8-K: Cardlytics Reports Mixed Q1 2024 Results, International Growth Shows Promise

Cardlytics announced its first quarter 2024 financial results, showing revenue growth and improved adjusted EBITDA, but also a net loss.

Summary

• Cardlytics reported a 5% year-over-year increase in revenue to $67.6 million for the first quarter of 2024, or 8% excluding the Entertainment business.
• Billings increased by 10% year-over-year to $105.2 million, or 12% excluding Entertainment.
• Adjusted Contribution grew by 20% year-over-year to $37.1 million, or 27% excluding Entertainment.
• The company experienced a net loss of $24.3 million, or $0.56 per diluted share, compared to a net income of $13.6 million in the same quarter of the previous year.
• Adjusted EBITDA was a gain of $0.2 million, compared to a loss of $6.1 million in the first quarter of 2023.
• Net cash used in operating activities was $17.6 million, a decrease of $7.6 million compared to the first quarter of 2023.
• Free cash flow was $22.4 million, a decrease of $9.5 million compared to the first quarter of 2023.
• Cardlytics MAUs increased by 7% year-over-year to 168.5 million.
• Cardlytics ARPU was $0.40, slightly down from $0.41 in the first quarter of 2023.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative. While there are positive aspects like revenue growth and improved adjusted EBITDA, the significant net loss and decrease in free cash flow temper the overall outlook. The company is showing progress but still faces challenges.

Positives

• The company saw a 5% increase in revenue year-over-year, or 8% excluding the Entertainment business.
• Billings increased by 10% year-over-year, or 12% excluding Entertainment.
• Adjusted Contribution grew by 20% year-over-year, or 27% excluding Entertainment.
• Adjusted EBITDA turned positive at $0.2 million, compared to a loss of $6.1 million in the same quarter last year.
• Cardlytics experienced a 7% increase in MAUs year-over-year, reaching 168.5 million.
• The company is seeing strong momentum in its international business.
• There was a material improvement to the balance sheet.

Negatives

• The company reported a net loss of $24.3 million, or $0.56 per diluted share, compared to a net income of $13.6 million in the first quarter of 2023.
• Net cash used in operating activities was $17.6 million, a decrease of $7.6 million compared to the first quarter of 2023.
• Free cash flow was $22.4 million, a decrease of $9.5 million compared to the first quarter of 2023.
• ARPU decreased slightly to $0.40 from $0.41 in the first quarter of 2023.

Risks

• The company's 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 performance is affected by marketer budgets, which are influenced by economic conditions.
• There are risks related to maintaining relationships with key partners and adapting to changing market conditions.
• The company's ability to generate sufficient revenue to offset contractual commitments to FI partners is a risk.

Future Outlook

Cardlytics anticipates Q2 2024 Billings to be between $115.0 million and $126.0 million, Revenue between $73.0 million and $81.0 million, Adjusted Contribution between $40.0 million and $45.0 million, and Adjusted EBITDA between $(3.0) million and $1.0 million.

Management Comments

• Karim Temsamani, CEO of Cardlytics, stated that the results reflect progress in delivering more value to consumers and advertising partners.
• Karim Temsamani noted that they are driving deeper engagement with higher redemptions, signaling potential for higher billings growth.
• Alexis DeSieno, CFO of Cardlytics, mentioned strong momentum in the international business and progress on longer-term initiatives.
• Alexis DeSieno highlighted the 27% growth in Adjusted Contribution excluding Entertainment and another quarter of positive Adjusted EBITDA.

Industry Context

The results indicate Cardlytics is navigating a competitive digital advertising landscape, focusing on engagement and international growth. The company's reliance on financial institution partnerships is a key factor in its business model, which is common in the rewards-based advertising sector.

Comparison to Industry Standards

• Cardlytics' performance can be compared to other digital advertising platforms such as The Trade Desk (TTD) and Magnite (MGNI), which also focus on programmatic advertising.
• While TTD and MGNI have different business models, their revenue growth and profitability metrics provide a benchmark for Cardlytics.
• Cardlytics' adjusted EBITDA turning positive is a positive sign, but its net loss highlights the challenges in achieving profitability.
• The 7% growth in MAUs is a positive indicator of user engagement, but the slight decrease in ARPU suggests a need to improve monetization strategies.
• Compared to companies like Rakuten Advertising, which also operates in the rewards and loyalty space, Cardlytics' growth in billings and adjusted contribution is a positive sign.

Stakeholder Impact

• Shareholders may be concerned about the net loss but encouraged by the revenue growth and improved adjusted EBITDA.
• Employees may be affected by the company's performance and future strategic decisions.
• Customers may benefit from the company's focus on deeper engagement and higher redemptions.
• Financial institution partners will be interested in the company's ability to drive value and maintain relationships.
• Marketers will be looking at the company's ability to reach and influence consumers effectively.

Next Steps

• Cardlytics will hold a live audio webcast on May 8, 2024, to discuss the first quarter 2024 financial results.
• The company will continue to focus on driving deeper engagement and higher redemptions.
• Cardlytics will work on its longer-term initiatives and international business growth.

Key Dates

Keywords

Cardlytics, digital advertising, financial results, billings, adjusted EBITDA, revenue, MAUs, ARPU, non-GAAP, financial institutions