Cardlytics, Inc. Q3 FY2025 earnings call

• Mitigated headwinds from largest FI partners by shifting volume to other network partners. - Increased and diversified supply, expanding relationships with financial institutions. For example, adding debit and SMB portfolios of a bank partner. - Ran Double Days campaign growing consumer engagement by ~15%, and expanded category-level offers in Q4, which were effective with 73% of consumers redeeming another offer after a category-level one. - Signed 3 new CRP partners in U.S., including OpenTable, with others to launch in Q4. - Strengthened advertiser demand with pilots of iconic brands on engagement-based pricing, winning back key accounts. - Modernized tech stack, with 21% year-on-year improvement in ROAS. - Bridg saw continued interest in identity resolution, signed 2-year renewal with fast food chain; Rippl added 2 retailers and doubled revenue for second quarter. - Cut workforce in September, reducing annualized cash savings by $26 million, with total savings of $50 million this year.

In Q3, U.S. revenue excluding Bridg decreased 28% due to lower billings from content restrictions and pricing investments. U.K. revenue saw 22% growth driven by higher billings and increased supply. Bridg revenue decreased 15% due to loss of a major account. Rippl had second consecutive quarter of doubling revenue. Total billings were $89.2 million, a 20.3% decrease. Adjusted contribution was $30.0 million, down 17.5% but margin as percentage of revenue was 57.7%, up 3.5 points. Adjusted EBITDA was positive $3.2 million, up $5.0 million. MQUs were 230.3 million, up 21%, with ACPU at $0.11, down 31% year-over-year.

• Q4 billings expected between $86M - $96M, revenue $51.1M - $59.1M, adjusted contribution $29M - $35M, adjusted EBITDA $0.9M - $7.9M. - Billings decrease due to further content restrictions from largest FI partner, but focusing on proving performance with top brands, scaling categories/brands aligning with advertiser measurement models, and growing in U.K. - Revenue as % of billings expected in low 60% range, adjusted contribution as % of revenue mid- to high 50% range. - Operating expenses expected at or below $28M in Q4 excluding stock-based comp and severance, reflecting reset cost base after workforce reduction.

• Headwinds from largest FI partners blocking advertiser content on their channels, impacting billings. - Supply changes causing choppiness in margins initially, though issues stabilized by end of Q3.

Q: Kind of wanted to touch on the billing margins commentary a bit. Maybe help piece together the impact in Q3 and trending as we enter '26.

A: Billings to revenue margin decrease in Q3 was primarily from abrupt supply change in July, normalized by end of quarter. Run rate in October higher than Q3, expect to continue in low 60s. Adjusted contribution to revenue margin was highest seen, ~58% in Q3, from newer partners with better economics, allowing investment in engagement and performance.

Q: More so on kind of the guidance. There's roughly a $7 million range between low-end and high-end of adjusted EBITDA. What are the puts and takes that get to higher vs lower end?

A: Adjusted OpEx is not a big range, only ~$1 million. All flows down from contribution and revenue guide. OpEx guided at $27M - $28M, rest from top line and margin flowing down.