MeridianLink (MLNK) AI Stock Analysis

• Market Cap: $1.28B
• Dividend Yield: N/A
• Average Volume (3M): 229.99K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.10
• Revenue Growth: 4.18%
• EPS Growth: 27.11%
• Country: US
• Employees: 682
• Sector: Technology
• Sector Strength: 63
• Industry: Software - Application
• EPS (TTM): -0.39
• Shares Outstanding: 76,626,180
• 10 Day Avg. Volume: 195,994
• 30 Day Avg. Volume: 229,985
• PEG Ratio: N/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 Ratio: 17.60
• Enterprise Value/Market Cap: 1.52
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 9.36
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $19.58
• Price Target Upside: 17.18% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 7

MeridianLink's stock score reflects a mix of both positive and negative factors. Strong revenue growth and a healthy cash flow are major strengths. However, persistent net losses and high operating costs weigh down the score. Technical indicators suggest a bearish trend, and the valuation is unattractive due to a negative P/E ratio and lack of dividend yield. While the earnings call provided some positive sentiment with strong operational results, challenges such as customer downsizing and declining mortgage revenue are notable risks.

Positive Factors

Cross-Selling

ACV release will be driven by strong bookings, which has been at record levels for two consecutive years, driven by continued strength of cross-sales via MeridianLink One with a growing number of new logo wins.

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.

Shareholder Returns

MeridianLink executed approximately $31 million in share repurchases during Q3, totaling about $106 million returned to shareholders year-to-date.

Negative Factors

Customer Downsells

A customer downsell of $6mn is creating a 220bps growth headwind in 2025.

Interest Rates

Expectations of higher-for-longer interest rates likely will push out its revenue growth recovery story until 2026.

Revenue Growth

MeridianLink's top-line growth continues to be pressured by lower consumer lending activity and mortgage origination volume.

MeridianLink Business Overview & Revenue Model

Company Description

MeridianLink, 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 Money

MeridianLink 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.

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.

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.

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

• Technical Analysis Sentiment: Negative
• Last Price: 16.71
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 16.71 is below the 20-day moving average (MA) of 16.96, below the 50-day MA of 18.21, and below the 200-day MA of 20.93, indicating a bearish trend. The MACD of -0.61 indicates Negative momentum. The RSI at 41.96 is Neutral, neither overbought nor oversold. The STOCH value of 70.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MLNK.

MeridianLink Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ALKT	68 Neutral	$2.77B	―	-11.98%	―	26.06%	38.19%
Sector *	59 Neutral	$10.72B	10.22	-6.67%	3.02%	7.39%	-11.27%
MLNK	57 Neutral	$1.28B	―	-6.36%	―	4.18%	27.11%
ONTF	48 Neutral	$198.51M	―	-24.82%	―	-9.55%	12.28%
OCFT	47 Neutral	$230.70M	50.30	-24.21%	―	-39.77%	-28.49%
BLND	45 Neutral	$859.48M	―	-93.00%	―	3.30%	68.45%
PRCH	44 Neutral	$601.92M	―	75.95%	―	1.75%	72.30%

MeridianLink Corporate Events

MeridianLink Sees Revenue Growth Amidst Challenging Environment

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.