Fitch Ratings announced on March 18, 2025, that it has affirmed the Long-Term Issuer Default Ratings (IDRs) for MeridianLink, Inc. and ML California Sub, Inc. at 'BB-'. The outlook for these ratings is Stable. Additionally, Fitch affirmed MeridianLink's first lien senior secured term loan and revolving credit facility at 'BB+' with a Recovery Rating of 'RR1'.
The affirmation is supported by MeridianLink's high recurring revenue, strong retention rates, low leverage, and robust free cash flow generation. Fitch noted that EBITDA leverage at year-end 2024 was 4.0x and is forecasted to remain below this level, assuming no major debt-funded acquisitions. The company's capital allocation strategy includes business investment, share repurchases, and acquisitions, with over $100 million spent on buybacks in 2024.
Fitch highlighted the company's resilient business model, which performs through economic cycles by generating returns from volume-based loan applications in expansionary periods and steady fees from collection solutions and deposit accounts during recessions. While exposure to the financial services sector is a concentration risk, it is mitigated by product diversification and low customer concentration.
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