Q3 2021 Meridianlink Inc Earnings Call
Leaving in Snake papers standby and Wilkinson region links Poyer 2021, and your skull at this time, all participants and listen eliminated outrigger speakers presentations that will be a question and answer session. Please you. The advice of today's conference is being recorded I would not like to turn to conference of it.
Here first speaker today, Eric Snyder had any better relations Eric. Please go ahead.
Good afternoon, and welcome to Meridian links third quarter 2021 earnings call, we will be discussing the results announced that our press release issued after the market closed today with me or Meridian links Chief Executive Officer, Nicholas Block and Chief Financial Officer, Chad Martin.
Before we begin I'd like to remind you that today's conference call will include forward looking statements based on the company's current expectations.
These forward looking statements are subject to a number of significant risks and uncertainties and our actual results may differ materially.
For a discussion of factors that could affect our future financial results and a business. Please refer to the disclosure in today's earnings release and the other reports in filings we file from time to time, but the securities and Exchange Commission.
All of our statements that were made based on information available to us as of today and accept as required by law, we assume no obligation to update any such statements.
During the call we will refer to both gap and non-GAAP financial measures you can find a reconciliation of our gap to non-GAAP measures included in our press release, which is posted to the Investor Relations section of our website.
With that let me turn the call over to Nicholas.
Thank you Eric and good afternoon, everyone. Thank you all for joining us for a third quota of 2021, earning school.
It's been another great quota and I want to recognize our employees for helping appliance make a positive impact on the consumers businesses and communities they serve.
Our commitment to our clients in the past I place them out platforms thrives off culture out of innovation and optimism for the future.
Thanks, again to the Meridian League team for making a difference.
During the day school chat and I will provide details on our third quarter results and give an update on 2021 guidance.
As you can see but I didn't link exhibited strong performance in Q3, which exceeded out previously communicated guidance.
Third quarter gap revenue was 67.4 million up 29% year over year, and we deliver this growth while continuing to demonstrate high levels of profitability with 46% adjusted EBITDA margins in the quota.
Alice Stunk you three results, what driven by continued growth in consumer lending volumes help clients and a higher than expected levels of mortgage activity.
I couldn't be proud of these results, which showcase out a commitment that growth while maintaining based on class margins.
We are well positioned in our markets have a strong growth trajectory and when the time off over 10 billion. We are excited about our future growth prospects.
Before we dive further into third quarter results.
I'd like to congratulate out clients, who might Forbes is 2021 base banks and basically aided unions list.
Does he lied less honest the top 3% to 4% of the country's financial institutions and.
And we ought humbled that a majority of the honorees automotive handling clients.
Their customer centric philosophy.
Digital first focus and commitment to excellence inspire us and feels as though the D G growth initiatives.
I want to talk about one's on four of our strategic growth initiatives today.
First innovation.
Second cross-sell.
Third expanding our target markets and fourth monetizing up bottom network.
I will also provide an update on strategic emanate.
First out innovation continues to drive growth.
Product innovation has been and will continue to be a whole mark of Meridian link.
Innovation drives a client success.
They face increasing consumer demand for more digital for solutions.
And need to modernize the digital learning processes and offerings.
In fact, most new and Crossrail client side out of innovative offerings and integrated platform as a keep that I have it in selecting meridian link to accelerate the digitalization efforts.
In Q3, we announced new data verification enhancements that enabled how consumer reporting agency clients to expand their portfolio of data services, including recurring background checks that reduce the risk and new features in outer advanced quick Abdul that enables them to serve customers modem Buckley.
Flying Shantha enthusiasm about these enhancements getting out annual task works you use a group flying the vein in September.
For consumer reporting agencies using mortgage created link we also expanded verification of employment offerings to mortgage lenders through a keen new loa's integration.
The feedback really see from clients will continue to drive product innovation, especially in areas that support the ongoing digital transformation.
Second.
The synergies of combining products on Meridian link one that's helping to thrive cross-sell.
But I didn't think one is how platform of products, which spans digital consumer lending journey from account opening through loan origination and data collection Decisioning and funding and.
Three we added more than 60, new modem Davenport Lane census.
An enhancement upgrades to new and existing clients.
But I didn't link portal is out of consumer lending digital point of sale solution and supports the industry's digital transformation, while broadening on Meridian link one footprint.
But I didn't think portal integrates seamlessly with them, but I didn't link consumer and Meridian link opening solutions to empower applying to deliver access and convenience do they customers by allowing them to apply anywhere and anytime for a consumer loan mortgage or savings account.
Further in early 20th 21, one of the largest privately owned banks in that state with $4 billion in assets and more than 30 locations selected meridian linked consumer as the consumer lending platform.
We then cross old Meridian link mortgage in Q3, displacing a longtime legacy system.
The bank was in place with the possibilities of the integrated platform. The vast network of mortgage service partners integrated with Meridian link mortgage and outreach reporting capabilities.
They have many other stories, highlighting how meridian link is driving value and differentiation for out existing clients and your logo prospects and how they trust and partnership drive outgrows.
We ought to honor that clients continue to side out industry leadership position and thrust in a long standing innovation is the key reasons they work with us.
Third.
We continue to one new logos, both in a sweet spot and beyond expanding our target market.
As you know our typical client as a financial institution with 100 million to 10 billion in assets.
During the third quarter, we brought on many new banks and credit unions that fit this profile.
One of these which has offices throughout the country chose meridian link over competitors due to a well rounded system.
Ease of application Decisioning tools.
<unk> and automation. These same factors allow us to expand out target market and we continued to one with larger clients and beyond out traditional and markets.
During the quarter, we added a federal reserve top one on the commercial bank with more than 20 billion in assets more than twice the size of a typical client.
We also added this fish out at the consumer Finance company with nationwide operations and several regional finance companies.
We will continue to focus on a primary target market, but these two recent successes at yet another growth opportunity for us and prove that are innovative solutions compete and win as we continue to expand.
Both.
We continued to monetize a partner network with increasingly high profiling integrations.
A vibrant partner marketplace provides our clients with the vendors and solutions are they choosing and offers us a substantial monetization opportunity through one time service fees.
Annual integration fees and throw them as action base or even you shan't income.
We continued to cultivate and optimize out bought in the market place and then the third quarter, we welcome several new partners, including Platt.
Provides instant account verification for account funding formatted anything portable.
It is an add on product that can be used to replace a T. H micro deposits for verifying account ownership.
Plaids integration into the marketplace offers clients, a faster and premium alternative to more laboring things of options.
It is already generating value for our clients and we are seeing stronger interest for Q4.
We continued to be excited at the breadth of offerings not bought in the market place and happy to see clients then to out press that button us to feel that grows.
Finally, I want to update you on strategic MNI.
Specifically the progress we have might integrating silent.
In addition to developing out own solutions organically, we will continue to selectively pursue acquisitions that provide additional capabilities or clients or both and we pride ourselves on our ability to efficiently integrate acquisitions.
I'm pleased to report that in Q3, we made great progress integrating silent and building on its capabilities. We completed the development of a new marketing automation beta product to offer a more personalized digital learning experience for our clients members and customers.
We are excited by the rapid progress, we're making and we will continue to provide updates on the integration of silent and other MNI activities when it occurs.
Before I close I'd like to end as I started and highlight another important industry recognition.
In September or Cofounded, Chief strategy officer, and a partner in the business that had a speck and admire greatly.
I'm Gonna win received a 2021 innovator of the year Award from Orange County Business Journal.
He's initial inspiration in drive Spock. This company and we are pleased that he's continuing innovation and business acumen received well deserve recognition.
Gratulation them.
I will now turn the call over to chat to talk about our financial results.
Thanks, Nicholas and thanks, again to everyone for joining us today.
Since this is only our second earnings call I'll start by providing the highlights for the quarter.
Give a brief recap of our financial model and then it'll go through our third quarter results in more detail before moving onto guidance for the fourth quarter and full year 2021.
Is Nicholas mentioned in the third quarter, we generated total revenue 67.4 million up 29% year over year.
88% of our third quarter revenues were subscription fees with the balance coming from professional services and other.
Are operating loss was 8.8 million, but are non-GAAP operating income was 17.1 million and adjusted EBITDA was 30.1 million.
R. I P. O was completed in the third quarter and the corporate conversion an accelerated vesting pre I P. O equity combined with the equity incentives granted to employees as of the I P. O drove a substantial increase in our stock based compensation, but please note that in our earnings release, we present or operate.
Expenses net of the impact of stock based compensation for comparability.
We have a usage based sauce recurring revenue model, our customers sign longterm contracts, usually three years that are not cancel without penalty and which auto renew at the end of term.
Typically customers commit to annual fees and monthly purchases of applications and.
In exchange for higher monthly commitment they received lower per application pricing and any transaction over the monthly minimum commitment is an incremental charge.
Our platforms ability to make our customers more efficient and effective at lending naturally drives more volume once it's installed and used.
We can grow with our customers and we are aligned with their success.
We provide both lending software solutions and data verification software solutions.
In the third quarter lending software solutions revenues accounted for approximately two thirds of our total revenue and grew 34% year over year.
The other one third of our revenues comes from data verification software solutions, which increased 20% year over year.
Third quarter revenues from the mortgage loan market generated 29% of our overall revenues, specifically, 9% of our lending software solutions revenues and 70% of our data verification software solution revenues were tied to our mortgage focused products.
Of our 29 points of year over year revenue growth in the third quarter twenty-three points were contributed by the acquisitions of T. C. I N passwords, while the remaining six points came primarily through the addition of new customers increased module penetration of existing customers and increased volume from our customers.
As expected organic growth from data verification software solutions trended lower year over year.
Panic growth for lending software solutions remained robust growing double digits versus the prior year period.
Gross margin in Q3 was 60%, but adjusted for stock based compensation. It was 73 per cent.
We continue to invest in our sales and marketing and R&D efforts to drive organic growth acceleration.
We are investing significantly to build robust sales and marketing capabilities.
Compared to the third quarter last year, we spent 87% more in sales and marketing and 64% more in research and development adjusted for stock based compensation.
Even with this additional spend our adjusted EBITDA margin was 46% in our adjusted EBITDA grew by approximately $2 million 30.
31 million.
While we intend to continue investing to drive growth. We will also carefully control expenses and are focused on the conversion of incremental revenue into profits and free cash flow.
Turning to the balance sheet and cash flow statement, we ended the third quarter with 93 million in unrestricted cash and cash equivalents.
$63.8 million from the end of the second quarter.
In the quarter, we used 200 million of our I P O proceeds to pay down debt extinguishing, our second lien debt and reducing the first lien by 75 million and reducing our quarterly interest expense to around 5.9 million.
As a part of this paydown of debt in two three we incurred a debt extinguishment charge up 4.4 million.
We are currently in the process of refinancing our existing credit facility and expect that process to be completed a shortly.
Indications are we expect to be able to reduce our base interest rate by 75 basis points. In addition to extending the duration of our loans and increasing the size of a revolving credit facility.
Operating cash flow in the third quarter was 19.1 million and free cash flow was $17.6 million or a 26% free cashflow margin.
We continue to generate buns that can be used to invest in the business pursue acquisitions or deleverage I will now conclude my prepared remarks by providing guidance for Q4 and for the full year of 2021.
Overall, we continue to see strong business momentum in our pipeline remains robust.
Given the seasonal nature of our business I would like to remind everyone that too for his financial results are typically lower than two three.
For the fourth quarter estimated total revenue was expected to be between $59.5 million and 60.5 million compared to $53.9 million for the same period in 2020.
This represents an estimated increase of 10% to 12% year over year.
On a non-GAAP basis are fourthquarter estimated adjusted EBITDA is expected to be between $21 million and 22 million, representing EBITDA margins of approximately 36% at the midpoint of the range.
For the full year 2021 estimated total revenue is expected to be between $263.2 million and $264 2 million compared to $199.3 million for the same period in 2020.
This represents an estimated increase of 32% to 33% year over year.
On a non-GAAP basis are full year 2021 estimated adjusted EBITDA is expected to be between $119.7 million and 120.7 million representing EBITDA margins of approximately 46%.
At the midpoint of the range.
We continue to be pleased with the performance of T. C. I N. Taz works, which are expected to continue contributing at levels in line with recent results.
Lending software is expected to suffer a modest drag from slowing mortgage lending activity.
And data verification software will face difficult comps and the quarters ahead, given the elevated mortgage refinance activity in the year ago quarters.
Overall, we expect the mortgage related percentage of our revenue in queue for to be in the low twenties versus 29% realized in Q3.
This expected reduction in mortgage contribution will continue to re wait the meridian link business towards faster growing areas, which support continued double digit underlying growth.
With that Nicholas and I are happy to take any of your questions operator.
Sure, Sir ladies and gentlemen, if you had a question at this time. Please press star one on your telephone keypad. If your question has been answered until you wish to remove yourself from the queue press the pound key.
Your first question comes from the line <unk> with Bank of America. Please go ahead.
Hey, guys, Hey, neck, Hey, Chad. Thanks, Thanks for taking my question I guess first question either for your for your Nicholas or Chad.
You you talked about these two actually I'll have a lot of wins here I wanted to focus on the consumer specialty lending and the and the top 100 Bank I think this is pretty important.
How did those conversations start with these these customers and then how how do I think about the initial land at that top 100 bank any any potential expand from here and then just given these are pretty big wins for you. I think are you gonna be leaning hi, leaning and harder to the higher end of the market from here.
Thank you for the question and Great question.
All lanes remains very focus on the 100 million to call attainable enough assets under management.
We have seen success, where larger institutions in them and this large bank in this case.
At.
Are totally into.
Interested and supportive of our Configurable approach to the platform.
As well as the enablement all functionality throughout Bartlett marketplace without partners, that's integrated into a partner marketplace.
And cause you I think there's a big difference between trying to highlight customization, we not a platform that goes out and say we are highly customizable and you spend years implementing the platform. We are very focused on that met market, but we've seen success and the and the and the upper end of the market and we continue to invest in black.
[noise] form and out product for example, there's going to be in it.
Work being done and we've spoken about this in the past where this investments being made and then enhance decisioning engine, which I think nationally opens up that market for us to go to.
Two biggest clients and also enhance.
P O S over time.
Where are we making investments, but it's not as expanding the lanes, it's us getting the introduction getting a call or speaking to the right folks. There's so much opportunity for us left an armoured market approach and that one on one on them entertain billion that.
We've got we've seen strong demand, we've seen great success without portal and that that market place in some great ones upmarket, but at the same time, we've been working on on pricing in fact packaging strategies to to help US do also go further downmarket with good momentum so I would say please.
What the outcome very proud of what the team did and and landing such a large opportunity in the business.
But I would not want to position it as the next girl flavored and kind of move everybody to focus on an upmarket, it's an opportunity that we pursuing but it's not refocusing all lanes.
Got it thanks for that and maybe one follow up here for Chad. Thank you for the color on the mortgage percentage of lending and mortgage percentage of of data revenue you know I wanted to just double click on that a little bit more here. So so it'd be punching the guidance and those assumptions here of low twenties.
That does imply some pretty steep declines in the mortgage loan.
Market related revenue.
Guess with with with interest rates that staying pretty low here and a nice performance that you hadn't that segment in the third quarter.
How should we be thinking about that segment are you guys seeing something different out there or is this just a level of conservatism for the mortgage side.
Could you. Thanks for the question. So we're still leveraging kind of the market view on where mortgage bankers Association, Fannie Freddie where where the market will go certainly if you know the.
Darker as the market and stage stronger longer which helped with our Q3 resolved.
And if you see that continue into the queue for then there may be some benefit to the number as well, but we're expecting that.
We gave incorporate that let me put that drop and you're seeing that in the in the queue for numbers, but I also want to just circle back right and do not take away from the grocery or seeing of the consumer side, where we also came in above expectation.
And the fact that we're seeing this benefit to the mortgage related businesses, just giving us more ability to continue to invest in sales and marketing and R&D generally drive the business forward.
Got it thanks look Nicholas Thanks, Chad appreciate the time.
Oh well thank you.
Thank you and your next question comes from the line at community Kitchen with Credit Suisse. Please go ahead.
Great. Thanks, a lot [laughter]. This is Ken so a question on the partner marketplace. So we often think about it as a good leading indicator of some of the ancillary services. If you will that are attractive to some of the banks and credit unions that you work with so the the recent announcement with quiet is obviously a credit interest but in general aside from that partnership maybe you can just send some.
Light on some of those ancillary services that seem to really be gaining traction and and what are the ones that are sort of picking up sure. If you will within usage of the park partner marketplace.
That's a great question.
I don't want to highlight specific.
Partner smokes, probably speak more on Jan that'll because we have multiples of partners in some cases doing the same and we let clients choose or partners kind of engaging and we enable what's being selected.
But yeah I thought we had a glorious Fry a fair way right yeah.
Yeah, Yeah, and I would say one area that I continue to see interest in is fraud.
And the prevention of fraud, specifically I think over the last.
12, 18 months with with so much moving out of branch and moving digital that they certainly Ah high an alert for kind of prevention.
Our fraud and how can you wait through what's what's out there.
And that's of interest for pretty much every meridian linked client one way or another and flats. A good example of that but there are numbers of other partners, which is which is part of our part in the marketplace and integrated into.
The Meridian link platform as well.
Okay excellent. Thank you and then just real quick for the Q4 is there.
Should we still think about CCI and Taz works as just being sort of down sequentially in queue for those those two businesses relative to their contribution in absolute dollar basis in Q3, I believe the seasonality is a little bit weaker in queue for.
Yeah, So I got one.
Sure. So we'll expect to see the same seasonal impact on the T. C I and passports businesses that were modeling into the base business, but we still is Nicholas mentioned and we've mentioned we're still seeing good results from those acquisitions, they're exceeding what we what we had an original business case, when we when we did them.
So we're still very pleased with how they're performing relative to their original business case.
Alright excellent. Thank you so much for all the help.
Thank you. Your next question comes from Blindness, Andrew Smith City. Please go ahead.
Hey, guys. Thanks for taking my questions here I wanted to dig in on the the enhanced decision you mentioned the winter standard historically.
If I would give you some parameters for credit profile the customer thank or after an.
You could still or you want a decision that way obviously in the market, we've seen and development.
Many many different ketchup wrong decision.
Turn it up data machine learning applications and things like that to kind of improve underwriting processes. Soon just curious you know when when we talk about an enhanced <unk> <unk>.
What what type of opportunity we're talking about here. Thanks.
Sure.
Our goal with Elliot enhanced decisioning is to be more flexible.
Enable more inputs and also the ability to incorporate more third party data into the Decisioning and the structure in which a decision and kind of ends up functioning.
The goal would be to make it.
Faster.
Allow.
More criteria to being soda and I would also believe ultimately opens up.
A more robust upmarket opportunity.
But the goal is for us to strengthen now Decisioning engine was kind of.
An approach to be smarter and more digitally connected and aware of the ecosystem.
Got it thank you for that Nicholas and then just just.
Just in the third order be it non mortgage on consumer L. O S site Uhm excellent seal it I just want to confirm this I have you know kind of estimating that growing in the upper teens range just want to confirm whether that's correct drink correct and then is there a way to break that down between.
Sort of what's called <unk> net new logos crossover spelling of activity.
Any detail there would be helpful. Thanks.
Yeah, Andrew Thanks for the question I think your your your analytics there are accurate and what I would point too is just we still see the.
The same kind of growth characteristics that we talked about we don't break it out in the numbers themselves, but still seeing the same growth characteristics of new customers driving growth in that number as well as seeing the cross sell upsell and the volume increases per customer included in the in the <unk> quarter over quarter quarter over your over.
Order over a year ago quarter growth.
Got it it made sense I can sneak more and more related question Uhm just need to get.
Talk about a large focus for people just talk about your.
Your visibility as it pertains to <unk>.
<unk> sort of sustaining are accelerating into 2022 based on implementation.
Implementation pipeline sales pipeline backlog et cetera, any any color around that would be helpful. Thanks a lot.
Yeah. Thanks, Andrew So we won't give 22 guidance until we report early next year, but there's there's no change too on the consumer side the trends that we've outlined around the double digit growth coming from the new logos Cross sell upsell vol.
Medium increases going forward, so no intention that that will be.
But the long range growth in the volume and drivers of growth that we've communicated will have changed.
Alright, Thank you very much I appreciate the comments.
Thank you. Your next question comes from the lineup Alex Clark like Raymond James. Please go ahead.
Hi. This is just go along on for Alex Gallard I just have a quick question. So there are a lot of moving pieces going on with the consumer debt wallet right now an auto and also a bit under pressure around industry by credit card and personal loan seem to be going to a bank strengthening.
What can you tell us about how the Knicks a volume it's impacting your guidance. Thanks.
Let let me respond to kind of it from a higher level and I'll I'll hand that over to chat if he wants to respond to the model and guidance.
I think the fact of the matter is we've been living what you've seen and kind of highlighted he had on the question over the last six 912 months, even from kind of a shift and also even touching on supply chain I think we've we've seen whatever the headwinds tailwinds Edwin.
Colon on the auto and maybe new home site sales side.
And kind of the the tailwind so in other areas of the business and.
Mm I strongly believe that the business is extremely well positioned and it's probably going to be like a coiled spring at some point in time I believe from a consumer standpoint, when the supply chain issues are easing up on getting resolved my viewpoint is.
We can't really pinpoint timing and we don't include that in our guidance we.
From a consumer standpoint.
I know that there is a a heavy focus on digitalization from our clients, we've seen really strong demand kind of building that footprint out.
I believe we gonna see a bigger benefit when when.
We see some of the headwinds become more tailwind centre business, but in the meantime.
The business is performing really well, even with kind of what you're saying and kind of highlighting out there.
And I believe the best thing, we as a company can do as a state laser focus.
On managing what's in our control executing on a strategic growth victors, which I've highlighted earlier and in my prepared remarks.
And.
To me the bottom line is a great third quarter, we've given you outburst guidance for fourth quarter.
And I continue to believe we going to thrive strong growth even despite some of the headwinds and tailwinds that that we see and we've seen over the last 912 months chat if you want to come in.
On.
Model, you're more than welcome to Ya.
Yeah, Thanks, Nicholas and thanks, Alex for the question I think Nicholas hit on it right. So we're we're not making any really radical predictions are changes in the expected mix of the business were expected to see in the queue for guidance, we provided other than we've been explicit in our.
<unk> around one of what has been the Tailwinds, which has been mortgage and where we expect to see that revenue go.
Thank you. Your next question comes from the lined up the <unk> with William Blair. Please go ahead.
Thank you.
Good afternoon, Nicholas and Chad.
So on the.
Long time looking at your net revenue retention rate and cross sell assuming once mortgage normalizes what would be your your target for a net revenue retention rate.
[noise]. So we've talked about when we look at our kind of a R. R and L. R year over year growth, which we've sandwich last year.
We reported 20%, 120% with some of the tailwind Nicholas talked about and mortgage those tailwinds may turn into headwinds at some point is Nicholas talked about in the headwinds may turn into tailwind. The longterm. We continue to think that that part of the growth will be roughly 10%.
As we look for both cross though so.
Mm price increase Turner marketplace driving growth in that range for our for consumer part of our business.
[noise], Okay, maybe for Eric on the M&A plant or chat with Nicholas I guess, yes.
And any update on.
The market environment for that you're the opportunities that you're seeing.
And the market.
[noise] types of acquisitions, you you might be looking for but is how active are you how active as the the pipeline.
And what types of deals are you looking for.
[noise], Bob Great question, and and good hearing your voice again.
I think Chad mentioned earlier that pretty.
Pretty much every acquisition we completed.
We anticipate it to be [noise].
One that is value added to the plat home brings growth opportunities to our clients and from an internal tracking standpoint at exceeding expectations.
The point I'm, making is we continue to be discerning.
Around strategic fetch and value creation, yeah and [noise].
While we we see good deal flow we tend to be.
Be very specific and a focus.
We do want a fold out our competitive [noise].
[noise] Frenchie Ada.
Stronger.
We also are looking at adjacent spaces that appear to be of interest to us you've seen us.
With silent into a.
Technology acquisition that we are.
Platform that will be integrated into our data analytics and drive real value for our clients and we continue to look at plays around that that's strengthening the platform would strengthen out offering drive growth for our clients.
We have assembled a team.
Eric and and and another individual.
And.
The team is focused it's part of our growth nation, those we've outlined five.
And <unk> is certainly kidding.
That's about what M&A component.
20.
S S.
As as we continue to evaluate great opportunities.
Thank you I appreciate it.
[noise]. Thank you once again, if you would like to ask a question. Please press star one on your telephone keypad and wait for your inconvenience again, that's star one to ask a question. Your next question comes from the lineup met then plant the B T. I E. Please go ahead.
Yeah. Thanks for taking my question, guys and shoveling the quarter I guess as as you look at where maybe the incremental sales and marketing investments are gonna be more focused moving ahead, realizing that the the recent ones have given you a pretty good returns have have some of the newer deals whether it's the larger bank or the the specialty lending company.
Are you are allocating more resources to to be a little more perspective, and some of those areas of the market. How should we think about kind of what what some of the incremental heads are gonna be focused on moving ahead.
That's a good question Matt.
I don't think we're gonna change the mix that we are investing in between new and cross sell upsell in in 22 and beyond.
We've we've found good momentum and a new logo when go to market motion we.
We are expanding.
In in specific markets.
And and focus on.
Certain segments.
With Mark Black marketing plays sales place that say top growth for us in 2022.
But no real significant change is contemplated Ah between.
As a reminder, having a new logo teams have a cross sell upsell team have a channel team and then our partner marketplace.
I would say expect more of the same type of investments.
We've invested heavily over the last 12, 18 months and take stock as well, we coming out of that cycle, where in 2022, I would like to see us continue to bolt out and gain efficiency without thick stack and I'll go to market organization.
Personally I'm pretty excited way, we fought from where we came from away we at and where are we going with with our go to market and.
I'm, a big believer in the investments, we making in the in the sales and marketing organization.
And then as you look at kind of what the Meridian link one platform ultimately sort of offers along with the partner marketplace.
Does that give you enough of a sort of competitive barrier as we see some of the five companies are are really even some of the tech companies trying to get into kind of lightweight loan pricing and offering.
Or or do you have to continue to to sort of push the envelope on the development side to make sure you're kind of staying ahead of including all of the necessary functionality to to not let some of these other providers kind of sneaking.
We we we don't rest on our laurels, but we do know we've got a very defensible mode and our partner marketplace and the integrations that we've both over more than a decade.
Into the platform.
From my perspective.
The positioning we have in the marketplace is strong we are in a leading a market leading position.
We will need to continue to invest in digitalization and.
Data and analytics and enhance decisioning.
The the touch points as the market continues to shift.
Into enabling the consumer where the consumer is move.
Moving away from pure branch interaction too and Omnichannel experience and the supporting infrastructure behind that but I do not believe that any company better positioned with a platform and an ecosystem and integrated into the great that Ah consumer lending landscape then.
And Lincoln.
While we need to continue to invest it's it's the culmination of two decades of knowledge and the investments we've been making over the last call. It.
More than two years into technology moving out of our platform to the cloudy out and getting that ready for 2022 in a meaningful way.
We had a great point in time in the history of the platform I believe what I believe the market is going we've we've been positioning ourselves for that for a long time and I feel where we add today and where are we going.
We have a very strong competitive position to compete in the market and the market that we've defined as that hundred million to 10 billion of assets under management.
And then sort of just quickly one more follow up you mentioned that and and.
And a growing trend here that people are going to the branch less than some of those interactions are there are there any areas of kind of a data verification.
Components that are maybe becoming more incremental.
You know obviously you guys added the the tendency screening.
Through acquisition, but are there other types of data sources or ways that Ah lending institutions are looking to be a little smarter, but cast a wider net.
Especially if the mortgage market continues to contract.
I would point you back to fraud I think at this point in time, when I speak to C. E. O's Lions one of the the top of mind items, especially kind of in the.
The world of digital exhilaration, as fraud, and fraud prevention and management around that and.
We are very focused on enabling additional functionality throughout beutner marketplace through integrations as well as continue the boat our platform in that regard so from from my standpoint.
I feel.
Digitalization is a great tailwind, it's bringing significant new opportunities to us and others in the marketplace.
The fact that our platform is so broad and so well integrated to consume data and make sure that the data is made it as part of the Decisioning and photos manage I view that as kind of the next frontier and analytics and how.
How you think through Decisioning as part of that and personally I believe we gonna look back five years from now in this industry and maybe 10 years.
Looking back.
We are looking at it very much a digital.
Evolution, taking place in the consumer lending landscape, what you've seen kind of with mortgage and the and the last decade or so as the home mortgage process. Each life, that's coming out on a broad basis for consumer lending and probably in a more meaningful way than what we've even anticipated a year or two.
[noise] ago.
Alright, great. Thank you.
Thank you and your next question comes from the lineup Tom Broderick with Stifel. Please go ahead.
Yeah, Hi, gentlemen, thank you for taking my question. So apologies I think everyone's juggling a few calls today. So I hope this wasn't already asked but I I know investors and and we in particular room pretty interested in in the update on the money and like Porno that you have more recently I think he has set you talked about some 60 customers.
Upgrading in the quarter, what I'd love to understand from that and in terms of you know what that means to your your customers that are selecting that talk.
Talk a little bit of a bit more about what the financial impact is to you and then also from you know from the perspective of does it change the competitive landscape out there in terms of who you might bump into in the financial services.
Services Technology World, you know sort of more of the same typical cause a triple a competition or is that changing it all as you kind of push your way into a broader digital digital footprint on the on the customer portal fries.
Let me, let me kind of respond to it from.
A market standpoint on all handed to chat to to kind of respond to the financial part of this.
Out portal is the innovation that took place over the last 18 months two years on specifically, creating an omnichannel experience for our customers.
Clients and members.
And it is the enablement of it and this strategy played out before they was a pandemic.
But I didn't links team and and and and and.
Bought stacked hands on really building the platform to be a digital enabler and and moving the met market financial institutions, we serve to be competitive with larger bang some larger financial institutions.
And our positioning [noise].
As always being invest in the Omnichannel invasive disease digital experience could hate the single sign on.
That's why we started investing over two years moving to the cloud is is is pretty hating. That's scalable platform an ecosystem that we invest in and we have partners participating in it.
And the portal is that front end, where the consumer touches our platform.
That that engagement point that they experience.
Our clients interaction with them and it's driven by them already and links so that's a pretty important investment for us in something that we really excited about bringing further to market.
From a a positioning standpoint today, it's very focused on the consumer lending landscape you can clearly see it's it's Ah.
Eight point of sale that can be more if we choose to go there, but today, we want to be the best.
Portal, the best access point for our clients into.
Into them or anything platform that enables they experience across the platform and being integrated with a partner ecosystem.
God I don't know if you want to speak to kind of the subscription part of it.
How this how this plays into the.
The platform and the financials.
Yeah, Tom So the portal is one of the modules one of the kind of a dozen modules, we sell and the consumer lending category is rapidly growing and it's subscription rather than application based but I would say we do also get the benefit of our customers are using a portal solution if there <unk>.
Acting additional applications by having that kind of customer friendly application, we do kind of get the benefit of seeing additional volume and the other modules that they have on the consumer side.
Yeah, perfect I'm glad you clarified that you're in and is that subscription just driven by you know number of end consumers on the platform. So start Transactionally. Your application driven it's just you know number of number of customers that the financial institution has it that would drive that price point.
[noise], we do price it more on size of the institution not necessarily tied to customers, but two assets.
Okay, and then one quick follow up I I was interested in your answer there just to match last question on an attitude solutions your highlighting fraud.
One solution that sort of seems to be catching on and you know when you. When you combine that with some of the data <unk> verification the analytics and the B I. It seems like perhaps you know the market is ready to move beyond just the automation of paper processes to really investing in artificial intelligence and and you know machine learning and and a lot of the.
<unk> <unk> a lot of the intelligence of the edge of the network. There maybe you could just go one step further and talking about you know high level. What your customers are going to lean in on that theme and you know as their attitude money around the horn should we should we expect to hear a lot more of the you know the AI the the.
The fraud and some of these sort of newer solutions that are that are you know a step up in intelligence.
It's an area of interest for us. It's it's an area that we are.
Investing in in in.
Our own capabilities as well as partner integrations and partner of capabilities as evidenced an example by the plot integration.
And it's also an area that we are looking through the lens of M&A and.
Certainly.
An opportunity that.
We would like to capture.
Value from if there is value to be captured but more importantly.
If there is value to be captured and driving growth for our customers and helping out customers kind of differentiate make faster better decisions.
Have a better risk management process and integrated into Decisioning.
We highly interested in building out that capability over time and I believe it's also to.
To the benefit of the greater market, not just our existing or new future customers.
Yeah really.
Really helpful. Thank you I'll jump back in here I appreciate it.
Thank you and that concludes our question and answer session for today I will now turn to call them back towards C. O equal last month for final comments.
So thank you everybody for joining us on our second.
A.
Quarter as a public company way, we reporting our results and.
I think you may have picked that up from both chat in my discussions today that.
We've never been more optimistic about the health of the business and the opportunity ahead of us.
We we have numerous growth landless at Meridian link and the.
The demand for our products are strong and I would say.
I would even venture wanting to say unprecedented.
For me as the holidays approach I I feel fortunate that the biggest thing that's keeping me up at night right. Now is how we can get our toys into into the hands of our clients faster here, we sitting on a great great opportunity, there's great tailwinds on this market and I'm very excited.
To be part of that journey.
In the digital consumer lending landscape.
And I would also like to finish on a personal note.
This is an incredible journey and and I Wanna say mice in Seattle, a good attitude to all of our employees our clients and our partners for getting US here. Thank you all for your interest in Meridian link.
And we look forward to talking to you on our next earning school Ah, where we will discuss Q4.
Thank you for joining today operator.
Thank you Sir This concludes today's conference call. Thank you for participating you may now disconnect.
Oh.
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