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): May 9, 2019
CARDLYTICS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 001-38386 | 26-3039436 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
675 Ponce de Leon Avenue NE, Suite 6000 Atlanta, GA 30308 | ||
(Address of principal executive offices, including zip code) | ||
(888) 798-5802 | ||
(Registrant’s telephone number, 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)) |
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:
Title of each class | Trading symbol | Name of each exchange on which registered |
Common Stock | CDLX | The Nasdaq Stock Market LLC |
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On May 9, 2019, Cardlytics, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2019, 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 Regulation FD Disclosure.
On May 9, 2019, 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: | May 9, 2019 | By: | /s/ David Evans |
David Evans | |||
Chief Financial Officer (Principal Financial and Accounting Officer) | |||
Exhibit 99.1
Cardlytics Announces First Quarter 2019 Financial Results
Atlanta, GA – May 9, 2019 – Cardlytics, Inc. (NASDAQ: CDLX), a purchase intelligence platform that helps make marketing more relevant and measurable, today announced financial results for the first quarter ended March 31, 2019.
“I am pleased to announce that we delivered strong first quarter results,” said Scott Grimes, CEO & Co-Founder of Cardlytics. “We saw continued growth from existing and new marketers, and added significant scale to our platform, increasing quarterly FI MAUs from 83.2 million to 108.5 million, a 30% quarterly increase and growth of 85% year over year.”
“Our significant scale positions Cardlytics to be an even more important tool for marketers,” said Lynne Laube, COO & Co-Founder of Cardlytics. “With the successful launch of a national bank’s mobile channel in Q4, email channel in Q1, and online banking in recent weeks, we have the ability to reach real, banked consumers at massive scale. This helps us drive even more impactful in-store and online sales growth for marketers, and we are actively working with our clients to scale their investments on our platform.”
First Quarter 2019 Financial Results
• | Revenue was $36.0 million, an increase of 10% year-over-year, compared to $32.7 million in the first quarter of 2018. |
• | Net loss attributable to common stockholders was $(6.3) million, or $(0.28) per diluted share, based on 22.5 million weighted-average common shares outstanding, compared to a net loss attributable to common stockholders of $(20.2) million, or $(1.54) per diluted share, based on 13.1 million weighted-average common shares outstanding in the first quarter of 2018. |
• | Non-GAAP net loss was $(5.1) million, or $(0.23) per diluted share, based on 22.5 million non-GAAP weighted-average common shares outstanding, compared to a non-GAAP net loss of $(6.1) million, or $(0.35) per diluted share, based on 17.6 million non-GAAP weighted-average common shares outstanding in the first quarter of 2018. |
• | Billings, a non-GAAP metric, was $58.6 million, an increase of 20% year-over-year, compared to $48.8 million in the first quarter of 2018. |
• | Adjusted contribution, a non-GAAP metric, was $17.6 million, an increase of 24% year-over-year, compared to $14.2 million in the first quarter of 2018. |
• | Adjusted EBITDA, a non-GAAP metric, was a loss of $(3.2) million compared to a loss of $(3.1) million in the first quarter of 2018. |
“Our first quarter results mark a very positive start to 2019, with several key metrics exceeding guidance,” said David Evans, CFO of Cardlytics. “We saw solid commitments from our banking partners as they reinvested money back into our platform to increase consumer engagement, and we continue to be excited about our prospects as we see data points of an accelerating business.”
Key Metrics
• | FI MAUs were 108.5 million, an increase of 85%, compared to 58.7 million in the first quarter of 2018. |
• | ARPU was $0.33, a decrease of 40%, compared to $0.55 in the first quarter of 2018. |
Definitions of FI MAUs and ARPU are included below under the caption “Non-GAAP Measures and Other Performance Metrics.”
Second Quarter and the Fiscal Year 2019 Financial Expectations
Cardlytics anticipates billings, revenue, adjusted contribution and adjusted EBITDA to be in the following ranges (in millions):
Q2 2019 Guidance | FY 2019 Guidance | ||
Billings(1) | $61.0 - $66.0 | $270.0 - $290.0 | |
Revenue | $42.0 - $45.0 | $175.0 - $190.0 | |
Adjusted contribution(2) | $19.0 - $21.0 | $83.0 - $88.0 | |
Adjusted EBITDA(3) | $(4.0) - $(3.0) | $(8.0) - $(5.0) | |
(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 revenue on a forward-looking basis is presented below under the heading "Reconciliation of Forecasted GAAP Revenue to Adjusted Contribution." |
(3) | A reconciliation of adjusted EBITDA to GAAP net loss 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 first quarter 2019 financial results during a teleconference today, May 9, 2019, at 5:00 PM ET / 2:00 PM PT. The conference call can be accessed at (866) 385-4179 (domestic) or (210) 874-7775 (international), conference ID# 6282667. A replay of the conference call will be available through 8:00 PM ET / 5:00 PM PT on May 16, 2019 at (855) 859-2056 (domestic) or (404) 537-3406 (international). The replay passcode is 6282667. The call will also be broadcast simultaneously 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) uses purchase intelligence to make marketing more relevant and measurable. We partner with financial institutions to run their banking rewards programs that promote customer loyalty and deepen banking 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, San Francisco 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 second quarter of 2019 and full year 2019. 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," 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: our financial performance, including our revenue, margins, costs, expenditures, growth rates and operating expenses, and our ability to sustain revenue growth, generate positive cash flow and become profitable; risks related to our substantial dependence on our Cardlytics Direct product; risks related to our substantial dependence on JPMorgan Chase Bank, National Association (“Chase”), Bank of America, National Association ("Bank of America") and a limited number of other financial institution (“FI”) partners; risks related to our ability to successfully implement Cardlytics Direct for Wells Fargo Bank, National Association (“Wells Fargo”) customers and 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; our ability to generate sufficient revenue to offset contractual commitments to FIs; our ability to attract new FI 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 FIs and retailers, and develop and launch new services and features; our significant amount of debt, which may affect our ability to operate the business and secure additional financing in the future, and other risks detailed in the “Risk Factors” section of our Form 10-Q filed with the Securities and Exchange Commission on May 9, 2019 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 FI Share and other third party costs, non-GAAP net loss and non-GAAP loss per share as well as certain other performance metrics, such as FI monthly active users (“FI MAUs”) and average revenue per user (“ARPU”).
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 FI 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 marketers for advertising campaigns in order to generate revenue. Billings is reported gross of both Consumer Incentives and FI Share. Our GAAP revenue is recognized net of Consumer Incentives and gross of FI Share. We define adjusted contribution as our revenue, which is reported net of Consumer Incentives, less our adjusted FI Share and other third-party costs. We define adjusted EBITDA as our net loss before income tax benefit; interest expense, net; depreciation and amortization expense; stock-based compensation expense; foreign currency (gain) loss; amortization of deferred FI implementation costs; costs associated with financing events; loss on extinguishment of debt; change in fair value of warrant liabilities; and a non-cash equity expense recognized in FI Share. We define adjusted FI Share and other third-party costs as our FI Share and other third-party costs excluding non-cash equity expense and amortization of deferred FI implementation costs. We define non-GAAP net loss as our net loss before stock-based compensation expense; change in fair value of warrant liabilities; foreign currency (gain) loss; loss on extinguishment of debt; costs associated with financing events; and a non-cash equity expense recognized in FI Share. Notably, any impacts related to minimum FI Share commitments in connection with agreements with certain FI partners are not added back to net loss in order to calculate adjusted EBITDA. We define non-GAAP net loss per share as non-GAAP net loss divided by non-GAAP weighted-average common shares outstanding, basic and diluted, which includes our GAAP weighted-average common shares outstanding, basic and diluted, and our weighted-average preferred shares outstanding, assuming conversion.
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 FI MAUs as targetable customers or accounts of our FI partners that logged in and visited the online or mobile banking applications of, or opened an email containing our offers from, our FI partners during a monthly period. We then calculate a monthly average of these FI MAUs for the periods presented. We define ARPU as the total Cardlytics Direct revenue generated in the applicable period calculated in accordance with GAAP, divided by the average number of FI MAUs in the applicable period.
CARDLYTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands)
March 31, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 36,428 | $ | 39,623 | |||
Restricted cash | 20,260 | 20,247 | |||||
Accounts receivable, net | 53,245 | 58,125 | |||||
Other receivables | 2,328 | 2,417 | |||||
Prepaid expenses and other assets | 5,037 | 3,956 | |||||
Total current assets | 117,298 | 124,368 | |||||
Long-term assets: | |||||||
Property and equipment, net | 11,351 | 10,230 | |||||
Intangible assets, net | 367 | 370 | |||||
Capitalized software development costs, net | 2,015 | 1,625 | |||||
Deferred FI implementation costs, net | 14,067 | 15,877 | |||||
Other long-term assets, net | 1,369 | 1,293 | |||||
Total assets | 146,467 | 153,763 | |||||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | 1,896 | 2,099 | |||||
Accrued liabilities: | |||||||
Accrued compensation | 4,734 | 5,936 | |||||
Accrued expenses | 3,743 | 4,388 | |||||
FI Share liability | 23,369 | 27,656 | |||||
Consumer Incentive liability | 15,217 | 11,476 | |||||
Deferred billings | 574 | 346 | |||||
Current portion of long-term debt | 22 | 21 | |||||
Total current liabilities | 49,555 | 51,922 | |||||
Long-term liabilities: | |||||||
Deferred liabilities | 3,044 | 3,173 | |||||
Long-term debt, net of current portion | 46,691 | 46,693 | |||||
Total liabilities | 99,290 | 101,788 | |||||
Stockholders’ equity: | |||||||
Common stock | 7 | 7 | |||||
Additional paid-in capital | 373,351 | 371,463 | |||||
Accumulated other comprehensive income | 1,620 | 1,992 | |||||
Accumulated deficit | (327,801 | ) | (321,487 | ) | |||
Total stockholders’ equity | 47,177 | 51,975 | |||||
Total liabilities and stockholders’ equity | $ | 146,467 | $ | 153,763 | |||
CARDLYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands except per share amounts)
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenue | $ | 35,988 | $ | 32,713 | |||
Costs and expenses: | |||||||
FI Share and other third-party costs | 19,004 | 21,420 | |||||
Delivery costs | 3,246 | 1,943 | |||||
Sales and marketing expense | 9,337 | 8,216 | |||||
Research and development expense | 2,941 | 3,459 | |||||
General and administration expense | 7,000 | 6,582 | |||||
Depreciation and amortization expense | 961 | 910 | |||||
Total costs and expenses | 42,489 | 42,530 | |||||
Operating loss | (6,501 | ) | (9,817 | ) | |||
Other (expense) income: | |||||||
Interest expense, net | (304 | ) | (1,749 | ) | |||
Change in fair value of warrant liabilities, net | — | (9,172 | ) | ||||
Foreign currency gain | 491 | 683 | |||||
Total other income (expense) | 187 | (10,238 | ) | ||||
Loss before income taxes | (6,314 | ) | (20,055 | ) | |||
Income tax benefit | — | — | |||||
Net loss | (6,314 | ) | (20,055 | ) | |||
Adjustments to the carrying value of preferred stock | — | (157 | ) | ||||
Net loss attributable to common stockholders | $ | (6,314 | ) | $ | (20,212 | ) | |
Net loss per share attributable to common stockholders, basic and diluted | $ | (0.28 | ) | $ | (1.54 | ) | |
Weighted-average common shares outstanding, basic and diluted | 22,503 | 13,093 | |||||
CARDLYTICS, INC.
STOCK-BASED COMPENSATION EXPENSE (UNAUDITED)
(Amounts in thousands)
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Delivery costs | $ | 164 | $ | 85 | |||
Sales and marketing expense | 707 | 943 | |||||
Research and development expense | 203 | 470 | |||||
General and administration expense | 634 | 1,402 | |||||
Total stock-based compensation expense | $ | 1,708 | $ | 2,900 | |||
CARDLYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands)
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Operating activities | |||||||
Net loss | $ | (6,314 | ) | $ | (20,055 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 961 | 910 | |||||
Amortization of financing costs charged to interest expense | 27 | 140 | |||||
Accretion of debt discount and non-cash interest expense | — | 1,500 | |||||
Stock-based compensation expense | 1,708 | 2,900 | |||||
Change in fair value of warrant liabilities, net | — | 9,172 | |||||
Other non-cash (income) expense, net | (235 | ) | 1,809 | ||||
Amortization of deferred FI implementation costs | 653 | 412 | |||||
Change in operating assets and liabilities: | |||||||
Accounts receivable | 4,740 | 8,623 | |||||
Prepaid expenses and other assets | (1,173 | ) | (1,520 | ) | |||
Deferred FI implementation costs | — | (250 | ) | ||||
Recovery of deferred FI implementation costs | 1,157 | 1,344 | |||||
Accounts payable | (691 | ) | (408 | ) | |||
Other accrued expenses | (1,770 | ) | (1,836 | ) | |||
FI Share liability | (4,287 | ) | (2,538 | ) | |||
Customer Incentive liability | 3,741 | (293 | ) | ||||
Net cash used in operating activities | (1,483 | ) | (90 | ) | |||
Investing activities | |||||||
Acquisition of property and equipment | (1,492 | ) | (418 | ) | |||
Acquisition of patents | — | (2 | ) | ||||
Capitalized software development costs | (489 | ) | (374 | ) | |||
Net cash used in investing activities | (1,981 | ) | (794 | ) | |||
Financing activities | |||||||
Principal payments of debt | (5 | ) | (26 | ) | |||
Proceeds from issuance of common stock | 173 | 70,490 | |||||
Equity issuance costs | — | (1,232 | ) | ||||
Debt issuance costs | (6 | ) | — | ||||
Net cash from financing activities | 162 | 69,232 | |||||
Effect of exchange rates on cash, cash equivalents and restricted cash | 120 | 175 | |||||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (3,182 | ) | 68,523 | ||||
Cash, cash equivalents, and restricted cash — Beginning of period | 59,870 | 21,262 | |||||
Cash, cash equivalents, and restricted cash — End of period | $ | 56,688 | $ | 89,785 | |||
CARDLYTICS, INC.
SUMMARY OF GAAP AND NON-GAAP RESULTS (UNAUDITED)
(Dollars in thousands)
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
Billings | $ | 58,550 | $ | 48,762 | $ | 9,788 | 20 | % | ||||||
Consumer Incentives | 22,562 | 16,049 | 6,513 | 41 | ||||||||||
Revenue | 35,988 | 32,713 | 3,275 | 10 | ||||||||||
Adjusted FI Share and other third-party costs(1) | 18,351 | 18,489 | (138 | ) | (1 | ) | ||||||||
Adjusted contribution | $ | 17,637 | $ | 14,224 | $ | 3,413 | 24 | % | ||||||
(1) | Adjusted FI Share and other third-party costs presented above excludes a non-cash equity expense included in FI Share and amortization of deferred FI implementation costs, which are detailed below in our reconciliation of GAAP net loss to non-GAAP adjusted EBITDA. |
CARDLYTICS, INC.
RECONCILIATION OF GAAP REVENUE TO BILLINGS (UNAUDITED)
(Amounts in thousands)
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenue | $ | 35,988 | $ | 32,713 | |||
Plus: | |||||||
Consumer Incentives | 22,562 | 16,049 | |||||
Billings | $ | 58,550 | $ | 48,762 | |||
CARDLYTICS, INC.
RECONCILIATION OF GAAP REVENUE TO ADJUSTED CONTRIBUTION (UNAUDITED)
(Amounts in thousands)
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenue | $ | 35,988 | $ | 32,713 | |||
Minus: | |||||||
Adjusted FI Share and other third-party costs(1) | 18,351 | 18,489 | |||||
Adjusted contribution | $ | 17,637 | $ | 14,224 | |||
(1) | The following table presents a reconciliation of adjusted FI Share and other third-party costs to FI Share and other third-party costs, the most directly comparable GAAP measure, for each of the periods indicated (in thousands): |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
FI Share and other third-party costs | $ | 19,004 | $ | 21,420 | |||
Minus: | |||||||
Non-cash equity expense included in FI Share | — | 2,519 | |||||
Amortization of deferred FI implementation costs | 653 | 412 | |||||
Adjusted FI Share and other third-party costs | $ | 18,351 | $ | 18,489 | |||
CARDLYTICS, INC.
RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
(Amounts in thousands)
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net loss | $ | (6,314 | ) | $ | (20,055 | ) | |
Plus: | |||||||
Income tax benefit | — | — | |||||
Interest expense, net | 304 | 1,749 | |||||
Depreciation and amortization expense | 961 | 910 | |||||
Stock-based compensation expense | 1,708 | 2,900 | |||||
Foreign currency gain | (491 | ) | (683 | ) | |||
Amortization of deferred FI implementation costs | 653 | 412 | |||||
Change in fair value of warrant liabilities, net | — | 9,172 | |||||
Non-cash equity expense included in FI Share | — | 2,519 | |||||
Adjusted EBITDA | $ | (3,179 | ) | $ | (3,076 | ) | |
CARDLYTICS, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS AND NON-GAAP NET LOSS PER SHARE
(UNAUDITED)
(Amounts in thousands except per share amounts)
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net loss | $ | (6,314 | ) | $ | (20,055 | ) | |
Plus: | |||||||
Stock-based compensation expense | 1,708 | 2,900 | |||||
Non-cash equity expense included in FI Share | — | 2,519 | |||||
Change in fair value of warrant liabilities, net | — | 9,172 | |||||
Foreign currency gain | (491 | ) | (683 | ) | |||
Non-GAAP net loss | $ | (5,097 | ) | $ | (6,147 | ) | |
Weighted-average number of shares of common stock used in computing non-GAAP net loss per share: | |||||||
GAAP weighted-average common shares outstanding, diluted | 22,503 | 13,093 | |||||
Weighted-average preferred shares, assuming conversion | — | 4,494 | |||||
Non-GAAP weighted-average common shares outstanding, diluted | 22,503 | 17,587 | |||||
Non-GAAP net loss per share attributable to common stockholders, diluted | $ | (0.23 | ) | $ | (0.35 | ) | |
CARDLYTICS, INC.
RECONCILIATION OF FORECASTED GAAP REVENUE TO BILLINGS (UNAUDITED)
(Amounts in millions)
Q2 2019 Guidance | FY 2019 Guidance | ||
Revenue | $42.0 - $45.0 | $175.0 - $190.0 | |
Plus: | |||
Consumer Incentives | $16.0 - $24.0 | $80.0 - $115.0 | |
Billings | $61.0 - $66.0 | $270.0 - $290.0 | |
CARDLYTICS, INC.
RECONCILIATION OF FORECASTED GAAP REVENUE TO ADJUSTED CONTRIBUTION (UNAUDITED)
(Amounts in millions)
Q2 2019 Guidance | FY 2019 Guidance | ||
Revenue | $42.0 - $45.0 | $175.0 - $190.0 | |
Minus: | |||
Adjusted FI Share and other third-party costs(1) | $21.0 - $26.0 | $87.0 - $107.0 | |
Adjusted contribution | $19.0 - $21.0 | $83.0 - $88.0 | |
(1) | Adjusted FI Share and other third-party costs presented above excludes amortization of deferred FI implementation costs, which is not available without unreasonable efforts due to high variability, complexity and low visibility. |
Contacts:
Public Relations:
ICR
cardlyticspr@icrinc.com
Investor Relations:
William Maina
ICR, Inc.
(646) 277-1236
ir@cardlytics.com
First Quarter 2019 Earnings Presentation MAY 2019 © 2019 Cardlytics – Proprietary and Confidential
Disclaimer This presentation includes forward-looking statements. All statements contained in this presentation other than statements of historical facts, including statements regarding future results of operations and the financial position of Cardlytics, Inc. (“Cardlytics,” “we,” “us” or “our”), our business strategy and plans, our objectives for future operations, including our long-term model, our target adjusted EBITDA in 2020 and our target MAUs and ARPU in 2021 and our financial guidance for the quarter ended June 30, 2019 and the year ended December 31, 2019 are forward- looking statements. The words “anticipate,” believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks and uncertainties. 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. 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 FI Share and other third-party costs, 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 FI Share and other third-party costs, 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. 2 © 2019 Cardlytics – Confidential and Proprietary
We power a native ad platform for marketers in banks’ digital channels. © 2019 Cardlytics – Proprietary and Confidential
Cardlytics provides a scaled solution based on purchase intelligence DISTINCTIVE BENEFITS FOR MARKETERS >108M Reach valuable banked customers MONTHLY ACTIVE USERS Operate in a brand-safe, privacy-protected, trusted digital channel Market to the most valuable customers based $2.4T on their actual spending IN ANNUAL SPEND Drive in-store and online traffic Closed-loop solution measures marketing 2IN5 results to the penny CARD SWIPES 4 © 2019 Cardlytics – Proprietary and Confidential
In 2019, we are focused on unlocking the value of prior years’ investments ACCELERATE DEMONSTRATE EVOLVE TOP-LINE GROWTH OPERATING LEVERAGE THE PLATFORM Leverage significant increase in Realize the value of Move to an always-on, highly scale to land new clients, expand technology, infrastructure, automated platform that can reduce into new target verticals, and grow and personnel investments to buying friction, be extended to third budgets with current clients support >200M MAUs parties, and support richer media Estimated FY 2020 Estimated FY 2021 Positive adjusted EBITDA in A return to normalized 2020 through exhibited ARPU levels by the operating leverage* end of 2021 * A reconciliation of non-GAAP adjusted EBITDA to GAAP net loss 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. 5 © 2019 Cardlytics – Proprietary and Confidential
Billings and Adjusted Contribution best reflect performance BILLINGS CONSUMER INCENTIVE Total in aggregate Set by CDLX to achieve marketing objectives; paid by marketers can fluctuate based on desired outcome ENHANCED CONSUMER INCENTIVE Additional Consumer Incentives funded by FI partners GAAP REVENUE Recognized as Revenue; to be split between CDLX & our FI partners FI SHARE Portion of Revenue shared with FI partners ADJUSTED CONTRIBUTION Amount retained by CDLX; net of FI Share 6 © 2019 Cardlytics – Proprietary and Confidential
In Q1 2019, more Consumer Incentives were funded by FI Share, reducing Revenue growth without materially impacting Adjusted Contribution Share of Billings CONSUMER More FI Share utilized as Consumer INCENTIVE CONSUMER 1 Incentive to drive engagement; this INCENTIVE decreases FI Share FI SHARE The increase in Consumer Incentive FI SHARE 2 compresses GAAP Revenue ADJUSTED ADJUSTED GAAP REVENUE GAAP No material impact to Adjusted Contribution CONTRIBUTION CONTRIBUTION 3 7 © 2019 Cardlytics – Proprietary and Confidential
Financial Information and Operating Metrics © 2019 Cardlytics – Proprietary and Confidential
Positive year-over-year growth $70.2 ($ in millions) Adj. Contribution(1)(2)(3) Billings(1) Revenue $58.6 $58.3 Q1 Billings +20% y/y $51.4 $48.6 $45.5 $47.6 $48.8 $40.1 $47.8 $39.3 $35.6 $34.6 $36.0 $32.8 $31.4 $32.7 $26.9 $22.1 $17.2 $17.4 $17.0 $17.6 $14.2 $16.2 13.5 $10.6 Q1 Adj. Contribution +24% y/y Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 (1) Adjusted contribution and billings are non-GAAP measures. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the appendix to this presentation. (2) Adjusted contribution includes the impact of an accrued expense totaling $1.5 million during both the first and second quarters of 2017 related to an expected shortfall in meeting a minimum FI Share commitment. The accrued expense was reversed during the third quarter of 2017, resulting in a non-cash gain totaling $3.0 million. 9 © 2019 Cardlytics – Proprietary and Confidential (3) Adjusted contribution includes the impact of a $0.8 million gain during the third quarter of 2018 related to the renewal of our agreement with Lloyds, which contains certain amendments that are retroactively applied as of 1/1/2018.
Q1 2019 results $58,550 20% $48,762 ($ in thousands) $22,562 Three Months Ended March 31, Change CONSUMER $16,049 INCENTIVE 2018 2019 $ % Billings(1) $ 48,762 $ 58,550 $ 9,788 20% Consumer Incentives 16,049 22,562 6,513 41 $18,351 ADJUSTED $18,489 Revenue 32,713 35,988 3,275 10 FI SHARE (1) Adjusted FI Share and other third-party 24% 18,489 18,351 (138) (1) costs(1) Adjusted Contribution(1) $ 14,224 $ 17,637 $ 3,413 24% $17,637 ADJUSTED CONTRIBUTION(1) $14,224 (1) Billings, adjusted FI share and other third-party costs and adjusted contribution are non-GAAP measures. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the appendix to this presentation. BILLINGS(1) BILLINGS(1) Q1 2018 Q1 2019 10 © 2019 Cardlytics – Proprietary and Confidential
Significant FI MAU increase precedes expected Billings growth and future ARPU expansion (FI MAUs in millions) $0.66 $0.60 $0.58 $0.57 108.5 $0.54 $0.55 $0.55 $0.47 83.2 $0.33 58.7 58.7 58.8 59.3 55.4 51.9 53.7 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 FI MAUs ARPU 11 © 2019 Cardlytics – Proprietary and Confidential
Q1 2019 Results ($ in thousands, except EPS and ARPU) Three Months Ended March 31, 2018 2019 Change Change (%) BILLINGS(1) $48,762 $58,550 $9,788 20.1% Customer Incentives 16,049 22,562 6,513 40.6% REVENUE 32,713 35,988 3,275 10.0% ADJUSTED CONTRIBUTION(1) 14,224 17,637 3,413 24.0% Net loss attributable to common stockholders (20,212) (6,314) 13,898 --- Net loss per share (EPS) ($1.54) ($0.28) $1.26 --- ADJUSTED EBITDA(1) ($3,076) ($3,179) ($103) --- Adjusted EBITDA margin(1) (9.4%) (8.8%) --- --- Non-GAAP net loss(1) (6,147) (5,097) 1,050 --- Non-GAAP net loss per share(1) ($0.35) ($0.23) $0.12 --- FI MAUs (in millions) 58.7 108.5 49.8 84.8% ARPU $0.55 $0.33 ($0.22) (39.6%) (1) Billings, adjusted contribution, adjusted EBITDA, non-GAAP net loss and non-GAAP net loss per share are non-GAAP measures. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the appendix to this presentation. 12 © 2019 Cardlytics – Proprietary and Confidential
Guidance ($ in millions) Q2 2019 FY 2019 Billings(1) $61.0 – $66.0 $270.0 – $290.0 Revenue $42.0 – $45.0 $175.0 – $190.0 Adjusted Contribution(2) $19.0 – $21.0 $83.0 – $88.0 Adjusted EBITDA(3) $(4.0) – $(3.0) $(8.0) – $(5.0) (1) A reconciliation of billings to GAAP revenue on a forward-looking basis is presented in appendix to this presentation under the heading "Reconciliation of Forecasted GAAP Revenue to Billings.“ (2) A reconciliation of non-GAAP adjusted contribution to GAAP revenue on a forward-looking basis is presented in appendix to this presentation under the heading "Reconciliation of Forecasted GAAP Revenue to Adjusted Contribution." (3) A reconciliation of non-GAAP adjusted EBITDA to GAAP net loss 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. 13 © 2019 Cardlytics – Proprietary and Confidential
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© 2019 Cardlytics – Proprietary and Confidential