Q1 2025 Cardlytics Inc Earnings Call
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This call is being recorded on Wednesday May 720 25.
Speaker Change: Now I would like to turn the call over to Nick Arlington, Chief legal and privacy Officer. Please go ahead.
Speaker Change: Good evening and welcome to the card <unk> first quarter 2025 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 risk.
Speaker Change: <unk>, including for the second quarter of 2025, our capital structure, the rollout of new partners and operational and product initiatives for discussion on 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 our 10-Q for the quarter ending March.
Speaker Change: 31, 2025, 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 card Lititz website.
Speaker Change: Today's call is available via webcast and a replay will also be available on our website.
Amit Gupta: On the call today, we have CEO, Amit Gupta and CFO electric due to you know.
Speaker Change: Following their prepared remarks, we'll open it up for your questions with that I'll hand, the call over to Amit.
Speaker Change: Good evening and thank you for joining our first quarter 2025 earnings call.
Speaker Change: I'm going to start our call with a few comments on the macro environment as.
Speaker Change: As you are all acutely aware, we've seen a lot of headlines about volatility and declining consumer sentiment in the first quarter.
Speaker Change: Based on our purchase data, which represents approximately five eight trillion dollars in spend annually consumer spending is still strong.
Speaker Change: While there were some softness in February we saw spending rebound in large and growing steadily in April.
Speaker Change: Our data showed strong growth across categories like auto home improvement e-commerce, and apparel, suggesting that consumers are front running their purchases before tariffs take effect.
Speaker Change: We are keeping a close pulse on these fluctuations and how consumers are responding to market changes.
Speaker Change: Leading brands continue to spend with us, but overall advertisers have been more cautious with their budgets given the macroeconomic uncertainty.
Speaker Change: While we expect this wait and see stance to continue we are focused on leveraging the breadth and depth of our purchase intelligence to help our advertisers navigate this uncertainty for example, we know that the airline industry has been facing headwinds and we've helped a large U S carrier bridge this gap.
Speaker Change: Seeing strong performance and incremental return this advertiser scaled up to annualized budgets to re engage their customers and deliver outsized value.
Speaker Change: Now turning to our key business pillars as I shared on our last call. We entered 2025 with continued focus on building momentum across our key pillars to match life consumer engagement, which remains our north star.
Speaker Change: Our four pillars, increasing supply strengthening demand optimizing our network and growing bridge continue to underpin our journey I've had two platform is card links.
Speaker Change: Let me explain what I mean by platform is building on our long standing leadership in the financial media space, We continue to evolve our business to position ourselves as a differentiated commerce media platform.
Speaker Change: This means building an ecosystem that provides true multi sided participation lie.
Speaker Change: Flywheel and network effects seamless plug and play integration and powerful data capabilities.
Speaker Change: I see these elements as hallmarks of a high performing tech platform and we are focusing on the initiatives that further strengthen our position.
Speaker Change: We believe we are the only platform with this level of scale and data, which enables us to provide an array of rich and sophisticated solutions for our publishers and advertisers alike.
Speaker Change: Now I'll share more details on our progress.
Speaker Change: First increasing and diversifying our supply to meet consumers wherever they are.
Speaker Change: I wanted to start by addressing a frequently asked question about why we don't share more details on our partners.
Speaker Change: While we try for crisp currency, our partners request and offer the terms of our contracts limit what we can discuss publicly.
Speaker Change: We look forward to sharing more details, including the names of certain new partners in time and when permitted.
Speaker Change: With our newest large Parker, we have lost with all eligible users and continue to scale the value of our content. We are seeing strong engagement from this user base and our locking different consumer demographics with this partnership.
Speaker Change: We expect this Parker to continue ramping the volume of our content throughout the year, which will enable us to deliver more offers featuring our high quality brands to their customers.
Speaker Change: As of April they are now one of our top five banks in terms of billings run rate.
Speaker Change: Our newest Neo Bank Parker is now ramped up and live on our latest platform and our offers are reaching all their eligible card members with premium membership. We are encouraged by the strong redemption rates and this digital only channel since the launched only a few weeks ago.
Speaker Change: Next I'm excited to share that our vision to expand and diversify our network beyond financial institutions is now a reality.
Speaker Change: We recently signed our first non Fr Parker agreement to run offers on a leading digital sports platform with friends and family now live and the full rollout expected in the coming weeks.
Speaker Change: We expect to bring additional partners on board soon and these non F. EIS will make up our new cordless extra rewards platform or CRP.
Speaker Change: With CRP any market with digital properties frequented by consumers can become a publisher partner, which opens the door for new verticals that expand our supply universe.
Speaker Change: This is an important step in the plot formalization of card lytic as we can now engage in watches and a more strategic way.
Speaker Change: In addition, we have been investing in our tech stack to offer more plug and play opportunities for our publisher partners historically, our integrations with large banks have been highly custom and lengthy.
Speaker Change: The work we've done to easy implementation process, we were able to onboard our newest neo bank partner in eight weeks and our first CRP partner in four weeks.
Speaker Change: We now offer an SDK hosted solutions and robust API. So that most publishers can integrate and go live on our platform quickly.
Speaker Change: These turnkey solutions are especially beneficial for smaller banks that want to join our network with minimal lift and friction.
Speaker Change: You can also expect to see benefits of our tech improvements. The next time, we integrate with a large bank.
Speaker Change: And lastly, we recently shared that we will not be renewing our current agreement with bank of America, We expect to continue providing uninterrupted service to them through early 2026, and all signs point to us continuing to partner together after that and delivering our offers to their customers through other means.
Speaker Change: Additionally, after the conclusion of our current agreement, we expect to fully offset our legacy tech stack and devote all resources to our card platform.
Speaker Change: Furthermore, we expect no material impact to our financials and we will continue to invest in diversifying our supply.
Speaker Change: Second strengthening and growing advertising demand.
Speaker Change: Our leaning into our core differentiator, which include more sophisticated capabilities like working location level data and multiyear offers.
Speaker Change: These types of offer setups now account for nearly 10% of budgets and have proven effective in influencing behavior.
Speaker Change: Leading advertisers are using our capabilities to target specific areas of softness in their business and deliver more value to their customers. For example airlines have used targeted receipt level offers to promote a breakthrough premium CD our bookings to specific destinations gas.
Speaker Change: <unk> brands have also leverage these offers to boost.
Speaker Change: Fuel purchases.
Speaker Change: Leading retailers are using our capabilities to drive omnichannel behavior to deepen their customer relationships.
Speaker Change: We built on our momentum to drive new business and continue to add new brands to our platform and we have also expanded our integration with additional third party content providers, which allows our publisher partners to Rede network benefits by accessing diverse content with high quality advertiser demand.
In the U K, we had strong performance and growth in categories like travel and entertainment and restaurants, even as advertisers overall marketing budgets shrunk.
Speaker Change: Looking ahead, we see opportunity for continued growth as brand shift their AD spend to direct marketing channels with proven results.
Speaker Change: We continue to see good traction with our insight port with a 77% sequential increase and advertisers utilizing the portal in Q1.
Speaker Change: <unk> has played a critical role in securing executive Bryan and contributed directly to high value renewables.
Speaker Change: Leading data driven brands are accessing the insights portal on a daily basis, and using insights routinely and broader business decisions.
Speaker Change: As our client at shake Shack that port we.
Speaker Change: We are in the port of regularly pulling data to share across the leadership team.
Speaker Change: <unk> share in particular is very valuable for us.
Speaker Change: Good.
Speaker Change: Sure.
Speaker Change: Our continued efforts to optimize and build a high performing network.
Speaker Change: On our last call I shared how we were making continued improvements to delivery.
Speaker Change: With these ongoing efforts I am pleased to share that we believe delivery issues are now largely resolved.
Speaker Change: Improved budget management projections and rankings have helped our progress and we are making significant strides to automate these initiatives.
Speaker Change: Further maximize the performance of our network. We are working on a number of models designed to optimize for Activations and redemptions by increasing relevancy and program participation.
Speaker Change: These models are showing early promising results and we will continue to fine tune that.
Speaker Change: Our continued investments in data engineering are not only enhancing network effectiveness, but are also providing solutions to address specific advertiser challenges.
Speaker Change: For example, we are leveling up geo targeting capabilities by matching spending patterns in different locations, enabling us to more precisely target consumers with offers in the areas. They frequently visit and shop, not only where they live.
Speaker Change: Our shift to engagement based pricing also continues to progress with 74% of our advertisers on engagement based pricing at the end of Q1, representing more than half of our billings.
Speaker Change: And our fourth and final pillar accelerating our growth in bridge, we continue to see interest and a healthy pipeline for our identity resolution solution. In Q1, we expanded our relationship with a leading retailer and signed a top sporting goods chain, which further validates our core technology and growth potential.
Speaker Change: Sure.
Speaker Change: We are working with these clients to power their identity, driven marketing strategies and support their digital transformation goals.
Speaker Change: With ripple, we now have more than 130 million unique shoppers across 11 retailers in the U S.
Speaker Change: We are working to strengthen our revenue opportunities through custom audience campaign growth with CPG and agency clients.
Speaker Change: As mid market and regional retail media networks gain prominence our integrated solutions across bridge uniquely position us to power both sides of this evolving ecosystem connecting retailers brands and shoppers with precision and measurable impact.
Speaker Change: Importantly, we continue to focus on integrating our SKU level data from bridge, which represents over 12 billion transactions per year with our core Linux purchase data.
Speaker Change: Last quarter, we mentioned, we will begin testing a series of CPG offers from large retailers using both bridge and card lytic data and I'm happy to share that we have just launched this pilot with the retailer and one of our bank partners and look forward to sharing updates on this effort.
Speaker Change: This pilot represents the first time, we've been able to publish a CPG offer our leverage British data on our core cosmetics platform.
Speaker Change: By continuing to lean into our core platform capabilities and Differentiators, we have created a resilient platform that performs through a different macro environment to position ourselves for success. We are proactively taking control of our costs and ensuring our liquidity is in a good position.
Speaker Change: We recently extended the maturity of our line of credit to 2028, and also implemented a 15% reduction to our workforce earlier this week.
Speaker Change: I will let a lesser share more details on these actions.
Speaker Change: I'd like to thank all our teams for their hard work and resiliency as we make decisions to future proof our company <unk>.
Speaker Change: Finally, I am excited to welcome Rory Mitchell, our new Chief business officer to our leadership team.
Speaker Change: Rory joins us with more than 15 years of experience in commerce media and leading teams through a critical business transformations.
Speaker Change: I look forward to his insights and fresh perspective, as we continue our platinum edition Jordan I will now turn it over to Alexis to discuss the financials.
Speaker Change: Thank you Amit.
Speaker Change: The first quarter, we performed above or at the top end of our guidance across all metrics. As a reminder, Q1 is a seasonally weak quarter for <unk> in terms of billings and free cash flow and we also decommissioned the dosh consumer App in late February.
Speaker Change: Turning to our specific first quarter results my comments will be year over year comparisons to the first quarter of 2024 unless stated otherwise.
Speaker Change: In Q1, our total billings were $97 6 million or seven 3% decrease we beat our billings guidance driven primarily by pipeline wins in the U S and incremental improvement on delivery.
Speaker Change: On a category basis, we saw strength in our core vertical everyday spend and in specialty retail grew 52%.
Speaker Change: The travel category declined as we saw budgets shrink from a few key accounts.
Speaker Change: We also continue to see high amounts of new business with 96% of new brands on engagement based pricing.
Speaker Change: Consumer incentives decreased by five 1% to $35 $7 million and revenue decreased eight 4% to $61 $9 million driven by lower topline billings and category mix of advertisers.
Speaker Change: Our revenue to billings margin remained flat to prior quarter, but down <unk>, 8% versus prior year due to pressures on advertiser performance.
Speaker Change: Looking at our segment revenue results.
Speaker Change: Our U S revenue, excluding bridge decreased 10, 9% due to lower billings as previously discussed in the UK, we saw eight 6% revenue growth driven by higher billings and increased supply.
Speaker Change: Signed 15, new brands in the UK this quarter, primarily indirect to consumer and retail categories.
Speaker Change: <unk> revenue increased one 6% due to new client wins with two major retailers.
Speaker Change: Adjusted contribution was $32 4 million down 12, 5%.
Speaker Change: As a percentage of revenue our adjusted contribution margin was 52, 4% down two four points due to a less favorable partner mix.
Speaker Change: Adjusted EBITDA was negative $4 4 million a decline of $4 $6 million.
Speaker Change: Total adjusted operating expenses, excluding stock based compensation came in at $36 8 million flat to the prior year.
Speaker Change: In Q1 operating cash flow was negative $6 $7 million free cash flow was negative $10 8 million an improvement of $11 $6 million from the prior year due to a reduction in incentive compensation payout related to 2024.
Speaker Change: Historically, the first quarter is the lowest from a cash flow standpoint, and we expect this to be the case in 2025.
Speaker Change: On the balance sheet, we ended Q1 with $52 million in cash and cash equivalents and $60 million of unused available borrowings under our line of credit.
Speaker Change: As previously announced we extended the maturity date of our line of credit to April 2028 under the same financial terms. This gives us $87 million of liquidity as of the end of Q1 after accounting for our minimum cash covenant of $25 million.
Speaker Change: Lastly, in Q1, we paid $3 million to our settlement with Srs with only $2 million remaining in Jan.
Speaker Change: This quarter, we are introducing a new metric monthly qualified users are <unk> and retiring monthly active users or MAA is.
Speaker Change: And to use our defined as unique targeted consumers that have made a transaction in a given month they represent the pool of possible redeemers that we can monetize.
Speaker Change: We are making this change for a few reasons first this new metric allows us to be consistent across our publisher partners as not all partners provide the data necessary for an equivalent miu metric.
Speaker Change: And can you use also align more closely with our efforts to diversify supply across our Si partners.
Speaker Change: In the first quarter, we had $214 9 million MQ use an increase of 12% driven by the introduction of our newest large si partner.
Speaker Change: Excluding this partner and can you use would have been down 1% due to winding down the das consumer App and a smaller partner for.
Speaker Change: For comparability and then use excluding our newest largest si partner would have been $169 7 million up 2% from prior quarter and up <unk>, 7% from the prior year.
Speaker Change: In conjunction with <unk>, we are introducing adjusted contribution per and Q U R E CPU and will retire average revenue per user or <unk>.
Speaker Change: ECP you will include adjusted contribution from the <unk> platform and exclude bridge. We continue to believe that adjusted contribution is a better indicator for our business and revenue as it reflects the value we retain after rewards and partner share.
Speaker Change: ECP you reflects how efficiently we convert advertiser budgets to value the company can retain.
Speaker Change: In the first quarter <unk> was down 24% year over year as the MQ you base of our newest large Si partner has not yet been fully monetized.
Speaker Change: Excluding this partner ECP, you would've been down 15%.
Speaker Change: For comparability <unk>, excluding this partner would have been 36 in Q1.
Speaker Change: We have provided an eight quarter historical deal with these two new non-GAAP kpis in the 10-Q that we filed today.
Speaker Change: Now turning to our outlook for Q2.
Speaker Change: I want to acknowledge the macro environment and note that our wider range reflects the potential for a wider set of outcomes.
Speaker Change: For Q2, we expect billings between 101 hundred $8 million.
Speaker Change: Revenue between 61 and $67 million.
Speaker Change: Adjusted contribution between 32, 5% and $36 $5 million.
Speaker Change: And adjusted EBITDA between negative four and positive $1 million.
Speaker Change: Our billings guidance represents a negative 9% to negative 2% decrease year over year.
Speaker Change: There is still a large amount of caution among our advertisers leading to delays when committing to AD spending on the flip side macro uncertainty is providing an opportunity for insights driven selling as there is interest in understanding U S consumer spending trends and industry impacts.
Speaker Change: From a pipeline standpoint, we are seeing traction with new logos from a category standpoint, we see strength in everyday spend and specialty retail as we did in Q1.
Speaker Change: As many peers have noted the travel and restaurant categories are seeing weakness, but we are in a unique position to help advertisers in these categories drive incrementally.
Speaker Change: As I mentioned, a few weeks ago, we signed a large annual commitment with a large U S carrier that had previously reduced spend with us in Q1.
Speaker Change: In Q2, we expect incremental improvements to delivery with a renewed focus on relevancy and program engagement.
Speaker Change: With our newest large Si partner, we are still in early stages of our partnership and continue to iterate on what works best to maximize value to their cardholders.
Speaker Change: Well, 100% of eligible customers are receiving offers we continue to unlock additional content and have grown the number of our brands on their platform by 21% in the last months.
Speaker Change: We are encouraged by our recent run rate in billings, which is now similar to one of our top five banks and there continues to be upside as this partner sales.
Speaker Change: Our newest Neo Bank partner is also included in our Q2 guidance at about half the billings of our newest large EFI partner.
Speaker Change: We are excited to launch the card latest rewards platform with our first non it by partner in Q2 as this is our first non if I partnership we are not assuming any financial impact in 2025 and are hoping to learn from this launch.
Speaker Change: Revenue as a percentage of billings is expected to be in the low 60% range for Q2 as well as for the full year.
Speaker Change: While we have largely solved over delivery, which historically has been a drag on this metric we have seen performance pressures in this macro environment.
Speaker Change: We believe these pressures will continue and have made strategic decisions to drive incremental performance in billings.
Speaker Change: We are expecting adjusted contribution as a percentage of revenue to be in the mid 50% range or.
Speaker Change: Our guidance reflects no material change to mix from any of our partners.
Speaker Change: Adjusted contribution as a percentage of revenues should improve sequentially as we diversify our supply.
Speaker Change: Our adjusted EBITDA guidance, primarily reflects our billings guidance, coupled with the reduction in staff that we completed earlier this week.
Speaker Change: This reduction impacted approximately 15% of our workforce, which translates to $16 million in annualized savings compared to our Q1 run rate.
Speaker Change: A portion of this will be reinvested into our lower cost technology hub. So we can continue to invest in key product areas.
Speaker Change: Operating expenses are expected to be sustained below $35 million per quarter accounting for the net savings and excluding stock based compensation.
Speaker Change: For 2025 capital expenditures are expected to reduce to below $4 million range per quarter free cash flow should sequentially improve including semiannual payments of our interest on our convertible note.
Speaker Change: We believe we have derisked, our business and that we have sufficient liquidity to satisfy all of our financial obligations, including the repayment of our outstanding convertible note.
Speaker Change: Let me have proven so far we are taking a disciplined approach and we will invest only as topline performance improves.
Speaker Change: As a result, we have de prioritized or delayed certain product initiatives divested noncore assets and shifted resources to lower cost geographies.
Speaker Change: We continue to invest in three main areas, including sales diversifying our supply, including non Fi partners Enbridge.
Speaker Change: For the rest of the year, we are focused on delivering improved adjusted EBITDA sequentially through the year based on improved execution and continued responsible expense management.
Speaker Change: We believe this can be enabled by sequential billings growth driven by a stabilized platform.
Speaker Change: Delivering enhanced advertiser value and greater diversification of our supply partners.
Speaker Change: I'll now turn it back to Amit for closing remarks.
Speaker Change: Thank you Alexis.
Amit Gupta: Before we move to Q&A I want to underscore the journey, we're on to a platform is our company, our expanding ecosystem depth and breadth of our data and ongoing tech investments put us in a unique position to become the preeminent commerce media platform.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session and if you wish to ask a question. Please press star and one on your telephone keypad. You will you will hear a prompt that your hand, that's been rates if you wish to cancel your.
Amit Gupta: Request, Please press star two.
Amit Gupta: Once again star in one if you wish to ask a question.
Amit Gupta: One moment, please why it will compile the Q&A roster.
Amit Gupta: We now have our first question and this comes from the line of Jacob Stefan from Lake Street. Your line is now open. Please go ahead.
Jacob Stefan: Hey, I appreciate you taking the questions congrats on the quarter.
Jacob Stefan: I was hoping that maybe we could touch on ERP a bit more.
Jacob Stefan: Can you kind of help us think about.
Jacob Stefan: What kind of opportunity does this represent on the non EFI side maybe.
Jacob Stefan: And maybe comparing it to the Fi.
Jacob Stefan: Size of the business as this market larger or.
Jacob Stefan: Is it kind of a nice complementary market to the current business.
Jacob Stefan: Jacob Thank you for the question.
Speaker Change: I think it's it's a very good question to start the.
Speaker Change: With a strong quarter we've had.
Speaker Change: <unk> card Linux award platform or CRP as.
Speaker Change: As we've mentioned is a it's a major step forward. It really allows us to frankly changed the definition of a partner.
Speaker Change: And in this case.
Speaker Change: It'll be a digital sports.
Speaker Change: Platform that'll be our first CRP partner and <unk>.
Speaker Change: Congratulations to them that they are actually forward thinking and leaning.
Speaker Change: With us and driving more value to their to their consumers in.
Speaker Change: In terms of the magnitude we definitely see this as a strong path forward, but we don't want to.
Speaker Change: Kind of get ahead of ourselves.
Speaker Change: We want to make sure that we continue to partner with some leading merchants and take the wrinkles out of that.
Speaker Change: Tech stack so to speak in the platform.
Speaker Change: And then scale.
Speaker Change: And as soon as we have a better sense of once the sum of these wrinkles or taken out we'll come back to you with the magnitude, but we're really excited about the potential.
Speaker Change: Actually now our advertising partners.
Speaker Change: Can become a publisher partners and we also get to attract new partners where consumers frequent.
Speaker Change: Got it helpful and just to clarify maybe is this is this like a sports betting platform, where maybe you're incentivizing consumers to.
Speaker Change: To make a better at a certain point during the gamer.
Speaker Change: And my hats off on that.
Speaker Change: Yes.
Speaker Change: I think we can say the partner, but it's not a sports betting platform.
Speaker Change: And it is a one of the larger.
Speaker Change: Our largest digital sports platform, but as I mentioned in my remarks at times were not able to we want to share their names by the times were not able to share but as soon as we can contractually will come back and share logic.
Speaker Change: Let me try to understand.
Speaker Change: Okay, and then for a minute it's Alexis just two things I think to.
Speaker Change: To hit on this really opens up anywhere you are using your app.
Speaker Change: On our website and log in with a partner it really unlocks any of that property. So it's not just necessarily this one example that we're talking about but you can think about anything that you are frequenting.
Speaker Change: In terms of an app or website, that's an opportunity to serve you and offer one of our one of our cashback offers so it really does open up the.
Speaker Change: Opportunities in terms of outside of the bank channels and then it also does.
Speaker Change: Can up opportunities for advertisers that we can't currently work with for example, financial services would not be something that we're putting onto our.
Speaker Change: If my partners, but we could be advertising that category on these non non bank partners.
Speaker Change: Okay got it.
Speaker Change: Yeah.
Speaker Change: Alright, and just could you repeat that.
Speaker Change: Sorry, if my audio is not good it just offers additional diversification benefits on both the advertising side.
Okay.
Speaker Change: Got it.
Speaker Change: One for me you guys noted some positive consumer spending I'm just kind of curious.
Speaker Change: Is that up significantly from maybe last year, this time, where it truly as consumers kind of front running those tariffs or is it relatively stable with kind of last year's trends just curious.
Speaker Change: Yeah, I think generally we think about it on a sequential quarter on quarter basis, So and we have seen the spending our growth continued to hold strong Jacob.
Speaker Change: As you know we see about five eight trillion dollars of spend such a large swath of.
Speaker Change: Consumer spending in the country and in mostly in the everyday spend categories to spend has held strong.
Speaker Change: I think as I mentioned in my prepared remarks.
Speaker Change: In areas of travel we've seen some softness creep in.
Speaker Change: But our right now.
Speaker Change: Some of the science point tool some of this might be front running.
Speaker Change: But we'll keep a close eye on this and on these fluctuations and what the trends change. This is an area, where we continue to partner with our advertising partners and.
Speaker Change: And other part publisher partners to get them to advice them. So that they can stay ahead of these potential changing consumer patterns.
Speaker Change: Okay. Thanks, I appreciate all the color.
Speaker Change: Yes.
Speaker Change: Thank you and the next question comes from Lou Carton from Northland Capital markets. Your line is now open. Please go ahead.
Lou Carton: Yeah, Hey, guys congrats on the quarter.
Lou Carton: Just wanted to touch back again on the CRP the consumer rewards platform just to kind of the economics for card lytic with these new partners.
Lou Carton: Would this be comparable to what you're seeing in the other side of the business or or is it early to tell or is it engagement based pricing.
Lou Carton: So is there any sort of details there.
Lou Carton: Yeah, I think most likely again, thank you for the question.
Lou Carton: Most likely it will be but we are moving the platform towards an engagement based pricing model. So we'll see more and more engagement based pricing offers an edge on these platforms on CRP as well.
Lou Carton: Generally in terms of economics, I think the great thing in this cases.
Lou Carton: The nature of interaction is different.
Lou Carton: The consumer frequency and the consumer engagement is different so we see the economics being pretty positive both for us and our publisher partners, but in terms of nuances I think we want to get a few rinse and repeat and a few data points and multiple partners and then we'll have a better sense of economics, but so far.
Lou Carton: We see positive economics.
Lou Carton: Both for us and our publisher partners.
Lou Carton: Got it makes sense and then just touching on the macro environment kind of between the U S and Europe.
Just any any puts or takes there that youre seeing between.
Lou Carton: Between geographies.
Lou Carton: Now if I had missed it on the call, but I don't think I heard about the UK.
Lou Carton: During the quarter.
Lou Carton: Yeah, I think that's a fair question I think in the U S. As we said the spend is largely holding strong.
Lou Carton: And in the UK as well, we don't see any major changes in the spend patterns and.
Lou Carton: Enough to cause us to advise our advertisers differently. So so far I think we're seeing the spend patterns being the same.
Speaker Change: As I mentioned in my prepared remarks advertisers. Some advertisers are in the wait and see environment, but they are actually continue to spend with us and specifically hitting the areas, where us softness and there are areas, which are software and their business patterns.
Speaker Change: Okay got it well. Thank you guys for taking the questions and congrats again on the quarter.
Lou Carton: Yes.
Speaker Change: Thank you once again necessary reminder, for those who want to ask a question. Please press star and one on your telephone keypad.
Speaker Change: And the next question comes from our Alberta coal break from Evercore. Your line is now open. Please go ahead.
Speaker Change: Alright, thanks for taking my questions.
Speaker Change: A few please just given the macro uncertainty at the moment, just wondering how you're sort of internally assessing your billings base your customer base at the moment.
Speaker Change: Well youre looking by vertical exposure customer tenure, and so forth and anything maybe tell us about the level of visibility that you have right now in say Q2, and the rest of the year and then secondly on the cosmetics rewards platform and the opportunity with the non Fi partners, sorry, I haven't I'm not up to speed, but can you just maybe it might be helpful to give a recap or an overview.
Speaker Change: On mechanics of things like redemption, you know how the spending strategy how the reward is delivered and so forth and this MSR non fr channel and then I have one quick follow up thank you.
Speaker Change: Sure Robert Let's I think let's get to both of your questions.
Speaker Change: On the advertising side I think as we briefly alluded advertisers have been cautious in.
Speaker Change: Some cases, they are wait and see approach.
Speaker Change: But the good good thing in this area, we can say.
Speaker Change: Even in the case of downturn or a slower economic environment there.
Speaker Change: There are certain categories that are counter cyclical so restaurant and retail advisor advertisers typically tend to perform better because consumers are more prone to looking for deals and offers and their everyday spend more frequently. So typically we've seen those advertisers not only perform better but the <unk>.
Speaker Change: Tumor engagement and redemption start too.
Speaker Change: Correspondingly increase.
Speaker Change: Generally I think as I mentioned before.
Speaker Change: In some cases, where advertisers are seeing potential macro uncertainty they are leaning in and theyre actually working with us so.
Speaker Change: Give example of one of our.
Speaker Change: A large U S carrier airline carrier, where they wanted to make sure that they secure like an annual level of capacity from our <unk> platform to make sure that they can continue to reach their customers and drive value to them. So there is some wait and see but generally we are working with advertisers.
Speaker Change: Closely and taking more creative.
Speaker Change: Opportunities to them to make sure that they can continue to spend with us.
Speaker Change: So that's more on the advertiser, Andy and the macro impact side on the CRP I think the probably do the summary version and happy to discuss specific details.
Speaker Change: As a follow up up it really allows us to redefine our partner ecosystem. So it allows us to extend or expand our publishing supply from banks to non bank merchants where consumers frequent.
Speaker Change: On their digital properties. So as an example, we shared.
Speaker Change: We're launching our CRP with a large data digital sports marketing platform.
Speaker Change: And that's an example, where their consumers will get there.
Speaker Change: The benefit of our offers and it gets them to drive deeper relationships and more value to their consumers.
Speaker Change: And for US this is a credit to their engineering team and our and our team we were able to onboard them within four weeks and we built a platform very quickly and we talked about it over the last earnings call and we're happy that we were launching them.
Speaker Change: We're launching this platform with them this.
Speaker Change: In this quarter.
Speaker Change: Great. Thanks, and then the quick follow up is just on the partner mix and the impact on adjusted contribution in the quarter.
Speaker Change: That's why I wanted to ask for a little more detail it looks like that's going to reverse in Q2, but just wanted to check on that thank you.
Speaker Change: Yes. Thank you for the question you're right.
Speaker Change: Q2, returning to a 54% at the midpoint of our guide for adjusted contribution to revenue margin and expecting this for kind of the rest of the year I think in Q1. This is really a matter of legacy bank makes an engagement shifts that happen for a variety for a variety of reasons, including content and engagement.
Speaker Change: And so we just had a little bit of a headwind there in terms of the content in Q1, but returning back to kind of the mid mid <unk> for the rest of the year.
Speaker Change: And especially I sequentially, improving as we continue to ramp our newest.
Speaker Change: My partners, both <unk> and <unk>.
Speaker Change: Great. Thank you thank.
Speaker Change: Thank you.
Speaker Change: Thank you and the next question comes from Jason <unk> from Craig Hallum. Your line is now open. Please go ahead.
Speaker Change: Great. Thank you this is for Jason and apologies. If you guys have touched on any of this already.
Speaker Change: But just kind of given you guys are a little unique in over indexing towards daily spend advertisers just kind of curious how having those daily spend offers can play into both from an advertiser perspective as far as kind of what you guys are hearing from those advertisers.
Speaker Change: How are you would expect that to kind of play into a consumer.
Speaker Change: Current consumer environment.
Speaker Change: Yeah I think this is.
Speaker Change: Thank you for the question Kyle.
Speaker Change: This was a strong suit right everyday spend.
Speaker Change: And the everyday spend advertisers.
Speaker Change: Are definitely trust our platform a lot and I think given the macro environment. There are some of these leading retailers are frankly leaning in and they are leveraging our platform and the superior capabilities to drive very targeted benefits in targeted.
Speaker Change: Behaviors. So in some cases, we see.
Speaker Change: Some of these advertisers actually drive leverage our platform to drive more omnichannel behaviors.
Speaker Change: Specifically get deeper relationship with their customers I'll also mentioned one of the Ceos of major retailers actually said not only are we looking to card latex to actually weather through this uncertainty.
Speaker Change: But their real estate acquisition is a big part of their growth journey and they actually rely on our insights to help them understand what the right real estate decisions might be even in these the potential macro uncertain environment that they have in front of us.
Speaker Change: So everyday spend is something that we feel very good about.
Speaker Change: And that's something that several of our bank partners and now some of the nonbank partners really benefit from.
Speaker Change: Okay.
Speaker Change: Great and then maybe just kind of building off of that answer. There you guys have kind of done a lot of work around the data and providing more holistic offering for some of your advertisers like you've kind of alluded to there with the real estate.
Speaker Change: So you know in the event that we see some more macro pressure I mean, do you think that that could lead to maybe some more discovery of these different offerings that you have been kind of leaning in on these products that <unk> been bringing to market.
Speaker Change: Actually that's a great question and when I mentioned about the strength of the quarter. This was an area that we're investing we're actually investing a lot in our models to make sure that our redemptions are stronger our targeting is better we're making sure that as we're presenting our presentment. It has significantly higher degree of relevancy.
Speaker Change: I think we shared an example, where we're now able to do a specific.
Speaker Change: Specifically higher level of Geo targeting where.
Speaker Change: Typically.
Speaker Change: A typical notional spend pattern would be we're targeting where consumers live.
Speaker Change: And large parts of the country refined consumer spend patterns almost mirror if not are greater.
Speaker Change: And geography, Geos, where they actually work and and.
Speaker Change: Recreate and spend and so we now can actually.
Speaker Change: Oh target consumers, not only where they live but also where they work and whether they actually travel so that that's been a great example.
Speaker Change: And helping our advertisers to expand their reach there are other areas of where we are models are also helping specific advertiser ratios. So I think youre.
Speaker Change: Actually right, we expect to continue to bring these new capabilities to the market. So on advertisers can reach their customers more actively and in a stronger format.
Speaker Change: Great. Thank you very much.
Speaker Change: Thank you and we don't have any further questions. At this time. This concludes our conference call for today. Thank you all for participating you may now disconnect your lines.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: No.