Company Overview

Cardlytics operates an advertising platform that helps marketers reach potential customers based on their past purchase data. The company partners with financial institutions and merchants to get access to anonymized purchase data, which it uses to create targeted ad campaigns.

Cardlytics grew revenue 5% year-over-year to $67.6 million in Q1 2024. However, it reported a net loss of $24.3 million compared to net income of $13.6 million in Q1 2023. The loss was primarily driven by a change in estimated contingent consideration related to the Bridg acquisition.

Revenue

• Total revenue was $67.6 million, up 5% versus the same quarter last year.

• Cardlytics platform revenue grew 6% to $62.2 million. This was driven by existing marketers spending 7% more and new marketers contributing $4.4 million. However, the sale of the Entertainment business reduced revenue by $1.8 million.

• Bridg platform revenue was flat at $5.4 million.

Expenses

• Partner share and other third-party costs fell 9% to $30.5 million due to renegotiated terms with a financial institution partner. As a percentage of revenue, these costs declined from 52% to 45%.

• Operating expenses, excluding stock-based compensation and acquisition/divestiture costs, grew 6% to $36.3 million. This reflects investments to support company growth. As a percentage of revenue, operating expenses declined from 69% to 64%.

• Stock-based compensation spiked to $11.0 million from $8.0 million last year due to executive departures in Q1 2023.

Profitability

• Gross profit rose 26% to $30.9 million. However, the company still reported a net loss of $24.3 million compared to net income of $13.6 million last year.

• The net loss was driven by a $40.4 million swing in estimated contingent consideration tied to the Bridg acquisition. This went from a $34.6 million gain last year to a $5.8 million loss this quarter.

Cash Flow

• Cash used in operations doubled to $17.6 million due to seasonal fluctuations in working capital and the payout of year-end accrued liabilities.

• Cash from financing included $48.3 million in net proceeds from an equity offering. This was used to pay $20.1 million to settle a Bridg acquisition dispute.

• The company ended the quarter with $97.8 million in cash and cash equivalents.

Outlook

Cardlytics expects to continue investing to drive growth in both the Cardlytics and Bridg platforms. It has over $125 million in available cash and borrowing capacity to fund operations and capital needs over the next year. The company believes it can achieve break-even adjusted EBITDA over time as it gains scale. However, fluctuations in working capital and acquisition-related expenses may continue to impact near-term profitability.