Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cardlytics Inc (CDLX, Financial) reported a 12% increase in billings over the first quarter of 2023, indicating strong advertiser interest.
- Adjusted contribution grew 27% over the first quarter of 2023, reflecting improved business performance after paying customer rewards and bank revenue share.
- Cardlytics Inc (CDLX) achieved positive adjusted EBITDA of $0.2 million for the first time in a first quarter, historically a seasonally lower billings period.
- The company successfully raised $50 million in cash and restructured debt, enhancing its capital structure and long-term financial stability.
- International business grew over 50% year-on-year in Q1, with strong growth potential in global markets highlighted for upcoming quarters.
Negative Points
- Despite overall growth, the company experienced some campaign cancellations and delays in the last two weeks of March.
- Operating cash flow was negative $17.6 million, influenced by seasonal factors such as annual bonus and interest payments.
- Free cash flow was negative $22.4 million in Q1, although it is expected to turn positive in the second half of 2024.
- The company anticipates continued high redemption rates, which may impact short-term financial metrics as they adjust targeting and ranking improvements.
- Operating expenses are expected to normalize in the mid to low 40s, reflecting increased investments in technology, product, and sales teams.
Q & A Highlights
Q: Given the billings trends throughout the quarter, were there any significant cancellations or delays in the last two weeks of March that impacted the results?
A: Alexis Desieno, CFO of Cardlytics Inc, acknowledged that while the company is growing at 12% on the top line and saw a 27% increase in adjusted contribution, there were indeed some changes in the network and tech, as well as partner UX changes, leading to higher engagement. Some campaigns did not come through as expected, impacting billings.
Q: With higher redemption rates observed, should the ratio of consumer incentives as a percentage of billings be expected to increase?
A: Alexis Desieno explained that for Q2, a similar model of redemptions on billings as a percentage is expected. The focus remains on North Star redemptions, and the company is converting accounts to new pricing models to harness this increased engagement.
Q: Can you clarify the impact of rapidly consuming budgets on your ability to secure additional budgets from marketers?
A: Alexis Desieno confirmed that the company is actively working to capture more budgets as they open up more engagement opportunities for brands. Karim Temsamani, CEO, added that driving more engagement is beneficial for both bank partners and advertisers, though it presents a timing challenge in securing additional budgets.
Q: How are investments in the agency side of the business being allocated, particularly concerning headcount?
A: Karim Temsamani noted that investments are being made across tech, product, and sales teams, including the agency team, to drive growth. The focus is on servicing more customers and capturing more budgets through agencies.
Q: What is the progress and future plans for the self-serve platform for advertisers?
A: Karim Temsamani stated that about 10% of customers would have access to automated insights by the end of Q2, with a full rollout expected by year-end. The complete self-serve capability for booking budgets without team intervention is a longer-term goal.
Q: What are the growth expectations for the Bridge platform, especially after recent investments?
A: Karim Temsamani clarified that significant investments are being made in Bridge's technology and infrastructure, with a focus on the Ripple retail media network. While specific growth rates were not provided, the company is optimistic about the potential in the large retail media market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
