MeridianLink’s first quarter as a public company proves profitable

After going public earlier this summer, fintech MeridianLink posted second quarter earnings that bested its results over the same period last year.

The company generated a net income of $7.4 million in the second quarter compared to the year-ago amount of $4.9 million. Meanwhile, gross profits jumped annually to $47.4 million in 2Q 2021 from $35.3 million in 2Q 2020.

MeridainLink’s second quarter net revenue grew to $68.5 million from $49.5 million the year earlier. The second quarter’s revenue growth represented a 38% year-over-year increase, a rate that usually came in near 15% before the pandemic, chief executive officer Nicolaas Vlok said in an interview.

The company, which provides financial institutions with cloud-based loan origination and decision-making software, launched its initial public offering on July 28 with net proceeds of $241.5 million. It repaid Thoma Bravo $200 million of outstanding first and second lien credit to bring down its private equity leverage to three times its debt-to-earnings ratio while keeping the remaining $41.5 million on its balance sheet as cash in the business, according to Vlok. After upsizing from 12 million shares of common stock, MeridianLink offered 13.2 million shares at a starting price of $26 per share. It most recently closed on the New York Stock Exchange at $28.48 per share on Sept. 7.

With lending profit margins tightening and earnings expected to fall next year, the Costa Mesa, Calif.-based fintech sees the opportunity for continued growth in sales to mid-sized mortgage companies, since they usually lack the customer-facing digitization investment of larger lenders, according to Vlok.

“That’s where we’re transitioning the business; helping middle-market financial institutions engage with clients for higher customer retention and revenues,” Vlok said. “Understanding the consumer they serve to the fullest extent they can and dealing with their full debt wallet is the nirvana every financial institution is really looking for.”