8-K: Cardlytics Announces Third Quarter 2024 Financial Results, Revenue Declines

Cardlytics reported third quarter 2024 financial results, with revenue decreasing by 15% year-over-year, although results exceeded the high end of guidance.

Summary

• Cardlytics announced its financial results for the third quarter of 2024, showing a revenue of $67.1 million, which is a 15% decrease compared to the same period last year.
• Billings, a non-GAAP metric, decreased by 4% year-over-year to $112.0 million.
• Adjusted Contribution also saw a decrease of 15% year-over-year, landing at $36.4 million.
• The company experienced a net loss of $145.2 million, or $2.90 per diluted share, compared to a net loss of $24.0 million, or $0.63 per diluted share, in the third quarter of 2023.
• Adjusted EBITDA was a loss of $1.8 million, a decline from a gain of $3.9 million in the same quarter of the previous year.
• Adjusted Net Loss was $7.5 million, or $0.15 per diluted share, compared to an Adjusted Net Income of $0.5 million, or $0.01 per diluted share, in the third quarter of 2023.
• Net cash provided by operating activities was $1.4 million, a slight increase from $1.2 million in the third quarter of 2023.
• Free Cash Flow was negative $3.9 million, a decrease of $1.9 million compared to negative $2.0 million in the third quarter of 2023.
• Cardlytics' MAUs (Monthly Active Users) increased by 2% year-over-year to 166.4 million.
• ARPU (Average Revenue Per User) decreased to $0.40 from $0.49 in the third quarter of 2023.
• The company anticipates Q4 2024 Billings to be between $102.0 and $108.0 million, Revenue between $62.0 and $67.0 million, Adjusted Contribution between $33.0 and $36.0 million, and Adjusted EBITDA between negative $5.0 and negative $1.0 million.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to significant declines in revenue, billings, and profitability, coupled with a substantial net loss and a projected loss for the next quarter. While the company exceeded guidance, the overall financial performance is concerning.

Positives

• The third quarter results exceeded the high end of the company's guidance.
• Monthly Active Users (MAUs) increased by 2% year-over-year, indicating growth in the user base.
• Net cash provided by operating activities saw a slight increase compared to the same quarter last year.

Negatives

• Revenue decreased by 15% year-over-year, indicating a significant decline in sales.
• Billings decreased by 4% year-over-year, showing a reduction in the gross amount billed to customers.
• Adjusted Contribution decreased by 15% year-over-year, reflecting a decline in the profitability of the platform.
• The company experienced a substantial net loss of $145.2 million, a significant increase from the loss in the same quarter of the previous year.
• Adjusted EBITDA was a loss of $1.8 million, compared to a gain in the same quarter of the previous year.
• Adjusted Net Loss was $7.5 million, a significant decrease from the adjusted net income in the same quarter of the previous year.
• Free Cash Flow was negative $3.9 million, indicating a decrease in available funds.
• Average Revenue Per User (ARPU) decreased from $0.49 to $0.40, showing a decline in revenue generated per user.

Risks

• The company's financial results are subject to fluctuations and may vary from period to period.
• Cardlytics is substantially dependent on its platform and a limited number of financial institution partners.
• The company's revenue is affected by marketer budgets, which are influenced by economic conditions and other factors.
• There is a risk that Cardlytics may not be able to generate sufficient revenue to offset contractual commitments to financial institution partners.
• The company faces risks related to maintaining relationships with key partners and adapting to changing market conditions.
• The company's future performance is subject to various risks and uncertainties, including those detailed in their SEC filings.

Future Outlook

Cardlytics anticipates significant year-over-year decreases in Billings, Revenue, and Adjusted Contribution for Q4 2024, with an expected Adjusted EBITDA loss.

Management Comments

• Our third quarter results beat the high end of our guidance, which reflects our relentless focus on addressing our short-term challenges, said Amit Gupta, CEO of Cardlytics.
• We maintain that our business transformation will take time, but we believe our priorities to build a more performant network and scale our partnerships will maximize consumer engagement and rewards.

Industry Context

The results reflect challenges in the digital advertising sector, where companies are navigating economic headwinds and evolving consumer behavior. The decrease in revenue and profitability suggests that Cardlytics is facing increased competition or difficulties in maintaining its market position.

Comparison to Industry Standards

• Cardlytics' performance is weaker compared to some of its peers in the digital advertising space, such as The Trade Desk (TTD) and Magnite (MGNI), which have shown more resilience in revenue growth.
• While some companies in the sector are experiencing slower growth, the magnitude of Cardlytics' revenue decline is more pronounced.
• The company's adjusted EBITDA loss contrasts with the profitability of some competitors, indicating potential operational challenges.
• The decrease in ARPU is a concern, as it suggests that the company is not effectively monetizing its user base compared to industry benchmarks.

Stakeholder Impact

• Shareholders will likely be concerned about the significant net loss and the projected losses for the next quarter.
• Employees may be affected by the company's financial performance and potential restructuring.
• Customers may experience changes in the platform as the company focuses on improving its network.
• Suppliers and creditors may be impacted by the company's financial challenges.

Next Steps

• Cardlytics will hold a conference call to discuss the third quarter 2024 financial results.
• The company will continue to focus on building a more performant network and scaling partnerships.

Key Dates

Keywords

Cardlytics, digital advertising, financial results, revenue, billings, adjusted contribution, EBITDA, net loss, MAUs, ARPU