Cardlytics, Inc. Q4 FY2024 earnings call

• 2024 was a transitional year with executional challenges like network upgrades, partner platform changes, competition, and Bridg growth constraints. Amit outlined a turnaround plan with four pillars: 1) Increasing supply by scaling new FI partners, renewing agreements, and engaging new sectors. 2) Strengthening and growing demand with advertisers, working to win back lost advertisers and add new ones, using custom targeting. 3) Building a high-performing network with sequential improvements in delivery, resolving key issues, and shifting to engagement-based pricing. 4) Accelerating Bridg growth, with optimism for revenue growth this year through new advertisers and product improvements. UK business had strong double-digit growth in Q4 driven by increased module supply and consumer engagement.

In Q4, U.S. revenue decreased 19.9% due to lower billings and higher redemptions. The UK saw the fourth consecutive quarter of double-digit revenue growth at 27.2%. Bridg revenue declined 12.7% compared to the prior year due to the loss of key accounts in early 2024. In full year 2024, top-line billings were negative 0.7% year-over-year (excluding sale of entertainment), and annual adjusted EBITDA was $2.5 million positive.

For Q1 2025, expected billings between $91.5 million and $94.5 million, revenue between $57 million and $60 million, adjusted contribution between $30 million and $32.5 million, and adjusted EBITDA between negative $7.5 million and negative $4.0 million. Q1 is expected to be the trough in performance for 2025. The UK continues to grow, Bridg should return to positive growth this quarter, and 2025 is focused on delivering improved adjusted EBITDA sequentially with billings growth driven by a stabilized platform and diversified supply partners.

• Executional challenges around network upgrades, changes in FI partner platforms, increased competition, and growth constraints with Bridg. - Macro factors affecting advertisers leading to churn and reduced budgets. - Under-delivery of campaign budgets as a drag in Q1 but expected to improve with refinements.

Q: Congrats on the quarter. Sounds like you guys have a lot going on. Just wanted to touch on delivery performance. I know last quarter, you guys were making some progress on the over delivery side. Just wanted to see if that continued to improve. And then also on the under delivery, what sort of progress you guys have made there?

A: Yeah, thank you for the question. I'm probably going to refer back to our prepared remarks. As mentioned, we've made sequential improvements in delivery from our low point in Q3. And delivery is now within acceptable parameters. Our network continues to perform. And now we're delivering budgets more predictably. And the campaigns are hitting the ROAS goals. And an important critical point to talk here or mention here is we've resolved many of the key issues that were really contributing to the extremes we've seen in the previous quarter. So we feel very good about that. And to your point, over delivery has been addressed. Under-delivery continues to improve with our new focus on targeting and relevancy.

Q: And then just on that new sign partner, Neobank in the U.S., just wondering kind of how significant of a partnership is this for you guys? And was that by the end of Q1 that you expect to be fully live with them? And then any sort of details on the on the partner sharing agreement with this FI partner?

A: Yeah, I would probably say every partner is important to us and significant for us regardless of their size. And that's just an important ingredient in how we think and how we think about partnerships in general. So, and we're happy, as I mentioned, my preferred remarks, they're one of the fastest growing fintechs. They're Neobank with a very diversified customer base. So we're excited about having them on our platform as a partner. And it's a testament to our engineering team that we've invested significant resources and capabilities, we're able to now onboard partners in record time like this. We signed a partner, we brought them on board, and we actually launched the initial kind of the early rounds. And as I mentioned, we plan to be ramped up within a matter of a few more weeks. So we're excited about them. And they'll actually add a lot of interesting new demographic segments to our mix.

Q: I just wanted to ask on the expansion with the large U.S. FI partner and then the new Neobank as well. As you begin to talk about these expansions with advertisers, just wondering if access to this new set of customers, different demographics and spending patterns, is that helping to catalyze advertiser demand or open any new doors for you on the demand side? And then secondly, as you turn your focus to renewals this year, just wondering about any prospect for revisions with respect to revenue share. I think you've talked in the past about, slightly different value proposition or sort of value algo, adding a little bit more value to consumers potentially in exchange for a lower partner, FI partner share. But just wanted to ask if you have any updated thoughts there?

A: Yeah. Thank you, Robert. I'll go maybe in that order. So first of all, as we bring on new partners, you're absolutely right. It allows our sales team and our partner teams to go and provide a bigger swath of the network impact that we can have in the market to our advertisers. So that is absolutely, we see that absolutely happening. And that does give dividends back in terms of getting more diverse set of advertisers on the platform and existing advertisers are inclined to spend larger budgets. So that absolutely does happen. But in addition to that, what I'm also excited about the fact that we are, we've invested a lot more in our data engineering capabilities. And so that allows us to have models of which we are in the process of building right now is a conversion model where we can target almost at an individual level so that they can actually further help increase redemption rate. So that increases the power of overall network and our ability to target the overall network. So that's kind of to your first question. On your second question on renewal, the renewals that we have, you're right, we have a few renewals coming up and we continue to work with our bank partners routinely on a daily basis, on a weekly basis. And I can say pretty much in every single case, the incentives, our incentives are aligned with our bank partners incentives to deliver the maximum amount of value to their cardholders or to their clients. And we continue to do the best we can. And in some cases, we've actually tailored the product roadmap to meet specific needs for some of our FI partners, which we are in a unique place of being able to do now, having built a more scalable tech stack.