MeridianLink, Inc. (NYSE:MLNK), a prepackaged software services provider, has announced updates to its stock repurchase program following a legal challenge. On Monday, the company disclosed that it had reached an agreement to modify the terms of its 2024 Repurchase Program, which had been contested in a lawsuit earlier this year.
The lawsuit, filed on March 26, 2024, by a stockholder in the Delaware Court of Chancery, alleged that the company's board of directors and certain individuals associated with Thoma Bravo, a private equity firm, breached fiduciary duties in approving the original repurchase program. The complaint suggested that the repurchase could unfairly increase Thoma Bravo's ownership stake in MeridianLink.
MeridianLink's board of directors, while denying all allegations of wrongdoing, approved resolutions on April 9, 2024, to ensure that the repurchase program would not allow Thoma Bravo's ownership to exceed 49.5% of the outstanding voting stock. These changes effectively mooted the claims in the lawsuit.
As part of the resolution, MeridianLink has agreed to pay $600,000 in fees and expenses to the plaintiff's counsel, although the Court has not yet ruled on the fairness of this amount. Following the agreement, the Court ordered the dismissal of the case with prejudice on July 22, 2024.
The company has filed this information in a Current Report on Form 8-K as required by the Court, providing notice to shareholders. This announcement is based on a press release statement and aims to keep investors informed of the recent developments related to the stock repurchase program and the associated legal proceedings.
In other recent news, MeridianLink reported a slight increase in Q1 revenue, reaching $77.8 million, a 1% growth year-over-year. The company also witnessed a substantial boost in adjusted EBITDA, which landed at $31.8 million, reflecting a 41% margin and outperforming forecasts. Despite lower mortgage and auto lending volumes, MeridianLink managed to grow through its lending platform, MeridianLink One, and a strategic land-and-expand approach. The company remains vigilant amid an uncertain macroeconomic climate, concentrating on profitability and cost management.
The firm also announced the appointment of a new CFO, Larry Katz, who will focus on operational priorities and investor relations. Looking ahead, Q2 revenue is projected to be between $70 million and $79 million, with full-year 2024 revenue expected between $311 million and $319 million. Adjusted EBITDA guidance for Q2 is set between $29 million and $32 million, and between $123 million and $130 million for the full year.
While MeridianLink experienced a decline in mortgage-related revenue by 1% and data verification software solutions revenue by 12%, non-mortgage lending revenue grew by 6%, contributing to a total lending software revenue growth of 5%. These are among the recent developments for the company.
InvestingPro Insights
Amidst the backdrop of MeridianLink's legal resolution regarding its stock repurchase program, the company's market activity provides additional context for investors. According to InvestingPro data, MeridianLink has a market capitalization of $1.81 billion and has experienced a revenue growth of 4.06% over the last twelve months as of Q1 2024. This growth is reflective of the company's ongoing business operations despite the legal challenges it has faced.
InvestingPro Tips suggest that management's commitment to shareholder value is evident through aggressive share buybacks, as well as a stock that trades with low price volatility. While the company has not been profitable over the last twelve months, analysts predict profitability within the current year. These insights could be crucial for investors considering the stock's potential for stability and growth, especially in light of the recent legal developments.
For those looking for a deeper dive into MeridianLink's financial health and future prospects, there are additional InvestingPro Tips available. Utilizing the coupon code PRONEWS24, investors can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking access to a comprehensive set of analytics and metrics that could further inform investment decisions.
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