Q4 2023 Cardlytics Inc Earnings Call

Operator: Copyright 2020, New Thinking Allowed Foundation. Good day, and thank you for standing by. Welcome to Cardlytics' fourth quarter 2023 earnings conference call. At this time, all participants are in the listen-only mode.

Okay.

Good day, and thank you for standing by.

Welcome to cosmetics fourth quarter 2023 earnings conference call at this time, all participants on a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automatic message when your hand is raised.

After the speaker's presentation, there will be a question and answer session.

A question. During this session you will need to press star one one on your telephone.

Got him automatic message by Single-hand space. Please note that today's conference is being recorded.

Operator: Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Nick Lynton, Chief Legal and Privacy Officer. Please go ahead.

And the conference over to your Speaker House.

Clinton Chief legal and privacy officer. Please go ahead.

Nick Lynton: Good evening, and welcome to Cardlytics' fourth quarter and full year 2023 financial results. Before we begin, let me remind everyone that today's discussion will contain forward-looking statements based on our current assumptions, expectations, and beliefs, including expectations regarding our future financial performance and results, including for the first quarter of 2024 and various product initiatives. For a discussion of the specific risk factors that could cause our actual results to differ materially from today's discussion, please refer to the risk factors section of the company's 10-K for the year ended December 31st, 2023, which has been filed with. Also, during this call, we will discuss non-GAAP measures. Gap Financial Reconciliations and Supplemental Financial are provided in the press release issued today in the 8K that has been filed.

Good evening and welcome to the card linked fourth quarter and full year 2020, Three's financial results call before we begin let me remind everyone that today's discussion will contain forward looking statements based on our current assumptions expectations and beliefs, including expectations regarding our future financial performance and results, including for the first quarter of 2020.

For the various product initiatives and improvements for a discussion of the specific risk factors that could cause our actual results to differ materially from today's discussion. Please refer to the risk factors section of the company's 10-K for the year ended December 31, 2023, which has been filed with SEC.

Also during this call we will discuss non-GAAP measures of our performance GAAP financial reconciliations and supplemental financial information.

In the press release issued today and the 8-K that has been filed with the SEC today's call is available via webcast and a replay will be available for one week you can find the information I've just described in the Investor Relations section of the cosmetics website.

Nick Lynton: Today's call is available via webcast, and a replay will be available for one week. You can find the information I have just described in the investor relations section. Please note that a supplemental presentation to our fourth quarter and full year results has also been posted in our investor relations section. Joining us on the call today is Cardlytics CEO, Karim Temsamani, and CSO, Alexis DeSieno. Following their prepared remarks, we'll open the call to your questions. With that said, let me turn the call over to you. Thank you, Nick.

Please note that a supplemental presentation to our fourth quarter and full year results has also been posted on our Investor Relations website.

Joining us on the call today, its political CEO framed them, some money and CFO electric Tcl following their prepared remarks, we'll open the call to your questions, but that said, let me turn the call over to Corey.

Karim Temsamani: Good evening, and thank you for joining us for our Q4 2023 earnings. I would first like to reflect on 2023 as a whole. We started the year in a difficult position financially, with the SRS dispute presenting a significant challenge for the company.

Thank you Nick good evening and thank you for joining our Q4 2023 earnings call.

I would first like to reflect on 2023 as a whole.

We started the year in a difficult position financially with the Sars dispute presenting a significant challenge for the company.

Karim Temsamani: I'm glad we not only resolved ESR's dispute but also finished the year with positive annual adjusted EBITDA of $3.8 million. This is the first time since 2019 that we ended the year with positive adjusted EBITDA. In 2023, we also made fundamental changes to our cost structure, including renegotiating partner contracts and rightsizing our expenses. And we made key hires for tech, product, sales, and leadership teams. All these efforts and results are a great foundation for us to continue to improve our business. With the SRS dispute resolved and a cost structure rebalanced, we can now fully focus on execution and growth as well as address a capital need. I am delighted to add that we have just signed a large new banking partner, as per the 8K we filed within the last hour. Q1 is off to a good start, and we're expecting 12% to 16% spilling scores when we exclude entertainment, which we solved in Q4.

God, we not only resolved ESI dispute, but also finished the year with positive annual adjusted EBITDA of $3 $8 million.

This is the first time since 2019, and we ended the year with positive adjusted EBITDA.

In 2023, we also made fundamental changes to our cost structure.

Adding renegotiating partner contracts and right sizing our expenses and we made key hires protect.

<unk> sales and leadership team.

All of these efforts and results are a great foundation for us to continue to improve our business.

With the ASR as dispute resolved and our cost structure rebalanced, we cannot fully focus on execution and growth as well as addressing our capital needs.

I am delighted to add that we have just signed a large new banking partner I spend the 8-K, we filed within the last hour.

Q1 is off to a good start and were expecting 12% to 16% billings growth when we exclude entertainment, which we sold in Q4.

Karim Temsamani: Alexis will provide further details on our financial performance later in the course. Aside from our finances, we are making progress across our operational team. Our sales teams in the U.S. and U.K. are driving stronger growth and bringing advertisers back to the platform. As I mentioned, our bank partner team has just signed a large new bank partner in the U.S., and we continue to have promising discussions with additional banks in the U.S. and the UK. Our product and engineering teams are continuing to launch new products that improve the experience of our bank partners and their customers, as well as provide more options for advertisers. Let me provide more specifics on our progress.

Alexis will provide further detail on our financial performance later in the call.

Oh, sorry for my finances, we are making progress across our operational teams.

Our sales teams in the U S and U K are driving stronger growth and bringing advertisers back to the platform.

As I mentioned.

Bank partner team has just signed a large new bank partner in the U S and we continue to have promising discussions with additional banks in the U S and the UK.

Our product and engineering teams are continuing to launch new products that improve the experience of our bank partners and their customers as well as provide more options for advertisers.

Let me provide more specifics on our progress.

Karim Temsamani: We continue to obsess about the outcomes we create for our banking partners and customers, and tech adoption is a foundational part of creating these outcomes. Our new technology provides us the ability to run the network better, surface more relevant offers to bank customers, and roll out new products more quickly. All these are great drivers for engagement, new content, and growth. We continue to make progress on tech adoption with almost 80% of our network traffic now on AWS. Bank partners that are on AWS have the ability to adopt our Ads Decision Engine, or ADE, and we are in discussions with the remaining banks who have not yet migrated to AWS. We've mentioned that ADE will be a powerful driver for improvements over time by allowing us to interface with banks in real time, enhance audience segmentation and offer relevance, and improve dynamic targeting. So far, we are already on our third version of ADE.

We continue to obsess about the outcomes, we create for our banking partners customers and adoption is a foundational part of creating these outcomes.

Our new technology provides us the ability to run the network better.

Surface more relevant offers to bank customers.

Rollout new products more quickly.

All these are great drivers for engagement, new content and growth.

We continue to make progress on <unk> adoption with almost 80% of our network traffic now on AWS.

Bank partners that are on AWS and have the ability to adopt decision engine OID.

And we are in discussions with the remaining banks, who have not yet migrated to AWS.

We've mentioned that <unk> will be a powerful driver for improvements overtime.

By allowing us to interface with banks in real time.

And hence audience segmentation and offer relevant.

And improve dynamic targeting.

So far we are.

Our already on our third version of Eddie.

Karim Temsamani: 80% of our network is now on ADE, with 40% of our network on the latest version. For those banks on ADE, we have seen a 23% increase in redemptions, compared to a 9% increase across the whole network. We saw this trend continue in January, and we are confident that subsequent versions of ADE will continue to improve redemption numbers. I focus on the impact of ADE on redemptions because we view driving redemptions as a North Star, as they provide the best outcome for our banks, their customers, and our advertisers. And because the best way to increase redemptions is to increase engagement, we have focused on four key pillars to drive more engagement with our platform. The first key pillar is content and insight.

80% of our network is now already with 40% of our network on the latest version.

For those banks already we have seen a 23% increase in redemptions compared to a 9% decrease increase across the whole network.

We saw this trend continue in January and we are confident that subsequent versions already we'll continue to improve redemption numbers.

Our focus on the impact of Eddie on redemptions, because we view driving redemptions as our north star as they provide the best outcome for our banks.

Their customers and our advertisers.

Because the best way to increase redemptions is to increase engagement, we have focused on four key pillars to drive more engagement with our platform.

The first pillar is content and insights.

Karim Temsamani: We are continuously aiming to improve the quality and variety of content on the network. We pride ourselves on being a high-quality, in-demand advertising solution for well-known, large brands. We are seeing growth from existing advertisers and are additionally seeing advertisers return that had previously left our network. The strength of our business resides in our insight. Most competitive analyses focus on scanned data from a limited number of retailers or a subset of car types. Our data provides the most comprehensive scope across channels, cards, and geography, making our insights highly differentiated. However, historically, it's been a manual process for our teams to pull this off.

We are continuously aiming to improve the quality and variety of content on the network.

We pride ourselves on being a high quality in demand advertising solution for well known large brands.

We are seeing growth from our existing advertisers and additionally, seeing advertisers return that had previously left our network.

The strength of our business resides in our insights.

Most competitive analysis.

On scan data from a limited number of retailers or a subset of car types.

Our data provides the most comprehensive scope across channels.

And geographically.

Making our insights highly differentiated.

However, historically, it's been a manual process for our teams to pull this data.

Karim Temsamani: We Fix Things. We plan to deliver an automated dashboard by the end of 2024 that will provide advertisers with a snapshot of their performance against industry benchmarks. This dashboard will give advertisers a self-serve view of the market summary for their category, and will let them visualize competitor activity showcasing revenue, transactions, and customer growth across different brands. Lastly, we will offer a customer-centric dataset showing brand affinity, new customer, and churned benchmark. This is just the beginning of a growing list of insights use cases that we'll be exploring over time.

We are fixing this week.

We plan to deliver an automated dashboard by the end of 2024 that will provide advertisers with a snapshot of the performance against industry benchmarks.

This dashboard will give advertisers a self serve view of the market summary for their category.

We'll let them visualize competitor activity showcasing revenue transactions and customer growth across different brands.

Lastly, we will offer a customer centric dataset showing brand affinity new customer and churn benchmarks.

This is just the beginning of a growing list of insights use cases, there will be exposing overtime.

Karim Temsamani: As we productize more of these insights... We will also free up time from our analytics team to provide custom, highly nuanced, and actionable insights for our largest advertisers and bank partners. We believe this is a highly differentiated offering that will enable us to reduce churn and increase budgets over time. The second key pillar is giving merchants customizable tools to optimize campaigns and offers. I wanted to highlight the success we had recently with the receipt level of a test we did with a major U.S. airline. As a reminder, receipt-level offers are offers tailored to a specific product category or item.

As we prioritize more of these insights we will also free up time from our analytics team to provide custom highly nuanced and actionable insights for our largest advertisers and bank partners.

We believe this is a highly differentiated offering that will enable us to reduce churn and increased budgets overtime.

The second key pillar is giving merchants customizable tools to optimize campaigns and offers.

I wanted to highlight the success, we had recently with a receipt level offer test we did with a major U S airline.

As a reminder, recent level offers offers tailored to a specific product category our time.

Karim Temsamani: In this case, the airline wanted to promote a higher cashback reward for flights that departed within the month, as they were experiencing softer-than-expected booking demand in the low season. To its delight, 45% of ticket purchases in the campaign were for the targeted time period and allowed us to close a renewal with a client just days later for a campaign that ran the following month. This is one example of how price initiatives are driving more targeted growth for advertisers and delighting their customers. The third key pillar is making offers easier to discover and use. [inaudible] Call-out button, new entry points, and alert.

In this case the airline wanted to promote a higher cash back reward for flight departed within the months as we're experiencing softer than expected booking demand in the low season.

To the airlines the light, 45% of ticket purchases and the campaign where for the targeted time period.

To close our renewal with the client just days later for campaigns that run the following months.

This is one example of how our product initiatives are driving more targeted growth for advertisers and delighting their customers.

The third key pillar is making offers easier to discover and use.

With several of our banks, we are testing different placements for the call which is <unk>.

Call out buttons, new entry points and alerts.

Karim Temsamani: All of these are at low volumes, but we have already shown a strong ability to increase engagement with the program. As an example, when one of our bank partners started placing offers on the line item transaction in customers' bank statements, we saw an activation rate for those offers that was five times higher than the typical activation rate. The fourth key pillar is a differentiated offering for each bank.

All of these at low volumes, but we have already shown a strong ability to increase engagement with the program. As an example, when one of our bank partners started placing offers on the line item transaction in customers Bank statements. We saw an activation rate for those offers.

It's five times higher than the typical activation rates.

The fourth key pillar is a differentiated offering for each bank.

Karim Temsamani: The tech and size of the network enables us to create differentiated offerings, such as featured offers, increased curation, and proximity offers. We're also relying on enrichment and customization of the offer experience. For example, we launched a unique event the week leading up to the Super Bowl called The Big Game with one of our bank partners.

Our tech and size of network enables us to create differentiated offering such as featured offers increased creations and proximity of it.

We are also aligning enrichment and customization of the offer experience.

For example, we launched a unique event the week, leading up to the Super Bowl called the Big game with one of our bank partners.

Karim Temsamani: The big game targeted cardholders of that bank with featured cashback deals for all of their party supply needs across multiple advertisers. This is the first of many 2024 initiatives where we will leverage existing advertisers to target customers with unique tentpole events to increase engagement with the Bank's Rewards Platform, with these four pillars in mind. We are building a best-in-class platform, with Flexible Platform APIs, a deep understanding of merchant data, a top-tier targeting and decisioning engine, and a rich, highly differentiated user experience with a fantastic source of content and insight. All of this is hosted in the cloud and fully flexible. Moving to a break.

Big game targeted cardholders of that bank with featured cashback deals for all of their party supply needs across multiple advertisers.

This is the first of many 2024 initiatives, where we will leverage existing advertisers to target customers with unique tent pole events.

To increase engagement with the bank's rewards platform.

With these four pillars in mind.

We are building a best in class platform, we have.

Flexible platform API.

A deep understanding of merchant data.

Tier targeting and Decisioning engine.

And a rich highly differentiated user experience with a fantastic source of content and insight.

All of this is hosted in the cloud and fully flexible.

Moving to bridge.

Karim Temsamani: First party data is the foundation for the cookie-free world of marketing, and Bridge continues to serve the leading retailers, QSRs, and entertainment businesses, helping them to better understand their customers by expanding and extending their first party data. For instance, we are helping one of the fastest growing grocers enhance their inventory management strategies by analyzing purchasing data. A partnership with a large fast food restaurant allows them to grow their loyal customers by delivering hyper-targeted promotions. Ripple, a retail media and data network that we recently launched, provides CPGs and other brands flexibility in building sophisticated audio and seamless access to a national footprint and user-friendly tools that empower them to gain valuable insights, drive substantial incremental sales, and accurately measure the impact of the campaign.

First party data is the foundation for the Cookie free World of marketing and breach continues to serve the leading retailers Qasr's and entertainment businesses.

<unk> them to better understand the customers by expanding and on reaching their first party data.

For instance, we are helping one of the fastest growing grocers and hence the inventory management strategies.

The purchasing data.

Our partnership with a large fast food restaurant allows them to grow the loyal customers by delivering hyper targeted promotions.

Repo, our retail media and data network that we recently launched provide.

Provide cpg's and other brands flexibility in building sophisticated audiences.

<unk> access to a national footprint and user friendly tools that empower them to gain valuable insights drive substantial incremental sale and accurately measure the impact of their campaigns.

Karim Temsamani: Over the last few months, several leading retailers, including Wegmans and Giant Eagle, have joined the Ripple platform, which translates to a national footprint of around 70 million profiles actively being loaded onto the platform. This has sparked interest from leading CPGs, who have started running test campaigns, and this gives us great confidence that our strategy will pay off. With a cost structure rebalance, we can now dedicate our time to returning to the higher growth rate we should expect from this business. Our Q4 results and projected Q1 progress give us confidence that we can do this. And just as I said last quarter, we are in the midst of a transformation that will spur growth. In addition to adding a new large banking partner, we're working towards a broader and deeper data set, and more sophisticated audience targeting. Better Analytics and Reporting, and a variety of other formats that will drive increased engagement.

Over the last few months, several leading retailers, including Wegmans and guarantee Youll have joined the repo platform, which translates to a national footprint of around 70 million profiles actively being loaded onto the platform.

It has sparked interest from leading Cpg's have started running test campaigns and this gives us great confidence that our strategy will pay off.

With our structure with our cost structure rebalance, we can now dedicate our time to returning to the higher growth rates, we should expect from this business.

Our Q4 results and projected Q1 progress give us confidence that we can do this.

And just as I said last quarter, we are in the midst of a transformation that will spur growth.

In addition to adding a new large banking partner, we're working towards a broader and deeper data sets more sophisticated audience targeting targeting better analytics and reporting and a variety of AD formats that will drive increased engagement.

Alexis DeSieno: As we move past the core transformation that needed to happen in the business, our belief in our long-term growth prospects continues to strike. Now I'll hand it over to Alexis to discuss our financial results. Thank you, Karim.

As we move past the core transformation that needed to happen in the business.

Our belief in our long term growth prospects continues to strengthen.

Now I'll hand, it over to Alexis to discuss our financial results.

Thank you Karim.

Alexis DeSieno: Before moving on to Q4, I want to echo Karim's sentiments about 2023 as a turnaround year for Cardlytics, with most of the acceleration occurring in the second half of the year. In 2023, we generated $453.4 million in billings, representing 2% growth, and we generated $309.2 million in revenue, representing 4% growth, both versus the prior year. Adjusted contribution was $158.6 million at 11% growth versus the prior year, with the second half of the year at 20% growth alone.

Before moving onto Q4, I want to Echo <unk> sentiments about 2023, as a turnaround year for cosmetics with most of the acceleration occurring in the second half of the year.

In 2023, we generated $453 $4 million in billings, representing 2% growth and we generated $309 $2 million in revenue, representing 4% growth both versus the prior year.

Adjusted contribution was $158 6 million and 11% growth versus the prior year with the second half of the year at 20% growth alone.

Alexis DeSieno: Adjusted EBITDA was positive for the first time since 2019, at $3.8 million, and nearly $50 million better than in 2022. As Karim mentioned, we've made fundamental changes to our cost structure that will enable us to drive positive adjusted EBITDA and invest strategically in the future. Now, let's move on to our Q4 results.

Adjusted EBITDA was positive for the first time since 2019 at $3 8 million and nearly $50 million better than in 2022.

As Karim mentioned, we've made fundamental changes to our cost structure that will enable us to drive positive adjusted EBITDA and invest strategically in the future.

Let's move on to our Q4 results.

Alexis DeSieno: We performed in-line or better than expected, with billings, revenue, and adjusted contribution consistent with our Q4 guidance and adjusted EBITDA exceeding expectations. We had our third consecutive quarter of positive operating cash flow and our second consecutive quarter of positive adjusted EBITDA. We continue to show momentum in driving the top line after right-sizing our business. My comments will be year-over-year comparisons for the fourth quarter, unless stated otherwise.

We performed in line or better than expected with billings revenue and adjusted contribution consistent with our Q4 guidance and adjusted EBITDA exceeding expectations.

We had our third consecutive quarter of positive operating cash flow and our second consecutive quarter with positive adjusted EBITDA.

We continue to show momentum and driving topline after right sizing our business.

My comments will be year over year comparisons for the fourth quarter unless stated otherwise.

Alexis DeSieno: In Q4, billings reached $131.9 million, a 5% increase due to continued success in everyday spend as well as in travel. Our restaurant category turned slightly positive in Q4, as the efforts of rebuilding our sales team are beginning to pay off. Revenue was $89.2 million, up 8%, partially driven by a one-time revenue-related benefit of $2.2 million. Our top five customers accounted for 16% of revenue this quarter, compared to 12% last year, and we continue to land new customers and expand existing ones. Geographically, U.S. revenue increased 8 percent, and the UK showed growth for the first time in several quarters at 4%.

In Q4 billings reached $131 9 million.

A 5% increase due to continued success in everyday spend as well as in travel.

Our restaurant the restaurant category turned slightly positive in Q4 as the efforts of rebuilding our sales team are beginning to pay off.

Revenue was $89 $2 million up 8%, partially driven by a one time revenue related benefit of $2 $2 million.

Our top five customers accounted for 16% of revenue this quarter compared to 12% last year, and we continue to land new customers and expand existing customers.

Geographically U S revenue increased 8%.

The UK showed growth for the first time in several quarters at 4%.

Alexis DeSieno: We resigned Lloyd's to a three-year contract and started the implementation of her auto-enrollment program. This means customers no longer have to opt-in to our offers, which has allowed our sales team to sell and deliver larger budgets. We expect to see a continued sequential improvement and very strong double-digit growth in the UK in Q1 as a result of these initiatives and new leadership. Bridge revenue grew 12% due to an existing customer expanding its contract, as well as a new large restaurant joining the platform. We will soon have over 70 million profiles in the database, and we believe we now have the scale to be relevant to CPG customers. Adjusted contribution increased 18% to $47.3 million, with a margin calculated off of revenue of 53% compared to 48% one year ago. Adjusted contribution growth is partially due to the benefit of our partner share renegotiation. Adjusted EBITDA exceeded the high end of guidance at positive $10 million, the largest in Cardlytics history. Business operating expenses came in lower than expected, at $37.3 million, and Bridge was profitable for the third quarter in a row.

We signed a three year contract and started the implementation over auto enrollment program.

This means customers no longer have to opt into our offers which has allowed our sales team to sell and deliver larger budgets.

We expect to see continued sequential improvement and very strong double digit growth in the U K in Q1 as a result of these initiatives and a new leadership.

<unk> revenue grew 12% due to an existing customer expanding gets contract as well as the new larger restaurant and joining the platform.

We will soon have over 70 million profiles on the database and we believe we now have the scale to be relevant to CPG customers.

Adjusted contribution increased 18% to $47 $3 million with a margin calculated off of revenue of 53% compared to 48% one year ago.

Adjusted contribution growth is partially due to the benefit of our partner share renegotiation.

Adjusted EBITDA exceeded the high end of guidance, a positive $10 million the largest in card lytic history.

Business operating expenses came in lower than expected at $37 $3 million and bridge was profitable for the third quarter in a row.

Alexis DeSieno: Operating cash flow was $2.9 million, and as previously mentioned, positive for the third consecutive quarter. On the balance sheet, we ended Q4 with $91.8 million in cash and cash equivalents, and we had $16.7 million of unused available borrowings under our line of credit. This does not reflect the amendment to our line of credit, which we completed in February, which now allows us to borrow up to 75% of our eligible accounts receivable, up from 50% previously. We also confirmed the extension of the maturity on our line of credit by one year to April 2025. As a reminder, we paid $20 million at the end of January as part of our settlement with SRS, and we issued 3.6 million shares in February.

Operating cash flow was $2 9 million and as previously mentioned positive for the third consecutive quarter.

On the balance sheet, we ended Q4 with $91 $8 million in cash and cash equivalents, and we had $16 $7 million of unused available borrowings under our line of credit.

This does not reflect the amendment to our line of credit, which we completed in February which now allows us to borrow up to 75% of our eligible accounts receivable.

50% previously.

We also confirm the extension of the maturity on our line of credit by one year to April 2025.

As a reminder, we paid $20 million at the end of January as part of our settlement with Srs and we issued $3 6 million shares in February.

Alexis DeSieno: We believe that our available liquidity is sufficient to support our long-term plans. However, our amendment to the line of credit is one of many steps we are taking to improve our balance. Lastly, MAUs were $168 million, and ARPU was $0.53 for the fourth quarter, an increase of 3% and 8%, respectively. Before I turn to guidance, I want to note that we added a new non-GAAP metric to our 10-K, which is free cash flow. We believe free cash flow is useful to measure the funds generated in a given period that are available to invest in the business.

We believe that our available liquidity is sufficient to support our long term plans. However, our amendment to the line of credit is one of many steps we are taking to improve our balance sheet.

Lastly, and they use were $168 million and ARPA was 53 for the fourth quarter, an increase of 3% and 8% respectively.

Before I turn to guidance I want to note that we added a new non-GAAP metric to our 10-K, which is free cash flow.

We believe free cash flow is useful to measure the funds generated in a given period that are available to invest in the business.

Alexis DeSieno: In Q4, free cash flow was negative $0.8 million, and for the year, we were nearly $55 million better than in 2020. To remind you, Q1 is seasonally weak due to consumer spending habits, which lead to decreased marketing budgets for most of our clients. Despite that, we are expecting double-digit top-line growth in Q1. For Q1, we expect billings between $105 and $109 million. Revenue between $70 and $73 million; adjusted contribution between $37 and $39 million; adjusted EBITDA between negative one and positive one million dollars. At the midpoint of our range for Jessa DeVita, this would be the first time we would be break even in Q1.

In Q4 free cash flow was negative zero point $8 million and for the year, we were nearly $55 million better than in 2022.

To remind you Q1 is seasonally weak consumer spending habits, which lead to decreased marketing budgets for most of our clients. Despite that we are expecting double digit topline growth in Q1.

For Q1, we expect billings between 105 and $109 million.

Revenue between 70 and $73 million.

Adjusted contribution between 37% and $39 million.

Adjusted EBITDA between negative one and positive $1 million.

At the midpoint of our range for adjusted EBITDA. This would be the first time, we would be breakeven in Q1.

Alexis DeSieno: Excluding the sale of entertainment, our Billings Guidance represents 12-16% growth and a meaningful acceleration from Q4. I'd like to provide some additional color on what we are seeing in the top line. Billings are being driven by continued success in the everyday spend and travel categories.

Excluding the sale of entertainment, our billings guidance represents 12% to 16% growth and a meaningful acceleration from Q4.

I'd like to provide some additional color on what we're seeing in the top line.

Billings were being driven by continued success in the everyday spend and travel categories. We continue to see our largest clients spending more with us.

Alexis DeSieno: We continue to see our largest clients spending more with us. The majority of our growth is from existing accounts increasing their spend with us, and we are continuing to focus on getting new brands onto the platform and winning back lost brands. In fact, we are seeing good momentum in restaurants with the return of two major clients back on the platform over the next two quarters. 2023 was an instrumental year as we built the foundation for future growth and positive adjusted EBITDA.

The majority of our growth is from existing accounts, increasing their spend with us and we are continuing to focus on getting new brands onto the platform and winning back lot France and.

In fact, we are seeing good momentum momentum in restaurants with the return of two major clients back on the platform over the next few quarters.

Right.

2023 was an instrumental here as we built the foundation for future growth and positive adjusted EBITDA.

Alexis DeSieno: Our Q1 guidance implies further acceleration and shows we are making progress towards our long-term goals. As we look forward to 2024, we expect the momentum to continue, and we expect to make progress on our capital structure. We are excited about the addition of a large new bank partner and will provide more details about the launch when we are able to do so. For fiscal year 2024, we expect continued operating leverage.

Our Q1 guidance implies further acceleration and shows we are making progress towards our long term goals.

As we look forward to 2024, we expect the momentum to continue and we expect to make progress on our capital structure.

We are excited about the addition of a large new bank partner and will provide more details about the launch when we are able to do so.

For fiscal year 2024, we expect continued operating leverage and.

Alexis DeSieno: And our expectation moving forward is to have double-digit billings growth for 2024 and to be operating cash flow positive on an annual basis. We are focused on our North Star, Redemptions, and will continue to drive consumer engagement, top-line growth, and adjustability. Now I'll turn it back to Karim for closing remarks. Thank you, Alexis.

And our expectation moving forward is to have double digit billings growth for 2024 and to be operating cash flow positive on an annual basis.

We are focused on our north star redemptions and continue to drive consumer engagement topline growth and adjusted EBITDA.

Now I'll turn it back to cream for closing remarks.

Thank you Alexis.

Karim Temsamani: With each passing quarter, we have delivered additional progress in the business. The trajectory of our financials continues to go upward. We have signed a new large bank partner, and the transformation of our platform is well under way. I'd like to thank our teams for their dedication to the business, and I'd like to thank our investors for their patience over the last several years. I am excited about 2024 and Cardlytics' long-term prospects. Thank you for your service.

With each passing quarter, we have delivered additional progress in the business.

The trajectory of our financials continues upward.

We have signed a new large bank partner and the transformation of our platform is well underway.

I'd like to thank our teams for their dedication to the business and I'd like to thank our investors for their.

Patients over the last several years.

I am excited about 2024, and cosmetics long term prospects.

Thank you for your support.

Operator: And ladies and gentlemen, it's now time for our Q&A session. If you'd like to ask a question, you will need to press star one, one on your telephone and wait for your name to be announced. To withdraw your question, simply press star one, one again.

And ladies and gentlemen.

It is now time for Q&A session.

If you'd like to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question simply press Star one again.

Operator: Please stand by while we compile the Q&A roster. Now, the first question coming from the lineup, Kyle Peterson with Needham, your line is open. Great, thanks guys. Good afternoon and thanks for taking the questions. I want to start off with the news about the new FI partner. It's great to see. I just wanted to see if you guys could give us any color on the timing of the ramp, both in terms of billings and revenue contribution, but also, will that require any sizable upfront expenses or capex for us to keep in mind as we think about our models this year? Happy to start, and Alexis can chime in as well, Kyle. We can't tell you anything more outside of what we have referenced in the 8k with regard to timing. With regard to expenses, there are no major expenses up front that you need to take into account.

Please standby, while we compile the Q&A roster.

And our first question coming from the line of call.

<unk> with Needham Your line is now open.

Great. Thanks, guys. Good afternoon, thanks for taking the question.

I wanted to start off.

The news on the new ESI partner.

And it's great to see.

Just wanted to see if you guys could give us any color on the timing of the ramp.

Both in terms of billings and revenue contribution, but also will that require any sizable upfront expenses or capex for us to keep in mind as we think about remodels this year.

Happy to start and <unk> can chime in as well.

We can't tell you anything more.

What we have referenced in the 8-K with the guests to timing.

With regards to expenses, there's no major expenses upfront.

To take into account and obviously as soon as we can talk more about the timing for the launch we will we will talk to the market.

Karim Temsamani: And obviously, as soon as we can talk more about the timing for the launch, we will talk. Yeah, I'll just add to that. The fuller comments I made do not include any material impact from the signing of this agreement, like many of our other bank partners. Implementation will take time, so we'll keep you posted on launch dates and other information. Got it.

Yeah, I'll just add to that.

The full year comments I made it does not include any material impact from the signing of this agreement like many of our other bank partners.

Implementation will take time, so we will keep you posted on launch launch dates and other information.

Alexis DeSieno: You know, that's really helpful. And then, you know, just a follow up, you know, on liquidity and cash. Obviously, you guys have, you know, done a really good job with expense structure, the credit facility is extended. But I guess, you know, what are some of the other, you know, kind of near term priorities you guys are thinking about, you know, with regards to, you know, whether it's just liquidity or, you know, the longer term cap structure for the business? Sorry.

Got it.

That's really helpful. And then just a follow up.

Liquidity.

Cash.

You guys have done a really good job.

<unk> structure is a credit facilities to extend it but I guess what are some of the other kind of near term priorities. You guys are thinking about with regards to whether it's just liquidity or the longer term cap structure for the business.

Alexis DeSieno: Yeah, thanks. So, obviously, we're focused on right-sizing our capital structure. It's a priority for us, and we needed to address it in stages. First, we needed to improve the business, so we've re-accelerated revenue, and we've right-sized our cost structure. And then, next, we needed to resolve SRS. Nothing would happen in a way that protected shareholders without these being addressed, so this is done

Sorry, yes.

Yes. Thanks.

So obviously, we're focused on right sizing our capital structure, it's a priority for us and we needed to address it in stages.

First we needed to improve the business so with re accelerated revenue and we've right sized our cost structure and then next we needed to resolve Srs nothing would happen in a way that protected shareholders without these being addressed so this is done.

Alexis DeSieno: And both of these have allowed us to extend the revolver and increase the amount that we can borrow, giving us further flexibility. So, in terms of next steps, we're working hard on this, and we have a clear strategy in place. And although I can't talk about specifics yet, I'm confident in our path forward, and again, we'll keep you updated as we can. Does that answer your question? Yeah. That's a very good caller. Thanks, guys. It was a nice quarter.

And both of these have allowed us to extend the revolver and increase the amount that we can borrow giving us further flexibility. So in terms of next steps. We're working hard on this and we have a clear strategy in place and although I can't talk about specifics yet I am confident in our path forward and again, we'll keep you keep you updated as we can.

Does that answer your question.

Yeah, Yeah, that's that's very good color, thanks, guys nice quarter.

Operator: Thank you, and our next question comes from the line of Jacob Stephen with Lake Street Capital Markets. Your line is open.

Thank you.

Our next question coming from the line of Jacobs, Stephen with Lake Street Capital markets. Your line is open.

Operator: Yeah, hey guys, congrats on the quarter, the guidance, and the new partner. When they're just, you know, touching on the guidance here, I'd like to get your thoughts on how you think about, you know, the upside to billions of growth, your guidance to kind of mid-teens growth from, you know, is that being driven by increased customer spend? Or, you know, is that, you know, how much of that is coming from increased engagement as well? Sure, and I'll let Karim chime in at the end.

Yeah, Hey, guys congrats on the quarter guidance.

<unk>.

Partner win there.

Just touching on the guidance here I'd like to get your thoughts on how youre thinking about.

But the upside the billings growth youre guiding to kind of mid teens growth.

From.

Is that being driven by increased customer spend.

Or is that.

How much of that is coming from the increased engagement as well.

Sure and I'll, let <unk> chime in at the end.

Alexis DeSieno: We're confident in the steps we're taking to reaccelerate revenue. At the midpoint and top of the range, you know, I want to reiterate that we're going to be breakeven or positive adjusted EBITDA for the first time in Q1, which is really exciting. So our initiatives are really paying off, and we're executing against our plan. And so, you know, we're focused on increasing inventory with new banks, improving our tech and product, investing in our teams to get great content and reduce churn, and our international business is growing double digits. So some of these initiatives are taking time, but I'm very confident in the guide and excited for the quarter. Yeah.

We're confident that the steps, we're taking to Reaccelerate revenue.

At the midpoint and top of the range I want to reiterate that we're gonna be breakeven or positive adjusted EBITDA for the first time in Q1, which is really exciting. So our initiatives are really paying off and we're executing against our plan.

And so.

We're focused on increasing inventory with new banks, improving our tech and product investing in our teams to get great content and reduce churn and our international business is growing double digits. So.

Some of these initiatives are taking time, but very confident and in the guide and excited for the quarter.

Karim Temsamani: Okay, maybe just kind of touching on the multi-tiered offers programs. It sounds like you've had good success with your airline partner. But you know, maybe you could talk about where you are in the process of rolling this out to kind of the broader client base. Yeah, I'm happy to take that, Jacob.

Yes.

Hey.

Maybe just kind of touching on the multi tier offers programs maybe it sounds like you've had good success with your airline partner.

But maybe you could talk about where you are in the process of rolling this out to kind of the broader client base.

Yes, I'm happy to take that Jacob.

Karim Temsamani: So, obviously, these are sort of early tests that we're doing with a number of clients, and we continue to ramp that up with any client that's interested and has a relevant use case. We will update the market when we have a view of the sizing of this across the whole of the network. But importantly, those new product initiatives are not only positive benefits for the bank's customers, the advertisers, and the clients, but they also allow sales teams to have normal discussions about the range of offerings that we have across the network. So, even if some clients are not adopting them, it allows us to have a discussion about bringing more budgets to the platform. So, there are several benefits to these initiatives. Got it.

So obviously these.

Sort of still tests that we're doing with a number of clients continuing to ramp that up with any clients. That's interested in the house.

Irrelevant use case.

We will update the market when we have a view of the sizing of this across the whole of the network, but importantly, those new product initiatives are not only positive benefits for the bank's customers. The advertisers in the current but they're also allow our sales teams.

To have <unk>.

Normal discussions about.

The range of offerings that we have across the network. So even if some clients are not adopting them. It allows us to have a discussion about bringing more budgets to the platform. So that so there are several benefits to these initiatives.

Operator: I'll hop back into Q here. Congratulations, guys. The Bulletproof Executive 2013, And our next question coming from the line-up: Jason Kreyer with Craig Calameel on his cell phone.

Got it.

I'll hop back into queue here congrats guys.

Thank you.

And our next question coming from the line of.

Jason <unk> with Craig Hallum. Your line is now open.

Karim Temsamani: Great, thank you guys. Um, we've seen a pretty nice uptick recently, just in terms of, you know, new logos in the offers, kind of bigger names coming into the offers. And I'm just curious, can you talk about some of those include, you know, vendors that are coming back to the platform that have left in the past. And so just curious what you think is different right now, what's driving them or what's changed where you're getting an audience with what appears to be a larger market? Yeah, I mean, I want to stress that larger marketers have always been our focus. So we are continuing to make strides with some of these clients. And going back to, you know, what happened in the last couple of years, some of those customers that we lost were not because of the performance of the platform but because, mostly, of a strategy at these customers. And some of the customers we also lost because we did not, you know, have the right activity at the sales team level.

Great. Thank you guys.

<unk> seen a pretty nice uptick recently just in terms of new logos in the offer a kind of bigger names coming into offers and I am just curious can you talk about like some.

Some of those include vendors.

Vendors that are coming back to the platform that are left in the past and so just curious what you think is different right now, what's driving them or what's changed where youre getting audience with what appears to be larger marketers.

Yes.

I want to stress that larger market as I've always been a focus so we are continuing to make.

Make strides with some of these clients and going back to.

What happened the last couple of years some of those customers that we had lost we're not because of the performance of the platform, but because mostly of a strangers strategy at these customers and some of our customers. We also lost because we didn't.

It did not.

Have the right activity at the <unk> level and we fixed that now we know I talked about this in the last call that we're reinvesting in our sales teams and we have made a couple of changes and we've seen those changes essentially allow us to.

Karim Temsamani: And, you know, we fixed that now. I talked about it in the last call that we're reinvesting in our sales teams, and we have made a couple of changes. And we've seen those changes essentially allow us to have stronger relationships with many of our customers. Now, there's plenty more that we want to do. And obviously, you know, having new product initiatives that we can talk to customers about, including the risk level offers that we mentioned before, also enables us to open doors and showcase great benefits to customers. So I'm very confident that the strategy is really starting to pay off.

How strong relationship with many of our customers.

Plenty more that we want to do and obviously, having new product initiatives that we can talk to customers about.

The risk level offers that we mentioned before also enabled us to open doors and showcase great benefits to customers. So I'm very confident that our strategy is is really starting to pay off and I know I'm very very keen to continue to see this growth moving forward and accelerating.

Karim Temsamani: And I know I'm very, very keen to continue to see this growth moving forward and accelerating. And then on ADE, it seems like, I mean, you've been talking the last couple of quarters about getting all the right validation points, that this is certainly working and providing better offers. What do you think is causing some FI partners not to migrate to that in a quicker way? And so, again, the vast majority of our network is now on ADE, so we're very pleased with that. And then, you know, subsequent improvements that we made to ADE just require a little bit of work at each of the partners, but it's very minimal. What we have is 20% of our network that's not yet on ADE, mostly because there are larger tech changes that are required for these partners to move from on-premise, which was essentially our old stack, to an on-cloud solution.

And then on a day.

It seems like I mean, you've been talking in the last couple of quarters about getting all the right validation points that this is certainly working and providing better offers what do you think.

Is causing.

Tom Fi partners not to migrate to that in a quicker way.

So again the vast majority of our network is now on LTE. So we were very pleased with that and then subsequent improvements that we made to a D. Just require a little bit the amount of work at each of the partners, but it's very minimal.

What we have is 20% of our network that's not yet.

Mostly because there's larger tech changes that are required for these partners to move from on premise, which was essentially are all stuck to and on cloud solution and now we're having very promising discussions with these partners, but it just takes time for the larger lift toolkit, so again positive discussions.

Karim Temsamani: And, you know, we're having very promising discussions with these partners, but it just takes time for the larger lift to occur. So, again, positive discussions. We'll hopefully update the market as soon as we can with regard to the timing for those banks. And then just one last one from me, please, on discovery. You know, I think we've talked in the past about how some FIs have moved offers around in different areas of their applications. And it seems like there, at least historically, hasn't been as much volatility in consumer uptake or consumer activation. So, I'm just curious if you can maybe talk about what things you can influence in terms of discovery or accessibility inside of an application that you think can change consumer behavior and increase consumer activation. Yeah, that's a great question.

Well hopefully you update the market as soon as we can with regard to the timing for those banks to move.

Okay and then just one last one for me please on on discovery.

I think we've talked in the past about how some <unk> has moved offers around in different areas of their applications.

It seems like there are at least historically hasnt been as much volatility in consumer uptake or consumer activation. So I'm. Just curious if you can maybe talk about what things you can influence in terms of discovery or accessibility inside of an application that you think can can change consumer behavior and increase.

Those activation rates.

Karim Temsamani: I mean, what we really haven't had in the past is a proper playbook and the right discussions with our bank partners to really discuss different placements for the widgets and different types of offers and different places where we can surface the offers. Not only are we having these discussions now, but we're creating those playbooks, but we also have the ability to provide some level of data on how these are working for the bank customers that are using them. And again, as I mentioned earlier in the call, we're basically seeing, you know, for instance, with regard to line item transactions in a customer bank statement, we're seeing five times higher activation than the normal activation that you see on the network.

Yes, that's a great question I mean, what what we really haven't had in the past is a proper playbook.

The right discussions with our bank partners to really discuss different placements for the widgets and different types of offers in different places, where we can surface. The offers not only we are having discussions now with creating those playbooks, but we also have an ability to provide some level of data on how these are working for the bank customers that all that.

They're using them and again as I mentioned earlier in the call.

Basically seeing for instance, with regard to line item transactions in a customer bank statements. We're seeing a five times higher activation then no one activation that you see.

Uh huh.

Karim Temsamani: So we can go back to more bank partners and tell them this is what we see and then work with them with regard to implementing it also on their platform. So we feel much more confident that we have the right structure now, that we're really basing those discussions on data rather than on sort of our view of what banks should be doing. And that's allowing us to have much, much better data.

In the network. So we can go back to more bank partners and tell them. This is what we see and then work with them with regards to implementing its also on their platform. So we feel much more confident that we have the right structure now that we really basing those discussions on data rather than on sort of our view of what banks should be doing and thats allowed.

Owing us to have much much better discussions.

Alright, Thank you guys and congrats on the debate partner.

Thank you.

Thank you.

And I'm showing no further questions in mechanic at this time I will now turn the call back over to Mr. Karim <unk> from money for any closing remarks.

Operator: All right, thank you guys, and congrats on the debate murder. Thank you. Thank you. And I am showing no further questions in the Q&A queue at this time. I will now turn the call back over to Mr. Karim Temsamani for any closing remarks. Thank you. Thank you very much. This concludes our call. As I mentioned, we remain committed to positioning the business for the future. Thank you for your continued support, and I look forward to our next discussion. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation, and you may now disconnect. www.TheBusinessProfessor.com

Okay.

Thank you very much.

This concludes our call.

As I mentioned, we remain committed to positioning the business for future success.

<unk> you for your continued support and I look forward to our next discussion.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation and you may now disconnect.

Okay.

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