lending have propensity deposit clients to offers credit promotional We as action.

and we versus and is of customers need others to own combination solutions thoughtful and today. So we our a it's biggest the regulatory industry cautious that front nature rollout difference in be center of our now, as and we'll this the do to we about do as partners very as that

Parker Lane

Understood, thanks for the color, Chris.

Chris Maloof

Thanks, Parker.

Operator

question your next from Thank of Please you. And comes line go the Kalia Saket ahead. from Barclays.

Saket Kalia

it view been in high this this in think revised on to question mortgage is late, market. is yet. $X it was item, thanks apologies hasn't question revision much the the much hopefully also I maybe just for for to on Sean, and that how will to customer here. I hi, of taking one level, just so joined how about the asked I you, that Awesome, my keep advance, year's But $X from from and million and guide million, the revenue is this of quarter one-time guys,

Sean Blitchok

i.e., pressure, recovery with the due it the of was from mortgage. and the dispute to in million is reseller the mortgage it $X.X Well, balance of in the delay

Saket Kalia

Got it. helpful, you. Very thank

Sean Blitchok

Yes, thanks, Saket.

Operator

questions you. Please at time. no are further proceed. Thank There this

Nicolaas Vlok

you joining operator. the I'd thank to the team. and a MeridianLink final for like extend to today thanks call you, Thank

apart and growing our help set serve customers. dedication list of and us better us focus Our

the our forum, their observed and every obvious we interacting it all care partner with I achieve at each and was customer much customers and how successfully. team about grow objectives user helping As

operator. in Thanks Our performance. you, the I'm you. and of forward the Back proud with listening and solid to speaking make people difference again look for I to

Operator

that conclude all participating. you. today. conference Thank Thank for gentlemen, and you for our Ladies does

You may all disconnect.

MeridianLink (MLNK) 1 Aug 232023 Q2 Earnings call transcript