Q1 2022 Meridianlink Inc Earnings Call

Ladies and gentlemen, thank you for standby and welcome to the region links first quarter 2022 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 your conference over to your first speaker for today, Eric Schneider head of Investor Relations. Please go ahead.

Good afternoon, and welcome to Meridian links first quarter fiscal year 2022 earnings call we.

We will be discussing the results announced in our press release issued after the market close today.

With me are 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 business.

Please refer to the disclosure in today's earnings release, and the other reports and filings we file from time to time with the Securities and Exchange Commission.

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

During the call. We will also refer to both GAAP and non-GAAP financial measures.

You can find the reconciliation of our GAAP 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.

Okay.

Thank you Eric and good afternoon, everyone.

Thank you all for joining us for our first quarter 2022 earnings calls.

I want to thank the entire marine link team for helping us achieve another strong quarter with continued growth and momentum throughout the business.

Soon Chad, who will discuss our Q1 financial performance, but I would like to provide an overview of what contributed to the quarter's solid performance.

Q1 showed strong momentum outside the expected slowing in mortgage related revenues as we've continued to improve our solutions, enabling our customers to perform well in the face of a normalizing market.

We have maintained investments in our product and team added partner integrations and increase the pace of customers going live on the platform.

As a result, but it didn't link exceeded guidance again in Q1 with Cathay, when you're up 7% year over year to $72 8 million and 47% adjusted EBITDA margins.

I want to take a few minutes to discuss three particular areas of strength from the quarter.

First our continued offering expansion.

Second.

Auto glass cross sell engine and third our.

Our investments to more quickly onboard customers.

These three important areas helped fuel our first quarter and I am excited and confident in the outcome.

Trajectory of delivering on our commitments to our customers our employees and our invasive.

First operating expansion.

Let's start by taking a look at new capabilities.

We have a demonstrated history of introducing incremental product innovations on a continuous basis to help our customer succeed serving consumers.

Today I want to highlight two new products, we are offering to customers engage and adolescents three chairs.

And two new partner relationships, we are making available.

Social intelligence and Verifone.

After a very successful Q4 data with great customer feedback, we began 2022 by announcing the general availability of commodity Enlink engage which builds on the foundation of our sales in the acquisition and the execution of our go to market plan.

But I didn't make engage enables financial institutions to increase engagement and profitability through data that have been lending campaigns.

The Q1 launch of Meridian linked engage is generating significant interest with pipeline continuing to build as it provides our customers additional ways to capture incremental wallet share while they delight consumers with beta leading experiences.

For example.

Early credit Union customer has leverage but I didn't think engage did talk with active named best with auto loans elsewhere, but I think auto loan refinance activity at their institution contributing to a nearly 300% auto I made you up to date on the campaign.

The success of this island acquisition and engaged which highlights our ability to identify strategic acquisition opportunities and complete successful technological integrations to build upon our powerful platform.

We pass on many more acquisition opportunities than we close as we seek the right combination of a strategic fit.

<unk> and value.

On our previous call in March we announced that we had entered into an agreement to acquire three chairs.

Our small business lending offering to banks and credit unions.

By experience business bankers.

Things specifically addresses the key challenges in small business first baseman and decisioning to meet the financing needs of small businesses efficiently.

I'm excited to confirm that we closed the transaction on April 1st and have been working with our new team members to execute our integration plans to provide this additional functionality as part of that but I didn't make one platform <unk>.

These examples demonstrate a few inorganic ways, we are adding to our long history of organic innovation, which continues as well.

Another innovation accelerator is our partner marketplace and we continue to add important capabilities. For example in Q1, we announced the first of its kind partnership with social intelligence a.

Social media screening organization.

This new collaboration provides our background screening cra's ability to offer social media screening to their customers seamlessly within the <unk> platform.

Our apartment marketplace continues to expand helping customers pilot choices to improve their customers' experiences through high quality easy to use API integrations with leading organizations.

And additional highlights from the first quarter is a site integration agreement between Meridian, Lincoln Verifone and industry, leading anti money laundering solution.

Next I would like to discuss cross sell.

All of these new capabilities are a great segue to talk about our success in cross selling our solutions as they add to the revenue opportunity of five data verification and meridian linked one platforms.

As a reminder, but I didn't make one as a platform of lending products, which spans a digital consumer lending journey from account opening through loan origination and data collection Decisioning and funding.

For example, one existing customer with a bank with over $9 billion in assets.

Added Meridian link mortgage and already linked portal in Q1.

They were considering other solutions, but ultimately chose meridian link due to our enhanced integrations and automation functionality.

Specifically the bank was looking for a more competitive web based solution with enhanced reporting automation and visualization.

They needed to simplify the processing workflows and eliminate manual packing.

And they what they were looking for a completely digital experience for the customer and found their ideal technology partner in Meridian link.

Enabled by the seamless interface and data integration of Meridian link one date.

Data optimization functionality was awarded.

In Q1.

This combination of the capabilities of our lending and data verification software solutions enables our customers to offer differentiated lending options that mono line lenders for those operating disconnected systems simply cannot.

In the quarter, we released the next phase of that optimization do we expand the types of loans that can be underwritten and offered to these unique capabilities.

I'd also like to share an update about our successful in person user Forum last week, we hosted nearly a thousand attendees from hundreds of customers and dozens of partners in Huntington Beach.

They'll use it for them.

The first time, we hosted the event live since 2019.

Energy and excitement.

Comparable as we connected about how our solutions help customers deliver personalized speedy experiences that today's consumers expect.

The positive feedback and stories about inspiring and validating filing for IFC.

It was a great reminder of why we do what we do.

It was also great to spend time in person with many of our employees while the reason for our continued success and excellence.

My last update would be discussing bringing customers online more quickly.

I'd like to talk about how the increasing recognition about market leadership with Meridian link one.

And the associated spring selling to both new and existing customers makes even more imperative. The investments we are making to bring customers online more quickly.

While our hiring is somewhat behind schedule, the productivity of new and existing team members is in line with expectations.

In Q1, we were excited to add lizard evenly to our executive leadership team as Meridian links new Chief people officer.

The benefit of lizards expertise, we will accelerate our hiring and investment in additional people initiatives.

We see the 30% year over year growth in services revenue in Q1 as indicative of the opportunity and expect to see sustained improvements in total time between contract signing and customer go lives as the investments in our services team come to fruition.

It's heartening to see the progress, we are making and I'm confident in our accelerating momentum.

Of course, none of this would be possible without the hard work of our dedicated team.

Before I turn the call over to Chad I'd like to discuss our continued success in migrating to the cloud.

The work stream to complete the re architecture and deployment of the assignment I didn't make one platform in the cloud remains on schedule with the first quarter involving the pipe work needed to migrate them ideally mortgage to the cloud during the second quarter.

I'm happy to confirm that we remain on track to migrate the final components of our platforms to the cloud this year at which point automotive they only one platform will be completely cloud native.

I will now turn the call over to Chad to talk about our financial results and guidance.

Thanks, Nicholas and thanks, again to everyone for joining us today.

I'll start by providing the highlights for the quarter and I will recap the highlights of our financial model and provide our results in more detail before finally, giving guidance for the second quarter and full year 2022.

As Nicolas mentioned in the first quarter, we generated total revenue of $72 8 million up 7% year over year.

87% of our first quarter revenues for subscription fees with the balance coming from professional services and other.

Our GAAP operating income was $14 6 million or non-GAAP operating income was $20 8 million and adjusted EBITDA was $34 million.

As a quick reminder, we have a usage based SaaS recurring revenue model our customers sign long term contracts, usually three years that are noncancelable without penalty and which auto renew at the end of term.

Typically customers compared to annual fees and monthly purchases of application or report.

In exchange for higher monthly commitment.

Received lower per unit pricing in any transaction over the monthly minimum commitments.

<unk> charge.

Our platform's ability to make our customers more efficient and effective naturally drives more volume once it is 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 first quarter lending software solutions revenue accounted for nearly 68% of our total revenue and grew 14% year over year.

Excluding the impact from the anticipated slowdown in mortgage related revenues are lending software solutions revenues grew 19% year over year.

The remainder of our revenues come from data verification software solutions, which decreased 4% year over year as mortgage related revenues declined.

First quarter revenues from the mortgage loan market generated 28% of our overall revenues more than previously expected as we believe the surge in mortgage interest rates pulled forward some demand specifically, 7% of our lending software solution revenues and 70% of our data verification software solutions revenues.

We're tied to our mortgage focused products in the first quarter.

While the majority of our data verification software solutions revenues is tied to mortgage this part of our business outperformed the market as we continued to find ways to augment our solutions with additional data items and partners to provide more value to our customers, enabling them to continue to win share in the market.

The seven points of year over year revenue growth in the quarter came primarily from our standard growth drivers as we added new customers.

Increased module penetration and increased volumes from our existing customers.

We expect to drive further growth as we bring additional capabilities to our customers through a combination of M&A.

Expansion of our partner marketplace and delivery of organically developed products.

Moving to our profitability gross margin in Q1 was 66% adjusted for stock based compensation gross margin was 72% we.

We continue to invest in our sales and marketing and R&D efforts to drive organic growth acceleration.

Compared to the first quarter last year, we spent 25% more in sales and marketing and 6% more in R&D adjusted for stock based compensation.

With this additional spend our adjusted EBITDA margin was 47%, we will continue to invest across the year to accelerate our underlying growth.

Turning to the balance sheet and cash flow statement. We ended the first quarter with $146 7 million in unrestricted cash and cash equivalents.

$33 1 million from the end of the fourth quarter.

Operating cash flow in the first quarter was $34 9 million and free cash flow was $32 9 million for a 45% free cash flow margin. We continue to generate funds that can be used to invest in the business pursue acquisitions deleverage or repurchase shares under our recently authorized.

Purchase capacity of up to $75 million in common stock.

I will now conclude the call by providing guidance for Q2 and an update for the full year of 2022.

Despite the rapid rise in mortgage interest rates since the start of the year and the associated decrease in expected market volumes, we continue to see strong momentum overall and our pipeline remains robust.

For the second quarter estimated total revenue is expected to be between 71, 5 million and $73 5 million compared to $68 5 million for the same period in 2021.

This represents an estimated increase of 4% to 7% year over year.

In the second quarter of 2021, the mortgage market contributed $23 million of revenue to Meridian link or just under a third of our revenue in the year ago quarter. We.

We expect the mortgage market to contribute less than 25% of revenue for the second quarter of 2022.

On a non-GAAP basis, our second quarter estimated adjusted EBITDA is expected to be between $25 million and $27 million, representing EBITDA margins of approximately 36% at the midpoint of the range.

While our reported Q1 adjusted EBITDA came in well above our previous guidance. This was primarily due to underspending plans in the quarter and we intend to accelerate spend in our outlined initiatives throughout the remainder of the year.

This includes approximately $1 million per quarter to bring the recently acquired street tiered solution fully to market as part of <unk> like one.

For the full year 2022 estimated total revenue is expected to be between $289 million and $293 million compared to $267 7 million for the same period in 2021.

This represents an estimated increase of 8% to 9% year over year.

On a non-GAAP basis, our full year 2022 estimated adjusted EBITDA is expected to be between $112 million and $116 million, representing EBITDA margins of approximately 39% at the midpoint of the range.

The lower year over year margin reflects anticipated increases in annual spending in areas that will drive future growth as described earlier by Nicolas We will continue to focus on the investment in services capacity to convert more bookings to revenue and the investment and development in the cloud to both enhance and expand our products.

Sweet both items that require current expense that we expect will lead to future returns.

As we forecast the balance of 2022, the normalization of activity in the mortgage lending market appears to be well underway.

We expect this to continue being a minor headwind in lending software in a more meaningful drag on data verification software performance in the quarters ahead.

Overall, the mortgage related percentage of our revenue in 2022 is expected to decrease to the low twenties.

From 30% in 2021, subtracting more than five percentage points of growth from Meridian link in 2022.

While this reduction is more than we anticipated at the start of the year as we have seen rates move higher faster than previously forecast, we have been building our business to counter the decline for some time, we have no doubt that we will continue adding new clients, providing more value to our customers and therefore, increasing revenue for <unk>.

I mean, because the whole and our guidance for the year reflects the ongoing strength of the non mortgage solutions, we provide which grew 17% year over year and our most recent quarter.

With that Nicholas and I are happy to take any questions operator.

Sure, Sir ladies and gentlemen, if you have a question at this time. Please press star one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue press the pound key again Thats star one to ask a question. Your first question comes from the line Koji Ikeda with Bank of America. Please.

Go ahead.

Hi, This is Lori law oncology.

So thanks for taking my question.

So I've got a couple the first one is.

On the three acquisitions.

Position, what's the contribution there for the full year given that.

The weak refi market, but you guys guided up plenty of full year.

And then Sanjay.

How do you think about like what's the.

Gross driver on the consumer side.

On the outlook demand and also what are the other growth driver there. Thank you.

Yes.

Sure. This is Chad Martin speaking.

On the street shares so we do have that built into the full year it'll be basically it's not a material acquisition for us from a revenue perspective.

We're basically around a point of revenue growth year over year.

Less than less than $1 million a quarter for the balance of the year and then the growth drivers on the consumer side, we continue to see as we've talked about in the past the same kind of growth drivers pushing the non mortgage consumer lending space. So the growth in new customers the growth in our customers and volumes.

As well as cross sell and upsell into those into those entities and if you look at the growth in the in the lending side for the first quarter. It was up 14% and if you adjust that for mortgage it was up around 19%, so continuing to spec expecting to see.

Tumor growth and the teams.

Okay, Great. That's helpful and then just a follow up.

Do you have any can you share any color on.

Consumer side, how is that Alto next there is considerable.

Majority of that consumer is that you are going to be the case going forward.

Yes, so we have not seen any real material change in our mix on the on the non mortgage side of the business.

Auto is the largest component of the consumer piece and that's been that's been doing pretty well I think you've seen.

Some of the data around used cars prices coming down and some constraints around supply easing up so we continue to see.

That would be a material contributor to the volumes and no real change.

As we expected going forward for the year.

Great and then just one last one last one from me is just do you have any.

The mix of new auto business used car.

Percentage.

We don't we don't we don't split out kind of the overall loans by by the auto type and we certainly don't put it into new and used and I don't think we frankly actually on the backend necessarily see that because an auto loan as an auto loan from from how our system to process. It.

Got you okay. Thanks, thanks very much.

Yes. Thank you.

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

Hey, guys. Thanks for taking my question.

Just start off on the just the annual revenue outlook.

If you take a street chairs and the outperformance in the first quarter, a little bit of a guide down for the rest of the year is that.

I just want to put a finer point on that is that mostly mortgage outperformance in the first quarter. What you feel is a pull forward in <unk>.

More of a softening given the rate environment, we're seeing for the rest of the year or are there. Other factors I know hiring has been a little bit slower. So I'm wondering if there's any impact on the implementation side or if this is purely.

More rate driven for mortgages.

Looking to get a little more color there. Thanks a lot.

Yeah, Andrew Good question. It is mostly driven by mortgage we did see our percent of revenue for mortgage come in slightly higher in Q1 that we had initially guided.

We saw a bit of a last gasp as rates started rising and some of the mortgage volume pushed through in Q1. So we think we did pull a little bit of revenue into the first quarter from for the year and then yes. We are guiding now for the balance of the year to be down from kind of the mid <unk> to the low 28% of mortgage.

For the year, so a couple of points of drag there on 2022 and the back half of the year, but again also seeing the strength on the consumer side, helping to kind of make up that that gap.

That's helpful. So it sounds like Youre working through the backlog as expected on the control, yes, sorry on your question around good hiring and bringing bringing folks on yes. So we've actually a lot of our emphasis has been on filling those positions in the services and the services team.

We're not quite exactly where we want to be but we are bringing folks on we're seeing there their productivity is nicholas.

As discussed in his remarks, and so they are having the impact that we're expecting.

But nothing that is kind of either swinging.

Swinging the number higher or lower from what we initially put forward for 'twenty two.

Yeah.

Very helpful. Thank you for that and then.

It seems like overall the consumer remains means relatively healthy, but obviously there are concerns about more economic turbulence as the year progresses. There are puts and takes obviously some types of <unk>.

Demand for some types of loans go down, but can be offset by <unk>.

Demand for other types of loans could you just remind us sort of the sensitivity of the business to economic turbulence, how do you think about that.

Sorry, just puts and takes the high level that would be helpful. Thanks.

Yes, Andrew so as we think about the sensitivity right I mean, the best kind of view, we have of the sensitivity of the consumer market is just looking kind of retrospectively and if you look.

And kind of the last 20 plus years absent one year in the great recession consumer loan behaviors consumer lending has grown every year. So it is a pretty.

Is not very sensitive I would say to kind of the macro movements or the economic shifts.

And so were using and leveraging what we see from the folks who kind of call the market for consumer Qunar has 2022 growing.

8% year over year up from 6% last year, I think thats, a slight decline from the 9% they called at the beginning of the year, but our volumes still reflect that we see kind of growth in this space in line with that.

And so we're not expecting we don't know what we don't know in terms of other kind of macroeconomic.

<unk> that may occur, but given kind of the current environment, we're comfortable with what we have put in for the forecast for the balance of the year.

Very helpful I'll jump back in the queue. Thanks, a lot Chad I appreciate the comments thanks.

Thanks, Andrew.

Thank you. Your next question comes from the line of <unk> with Barclays. Please go ahead.

Okay, Great Hey, guys. Thanks for taking my questions here.

Nicholas maybe maybe I'll start with you.

Little bit a little bit of a similar question, but just a little more specific.

As you think about new customers in the in the lending solutions business. What have you typically seen in terms of new deals and new customer wins during rising rate environments, and what I mean by that is.

Is it a rising rate environment, sometimes a catalyst for a bank or credit union to invest while interest income is better or do they need maybe handle their investments differently.

Rising rates slash kind, a more uncertain environment.

Thanks.

And a great question and I, if I may respond I may actually weaving some coming to the two previous folks to ask questions as well, but.

Our take is on the consumer lending side overall trains remains largely unchanged and Chad highlighted the Q not data that is escalation dose April .

And we continue to see <unk>, making continued investments in digital transformation in fact, I would say.

Coming off from our user Forum last week, where it was nearly a thousand folks interacting with us at a high pace for four days.

I walked away with some great.

Very strong views on a lot of our customers are embarking on a journey and this is a multiyear journey and they are rethinking their business.

To be on the digital transformation.

But so to speak and.

Some have made some real steps forward, others are kind of getting into it.

And I believe that was rising rates it creates an opportunity for our core <unk> customers.

Which our deposit taking institutions to destinations differentiate themselves yet in the lending market I think it's a playbook that plays into our platform and what we've been investing in.

For the last three or four years.

I would add than many of our customers are sitting on a large base of deposits that came in during that time.

Times of Covid.

Covid stimulus.

Higher rates are a catalyst for them to put that money to work by extending credit.

And in this type of environment I feel it's.

Good opportunity for us to also position, our new engage product which is the.

Focus on.

Enabling our customers to be very tough in the marketing trying to focus on increasing their lending portfolio the way they choose to go do it.

And we are in.

And on top of that we've also seen.

Strong interest and a push by our customer base into Helocs.

And I expect that to be kind of a.

Our loan channel on the consumer side, where those folks that would go out with those folks want to take advantage of equity in People's homes, and offset some of the refi drop some of them have experience and another loan channel that I continue to get more into a strongest personal loans and I expect that to be also a strong area of intra.

Now Thats stimulus has started relaxing and.

My take is rising interest rates based on a large larger than usual deposit base.

It is a market that meridian link can play very well in.

Got it that's fair.

Helpful.

Maybe for my follow up I'll, just keep it to two here.

Chad.

Are you.

Obviously that conversion for the strong bookings in 'twenty, one to to revenue in 'twenty, two and going forward is it going to be contingent on sort of that hiring in the in the services organization can you just give us sort of a sense for where you are in and just as importantly, what is that that that gross margin or.

Our cost of sales line don't look here through 'twenty two as again you invest ahead of that revenue does that makes sense.

Yes, yes that makes sense so.

We are hiring.

We were a little bit better on margin in Q1, I think we were a little bit behind our overall company hiring as.

As well as just kind of had some deferred initiatives that kind of pushed into the back of the year, but we did the full year our margin guidance is.

In a similar place where we're going to see some some impact on 2022 gross margins, mostly around adding the services resources, but.

But we think that that investment is prudent because that will bring on the revenue was due referenced that will kind of take margins back up through time, because we think we're going to kind of rightsize. The services group and then not need to kind of continue to add and augment going forward and we will have the capacity to kind of convert.

Good growth, we're seeing in bookings into revenue at the appropriate case so.

It will be a bit of a drag on 22 gross margins, but we're still comfortable with our long term margin guidance.

We kind of see that being a one time investment that pays off this year and next.

Got it very helpful. Thank you.

Thank you. Your next question comes from doing ethnic chemo with <unk>.

Credit Suisse. Please go ahead.

Hey, Thanks, very much for taking my question.

First I wanted to ask about.

The contract minimums.

That was discussing in the prepared remarks, and if you guys could give us any kind of high level color as to what the contract minimums, representing the 2022 guide.

Sure. So we do have contract minimums, most of our customers still.

Set their minimum at a rate at which they usually exceed during the months of the year. They typically pick a number that is tied to their low point in volume on a seasonal basis and so in our guidance for the year.

And many customers are.

The above their historical minimum or their contract minimum, especially those customers who have been on historical contracts that were set they set their minimums.

A while ago, so as it relates to our 'twenty two guidance.

The minimums aren't really something that we we forecast or talk about and how we set our budget.

We expect most customers to exceed that and therefore, we focus more on what we think volume or number of customers will be in the volume from our customers.

But every year that we kind of bring more customers on our customers reset their minimums that minimum level of revenue is increasing but it's still not the preponderance of our of our overall revenue streams.

Okay got it understood. Thanks for the color.

Then as my follow up.

I just wanted to get a sense for what kind of cost savings that you could see from Meridian link one being completely in the cloud by the end of the year.

Is that something that we would see in gross margins in 2023.

Thanks.

So from the margin perspective, candidly 'twenty two will be an increased cost as we move all the customers into the cloud, but still have the costs of our data centers that were carrying until we kind of get the full movement in motion into the cloud. So we can begin to wind those.

Those data center costs down, but we do expect in 'twenty three that there will be benefit to the overall margin one once we get our customers all in the cloud and to have a better understanding for.

How we can kind of optimize our cloud spend with our with our cloud partners and then to the reduction in our data center costs that will create some some reduction in spend in 'twenty, three but candidly 'twenty, two where were both carrying the data center and the migration.

We won't see much savings in this year.

Okay got it thanks very much.

Thank you. Your next question comes from the line of Matt Van Vliet with <unk>. Please go ahead.

Yes, hi, good afternoon, Thanks for taking my question.

I wanted to maybe digging a little bit in terms of what you've seen so far year to date as rates have been going up if theres much.

Whether it's mix shift or just overall demand.

Cross Ernie differences between credit unions, and maybe smaller regional or smaller community banks and then maybe some of your larger banks out there just if youre seeing any kind of difference of.

Activity within those different groups of institutions.

Yes, I would highlight what I've said, a little earlier more interest in <unk>.

In Helocs.

And the Paas also personal loans, but in the bigger story is as folks are engaging and very committed to digital transformation for their businesses.

And from our standpoint, we continue to see high levels of activity and high levels of engagement.

My my.

My experience at how we use them for them was very buoyant that exceeded my expectations.

In client engagement and the questions.

What folks are planning on for the next year two years three years.

The number of hand raises and attendees and breakout sessions I would tell you it is.

Yes.

People are looking at at how to.

To accelerate the business in <unk> right now is that the Qunar data that we referenced a little earlier is not far off.

Something baked would need to change in my opinion too.

Two.

The impact that trajectory of call. It main street Americas financial institutions.

Alright, Thats very helpful and then.

Any update your own share in terms of the uptake on Meridian Mic one.

And then some of the other kind of add on modules.

Some of the more kind of direct targeting direct marketing type of modules you have out there and sort of what the uptake has been on those as.

A number of your clients are looking to drive that interest income as much as possible.

Yes.

Continue to see great great traction great moment.

Momentum with.

Our ability to deliver the platform cloud clients very excited to be in the cloud by the end of the year, which is going to continue to enable us to scale and do more with the platform from an overall integration.

Analytics automation standpoint.

And Meridian link is doing really well keeping pace with that commitment.

In addition.

We also have.

<unk> had a very successful beta program and then a launch of engage.

Sure.

Really strong top of funnel metrics, specifically to your question on on that.

And expect to start seeing more of that convert in the second half of the year into bookings from clients, whose lose leaning into the solution leaning into automation leaning into more data driven personalized lending playbooks.

So very pleased with the.

<unk>.

<unk> momentum.

To date with what we've seen.

Alright, great. Thank you.

Thank you. Your next question comes from the line of Kennedy William Blair. Please go ahead.

Good afternoon. Thanks for taking my questions I apologize if I missed it but did you talk about how bookings were in the first quarter I think they were at record levels in the fourth quarter.

Okay.

Again.

We've seen a good quarter overall I don't think we've announced a number of new client wins, but it was up in a decent new climbed one quarter for us.

The business has continued to work.

Then move forward I can tell you we excited about product launches, we excited about where we at bringing in some new sales folks bring them online so really well positioned for the year.

Driving.

Driving growth.

Okay, Great and then just a follow up on the sales force investments can you kind of talk about where we are in that journey and how the productivity of your investments are progressing thanks a lot.

Yes, we continue to invest on that take effect.

And from a Meridian link standpoint, we we believe in.

Automation and also efficiency gains through the tech stack as we can as we drive scaling in the business.

The investments are going well.

We were pretty pleased with.

The systems, we have and that we've been working on over the last few years.

It should position the company well to layer in additional acquisitions that will position us well to continue to go to market resources in the business.

Feeling good about the Paas and trajectory forward with it.

Great. Thank you.

Thank you. Your next question comes from the line, Alex Sklar with Raymond James. Please go ahead.

Thanks Nicholas.

Specifically about the cross sell of your mortgage LLS to consumer LLS customers now with a better integration between those two solutions I know you named one win in the prepared remarks, but can you just talk about that cross sell motion in particular and what percentage of your consumer LLS customers take the mortgage lending product. Thanks.

A good question from from a cross sell standpoint.

It's a great opportunity ahead of us we see.

Deposit taking institutions as a playbook that we're going to continue to expand on historically that was not the focus.

More of a focus.

Over the last 12 months 18 months without platform playbook coming to reality.

It is.

I would say still single digit customer penetration and something that our team is focused on and driving.

And Phoenix.

From a cross sell standpoint, especially with a focus on all the way the market is meeting an opportunity that will play out in our favor over the course of the next few years.

Okay, Great and then on the sales hiring efforts.

Kind of referring back to earlier question, but can you just walk us through where you stand in terms of overall head count now in there and what kind of the target is for the end of the year, if thats changed at all thanks.

Yes.

Head count hiring standpoint.

We continue to.

Driver hiring and.

I would say.

Found some great people in the quarter over quarter.

Especially in a fairly challenging auto very challenging hiring.

Marketplace to date.

Excited about the talent that have joined us.

We would love to.

Seen more.

All of the same quality of talent, joining the company and integrate into our sales leadership and our sales and go to market motions.

We certainly build out capacity on the marketing side as well to lead on the forefront.

Campaigns and initiatives for our sales team, so mostly keeping pace and our go to market organization would have loved to maybe have a handful of highest knocked down in Q1, but overall no major concerns.

From the sales and marketing hiring we've done in Q1, leading into Q2.

Alright, great. Thank you.

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

Hey, guys, it's Matt <unk> on for Parker line. Thanks for taking my questions I want to start just by circling back on engage and the early success that you guys have seen is it really attracting a new set of customers that are using other marine linked products or is it kind of bridge the gap and completed.

Package, so to speak on marine links offerings.

It does both.

But our initial focus and focus for 2022 is more.

On driving cross sell and upsell.

And again referencing a user forum from last week.

That was.

Very big Cross sell upsell playbook for us and our account management team and engage was.

On the.

Forefront of the discussions.

Might take right now is we can be more than successful and can continue to drive significant cross sell upsell opportunities this year or next year being heavily focus on the existing customer base, but that is not the playbook.

After initial launch traction.

It will expand and will drive also new logo sales with it.

Got it and then just thinking about the street shares acquisition does that kind of complement the template based offering you created for the smaller business lenders.

How should we think about the size of that kind of customer group and its contribution overall revenue going forward as you add more solutions.

Yes.

We've had.

One small business lending.

Module for our platform, which has found good traction.

The Street <unk> solution is just a broader a deeper offering and we really like what they've done with automation and decisioning and the relationships that they've built with industry partners.

Think of small business lending as.

Loans to small businesses of $1 million or less and thats kind of a very rough socal havent going.

And we've looked at the market we know what's available we know who we are competing against.

And street chefs from a product standpoint is a fantastic product, it's a cloud native product and it integrates well into our own strategy as well as our platform. So excited to expand the small business offering that literally enlink had with the strength and the breadth and depth of.

The study chair solution.

Got it thanks, that's it for me.

Once again, if you would like to ask a question. Please press star one on your telephone keypad and wait for your name to be announced and then Thats Star one to ask a question. Your next question comes from the line of Andrew Schmidt with Citi. Please go ahead.

Hey, guys. Thanks for taking my follow up I, just wanted to ask a higher level portfolio question kind of actually tagging on to that previous question.

<unk> shares gives you more sophisticated.

Capabilities is more small business lending does it also creates sort of.

More of a road map for just adding more capabilities and general business or commercial.

Curious, how you think about the opportunity in business in commercial relative to the core consumer business. Thanks.

Yes, Great question, Andrew our focus is very much on consumer and this type of small business lending that we focused on is the consumer who is a small business owner and typically.

The profile of the small business owner backs up the decision thats tied into lending to the small business owner on main street.

The differentiation between what we do and call. It more full blown commercial lending is it's a very different decision cycle. It's a very different playbook on the commercial lending side, which tends to be focused on.

A lot more analysis from a financial.

Standpoint balance sheet cash.

Cash flow, which is typically not the small business lending.

Our clients are engaging in as it relates to a specific consumer and I'll focus is providing more value in cola that million dollar and below.

Market with our COO.

Consumer kind of being the creative.

<unk> profile that gets decision.

Understood. Thank you Nicholas I appreciate those comments.

And I'm showing no further question at this time I will now turn the call back over to our CEO , Nick Smith for closing remarks.

Thank you operator, and I again want to thank our employees for all that they do which was recently recognized externally by two different organizations.

But I didn't think mortgage product won the prestigious housing why 2020 to take 100 mortgage award.

Our mortgage loan origination and account opening software.

Was selected as one of them based on its innovative approach to improving borrower experience and.

Also bringing flexibility to the mortgage origination and servicing processes and.

In addition to that we were also recently recognized by the American business Awards and somebody no data on Stv's cloud achievement and growth on our path and leading up to a successful IPO in 2021.

And that's all thanks to our employees and.

That I will sign off and hand, it over to the operator and thank you. So much for your time today and we appreciate you joining us as we review yet another successful quarter behind Millennium line.

Great day.

Thank you Sir and this concludes today's conference call. Thank you for participating you may now disconnect.

Yes.

[music].

Okay.

Yes.

[music].

Yes.

Yes.

Yes.

Yes.

Sure.

Okay.

Okay.

[music].