Cardlytics(CDLX) - 2024 Q4 - Annual Report

User Growth - Cardlytics Monthly Active Users (MAUs) increased by 4.8 million in 2024, reaching 166,943, primarily driven by organic growth from existing financial institution partners in the U.K. and U.S. and a new partner in the U.K.[217] Revenue and Financial Performance - Total Revenue for 2024 was $278.3 million, a decrease of$ 30.9 million (10%) compared to $309.2 million in 2023[222]. - Consolidated revenue for 2024 was$ 278,298, a decrease of 10% from $309,204 in 2023[234]. - Revenue from the Cardlytics platform in 2024 was$ 255,615, down from $285,425 in 2023, a decrease of 10%[234]. - Revenue from the Bridg platform in 2024 was$ 22,683, slightly down from $23,779 in 2023[234]. - Adjusted contribution for 2024 was$ 150,537, down from $158,626 in 2023, reflecting a decrease of approximately 5%[235]. - The company reported a loss on divestiture of$ 6.6 million in 2024, which is 2% of revenue, following the sale of HSP EPI Acquisition, LLC for $6.0 million in cash[269]. Profitability and Losses - Net Loss for 2024 was$ 189.3 million, compared to a net loss of $134.7 million in 2023, reflecting increased costs and lower revenue[222]. - Adjusted EBITDA for 2024 was$ 2.5 million, down from $3.8 million in 2023, indicating a decline in operational performance[222]. - Free Cash Flow for 2024 was$ (28.1) million, a decrease from $(12.6) million in 2023, indicating higher cash outflows[222]. - Total costs and expenses increased to$ 473.8 million in 2024, up from $444.9 million in 2023, resulting in an operating loss of$ 195.5 million compared to a loss of $135.7 million in the previous year[256]. Expenses - Gross Profit for 2024 was$ 120.9 million, a decrease of $9.5 million (7%) compared to$ 130.4 million in 2023[222]. - General and administrative expenses decreased by $2.3 million or 4% to$ 56.5 million in 2024, with a significant reduction in software licenses and data storage costs[264]. - Sales and marketing expenses decreased by $4.8 million or 8% to$ 52.6 million in 2024, primarily due to a reduction in staff expenses related to the divestiture of entertainment[262]. - Research and development expenses decreased by $1.7 million or 3% to$ 49.6 million in 2024, with a notable decrease in professional fees[263]. - Stock-based compensation expense for 2024 was $40,367, compared to$ 40,980 in 2023[237]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $65.6 million in 2024 from$ 91.8 million in 2023, with working capital dropping to $29.0 million from$ 52.8 million[274]. - The company experienced a net cash used in operating activities of $8.8 million in 2024, reflecting a net loss of$ 189.3 million, with $196.3 million of non-cash charges[297]. - Cash flows used in investing activities totaled$ 18.7 million in 2024, primarily for technology hardware purchases and internal-use software development costs[300]. - Financing activities provided $1.4 million in cash in 2024, including net proceeds of$ 166.8 million from the issuance of 2024 Convertible Senior Notes[302]. Debt and Financing - The company issued $172.5 million in 4.25% Convertible Senior Notes due in 2029, with net proceeds of$ 166.8 million used to repurchase $183.9 million of the 2020 Convertible Senior Notes[283]. - The company entered into an equity distribution agreement allowing for the sale of up to$ 50.0 million in common stock, raising $48.3 million from the sale of 3,907,600 shares at an average price of$ 12.80[282]. - The company amended its 2018 Loan Facility to increase borrowing capacity to 85% of U.S. eligible accounts receivable and extended the maturity date to July 31, 2026[289]. Impairment and Valuation - Impairment of goodwill and intangible assets rose to $131.6 million in 2024, an increase of$ 61.1 million or 87% from $70.5 million in 2023, attributed to economic slowdown and decreased consumer spending[268]. - The company recognized a goodwill impairment of$ 117.8 million for the Bridg platform as of September 30, 2024, due to a decline in stock price[308]. - The company performed its annual impairment test in the fourth quarter of 2024 and found no impairment associated with the Cardlytics platform in the U.S.[308]. Future Outlook - Cardlytics plans to enhance engagement through increased Consumer Incentives, which may negatively impact GAAP Revenue but is expected to drive long-term growth[212]. - The company expects to continue using cash for investing activities as it grows its business[299]. - The company expects to incur additional operating losses as it continues to grow its business[277].