CDLX - Earnings call transcript Q2 2022

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Operator

Hello! Thank you for standing by, and welcome to the Second Quarter 2022 Cardlytics, Inc., Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference may be recorded. I would now like to hand the conference over to your speaker today, Nick Lynton, Chief Legal Officer. Please go ahead.

Nick Lynton

to quarter welcome call. financial and evening Cardlytics XXXX second results Good

expectations expectations other we everyone financial the based half forward-looking assumptions, remind as let performance and on of beliefs, increase upcoming today’s well ad current Monthly Before growth me second term contain and that priorities, results, begin, long expectations Our achieve the our about changes key or following: in increase discussion our will to our XXXX, our and future including the for server, MAUs increase as management diversification in MAUs team, Active lines flow, Revenue initiatives Bank ARPU structure, our business our our acquisition. Users, and in ability to growth implementation to for of the our the anticipated partnership connected statements the the EBITDA with Bridg, a our achieving of adjusted financial macroeconomic and Per the earn-out, our of and benefits economy and partners, of the the continued use performance Bridg banking reduction cost new our and capital trends User, of adding our or sufficiency time of as our on the Average positive cash and America, for free of cash whole, the inflation recent positive institutions impact of

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

in the find that You can second the the of section our a information website. posted quarter note to results been Relations Cardlytics Investor website. Relations presentation Investor our supplemental just described have has also to I Please

are Lynne CFO; us and on Cardlytics’ Laube, CEO and today Andy Co-Founder, call the Christiansen. Joining

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

Lynne Laube

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

to Before new I excited numbers, I to Cardlytics’ get CEO, Temsamani. want to have say our the that Karim recruited is

for he at region, its Google’s was to of Global business worldwide. across instrumental financial we services laid. tremendous build and the candidates. business, potential truly Services us comprehensive well Products. sees of to with on served Our Board Financial a joins September as thorough the align Internet. our believe and At Karim company. fantastic hiring Karim, and he’s myself, and the right foundation in Like needs extremely on also leader advertising experience Karim of future. of closely skill excited this the Karim many Karim payment partnership, take helm capable a conducted also he the Stripe, we His and all Google, sales I where Head the market Cardlytics operations and of into found oversaw the leader served interviewed By X as the the and Global scale Pacific from an Financial infrastructure nearly Head Mobile, set the as search where process spent as of Head growth Stripe, in years of XX extensive Asia with

travel performance, Moving gas, second quarter on to our in delivered XX% and and solid year-over-year a we revenue with performance XXXX growth entertainment. grocery

excess in XX%. grew of business agency our addition, In

$XX.X $XXX.X increased to contribution $XX.X XX.X% year-over-year million and year-over-year Billings the XX.X% to are year-over-year increased Revenue adjusted XX.X% numbers: million. to Here increased million.

our key on Moving the on are platform from initiatives. updates results, here

continue Bank relationships Our America benefits successfully is last and More we’re most continue both with We’ve to that still excited longest broadly month Bank important parties. to end them years partnering bank we’re standing of with year America to of to partners, the contains be for ad our of come. a new server three for across and bank on of signed contract XX% XXXX. connect to of by new one the strong. our partners, MAUs track

largest ramping While up agree We announce that focused the with Karma are upon Credit and neobanks technology time reaches we platform. long-term we them U.S. remain supporting the growth as we’re in Karma million on on the opportunities well lines, banks on signed Credit as focused quarter. remain partner the based Dosh members our partners, on our ability pleased and fintech enthusiastic sticking launched to partnering to dependent laser in with to new fintechs, we’re and on bank diversify about the XXX we’ve We and the further is our MAUs. platform.

investment of a omnichannel consumer Cardlytics traction year advertisers. the acquisition. is quarter, in over Bridg period. deals and We is We set is million of the gain two solution rationale believe of and with behavior. Bridg view one worth purchase data a the nearly another combination worth the We and Cardlytics and true an provides joint unmatched $XX million closed is $X two Bridg are out to beginning the rapidly It compelling proving that in

to in look to and we and impacted Cardlytics when at at rates. we fell interest growth. quarter. in QX, year, QX, of spend decline to the growth XX% the the transaction the solid delay the declined end These we When We Retail both of beginning less digital the XX% for and uncertainty transaction significant a similar very macro-shift these X% advertisers volumes. inflation by trends the year-over-year of high QX of end caused the are are advertising year-over-year can spend difficult spending digital spend own we’ve before and as by shifting quarter are for in we created challenging. their X% half decrease of the market environments XXXX. we quarter. cause of advertisers The entertainment forecasting it QX. their at in ad end most in in but effects and and stories. advertisers saw to the had reactions becoming persistently business, and quickly QX a to of declining travel turn seeing unpredictable XX the them pandemic beginning it or by reduce Let rising was saw Like year-over-year X% makes which entertainment in start top retail saw But response growth platforms, easy X% weeks increase the some ad Transactions are factors, Because made XX even entered XXXX to in of X% can of slowed XXXX, me spend. the Travel and in exited the to apparent consumers of started volumes inflation restaurant pressures. of but cost trends: quarter than being our in and in line back

our are XX% for the so the rest conditions lowering put pressure ad the year, to XX% macroeconomic potentially We are we year of second challenging will growth of and on XXXX. assuming next this half expectations into to budget through

work cash affect does and our towards uncertainty positive we costs generating flow. control this top can our While line,

to that and of flow QX a Andy positive I strategy. of positive, more sustain, are it taking hand and QX to EBITDA over our to cost XXXX. by financial XXXX steps We that, adjusted our on reduce structure cash free immediately results will by and will path provide With ensure detail our

Andy Christiansen

Lynne. you, Thank

the light our high pleased of this persistently with are in in pressure results quarter We consumer spending. inflation

contribution ad digital XX.X% We revenue growing $XXX.X to XX.X% started QX. from half effective in grew in XX.X% uncertainty these Bridg million. recognized back to with also and quarter. grew grew grew We revenue faced Despite of markets QX sequentially revenue in constraining the billings budgets $XX.X dates XX.X% contracts to QX. in that million $XX.X of adjusted headwinds, $XXX,XXX QX to from the the million,

Excluding XX.X% QX. in ARR, dollars, this increase platform. level to these regarding was revenue and on are are UK currency adjustments I XX.X% spending grew a XX.X% share $XX.X to on revenue which from basis. Cardlytics These quarter, constant and year-over-year Bridg want XX.X% QX There and included U.S. a million notes few Geographically, adjustments, the U.S. a Bridg sequentially grew XX.X% revenue grew in not quarter-to-quarter. industry

All restaurant of especially of grocery a first solid on year verticals gas, executing growth had difficult We performed entertainment. of strongly, I outside environment. half and our want on ambitious and plans and these and a the teams travel in our congratulate to

and as back client we partially planned client in year. by offset but beginning they spending was restaurant situation remains major well. their a their the at ad a platform mentioned these of and in that ad This success on channel, our campaigns QX, the scale of we the QX spending, decreasing size Our expect the for lower in in verticals

expectations. this Excluding vertical our year-over-year, grew XX.X% our with restaurant client, in-line is which more

a with While combined headwind, certainly the susceptible business this risk diversify customers to make and revenue revenue will our individual future. to much the less decrease in efforts

majority year of the partnership of actively of this top five dramatically and past over and GAAP over of represents and shortfall to risk FI QX guarantee. GAAP, taking temporary steps to expires. this a contribution Our for growth The unfavorable for improved was the including XXXX. adjusted and costs, XX% we minimum accrual are down and hosting rate revenue the a due was mix, shortfall accounted our data to it our elevated potential level which between XX% factors, until the few and advertiser has customers this concentration quarter, from compared in quarters revenue The in next mitigate few

I meeting adjusted Before our goals. EBITDA, our profitability commitment into we want dive discuss to to

and are we several are our environment taking structure lower steps entering. reduce to of recognition growth proactive the We cost

which the activity, operating in we are will our half the year. positive pausing a our back leverage of First, on have hiring impact

was risk, adjusted by to of annualized positive of will are on Adjusted million strategic cash contains this QX. our not million plan immediately by of EBITDA loss This compared flow cost we XXXX XXXX. place that of plan quarter, us million to positive EBITDA goals sustained savings. achieve a at of loss in Second, $XX.X active $XX.X allow and QX free QX $XX a does and a

retain last EBITDA due to our I significant QX in QX to and talent. be than loss attract recruit, we quarter, adjusted stated As in expect larger loss to the costs top increases in

internal certain applications we data began of During migration for the cloud. the and QX,

fairly with FI long a expect work of processes migration an the need technical given administrative We and our partners. to

the incremental QX estimate during to total and to hosting by QX costs of ended equivalents compared expect million to $XX $XXX at $XXX the We cash $X end with continue of million in million migration, to which cash million XXXX. we We completed QX. be

expenditures. stock, to $XX cash shares operating million our During of in of $X.X repurchase capital QX activities million we million use used $X.X common for and use

$XX.X for pay to million out related acquisition. Bridg to in expect QX cash first We the in earn the

Our $XX liquidity balance and need no immediate us, sheet strong, so funds. a and to additional million loan remains see to raise available have have also we we facility

a not Our VWAP, of investors optimism stock coming investors of The decreasing arbitrage program Price nearly make Stock we common and the related regardless the buyback below the the or $XX now by in capital. do of earn initiated aware million out. earn program record VWAP, $XX per fits stock to million out. to dilution This our future. shares purchase the equity expect to Average Bridg. was was of We in I want opportunity impairment our also into capitalize $XX to settled the necessity, which purchased created additional near goodwill on complete X.X value the shares Volume-Weighted in share, an Bridg at saving and the $XX to for million and is

need our our about or Bridg year-over-year. us the units. value fair MAUs not the were assess the $XXX.X long-term of of optimistic altered increase Our have current the remain triggered combined of for market and Cardlytics operating an outlook business. We today of offerings to million, as our capitalization just X.X% and plans

quarter ARPU mid-single-digit of organic an growth the rate year-over-year. was second increase Our growth. was low to of long-term in slightly XX.X% $X.XX, expectations our above

sequential of QX. a shares at grow rest was and of a XX.X year at ARPU outstanding continues expect the to million during basis with during QX of the average XXXX. quarter million MAUs. We for Weighted had to the QX, rate at to as shares XX revenue outstanding continue end million than year-over-year million, to on down We faster compared increase XX.X compared XX.X the

to turning Now, guidance.

the trends back their approximately purchase growth clients mentioned our earlier, uncertainty in expect of XX% change Lynne them significant that’s As the year-over-year in causing for half rapid XX% to that to ad or With in was reduce even creating of spending. we mind advertising delay XXXX.

developing cost low loss adjusted Given with We We growth, are expect the in as we our do digit relationships lower remain growth turn offerings with that half. prospects fourth platform expanding will back maintaining unlock initiatives on Lynne. partners, and EBITDA of a business. environment second can lower minimal single I’ll long-term the it quarter massive our of our expect the impact on focused EBITDA to the positive navigate I that, the the strong believe channel. technology over a implemented. adjusted a potential in fully And reduction our we with

Lynne Laube

Thank free Andy. year that EBITDA adjusted and flow the our despite in conditions, next growth macro half pleased the I’m meet you, I’m with our the we and confident goals of year. first cash will

of and of points further platform, the Cardlytics us we on the destiny combination while future seeing our with are focus your financial honor our for this I’ll scale lead help the been build With Bridg business to Thank XX progress Bridg allow the relationships industry everyone ahead. us and able The and for to own has for you adviser in on him and excited pleased cusp look has perfect datasets proof to to on also working for forward the see core and up His experience, and to the that, in I to truly I’m the being quarters. months will are the acquisition board. business, to with control past are my Board have strategic moving beyond open our years. expect Cardlytics business. forward. the on the Karim supporting questions. in call company expertise our a come It goals up as leading We

Operator

Our comes Instructions] Peterson first with [Operator Kyle Needham. question you. from Thank

proceed. may You

Kyle Peterson

Hey! taking Good afternoon Thanks guys. the for questions.

and can cost you some Just, savings guys with of reaccelerate being I you growth pretty when initiatives you particularly start outlined know macro wanted and still to expenses environment confident guys the the improves.

hiring, big cost you high structure the of I a pausing outlook what impacting are outlined the guys So some you think of at you reduce where outside guess have areas without here? that level growth long-term can

Lynne Laube

any like Look, open and there’s focus Yeah, the reduce I’ll on start know It’s employees, Kyle. costs, growth it thanks some to opportunities I’ll over there’s over like initiatives, company and for looked you to opportunities pass we everywhere, then of the etc. longer-term Lynne. there’s with reduce Andy. vendor efficiency, to XXX opportunities things banking,

Andy, macro and – we’re confident we’ve we’ve there’s out into we’ve well profitability goals a why booked So identified, XXXX, already which but can it’s persist know more bit that would Even describe is be that? XX confident. surprised I we quickly you from the there, million you we’re tailwinds. adds those that maintain know laid Yeah, the and we you’d everywhere. how and we’re definitely way seeing some out, that cash if to flow It’s up. anything little it

Andy Christiansen

just I’ll Yes, to add that.

There know in us that future giving a the of really now. transition, on still top is got those We’ve a with really of and server, know out carriers is everybody with the with growth plan. lot flexibility, a bunch AWS knows we’ve think quite what about of right. there selling are not feel this growth, things are mind, been things ad operating We’ve very very don’t lower what headwinds reasonable important to I We obviously you comfortable got our very, impact we bit really holds. careful this right of initiatives. going

Kyle Peterson

headlines other some sense. Figg, guess bought some offer things quick a linked you some which that just has news I know I know there follow-up, it. quite And Got card capabilities. among That makes a following know was I few Chase

the how changes your conversations any all Chase of on in based your been moving your at partnership near term there changing see has see, on expectations you with or to wanted with Just evolving them forward?

Lynne Laube

our focused we usually Yes. talk is approved try They me individual No, but following: saying question. on too Look, banks, remain Chase much the continuing great don’t actually to period. to partnership about

go changed. changed So with all. continue own They’ve reasons and standout space, it we nothing on a SMB We of sense them momentum makes been always huge focus why ours, for a fantastic and not at to primarily a to be. absolutely relationship are but like the have. impact to nothing always they bunch has them, Chase our There maintain of with has partner Figg

reason no The all than see read focus Street for on I at into to So other SMB. this wanted to anything Chase

Kyle Peterson

Got it, helpful. Thanks that’s guys.

Operator

Thank you. One moment for questions.

question comes next Our with Doug Anmuth JPMorgan. from

may You proceed.

Doug Anmuth

– I talk questions. large out the Lynne, just for the about you called could restaurant Thanks taking hoping partner. you was

with that working that’s or more any So can is data. a on I little know of closely steps take? there this about, showing number back more you’ve you can also guess one. of can bit the us if the steps kind And I terms you chasing help you there year. got So, Are the that anything them cost side, could in do there then two, you’re of them talk just understand. just you in half

a on you forward? the can you forward, kind As bit cost detail of structure how look more little out going play think

Lynne Laube

Yes, obviously lot. you know client, done a Doug so on large we’ve restaurant the

I who massive and there’s think so many I people core they’re change strategy. is, won’t name, out probably but them reevaluating a know by there their been and everything call CEO it but

foot with of forward our Chase haven’t the partners, over but that get several we’ll America, given put bank know including and if a I don’t of line, for on meaningful up. proposal certainly have, our We Bank we pretty best them.

case for worst modeling relationship. that We are scenario however absolute

going at cost materially and conservative to the profitability case destiny mean, to being macroeconomic continue impact want throughout and So into and get flow this to next looking taken to but with identifying that conditions still free controlling still hyper get that the terms this are modeling in QX particularly reiterate QX. effect client, our not I savings worst business, – we’re required appropriate of into I worse year that year, in we in cash own with scenarios to have

the people control would conditions next year? in So like assumes to continue I’m we destiny. XX% cost that and can anything to XX% still to do the about sure guide, our that we don’t Andy, add that believe you really but deteriorate, own

Andy Christiansen

things. this Well client past. the situation I a restaurant obviously is the too. couple in One, we’ve mentioned yes, mean of a on

not the that going certainly business. back accounting understand been really that changed we’ve think about It’s year our million, costs. that where but I we’ve that whole $XX guide, the we seeing the that. the the That’s to reason we already saw run and across in rate we’re half. why for that’s headwinds In largely regards is the

in So That’s back an certainly year. annualized of going we’re a it’s exploring. are not the kind opportunities half be There of that lot one-time to this of number. other

Some in nature, be those see that is largely rate one run more we’ll time. cost time of but over might that a

Doug Anmuth

Okay. Thank you both.

Operator

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

You may proceed.

Jason Kreyer

for Hey! taking Thanks the questions.

wondering seeing and delivered quite of on guidance back but Just for. what were bit can then macro. range, and I you’re slower within that conservatism a in than that, the you I we’re we half what if a know the your elaborate think into about talking year, talked you the you QX obviously looking mean about was baked you’ve a

time commentary on has in in kind details slow of called of great that started So a and or restaurant, outside which curious which if there things saw specific July. point verticals really of would in Any more happened to if consumer out. this all or change spending any you you there’s in be

Lynne Laube

out flatten, the mean in I Jason, as It spend a in a the and most is of in kind and I end throughout about lion decline. we it saw trips declined, rapidly. coming dimensions. and which category It like quarter multiple We declined lamb. just going saw the deteriorated some didn’t the was every kind that category but necessarily saw good describe We in going the We category. consumer was XX% T&E stats like No, the every entire spending and also Look, that’s thanks clients. of would trips of, quarter. the less it QX up at their way declining Yes. are means impacting start question. spends and many which are quarter up the at I average mean off whammy they earnings ticket declining, almost of the of as script, our down course of the I saw and rattled fairly of of is in double

deteriorate it very So but throughout want the it very of and remainder as I modeled happened steadily so in to we have really conditions those quarter, rapidly well, to reiterate, XXXX. the happened continue

even modeling we’re same. So not the

modeling in case wrong scenario, that that - a but we’re more worst we’re is Hopefully guide that really right We’re what you. that and that’s is giving modeling now. we’re deterioration

Jason Kreyer

on there called And Thank then remarks that to prepared in out the you the both BofA benefits extension, you. parties. are

about bit there particular those wondering then talk material there long that if has signed, done? reasons get now are been to or just contract are, So any so that little extension you more can and any are a changes that what took benefits it why

Lynne Laube

contracts. not banks time. quite So bank the of the never individual going and and signed us What doesn’t contract It can tell about all, of be look, talking I we’ve it don’t banks like is bank had frankly a good I’m first either. to you any on in business serve individual

done – with I we’re a talked very going so is year get Upgrade the the indeed us, about which end contract, trying very I of BofA, probably can to unusual. typical it for of I say. pleased three etc. you first get at It you of we’re very things it Technology, and to pleased. expected. our the do, think is AWS, banks all you exactly It wasn’t to what is a is was I going we guys year, the get the What this to can it’s that done lot tell told and I not that’s contract all we’re a So just did. it year of half not told was before I

Jason Kreyer

Perfect! Thank you.

Lynne Laube

if go not Okay, now. hear. have close listening. people the right not can technology we operator I’m ahead Is Are going and to want we for call. happening the sure But or do on thank I’m still still to I the issues Hopefully, everyone call? there?

seeing the with we and economic pleased our while we control certainly tailwinds, can We’re quarter are own that destiny. delivered, we

think we’re the a control about changed absolutely and going can We destiny, want The to, Street business. message this XX% that big nothing still our year-over-year core grower. to It’s fundamentally that’s I I understand. and has

We’re just really and or facing it’s right uncertain times think us now, digital to to unique I advertising. don’t

I think economy. it’s the entire

I other I would The thing Karim. welcome is, thrilled say to really am

know going think he addition banks I and with really into is for this – advertisers, experience needs be in to about an that a the really needle what boost it’s to company He I to be so fundamental. awesome the hay he really with the the team. both built this foundation excited future, I stack. about He much, we has going and and has so going our good him much call he’s

foundation So laid that right feel company yes, the me, about there and are excuse now but some that the still we’ve great we’ve we tailwinds headwinds, sorry, – built.

you call. for the with joining and that end So, will we Thank everyone listening.

Cardlytics (CDLX) 3 Aug 222022 Q2 Earnings call transcript