Q3 2024 Cardlytics Inc Earnings Call
His intelligence that offers market trends and competitive insights empowering brands to make more informed business decisions.
We expect to see increased interest and usage as more advertisers gain access to the port.
We see our insights on demand as a key differentiator and value add for brands and ultimately a driver of new and stickier relationships.
Looking at our topline results, we had a solid quarter with budget growth. However, billings were down 2% excluding entertainment due to the ongoing challenges with delivery, which we will cover in more detail in.
In the U S. We saw continued growth in categories like travel and everyday spend we were able to close some large upsells intra quarter, which led to beating our original billings guidance in the U K. We continued strong double digit growth and saw the highest amount of consumer rewards.
And the history of our UK business.
We signed 26, new brands, which is an increase of 27% and also strengthen our key partnerships with existing advertisers to meet a diverse set of advertiser kpis and reward consumers in new ways. We are continuing to develop new offer constructs. In addition to generally.
<unk> brand level offers we can deliver offers with higher values for specific purchases based on product category purchase channel and store location.
We can also report on what products were purchased which helps advertisers better understand the profitability of a campaign and tap into category level marketing budgets.
This quarter, we saw success with an everyday spend advertiser that ran SKU level insights integrating both their own transaction data and cosmetics data at.
As an example, these insights could help inform future campaigns for premium versus regular fuel and show not only what fuel grade was purchase but also if customers were loyalty members and what other products were purchased in store.
This helps advertisers drive regional growth and increase store level sales.
We continue to test these kinds of offers and are working to automate them next year.
We're encouraged to see consumers engaging more with these new AD formats, which we believe.
Help differentiate our offers and open additional advertiser budgets.
Moving onto our third pillar our continued focus on enhancing the performance of our network and stabilizing our core platform.
We continue to actively address the delivery challenges that we discussed last quarter.
We've taken several measures, including placing more stringent limits on campaigns enhanced daily monitoring and budget management improvements. We are also making improvements to our AD decisioning engine and seeing good initial results with our budget management tools.
These are helping to adjust the pace at which serves are made based on campaign tight media fees and targeting.
We've made initial progress with improving delivery this quarter through these efforts.
As we've said some level of over and under delivery will always be inherent to any AD business and we are working to get to a more stable place where these extremes are no longer a concern.
We are working on automating our efforts to further narrow the bookends of delivery outcomes. We also want to continue optimizing for engagement as increasing rewards powers, our flywheel as part of our network enhancements and to help with stabilizing delivery. We also continue to work with our advertisers to shift too.
Engagement based pricing, which includes CPE CPR and CPT pricing models, we've seen strong interest from our new advertisers with 84% of new logos and 51% of all logos in the U S. In Q3 on engagement based pricing.
We expect the majority of our advertisers to transition to engagement based pricing by the end of next year, which should help us optimize campaign performance through faster engagement based feedback.
We're also making progress on the dynamic marketplace, which allows advertisers to see their campaign performance on a daily basis and make ongoing changes to their role as goals fees and budgets.
This will lead to better performance of campaigns and higher retention of advertisers.
We had 58 campaigns running on our dynamic marketplace in Q3 up from 20% the previous quarter.
And regarding measurement, we are working with leading marketing measurement experts to appropriately integrate card lytic data into media mix models and help our advertisers understand the incremental impact of our CLO campaigns.
This helps ensure that we can participate in industry standard measurement, making it easier for advertisers to measure our impact.
Our fourth and final pillar is continuing to invest in bridge and ripple as a significant growth driver for our business in October we welcomed and reclaim Munoz Torres as our new General manager of bridge, who is focusing on maximizing connectivity and further scaling.
Our platform to address a larger suite of advertisers and retailers.
And retail led the advertising and search business at Yahoo, and also brings a range of experience from Sunshine and Google.
With ripple, we continue to make progress in Q3, we reached our goal of 100 million active unique shopper profile ahead of schedule, making ripple one of the largest networks of regional grocers and convenience stores in the U S.
These shoppers have been historically hard to reach and ripple presents a unique opportunity for CPG brands to engage with these shoppers at scale.
We saw increased adoption of our syndicated and custom audiences of these shopper profiles from CPG brands and agency partners, who find value in the ability to reach deterministic purchasers at the brand and product level.
These four pillars continue to underpin what we believe is necessary to deliver maximum savings for consumers, which we believe will help power, our flywheel and drive growth in our business.
We remain relentlessly focused on addressing our short term challenges while also taking a deliberate approach on how we prioritize our initiatives moving forward.
Speaker Change: I'll now turn the call over to a lexus to discuss the financials.
Speaker Change: Thank you Amit this quarter exceeded our expectations as we focused on stabilizing our core platform. We beat the high end of our guide on all metrics, primarily due to higher than expected budget.
Speaker Change: Turning to our specific third quarter results my comments will be year over year comparisons to the third quarter of 2023, excluding entertainment our former subsidiary that we sold in December 2023, unless stated otherwise.
Speaker Change: In Q3, our total billings were $112 million, a 2% decrease as expected our billings were impacted by continued challenges with delivery rather than pipeline weakness.
Speaker Change: As Matt mentioned.
Speaker Change: Look decisive action during Q3 and made initial progress in improving delivery and we saw sequential improvement throughout the quarter.
Speaker Change: Stabilizing delivery remains an all hands on deck priority for us so that our billings can start to reflect our ability to capture a bigger budgets and we can drive both performance and predictability for our advertisers.
Speaker Change: As a reminder, our north star is consumer rewards, which materialized as consumer incentives in our financials.
Speaker Change: We believe that consumer rewards are a key indicator that our technology is delivering the most relevant offers to each person and driving value for our advertisers and bank partners.
Speaker Change: This quarter consumer incentives increased by 20% to $44 9 million.
Speaker Change: As we've seen in the last few quarters revenue, which was $67 1 million in Q3 decreased 13% due to driving more user engagement with our offers.
Speaker Change: Over delivery peaked in July and has sequentially improved as our efforts began to take effect and we do not expect this level of revenue as a percentage of billings to persist at 60%.
Speaker Change: We continue to believe that adjusted contribution is a better metric for assessing the health and performance of our business as it reflects how much we keep on every dollar we make.
Speaker Change: In Q3, adjusted contribution was $36 $4 million down 11% from the prior year.
Speaker Change: As a percentage of revenue adjusted contribution margin was 54% up 1% year over year.
Speaker Change: Partner mix, partially offset the margin decline, we saw from elevated rewards and we expect similar or improved margins as we onboard new bank partners.
Speaker Change: Looking at our segment results.
Speaker Change: U S revenue decreased 17% due to delivery challenges, but we saw growth in total budgets, especially from new brands, which helped to broaden and diversify our advertiser base.
Speaker Change: In the U K, we continue to see strong double digit revenue growth at 33% as well as the fourth consecutive quarter of profitability.
Speaker Change: July was the highest ever billings month in our 10 year partnership with Lloyd's.
Speaker Change: As I mentioned, we are pleased to see consumer rewards in the U K reached an all time high demonstrating strong engagement with our offers.
Speaker Change: Branded revenue was flat compared to last year, but as I mentioned, we've made good progress with ripple.
Speaker Change: We have early positive signals from ongoing and active engagement with advertisers and agencies.
Speaker Change: First party data is valuable and according to E. Marketer the retail media market is expected to double in the next three years.
Speaker Change: We believe we are well positioned to capture market share in this sector.
Speaker Change: Adjusted EBITDA declined year over year from $3 $6 million to negative $1 $8 million.
Speaker Change: Total adjusted operating expenses, excluding stock based compensation came in at $38 2 million.
Speaker Change: While we continue to believe in the investments we are making to support longer term growth, we are tightly managing our expenses and maintaining cost discipline.
Speaker Change: We expect operating expenses to remain below $40 million in Q4.
Speaker Change: In Q3 operating cash flow was positive $1 $4 million.
Speaker Change: Free cash flow was negative $3 9 million driven by.
Speaker Change: Increased internally developed software expense.
Speaker Change: On the balance sheet, we ended Q3 with $67.0 million in cash and cash equivalents and we had $60 million of unused available borrowings under our line of credit which was recently extended through July 2026.
Speaker Change: Our total revenues were $166 million for the third quarter, an increase of 2% driven primarily by organic growth in the U S as well as auto enrollment at Lloyd's and ramping up Monzo and the U K.
Speaker Change: <unk> was <unk> 40 down 18% as a result of the 20% increase in consumer incentives as we continued to deliver more rewards to card holders.
Speaker Change: Turning to our Q4 outlook.
Speaker Change: For Q4, we expect billings between 102 and $108 million.
Speaker Change: Revenue between 62 and $67 million.
Speaker Change: Adjusted contribution between 33% and $36 million.
Speaker Change: Adjusted EBITDA between negative $5 million and negative $1 million.
Speaker Change: Our billings guidance represents negative 22 to negative 18% growth, excluding our former subsidiary entertainment.
Speaker Change: This weakness is driven by continued upon improving challenges with delivery as well as with pipeline.
Speaker Change: Let me start with delivery.
Speaker Change: We expect continued disruption in Q4, but continue to believe that modernizing our technology and evolving our pricing are necessary to our long term success.
Speaker Change: As Amir mentioned cielo is becoming more important to our banks. They are continuing to make changes to their channels and user experience, which includes improved placement of the widget and more communication with their customers, but makes forecasting more difficult.
Speaker Change: We are assuming improvement over delivery as illustrated by our improved revenue as a percentage of billings of 62%.
Speaker Change: That said, we believe some level of elevated rewards will continue as our targeting surfaces. The right offers to the right users.
Speaker Change: Billings are suppressed due to continued under delivery.
Speaker Change: We have more work to do to improve the efficiency of our AD network around under delivering campaigns.
Speaker Change: We continue to assume that our new financial institution partner will have no material impact to Q4.
Speaker Change: On pipeline.
Speaker Change: We're seeing advertiser caution around budgets, especially in the restaurant and travel verticals.
Speaker Change: While we continue to grow the number of advertisers we work with in restaurant overall spending has declined as a result of industry performance.
Speaker Change: We also expect to see some headwinds this holiday season, including the shorter period between Black Friday, and Christmas, but we are seeing areas of strength in everyday spend and this continues to be a key differentiator for <unk> in the market.
Speaker Change: We also are lapping in the reduction of a few key accounts in Q4 of last year.
Speaker Change: While the number of new logos are up 38% they do not fully offset the decline in these large accounts.
Speaker Change: These accounts that term for various reasons, including large scale reorganizations, sipson marketing strategy or their own company performance the.
Speaker Change: The UK continues to be a bright spot and we expect continued double digit billings growth as we continue to work well with our new bank partners that enable us to unlock larger advertising budgets.
Speaker Change: We expect adjusted contribution to be similar on a margin basis, our adjusted EBITDA guidance reflects the impact of our billings guidance and the fact that we will continue to make strategic hiring decisions, where we believe the return will be realized in the near term.
Speaker Change: We will continue to evaluate our investments in ongoing cost as we monitor performance.
Speaker Change: For 2025, we believe performance will accelerate as we improve our operational execution scale, a major new ESI partner see continued strength in the U K and start to more fully realize contributions from ripple.
Speaker Change: We expect to invest only as topline performance improved and remain focused on improving delivery and launching a new bank partner in the near term.
Speaker Change: Now I'll turn it back to <unk> for closing remarks.
Speaker Change: Thank you Alexis overall, we are encouraged by the progress we've made this quarter above all our Q3 results indicate better predictability of our business and our relentless focus on addressing our short term challenges.
Speaker Change: Our efforts will take time, but we are focusing on the right priorities to maximize consumer engagement and rewards.
Speaker Change: I'll now turn it over to the operator to begin Q&A.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Speaker Change: John Your question. Please press star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Yeah.
Speaker Change: Our first question comes from Robert <unk> with Evercore ISI. Your line is open hi.
Rob: Hi, Good afternoon. This is rob on the call from Mark.
Speaker Change: It sounds like Youre getting a handle on over delivery.
Speaker Change: Can you talk a little bit about some of the key drivers of under delivery in sort of the plan to address some of those and then also with the growth in logos, which I think is encouraging could you could you talk about trends in billings per logo.
Speaker Change: Ability to.
Speaker Change: You continue to improve platform capabilities through <unk> and dynamic marketplace.
Speaker Change: Maybe your ability to go back to some of the customers, where you're seeing churn of budget reduction answer to reintroduce yourself to some of those and then also just organically grow billings per logo over time. Thank you.
Speaker Change: Thank you Robert.
Speaker Change: And thanks, everyone again for joining the call.
Speaker Change: I think.
Speaker Change: First of all thank you for recognizing the progress we've made.
Speaker Change: On overall delivery challenge that we had.
Speaker Change: And that's something that as <unk> mentioned in her prepared remarks that continues to be our all hands on deck priority now we've made deliveries.
Speaker Change: <unk> sequentially, especially on over delivery, but there's more work to be done on under so things like ranking under delivering campaigns differently better forecasting.
Speaker Change: Using mid flight changes testing different reward amounts all of those are different parts.
Speaker Change: Parts of the product that we're going to test and <unk>.
Speaker Change: Assess the under delivering campaigns and then just like what we did with under delivery.
Speaker Change: Our typical approach Robert is that will test a set of things initially and then over time, we'll automate it and so we're going to follow the same approach on this.
Speaker Change: In terms of billings per logo I think as we've mentioned, we're quite happy to see that.
Speaker Change: Overall, the Advertiser count has studied has steadily grown and continues to increase.
Speaker Change: And as market conditions start to get better. We also increase we also expect the budgets our logo our budgets per advertiser to continue to grow.
Speaker Change: And to that end, we are actually working actively with advertisers to map out their 2025 budgets and their 2025 strategies.
Speaker Change: Got it thank you.
Speaker Change: Just one quick follow up just on the.
Speaker Change: The issue of under delivery.
Speaker Change: As you addressed some of those issues are you able to automate those capabilities or create a feedback loop route with advertisers that they need to master sort of their the way they handle the platform to optimize delivery or is it fairly sort of an automated or.
Speaker Change: Processes continual optimization. Thank you.
Speaker Change: Yes, Robert that's a good question.
Speaker Change: I think our typical.
Speaker Change: Mantra in this case is that we should take away all friction from the advertiser that it is our internal product teams.
Speaker Change: Work to fix that and engineering teams.
Speaker Change: Area to fixed.
Speaker Change: For an advertiser it would.
Speaker Change: Not be something that they need to optimize our teams will work with the advertisers to inform and work with them how best restructure of the campaign.
Speaker Change: On an ongoing basis.
Speaker Change: Great. Thank you.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Jason <unk> with Craig Hallum. Your line is open.
Jason: Thank you I just wanted to see if you can give maybe some details. Unlike contrasting Q3 and Q4. It seems like you had a lot of success in Q3 with with buildings and things like that but there's a growth step down as we get into Q4. So if you can parse those two things out that'd be great.
Speaker Change: Hey, Jason Thanks for the question.
Jason: Yeah I think.
Speaker Change: I really wanted to point out there is delivery did sequentially improve in Q3. So we are seeing that continuing into Q4.
Speaker Change: What's different this time is that <unk>.
Speaker Change: Going into Q4, we are lapping some.
Speaker Change: Large accounts that did not reoccur in Q4 2023.
Speaker Change: If we did not have that happen the retail sector actually would be up in terms of dollars and brands for Q4. So.
Speaker Change: Underlying advertisers are still spending more with us committing budgets.
Speaker Change: But we did have a dip.
Speaker Change: <unk> comps I would say versus last year. So that is a lot of that a driver of some of the performance youre seeing in the pipeline.
Speaker Change: And then I just wanted to elaborate on something that I.
Speaker Change: <unk> said in the prior answer solving under delivery is really important because it enables us to not over serve people and then open up for some of those under delivering campaigns. So that was really important that we did that first.
Speaker Change: And so as you can see from the margin guide delivery has improved especially on the over delivery side.
Speaker Change: Going from 60% of revenue as a percentage of billing $2 62.
Speaker Change: At the high end of the range, but.
Speaker Change: Still more work to do to kind of close the gap on the under delivery side and that is a part of the reason why youre seeing.
Speaker Change: I guess Q4 guide that we provided today.
Speaker Change: Okay.
Speaker Change: And then just any maybe.
Speaker Change: Maybe any updates over the last quarter in your conversations with customers just around the CPE pricing solution I don't know if theres anything in terms of number of customers or just kind of receptivity and what youre hearing.
Speaker Change: So I think on pricing I think we've talked about that we want them.
Speaker Change: Move towards engagement based pricing and that progress has continued to go well.
Speaker Change: Our advertisers who are engaging.
Speaker Change: They like it quite a bit and large number as I mentioned in my prepared remarks large number of new advertisers are opting for those and so we continue to see success on that side.
Speaker Change: And in terms of.
Speaker Change: Our billings I think overtime.
Speaker Change: As I mentioned.
Speaker Change: In my prepared remarks, we continue to expect that we'll have a higher proportion of our advertisers move towards engagement based pricing.
Speaker Change: Alright, thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Our next question.
Speaker Change: Our next question comes from Jacob Stefan with Lake Street Capital Markets. Your line is open.
Jacob Stefan: I appreciate you taking my questions.
Jacob Stefan: Between call, so sorry, if theres a double coverage here.
Speaker Change: On the engagement is price model.
Speaker Change: I'm just curious it sounded like 5% or so of your customer base was using the engagement based pricing as of last quarter.
Speaker Change: Maybe could you just kind of help us understand.
Speaker Change: Is this going to be.
Speaker Change: Five six quarter sort of.
Speaker Change: Transition or.
Speaker Change: Is this fully elected by the actual customer.
Speaker Change: Yeah, Let me just clarify a little bit here, so dynamic pricing was 5%, which is more specifically around CPC or cost per click engagement based pricing is encompassing CPT, which is cost per transaction cost per redemption, and as well as cost per click so more broadly.
Speaker Change: We're at 38% of total billings in Q3.
Speaker Change: Up.
Speaker Change: Sequentially and that continues to grow so we do expect to be.
Speaker Change: The majority on CPE by end of next year in terms of the dynamic pricing, specifically and CPC, specifically that went from 20 brands in Q2 to 58.
Speaker Change: This quarter, so hopefully thats a little more clear.
Speaker Change: The trend the overall, we're not seeing pushback on pricing from brands that the lines ended industry standard and again it improves the visibility to us and improve campaign performance.
Speaker Change: And it's also what the brands are used to buying.
Speaker Change: So really this is where we expect to be by the end of next year.
Speaker Change: Okay got it very helpful and then.
Speaker Change: You've been in the CEOC for three months now.
Speaker Change: It would be great to get a sense of what are your top three priorities, maybe near term and just kind of medium.
Speaker Change: <unk>.
Speaker Change: Yes, absolutely thanks, and thanks for that question.
Speaker Change: I, probably want to say at the top level my belief in the company and our place in the ecosystem continues to be very strong.
Speaker Change: And that is very much reflected by our team's excitement about what we do.
Speaker Change: And how they're showing up in the market and with our new partners.
Speaker Change: And so on.
Speaker Change: The priorities are.
Speaker Change: I'll go back to what I mentioned of basically centered our teams around the four key pillars.
Speaker Change: And we really are thinking about supply.
Speaker Change: Partners very differently, we're engaging with partners in a fundamentally different way.
Speaker Change: Likewise, where.
Speaker Change: Going after our demand our advertisers engagement in a much more strategic and a broad based way.
Speaker Change: We want to make sure the network performance continues to improve.
Speaker Change: And to that end, we're really looking at our network from an end to end point of view. So we're looking at all the way from the start of the process, which is our own forecasting and projections and then we think about delivery and then all the way towards measurement.
Speaker Change: And then we're bringing them closer.
Speaker Change: Bridge closer to connect with our core business and the core platform. So so those are the four key pillars as I mentioned earlier.
Speaker Change: And I think it will the transforming a business takes some time, but we strongly believe that this is the right path for us to grow the company.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: Okay.
Speaker Change: One moment.
Speaker Change: Okay.
Speaker Change: And our next question comes from Luke Horton with Northland Capital markets. Your line is open.
Luke Horton: Hey, guys. Thanks for taking the question.
Luke Horton: Just wanted to touch on I know, obviously youre working through these delivery issues at the moment, but.
Speaker Change: If we look ahead, a little bit if you're a or once you are able to get the advertisers over the CPE.
Speaker Change: And kind of work through some of these delivery issues the rollout of the major U S.
Speaker Change: Financial institution is there any sort of.
Speaker Change: Kind of ballpark of where you see revenue as a percentage of billings normalizing.
Speaker Change: Yeah.
Speaker Change: Hey, thanks.
Speaker Change: Yes, Unfortunately, not giving guidance around 2025 at this time.
Luke Horton: I think you should expect we're working we continue to believe that our Northstar is rewards and we want to continue to drive redemptions and kind of increase that ratio I think we can only do that to the extent that we can improve our margins over time and so a little early to say, where that's going to land.
Luke Horton: But driving redemptions is definitely yes.
Luke Horton: Yes, it's still a.
Luke Horton: Key piece of our strategy.
Luke Horton: And I think we should be able to continue to improve.
Speaker Change: Both the bookends of over and under delivery.
Speaker Change: Time goes on and then once that stable, we can start to test different reward formats different reward amounts.
Speaker Change: But at this time that not ready to give a guide on that longer term margin.
Speaker Change: Okay Fair enough and then just with the rollout of the major bank partner in the U S.
Speaker Change: I think you had mentioned there is no material impact in <unk>.
Speaker Change: Just wondering how that sort of plays out over 2025, if we see an initial impact or kind of the <unk>.
Speaker Change: Tiered approach with the rollout there.
Speaker Change: I know I wish I could give you some more clarity here.
Speaker Change: Yes.
Speaker Change: We're doing an initial launch right now are very small and it will continue to scale over time so.
Speaker Change: We're not ready to provide additional guidance into 2025, but very optimistic.
Speaker Change: And partnering really well with this large partner.
Speaker Change: So very excited to see how this all plays out over time.
Speaker Change: Got it thanks for taking the questions.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Again to ask a question please press.
Speaker Change: SAR one one on your telephone.
Speaker Change: I'm showing no further questions at this time, so I would now like to turn it back to Amit Gupta for closing remarks.
Amit Gupta: Thank you all for joining US today, we look forward to discussing our fourth quarter and full year results on the next earnings call. Thank you again for all your questions.
Speaker Change: Okay.
Speaker Change: This does conclude today's program you may now disconnect.
Speaker Change: [music].
Speaker Change: Good day, and thank you for standing by welcome.
Speaker Change: Welcome to the cosmetics third quarter 2024 financial results call. At this time, all participants are in a listen only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
Speaker Change: You ask a question during this session you will need to press star one one on your telephone.
Speaker Change: Then here an automated message advising that your interest rates.
Speaker Change: To withdraw your question. Please press star one one again.
Speaker Change: Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand, the conference over to your first speaker today, Nick Linnane, Chief legal and privacy officer.
Speaker Change: Ready to go.
Nick Linnane: Good evening and welcome to the card Livings third quarter 2024 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.
Speaker Change: Including for the fourth quarter of 2020 for the rollout of new financial institution partners, and operational and product initiatives and improvements.
Speaker Change: 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 sections of our 10-Q for the quarter ending September 32024, which has been filed with the SEC.
Speaker Change: Also during this call we will discuss non-GAAP measures of our performance GAAP financial reconciliations and supplemental financial information are provided in the press release issued today, which you can find on the Investor Relations section of the <unk> website.
Speaker Change: This call is available via webcast and a replay will also be available on our website.
Speaker Change: On the call today, we have CEO, Amit Gupta and CFO Alexis Tcl following their prepared remarks, we'll open it up for your questions.
Speaker Change: With that I'll hand, the call over to Amit.
Amit Gupta: Thanks, Nick and thank you all for joining us today as.
Amit Gupta: As you all know I stepped into my new role shortly after we released Q2 earnings.
Speaker Change: Over the last three months as CEO I have spent time going deeper with our teams and hearing feedback from our advertisers and bank partners.
Speaker Change: A few things have become clear.
Speaker Change: Data continues to be a superpower, our ability to see approximately 50% of U S. Cardholder transactions, representing nearly $4 seven trillion in annual consumer spend is unparalleled in the industry and this number will continue to grow as we onboard new partners.
Speaker Change: It has also become evident that card linked offers.
Speaker Change: Clos have evolved and are becoming a more important differentiator than a year ago.
Speaker Change: There have been new entrants to the CLO market increased competition between financial institutions and diversification and the way bank reward programs are run.
Speaker Change: Some of this is a tailwind due to more focus on CLO programs than ever before which is good for us and the broader ecosystem.
Speaker Change: As we have seen these market dynamics changing we have not reacted quickly enough.
Speaker Change: So you rightfully have been focused on evolving our technology and platform from static to dynamic.
Speaker Change: But as we look to our Northstar driving consumer engagement and rewards we need to be even more focused on the end consumer.
Speaker Change: We want to make it easier for our consumers to find and utilize our offers this means continuing to work to improve our offer relevance. In addition to diversifying the channels through which we are engaging with them.
Speaker Change: More importantly, we get consistent feedback that our platform is unique not only because of our diverse set of advertisers, but also our innovative offer constructs that meet advertiser kpis.
Speaker Change: We must continue to strengthen these key differentiators.
Speaker Change: We are staying true to our mission of making commerce more rewarding we are in the business of helping consumers maximize their savings with the brands. They love while also discovering new ones and if we continue to build and more performing network and consumers will benefit and our bank partners and advertisers.
Speaker Change: While also clearly see benefits of partnering with us.
Speaker Change: We have laid out our path to bring more value to consumers, which I will talk about shortly we acknowledge we have been on this journey for several quarters.
Speaker Change: Now we have narrowed our focus to the fundamentals of driving network performance. Our approach includes a renewed focus on all stakeholders. Our bank partners are advertisers and consumers as we continue to work towards our North Star. We also acknowledged a backdrop of a more challenging macroeconomic environment.
Speaker Change: Some of our largest advertisers, but we see bright spots.
Speaker Change: On the feedback we've heard from them.
Speaker Change: They continue to see the value of CLO programs.
Speaker Change: As one CMO of a large advertisers set to us.
Speaker Change: <unk> as a strategic partner rather than a transactional relationship.
Speaker Change: That CMO noted that we successfully demonstrated the best incremental returns across their digital marketing channels. They are now looking to allocate more budget and integrate <unk> into their strategic plans for loyalty acquisition audience identification and category cross sells into.
Speaker Change: Higher margin products.
Speaker Change: Looking forward I have centered the team around four key pillars.
Speaker Change: Of our business supply demand network performance and bridge.
Speaker Change: First we will work to increase our supply so we can reach more consumers and help them maximize savings as well as diversify our revenue.
Speaker Change: Our broadening relationships with existing and new financial institutions in the U S and internationally.
Speaker Change: We are still on track to launch with a large financial institution in the U S before year end.
Speaker Change: Which will help expand our network and enable us to reach a larger audience to serve relevant offers.
Speaker Change: As expected the initial launch of our partnership will involve testing with a small card member base and grow from there.
Speaker Change: We are also focused on engaging with potential new financial institution partners and other commerce platforms in the U S to continue to grow our supply and meet consumers wherever they are in the U K, we continue to ramp up our partnership with Monzo and are in active conversations with.
Speaker Change: New financial institution partners.
Speaker Change: We are focused on increasing our supply and expanding our UK footprint in 2025.
Speaker Change: Second on the demand side, we are honing in on how we can drive more growth with our advertisers.
Speaker Change: We are focused on scaling our relationships with brands across core categories, while exploring new advertiser verticals the.
Speaker Change: The more diversified our advertiser base the more reward we will bring to consumers.
Speaker Change: More than a quarter of our advertisers are now on the insights portal.
Speaker Change: Self service portal powered by our unique purchase intelligence that offers market trends and competitive insights empowering brands to make more informed business decisions.
Speaker Change: We expect to see increased interest and usage as more advertisers gain access to the port.
Speaker Change: We see our insights on demand as a key differentiator and value add for brands and ultimately a driver of new and stickier relationships.
Speaker Change: Looking at our topline results, we had a solid quarter with budget growth. However, billings were down 2% excluding entertainment due to the ongoing challenges with delivery, which we'll cover in more detail.
Speaker Change: The U S. We saw continued growth in categories like travel and everyday spend we were able to close some large upsells intra quarter, which led to beating our original billings guidance.
Speaker Change: In the U K, we continued strong double digit growth and saw the highest amount of consumer rewards in the history of our UK business.
Speaker Change: We signed 26, new brands, which is an increase of 27% and also strengthen our key partnerships with existing advertisers to meet a diverse set of advertiser kpis and reward consumers in new ways. We are continuing to develop new contracts. In addition to generalize.
Speaker Change: <unk> brand level offers.
Speaker Change: Can deliver offers with higher values for specific purchases based on product category purchase channel and store location.
Speaker Change: We can also report on what products were purchased which helps advertisers better understand the profitability of our campaign and tap into category level marketing budgets.
Speaker Change: This quarter, we saw success with an everyday spend advertiser that ran SKU level insights integrating both their own transaction data and cosmetics data at.
Speaker Change: As an example, these insights could help inform future campaigns for premium versus regular fuel and show not only what fuel grade was purchase but also if customers were loyalty members and what other products were purchased in store.
Speaker Change: This helps advertisers drive regional growth and increase store level sales.
Speaker Change: We continue to test these kinds of offers and are working to automate them next year.
Speaker Change: We're encouraged to see consumers engaging more with these new AD formats, which we believe helped.
Speaker Change: Help differentiate our offers and open additional advertiser budgets.
Speaker Change: Moving on to our third pillar our continued focus on enhancing the performance of our network and stabilizing our core platform.
Speaker Change: We continue to actively address the delivery challenges that we discussed last quarter.
Speaker Change: We've taken several measures, including placing more stringent limits on campaigns enhanced daily monitoring and budget management improvements. We are also making improvements to our AD decisioning engine and seeing good initial results with our budget management tools.
Speaker Change: These are helping to adjust the pace at which serves are made based on campaign tight media fees and targeting.
Speaker Change: We've made initial progress with improving delivery this quarter through these efforts.
Speaker Change: As we've said some level of over and under delivery will always be inherent to any AD business and we are working to get to a more stable place where these extremes are no longer a concern.
Speaker Change: We are working on automating our efforts to further narrow the bookends of delivery outcomes.
Speaker Change: We also want to continue optimizing for engagement as increasing rewards powers, our flywheel as part of our network enhancements and to help with stabilizing delivery. We also continue to work with our advertisers to shift to engagement based pricing, which includes CPE CPR and CPT pricing.
Speaker Change: <unk>, we've seen strong interest from our new advertisers with 84% of new logos and 51% of all logos in the U S. In Q3 on engagement based pricing.
Speaker Change: We expect the majority of our advertisers to transition to engagement based pricing by the end of next year, which should help us optimize campaign performance through faster engagement based feedback.
Speaker Change: We're also making progress on the dynamic marketplace, which allows advertisers to see their campaign performance on a daily basis and make ongoing changes to their role as goals fees and budgets.
Speaker Change: This will lead to better performance of campaigns and higher retention of advertisers.
Speaker Change: We had 58 campaigns running on our dynamic marketplace in Q3 up from 20% the previous quarter.
Speaker Change: Regarding measurement, we are working with leading marketing measurement and experts to appropriately integrate card lytic data into media mix models and help our advertisers understand the incremental impact of our CLO campaigns.
Speaker Change: This helps ensure that we can participate in industry standard measurement, making it easier for advertisers to measure our impact.
Speaker Change: Our fourth and final pillar is continuing to invest in bridge and ripple as a significant growth driver for our business in October we welcomed and <unk> Torres as our new General manager of bridge, who is focusing on maximizing connectivity and further scaling.
Speaker Change: Our platform to address a larger suite of advertisers and retailers.
Speaker Change: And retail led the advertising and search business at Yahoo, and also brings a range of experience from Sunshine and Google.
Speaker Change: With ripple, we continue to make progress in Q3, we reached our goal of 100 million active unique shopper profile ahead of schedule, making ripple one of the largest networks of regional grocers and convenience stores in the U S.
Speaker Change: These shoppers have been historically hard to reach and ripple presents a unique opportunity for CPG brands to engage with these shoppers at scale.
Speaker Change: We saw increased adoption of our syndicated and custom audiences of these shopper profiles from CPG brands and agency partners, who find value in the ability to reach deterministic purchasers at the brand and product level.
Speaker Change: These four pillars continue to underpin what we believe is necessary to deliver maximum savings for consumers, which we believe will help power, our flywheel and drive growth in our business.
Speaker Change: We remain relentlessly focused on addressing our short term challenges while also taking a deliberate approach on how we prioritize our initiatives moving forward.
Speaker Change: I'll now turn the call over to a lexus to discuss the financials.
Speaker Change: Thank you Amit this quarter exceeded our expectations as we focused on stabilizing our core platform. We beat the high end of our guide on all metrics, primarily due to higher than expected budget.
Speaker Change: Turning to our specific third quarter results my comments will be year over year comparisons to the third quarter of 2023, excluding entertainment our former subsidiary that we sold in December 2023, unless stated otherwise.
Speaker Change: In Q3, our total billings were $112 million, a 2% decrease as expected our billings were impacted by continued challenges with delivery rather than pipeline weakness.
Speaker Change: As Matt mentioned.
Speaker Change: Decisive action during Q3 and made initial progress in improving delivery and we saw sequential improvement throughout the quarter.
Speaker Change: Stabilizing delivery remains an all hands on deck priority for us so that our billings can start to reflect our ability to capture bigger budgets and we can drive both performance and predictability for advertisers.
Speaker Change: As a reminder, our Northstar is consumer rewards, which materialized as consumer incentives in our financials.
Speaker Change: We believe that consumer rewards are a key indicator that our technology is delivering the most relevant offers to each person and driving value for advertisers and bank partners.
Speaker Change: This quarter consumer incentives increased by 20% to $44 $9 million.
Speaker Change: As we've seen in the last few quarters revenue, which was $67 1 million in Q3 decreased 13% due to driving more user engagement with our offers.
Speaker Change: Over delivery peaked in July and has sequentially improved as our efforts began to take effect and we do not expect this level of revenue as a percentage of billings to persist at 60%.
Speaker Change: We continue to believe that adjusted contribution is a better metric for assessing the health and performance of our business as it reflects how much we keep of every dollar we make.
Speaker Change: In Q3, adjusted contribution was $36 4 million down 11% from the prior year.
Speaker Change: As a percentage of revenue adjusted contribution margin was 54% up 1% year over year.
Speaker Change: Partner mix, partially offset the margin decline, we saw from elevated rewards and we expect similar or improved margins as we onboard new bank partners.
Speaker Change: Looking at our segment results.
Speaker Change: <unk> revenue decreased 17% due to delivery challenges, but we saw growth in total budgets, especially from new brands, which helped to broaden and diversify our advertiser base.
Speaker Change: In the U K, we continue to see strong double digit revenue growth at 33% as well as the fourth consecutive quarter of profitability.
Speaker Change: So why was the highest ever billings month in our 10 year partnership with Lloyd's.
Speaker Change: As Matt mentioned, we are pleased to see consumer rewards in the U K reached an all time high demonstrating strong engagement with our offers.
Speaker Change: Branded revenue was flat compared to last year, but as Amit mentioned, we've made good progress with ripple.
Speaker Change: We have early positive signals from ongoing and active engagement with advertisers and agencies.
Speaker Change: First party data is valuable and according to E. Marketer the retail media market is expected to double in the next three years.
Speaker Change: We believe we are well positioned to capture market share in this sector.
Speaker Change: Adjusted EBITDA declined year over year from $3 $6 million to negative $1 8 million.
Speaker Change: Total adjusted operating expenses, excluding stock based compensation came in at $38 2 million.
Speaker Change: While we continue to believe in the investments we are making to support longer term growth, we are tightly managing our expenses and maintaining cost discipline.
Speaker Change: We expect operating expenses to remain below $40 million in Q4.
Speaker Change: In Q3 operating cash flow was positive $1 4 million.
Speaker Change: Free cash flow was negative $3 $9 million driven by increased internally developed software expense.
Speaker Change: On the balance sheet, we ended Q3 with $67.0 million in cash and cash equivalents and we had $60 million of unused available borrowings under our line of credit which was recently extended through July 2026.
Speaker Change: Our total <unk> were $166 million for the third quarter, an increase of 2% driven primarily by organic growth in the U S as well as auto enrollment at Lloyd's and ramping up Monzo and the U K.
Speaker Change: <unk> was 40.
Speaker Change: 18% as a result of the 20% increase in consumer incentives as we continued to deliver more rewards to cardholders.
Speaker Change: Turning to our Q4 outlook.
Speaker Change: For Q4, we expect billings between 102 and $108 million.
Speaker Change: Revenue between 62 and $67 million.
Speaker Change: Adjusted contribution between 33% and $36 million.
Speaker Change: Adjusted EBITDA between negative $5 million and negative $1 million.
Speaker Change: Our billings guidance represents negative 22 to negative 18% growth, excluding our former subsidiary entertainment.
Speaker Change: This weakness is driven by continued but improving challenges with delivery as well as with pipeline.
Speaker Change: Let me start with delivery.
Speaker Change: We expect continued disruption in Q4, but continue to believe that modernizing our technology and evolving our pricing are necessary to our long term success.
Speaker Change: As Matt mentioned Cielo is becoming more important to our banks. They are continuing to make changes to their channels and user experience, which includes improved placement of the widget and more communication with their customers, but makes forecasting more difficult.
Speaker Change: We are assuming improvement over delivery as illustrated by our improved revenue as a percentage of billings of 62%.
Speaker Change: Said, we believe some level of elevated rewards will continue as our targeting surfaces. The right offers to the right users.
Speaker Change: However, billings are suppressed due to continued under delivery.
Speaker Change: We have more work to do to improve the efficiency of our AD network around under delivering campaigns.
Speaker Change: We continue to assume that our new financial institution partner, we will have no material impact to Q4.
Speaker Change: On pipeline.
Speaker Change: We're seeing advertiser caution around budgets, especially in the restaurant and travel verticals.
Speaker Change: While we continue to grow the number of advertisers we work with in restaurant overall spending has declined as a result of industry performance.
Speaker Change: We also expect to see some headwinds this holiday season, including the shorter period between Black Friday, and Christmas, but we are seeing areas of strength in everyday spend and this continues to be a key differentiator for <unk> in the market.
Speaker Change: We also are lapping in the reduction of a few key accounts in Q4 of last year.
Speaker Change: Well the number of new logos are up 38% they do not fully offset the decline in these large accounts.
Speaker Change: These accounts are termed for various reasons, including large scale reorganizations citizen marketing strategy or their own company performance the.
Speaker Change: The UK continues to be a bright spot and we expect continued double digit billings growth as we continued to work well with our new bank partners that enable us to unlock larger advertising budgets.
Speaker Change: We expect adjusted contribution to be similar on a margin basis.
Speaker Change: Our adjusted EBITDA guidance reflects the impact of our billings guidance and the fact that we will continue to make strategic hiring decisions, where we believe the return will be realized in the near term.
Speaker Change: We will continue to evaluate our investments and ongoing cost as we monitor performance for 2025, we believe performance will accelerate as we improve our operational execution scale, our major new ESI partner see continued strength in the U K and start to more fully realize contributions from ripple.
Speaker Change: We expect to invest only as topline performance improved and remain focused on improving delivery and launching a new bank partner in the near term.
Speaker Change: Now I'll turn it back to <unk> for closing remarks.
Speaker Change: Thank you Alexis overall, we are encouraged by the progress we've made this quarter above all our Q3 results indicate better predictability of our business and our relentless focus on addressing our short term challenges.
Speaker Change: Our efforts will take time, but we are focusing on the right priorities to maximize consumer engagement and rewards.
Speaker Change: I'll now turn it over to the operator to begin Q&A.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question. Please press star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Our first question comes from Robert <unk> with Evercore ISI. Your line is open.
Speaker Change: Hi, Good afternoon. This is rob on the call from Mark.
Speaker Change: It sounds like Youre getting a handle on over delivery.
Speaker Change: Can you talk a little bit about some of the key drivers of under delivery in sort of the plan to address some of those.
Speaker Change: Then also with the growth in logos, which I think is encouraging could you could you talk about trends in billings per logo your ability to consider as.
Speaker Change: You continue to improve platform capabilities through <unk> and dynamic marketplace.
Speaker Change: Maybe your ability to go back to some of the customers, where you're seeing churn of budget reduction and sort of reintroduce yourself to some of those and also just organically grow billings per logo overtime. Thank you.
Speaker Change: Thank you Robert.
Speaker Change: And thanks, everyone again for joining the call.
Speaker Change: I think.
Speaker Change: First of all thank you for recognizing the progress we've made.
Speaker Change: On overall delivery challenge that we had and that's something that as <unk> mentioned in her prepared remarks that continues to be our all hands on deck priority now we've made deliveries.
Speaker Change: <unk> sequentially, especially on over delivery, but there's more work to be done on under so things like the ranking under delivering campaigns differently better forecasting.
Speaker Change: Using mid flight changes testing different reward amounts all of those are different.
Speaker Change: Parts of the product that we're going to test and.
Speaker Change: Assess the under delivering campaigns and then just like what we did with under delivery.
Speaker Change: Our typical approach Robert is that we will test a set of things initially and then over time, we'll automate it and so we're going to follow the same approach on this.
Speaker Change: In terms of billings per logo I think as we've mentioned, we're quite happy to see that.
Speaker Change: Overall, the Advertiser count has studied has steadily grown and continues to increase.
Speaker Change: And as market conditions start to get better. We also increase we also expect the budgets our logo our budgets for advertiser to continue to grow.
Speaker Change: And to that end, we are actually working actively with advertisers to map out their 2025 budgets and their 2025 strategies.
Speaker Change: Got it thank you.
Speaker Change: Ask one quick follow up just on the.
Speaker Change: The issue of under delivery.
Speaker Change: As you addressed some of those issues are you able to automate those capabilities or create a feedback loop route with advertisers do they need to master.
Speaker Change: The way that they handle the platform too.
Speaker Change: Optimize delivery or is it fairly sort of an automated or.
Speaker Change: Process is a continual optimization. Thank you.
Speaker Change: Yes, Robert that's a good question.
Speaker Change: Our typical <unk>.
Speaker Change: Entre in this case is that we should takeaway all friction from the advertiser that it is our internal product teams.
Speaker Change: Our work to fix that and engineering teams.
Speaker Change: Area two fixed.
Speaker Change: For an advertiser it would.
Speaker Change: Not be something that they need to optimize our teams will work with the advertisers to inform and work with them how best restructure of the campaign.
Speaker Change: On an ongoing basis.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Jason Cryer with Craig Hallum. Your line is open.
Jason Cryer: Thank you I just wanted to see if you can give maybe some details. Unlike contrasting Q3 and Q4. It seems like you had a lot of success in Q3 with with billings and things like that but there is a growth step down as we get into Q4. So if you can parse those two things out that'd be great.
Speaker Change: Hey, Jason Thanks for the question.
Speaker Change: Yes, I think.
Speaker Change: I really wanted to point out there is delivery did sequentially improve in Q3. So we are seeing that continuing into Q4.
Speaker Change: What's different this time is that going into Q4, we are lapping some large accounts that did not reoccur in Q4 2023.
Speaker Change: If we did not have that happen the retail sector actually wouldn't be up in terms of dollars and brands for Q4. So.
Speaker Change: Underlying advertisers are still spending more with us committing budgets.
Speaker Change: But we did have a.
Speaker Change: Difficult comp I would say versus last year. So that is a lot of that.
Speaker Change: Driver of some of the performance Youre seeing in the pipeline.
Speaker Change: And then I just wanted to elaborate on something that I missed that in the prior answer solving under delivery is really important because it enables us to not over serve people and then open up for some of those under delivering campaigns. So that was really important that we did that first.
Speaker Change: And so as you can see from the margin guide delivery has improved especially on the over delivery side.
Speaker Change: Going from 60% of revenue as a percent of billing $2 62.
Speaker Change: At the high end of the range, but.
Speaker Change: Still more work to do to kind of close the gap on the under delivery side and that is a part of the reason why youre seeing.
Speaker Change: I guess Q4 guide that we provided today.
Speaker Change: Okay.
Speaker Change: And then just any maybe.
Speaker Change: Maybe any updates over the last quarter in your conversations with customers just around the CPE pricing solution I don't know if theres anything in terms of number of customers or just kind of receptivity and what youre hearing.
Speaker Change: So I think on pricing I think we've talked about that.
Speaker Change: We want them.
Speaker Change: Move towards engagement based pricing and that progress has continued to go well.
Speaker Change: Our advertisers who are engaging.
Speaker Change: They are.
Speaker Change: Like it quite a bit and large number as I mentioned in my prepared remarks large number of new advertisers are opting for those and so we continue to see success on that side.
Speaker Change: And in terms of.
Speaker Change: Our billings I think over time as I mentioned.
Speaker Change: In my prepared remarks, we continue to expect that we will have a higher proportion of our advertisers move towards engagement based pricing.
Speaker Change: Alright, thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Our next question.
Speaker Change: Our next question comes from Jacob Stephan with Lake Street Capital markets. Your line is open.
Jacob Stephan: I appreciate you taking my questions.
Jacob Stephan: Between call, so sorry, if theres a double coverage here.
Jacob Stephan: On the engagement is price model.
Jacob Stephan: I'm just curious it sounded like 5% or so of your customer base was using.
Speaker Change: Engagement based pricing as last quarter, but.
Speaker Change: Maybe could you just kind of help us understand.
Speaker Change: Is this going to be.
Speaker Change: Five six quarter sort of.
Speaker Change: Transition or.
Speaker Change: Is this fully elected by the actual customer.
Speaker Change: Yeah, Let me just clarify a little bit here, so dynamic pricing with 5%, which is more specifically around CPC or cost per click engagement based pricing is encompassing CPT, which is cost per transaction cost per redemption, and as well as cost per click so more broadly.
Speaker Change: We're at 38% of total billings in Q3.
Speaker Change: Up.
Speaker Change: Sequentially and that continues to grow so we do expect to be.
Speaker Change: The majority on CPE by end of next year in terms of the dynamic pricing, specifically and CPC, specifically that went from 20 brands in Q2 to 58.
Speaker Change: This quarter, so hopefully thats, a little more clear about the trend overall.
Speaker Change: We're not seeing pushback on pricing from brands did the lines ended industry standard and again improves the visibility to us and improve campaign performance.
Speaker Change: And it's also what the brands are used to buying.
Speaker Change: So really this is where we expect to be by the end of next year.
Speaker Change: Okay got it very helpful and then.
Speaker Change: <unk> been in the CEOC for three months now.
Speaker Change: It'd be great to get a sense of.
Speaker Change: What are your top three priorities, maybe near term and just kind of medium term.
Speaker Change: Yes, absolutely. Thanks, Thanks for that question.
Speaker Change: I, probably want to say at the top level my belief in the company and our place in the ecosystem continues to be very strong.
Speaker Change: And that is very much reflected by our team's excitement about what we do.
Speaker Change: And how they're showing up in the market and with our new partners.
Speaker Change: And so on.
Speaker Change: In terms of priorities I'll go back to what I mentioned of basically centered our teams around the four key pillars.
Speaker Change: We really are thinking about supply.
Speaker Change: Sure.
Speaker Change: Partners very differently, we're engaging with partners in a fundamentally different way.
Speaker Change: Likewise, where.
Speaker Change: Going after our demand our advertisers engagement.
Speaker Change: Much more strategic and broad based way.
Speaker Change: We want to make sure the network performance continues to improve.
Speaker Change: And to that end, we're really looking at our network from an end to end point of view.
Speaker Change: We're looking at all the way from the start of the process, which is our own forecasting and projections and then we think about delivery and then all the way towards measurement.
Speaker Change: And then we're bringing it closer.
Speaker Change: Bridge closer to connect with our core business and the core platform. So so those are the four key pillars as I mentioned earlier.
Speaker Change: And I think it will the transforming a business takes some time, but we strongly believe that this is the right path for us to grow the company.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: Okay.
Speaker Change: One moment.
Speaker Change: Okay.
Speaker Change: And our next question comes from Luke Horton with Northland Capital markets. Your line is open.
Luke Horton: Hey, guys. Thanks for taking the question.
Speaker Change: I just wanted to touch on I know, obviously, you're working through these delivery issues at the moment, but.
Speaker Change: If we look ahead, a little bit if you're once you are able to get the advertisers over the CPE.
Speaker Change: And kind of work through some of these delivery issues the rollout of the major U S.
Speaker Change: Financial institution is there any sort of.
Speaker Change: Kind of ballpark of where you see revenue as a percentage of billings normalizing.
Speaker Change: Okay.
Speaker Change: Hey, thanks.
Speaker Change: Yes, Unfortunately, not giving guidance around 2025 at this time.
Speaker Change: I think you should expect we're working we continue to believe that our Northstar is rewards and we want to continue to drive redemptions and kind of increase that ratio I think we can only do that to the extent that we can improve our margins over time and so a little early to say, where that's going to land.
Speaker Change: But driving redemptions is definitely yes.
Speaker Change: Yes, still a key piece of our strategy.
Speaker Change: And I think we should be able to continue to improve.
Speaker Change: Both the bookends the over and under delivery at.
Speaker Change: Time goes on and then once that stable, we can start to test different reward formats different reward amounts.
Speaker Change: But at this time that not ready to give a guide on that longer term margin.
Speaker Change: Okay Fair enough and then just with the rollout of the major bank partner in the U S.
Speaker Change: I think you had mentioned there is no material impact in <unk>.
Speaker Change: Just wondering how that sort of plays out over 2025, if we see an initial impact or kind of the <unk>.
Speaker Change: Tiered approach with the rollout.
Speaker Change: I know I wish I could give you some more clarity here.
Speaker Change: Yes.
Speaker Change: We're doing an initial launch right now very small and it will continue to scale over time so.
Speaker Change: We're not ready to provide additional guidance into 2025, but very optimistic.
Speaker Change: And partnering really well with this large partner.
Speaker Change: So very excited to see how that plays out over time.
Speaker Change: Got it thanks for taking the question.
Speaker Change: Thank you.
Speaker Change: Again to ask a question. Please press star one on your telephone.
Speaker Change: I am showing no further questions at this time, so I would now like to turn it back to Amit Gupta for closing remarks.
Speaker Change: Okay.
Amit Gupta: Thank you all for joining US today, we look forward to discussing our fourth quarter and full year results on the next earnings call. Thank you again for all your questions.
Speaker Change: Yeah.
Speaker Change: This does conclude today's program you may now disconnect.