Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. Welcome to the Q1 2023 Cardlytics, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today's recorded. [Operator

Please, the now and to Lynton. like would conference Privacy ahead. to Nick Legal I Chief hand over today, your Officer, go speaker

Nick Lynton

call. welcome to first financial Good evening, the and quarter Cardlytics XXXX results

savings begin, expectations that discussion bridge Before our including our adding financial and and new about forward-looking monthly our let will existing these expectations assumptions, to for our remind the partners our cost the second server, U.S. the partners payment, expanding base of our of initiatives. including user quarter payments, results, UK, and the to experience the engine in on future earn-out based transition network current me various decisioning of the and contain everyone plans ad and we ad active and the new initiatives, earn-out today's statements for beliefs, XXXX, to user impacts impact line for second financial including performance anniversary financial our the the time

growth and our Bridge position our free The the growth cash of achieving plans Media our line Network, constructs, advertiser our flow, base. liquidity the of new and the positive of offer and time rollout and Retail expansion for cash

the factors For Risk information in the press Factors results risk and that the will GAAP discussion ended from filed a reconciliations of of our XX, has performance. SEC. today the please SEC. the company's financial March has refer provided to the been discuss section call, for Also that actual the financial today's XX-Q non-GAAP cause supplemental could been quarter with during specific measures issued X-K with we filed this XXXX, to release the and our are discussion, differ which materially of

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

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

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

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

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

Karim Temsamani

to Good of first, will But journey determination company. how for of road importance set for product you a QX QX the and payout, its Today, highlights bridge anniversary these share thank our and evening map XXXX joining and I important our our discuss foundational second call. first the like explain to changes to I'd results. business, earnings and changes given the the our stronger direction anniversary earn-out the

read to week, the made As $XXX.X X-K the this finding you in earlier an be the payout, on anniversary fees. of payout inclusive accountant a million, independent first determination

that we of beneficial on is Importantly, to is outcome first clients. anniversary anticipate highly monetary growth second the our and The is given total portion believe anniversary anniversary based on the the this of cash $X earn-out based the it to the with expectations, shift be our we stockholders. the for in first line total will payment the determination, earn-out its and

ownership eliminated. current regardless to cap merger and the expect shares nearly dilution shareholder now this by inclusive earn-outs, both of earn-outs full fees, VWAP Notably, the we earn-out. in shares determination, of able on to to the reduced outstanding, be risk outflow of original to provision expectation based to the million. million equity be for for $XX.XX expect cash $XX.X stock. on favorable we current the of Under rely delivered any X.X total our deliver portion portion we The trading be expected to agreement expect equity expected of considerations. key be be the the our is are to of Here to due the are the the additional half price for cash the

patience renewed this We vigor attention allow with organization. to throughout to move on and appreciate to determination. block, a becoming look continue energy ahead your forward process our are support product-led will and We move road to thrilled past and focus us this which and

We million. external to $X.X on contribution XX% X.X% to decreased decreased results. QX. expectations to revenue X.X% Bridge in Adjusted our decreased to to year-over-year Revenue X.X% million. million. Billings $XX.X exceeded Now year-over-year $XX.X million. year-over-year year-over-year $XX.X grew

our our large year, XX% channel growth U.S. XX% the Excluding and year-over-year. clients that growth year-over-year, our increased business last total increased billings exited

and operational economy advertising despite expectations product difficulties Our exceed focus to markets. real and in us initiatives the on led

made saw still Top line challenging, entertainment have the decisions the grocery. performance and solid continuing product gas economic and We as make and from in benefited a optimizations company. the is via and are and results financial we That for prudent strong business. particularly to better we outlook efficiency a said, billings March travel

on Over the months, $X.X renegotiating improved a our bonus in space long-term, including reversal our million a cost in few the immediately list past accrual and we Atlanta. have office base and of the one-time

to save $XXX,XXX total the in next $X.X quarters XXXX XXXX. lease January amended the us through expect We in from April three million and over total

is channel. great to large several greater total underlying and metrics year-over-year, Adjusting and is XX% operational we key increased of with activating climate focus even strong. our clients initiatives This that specifically redemptions the our XX% this activations exiting news. business. Unique economic saw consumers tough, offers than the for improvement increased than greater are client the in year-over-year. exit, this QX, in on the metrics the though total evident show year-over-year business Even X.X% restaurant I'd foundational impact like increased

$X QX more the current spending our by year-over-year. new $XXX,XXX more increased but billings focused X% of we Advertisers users advertisers with the are increased between engaging often. on $XX,XXX during million and than low, increasing the XX%, We number partners. number in users are of and MAU by seasonal active Historically, is signing a our we by channel QX are base increasing

at U.S. one banks multiple these of several and upside we we by partners of XX major over our XXXX. fintechs, in top the will We're pipeline discussions solid. progress in and Our QX is high end least sign with believe

will as these on We we you update to make potential continue progress partnerships.

it product company strategic had to When was Now move Cardlytics, the joined initiatives. I our foundations. solid that I to clear want

and have high for outcomes for that improve to partners, aspect our unique drives relevant delivers we platform highly our of We offers banking significant and conscientiously consumers great Since I for provides working a markets. scaled ROI been value with have joined, every foundation.

the and advertising a we strong program control are and We needs, conditions. are the of supporting obsessed and innovation and in greater becoming of expenses profitable business stronger engagement partner consumer their that become so better combining with and that our fueling processes operational ultimately economic regardless

around then If while could drive profitability we optimize also and and thesis. could our long-term growth work bank is company. needs product teams centered our the accelerate partners this for to the drive advertisers, we meeting operating of and All our strategy,

Now just into eight company. a is product-led months later, Cardlytics transforming we speed change. benefiting from are of the already

sit to a the common and product to every aspect enabling aligned move of our are partners our have working and better allowing We clear collaboratively pace at goals. customers. of focus, us towards our experience operations, are It's at forefront create and for faster and teams a

product have combine results. making The quarter, consistently and we great complements initiatives On will benefits partners ad the bank seeing important initiatives the progress but these are we last on new on already are three believe calls, advertisers. our our several of talked our and passing experience we other. user about progress each all. server, with cloud And Each new for migration. We

For U.S. our systems have the in major have data of and cloud, in all banks four AWS AWS.

progress server new and ad the banking on all our partners to We to user I'd major expect the by the move of XXXX. to nearly UI. highlight end new of like experience

new creating feel functionality a and for a UI more for is partners. While new our it both superior bank advertisers creates looking offers, about

largest provide data, reach and a more results, The customer of in offers, UI of detailed our can seeing to out than descriptions of major which the categorized its one engagement, bank users. partners early we rolled example, more offers. has XX% we're already more our For

on While around is increase beginning. seen impressions We this XX% rewards believe early, summary. the only we the have in a

that UI we the more As has partners. these when are the intend out, metrics on we of disclose data and promising, to engagement equally statistics scaled other across new observed have some new we've UI bank rolled

that lift higher by the from budget activations. of the the all business. last monetization our of offer for our are our around increase Banks QX now migrated of call, and migrate nearly we mentioned engine drive ad we $X.X we that QX. end ad have to for banks decisioning relevancy upgraded our banks ranking Most upgraded On and engine X% decisioning seeing to a have smaller to the expect million expect quarter. estimate and better, to be optimization I pacing to our Even AADE, the around in

new X a you Manager. works, how released give targeting our we of are better Ads in idea features here this To

to functionality a of brands. is and at to target of audiences who only advertisers example large that target could customer share that great breakfast wants First, traffic restaurant customers or wallet brands. breakfast shop spend increase A allows competitive

not maximum mean drive targeting during based area only the customers. spend is tool to of is progress. a the Second, elevated or advertisers that let or amounts gives max current minimum period. advertisers from the on spend targeting target same ability Improved This showing the to

new Here are developments about. are we offer examples a excited of the few most

spend in that to offers expect call. we prior alpha version discussed We an QX stretch the the of launch on

their customers a stretch the on a certain spend next spending spending of to reminder, a As incentivize allows range increase to advertisers set in visit.

on or example, they customers cash targeting. $XX offer $XX spend who with average as discount could mid-max more. For a This spend if well $X receive concept

multi-tier an customers version based for also The to choice. provide gives allow structure We launch of on expect flexibility in These to steering alpha QX. objectives. their offers also variable advertisers more offers incentives

on reward in Angeles For states all example, travel client and X% a stays in all on Los other XX% the U.S. can

back provider subscription other back annual on X% and could purchases. subscriptions all on XX% reward Our

For media progressing Bridge, network our nicely. is retail product

can smaller is base building by concepts restaurant new of the several insights retail hope large proof CPGs convenience campaigns. to full retailers, relationships product important with secured to scale as have a And this gain later to on This to we scale for media a it is network. of and We drive compelling the which first convert measure building clients, these incremental to for reminder, retailers our sales year. step as we and create

only XXXX of respectively. for span, year-over-year spend retail market XX% both X% grew that more which the no a boost Turning QX X% economy. was growing I X% quarter, the versus minus of a quarter in in and to Overall, spend Travel growth and XX% rate post-pandemic in year-over-year. and XXXX. Restaurant with There a struggled year-over-year, XXXX of growth is QX signs showing enjoyed is trends. normalized difficult denying

business squarely the the since as Given evidenced XXXX. of on focus by responsibly challenging economy, actions growing our remains QX

continue will we our linearly monitor We expenses to since quarter decreased I and each have them. in started,

XXXX revenue, Our adjusted despite and QX expect million with our a we EBITDA QX. similar lower year-over-year by EBITDA trend in $X.X is in adjusted better better or

advertising challenging getting off in be remain XXXX, cash breakeven the soon flow market, possible. focused cash free positive of slightly free our goal but Given we as as on QX flow we may of to

in have And on on quarters, with As a prior obsessed. It hinges being on teams said how remain also product I initiatives. we they approach. can hinges to laser-focused ability success most disciplined importantly, partner our our our execute support

achieving allows with our improved the confident strategic our by remain product-led priorities which Cardlytics pace, our company that and initiatives. towards the clearer uptake I banks propelling translate faster focus strategy a are into results. long-term relationships company and and will profitability. into Our of evidenced as growth are a Transforming

Andy Christiansen

Thank you, Karim.

this quarter expectations. results Our exceeded

in We very still uncertain economy. are a

there the advertisers signs elevated an in still with high positive near business, interest within pressuring their are inflation elevated smaller a but platforms. consumer. advertising budgets, so and are the are our Karim recession chance still being with As cautious of term, There's said, rates especially

numbers QX. $XX.X the million. X.X% year-over-year decreased are Billings Here to for

$XX.X decreased to cycles Revenue $XX.X strong Bridge year-over-year, grew XX% for million. while revenue Adjusted proof decreased due longer growth concepts. rates year-over-year to contribution X.X% to million. decreased X.X% conversion quarter-over-quarter of year-over-year

quarter-to-quarter. rates continue are we RMN we to fluctuation our Our our some opportunities and the stand-alone But markets RMM as substantial. within business, in grow expect growth CDP

Geographically, which concentration. in primarily dollars. decrease U.S. comprises We've bank XX.X% partner of decreased decreased to customer due year-over-year. UK revenue, in total revenue, make X.X% approximately U.S. reducing revenue UK continued revenue our to X% in of channel. the loss the progress The is a

expand of This quarter to a accounted our XXXX. of Our we top compared and XX% revenue customers XX.X% in key to base. this as QX will focus continue remain for advertiser grow five

adjusted XXXX EBITDA cost quarter Adjusted EBITDA quarters, cost to loss size right of of in our QX the a this million our in taken highlights discipline of was we've to XXXX. the both actions in adjusted contribution loss XXXX, and loss to seasonal a compared $XX.X of QX QX Despite million of decline $X.X base. was from million $X.X our which

As control positive goal are mentioned, our soon costs we as focused flow while QX, reach of as cash not Karim in possible. free our and positive being on we achieving of may free extremely cash remain in flow

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

During operating activities million cash software of and and and QX, $X.X we used capital $XX.X expenditures. for a million used development

During QX, favorable against $XX dollar. million also U.S. our impact credit strengthening and we $XXX,XXX from of withdrew a line realized

of we unused of had QX, the of our of end available credit. million As line under $X.X borrowings

the economic of payments Despite even this to that the liquidity business. run after is available bridge believe sufficient period uncertainty, we our

and as line enhance discipline initiatives cost We grow top well operational as continue focus our our to efficiency. to on

for While in proper we're accordance immediate we plans additional our ways constantly capital have corporate structure with assessing capital, optimize raising don't governance. to

outstanding had quarter for QX QX million shares of the of $XX.X compared of $XX.X XXXX. million average XXXX. was to weighted with million We end of compared at XX.X during at the outstanding QX the shares million end Diluted $XX.X

dilution As second than an the year-over-year. X.X% with connection issue of quarter XX% of mentioned is $XXX.X in X.X shares million, based to increase down MAUs the was bridge QX. represents ARPU which at we million were which the expect shares earn-out, during end on $X.XX, less X.X% year-over-year. outstanding earlier, approximately

of delays this still committing advertising and discussed disproportionately smaller believe a to Now spending million loss million $XX we amount $XXX expect platforms. caution and QX, when million, With to $XX clients and $XX quarters, advertising an between of million billings $XX ad guidance. over turning few today. is $XX and last $X There of that of we've exist between the between reductions We EBITDA our contribution still the in for that among of adjusted is million. million large affecting and mind, million, revenue million between and and $XX adjusted uncertainty

A the mid-single-digit a has in key business, decline impact driver rates. which is in growth guidance our UK our on our negative

is the we base, several There next months. optimistic MAU expect that new performance can increase we initiatives over disappointing, an While the including are that nine we recover to are enhancement partners the we one late by large users XXXX. program UK result new of being of that to auto partners expect our launch in will and in our bank enrolled into that occur our

a have demand in not do of We the advertising lack UK.

initiatives expected returns are result to positive these growth after shortly So MAU in implementation.

As environment. managing Karim said, responsibly business we are the in economic this difficult

looking We achieving a half. consistent profitability second forward the to are and to committed profile of

this bridge Additionally, the business the available economic reduces liquidity term makes our for during dilution results comfortable us that support earn-out in will both challenging near period. the and shareholders

can't leadership you, the to works. before positive wait impacts in expect note, all exit. this this we working call will be I from that last planned moving thoroughly team is have exciting developments I the direction. my On forward I have my Cardlytics all with enjoyed with of the a in earnings right the business I'm personal the confident and see

And that, back to it over turn with I'll Karim.

Karim Temsamani

Thank listening. you everyone to

all appreciate him contributions want I service to to Andy for First, best to We thank company moving the forward. his wish sincerely and his the Cardlytics.

of We focusing are to driver on move largest of product and central past the issues excited as strategy. one continue our to short-term our

the up platform scale our We're drives that and marketers. positioning long-term opportunity a bright setting uncertain, is us. the goals are prioritizing unique high about success, While of partners we for ROI for deliver lies our values for future. the are our company that ahead ourselves By still we tremendous confident economy for and excited

the call open will to I questions. Now

Operator

question Our Peterson of Instructions] this At time, question-and-answer Kyle comes the Needham. you. of conduct first will we line from the session. Thank [Operator

now is line Your open.

Kyle Peterson

afternoon, taking guys. thanks. the Great, Good question. Appreciate

of of you Just you're some in and kind cross-sectional wanted you a some the a logos. of to spending on into I some dive see new whether just a of give also clients a a your if color an is sales or pieces basis, more of maybe moving client of there's restaurant of kind basis, of view guys on now some right know with then some it's But same-store between the average if clients could a terms little little on large same-store with migration platform? spending sales the lot how onboarding on could the of of our key bit

Andy Christiansen

I restaurant mean XX%. I actually This Hi. QX, great Andy. drag. from business client, quite U.S. a the a in a when mean, loss headwind impact Yes, grew is pretty certainly, of question. that, the really over was we We nice large lot quarter you felt of there. the remove had the of there the that

So really choppy just nice still we're in QX. It's a results market. seeing some very

the around as just see persists. marketers that And an for headwinds the we interest And where it's consumer rates get that longer are environment And difficult. well. going see the inflation of to think and feeling we generally persist some increasingly I

the so And But quarter board. market guiding restaurant we a the bit QX, here. certainly, we're of customer, towards in impacts certainly a the of moving we're outside a across choppy large nice do

Kyle Peterson

how some of to guys see of there's at a just the that you that then the like Got about confirm down really feel it item draw a like security about know kind concern guys holding million I of a you not kind And $XX of That’s lot looks and time? just line PacWest, you headlines it. being you where credit where held? but here, of are follow-up I the drew Could of helpful. I just quarter. given about that's this as saw want cash this on housekeeping down,

Andy Christiansen

That’s a good question.

release press program. of utilizing use cash a a they in here So at PacWest, our mentioned that the recently majority where deposit multi-bank We product vast I March. kind we have of we're a we keep but in think this

applies accounts. all really actually that $XX so well. of that as we million drew that of is to program And The part our

taken appropriate kind to And how of we're a so we as managing view really think that we've risk. conservative, that

really And so cash in that sitting that is program. all

Kyle Peterson

All right, that’s helpful. Thanks guys.

Operator

participation conclude now Thank [Operator your you. conference. the question-and-answer session. today's This you does our Instructions] for Thank This concludes in program.

You disconnect. may now

Cardlytics (CDLX) 4 May 232023 Q1 Earnings call transcript