Cardlytics(US:CDLX)2025-05-07 20:30PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements The company reported decreased Q1 2025 revenue of $61.9 million but an improved net loss of $(13.3) million Condensed Consolidated Balance Sheets (Unaudited) Total assets decreased to $369.1 million and stockholders' equity declined to $64.1 million as of March 31, 2025 Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $156,829 | $177,983 | | Total assets | $369,073 | $392,711 | | Total current liabilities | $131,851 | $148,955 | | Total liabilities | $304,983 | $322,718 | | Total stockholders' equity | $64,090 | $69,993 | Condensed Consolidated Statements of Operations (Unaudited) Q1 2025 revenue fell to $61.9 million, while the net loss improved to $(13.3) million from $(24.3) million YoY Statement of Operations Highlights (in thousands, except per share amounts) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $61,898 | $67,608 | | Total costs and expenses | $75,977 | $90,434 | | Operating Loss | $(14,079) | $(22,826) | | Net Loss | $(13,282) | $(24,275) | | Net Loss per share, basic and diluted | $(0.26) | $(0.56) | Condensed Consolidated Statements of Comprehensive Loss (Unaudited) Total comprehensive loss for Q1 2025 improved to $(15.6) million, including a $(2.4) million foreign currency loss Comprehensive Loss (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Loss | $(13,282) | $(24,275) | | Foreign currency translation adjustments | $(2,355) | $580 | | Total Comprehensive Loss | $(15,637) | $(23,695) | Condensed Consolidated Statements of Stockholders' Equity (Unaudited) Stockholders' equity decreased by $5.9 million to $64.1 million in Q1 2025, driven by the quarterly net loss - Total stockholders' equity decreased by $5.9 million during Q1 2025, from $69,993 thousand to $64,090 thousand17 Condensed Consolidated Statements of Cash Flows (Unaudited) Net cash used in operations improved to $(6.7) million, while cash and equivalents ended the quarter at $52.0 million Cash Flow Summary (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,706) | $(17,617) | | Net cash used in investing activities | $(3,903) | $(4,747) | | Net cash (used in) provided by financing activities | $(3,034) | $28,321 | | Net (decrease) increase in cash | $(13,548) | $5,936 | | Cash and cash equivalents — End of period | $52,046 | $97,766 | Notes to Condensed Consolidated Financial Statements (Unaudited) Key disclosures include a gain from the Dosh app decommissioning and the non-renewal notice from Bank of America - The Dosh app was decommissioned on February 28, 2025, resulting in a gain on disposal of $5.4 million from the derecognition of the associated wallet liability29 - On January 25, 2024, the company settled outstanding disputes related to the Bridg acquisition, agreeing to pay $25.0 million in cash and issue 3.6 million shares of common stock33 - The top three FI partners accounted for over 80% of total Partner Share in Q1 2025; the company received a non-renewal notice from Bank of America, effective July 31, 2025112113 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses an 8% revenue decline, an improved net loss, and sufficient liquidity despite key partner risks Non-GAAP Measures and Other Performance Metrics Key non-GAAP metrics show a 7% decrease in Billings and a decline in Adjusted EBITDA to negative $(4.4) million Key Performance Metrics | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Cardlytics MQUs (in thousands) | 214,891 | 191,206 | 12% | | Cardlytics ACPU | $0.13 | $0.17 | (24)% | Key Financial Metrics (Non-GAAP, in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Billings | $97,579 | $105,216 | | Adjusted Contribution | $32,448 | $37,065 | | Adjusted EBITDA | $(4,384) | $226 | | Free Cash Flow | $(10,809) | $(22,364) | Results of Operations Revenue decreased 8% YoY due to lower Billings, while operating loss improved due to reduced expenses and a one-time gain - Revenue decreased by $5.7 million (8%) YoY, primarily due to a $7.6 million decrease in Billings157 - Stock-based compensation expense decreased by $2.3 million (21%) YoY, primarily due to higher forfeitures related to executive departures164 - A gain of $5.4 million was realized in Q1 2025 from the decommissioning of the Dosh app166 Liquidity and Capital Resources The company ended Q1 with $52.0 million in cash and believes its liquidity is sufficient for the next 12 months Liquidity Position (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $52,046 | $65,594 | | Working capital | $24,978 | $29,028 | | Unused available borrowings | $60,000 | $60,000 | - In April 2024, the company issued $172.5 million of 4.25% Convertible Senior Notes due 2029 and used the proceeds to repurchase $183.9 million of its 2020 Convertible Senior Notes180 - The company has a commitment to spend $17.0 million each year for three years with a cloud hosting provider, starting in January 2024177 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate fluctuations on its credit line and foreign currency exchange risk - Interest rate risk is tied to the variable-rate 2018 Line of Credit; a 10% increase in the prime rate would result in a $0.5 million annual increase in interest expense if fully drawn199 - Foreign currency risk arises from UK operations; a 10% weakening of the British pound in Q1 2025 would have decreased revenue by $0.6 million and operating expenses by $1.3 million200 Item 4. Controls and Procedures The company's principal officers concluded that disclosure controls and procedures were effective as of March 31, 2025 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025201 PART II. OTHER INFORMATION Item 1. Legal Proceedings A securities class action lawsuit was voluntarily dismissed without prejudice by the plaintiff in March 2025 - A securities class action lawsuit filed in January 2025 was voluntarily dismissed by the plaintiff without prejudice in March 2025, meaning similar claims could be refiled in the future204205 Item 1A. Risk Factors The company faces significant risks from FI partner dependency, economic conditions, debt, and data privacy regulations Risks Related to our Business and Industry Major risks include heavy reliance on a few FI partners, the non-renewal by Bank of America, and economic sensitivity - The company is substantially dependent on Chase, Bank of America, and Wells Fargo; in April 2025, it received a non-renewal notice from Bank of America for agreements expiring July 31, 2025217218220 - Unfavorable economic conditions, such as inflation and tariffs, could limit business growth and negatively affect operating results by causing marketers to reduce spending208 - The loss of one or more of its top five marketers, who accounted for 19% of revenue in Q1 2025, could adversely impact the business as there are no material long-term commitments241242 Risks Related to our Indebtedness The company's ability to service its significant debt obligations, including its convertible notes, is a key risk - Servicing debt requires significant cash, and the company may not have sufficient cash flow from its business to pay its indebtedness, including the 2020 and 2024 Convertible Senior Notes285 - Holders of the Notes can require the company to repurchase them upon a 'fundamental change,' and the company may not have enough available cash or be able to obtain financing to do so287 Risks Related to Regulatory and Intellectual Property Matters The business is subject to complex data privacy laws like CCPA and GDPR and risks related to protecting its IP - The company is subject to complex and evolving data privacy laws like the CCPA and GDPR; non-compliance could lead to significant fines (up to 4% of annual global revenue under GDPR)293297300 - Failure to protect proprietary technology and intellectual property rights could harm the business, as legal protections provide only limited coverage308 Risks Related to Ownership of our Common Stock The company's common stock price is highly volatile, and no dividends are expected in the foreseeable future - The market price of the common stock has been highly volatile, with an intraday price range from $1.22 to $161.47 since its IPO in February 2018320 - The company does not intend to pay dividends in the foreseeable future, so returns on investment depend solely on stock price appreciation322 - Anti-takeover provisions in the company's charter and under Delaware law may delay or prevent a change in control or changes in management323 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales or issuer repurchases of equity securities occurred during the quarter ended March 31, 2025 - There were no unregistered sales of equity securities or issuer repurchases during the quarter337338 Item 5. Other Information There was no information to be reported under this item for the quarter - None339 Item 6. Exhibits This section lists exhibits filed with the report, including agreement amendments and officer certifications - The exhibits filed with the report include amendments to the Loan and Security Agreement, officer certifications required by the Sarbanes-Oxley Act, and XBRL data341