UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 1, 2022
(Exact Name of Registrant as Specified in its Charter)
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||||||
| (Address of principal executive offices, including zip code) | |||||||||||
| (Registrant's telephone, including area code) | |||||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On November 1, 2022, Cardlytics, Inc. (the “Company”) issued a press release announcing its financial results for the three and nine months ended September 30, 2022, as well as information regarding a conference call to discuss these financial results and the Company’s recent corporate highlights. The Company’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information included in this Item 2.02 and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
ITEM 7.01 OTHER EVENTS
On November 1, 2022, the Company is also posting a slide presentation on its website, which the Company will reference during the conference call described above.
A copy of the slide presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The information in this Item 7.01 and Exhibit 99.2 hereto shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing..
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
| Exhibit | Exhibit Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Cardlytics, Inc. | |||||||||||
| Date: | November 1, 2022 | By: | /s/ Andrew Christiansen | ||||||||
| Andrew Christiansen | |||||||||||
Chief Financial Officer (Principal Financial and Accounting Officer) | |||||||||||
Exhibit 99.1
Cardlytics Announces Third Quarter 2022 Financial Results
Atlanta, GA – November 1, 2022 – Cardlytics, Inc. (NASDAQ: CDLX), a digital advertising platform, today announced financial results for the third quarter ended September 30, 2022. Supplemental information is available on the Investor Relations section of Cardlytics' website at http://ir.cardlytics.com/.
“We delivered solid double-digit growth despite the serious challenges present in the economy,” said Karim Temsamani, CEO of Cardlytics. “While the economy may be uncertain, I believe there is inherent resiliency in platforms that prove return on ad spend, and I am positive that we can grow profitably. There is a large opportunity ahead of us, and we will be disciplined in Q4 and beyond as we prioritize our goals and position the company well for the next ten years.”
“Our results this quarter were in line with our expectations given our clients' concerns about the economy,” said Andy Christiansen, CFO of Cardlytics. “There is a wide range of outcomes for Q4, but our highest priority is meeting our profitability and cash flow goals for 2023. We are focused on taking the necessary steps to ensure we can control our destiny and achieve our long-term goals.”
Third Quarter 2022 Financial Results
•Revenue was $72.7 million, an increase of 12% year-over-year, compared to $65.0 million in the third quarter of 2021.
•Billings, a non-GAAP metric, was $110.4 million, an increase of 12% year-over-year, compared to $98.4 million in the third quarter of 2021.
•Gross profit was $26.0 million, an increase of 6% year-over-year, compared to $24.5 million in the third quarter of 2021.
•Adjusted contribution, a non-GAAP metric, was $35.1 million, an increase of 11% year-over-year, compared to $31.6 million in the third quarter of 2021.
•Net income attributable to common stockholders was $6.3 million, or $0.19 per diluted share, based on 33.3 million fully diluted weighted-average common shares, compared to a net loss attributable to common stockholders of $(44.5) million, or $(1.35) per diluted share, based on 33.1 million fully diluted weighted-average common shares in the third quarter of 2021.
•Non-GAAP net loss was $(16.5) million, or $(0.50) per diluted share, based on 33.3 million fully diluted weighted-average common shares, compared to non-GAAP net loss of $(11.0) million, or $(0.33) per diluted share, based on 33.1 million fully diluted weighted-average common shares in the third quarter of 2021.
•Adjusted EBITDA, a non-GAAP metric, was a loss of $(12.7) million compared to a loss of $(5.2) million in the third quarter of 2021.
Key Metrics
•Cardlytics MAUs were 184.7 million, an increase of 8%, compared to 170.6 million in the third quarter of 2021.
•Cardlytics ARPU was $0.36 in the third quarter of 2022 and 2021.
•Bridg ARR was $22.1 million in the third quarter of 2022.
Definitions of MAUs, ARPU and ARR are included below under the caption “Non-GAAP Measures and Other Performance Metrics."
Fourth Quarter 2022 Financial Expectations
Cardlytics anticipates billings, revenue, and adjusted contribution to be in the following ranges (in millions):
| Q4 2022 Guidance | |||||
Billings(1) | $120.0 - $132.0 | ||||
| Revenue | $80.0 - $90.0 | ||||
Adjusted contribution(2) | $38.0 - $44.0 | ||||
(1)A reconciliation of billings to GAAP revenue on a forward-looking basis is presented below under the heading "Reconciliation of Forecasted GAAP Revenue to Billings."
(2)A reconciliation of adjusted contribution to GAAP gross profit on a forward-looking basis is not available without unreasonable efforts due to the high variability, complexity and low visibility with respect to the items excluded from this non-GAAP measure.
Earnings Teleconference Information
Cardlytics will discuss its third quarter 2022 financial results during a teleconference today, November 1, 2022, at 5:00 PM ET / 2:00 PM PT. A live dial-in will be available after registering at http://ir.cardlytics.com/. Shortly after the conclusion of the call, a replay of this conference call will be available through 8:00 PM ET on November 8, 2022 on the Cardlytics Investor Relations website at http://ir.cardlytics.com/. Following the completion of the call, a recorded replay of the webcast will be available on Cardlytics’ website.
About Cardlytics
Cardlytics (NASDAQ: CDLX) is a digital advertising platform. We partner with financial institutions to run their rewards programs that promote customer loyalty and deepen relationships. In turn, we have a secure view into where and when consumers are spending their money. We use these insights to help marketers identify, reach, and influence likely buyers at scale, as well as measure the true sales impact of marketing campaigns. Headquartered in Atlanta, Cardlytics has offices in London, New York, Los Angeles, San Francisco, Austin, Detroit and Visakhapatnam. Learn more at www.cardlytics.com.
Cautionary Language Concerning Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our financial guidance for the fourth quarter of 2022, future growth and achievement of long-range goals. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," or variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control.
Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to: risks related to the uncertain impacts that COVID-19 may have on our business, financial condition, results of operations; unfavorable conditions in the global economy and the industries that we serve; our quarterly operating results have fluctuated and may continue to vary from period to period; our ability to sustain our revenue growth and billings; risks related to the integration of Dosh, Bridg and Entertainment with our company; potential payments under the Merger Agreement with Bridg; risks related to our substantial dependence on our Cardlytics platform; risks related to our substantial dependence on JPMorgan Chase Bank, National Association (“Chase”), Bank of America, National Association ("Bank of America"), Wells Fargo Bank, National Association (“Wells Fargo”) and a limited number of other financial institution (“FI”) partners; risks related to our ability to maintain relationships with Chase, Wells Fargo and Bank of America; the amount and timing of budgets by marketers, which are affected by budget cycles, economic conditions and other factors, including the impact of the COVID-19 pandemic; our ability to generate sufficient revenue to offset contractual commitments to FIs; our ability to attract new partners, including FI partners, and maintain relationships with bank processors and digital banking providers; our ability to maintain relationships with marketers; our ability to maintain relationships with marketers; our ability to adapt to changing market conditions, including our ability to adapt to changes in consumer habits, negotiate fee arrangements with new and existing partners and retailers, and develop and launch new services and features; and other risks detailed in the “Risk Factors” section of our Form 10-Q filed with the Securities and Exchange Commission on November 1, 2022 and in subsequent periodic reports that we file with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results.
The forward-looking statements included in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
Non-GAAP Measures and Other Performance Metrics
To supplement the financial measures presented in our press release and related conference call or webcast in accordance with generally accepted accounting principles in the United States (“GAAP”), we also present the following non-GAAP measures of financial performance: billings, adjusted contribution, adjusted EBITDA, adjusted Partner Share and other third party costs, non-GAAP net loss and non-GAAP net loss per share as well as certain other performance metrics, such as monthly active users (“MAUs”), average revenue per user (“ARPU”) and annualized recurring revenue ("ARR").
A “non-GAAP financial measure” refers to a numerical measure of our historical or future financial performance or financial position that is included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in our financial statements. We provide certain non-GAAP measures as additional information relating to our operating results as a complement to results provided in accordance with GAAP. The non-GAAP financial information presented herein should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP and should not be considered a measure of liquidity. There are significant limitations associated with the use of non-GAAP financial measures. Further, these measures may differ from the non-GAAP information, even where similarly titled, used by other companies and therefore should not be used to compare our performance to that of other companies.
We have presented billings, adjusted contribution, adjusted EBITDA, adjusted Partner Share and other third-party costs, non-GAAP net loss and non-GAAP net loss per share as non-GAAP financial measures in this press release. Billings represents the gross amount billed to customers and marketers for advertising campaigns in order to generate revenue. Cardlytics platform billings is recognized gross of both Consumer Incentives and Partner Share. Cardlytics platform GAAP revenue is recognized net of Consumer Incentives and gross of Partner Share. Bridg platform billings is the same as Bridg platform GAAP revenue. We define adjusted contribution as a measure by which revenue generated from our marketers exceeds the cost to obtain the purchase data and the digital advertising space from our partners. Adjusted contribution demonstrates how incremental marketing spend on our platforms generates incremental amounts to support our sales and marketing, research and development, general and administration and other investments. Adjusted contribution is calculated by taking our total revenue less our Partner Share and other third-party costs exclusive of deferred implementation costs, which is a non-cash cost. Adjusted contribution does not take into account all costs associated with generating revenue from advertising campaigns, including sales and marketing expenses, research and development expenses, general and administrative expenses and other expenses, which we do not take into consideration when making decisions on how to manage our advertising campaigns. We define adjusted EBITDA as our income (loss) before income taxes; interest expense, net; depreciation and amortization expense; stock-based compensation expense; foreign currency loss (gain); deferred implementation costs; restructuring and reduction of force, acquisition and integration (benefit) costs, change in fair value of contingent consideration and goodwill impairment. We define adjusted Partner Share and other third-party costs as our Partner Share and other third-party costs excluding non-cash equity expense and amortization of deferred implementation costs. We define non-GAAP net loss as our net income (loss) before stock-based compensation expense; foreign currency loss (gain); acquisition and integration (benefit) costs; amortization of acquired intangibles; change in fair value of contingent consideration; and restructuring and reduction of force. Notably, any impacts related to minimum Partner Share commitments in connection with agreements with certain partners are not added back to net income (loss) in order to calculate adjusted EBITDA, adjusted contribution and non-GAAP net loss. We define non-GAAP net loss per share as non-GAAP net loss divided by weighted-average common shares outstanding, diluted.
We believe the use of non-GAAP financial measures, as a supplement to GAAP measures, is useful to investors in that they eliminate items that are either not part of our core operations or do not require a cash outlay, such as stock-based compensation expense. Management uses these non-GAAP financial measures when evaluating operating performance and for internal planning and forecasting purposes. We believe that these non-GAAP financial measures help indicate underlying trends in the business, are important in comparing current results with prior period results and are useful to investors and financial analysts in assessing operating performance.
We define MAUs as targetable customers or accounts that have logged in and visited online or mobile applications containing offers, opened an email containing an offer, or redeemed an offer from the Cardlytics platform during a monthly period. We then calculate a monthly average of these MAUs for the periods presented. We define ARPU as the total revenue generated in the applicable period calculated in accordance with GAAP, divided by the average number of MAUs in the applicable period. We define ARR as the annualized GAAP revenue of the final month in the period presented for the Bridg platform. ARR should not be considered in isolation from, or as an alternative to, revenue prepared in accordance with GAAP. We believe that ARR is an indicator of the Bridg platform’s ability to generate future revenue from existing clients.
CARDLYTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands, except par value amounts)
| September 30, 2022 | December 31, 2021 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 138,514 | $ | 233,467 | |||||||
| Restricted cash | 74 | 95 | |||||||||
| Accounts receivable and contract assets, net | 97,168 | 111,085 | |||||||||
| Other receivables | 4,675 | 6,097 | |||||||||
| Prepaid expenses and other assets | 8,697 | 7,981 | |||||||||
| Total current assets | 249,128 | 358,725 | |||||||||
| Long-term assets: | |||||||||||
| Property and equipment, net | 7,103 | 11,273 | |||||||||
| Right-of-use assets under operating leases, net | 9,276 | 10,196 | |||||||||
| Intangible assets, net | 113,878 | 125,550 | |||||||||
| Goodwill | 665,813 | 742,516 | |||||||||
| Capitalized software development costs, net | 18,377 | 13,131 | |||||||||
| Other long-term assets, net | 2,737 | 2,406 | |||||||||
| Total assets | $ | 1,066,312 | $ | 1,263,797 | |||||||
| Liabilities and stockholders' equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 4,768 | $ | 4,619 | |||||||
| Accrued liabilities: | |||||||||||
| Accrued compensation | 12,940 | 12,136 | |||||||||
| Accrued expenses | 20,556 | 19,620 | |||||||||
| Partner Share liability | 41,051 | 46,595 | |||||||||
| Consumer Incentive liability | 48,353 | 52,602 | |||||||||
| Deferred revenue | 3,004 | 3,280 | |||||||||
| Current operating lease liabilities | 6,088 | 6,028 | |||||||||
| Current contingent consideration | 118,151 | 182,470 | |||||||||
| Total current liabilities | 254,911 | 327,350 | |||||||||
| Long-term liabilities: | |||||||||||
| Convertible senior notes, net | 225,678 | 184,398 | |||||||||
| Deferred liabilities | 58 | 173 | |||||||||
| Long-term operating lease liabilities | 5,135 | 6,801 | |||||||||
| Long-term contingent consideration | — | 49,825 | |||||||||
| Other long-term liabilities | 21 | 4,550 | |||||||||
| Total liabilities | 485,803 | 573,097 | |||||||||
| Stockholders’ equity: | |||||||||||
Common stock, $0.0001 par value—100,000 shares authorized and 33,043 and 33,534 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively. | 9 | 9 | |||||||||
| Additional paid-in capital | 1,169,213 | 1,212,823 | |||||||||
| Accumulated other comprehensive income | 9,578 | 486 | |||||||||
| Accumulated deficit | (598,291) | (522,618) | |||||||||
| Total stockholders’ equity | 580,509 | 690,700 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,066,312 | $ | 1,263,797 | |||||||
CARDLYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenue | $ | 72,706 | $ | 64,984 | $ | 216,039 | $ | 177,067 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Partner Share and other third-party costs | 37,563 | 34,090 | 112,996 | 93,814 | |||||||||||||||||||
| Delivery costs | 9,125 | 6,390 | 23,820 | 16,076 | |||||||||||||||||||
| Sales and marketing expense | 18,289 | 16,733 | 57,920 | 46,998 | |||||||||||||||||||
| Research and development expense | 13,762 | 11,141 | 39,634 | 26,293 | |||||||||||||||||||
| General and administration expense | 19,972 | 20,073 | 61,381 | 49,136 | |||||||||||||||||||
| Acquisition and integration (benefit) costs | (1,867) | 1,714 | (4,269) | 22,926 | |||||||||||||||||||
| Change in fair value of contingent consideration | (46,126) | 6,261 | (114,144) | 7,741 | |||||||||||||||||||
| Goodwill impairment | — | — | 83,149 | — | |||||||||||||||||||
| Depreciation and amortization expense | 10,468 | 8,375 | 30,695 | 20,273 | |||||||||||||||||||
| Total costs and expenses | 61,186 | 104,777 | 291,182 | 283,257 | |||||||||||||||||||
| Operating income (loss) | 11,520 | (39,793) | (75,143) | (106,190) | |||||||||||||||||||
| Other expense: | |||||||||||||||||||||||
| Interest expense, net | (580) | (3,193) | (2,406) | (9,316) | |||||||||||||||||||
| Foreign currency loss | (4,673) | (1,543) | (10,882) | (1,224) | |||||||||||||||||||
| Total other expense | (5,253) | (4,736) | (13,288) | (10,540) | |||||||||||||||||||
| Income (loss) before income taxes | 6,267 | (44,529) | (88,431) | (116,730) | |||||||||||||||||||
| Income tax benefit | — | — | 1,446 | — | |||||||||||||||||||
| Net income (loss) | 6,267 | (44,529) | (86,985) | (116,730) | |||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 6,267 | $ | (44,529) | $ | (86,985) | $ | (116,730) | |||||||||||||||
| Net income (loss) per share attributable to common stockholders, basic | $ | 0.19 | $ | (1.35) | $ | (2.60) | $ | (3.67) | |||||||||||||||
| Net income (loss) per share attributable to common stockholders, diluted | $ | 0.19 | $ | (1.35) | $ | (2.60) | $ | (3.67) | |||||||||||||||
| Weighted-average common shares outstanding, basic | 32,950 | 33,101 | 33,455 | 31,802 | |||||||||||||||||||
| Weighted-average common shares outstanding, diluted | 33,269 | 33,101 | 33,455 | 31,802 | |||||||||||||||||||
CARDLYTICS, INC.
STOCK-BASED COMPENSATION EXPENSE (UNAUDITED)
(Amounts in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Delivery costs | $ | 920 | $ | 552 | $ | 2,416 | $ | 1,382 | |||||||||||||||
| Sales and marketing | 1,428 | 3,841 | 8,765 | 9,928 | |||||||||||||||||||
| Research and development | 1,968 | 3,170 | 9,419 | 7,132 | |||||||||||||||||||
| General and administration | 1,451 | 9,267 | 11,594 | 18,973 | |||||||||||||||||||
| Total stock-based compensation | $ | 5,767 | $ | 16,830 | $ | 32,194 | $ | 37,415 | |||||||||||||||
CARDLYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Operating activities | |||||||||||
| Net Loss | $ | (86,985) | $ | (116,730) | |||||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||||||
| Credit loss expense | 949 | 1,440 | |||||||||
| Depreciation and amortization | 30,695 | 20,273 | |||||||||
| Amortization of financing costs charged to interest expense | 1,192 | 701 | |||||||||
| Accretion of debt discount and non-cash interest expense | — | 7,078 | |||||||||
| Amortization of right-of-use assets | 4,230 | 3,770 | |||||||||
| Stock-based compensation expense | 32,194 | 37,415 | |||||||||
| Goodwill impairment | 83,149 | — | |||||||||
| Change in fair value of contingent consideration | (114,144) | 7,741 | |||||||||
| Other non-cash expense (income), net | 10,524 | 1,275 | |||||||||
| Deferred implementation costs | — | 2,343 | |||||||||
| Income tax benefit | (1,446) | — | |||||||||
| Change in operating assets and liabilities: | |||||||||||
| Accounts receivable | 15,082 | (757) | |||||||||
| Prepaid expenses and other assets | (456) | (1,296) | |||||||||
| Accounts payable | 111 | 42 | |||||||||
| Other accrued expenses | (5,814) | (2,626) | |||||||||
| Partner Share liability | (5,836) | (2,171) | |||||||||
| Consumer Incentive liability | (4,248) | 3,534 | |||||||||
| Net cash used in operating activities | (40,803) | (37,968) | |||||||||
| Investing activities | |||||||||||
| Acquisition of property and equipment | (1,090) | (2,145) | |||||||||
| Acquisition of patents | (73) | (68) | |||||||||
| Capitalized software development costs | (9,170) | (6,937) | |||||||||
| Business acquisitions, net of cash acquired | (2,274) | (494,131) | |||||||||
| Net cash used in investing activities | (12,607) | (503,281) | |||||||||
| Financing activities | |||||||||||
| Principal payments of debt | (24) | — | |||||||||
| Proceeds from issuance of common stock | 397 | 486,163 | |||||||||
| Repurchase of common stock | (40,000) | — | |||||||||
| Deferred equity issuance costs | — | (190) | |||||||||
| Debt issuance costs | (181) | (200) | |||||||||
| Net cash received (used in) provided by financing activities | (39,808) | 485,773 | |||||||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | (1,756) | (393) | |||||||||
| Net decrease in cash, cash equivalents and restricted cash | (94,974) | (55,869) | |||||||||
| Cash, cash equivalents, and restricted cash — Beginning of period | 233,562 | 293,349 | |||||||||
| Cash, cash equivalents, and restricted cash — End of period | $ | 138,588 | $ | 237,480 | |||||||
CARDLYTICS, INC.
SUMMARY OF GAAP AND NON-GAAP RESULTS (UNAUDITED)
(Dollars in thousands)
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
Billings(1) | $ | 110,392 | $ | 98,448 | $ | 11,944 | 12 | % | $ | 316,361 | $ | 260,102 | $ | 56,259 | 22 | % | |||||||||||||||||||||||||||||||
| Consumer Incentives | 37,686 | 33,464 | 4,222 | 13 | 100,322 | 83,035 | 17,287 | 21 | |||||||||||||||||||||||||||||||||||||||
| Revenue | 72,706 | 64,984 | 7,722 | 12 | 216,039 | 177,067 | 38,972 | 22 | |||||||||||||||||||||||||||||||||||||||
Adjusted Partner Share and other third-party costs(1) | 37,563 | 33,359 | 4,204 | 13 | 112,996 | 91,471 | 21,525 | 24 | |||||||||||||||||||||||||||||||||||||||
Adjusted contribution(1) | 35,143 | 31,625 | 3,518 | 11 | 103,043 | 85,596 | 17,447 | 20 | |||||||||||||||||||||||||||||||||||||||
| Delivery costs | 9,125 | 6,390 | 2,735 | 43 | 23,820 | 16,076 | 7,744 | 48 | |||||||||||||||||||||||||||||||||||||||
| Deferred implementation costs | — | 731 | (731) | (100) | — | 2,343 | (2,343) | (100) | |||||||||||||||||||||||||||||||||||||||
| Gross profit | $ | 26,018 | $ | 24,504 | $ | 1,514 | 6 | % | $ | 79,223 | $ | 67,177 | $ | 12,046 | 18 | % | |||||||||||||||||||||||||||||||
| Net income (loss) | $ | 6,267 | $ | (44,529) | $ | 50,796 | 114 | % | $ | (86,985) | $ | (116,730) | $ | 29,745 | (25) | % | |||||||||||||||||||||||||||||||
Adjusted EBITDA(1) | $ | (12,708) | $ | (5,169) | $ | (7,539) | (146) | % | $ | (39,030) | $ | (14,779) | $ | (24,251) | 164 | % | |||||||||||||||||||||||||||||||
(1)Billings, adjusted Partner Share and other third-party costs, adjusted contribution and adjusted EBITDA are non-GAAP measures. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are presented below under the headings "Reconciliation of GAAP Revenue to Billings", "Reconciliation of GAAP Gross Profit to Adjusted Contribution" and "Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA."
CARDLYTICS, INC.
RECONCILIATION OF GAAP REVENUE TO BILLINGS (UNAUDITED)
(Amounts in thousands)
| Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
| Cardlytics Platform | Bridg Platform | Consolidated | Cardlytics Platform | Bridg Platform | Consolidated | ||||||||||||||||||||||||||||||
| Revenue | $ | 67,285 | $ | 5,421 | $ | 72,706 | $ | 62,075 | $ | 2,909 | $ | 64,984 | |||||||||||||||||||||||
| Plus: | |||||||||||||||||||||||||||||||||||
| Consumer Incentives | 37,686 | — | 37,686 | 33,464 | — | 33,464 | |||||||||||||||||||||||||||||
| Billings | $ | 104,971 | $ | 5,421 | $ | 110,392 | $ | 95,539 | $ | 2,909 | $ | 98,448 | |||||||||||||||||||||||
| Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
| Cardlytics Platform | Bridg Platform | Consolidated | Cardlytics Platform | Bridg Platform | Consolidated | ||||||||||||||||||||||||||||||
| Revenue | $ | 200,538 | $ | 15,501 | $ | 216,039 | $ | 172,068 | $ | 4,999 | $ | 177,067 | |||||||||||||||||||||||
| Plus: | |||||||||||||||||||||||||||||||||||
| Consumer Incentives | 100,322 | — | 100,322 | 83,035 | — | 83,035 | |||||||||||||||||||||||||||||
| Billings | $ | 300,860 | $ | 15,501 | $ | 316,361 | $ | 255,103 | $ | 4,999 | $ | 260,102 | |||||||||||||||||||||||
CARDLYTICS, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED CONTRIBUTION (UNAUDITED)
(Amounts in thousands)
| Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
| Cardlytics Platform | Bridg Platform | Consolidated | Cardlytics Platform | Bridg Platform | Consolidated | ||||||||||||||||||||||||||||||
| Revenue | $ | 67,285 | $ | 5,421 | $ | 72,706 | $ | 62,075 | $ | 2,909 | $ | 64,984 | |||||||||||||||||||||||
| Minus: | |||||||||||||||||||||||||||||||||||
| Partner Share and other third-party costs | 37,399 | 164 | 37,563 | 33,929 | 161 | 34,090 | |||||||||||||||||||||||||||||
Delivery costs(1) | 7,623 | 1,502 | 9,125 | 4,777 | 1,613 | 6,390 | |||||||||||||||||||||||||||||
| Gross profit | 22,263 | 3,755 | 26,018 | 23,369 | 1,135 | 24,504 | |||||||||||||||||||||||||||||
| Plus: | |||||||||||||||||||||||||||||||||||
Delivery costs(1) | 7,623 | 1,502 | 9,125 | 4,777 | 1,613 | 6,390 | |||||||||||||||||||||||||||||
Deferred implementation costs(2) | — | — | — | 731 | — | 731 | |||||||||||||||||||||||||||||
| Adjusted contribution | $ | 29,886 | $ | 5,257 | $ | 35,143 | $ | 28,877 | $ | 2,748 | $ | 31,625 | |||||||||||||||||||||||
(1)Stock-based compensation expense recognized in consolidated delivery costs totaled $0.9 million and $0.6 million for the three months ended September 30, 2022 and 2021, respectively.
(2)Deferred implementation costs is excluded from adjusted Partner Share and other third-party costs as follows (in thousands):
| Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
| Cardlytics Platform | Bridg Platform | Consolidated | Cardlytics Platform | Bridg Platform | Consolidated | ||||||||||||||||||||||||||||||
| Partner Share and other third-party costs | $ | 37,399 | $ | 164 | $ | 37,563 | $ | 33,929 | $ | 161 | $ | 34,090 | |||||||||||||||||||||||
| Minus: | |||||||||||||||||||||||||||||||||||
| Deferred implementation costs | — | — | — | 731 | — | 731 | |||||||||||||||||||||||||||||
| Adjusted Partner Share and other third-party costs | $ | 37,399 | $ | 164 | $ | 37,563 | $ | 33,198 | $ | 161 | $ | 33,359 | |||||||||||||||||||||||
| Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
| Cardlytics Platform | Bridg Platform | Consolidated | Cardlytics Platform | Bridg Platform | Consolidated | ||||||||||||||||||||||||||||||
| Revenue | $ | 200,538 | $ | 15,501 | $ | 216,039 | $ | 172,068 | $ | 4,999 | $ | 177,067 | |||||||||||||||||||||||
| Minus: | |||||||||||||||||||||||||||||||||||
| Partner Share and other third-party costs | 111,829 | 1,167 | 112,996 | 93,590 | 224 | 93,814 | |||||||||||||||||||||||||||||
Delivery costs(1) | 18,841 | 4,979 | 23,820 | 13,552 | 2,524 | 16,076 | |||||||||||||||||||||||||||||
| Gross profit | 69,868 | 9,355 | 79,223 | 64,926 | 2,251 | 67,177 | |||||||||||||||||||||||||||||
| Plus: | |||||||||||||||||||||||||||||||||||
Delivery costs(1) | 18,841 | 4,979 | 23,820 | 13,552 | 2,524 | 16,076 | |||||||||||||||||||||||||||||
Deferred implementation costs(2) | — | — | — | 2,343 | — | 2,343 | |||||||||||||||||||||||||||||
| Adjusted contribution | $ | 88,709 | $ | 14,334 | $ | 103,043 | $ | 80,821 | $ | 4,775 | $ | 85,596 | |||||||||||||||||||||||
(1)Stock-based compensation expense recognized in consolidated delivery costs totaled and $2.4 million and $1.4 million for the nine months ended September 30, 2022 and 2021, respectively.
(2)Deferred implementation costs is excluded from adjusted Partner Share and other third-party costs as follows (in thousands):
| Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
| Cardlytics Platform | Bridg Platform | Consolidated | Cardlytics Platform | Bridg Platform | Consolidated | ||||||||||||||||||||||||||||||
| Partner Share and other third-party costs | $ | 111,829 | $ | 1,167 | $ | 112,996 | $ | 93,590 | $ | 224 | $ | 93,814 | |||||||||||||||||||||||
| Minus: | |||||||||||||||||||||||||||||||||||
| Deferred implementation costs | — | — | — | 2,343 | — | 2,343 | |||||||||||||||||||||||||||||
| Adjusted Partner Share and other third-party costs | $ | 111,829 | $ | 1,167 | $ | 112,996 | $ | 91,247 | $ | 224 | $ | 91,471 | |||||||||||||||||||||||
CARDLYTICS, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA (UNAUDITED)
(Amounts in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income (loss) | $ | 6,267 | $ | (44,529) | $ | (86,985) | $ | (116,730) | |||||||||||||||
| Plus: | |||||||||||||||||||||||
| Income tax benefit | — | — | (1,446) | — | |||||||||||||||||||
| Interest expense - net | 580 | 3,193 | 2,406 | 9,316 | |||||||||||||||||||
| Depreciation and amortization | 10,468 | 8,375 | 30,695 | 20,273 | |||||||||||||||||||
| Stock-based compensation expense | 5,767 | 16,830 | 32,194 | 37,415 | |||||||||||||||||||
| Foreign currency loss | 4,673 | 1,543 | 10,882 | 1,224 | |||||||||||||||||||
| Deferred implementation costs | — | 731 | — | 2,343 | |||||||||||||||||||
| Acquisition and integration (benefit) costs | (1,867) | 1,714 | (4,269) | 22,926 | |||||||||||||||||||
| Change in fair value of contingent consideration | (46,126) | 6,261 | (114,144) | 7,741 | |||||||||||||||||||
| Goodwill impairment | — | — | 83,149 | — | |||||||||||||||||||
| Restructuring and reduction of force | 7,530 | 713 | 8,488 | 713 | |||||||||||||||||||
| Adjusted EBITDA | $ | (12,708) | $ | (5,169) | $ | (39,030) | $ | (14,779) | |||||||||||||||
CARDLYTICS, INC.
RECONCILIATION OF ADJUSTED CONTRIBUTION TO ADJUSTED EBITDA (UNAUDITED)
(Amounts in thousands)
| Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
| Cardlytics Platform | Bridg Platform | Consolidated | Cardlytics Platform | Bridg Platform | Consolidated | ||||||||||||||||||||||||||||||
| Adjusted Contribution | $ | 29,886 | $ | 5,257 | $ | 35,143 | $ | 28,877 | $ | 2,748 | $ | 31,625 | |||||||||||||||||||||||
| Minus: | |||||||||||||||||||||||||||||||||||
| Delivery costs | 7,623 | 1,502 | 9,125 | 4,777 | 1,613 | 6,390 | |||||||||||||||||||||||||||||
| Sales and marketing expense | 16,529 | 1,760 | 18,289 | 15,469 | 1,264 | 16,733 | |||||||||||||||||||||||||||||
| Research and development expense | 11,682 | 2,080 | 13,762 | 10,163 | 978 | 11,141 | |||||||||||||||||||||||||||||
| General and administration expense | 19,558 | 414 | 19,972 | 19,039 | 1,034 | 20,073 | |||||||||||||||||||||||||||||
| Stock-based compensation expense | (5,302) | (465) | (5,767) | (15,627) | (1,203) | (16,830) | |||||||||||||||||||||||||||||
| Restructuring and reduction of force | (7,530) | — | (7,530) | (713) | — | (713) | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (12,674) | $ | (34) | $ | (12,708) | $ | (4,231) | $ | (938) | $ | (5,169) | |||||||||||||||||||||||
| Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
| Cardlytics Platform | Bridg Platform | Consolidated | Cardlytics Platform | Bridg Platform | Consolidated | ||||||||||||||||||||||||||||||
| Adjusted Contribution | $ | 88,709 | $ | 14,334 | $ | 103,043 | $ | 80,821 | $ | 4,775 | $ | 85,596 | |||||||||||||||||||||||
| Minus: | |||||||||||||||||||||||||||||||||||
| Delivery costs | 18,841 | 4,979 | 23,820 | 16,076 | — | 16,076 | |||||||||||||||||||||||||||||
| Sales and marketing expense | 53,345 | 4,575 | 57,920 | 45,257 | 1,741 | 46,998 | |||||||||||||||||||||||||||||
| Research and development expense | 34,577 | 5,057 | 39,634 | 26,135 | 158 | 26,293 | |||||||||||||||||||||||||||||
| General and administration expense | 59,999 | 1,382 | 61,381 | 49,136 | — | 49,136 | |||||||||||||||||||||||||||||
| Stock-based compensation expense | (31,181) | (1,013) | (32,194) | (37,415) | — | (37,415) | |||||||||||||||||||||||||||||
| Restructuring and reduction of force | (8,488) | — | (8,488) | (713) | — | (713) | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | (38,384) | $ | (646) | $ | (39,030) | $ | (17,655) | $ | 2,876 | $ | (14,779) | |||||||||||||||||||||||
CARDLYTICS, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET LOSS
AND NON-GAAP NET LOSS PER SHARE (UNAUDITED)
(Amounts in thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income (loss) | $ | 6,267 | $ | (44,529) | $ | (86,985) | $ | (116,730) | |||||||||||||||
| Plus: | |||||||||||||||||||||||
| Stock-based compensation expense | 5,767 | 16,830 | 32,194 | 37,415 | |||||||||||||||||||
| Foreign currency loss | 4,673 | 1,543 | 10,882 | 1,224 | |||||||||||||||||||
| Acquisition and integration (benefit) costs | (1,867) | 1,714 | (4,269) | 22,926 | |||||||||||||||||||
| Amortization of acquired intangibles | 7,207 | 6,497 | 21,560 | 13,009 | |||||||||||||||||||
Change in fair value of contingent consideration | (46,126) | 6,261 | (114,144) | 7,741 | |||||||||||||||||||
| Goodwill impairment | — | — | 83,149 | — | |||||||||||||||||||
| Restructuring and reduction of force | 7,530 | 713 | 8,488 | 713 | |||||||||||||||||||
| Income tax benefit | — | — | (1,446) | — | |||||||||||||||||||
| Non-GAAP net loss | $ | (16,549) | $ | (10,971) | $ | (50,571) | $ | (33,702) | |||||||||||||||
| Weighted-average number of shares of common stock used in computing non-GAAP net loss per share: | |||||||||||||||||||||||
| Non-GAAP weighted-average common shares outstanding, diluted | 33,269 | 33,101 | 33,455 | 31,802 | |||||||||||||||||||
| Non-GAAP net loss per share attributable to common stockholders, diluted | $ | (0.50) | $ | (0.33) | $ | (1.51) | $ | (1.06) | |||||||||||||||
CARDLYTICS, INC.
RECONCILIATION OF FORECASTED GAAP REVENUE TO BILLINGS (UNAUDITED)
(Amounts in thousands)
| Q4 2022 Guidance | |||||
| Revenue | $80.0 - $90.0 | ||||
| Plus: | |||||
| Consumer Incentives | $40.0 - $42.0 | ||||
| Billings | $120.0 - $132.0 | ||||
Contacts:
Public Relations:
Monica McDonald
Cardlytics, Inc.
MMcDonald@cardlytics.com
Investor Relations:
Robert Robinson
Corporate Development & IR
ir@cardlytics.com
CARDLYTICS Q3 2022 Earnings Presentation November 1, 2022
Disclaimer This presentation includes forward-looking statements. All statements contained in this presentation other than statements of historical facts, including statements regarding expectations about future financial performance or results of Cardlytics, Inc. (“Cardlytics,” “we,” “us,” or “our) including the potential benefits of our acquisitions of Dosh, Bridg and Entertainment, becoming cash flow positive by the second half of 2023, earnings guidance for the fourth quarter of 2022, Bridg's future gross margin, the anticipated impact of our strategic initiatives to create shareholder value and growth in MAUs and ARPU are forward looking statements. The words “anticipate,” believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. The future events and trends discussed in this presentation may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to: risks related to the uncertain impacts that COVID-19 may have on our business, financial condition, results of operations; unfavorable conditions in the global economy and the industries that we serve; our quarterly operating results have fluctuated and may continue to vary from period to period; our ability sustain our revenue and billings growth; risks related the integration of Dosh, Bridg and Entertainment with our company; potential payments under the Merger Agreement with Bridg; risks related to our substantial dependence on our Cardlytics platform product; risks related to our substantial dependence on JPMorgan Chase Bank, National Association (“Chase”), Bank of America, National Association (“Bank of America”), Wells Fargo Bank, National Association (“Wells Fargo”) and a limited number of other financial institution (“FI”) partners; risks related to our ability to maintain relationships with Chase, Bank of America and Wells Fargo; the amount and timing of budgets by marketers, which are affected by budget cycles, economic conditions and other factors, including the impact of the COVID-19 pandemic; our ability to generate sufficient revenue to offset contractual commitments to FIs; our ability to attract new partners, which include FI partners and merchant data partners, and maintain relationships with bank processors and digital banking providers; our ability to maintain relationships with marketers; our ability to adapt to changing market conditions, including our ability to adapt to changes in consumer habits, negotiate fee arrangements with new and existing partners and retailers, and develop and launch new services and features; and other risks detailed in the “Risk Factors” section of our Form 10-Q filed with the Securities and Exchange Commission on November 1, 2022. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after the date of this presentation to conform these statements to actual results or revised expectations, except as required by law. In addition to U.S. GAAP financial information, this presentation includes billings, adjusted contribution, adjusted Partner Share and other third-party costs, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net loss and non-GAAP net loss) per share, each of which is a non-GAAP financial measure. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. Reconciliations of billings, adjusted contribution, adjusted Partner Share and other third-party costs, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net loss and non-GAAP net loss per share to the most directly comparable GAAP measures are included in the appendix to this presentation. Please see appendix for definitions.
Company overview
© 2021 Cardlytics 4 We power a native ad platform in our partners’ digital channels.
Cardlytics provides a scaled solution based on purchase intelligence 184M+ Monthly Active Users(1) $3.9T+ in Annual Spend(2) 1 in 2 U.S. Purchase Transactions(3) Distinctive benefits for marketers + Reach valuable banking customers + Operate in a brand-safe, privacy-protected, trusted digital channel + Market to the most valuable customers based on their actual spending + Drive in-store and online traffic + Closed-loop solution measures marketing results to the penny
Cardlytics is focused on five strategic initiatives to create shareholder value + Connecting 100% of MAUs to new Ad Server by the end of 2023 + Increasing adoption by agency, middle market and SMB clients Drive long-term growth & operating leverage + Upgraded UI / UX for more content and better offer constructs, and engagement solutions to drive engagement and spend Ad Server and Ads Manager adoption + Delivering product-level offers across wider retail to provide advertisers enhanced flexibility and optionality Next-gen customer experience + Scaled product-level offers from leading brands with a friction-free customer experience Product & category offers + Becoming cash flow positive by the second half of 2023 with continued self- funding of growth initiatives Grocery & CPG at scale
Financial information & operating metrics
Trended consolidated results Q3 Adj. Contribution 11.1% y/y Q3 Revenue 11.9% y/y Q3 Billings 12.1% y/y Revenue Adj. Contribution(1) Billings(1) $107.7 $20.4 $12.4 $19.7 $29.7 $24.3 $29.6 $31.6 $44.0 $32.8 $35.1 $35.1 $45.5 $28.2 $46.1 $67.1 $53.2 $58.9 $65.0 $90.0 $67.9 $75.4 $72.7 $67.8 $39.5 $62.1 $94.0 $76.3 $85.3 $98.4 $134.0 $98.2 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 $107.7 $110.4
Billings and adjusted contribution best reflect performance Billings Total in aggregate paid by marketers Consumer incentive Set by CDLX to achieve marketing objectives; can fluctuate based on desired outcome Enhanced consumer incentive Additional Consumer Incentives funded by our Partners GAAP revenue Recognized as Revenue; to be split between CDLX & our Partners Partner share Portion of Revenue shared with our Partners Adjusted contribution Amount retained by CDLX; net of Partner Share
Q3 2022 year-over-year consolidated results Consumer Incentives $33,464 $37,686 Adjusted Partner Share $37,563 $31,625 $35,143 BILLINGS REVENUE ADJ. CONTRIBUTION Adjusted Contribution 12.1% 11.9% 11.1% Q3 2021 Q3 2022 $33,359 Three Months Ended September 30 Change 2021 2022 $ % Billings(1) $98,448 $110,392 $11,944 12.1% Consumer Incentives 33,464 37,686 4,222 12.6% Revenue $64,984 $72,706 $7,722 11.9% Adjusted Partner Share and other third-party costs(1) 33,359 37,563 4,204 12.6% Adjusted contribution(1) $31,625 $35,143 $3,518 11.1% Delivery costs 6,390 9,125 2,735 42.8% Deferred implementation costs 731 - (731) (100.0%) Gross profit $24,504 $26,018 $1,514 6.2% Net (loss) income ($44,529) $6,267 $50,796 n/a Adjusted EBITDA(1) ($5,169) ($12,708) ($7,539) n/a
Cardlytics platform advertiser spend by industry Advertising spend from agency accounts grew > 85% during the third quarter of 2022 compared to the third quarter of 2021. Agency accounts represented > 10% of total advertising spend during the third quarter of 2022 compared to < 10% during the third quarter of 2021. Industry % Change % of Advertiser Spend Three Months Ended September 30, Three Months Ended September 30, vs 2021 vs 2020 vs 2019 2019 2020 2021 2022 Grocery & Gas > (10%) > 30% >53 % < 10% > 10% > 10% < 10% Restaurant < (15%) > 20% < 10% < 30% > 30% < 30% > 20% Retail < 20% > 120% < (30%) > 30% < 25% < 30% > 30% T&E < 100% < 125% < 20% > 15% < 10% > 5% > 10% Other n/a n/a < 365% > 0% > 0% > 0% < 5% DTC > 10% < 70% > 150% < 15% < 25% > 25% < 25%
Cardlytics platform engagement metrics(1) There may be variation in future quarters due to factors such as global economic events, bank launches, new advertisers with significant spend, and growth in nascent or new verticals. Monthly log-in days(2) show that MAUs logged in 10 days per month in Q3 2022 and Q3 2021. Offer activation rates(2) show higher rates for small-ticket, volume-heavy offers versus large-ticket and subscription offers. Campaign spend ratios(2) show Cardlytics currently targets a small proportion of total MAU spend. + As budgets increase and more advertisers come onto the platform, more spend from MAUs can be targeted with offers. + There remains considerable room to target larger audiences in light of existing MAU engagement levels. Campaign Spend Ratios by Industry Offer Activation Rates by Industry Q3 2021 Q3 2022 Q3 2021 Q3 2022 0.43% 0.50% 0.90% 0.03% 3.47% 1.19% 1.83% 2.24% 0.63% 1.53% 1.10% 0.47% 2.36% 1.35% 0.31% 2.56% 1.97% 2.10% 3.66% 2.73% 7.30% 2.76% 2.83% 5.25% 2.17% 2.91% 2.92% 2.34% 6.99% 2.54% 2.66% 4.32%
Significant MAU increase precedes opportunity for expected billings growth and future ARPU expansion for the Cardlytics platform ARPU(1)MAUs(1) 140.8 157.2 161.6 163.6 168.6 167.6 170.6 175.4 178.5 179.9 184.7 $0.32 $0.18 $0.29 $0.41 $0.32 $0.34 $0.36 $0.49 $0.36 $0.38 $0.36 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22
Bridg Gross Margin Bridg incurs higher expenses during onboarding + Processing of several years’ worth of historical data initially versus steady state processing of data on a daily basis + Implementation costs are also incurred upfront + New data lake and data warehouse costs + Data transfer costs + Custom set-up costs Increases in revenue over time + Clients progress from proof of concept to full user of the platform + Tiered pricing results in gradual revenue increases Margin improvement for company over time as more clients scale beyond proof of concept and data costs normalize Note: Gross margin estimates are for total Bridg platform Total Revenue Gross Margin 75.0% 70.4%
Appendix
Q3 2022 results Three Months Ended September 30, Change Nine Months Ended September 30, Change 2022 2021 AMT % 2022 2021 AMT % Revenue $72,706 $64,984 $7,722 11.9% $216,039 $177,067 $38,972 22.0% Billings(1) 110,392 98,448 11,944 12.1% 316,361 260,102 56,259 21.6% Gross Profit 26,018 24,504 1,514 6.2% 79,223 67,177 12,046 17.9% Adjusted contribution(1) 35,143 31,625 3,518 11.1% 103,043 85,596 17,447 20.4% Net income (loss) attributable to common stockholders 6,267 (44,529) 50,796 n/a (86,985) (116,730) 29,745 (25.5%) Net income (loss) per share (EPS), diluted $0.19 ($1.35) $1.54 n/a ($2.60) ($3.67) $1.07 (29.2%) Adjusted EBITDA(1) ($12,708) ($5,169) ($7,539) n/a ($39,030) ($14,779) ($24,251) n/a Adjusted EBITDA margin(1)(2) (17.5%) (8.0%) (9.8%) n/a (18.1%) (8.3%) (9.7%) n/a Non-GAAP net loss(1) ($16,549) ($10,971) ($5,578) n/a ($50,571) ($33,702) ($16,869) n/a Non-GAAP net loss per share(1) ($0.50) ($0.33) ($0.17) n/a ($1.51) ($1.06) ($0.45) n/a Cardlytics MAUs (in millions) 184.7 170.6 14.1 8.3% 181.2 167.5 13.7 8.2% Cardlytics ARPU $0.36 $0.36 $0.00 n/a $1.11 $1.03 $0.08 7.77% Bridg ARR $22,115 $12,734 $9,381 73.7% $22,115 $12,734 $9,381 73.7%
Guidance Q4 2022 Guidance Billings(1) $120.0 - $132.0 Revenue $80.0 - $90.0 Adjusted Contribution(1) $38.0 - $44.0
Reconciliation of GAAP revenue to billings Three Months Ended Mar 31, 2020 Jun 30, 2020 Sept 30, 2020 Dec 31, 2020 Mar 31, 2021 Jun 30, 2021 Sept 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sept 30, 2022 Cardlytics Platform Revenue $45,509 $28,222 $46,079 $67,082 $53,230 $56,763 $62,075 $86,686 $63,983 $69,270 $67,285 Plus: Consumer Incentives 22,267 11,299 16,014 26,883 23,087 26,484 33,464 43,924 30,297 32,339 37,686 Billings $67,776 $39,521 $62,093 $93,965 $76,317 $83,247 $95,539 $130,610 $94,280 $101,609 $104,971 Bridg Platform Revenue - - - - - $2,090 $2,909 $3,363 $3,945 $6,135 $5,421 Plus: Consumer Incentives - - - - - - - - - - - Billings - - - - - $2,090 $2,909 $3,363 $3,945 $6,135 $5,421 Consolidated Revenue $45,509 $28,222 $46,079 $67,082 $53,230 $58,853 $64,984 $90,049 $67,928 $75,405 $72,706 Plus: Consumer Incentives 22,267 11,299 16,014 26,883 23,087 26,484 33,464 43,924 30,297 32,339 37,686 Billings $67,776 $39,521 $62,093 $93,965 $76,317 $85,337 $98,448 $133,973 $98,225 $107,744 $110,392
Reconciliation of GAAP gross profit to adjusted contribution Three Months Ended Mar 31, 2020 Jun 30, 2020 Sept 30, 2020 Dec 31, 2020 Mar 31, 2021 Jun 30, 2021 Sept 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sept 30, 2022Cardlytics Platform Revenue $45,509 $28,222 $46,079 $67,082 $53,230 $56,763 $62,075 $86,686 $63,986 $69,270 $67,285 Minus: Partner Share and other third-party costs 26,138 16,811 27,971 38,388 29,771 29,890 33,929 47,274 35,027 39,403 37,399 Delivery costs 3,406 3,499 3,498 3,907 3,938 4,837 4,777 4,618 4,907 6,311 7,623 Gross Profit $15,965 $7,912 $14,610 $24,787 $19,521 $22,036 $23,369 $34,794 $24,049 $23,556 $22,263 Plus: Delivery costs 3,406 3,499 3,498 3,907 3,938 4,837 4,777 4,618 4,907 6,311 7,623 Deferred implementation costs 1,008 991 1,641 958 882 730 731 1,442 - - - Adjusted contribution $20,379 $12,402 $19,749 $29,652 $24,341 $27,603 $28,877 $40,854 $28,956 $29,867 $29,886 Bridg Platform Revenue - - - - - $2,090 $2,909 $3,363 $3,945 $6,135 $5,421 Minus: Partner Share and other third-party costs - - - - - 63 161 185 126 877 164 Delivery costs - - - - - 911 1,613 1,809 1,626 1,851 1,502 Gross Profit - - - - - $1,116 $1,135 $1,369 $2,193 $3,407 $3,755 Plus: Delivery costs - - - - - 911 1,613 1,809 1,626 1,851 1,502 Adjusted contribution - - - - - $2,027 $2,748 $3,178 $3,819 $5,258 $5,257 Consolidated Revenue $45,509 $28,222 $46,079 $67,082 $53,230 $58,853 $64,984 $90,049 $67,928 $75,405 $72,706 Minus: Partner Share and other third-party costs 26,138 16,811 27,971 38,388 29,771 29,953 34,090 47,459 35,153 40,280 37,563 Delivery costs 3,406 3,499 3,498 3,907 3,938 5,748 6,390 6,427 6,533 8,162 9,125 Gross Profit $15,965 $7,912 $14,610 $24,787 $19,521 $23,152 $24,504 $36,163 $26,242 $26,963 $26,018 Plus: Delivery costs 3,406 3,499 3,498 3,907 3,938 5,748 6,390 6,427 6,533 8,162 9,125 Deferred implementation costs 1,008 991 1,641 958 882 730 731 1,442 - - - Adjusted contribution $20,379 $12,402 $19,749 $29,652 $24,341 $29,630 $31,625 $44,032 $32,775 $35,125 $35,143
Reconciliation of GAAP partner share and other third-party costs to adjusted partner share and other third-party costs Three Months Ended Mar 31, 2020 Jun 30, 2020 Sept 30, 2020 Dec 31, 2020 Mar 31, 2021 Jun 30, 2021 Sept 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sept 30, 2022Cardlytics Platform Partner Share and other third-party costs $26,138 $16,811 $27,971 $38,388 $29,771 $29,890 $33,929 $47,274 $35,027 $39,403 $37,399 Minus: Deferred implementation costs 1,008 991 1,641 958 882 730 731 1,442 - - - Adjusted Partner Share and other third-party costs $25,130 $15,820 $26,330 $37,430 $28,889 $29,160 $33,198 $45,832 $35,027 $39,403 $37,399 Bridg Platform Partner Share and other third-party costs - - - - - $63 $161 $185 $126 $877 $164 Minus: Deferred implementation costs - - - - - - - - - - - Adjusted Partner Share and other third-party costs - - - - - $63 $161 $185 $126 $877 $164 Consolidated Partner Share and other third-party costs $26,138 $16,811 $27,971 $38,388 $29,771 $29,953 $34,090 $47,459 $35,153 $40,280 $37,563 Minus: Deferred implementation costs 1,008 991 1,641 958 882 730 731 1,442 - - - Adjusted Partner Share and other third-party costs $25,130 $15,820 $26,330 $37,430 $28,889 $29,223 $33,359 $46,017 $35,153 $40,280 $37,563
(Amounts in thousands) Reconciliation of GAAP net (loss) income to adjusted EBITDA Three Months Ended Mar 31, 2020 Jun 30, 2020 Sept 30, 2020 Dec 31, 2020 Mar 31, 2021 Jun 30, 2021 Sept 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sept 30, 2022 Net (loss) income ($13,531) ($19,758) ($15,356) ($6,777) ($24,895) ($47,306) ($44,529) ($11,834) $33,038 ($126,290) $6,267 Plus: Income tax benefit - - - - - - - (7,864) - (1,446) - Interest expense (income), net (284) 10 283 3,039 3,045 3,078 3,193 3,247 947 879 580 Depreciation and amortization expense 2,331 1,545 1,933 2,017 3,065 8,833 8,375 9,598 9,871 10,356 10,468 Stock-based compensation expense 4,126 9,108 11,578 7,584 7,248 13,337 16,830 12,849 13,585 12,842 5,767 Foreign currency (gain) loss 1,886 8 (1,066) (2,377) (319) - 1,543 43 1,671 4,538 4,673 Deferred implementation costs 1,008 991 1,641 958 882 730 731 1,442 - - - Acquisition and integration costs (benefit) - - - - 7,030 14,182 1,714 1,446 (4,599) 2,197 (1,867) Change in fair value of contingent consideration - - - - - 1,480 6,261 (6,367) (65,050) (2,968) (46,126) Goodwill impairment - - - - - - - - - 83,149 - Restructuring and reduction of force 482 403 391 47 - - 713 - - 958 7530 Adjusted EBITDA ($3,982) ($7,693) ($987) $4,444 ($3,944) ($5,666) ($5,169) $2,560 ($10,537) ($15,785) ($12,708)
Reconciliation of adjusted contribution to adjusted EBITDA (Amounts in thousands) Three Months Ended Mar 31, 2020 Jun 30, 2020 Sept 30, 2020 Dec 31, 2020 Mar 31, 2021 Jun 30, 2021 Sept 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sept 30, 2022Cardlytics Platform Adjusted Contribution $20,379 $12,402 $19,749 $19,749 $24,341 $27,603 $28,877 $40,854 $28,956 $29,867 $29,886 Minus: Delivery costs 3,406 3,499 3,498 3,498 3,938 4,837 4,777 4,618 4,907 6,311 7,623 Sales and marketing expense 10,968 10,405 11,431 11,431 13,202 16,665 15,469 17,435 15,908 20,908 16,529 Research and development expense 3,851 3,966 4,627 4,627 6,218 8,481 10,163 10,531 10,960 11,936 11,682 General and administration expense 10,744 11,734 12,757 12,757 12,175 16,454 19,039 15,708 19,209 21,232 19,558 Stock-based compensation expense (4,126) (9,108) (11,578) (11,578) (7,248) (13,179) (15,627) (11,169) (11,935) (13,944) (5,302) Restructuring and reduction of force (482) (403) (391) (391) - - (713) - - (958) (7,530) Adjusted EBITDA ($3,982) ($7,691) ($595) ($595) ($3,944) ($5,656) ($4,231) $3,730 ($10,093) ($15,618) ($12,674) Bridg Platform Adjusted Contribution - - - - - $2,027 $2,748 $3,178 $3,819 $5,258 $5,257 Minus: Delivery costs - - - - - 911 1,613 1,809 1,626 1,851 1,502 Sales and marketing expense - - - - - 398 1,264 1,564 1,740 1,075 1,760 Research and development expense - - - - - 453 978 1,280 1,331 1,645 2,080 General and administration expense - - - - - 434 1,034 1,376 1,216 (248) 414 Stock-based compensation expense - - - - - (158) (1,203) (1,681) (1,650) 1,102 (465) Restructuring and reduction of force - - - - - - - - - - - Adjusted EBITDA - - - - - ($11) ($938) ($1,170) ($444) ($167) ($34) Consolidated Adjusted Contribution $20,379 $12,402 $19,749 $19,749 $24,341 $29,630 $31,625 $44,032 $32,775 $35,125 $35,143 Minus: Delivery costs 3,406 3,499 3,498 3,498 3,938 5,748 6,390 6,427 6,533 8,162 9,125 Sales and marketing expense 10,968 10,405 11,431 11,431 13,202 17,063 16,733 18,998 17,648 21,983 18,289 Research and development expense 3,851 3,966 4,627 4,627 6,218 8,934 11,141 11,811 12,291 13,581 13,762 General and administration expense 10,744 11,734 12,757 12,757 12,175 16,888 20,073 17,085 20,425 20,984 19,972 Stock-based compensation expense (4,126) (9,108) (11,578) (11,578) (7,248) (13,337) (16,830) (12,849) (13,585) (12,842) (5,767) Restructuring and reduction of force (482) (403) (391) (391) - - (713) - - (958) (7,530) Adjusted EBITDA ($3,982) ($7,691) ($595) ($595) ($3,944) ($5,666) ($5,169) $2,560 ($10,537) ($15,785) ($12,708)
Reconciliation of GAAP net income (loss) to non-GAAP net loss and non-GAAP net loss per share Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net income (loss) $6,267 ($44,529) ($86,985) ($116,730) Plus: Stock-based compensation expense 5,767 16,830 32,194 37,415 Foreign currency loss (gain) 4,673 1,543 10,882 1,224 Acquisition and integration (benefit) costs (1,867) 1,714 (4,269) 22,926 Amortization of acquired intangibles 7,207 6,497 21,560 13,009 Change in fair value of contingent consideration (46,126) 6,261 (114,144) 7,741 Goodwill impairment - - 83,149 - Restructuring and reduction of force 7,530 713 8,488 713 Income tax benefit - - (1,446) - Non-GAAP net loss ($16,549) ($10,971) ($50,571) ($33,702) Weighted-average number of shares of common stock used in computing non-GAAP net loss per share: Weighted-average common shares outstanding, diluted 33,269 33,101 33,455 31,802 Non-GAAP net loss per share attributable to common stockholders, diluted ($0.50) ($0.33) ($1.51) ($1.06)
Reconciliation of forecasted GAAP revenue to billings Q4 2022 Guidance Revenue $80.0 - $90.0 Plus: Consumer Incentives $40.0 - $42.0 Billings $120.0 - $132.0
Definitions Adjusted contribution: We define adjusted contribution measures of the degree by which revenue generated from our marketers exceeds the cost to obtain the purchase data and the digital advertising space from our partners. Adjusted contribution demonstrates how incremental marketing spend on our platform generates incremental amounts to support our sales and marketing, research and development, general and administration and other investments. Adjusted contribution is calculated by taking our total revenue less our Partner Share and other third-party costs exclusive of deferred implementation costs, which is a non-cash cost. Adjusted contribution does not take into account all costs associated with generating revenue from advertising campaigns, including sales and marketing expenses, research and development expenses, general and administrative expenses and other expenses, which we do not take into consideration when making decisions on how to manage our advertising campaigns. Adjusted EBITDA: We define adjusted EBITDA as our (loss) income before income taxes; interest expense, net; depreciation and amortization expense; stock-based compensation expense; foreign currency gain (loss); deferred implementation costs; restructuring and reduction of force; acquisition and integration costs (benefit); and change in fair value of contingent considerations. Bridg ARR: We define ARR as the annualized GAAP revenue of the final month in the period presented for the Bridg platform. ARR should not be considered in isolation from, or as an alternative to, revenue prepared in accordance with GAAP. We believe that ARR is an indicator of the Bridg platform’s ability to generate future revenue from existing clients. Cardlytics ARPU: We define ARPU as the total Cardlytics platform revenue generated in the applicable period calculated in accordance with GAAP, divided by the average number of MAUs in the applicable period. Billings: Billings represents the gross amount billed to customers and marketers for advertising campaigns in order to generate revenue. Cardlytics platform billings is recognized gross of both Consumer Incentives and Partner Share. Cardlytics platform GAAP revenue is recognized net of Consumer Incentives and gross of Partner Share. Bridg platform billings is the same as Bridg platform GAAP revenue. Campaign spend ratio: We define campaign spend ratio as the amount of spend from MAUs that is associated with the campaigns in which they were targeted with offers divided by the total amount of spend from MAUs in the industries in which MAUs were targeted with offers during the applicable period. Cardlytics MAUs: We define MAUs as targetable customers or accounts that have logged in and visited online or mobile applications containing offers, opened an email containing an offer, or redeemed an offer from the Cardlytics platform during a monthly period. We then calculate a monthly average of these MAUs for the periods presented. Monthly log-in days: We define monthly log-in days as the number of days in which MAUs logged in and visited the online or mobile banking applications of, or opened an email containing our offers from, our partners during a monthly period. We then calculate an average of the monthly log-in days for the periods presented. Non-GAAP net loss: We define non-GAAP net loss as our net loss before stock-based compensation expense; foreign currency (gain) loss; acquisition and integration (benefit) costs; amortization of acquired intangibles; change in fair value of contingent considerations; and restructuring and reduction of force. Notably, any impacts related to minimum Partner Share commitments in connection with agreements with certain Partners are not added back to net loss in order to calculate adjusted EBITDA. Non-GAAP net loss per share: We define non-GAAP net loss per share as non-GAAP net loss divided by GAAP weighted-average common shares outstanding, diluted. Offer activation rate: We define offer activation rate as the total number of offers activated by MAUs divided by the total number of offers served to MAUs in the applicable period.
Industry and account definitions Segment Segment Constituents DTC Direct to consumer Entertainment Amusement Parks, Cinema/Video, Concerts/Theater, Gaming, Golf, Miscellaneous Recreation Services, Museums/Parks, Radio, Sporting & Sporting Venues/Other, Ticket Providers Grocery Convenience, Grocery Other Business Services, Financial Institutions, Gyms/Fitness, Home/ Maintenance, Online Education/ Distance Learning, Other Services, Salon/Spa Restaurant Banquet/Caterers, Bars/Night Clubs/Taverns, Fast Food/ Quick Serve, Full Service Restaurants, Quick Serve Light Fares Retail Accessories, Apparel, Auto Services and Products, Beauty Products/Cosmetics, Books/ Magazine, Child/ Infant Care, Drug Store/Pharmacy, General/Multi-Line, Home & Garden, Office Supplies, Other Retail, Pets, Shoes & Athletic Footwear, Specialty Gifts, Sporting & Outdoor Goods Subscription Bundled, Insurance/Real Estate, Internet, Phone, Professional Services, Television Travel Airlines, Car Rental, Cruise Lines, Gas Stations, Hotels/Lodging, Other Travel, Parking Services, Personal Transportation, Tour Operators/Agencies, Travel Aggregators and Agencies Exclusions Antique/Pawn, Charitable and Social Service Organizations, Courier/Freight/Storage, Gambling, Government, Lifestyle/ Social, Medical Services, Other Educational, Schools Merchants on the Cardlytics platform in which we interact with an advertising agency that we believe holds significant influence over the decision-making process as it relates to the design and management of advertising campaigns Agency Accounts
