CDLX - Earnings call transcript Q2 2021

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Unidentified Company Representative

Good evening, and welcome to the Cardlytics Second Quarter 2021 Financial Results Call.

Before we begin, let me remind everyone that today's discussion will contain forward-looking statements based on our current assumptions, expectations and beliefs, including expectations about future financial performance or results, our financial guidance and cash position for the third quarter of 2021, our ability to achieve long-term initiatives to drive long-term growth, growth in MAUs or monthly active users, launches by new partners in the coming quarters, the increase in ARPU or average revenue per user, the impact of COVID-19 on our business and the economy as a whole, including the uneven recovery and volatility of the economy. Q4 being a seasonal high period of ads spending and consumer spending. The increase in stock-based compensation next quarter, continued pressure on our U.K. results and the anticipated benefits and expections and goals related to the integration of our acquisition of Dosh Holdings, Inc. Inc. Bridg and

company's financial of periodic financial information discuss will provided Commission. Today's our Also with discussion discussion, webcast, reconciliations measures risk that replay the be via our and Exchange release and of performance. call, the factors refer and available supplemental ended and the quarter For has will press during XX, the Securities available that non-GAAP June GAAP and results this we X-K to cause XXXX, are of in the section we Factors SEC. actual the today the today's one for been for differ could the is a this issued to call that filed year subsequent a in Risk specific XX-Q reports materially please with from file week.

of You quarter to Investor Cardlytics Relations section of the can I've presentation website. our find our on note supplemental all just been described posted Relations has a also to Please the website. Investor information that results first

is Joining leadership on today Andy Co-Founder, Cardlytics and call the and team, including Christiansen. Lynne Laube; us CEO CFO,

call remarks, let call With the we'll me prepared Lynne. to to questions. turn your their Following open the over Lynne? that,

Lynne Laube

our thank and you XXXX evening, Good for QX call. joining earnings

XXX% in realized grew driven was by was and This adjusted While a XXXX, platform contribution recovery below retail, to than we guidance. our we restaurant. and us billings Cardlytics XXX% fell from QX travel, faster forecasting

Cardlytics our year-over-year. in increase key separate better this million, segment was adjusted spent performance were and to also results to verticals. an investors investments advertiser $XX.X growth We of we're of labor into reporting we're our up understand net Cardlytics revenue, forecasted well. equal to shortages. and believe the that platform more platform transparency million, disappointed is want provide Here billings, we XXXX. rates We're quarter, from First, was three there providing a are QX contribution reiterate Bridg year-over-year. the investors incentives the performing consumer which numbers. help $XX.X for XXX% with And XXX% concentration spending advertisers for million, XXX% To while our reasons; billings platform up Cardlytics business of myth is business. than each I as a less were in $XX.X

third, Second, retailers an increase And and the consumer clients. issues. for had demand key in there restaurants advertising with chain supply need several reducing was

of pause because selection. client For customer couldn't example, clothing several restaurants chain of spend needed they A when couldn't they their purchase realized men's client halted key their all they their maintain marketing the critical to marketing ingredients. our enough inventory deliver supply

QX. in As a in our result, to something some we actually and/ see were or QX, business push across client pace marketing budgets paused our rarely

entertainment, can new XXXX, you U.K. see QX Additionally, down and as XXXX. travel supplemental QX is spend from and the are information, about advertising about still down % the from from XX still XX%

our acknowledges guidance that the pandemic business. affecting QX is still Our the reality

Additionally, guidance full to as volatility. time continue year not this we're we or see QX at providing

quotas. or targets internal reducing not we're Importantly,

advertising continue committed clients marketing remain uncertain that the to us telling platform. budgets our macroeconomic While to to are due events. be They

COVID, advertising concentrated base. the impacted our As expand are importance most of billings much to advertisers highlighting capabilities discussed and with we large self-service verticals past have our of by in the

out will and initiatives our Our with on made the that beginning focused I'm we team the the that said, markets of the the is the on progress at against growth. drive year. laid long-term achieving facing goals pleased we've With challenges head

several We for quarters. are on single of discussed ahead we plan that every last have initiative the

plan integration Dosh key we integration, post-acquisition the XXXX. realizing against process, go plan during acquisition EBITDA client of synergies and highlight first by half integration our product to accomplishments. the the me that by and loss eliminate Let continues exceedingly to we're the of executing some well,

now eight Venmo. and with We platforms live including fintech neo-banks are

fintech XX platforms over strategic most have selected Dosh the with U.S. and neo-bank following and partner innovative the another contract adoption, loyalty we of card by spend. coming fintechs Additionally, This enhance partners rewarding quarters. online holders in one company the and customer retention everyday include as card Cardlytics use The a a to new for

Cardlytics is as sectors. addition we of the platform Bridg planned. and lighter growing neo-bank integration Dosh of Dosh choice the while With positioned fintech also have progressing to fast for much be than

scale. restaurants. a the their business Client begun significant many leading we functions integrating legal. Bridg improvement and investing feedback strong has as such to retailers we capital finance staff has have been And impressive. efforts home accelerate closed a pipeline on large HR, and We and to Recently achieve are and resource client with

now of to our the this deep have us allows we One of along all to say unknown complement understanding was insights their us understanding customer quote, and customer an with purchase that a had holistic with optimal around about We develop members deliver the individuals their partners behavior, true product, their a customer not customers enabled our possible before. experience. into our view Bridg of these has base to reach engagement have customer to relationship. ability levels loyalty an in-store key to our differentiated

paying platform dividends. is Cardlytics Our sales strategy

the XXXX which growth XXXX. strong their to QX We new up compared continue mobile QX soft-launch we XXX% year-over-year to in industries was customers. from Nectar DXC, In U.K., online with like Connect and over see

by Nectar's Nectar the in The step one Sainsbury. the all promotional is largest U.K. loyalty campaign reminder, run next programs is a a phased and is of the of grocer members. As to

on enrollment positive showing encouraging We hired is have as expectations. engagement extremely initial impact banking outstripped the rates to Amazon Peter platform already and Chan our CTO. migrating from open self-service Peter's on results evident. already and customer are as new focus Our is

closely spending on now We We of agencies on are making XX strides platform. with agencies the behalf our XX partnering leveraging and have great money platform. clients Cardlytics

yet self-service, are our those all not that are new of the While to using aren't clients migrating the platform. agency

understand momentum the have enable over We this we will time. that agencies capabilities created as

strengthen break we As bank our reminder, starting we year. in a to to QX agencies relationships. this spend of will further invest And finally continue out

each of ways more XD their We content our delivering customers value are working partners and to to bank find to programs. improve deliver overall with

established increases overall example, of For a to across for bank even spend, card clear savings we've in rates and creating partners. even habitual support now use excitement engagement and our are investment program linkage the our program in and increases more

we that it Before a no We're continue is despite for advertising stone and want I the strong year over committed leaving to quarter headwinds to leading our I that customers hand to to and partners. make entire the CDLX initiatives. say, the Andy, unturned the in become executing against to just platform team finish sure our

Andy Christiansen

Lynn. you, Thank

pandemic. Lynn initiatives. to immense But also As excitement and mentioned, about impacted the by longer I be continue we've financial the share Lynn's product made technology on progress our results term our

me XXX% to results. increase Total $XX.X increased of $XX.X million. to billings financial XXX% year-over-year billings million. million, over platform an Cardlytics let our QX Cardlytics' to revenue increase Total year So an of XXX%. million, year platform $XX.X was increased to XXX%. review was $XX.X revenue

in industry the with still lingering restaurant. challenges clear year-over-year our year-over-year growth increased increased in some of verticals. to affected revenue and are is cases our and across Cardlytics by When In that travel it XXX%. XX% revenue U.S. however, retail we significant compared XXXX U.S. uneven we U.K. recovery being and saw Cardlytics each Our an

results more U.K. to continues pressure unwinding. severely budget continued business lockdowns Consumer rebounded U.K. last over by some next quarters. the restrictions Our spending anticipate and ad impacted our on significantly are few as from We be pandemic and still have year the

the on to forecasting of As we even But rebound ad both at industries platform have pace were industry, Lynn the restaurant of both expected mentioned, spending an information provided faster spending and excess Cardlytics XXX% year-over-year. on the retail beginning year. in of these when at by new we

platform Our specifically reinforced stronger and in with $XX million in expectation, March. January, February expected in Cardlytics million March this in million $XX revenue $XX than results our

our During and increase increase May of reflect $XX.X June. contribution short-term forecasted loss QX, to $XX.X EBITDA was us compared a of $XX Adjusted verticals volatility year-over-year. was $XX platform our challenges million monthly XXXX. some accurately presents QX platform ad and in budgets in an $XX Adjusted million April, spending $X.X million, These key million Cardlytics' in consumer in was was it million of million and a fluctuations and the loss an XXX%. revenue adjusted $X.X XXX% results. with of million, of contribution Cardlytics in of

adjusted Our of related loss $XX operating million to EBITDA recent includes expenses our an acquisitions. incremental

QX, larger loss the half quarter EBITDA included last QX is than quarter. our Dosh quarter, in a whole expected reflected investment mentioned of for roughly for is and in as Bridg a we As

segment separate to at the and growth even As is operations within business. on Lynn Bridg a in executing we reports. and representing external rationalize an EBITDA plan support have mentioned integrate nearly that earlier, Dosh QX. Bridg plan investment in a have we to But our break adjusted expected the operated begun

Here other are outside are that results a our worth few mentioning. EBITDA items

$XX in and portion diligence EBITDA. are adjusted relates transaction A QX, significant this of from and excluded acquisition include costs costs we First, innovation these and to million of costs.

incurring of We small acquisition amount a are post costs. integration

the to costs So the incur rest of expect throughout year. some we additional

in acquisition compensation $X by of issued originally the in issued of stock-based and from half with assumption million the to rates million the our QX. increased Dosh QX About increased connection $XX awarded Second, options in Dosh.

retention annual employees. predominantly half relates other grants The our to to

couple May due at million the quarter, end $XXX $XXX equivalents cash to stock-based May. of million May hires. is dollars Bridg in acquisition, ended largely XXXX. expect acquisition, and to which Bridg earnouts million with XXXX integration compared for QX We of in change $XX cash Bridg a driven We expected next in are shareholders a Dosh go million of up the and and in $XX QX. few cash to the new compensation to total the The cash by closed Minimum million

available another under still at have In we $XX million our this facility addition, loan time. us to

strong we flat and and evaluating sheet raise we're always additional remains Our year-over-year structure see X% increased and capital MAUs while immediate balance no to funds. were sequentially. need our liquidity

very earlier, mentioned we signed. including just and with momentum Lynn have recently we client As that to neo-banks Dosh great fintechs a innovative

to many quarter the the in $X,XX launch was over $X.XX two during expect quarters. prior new compared the second next We partners year. ARPU to

million shares during and the million was This million Dosh our revenue a at sequential shares ARPU MAUs. Weighted XX.X than and the end expect on rest the continue QX. a March outstanding as of compared equity XX.X outstanding basis XX.X XXXX. reflects last the shares We faster with the we million to XX end QX year, We at the compared issued throughout in of earn our of year-over-year the average issuance rate to acquisition. of to grow at during QX the increase quarter largely

This and million $XX we Now and of and $XX turning expect million. In $XX an is $XX believe prior adjusted between guidance. spending million. expectations ad for contribution also dealing lowered million travel with be We've and year. to $XX million within of billings uneven below recovery revenue expectations to Total our this $XX QX return total QX. we as we'll between still our in between

decided we we've high QX point guidance visibility. expect provide to the we Given continue verticals, our in both for climate on macroeconomic to industry expect head spending. consumer wait Based the spending seasonal we to more volatility key have QX current and until being

and that we However, operate campaign decision later varying of these dynamics launches. through degrees of of in in high unique each on working challenges result is a still variability industry expect making we level may market

our largest several clients plans Additionally, QX. their of marketing during develop

two gain to excited value expect Cardlytics next and remain the combined months. and So more with the clarity potential about Bridg. We in the long-term Dosh we very

focus that, long-term results investments near-term important achieve initiatives. continue sufficient and and over our and on execution with to making I'll we resources have is on turn squarely back it to Our And sure progress Lynn.

Lynne Laube

towards There's the believe up now strength still open call questions. our our and looking I'll of forward through uneven to But half that, significant trending of will a your acquisition XXXX. market continue trends. Andy. recovery. in With uncertainty on second plan We're given COVID-XX this integration for right for executing business the position Thanks we the

Operator

Kreyer Jason [Operator Thank first question Our from you. Craig-Hallum. of comes Instructions]

line is Your open.

Jason Kreyer

taking my for you Thank questions. right. All

mind. Just if a clarification you couple don't of items

metrics of like looks So, provided, the you a in million quarter were over terms MAUs down it quarter. about

level. when like it outcomes. wondering QX show low there we Just guide then, a if an that. range looks would movement the a the wide from look you're QX guide, of was lower QX obviously, explanation at end the sequential But And of actually providing the on

and I'm logic kind So understand that and puts sequential just trying the reduction takes would the to drive a there? of

Andy Christiansen

did the a is MAUs wind with MAUs have the of with launch we them this We $XX,XXX a This also them down MAUs, thanks. Andy. first Hey, had down U.S. were point We've actually of partner bank. to On We been that while your really get year. few necessary on come less actually a did while few successful million add planned from trying have to have that revenue processor. do to program. for a a working a than from of things million

unprofitable. were actually they So

And so really we've as didn't -- where of a about it lot going sense. a just platform, as talked kind make any we're

and guide at continued what you're midpoint just we you there's point look of right. we the that market to then then talked decided -- and that we think supply a kind our quarter do But of from guide, and was. over And challenges that's when we see there about We've the of continue travel visibility. Certainly, there, increase things to we're progress. the of at we're that a right, really to certainly quarter. there the U.K. in to have fairly a work lot are continue So I generally in I guidance demand on Still some We through continuing struggles perspective. mean, look to wide. seen uncertainty. that there's speaking just speaking, QX and keep the the things have some trying lot where We that a with anticipate

And expect of we We continue. right wide visibility to because that the now. lack have that that guys

Jason Kreyer

this the enhanced more I strategic U.S. in Got squeeze bank But of Andy. out. appreciate to just that color I terms on rolling in it. platform the side. want one is more

got add that if wondering, the mass utilizing on from of like -- and -- you we think to Just institutions critical there expectations time. the where in what from can these Other financial reset you've point kind you platform? you in get go at time current where institutions point you several expect

Lynne Laube

platform, one we've in said What half experience this is of Yes. live back the Thanks Lynne. there a Jason, going large on publicly that new it's be bank is very will year. this new

year, then to And the starting that. we So platform course just get majority, all, also platform. of over what the time not new XXXX, of significant majority the by of the have expect the of of we'll rest on experience. that And so to on have probably add we user MAUs MAUs is but into a adopt we XXXX, will the to we've next most the version MAUs the said the

But with it's -- We very bank encouraging are already good U.S. bank surprise. of higher on seeing and course results that a pictures. is a mid-sized early, already click nice it's we're significantly Not ads rates very very early. have

added. as click that are well that features higher rates the on with significantly As we've ads categorization

So very early but times, exciting.

Jason Kreyer

Perfect. Thank you. time. the Appreciate

Operator

you. Thank

question from of comes Our Aaron next James. Kessler Raymond

is line Your open.

Aaron Kessler

Thanks Great. guys.

the have specifically made and may the recovery other And discuss as questions. of little revenue One, you that the the verticals of like Just but can a ARPU looks a of percentage advertiser of because quickly just like calculation. that basis. on may And of couple bit. kind maybe maybe pipeline just they looks a them flattened trends DXC it out, some

a that. clarify off to just was clarify Thank you there I Just excluding you. penny from that? Bridg to by

Andy Christiansen

from Yes. the I ARPU The was included revenue Cardlytics platform just then only number the Bridg Yes. number clarity for going The is in Cardlytics that. is a to generate MAU and our really not platform. calculations.

Aaron Kessler

it. Got

Lynne Laube

much And which more categories is the what I starting you to come then on DXC are think other Aaron, Yes. question, back. it's observed

-- categories category still it as for flattening very us. growing. is the are it's they So out. are fast a like as looks But coming very, is absolutely a business the DXC growing But of overall back, percentage still other DXC

Aaron Kessler

feel Got details with advertiser just the do of pipeline Kind you it. right about the salesforce, now? any how further And there?

Lynne Laube

But Yes. it's mean, any flipped< contribution, did higher there. miss. I I we sounds XXX% look, just we adjusted which out year-over-year, also I digital other because know is platform have grew a than think

We agencies, talked about great bringing clients. are logos feel seeing the we new we're a and lot momentum of in pipeline. So, the which about with new

clients about the are is still robust. platform. Our current pipeline The very excited

core nothing sounds flipped, with there over recovery. it I but We So, just wrong know forecasted the business.

Aaron Kessler

Got you it. Thank Great. guys.

Operator

you. Thank

from next Needham. question comes Peters Karl from Our

Your open. line is

Karl Peters

Thanks afternoon. for good Hey, guys. questions taking my

feedback little see guys these kind of Maybe how kind of your creating much of clients. the And pent-up to of some some been from supply narrow from how much maybe this shortfall you the want of of some getting some Just are is of this and from bit is of labor of issues? chain pocket. quarter demand it

Just like, want hearing? are what you from to see guys you guys,

Lynne Laube

like We in -- the then pause midpoint. color. of campaign just of feel have the Yes. we would like because I in guide. not because add that. of -- were probably I seen -- I'll meet lack And the think, advertisers, would middle pause quarter do quarter. and demand. have decide not Andy Had it to of in certainly campaigns advertisers in some certainly the the about chicken of we middle of Had the the seen jump high didn’t very free that we labor not basically end to mean, above the issues you been they been or range or the because things

because probably past, been we have issues. said, And had our midpoint for memory like don't honestly the obviously sure its But campaigns pausing I rarely every its that budgets a the seeing already have in something enough would guidance don't were bit committed above those. but is So remember those seen. the recent I remember, of happened clearly it. we of it. really of was both. have I I of it in And mean, inside I'm comfortably

Karl Peters

us the the But seeing And bookings the moving breakout we momentum, about wondered Okay. how revenue super That's just give on into revenue should breakdown the they're will in of additional releases, color or how that forward? on helpful. and then, kind if that follow-up either you helpful. ARR -- think any just Bridg, roll ARR a

Andy Christiansen

Yes. that revenue. relationship good a of already that look, ARR. And will these quite some I that going We you going other grow of jointly see Really that as the mean, to to about. to having bit fairly that lot We're through realize, to drive trying has platforms. moment software I a we And think see scale. and on standard those begun. in But, will of roll talk business. think related I conversations is have market a to become side I continue

Lynne Laube

Karl, you acquired they had give just we up And three. They one there. numbers to now are some tangible investing When sales Bridg full-time heavily. to person. we're

So blow out three, been always really to That's take goal. we and the going the are going to obviously one pipeline. et objective. train But people from the person cetera. to That's sales time

going we're really journey to clients combined. are after These benefit be its now. identified some Bridg scale. material from focused could multi we're a client right calling. then on And them aggressively. quarter that clients. So both also going benefit and pretty really but potential Bridg, high very XX from And the We've Cardlytics to we're that But could

Karl Peters

great That's guys. Thanks color. right. All

Operator

Thank you.

Our next question comes from Doug Anmuth of JPMorgan.

Your is line open.

Unidentified Analyst

Hey. David the This Anmuth. on Dough for Thanks questions. for taking is

think a guys And contribution bit like as do you the we it little your revenue, to think being about in And think guiding are going at high more that that challenging are in they are Or XX% like, even a XX% XX%. first turning do suppressed just on least increase? them, And before for to what challenging. things when you one, the should how you those the forward? also quarter-over-quarter of then, it you improves? And the Do exclude softening time challenges And what corner? look that's you But the talk adjusted they First seeing. close think curious this that you percent contribution, quarter. just seems to the it [ph]. Bridg drove if --

Lynne Laube

and Yes. take the I'll Andy, second part. first part can take the you

future. its to going labor impacted are that chain But I seem I I not. will the think think, clients, supply those shortages shortages say, predict away. I to the a mean, of couple But hard the

to the Burger didn't send daughter get days a redeem just to my really they last try King was the I have a example, were Onion I King I couple getting closed. an I And enough Onion and They went offer. days. Two row Burger employees. go to Rings. Rings As in

shortages. right but gone labor its about at worried dramatically to predict, Supply have still declined. seem I'm now So or away chain, least hard those to

Andy Christiansen

point. bit helping that quarter are second have this your enhanced a is fund share. periods. on do more neo-banks than in in through and where the FI recent And about right, incentive talked offers, we've enhance We've right to We had that dynamic

our adjusted to will So revenue, GAAP But what that That its contribution. right? does? suppress neutral

normal. about going We ratio the historically on to But if probably the of a adjusted as a percentage So XX%. you're but that, can being is it don't little at see revenue, you that under expect which look bit than looking that we where see at XX% that a distorts way in those higher those is to have term, adjusted periods. be [Indiscernible] you that a be of that's look XX% about at come contribution talk We where billings. quarter, see bit in bit better guidance. actually to probably will when contribution percentage we even as forward. little is And it longer XX% going high to

Unidentified Analyst

Got it. Helpful. Thank you.

Operator

I of Wells Fargo. I'm though, a Thank have sure Instructions] Charles you. [Operator question Norman from

Your open. line is

Charles Norman

my U.K. your you you're seeing had space Good of of afternoon, exposure, similar and Few you trends taking And payment wondering acceleration could for given that I comment, the some during follow reported given in region? the we if July. thank an the in in if was companies questions. reopenings anything in

Andy Christiansen

Yes.

actually some we've improvements, think I significant basis. year-over-year nice specially on improvements seen the

on they're down. but of still process this winding they unwind lockdown, the the started As of kind restrictions, to

the different are I something for which that about spending just speak we the very a its consumer the U.S. back. more to did have generation. budget you But making of have demand in couple that in in really both And spending, need we I sure as dynamic where see a spending here There do come think the and near starting of that. we to similar those. would travel not U.K. ad far times, of think enough need we now we as the

Charles Norman

Okay. we the I activation rates the offer upside see looking just where activation you potential the the rates? in on a rather curious XX most And as industry. by across XX industries color slide follow-up. appreciate with with And those

Lynne Laube

It’s Yes. a question. good

Sorry, to that? Andy, did you want take

Andy Christiansen

Go ahead.

Lynne Laube

I know would just say, I all, Everybody start what of it's with mean, we question. basic a is eats. first great some let's stuff.

going click So to we U.S., some seeing pictures. bank UI. with the are key by think showing new with restaurants rates where be our of Restaurants nice always that fact highest engagement we're really far. I some did we're mention are the some places the

have think real -- some there's I So potential there. those

like a something subscription. high kind about much low Offer is of think to higher. think going is take don't engagement, value. you're the it see go way ever we You Subscription but I in it.

be, click of over So the are but dramatically the do way fun I those and the click higher. go higher the time. infrequent it. are restaurant, the the kinds lower more about think And rates going rates to the frequently category click rates revenue is think going things the the people category to to more and could every go is, retail, higher the fast, is, day, frequent But a generation, the

Andy Christiansen

Yes.

that There's a walk grocery probably could is I we we over level move say, skew those that probably significant in things, thing one though into right? as would grocery opportunity. one about start types especially as talking time too. think offers of where happen I and

Charles Norman

Great. for Thank color. you the

Operator

this Thank you. the further to I'm like closing call back At any showing time, no I'd remark. for questions. over management to turn

Lynne Laube

Thanks.

horribly in time. the There business. time, we look, uncertain [ph] So bugs a miss. about was There's XXX%. We're at over adjusted very it contribution forecasting core nothing the is with grew But if had same still it. no, disappointed. wrong a answer We

fully So for down we are miss. But the we focused. apologize heads

in still If you was business Thanks than your here for the even a ago. long stuff time. We appreciate everyone. the all and term, invested it is this more quarter robust long-term

Operator

today's you gentlemen, conference. and does Thank all conclude participating. Ladies for this

all Now day. great you disconnect. a Have

Cardlytics (CDLX) 4 Aug 212021 Q2 Earnings call transcript