MeridianLink buys OpenClose for $65 million in bid to reach more banks

MeridianLink reported in an earnings call this week that it bought mortgage technology platform OpenClose for $65 million.

The acquiring company, which provides cloud-based software to financial institutions, found buying the point of sale technology attractive because the move extends its reach in mortgage software.

“We continue to see a lot of value going forward in the combined company,” Chief Financial Officer Sean Blitchok said during the call. “It gets us to an at-scale solution or approaching an at-scale solution for the mortgage products.”

The acquisition specifically adds more banks to the customer base for the company’s mortgage lending technology, Chris Maloof, president in the company’s Go-to-Market division, said during the call.

“OpenClose leans a little bit more heavily towards depositories, which is highly complementary,” Maloof said.

Although mortgage lending has been under pressure due to rising rates, Maloof said he’s seen “consistent demand or even increasing demand from a depository perspective” when it comes to technology used to originate home loans.

MeridianLink, which went public last year, reported a $2.9 billion net loss for the third quarter. The company had taken larger net losses the previous quarter and a year earlier at $24.2 billion and $21.4 billion, respectively.

Mortgage-related business represented 21% of MeridianLink’s total revenue during the quarter, down slightly from 22% a year earlier, CEO Nicolaas Vlok said during the company’s earnings call. The bulk of its revenue in this category has come from data verification as opposed to lending software recently, and mortgage related revenue at the company has been slower than expected this year. Outside the mortgage market, its revenue growth in lending software has been relatively more favorable.

OpenClose “delivers approximately $1 million per month in revenue and has been growing at a high-teens rate throughout this year,” according to Blitchok.

Part of the reason for the OpenClose acquisition was “just to continue to invest where we feel there’s a downcycle,” Vlok said.