Earnings call transcript Q4 2022

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Operator

Hello! And thank you for standing by. Welcome to the Cardlytics Fourth Quarter and Full Year 2022 Financial Results Conference Call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session [Operator Instructions].

I will now like to hand the conference over to Nick Lynton, Chief Legal and Privacy Officer. begin. may you Sir,

Nick Lynton

us XXXX to Financial joining and Fourth Full Year Results and for Cardlytics welcome Quarter Thanks Call.

processes assumptions, based Before everyone we financial our our new our performance statements to our our upgrades to key that remind of beliefs, and current on products. achieve today’s discussion and current expectations begin, will and contain future let about rollout expectations and me long our ability priorities, including results, forward-looking products term

ad new the timeline our concentration of and deprecation user our flow of rollout The profiles; centers; for customer transition our server free cash pipeline; and cloud, of our experience; positive and margin our the our and achieving profitability. our path on-premise data sales to

initiatives out the and and dispute shareholder payments. reduction earn Bridg Our cost

the actual company's has For discussion, today's section December SEC. XXXX the refer could risk-factors specific differ XX, to a materially of that discussion for Factors results the Risk from filed cause with of ended the to the please year XX-K been our which

that the call, this release performance. and been during reconciliations financial are we financial our the non-GAAP with measures information GAAP in X-K in today filed supplemental the will issued SEC. provided press of discuss has Also

and Today's week. be a call via is available available webcast will replay for one

just has results Investor find supplemental year presentation a posted that in can fourth of I the and website. website. been have full Relations the not Please the to described to You information Investor Cardlytics Relations section also quarter our our

Andy is Joining us Karim Christiansen. the Cardlytics’ Temsamani CEO, CFO, today call on and

your to the prepared remarks, their Following open call we’ll questions.

call me over With to Karim. turn let Karim? the that said,

Karim Temsamani

to Cardlytics, this fourth been I my us, call. belief the of and earnings exactly has strengthened. long while term have would incredible business in Thank you still joined I has six issues It potential short quarter some months joining term to resolve, been welcome our since and for only

topics our and The value a and safe unique are squarely of of our position aligned online brand industry. which time top Cardlytics advertising in customers the a at partners, unique many are both is proposition. in with performance with mind

see ads past so many groups. customers virtuous, brands relevant that It benefits that but a based is the Brands as The we model and financial to still to It's Customers to loyalty. many early, business, are they the to is costs, needed these building. get save see starting true offer operational improvements. on cycle institutions on are rare to engagement realize results potential so that and led purchases. prefer, improve increase products the and company has are efficiency, but reduce a to the we we our is by excess the become that of a

to our give cost operational On we into enhancements financial and the that have for year. call, product highlight I'd discipline, on results; the we affect and demonstrated where to expect positively areas like growth focus insights our

First, highlights. financial some

fourth tampered Our revenue and inflation market. the contribution interest budgets where billings, a guidance. macro across ad our rising and environment with navigated adjusted We in line quarter rates challenging tech performance delivered

contribution. we and XXXX, digit delivered year once revenue headwinds growth full these Despite again across the billings, adjusted for double

Additionally, Bridg delivered revenue growth. triple digit

adjusted For Bridg $XXX the million. to revenue $XXX.X grew XX% billings XX% grew to to million to $XX.X full $XXX.X million. million. year Revenue XXXX, and XXX% grew grew contribution XX%

even in restaurant grew channel. client Consumer with offers large the our impact Users program exiting QX. year-over-year, the in engagement activating of the increased X.X%

an program engaging engaged with for is data our customers. showed banking creating trips platform spent XXXX, and partners on retailers Our an more our their card customers shopping made more X.Xx In too. and for X.Xx our impact than

between the total billings by $X in number XXXX. Not $XXX,XXX we in XX%. well billings We million only but increased than and for the number channel $X advertisers. increased XX%, with the million number with and that, works the we increased X% of And by greater also advertisers clearly, of by advertisers it

foundation business state economy. great current a have despite of the We the

efficiencies In When more. putting long combine enhancements many to ways business you the place, ourselves more a into up are though, the efficient product with economy clear business improve good numerous forcing is success. even setting we that a mechanism we're term it's for our

will mentioned December. difficult cost QX in end appear quarter, took successfully stopping this The year. We're of we these As control not this full the there. We $XX our in effect last at of million action costs to reductions of environment. implemented actions in

focused this operational flow We efficiency positive cash on and QX are improving wide free company are of conditions, year. in achieving we economic difficult despite

changes would I has us our a team members and all commitment these take leaders to strong changes We focus, make to their team team and business. significant Our and work. seen like through moment will a for this a hard believe and thank as as process,

about every department internally talk are across and workflow our and the importance product sales, and tirelessly working in operations often product, revamp I to analytics. a led teams our engineering, of improve becoming company,

Let me to few the changes. of these a illustrate give you examples impact

to offer of early upgrading ad believe that we results, in to Based decisioning drive ranking changes these relevancy. XX% of XXXX. to XX% models the support lift First, back drive RPMs higher on engine are ad we in can our modern half a monetization and

for which pricing serve better still balance provides optimizing approach models and exploring advertiser budget also delivery or reach targets. selection, ad are performance more more us that to mobility. capture Cardlytics This are impression of gives tied It management, goals. control events, rollout helps between while we Second, and

delays tools, but overall and performance, Third, operational for efficiency save the processes track allow in $XXX,XXX company will also on us averages, have place to the to adjustments allowed redundant we immediately put product us launch only increase our not better to

details of initiatives are the the place more sharing by expect improve products. full impact to our the look forward and our combined positively These margins impact coming in in billing year. of above we're months. improvements I the around putting many that I first to operations X%. to year

dedicated publisher XXXX engineering our XXXX. XX% within operations created has helped team from Product implemented improvements over perspective. February that accretion [inaudible] decreasing monitoring also to techniques, a group bank rigorous from We a by November

does and only us our the Ad User cost Three last make initiatives Cloud New our efficient satisfaction. I this it also Server, product highlighted in our important partner area; and Experience more especially Migration. improves new quarter are effective, Not

So let me give you some insight in into these progress areas. of each

to have for than key the of base on Server Ad all of new Ad XX% end We one of connected remain the We our already more our our the partners our to Server, experience to track MAU of by objectives XXXX. completing connect new user and year.

major to its full excited a base new experience Experience, User out New that partner and the user launching Regarding next we're to is should the roll user it month. a announce over

partner As the will will discuss in more on by New we and scale Ad a Server major our having created in us shortly. mentioned bank User which allow detail to ship Experience past, new I the products,

on Cloud have also share finished our to news we In Migration. moving platform cloud. U.S. We core QX, the to

We on-premise our our create million are will nearly now centers. centers duplicating cost $X of data focused on in savings data Duplicating XXXX.

the all Our goal have to is XXXX. banks cloud by QX, to our move

efficient. than us new makes It capabilities. more unlocks product also just on Focusing

examples specific better will offer are Here QX of we QX. and in three constructs that new

receiving a a the on $XX discount increase or in offers visit. spend a who certain spending a average, $X spending range spent on if of First, customer will their to next spends ability An they set to more. $XX or customers cash be stretch their incentivize example

we Second, campaign. around a allow a merchant funded bank are specific saw standard large test types purchases. category partner, gas increase transactions campaigns to of a redemption grocery code offers, bank or with targeted of that as which a such times in two In dollars

level retailer not an items. of construct good who came and early most Third, test, XX% are offers, These XX activations never an the shopped the at from tailored to receipt of In customers customers which excited specific product those that offers categories campaign. months XX% are are had prior activated in reasons. we offer and for before to had about or

Growth isn't just from business. coming core our

as for As extremely Amit the Bridg. hard General of attracted and both know, Manager work, already Cardlytics business. have such to we an is Amit of new many COO Gupta our talent incredible on of you We're excited at hired

of optimizing long-term realizing Bridg and Cardlytics. fully our the potential and platform on

data business retailers. customer believe retail retailers evolution mid-market regional We cannot Relating the for accelerating a and to media build a of smaller network most the Bridg, Amit that is to platform these from alone. platforms

same the mid-market While work retailers, with Bridg a the key way for capability we convenience providers, success in core that Bridg regional fuel built and and cover larger for is building to stores, sets stores us allows to scale much data Cardlytics. grocery team,

compelling building we retailers, scale can new product CPGs for By create gain these to a for

network media will incremental smaller sales best-in-class our are teams and vision go-to-market of a retail providing Amit drive and Bridg measure hard on retailers. work at that campaigns. the this enable efforts insight, for

cash adjusted to scales, margin, will see And improvement higher its also affect as to due Bridg we our our margin flow. growth will which contribution positively

that numerous improvements excited I and on am incredibly horizon, the for future Cardlytics. of Given the products innovative the are

a Our our partners. move for our to continue better advertisers our and reach provide which differentiate us expanding market in is the company to capabilities, product-line enhancing will solutions being and and

year. close with like the spend, economy and I'd outlook for our to observation the some on consumer

the pace of For finished XXXX, XXXX, which second recovery the affected spending mostly half through year. over travel X% clearly by the entertainment, categories year. transaction in XXXX, and or a X%. grew consumer for flat Outside in Inflation spend of growth the down consumer enjoyed over discretionary

gas discretionary finished was and flat, For restaurant night XXXX, as up Travel up year-over-year. spend clubs and and X%, grocery XX%. but entertainment up categories such spend year-over-year Retail X%. and bars was X% was down was more

the the were we is policy. but fed from of remain and that the of yet remain in cautious inflation resilient much monetary way has an Advertising threat the of that extremely The pause budget Leading has QX, not during stages its receding slowdown indicators high, onset so backed pandemic. early slowed clients consumers and economic show QX from and in away in its the in QX. current same saw QX

especially second am move advertisers said, will of pipeline, benefit That and I believe we half cost the continued for once year. new I encouraged that strength advertising. the our ongoing brand the structures budgets, the safe, to of business by from still performance-based reassess the

a regardless are is in that term resilient business We building the economic of long conditions.

the solid see growth, year. especially the a path we of exiting half restaurant anniversary of client we XXXX, significant to in pass as a the our channel second For

to business us of around billings provide should our optimization flow will with the growth rest for and as of Bridg enhancements benefit the forward. upside year. X% additional And margin of and billings move cash product Our both we the higher-margin

dependent control dispute with and our business the our Even profitability success with end confident responsibly. strategy know shareholder have cash positioning to our by we position We the been Bridg approach, resolved the liquidity, executing the that conditions, and is currently expect the remain company last in to I'm flow that muted a confident distraction are over has to room few to report of and be to a we profitability. for get happy by matter on long-term the managing are the economic the quarters, disciplined growth and priorities April. And while business we our and

will Andy I hand on strategy. more results our that, to With over financial and provide to detail

Andy Christiansen

you, Thank Karim.

results we ad budgets, headwinds QX digit Our quarterly were ranges, in consumer growth despite that guidance macroeconomic and and year-over-year our delivered impacted double XXXX. within spending

Let numbers QX. through me walk the for

was million, $X.X million, year. gain of Billings adjusted compared QX million, $XX.X totaled a million of $X.X year-over-year. $XX EBITDA and last loss Revenue totaled million X.X% of down totaled year-over-year down in Adjusted down X.X% $XXX.X year-over-year. to contribution X.X% a

XX.X% Additionally, for on Bridg ad and revenue grew agency QX year-over-year spending

billings over flat when clients the grew Cardlytics restaurant core excluding channel left large also the Cardlytics worth was platform It's in noting that the year-over-year XX%. XXXX. that

compared XX% by margin and advertiser year-over-year. down typically spending ad billings Restaurant X.X% channel and margin increase travel the quarter, within was entertainment. generate vertical billings mix. was within driven a on XX% Part to declined year-over-year, of travel the restaurant our a For We compared higher entertainment. this to

Additionally, of and the there phase on drags are our by stack temporary margin automate some the transition out that operations. tech will year middle billings we as

base and from grow Bridg billing of revenues we opportunities our time, returned also our expectations levels customer leverage margin our fast-growing see higher margin and expand margins as to to diversify historical offerings. we Our over

to Customer continue of organically our XX% top five improved the and focus expand base. as breadth for This and QX as concentration the customers XX% a past of of central accounted we over XXXX. customer depth revenue grow quarter compared to year in remains our this

costs. to Moving

million $XX the compared We announced reduction have completed in over in XXXX run we annualized initiatives QX XXXX. in cost of rate expect to savings annualized and our

XXXX in can As flow believe room we we Karim more in reach to our economic goals but we of decline, costs mentioned, base. the have with control cash our cost event further current

Cardlytics, impairment cost a a in interest the intangible excited market and remain prospects intangible were $XXX the about and As but and of we We a decline increases fact goodwill in was quarter. assets our our Bridg our that of significant and excess million impairment rates sustained non-cash the result of capital, in of this goodwill recorded necessary cap assets of market given cap.

Moving our to million cash and cash million sheet QX. year $XXX.X of compared ended in at to balance with equivalents We cash $XXX flow. the the and end

Our $XX also million line remains of credit undrawn.

QX we for unfavorable pound a of used cash activities. realized of $XX.X expenditures, a and cash software During used used capital $XXX,XXX $XXX,XXX activities, impact million development operating related million and strengthening in financing from $X.X to British

increase an X.X% year-over- QX, year. of in million $XXX.X were MAUs

year-over-year. to low $X.XX, decrease organic mid-single-digit ARPU rate our in which the with growth. was is quarter during of expectations was X.X% Our growth a fourth line long-term

For XX.X at shares outstanding during compared QX XXXX. with which X.X% outstanding increased year-end the increased year-over-year MAUs Weighted We were end average of million quarter year, shares million $XX.X unchanged of and from ARPU full XX.X at had was million, the QX. X.X%. the

has be $XX.X been outlined timely updates the resolved. minimum the regarding We is matter million. resolution broker merger bonuses of process fees as the public and we transaction remain Lastly, first confident $XXX.X provide currently earn-out. inclusive Bridg agreement, cash in in to to The and once the position our of and payment will the dispute in a with million, expect earn-out the

$XX of a second earn-out the minimum payment expect be million cash million. $XX.X with We to

merger may XX% the XX.X% than shares the place have in issued. equity cash of on the in greater dilution pay agreement, given outlined As we cap to minimum the

QX, consumer our budgets and of continued Now, marketing typically quarterly The into is clients. QX our most turning trends market also ad seasonal QX spending to to we guidance. in challenges low point but annual faced for decreased due

between $XX expect $XX between million $XX and and an contribution we adjusted For million, and million of $XX the XXXX, first $XX revenue $XX quarter between adjusted billings million $XX was million. and of between and million, million loss EBITDA million $XX

cash We QX. operating in $XX expect expenses million of approximately

We expect expense of due our cycle, merit promotion million fully in expenses slight XXXX. of the our QX, rate QX increase to savings but annualized annual run and in new XXXX reflects a from $XX

become in in in QX. sign Excluding the mentioned Cardlytics of we to to U.S. sequential that to large signaling the digits historical loss that QX low and we the decline core in environment the earlier, that the mid-single trends quarter-to-quarter. line positive business is our from of is in from with customer expect year-over-year QX the billings grow worse XXXX the hasn't QX XXXX, A QX materially of ad

for cash our significant will Karim business year through time, generate reach the earlier, Bridg not of higher-margin growth as We're full the sufficient of but loss QX guidance we in mentioned free and growing providing customer. formal positive our this at we flow believe optimizing enhancements, lapping to the product XXXX platform,

Karim. to over it turn I'll that, With

Karim Temsamani

create our revenue on thank support price opportunities meet employees our the for the to would in We growth driving our forward and their company. focused objectives. trust more and and to we and efficiency We shareholders, to focus updates partners on ongoing progress sharing expanded profitability This partners, solutions our for remain and We advertisers. want reach, innovation during the and year. look need customers

open will the I call questions. that, to With

Operator

[Operator you Instructions]. Thank

the from comes question line Peterson Needham first Our with of & Company. Kyle

line is Your open.

Kyle Peterson

cash like merit talking start million of just XQ, of couple mentioned of and wanted expenses or there's helpful you the savings the $XX kind with Thanks gave afternoon. timing that. of a for of I guys roughly guys then offset Great! color kind for Good on the cost you expenses, off those some some to some questions. partly of pieces increases annualized by with of realization moving full in

without based is opportunities? for and use So I growth sacrificing Is savings forward adjustments that million run $XX guess, additional that efficiencies those rate are modest to opportunities your a with some good on or moving factors. there

Andy Christiansen

in Hey! rate. run kind fully reflect does give that's actions mean and QX color going bit we the wanted run we good exactly took around to a number We I run This that a in is XXXX of little right. forward. to mean Andy. rate see the I the you're of

we little that year, is kind but understand have of modeling. of I may Now, the how we're throughout bit increases a

certainly manage have there's the Now to we're year our run we during kind opportunities that now further. But, kind that seeing. costs of is that right the of rate

model So of good that's there. to a number kind

Kyle Peterson

of I do these on getting a the or and offers, big Okay, of to or the on more funded boost category there, 'XX newer that's touch trips. to could for multiyear wanted some not a future products, contributor really it's of but slowly spending helpful. more you big whether is I of this guess offers right And of some then the see these incentivizing opportunity some a guys of kind material of in of growth these a how be kind results out bank gate?

Andy Christiansen

Yes, sure.

swing probably me conservative about But we've as a think rolling this has Let that, I Karim some think thoughts take things and out year. these at a as we bit been well.

able we'll execute. big upside XXXX probably and I the it's start going will the the on to here we I it opportunity. going get that be certainly pull impact one to much and it the think in quarters. the if really and next We'll next by items in bigger XXXX, end really it, with to But year but where think a see of right forward few of it year feel we're a be will business, were

Kyle Peterson

it. guys. Appreciate Thanks

Karim Temsamani

Andy's would I Kyle, sentiment. echo

level of some think we opportunities growth get us this that potential are give these that year. to can I comfort

come benefits XXXX. growth Some most but this of reasonable in, are in of to the year, going level

Kyle Peterson

you. sense. Makes Thank

Operator

next Please stand you. question. by Thank for our

of with JPMorgan. line the Anmuth from comes question Douglas next Our

open. line Your is

Douglas Anmuth

like questions. looks two talking where rates industries the increased for It year-over-year were entertainment activation and travel. the Thanks

consumer impact the Just business how how that the go-to-market in about shift experiences things curious strategy you're your from forward? thinking and spending of does to going

one you of that some Thanks. for And about us partner more then of user major and give terms the How insight launching benefits better Can advertisers? users separately, the the just user talked experience? be for you will experience. new in new

Andy Christiansen

strong first the very, been for talked some we've us. point for QX felt in about On your around entertainment, real questions. like Thanks the a very it’s and vertical travel of Sure. right, momentum that we industry lot a

In fact right. XX%, was compared up to QX 'XX of ’XX

lot lot of obviously engagement happening that's So seeing spend a there, I a think, of we're there.

it's So where area I it's active as looking money they're where think top mind traveling. save an of to people are

your the point, think on second given To our pretty one, maybe you I'll in entertainment Karim is that trends. know let and travel I but chime self-explanatory spend

Karim Temsamani

I'll in also business forward. will for see of our the smarter as difference the we will offers Essentially much surfaced for the getting how vast ability both derive that's a there's right that important the right to a engagements to ad, to Yes. where to be make revenue add is business with be modern we product-led time important to the from customers. these us regards Thanks, rewards the becoming a going the base go-to-market Server to customers And important optimize you Andy. how Ad going can aspects lot of forward, right the this and the the that to terms that's how of we Very at us know. that. from right we hardware stronger our we in but to right other us But put with customers. company just part rewards a is really obviously,

Douglas Anmuth

you. Thank

Operator

for question. you. stand next Instructions]. by Thank our [Operator Please

comes of Our Craig-Hallum. with line Kreyer from next question the Jason

open. is line Your

Jason Kreyer

Great! guys. Thank you

for on next It bridge see cost in can that to fill QX. you guide the you reduction there, flow you're but seem us just the can you gap from two the that gave QX like Just commentary cash quarters. any doesn't in wanted over in help if the baking gap wonder to generation if other help

Andy Christiansen

– a here, expense help at. of continue our about. are But there think kind of it's So We want right? to right, kind Happy we're to that's to little sure. costs. probably opportunities one give certainly to we manage for us anchor certainly of run we Yes, rate, our color, that people where bit try to

be a would the in to numbers software here really As the costs, development interest to we get that reach expect, that breakeven. perspective, of to from considering QX into payments right, able contribution need sure back the flow right, cash make kind we right, for adjusted you're to breakeven we then

remarks lot different talking when business. able we So comfortable right, about Karim the spent being factors about grow altogether, think growth. you feel of of to a really time put his prepared all those I And the in

the One flowing Bridg higher where is of too all the is a much business, think a those down in business to contribution. underappreciated dollars the pieces for just is growth way that maybe I the which are the bit margin us,

the combined So are propel in that we're that, cost going here the that the things with talking Cardlytics core us that in growth many savings impressive offer some we're new experience, the the and with combined that platform to user back new with structure Bridg. double-digit with of business, [ph] about offers, experiencing rates those are to growth getting to pretty we rate

Jason Kreyer

have return changes you updates to the confidence growth. growth suite can but Thanks that just giving 'XX? are that product here in what were product influence Andy. guys are talking may you about that in near-term I to answered my the you second And mean, question,

Andy Christiansen

Yes.

angles there's of lot here. So a different

where me the user new down certainly constructs with one a certainly things is offer on the horizon. right. couple Let a of new break of different things, experience Product is

opportunities and those us of bringing now some banks we're optimize larger all becoming even Additionally, campaigns, that, our capabilities organization, small upside things new smaller the right, when consume how in how well, that today. scale banks, transformation the already in those to do ad our our business of seen as of that we biz, some we've product-led some you for think a of about How benefits and we automation we a right. what our but are

meaningfully an more needle those back an doing growth us product being to towards you added have the some meaningful more things and there's things opportunity certainly become for those online, know like offers to expectation half, we And things, if little right. we of accelerate will. –you earlier that to those come when of move realize expect a So the

there. So all tailwinds. some a couple different of us there's giving kind They're additional on of going things all

Jason Kreyer

Okay. if And bunch highlighted, job of last and in. were squeeze a one changes a were expanding offers great you was changes reach. There product can about product I and more I one one think second different you Karim, one more kind some of to things. that three new talking did and I think tied impression the about

Just wanted around to see a bit clarity if give you little can more that.

Karim Temsamani

or pricing our two You're and tied of about remarks. to about category core the are Those serve separate you that events are more models merchant talking impression offers. talking are are

Jason Kreyer

The models. first impression the one,

Karim Temsamani

know, Yes. the We not customers. regards optimizing necessarily as essentially are we probably you saw currently to with offers that in

than investment so so to that we those customers, and continuing advertiser serving right same the that our for ads the purchases the essentially we pricing we can to of models ensure reach the continuously the to customers each same better are understanding impression right our more are return and are that performance to what gets, the ads on we balancing surface events driving that what while we customers. rather So, revisiting look is for right want are

control better delivery. have of of we control have much it budget because better So much of we'll management,

to continuously likely select we'll right same to are instead serving same the same to the outcome the in ads able be same rewards customers, customers, of those more the the end ads So to customers. for the that

for that app, better also much budgets a outcome, a will the engagement with customers the can have in we to regards the banking both their that consume. of So but the terms leverage experience better within and us

Jason Kreyer

you much. Thank great. Okay very

Operator

not you questions I'm the you. conference and Thank gentlemen, showing in concludes your for Thank any today's call. participation. Ladies this further queue.

now disconnect. may You

Cardlytics (CDLX) 1 Mar 232022 Q4 Earnings call transcript