• Total Billings: $112 million, a 2% decrease year-over-year.
• Revenue: $67.1 million, a 13% decrease year-over-year.
• Consumer Incentives: Increased by 20% to $44.9 million.
• Adjusted Contribution: $36.4 million, down 11% year-over-year.
• Adjusted Contribution Margin: 54%, up 1% year-over-year.
• Adjusted EBITDA: Negative $1.8 million, down from $3.6 million the previous year.
• Operating Cash Flow: Positive $1.4 million.
• Free Cash Flow: Negative $3.9 million.
• Cash and Cash Equivalents: $67.0 million at the end of Q3.
• Total MAUs: 166 million, a 2% increase.
• ARPU: 40 cents, down 18% year-over-year.
• US Revenue: Decreased 17% due to delivery challenges.
• UK Revenue Growth: 33% increase, with the highest consumer rewards in UK history.

• Warning! GuruFocus has detected 3 Warning Signs with CDLX.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cardlytics Inc (NASDAQ:CDLX) continues to leverage its unique data capabilities, seeing approximately 50% of US cardholder transactions, which is a significant competitive advantage.
• The company is on track to launch with a large financial institution in the US by year-end, which is expected to expand its network and audience reach.
• Cardlytics Inc (NASDAQ:CDLX) has seen strong growth in the UK, with double-digit revenue growth and the highest consumer rewards in its UK business history.
• The company is making progress with its dynamic marketplace, increasing the number of campaigns from 20 to 58 in Q3, which should enhance campaign performance and advertiser retention.
• Cardlytics Inc (NASDAQ:CDLX) is transitioning to engagement-based pricing, with 84% of new advertisers opting for this model, which is expected to optimize campaign performance and provide faster feedback.

Negative Points

• Cardlytics Inc (NASDAQ:CDLX) faced a 2% decrease in total billings due to ongoing delivery challenges, impacting its financial performance.
• Revenue decreased by 13% in Q3, attributed to overdelivery issues and a higher focus on user engagement.
• The company is experiencing advertiser caution around budgets, particularly in the restaurant and travel verticals, affecting its pipeline.
• There is a continued disruption expected in Q4 due to delivery challenges and a difficult comparison with the previous year's large accounts.
• Cardlytics Inc (NASDAQ:CDLX) is not yet ready to provide guidance on the long-term margin or the impact of its new financial institution partner, indicating uncertainty in future financial performance.

Q & A Highlights

Q: Can you discuss the key drivers of under delivery and your plans to address them? Also, with the growth in logos, how do you plan to grow billings per logo over time? A: Amit Gupta, CEO: We've made progress on over delivery, but under delivery needs more work. We're testing different product aspects like campaign ranking and reward amounts. Our approach is to test and then automate. Regarding billings per logo, as market conditions improve, we expect budgets per advertiser to grow. We're actively working with advertisers on their 2025 budgets and strategies.

Q: How are you addressing under delivery issues, and is there a feedback loop with advertisers to optimize delivery? A: Amit Gupta, CEO: We aim to remove friction for advertisers, so they don't need to optimize delivery themselves. Our internal teams work on fixing these issues, and we collaborate with advertisers on campaign structuring.

Q: Can you contrast Q3 and Q4 performance, especially regarding billings and growth? A: Alexis DeSieno, CFO: Delivery improved in Q3 and continues into Q4. However, we're lapping large accounts from Q4 2023 that didn't recur, affecting retail sector performance. Despite this, underlying advertisers are spending more, and we're seeing improved delivery margins.

Q: What updates can you provide on the engagement-based pricing model and its adoption? A: Amit Gupta, CEO: Engagement-based pricing is progressing well, with many new advertisers opting for it. We expect a majority of advertisers to transition to this model by the end of next year, aligning with industry standards and improving campaign performance.

Q: What are your top priorities as CEO in the near and medium term? A: Amit Gupta, CEO: My priorities are centered around four key pillars: supply, demand, network performance, and bridging our core business with new initiatives. We're engaging with partners and advertisers strategically, improving network performance, and integrating Bridge with our core platform to drive growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.