Executive Summary

Q3 delivered 5% YoY revenue growth to $80.4M, with lending software up 7% and Adjusted EBITDA of $33.8M (42% margin), at/above the high-end of guidance; GAAP diluted EPS was $(0.09) as interest expense and higher G&A offset operating leverage .
Management highlighted continued ACV release, strong cross-sell, and disciplined spend; macro headwinds persist across mortgage (below minimums), deposit constraints at community banks/CUs, and used-auto affordability, tempering Q4 expectations .
Q4 2024 guidance: revenue $76–$80M and Adjusted EBITDA $29.5–$32.5M; FY24 revenue maintained/narrowed to $313–$317M; FY24 Adjusted EBITDA raised to $127–$130M, implying ~41% margin at midpoints .
Wall Street consensus (S&P Global) was unavailable due to request limits; compare to guidance instead: revenue in line with high end and EBITDA above, driven by ACV release and cost discipline (note on estimates below) .

What Went Well and What Went Wrong

What Went Well

Margin execution: Adjusted EBITDA margin expanded ~309 bps YoY to 42% on disciplined cost management and services productivity; Adjusted gross margin improved to 73% .
Cross-sell momentum and platform wins: “Multiple high-value cross-sell deals” across consumer and mortgage; customers consolidating disparate systems on MeridianLink One to reduce processing times by up to six days (e.g., Broadway Bank) .
Capital allocation: Returned $31.3M via buybacks (YTD $105.6M), while completing a sponsor secondary that increased float and liquidity; management reiterated disciplined capital allocation and transparency priorities .

What Went Wrong

Mortgage and macro headwinds: Mortgage volumes remain at “generational lows” and most customers are below minimums; management believes rates need to fall below ~5% to materially change mortgage activity .
Data verification softness: Data verification revenue declined 1% YoY; a one-time downsell of a large customer in mortgage-related data verification pressured results .
Higher G&A and interest expenses: GAAP net loss widened to $(7.1)M vs $(2.1)M a year ago, as interest expense (~$10.2M) and G&A spend rose; management noted margins likely normalize in 2025 as discretionary growth investments continue .

Financial Results

Summary (GAAP unless noted)

Metric	Q3 2023	Q2 2024	Q3 2024
Revenue ($M)	76.49	78.68	80.37
Diluted EPS ($)	(0.03)	(0.13)	(0.09)
Adjusted EBITDA ($M)	29.84	31.75	33.83
Adjusted EBITDA Margin (%)	39%	40%	42%
Gross Profit ($M)	49.48	50.50	52.72

Revenue by Source and Solution

Metric ($M)	Q3 2023	Q2 2024	Q3 2024
Subscription Fees	64.61	65.95	67.34
Professional Services	8.71	9.56	10.15
Other	3.17	3.17	2.88
Lending Software Solutions	58.95	61.64	63.01
Data Verification Software Solutions	17.54	17.03	17.36

KPIs

KPI	Q1 2024	Q2 2024	Q3 2024
Total ARR ($M)	256.4	257.3	259.3
Net Retention Rate (Total)	98.1%	98.6%	99.2%
Total Customers	1,985	1,974	1,961
% Revenue Related to Mortgage – Total	20% (FYTD)	20%	20%
% Revenue Related to Mortgage – Lending	11% (FYTD)	10%	10%
% Revenue Related to Mortgage – Data Verification	56% (FYTD)	55%	56%

Notes: Subscription revenue ~84% of total; ACV release was a high single-digit contributor to growth in Q3; volumes and one-time downsells were a low single-digit drag .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q4 2024	N/A	$76.0–$80.0M	New
Adjusted EBITDA	Q4 2024	N/A	$29.5–$32.5M	New
Revenue	FY 2024	$312.0–$318.0M	$313.0–$317.0M	Maintained (narrowed)
Adjusted EBITDA	FY 2024	$123.0–$128.0M	$127.0–$130.0M	Raised

Management tempered Q4 expectations mainly due to higher mortgage/treasury rates, deposit constraints, and auto affordability; expects mortgage to be ~20% of Q4 and FY24 revenue .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3)	Trend
Macro/mortgage	Q1: mortgage at generational lows; volumes below minimums; slow auto; cautious outlook . Q2 PR: mortgage mix 20% of revenue; continued headwinds .	Mortgage still below minimums; need sub-5% rates for meaningful recovery .	Persistent headwind.
ACV release/time-to-revenue	Q1: accelerating ACV release; offset by volumes . Q2 PR: bookings/activations underpin ACV release and growth .	ACV release high single-digit contribution; delivery stable; bookings-driven .	Positive driver.
Cross-sell/platform wins	Q1: cross-sell/land-and-expand; new logos; data/analytics modules . Q2 PR: consumer adds mortgage and analytics; integrations (Insight, Conductiv) .	Strong bidirectional cross-sell (consumer↔mortgage); Broadway Bank go-live (−6 days processing) .	Building momentum.
Auto affordability	Q1: used auto still soft YoY; sequential improvement .	Affordability constrained; expects improvement with lower rates/prices over time .	Gradual improvement needed.
Data verification	Q1: -12% YoY; mortgage DV down 17% incl. one large downsell . Q2 PR: DV down YoY; mortgage mix 55% .	DV -1% YoY; one-time downsell impact; mortgage DV 56% of DV .	Stabilizing off a lower base.
Capital allocation	Q1: $44M buybacks; framework: organic, M&A, buybacks . Q2 PR: $29.9M buybacks .	$31.3M buybacks; year-to-date $105.6M; secondary by sponsor increased float/liquidity .	Ongoing, opportunistic.
Leadership and transparency	Q2 PR: named Larry Katz President; Elias Olmeta to join as CFO .	Emphasis on rigor, 3-year plan, transparency; margins to normalize as investments continue .	Strengthened team.
M&A/end-market consolidation	Q1: turn up inorganic efforts; disciplined/accretive .	Expects FI consolidation to continue; MLNK tends to benefit as consolidators are tech-forward .	Potential tailwind.

Management Commentary

CEO: “We achieved revenue of $80.4 million or 5% growth… Adjusted EBITDA was $33.8 million, representing a 42% EBITDA margin… Our view of recovery remains unchanged as we expect that headwinds will persist” .
President: “No other solution offers the breadth or depth of MeridianLink One’s end-to-end modern digital lending capabilities… bidirectional cross-sell is a very strong motion” .
CFO: “Subscription revenue… grew from… ACV release… volumes and one-time downsells combined were a low single-digit drag… We do not expect margins to remain at these elevated levels… expect [them] to normalize in 2025 and beyond” .
CEO on mortgage: “Mortgage rates will need to drop below 5 for it to have a meaningful impact… We anticipate this to be quarters and not near term” .

Q&A Highlights

ACV release driver: Growth driven by bookings and services delivery; delivery times are stable; high single-digit contribution to growth in Q3 .
Mortgage outlook: Recovery requires sub-5% mortgage rates; most customers still below minimums; recovery to take quarters .
Normalized growth algorithm: In normalized environment, revenue could reach mid-teens growth; management corrected and emphasized double-digit potential .
Cross-sell factors: Platform breadth; bidirectional consumer↔mortgage; rising interest in data/analytics (debt optimization) .
Consolidation: Expect more FI M&A as rates decline; MLNK tends to benefit as larger, tech-forward institutions are consolidators .

Estimates Context

S&P Global consensus for Q3 2024 revenue and EPS was unavailable due to data request limits; thus, we cannot provide beat/miss vs Street consensus at this time (Values would be retrieved from S&P Global; unavailable in this session). Instead, results were in line with the high end of company guidance and EBITDA exceeded, per management commentary .

Key Takeaways for Investors

Quality of earnings: Strong incremental margins (42% Adj. EBITDA) on modest 5% revenue growth signal solid cost discipline and services productivity; expect some margin normalization as growth investments resume in 2025+ .
Growth durability: ACV release continues to drive growth (high single digits), with cross-sell momentum and new logos underpinning pipeline; volumes are a modest drag until macro improves .
Mortgage mix risk is contained: Mortgage ~20% of revenue; meaningful upside awaits sustained rate declines, but not near term—maintain conservative expectations into Q4 .
Q4/FY setup: Q4 guide reflects rate and liquidity headwinds; FY revenue range maintained/narrowed while EBITDA raised—expect focus on execution vs macro dependency in near term .
Capital allocation as support: Ongoing buybacks and improved float/liquidity should provide support; balance sheet leverage ~3x net debt/LTM Adj. EBITDA indicates manageable profile .
Medium-term thesis: As volumes normalize, revenue algorithm could move toward mid-teens growth given platform cross-sell and ACV release; watch for macro inflections (mortgage rates, auto affordability) .
Catalysts: Evidence of customers moving above contractual minimums (mortgage), acceleration in auto volumes, incremental cross-sell disclosures, and transparency initiatives from new CFO could re-rate growth expectations .

Appendix: Additional Detail

Share buybacks: $31.3M in Q3; YTD $105.6M; sponsor secondary of 6M shares increased float/liquidity .
Mix: Subscription ~84% of revenue; services +17% YoY; ‘Other’ −9% YoY; lending software ~78% of revenue; DV ~22% .
Notable recognition: Included in IDC 2024 Global FinTech 100 Top 50; underscores platform’s market position .

Sources:

Q3 2024 8-K and exhibits: results, reconciliations, guidance, ARR/NRR, mix .
Q3 2024 press release: highlights, cash flow, repurchases, guidance .
Q3 2024 earnings call transcript: management commentary, drivers, Q&A .
Q2 2024 press release (for prior guidance and trend): results, guidance, mix .
Q1 2024 earnings call transcript (trend context): macro, ACV, cross-sell .

MeridianLink, Inc. (MLNK)·Q3 2024 Earnings Summary