Q2 2022 Meridianlink Inc Earnings Call
This engagement led directly to.
And increased pipeline for both new logos and cross sell opportunities.
The launch of a product administrative certification program. So that customers are able to optimize the use of our software and increase the efficiency of their organizations.
And customer excitement about future Meridian link innovations that will help our customers and partners one of the market.
We believe that continuous engagement with our customers and shifts at Meridian link is focus on the writing basements.
Divide both immediate and long term value to the market.
Our next focus area is to continue expanding our platform's capabilities by delivering new innovative functionality.
But I didn't think one is a cloud based multi product platform, which uniquely spans a digital consumer lending journey from account opening through marketing loan origination and Decisioning.
Highlights in our cloud transition include the following.
First we are ahead of schedule to complete the full public cloud migration of Meridian link one initiated in 2019 by the end of this year.
Second.
Taking the debt optimization solution, which helps our customers look across our client portfolio and identify where they can save money and improve the purchasing power continues to gain traction with customers.
And third we have rolled out a modern experience for home equity so customers can more efficiently serve the surging demand for home equity lending.
We are focused on increasing the value of the platform by expanding its capabilities, which attracts new logos and fuels our cross sell motion in turn driving revenues.
As a final focus area, but I didn't link empowers our customers to compete.
And succeed in any market.
Our track record of providing best in class functionality flexibility and automation as customers move to a digital environment has allowed our customers to win more clients capture a greater share of their wallet and more fully meet their needs.
This is why we are winning more customers and our existing customers are expanding their use of the platform.
Like other companies exposed to the mortgage space, we have been adversely impacted by these studies in the mortgage market.
Unlike others. However, we benefit from the resilience of our business model and product mix.
We are seeing an accompanying increase in non mortgage activity that more than offsets the headwinds in mortgage refinancing.
I know I have said this before but I want to emphasize this point.
The diversity of our business and strong unit economics enable sustained investment in critical growth and scale initiatives across the economic cycle.
Now, let me discuss our key highlights of the second quarter.
This quarter, we completed the migration of our mortgage lending module to the cloud.
This milestone is critically important as we migrate more of our products to a cloud native environment. We are strengthening the murdered in one platform and a better serving our customers.
Our enhanced security flexibility and new capability delivery speed increases cross sell and upsell demand.
<unk> created union customer, who has been leveraging meridian's opening and consumers. Since 2017 recently selected Meridian League mortgage to take advantage of the synergies of combining with again linked products.
Then redeeming one footprint now includes mortgage multiple consumer modules and our unified point of sale solution.
Additionally, our market leading home equity lending capabilities were selected in the quarter by a top 50 national mortgage Linda to facilitate their launch into this new category of lending.
This election was based on the combination of the unique depth and breadth of functionality, we provide and meridian links ability to facilitate a swift market entry and provides another example of our ability to serve higher value customers.
Finally.
But assuming success is tied to a strong team.
As we prepare for the next phase of growth at Meridian link, we strengthened our executive team by elevating Chris Maloof into a newly created role.
Isn't of go to market with.
We now have direct ownership of all phases of the go to market engine.
This will further increase the part of our go to market organization.
Average and Chris has deep expertise and operating experience and increase our capacity for strategic initiatives.
To conclude relinquished focus on engaging with customers to help prioritize investments that expand our platform capabilities and revenue opportunity and empower customers to better serve their clients and communities.
But it didn't link as a customer focused business.
As we improve customer's revenue generation, they improve Alice creating a thoughtful virtuous cycle.
I will now turn the call over to Sean to talk a little bit about his background and then review our financial results and guidance.
Sean and I are aligned on the values and vision of the future of Meridian link and I. Appreciate it shows early insights and it's quicker simulation into the business.
Thank you Nicholas and thank you again to everyone for joining us on the call today.
Being seven weeks in the chair, let me start with a brief introduction, including why I joined merging link then I'll review our results for the quarter and provide guidance for the third quarter and full year 2022.
I've spent more than 25 years in senior leadership roles that spans a diverse set of markets functions and business models.
Throughout my career I've relied on four key pillars with a specific mission.
To increase the velocity of growth and innovation in our business.
Those pillars are one a laser focus on customer success.
Two driving strategic clarity to create value for our customers.
Three creating operating scale and leverage in the business model and four and perhaps most importantly, an intentional focus on having a positive impact on people and relationships. The result of which is high performing highly engaged teams customers and partners.
<unk>.
These pillars are in my DNA and are exactly why I chose Meridian Lake.
Strong alignment with Nicholas the management team and the board on our mission and values.
With a vast largely untapped market opportunity ahead, and a clear focus on our customer journey and experience, we have an incredible opportunity for market expansion and acceleration of growth to drive this company to a $1 billion and beyond.
As for results as Nicolas mentioned in the second quarter, we generated total revenue of $73 million up 7% year over year.
And links ability to grow in both our rapidly expanding and rapidly contracting mortgage market speaks to the balanced strength of the business, which is part of what attracted me to this company.
In the second quarter lending software solutions revenue accounted for nearly 71% of our total revenue and grew 14% year over year.
Excluding the impact from anticipated slowdown in mortgage related revenues are lending software solutions revenue grew 16% year over year.
For the mortgage loan market second quarter revenue generated 24% of overall revenues roughly in line with our expectations, but down from 30% in the prior year.
More specifically, 7% of our lending software solutions revenue and 64% of our data verification software solutions revenue were tied to our mortgage focused products.
The majority of our data verification software solutions revenue is tied to mortgage was part of our business continues to meaningfully outperform the market.
The seven points of year over year revenue growth in the quarter came primarily from increased transaction volumes and product go lives at both new and existing customers.
We expect to continue to drive accelerated growth as we bring additional capabilities to our customers.
Moving to profitability adjusted gross margin in Q2 was 70% in line with expectations accounting for stock based compensation GAAP gross margin was 63%.
Our non-GAAP operating income was $14 4 million and our GAAP operating income was $8 9 million.
Adjusted EBITDA for the quarter was $28 2 million, representing an EBITDA margin of 39%.
This reflects ongoing cost discipline.
But more importantly, the significant value our solutions provide in the market.
Our EBITDA margins are near the level of the largest banking technology providers and clearly distinguish us from most of the smaller providers, who have yet to achieve a positive EBITDA.
In response to market demand, we spent 21% more in sales and marketing and 28% more in R&D adjusted for stock based compensation compared to the second quarter of last year.
Importantly, we will continue to invest in our sales and marketing and R&D efforts across the balance of the year as we have enormous potential for further market penetration of our existing solutions and have clear line of sight to expand our offering.
Now turning to the balance sheet and cash flow statement, we ended the second quarter with $103 million in unrestricted cash and cash equivalents.
$46 million from the end of the first quarter, primarily driven by the closing of the street shares acquisition at the start of the quarter.
Operating cash flow in the second quarter was $12 8 million and free cash flow was $10 2 million or a 14% free cash flow margin.
In the trailing 12 month period, ending in the second quarter operating cash flow was $87 6 million and free cash flow was $80 1 million or 29% free cash flow margin.
Where do you and links current cash position and ongoing cash generation provides a wealth of allocation opportunities for us to most efficiently build value for our customers and shareholders.
We did initiate stock repurchase activity in the quarter, but at low volumes as we see a number of strategic opportunities potentially being unlocked by the current capital raising environment.
I am personally very excited to be part of meridian linked at this point in its development.
Non mortgage revenues comprised more than three quarters of total revenue in the second quarter.
The highest level since at least the start of 2019 and grew in the mid teens.
With the restructured management team focused on accelerating growth in a number of high return investment initiatives, both in place and in Q.
It is a great time to be part of this company.
I will now pivot to guidance for Q3, and an update for full year 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 demand momentum overall and our pipeline remains robust.
For the third quarter estimated total revenue is expected to be between $73 million and $75 million compared to $67 4 million for the same period in 2021.
This represents an estimated increase of 8% to 11% year over year and it was above market expectations.
For the full year 2022, we are reaffirming guidance for total revenue 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.
I want to emphasize this point irrespective of macroeconomic uncertainties, we are confident.
Confident that we will continue to add new customers and increased module penetration among our existing customers across the remainder of the year.
We remain committed to our previously stated guidance.
For a bit more context on our expectation of mortgage related revenues, we've reflected the incremental decline of the market in our guidance.
In the third quarter of 2021.
Mortgage market contributed $19 6 million of revenue to meridian linked or nearly 30% of our revenue.
<unk>, we expect the mortgage market to contribute less than 20% for the third quarter of 2022 as rates continue to rise across the second quarter.
Overall, the mortgage related percentage of our revenue in 2022 is still expected to decrease to the low twenty's.
Down from 30% in 2021.
With our current mortgage revenue forecast, we anticipate ending the year with our potential exposure in the high teens as a share of our overall revenue.
On a non-GAAP basis, our third quarter estimated adjusted EBITDA is expected to be between $25 million and $27 million, representing EBITDA margins of approximately 35% at the midpoint.
Our reported Q2 adjusted EBITDA came in above our guidance, which is a great result.
This is while partially catching up on hiring plans to facilitate our investment initiatives during the quarter.
Our expectation is for those plans to be fully funded through the remainder of 2022.
As we've discussed on prior calls. This also includes in Q2 and for the remainder of the year approximately $1 million dilution per quarter to bring the street chair solution fully to market as part of Meridian link one.
For full year 2022, our estimated adjusted EBITDA is expected to be between $112 million and $116 million, representing EBITDA margins of approximately 39% at the midpoint.
Again holding to our committed guidance.
Our investment priorities. This year include services capacity to convert existing bookings to revenue and development capacity to complete the movement to the cloud and enhancements to our platform.
In summary, we are successfully managing a turbulent macroeconomic environment we.
We will continue investing in our business, adding new clients driving incremental revenues to our customers and.
And we are confident we will continue to outperform the market in both our mortgage related revenue and in our non mortgage solutions.
That concludes my prepared remarks with that Nicholas Chris and I are happy to take any of your questions and I'll turn it over to the operator.
Thank you, Sir ladies and gentlemen, if you would like to ask a question. Please slowly press star followed by one on your Touchtone phone you will hear a three ton prompt acknowledging your request and if you would like to withdraw from the question queue simply press star followed by two and if you're using a speaker.
We do ask that you. Please lift the handset before pressing any case. Please go ahead and press Star one now if you have a question.
And your first question will be from Koji Ikeda with Bank of America. Please go ahead.
Hey, guys. Thanks for taking the questions Nicholas.
And again, Sean Congrats on the new seat looking forward to working with you in the future.
First question here, just thinking about the guide what the guy being reiterated out there and I think that's pretty good considering the mortgage side of the side of the business is really turning out to be a bigger headwind than maybe previously thought entering this year.
But the non mortgage side it is growing mid teens.
I think I would just add.
That's really great and it sounds like that that growth is coming in even though auto loans.
So what's driving that consumer strength, even when consumer sentiment is not that great out there.
Thank you for the question this is Chris Maloof.
One thing.
I think everyone on the call would benefit from looking at how mid market institutions credit unions and banks have fared across the economic cycles over the last 10 to 20 years.
Up cycles and down cycles consumers have demonstrated a strong interest in credit.
And which which particular aspects of credit go up and down depending on their specific needs.
The liquidity crisis or more recently, there is some supply chain challenges and despite any of those elements. It has remained strong and that's something we're seeing in our volumes now are seeing it in vehicle despite the supply chain challenges.
I have yet to see anything that would change me change my view on that which is also reflected in.
Economic forecast from organizations such as Kenya.
Thank you again for the question.
Thanks, Chris and I forgot to mention congrats on your new seat to so congrats on that and just one follow up for me I noticed in the press release.
You guys wanted to top 15 national mortgage lender with the home equity lending product, that's pretty huge in our view and it shows the scalability of the product. So I guess can you talk a little bit about how that deal came about and does this imply or maybe mean that you might be leaning into that part of the market more in the future.
Yes. Thank you.
Again, I think first of all answer the question of are we going further upmarket we continue to see success.
The resting upmarket, but its typically when customers come to us.
And we meet their needs and they look at our product and our platform and <unk>.
The scalability of our platform across volume environments and their needs.
What from my perspective really stand out about our platform is its ability to be configured as a highly configurable platform.
Integration is now part of our marketplace and that benefits the go to market.
For these folks who wants to roll out.
Our solution at a pretty fast clip and speed.
Specifically as it relates to HELOC so from my perspective.
Citing times, we seem traction when folks come to us, but it hasnt changed our go to market motion, where we are still highly focused on that 100 million to $10 billion of assets under management.
Thanks, Nicholas Thanks, guys. Thanks for taking the questions.
Thanks Scott.
Next question will be from Patrick Kelly at Barclays. Please go ahead.
Okay, Great Hey, guys. Thanks for taking my questions here Echo my congrats for Sean and Chris.
Nicholas maybe maybe I'll start with you coming into this year it sounded like we needed to build out the services organization a little bit.
Really implement the strong bookings that you were seeing maybe the question is how is that process going and what are you seeing on on sort of the implementation of our drawdown or whatever the best where it is for that backlog that you've built up does that make sense.
Yes. It does thank you for the question.
And then I'm going to break it up in two parts and first speak to yes, we we entered Q2.
Little bit behind in hiring, but we largely.
Caught up in Q2 by the end of Q2 and hiring services resources that we were budgeting and planning for in the Q2 timeframe, we know that ramping phase. So there's a fair bit of planning and maintaining taking place before these folks can really engage.
On implementations on their own.
But pretty excited.
We found some great talent in the market in the second quarter that we would bring online as as.
As folks who.
We will be out of the <unk> late this year into next year.
We kind of guided you takes us four to five six months to get folks.
On the projects that in terms of backlog, we continued to build backlog.
Through Q2, our goal is still to kind of place late in the second half of the year.
And to start driving backlog down but at this point in time, we have seen.
A sequential increase of backlog from Q1 to Q2.
Yeah.
Got it got it that's very helpful.
Sean maybe maybe for my follow up for you understanding it.
Still only seven weeks in.
And maybe and maybe Chris touched on this a little bit, but I'm curious how you think about the growth algorithm.
The lending software business excluding mortgage.
And whatever that lenders, whether that total growth rate components of customers and volume open ended I am curious how you kind of think about that growth framework.
Okay.
Yes, good question.
So the balance of the portfolio I guess is diverse number one but I do think of it in separate components I think there is a <unk>.
Component, that's new logo.
I want to drive new logo as much as I can.
A component of it that is.
Just pure volume based growth.
And then there is a component that's cross sell and I want that cross sell by the way.
The price increase as well and so really there are four components that were driving.
We're looking at all of them I want to drive healthy growth in all of them, but that's kind of the outline or the framework of the algorithm if you will.
And then and then we get into the details of the specific product lines.
Got it very helpful. Thanks, guys.
Yep.
The next question will be from Nick <unk> at Credit Suisse. Please go ahead.
Thanks for taking my question.
I was hoping you could talk about.
What sort of protection in your contract minimums provide a consumer loan applications were to slow at some point down the line in a recessionary scenario with higher interest rates.
Given weakness in mortgage origination in auto loan.
Hi, This is Shawn I'll take it.
So.
Part of part of what we call resiliency or part of the installation is baked into our contracts.
Most of our.
Tracks have a tiered system.
Our volume decreases the prices increase and so.
We're able to deflect.
A lot of that decrease the volume decreases.
<unk>.
Based on the contracts that we have with our customers. So hopefully that answers your question.
Yes. Thank you.
Any further questions Nick.
And at this time.
Thank you next question will be from Chris Kennedy with William Blair. Please go ahead.
Good afternoon, and thanks for taking the question and Echo the congrats there can you talk a little bit more about meridian link one and how you think that could help accelerate growth of the business.
Over the next couple of years.
Yes. Thank you for the question.
Chris I'll take this one.
<unk> already highlighted that we're ahead of schedule Meridian link, one which is which is.
We're excited for the business and laying that out into a few components, but first and foremost is we've made a concerted multiyear investment to set up our platform for the next decade. So what that means to me is that we have a software platform. That's on the latest infrastructure leveraging the latest tools from a cloud vendor.
On the latest architecture, so the way the way that benefits us as we can focus on what we do best we are not going to be a data center provider, we will not be building data center tools, we will leverage what's best in class out there and then most exciting for me personally is as all of those development resources free up.
We finished the last stage of this project, we can focus the remaining on extending our position in the marketplace and on future innovations.
Yes.
Thank you for the question Okay.
Got it.
And then I guess, Chris just a follow up.
Iridium link has done a lot.
<unk> made a lot of changes and its go to market over the last couple of years I guess, what's your key focus going forward from here. Thanks a lot.
My key focus for going from here is helping.
We've added a lot of people to the organization, which is very exciting thats. The foundation of how we grow our business faster.
Maintain that pace, we need to educate every new person as well as the last 10 were educated on how our solutions help our customers succeed and ultimately win in their respective markets. So that training coaching and organizational infrastructure to make that possible as my central focus.
Yes.
Got it thank you.
Next question will be from Alex Sklar with Raymond James. Please go ahead.
Hi, This is Scott on for Alex.
I've got a quick question.
One kind of follow up on it.
Click on our progress I'm, writing at least want to rollout and typically how much cross selling manifesting for some of the early adopters.
Yeah.
So this is Chris again, so from a progress perspective, all of our mortgage clients are in the cloud.
Again, we are.
Routinely in monthly moving more and more of our customers. So we're doing it in a staged approach to minimize the interruption and what I want to call out here.
It's really a tremendous effort by the team and transitioning so many clients.
With minimal interruptions, especially given the breadth of integrations that are customers are using from our third party marketplace. That's a tremendous achievement no. When you think about from a cross sell perspective, where youre seeing the enablement and the acceleration of the cross sell is in areas, such as where Nicholas called out about.
The debt optimization by having all of our solutions in the cloud on a common stack.
Well to create that.
Various solutions, our loan types create more value together than apart by having them in one place in a highly highly responsive location.
Sure.
Great.
Dan.
Follow up question.
What did anything change in your mass man what are you kidding around.
Is that just a simple way to go to market and has there any been hey, your guidance policy.
Yes.
This is Sean and thank you for the question.
Thank you.
The go to market perspective, I don't think we are.
We're just we're going to continue to build out the management team I don't think that affects our guidance policies at all.
I think our guidance is as strong.
And we.
We will continue to look at it but I don't think go to market restructuring effects our guidance policy.
Any further questions.
That's it for me thank you.
Thank you.
Once again, ladies and gentlemen, if you do have any questions. Please press star followed by one on your Touchtone phone and your next question will be from Matt Vanvliet BTG. Please go ahead.
Hi, Good afternoon, guys. Thanks for taking my question.
Chris wanted to dig in a little bit more on one of the answers you gave before.
I will also echo my congrats on sort of the new expanded role there, but in terms of the four biggest drivers.
Obviously price increase you're trying to implement through so maybe any update on just sort of how much of the installed base continues to see price increases roll through is that consistently on an annual basis or do we have.
Or are we looking at just sort of certain tranches of the customer base for now, but maybe more importantly on the other three key areas there.
What do you feel like there is maybe the biggest drivers likely in the second half of the year and then.
As you look out towards 'twenty, three and beyond where where do you expect to add whether it's more resources or expect greater sales efficiency.
To win across new logos expansionary deals and some of the other components.
Alright. Thank you for the question I wanted to ask a clarifying question first.
Don't mind, when you're talking about the levers are you referring to Sean Sean illustration of consumer lending growth.
So I think you outlined during the questions earlier that sort of four four key areas are driving growth across the business I think it was new logos.
Cross sell geological.
Alright.
Yes, Sir.
So again, thank you for the question. So we'll look to answer this in two parts I'm going to answer the pricing component and then Charles is going to talk about the levers that we've just outlined.
Reising perspective, we have an annual pricing cadence that we have where we pursue a willingness to pay model and what's happening in the marketplace.
We consistently drive that lever and then the high inflation environment, that's more important than ever.
Central part to our operating model.
Sure.
Yeah, and I think perhaps this is.
Getting to the last question.
Maybe connecting the dots a little bit, but I did I did outline.
The model and how I was thinking about the growth algorithm.
Volume New logo cross sell and price and so if I just talk to the balance of those.
I do think it relates to kind of phase three of Meridian link right. We are we are turning a corner when it comes to.
Go to market.
What our focus areas are.
Our new Chief sales officer, who is starting.
It's already started actually and.
It's going to be focused more heavily on on new logo.
And so we'll we'll be we'll be that will be focused there.
More intently than we have been in the past.
From a cross sell perspective, the opportunities for cross sell are they exist.
Tremendously within our existing portfolio. So were on average penetrated into four of our 13 modules as an example.
We have a lot of opportunity for cross sell and we're constantly looking for new opportunities peripheral opportunities.
To add to the portfolio to add to the platform. So I think we're constantly looking at our customers what our customers need to drive that cross sell upsell.
Motion.
And then volumes were.
Volumes we are.
When you talk about mortgage volumes as an example, I think it's largely driven by the market.
As there is a lot of the other.
Products that we have.
We're seeing kind of offsetting and we have seen and I looked at <unk>.
Five years of history, and the product volume is a piece that consistently growth it just and Chris talked about this a little bit earlier.
But if.
If more even if mortgage mortgage levels off and this is the new normal I think we're very well prepared for that to be the new normal and to continue to put up our growth trajectory, which is mid teens grower.
Alright very helpful. And then just following up on.
Michael's comments that sort of entered second quarter, a little behind on hiring but it seems like you've touched.
Caught up nicely.
Nicely in their sort of exiting the quarter back on plan.
Im curious from a margin perspective.
Should we expect to see a little bit of pressure and compression through the end of the year and maybe into next year is that hiring continues to pick up and you sort of have a full run rate of <unk>.
On expenses.
Or is that already contemplated in the expansionary and cross sell components are offsetting those new thank you.
I think.
For the question I think it's I think it's a little bit of both.
Even in Q2 you saw.
Margin pressure from a number of things one the <unk> acquisition I want to point that out.
Dan.
But but also because of the hiring in services that will continue but I think it becomes as we catch up with backlog and that's one of my key focus areas.
As to create velocity with with the backlog and move move implementations faster I think we will catch up to do that in the margin pressure will relieve over a period of time.
Alright, great. Thank you for taking the questions.
Thank you next question will be from Parker Lane at Stifel. Please go ahead.
Hi, guys, it's Matt.
Parker.
Just one from me thinking about the transition.
All of the solutions to the cloud and Meridian link one being ahead of schedule can you kind of remind us what the cost benefits are of that and when we should really start to see those in the model.
Yes so.
I think in general.
The answer is.
Our gross profit decreases.
By about 3%.
Year over year.
And a large portion of that is data center.
And.
We.
It decreases to 2%.
For <unk>.
Future years, but the offset really starts to build.
And as we get exit our existing data centers, which is end of Q in the next quarter. So I think the pay offs begin.
Sometime next year, its basically a wash for FY 'twenty three.
But has been a drag on gross margin.
For for a while now.
Got it thanks.
Maybe to add something Dave Parker, if you don't mind me, saying that this isn't a margin story. This is a future proof platform investment and while we will be exiting a data center.
With Sean highlighted some savings given the fact that we have.
Sure.
A very decent backlog and seeing clients continuing to existing clients continue to expand you should expect to see us.
Spend increase spend on cloud year over year over year.
And from my perspective.
Yes, the data center costs will disappear, but some from along with them standpoint. This is why we should be this is how we drive cross sell this is how we gain going to provide a higher level of security.
To our clients. This is also how we will be in a position to.
Implement any installed clients a lot faster than doing it in their own data center and those are the benefits that I'm personally excited about I get shown in the gross margin and everything.
Yeah.
I'm excited when I speak to clients and kind of connect with folks that these are the real benefits.
Any further questions.
Okay.
Thanks.
Thank you.
Next question will be from Andrew Smith at Citi. Please go ahead.
Hey, guys. Thanks for taking my questions here I wanted to dig in on a smaller part of the business the non mortgage.
Dana verification side, we have employment verification and other other aspects like that.
Talk about the strategy there and.
<unk> potentially growing as a piece of data verification and what else you could add the data verification.
To support the growth I know you've had a few pickups there historically.
Okay.
Any comments on strategy there would be helpful. Thanks.
This is Chris. Thank you for the question, so I'm going to talk about it in two different lenses. So the first is what's the benefit to the consumer and mortgage aspects of the business and the benefit there is increased integrations and scale.
Third party Verifications that are important for decisioning.
So that is the foundation of our partner marketplace and it's a major contributor that the verification data business overall provides to the lending portion of the vessels. So.
We have at scale hundreds of partners that are running through these pipes and those same data pipes are used across all of our products. So that's one.
The aspect of our strategy as it is part of our customer promise is providing our clients with the software tools they need to run and grow their business, our credit reporting agencies operate either one or multiple verticals. So the verticals our mortgage.
Tenants are employment and for them to maximize their success a lot of business that reduces that has less volatility than just running on mortgage they require all three.
And we're now able to provide that within our solution set.
Thank you for the question.
Thanks, Chris I appreciate that perspective Thats helpful.
And apologies if this has probably been asked but.
And if you could talk about just the consumer LLS side of the business in terms of.
Sort of confidence, meaning encourage current rates of growth and then yes.
Kind of a backlog that youre seeing.
As you put more resources into.
Absorbing that backlog, if we can see sort of a step up into 2023 as we get all the implementation resource into place policies, if I missed that but any color would be helpful. Thanks a lot.
Okay.
I think.
Yes.
With the declines elsewhere guidance kind of proves out that we are seeing a step up.
And so because we're holding guidance I think I would look at that as a positive.
Thank the.
The services look backlog is a.
We want more backlog.
I've said this.
But we want velocity in clearing the backlog and so we're working on that I don't know.
There's another piece of this which is.
We're not just in an environment of macroeconomic uncertainty. It's also a very interesting time.
Socially with.
Great.
Resignation people back to work.
A shift in end market, so we're seeing even customer's capacity to <unk>.
<unk>.
As an issue and so we're well work. The we'll continue to work the services piece will continue to work the velocity, but I will point out that the backlog itself.
We have a long runway.
Backlog.
And it is reasonable to specifically address your question. It is reasonable to think that we can sustain or even do better in terms of growth rate based on based on that backlog alone.
Helpful. Thank you very much.
Thank you.
And at this time it appears that we have no further questions. Please proceed.
Yes.
Thank you.
I'd like to close by recognizing the great work of our team.
What we accomplished together is truly remarkable.
<unk>.
Were recently selected as the winner of the association for corporate growth Orange County Spotlight Award.
That spotlight.
That spotlight on outperformance inspires us to continue reaching high and I am confident in our continued success.
You for joining us today, and we'll be in touch have a great day.
Thank you Sir.
Ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.
[music].
Right.