Cardlytics, Inc. Q1 FY2025 earnings call

• Macro Environment: Consumer spending is strong despite volatility, with rebound in March and April; advertisers cautious due to macro uncertainty. - Business Pillars: Focus on increasing supply, strengthening demand, optimizing network, and growing Bridg. Platformization efforts include building an ecosystem with multisided participation, flywheel effects, etc. - Supply: Launched with a new large FI partner, scaled content, and signed first non-FI partner for Cardlytics Rewards Platform (CRP). Onboarded new partners quickly using improved tech stack. - Advertising Demand: Core differentiators like merchant location level data and multi-tier offers driving value; Insights portal saw 77% sequential increase in advertisers using it. - Network Optimization: Delivery issues largely resolved, working on models to optimize activations and redemptions; data engineering enhancing network effectiveness. - Bridg: Expanded relationships with retailers, launched pilot using Bridg and Cardlytics data. - Cost Control: Extended line of credit to 2028 and reduced workforce by 15%. - New Leadership: Welcomed Rory Mitchell as Chief Business Officer.

In Q1, total billings were $97.6 million, a 7.3% decrease. U.S. revenue excluding Bridg decreased 10.9%. U.K. revenue saw 8.6% growth due to higher billings and increased supply. Bridg revenue increased 1.6% from new client wins. Adjusted contribution was $32.4 million, down 12.5%. MQUs (monthly qualified users) were 214.9 million, a 12% increase, driven by a new large FI partner. Excluding this partner, MQUs would have been down 1%. ACPU (adjusted contribution per MQU) was down 24% year-over-year, but excluding the new large FI partner, it was down 15%.

• Q2 billings expected between $100 million and $108 million, revenue between $61 million and $67 million, adjusted contribution between $32.5 million and $36.5 million, and adjusted EBITDA between negative $4 million and positive $1 million. - Billings guidance represents a negative 9% to negative 2% decrease year-over-year. - Extended line of credit maturity to April 2028, providing $87 million liquidity. - Workforce reduction to drive $16 million annualized savings, with some reinvestment in technology. - Adjusted contribution as a percentage of revenue expected in mid-50% range, improving sequentially.

Refer to the Risk Factors section of the 10-Q for the quarter ending March 31, 2025, filed with the SEC, which outlines factors that could cause actual results to differ materially from forward-looking statements.

Q: Could you touch on ERP and the opportunity on the non-FI side compared to FI?

A: Cardlytics Reward Platform (CRP) is a major step forward, allowing redefinition of partners. It's a strong path forward but details will be shared as wrinkles are ironed out. Advertisers can become publisher partners, and it opens up new verticals.

Q: About the economics of CRP and if it's comparable to FI side?

A: Most likely moving towards engagement-based pricing. Economics are positive but nuances will be better understood with more data points.

Q: Assessing billings base and visibility into Q2 and beyond, and partner mix impact on adjusted contribution?

A: Advertisers cautious but some categories like restaurant and retail are countercyclical. In Q2, adjusted contribution as a percentage of revenue is expected to return to mid-50% range, improving sequentially as supply diversifies.

Q: How daily spend offers play into advertiser behavior and macro pressure?

A: Everyday spend advertisers perform well in macro uncertainty as consumers look for deals. Models are being improved for better geo-targeting and relevancy to help advertisers reach customers more effectively.