Cardlytics(US:CDLX)2024-11-07 01:52Financial Data and Key Metrics Changes - Total billings for Q3 2024 were $112 million, a 2% decrease year-over-year, impacted by delivery challenges rather than pipeline weakness [35] - Consumer incentives increased by 20% to $44.9 million, indicating a focus on user engagement [36] - Revenue decreased by 13% to $67.1 million, attributed to increased user engagement with offers [36] - Adjusted contribution was $36.4 million, down 11% year-over-year, with an adjusted contribution margin of 54%, up 1% year-over-year [38] Business Line Data and Key Metrics Changes - US revenue decreased by 17% due to delivery challenges, but total budgets grew, especially from new brands [39] - UK revenue saw strong double-digit growth at 33%, with the highest consumer rewards in the history of the UK business [40] - Bridge revenue remained flat year-over-year, while Ripple showed early positive signals from engagement with advertisers [40] Market Data and Key Metrics Changes - The retail media market is expected to double in the next three years, positioning the company to capture market share [41] - Total monthly active users (MAUs) were 166 million, a 2% increase, driven by organic growth in the US and auto enrollment at Lloyd's [44] - Average revenue per user (ARPU) was $0.40, down 18% due to increased consumer incentives [44] Company Strategy and Development Direction - The company is focused on four key pillars: supply, demand, network performance, and Bridge [15][30] - Plans to broaden relationships with existing and new financial institutions to increase supply and reach more consumers [15] - Emphasis on enhancing network performance and stabilizing the core platform to improve delivery challenges [23][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging macroeconomic environment for some advertisers but noted positive feedback regarding the value of card-linked offers (CLO) [14] - Expectations for Q4 include billings between $102 million and $108 million, with continued challenges in delivery impacting performance [45] - Management remains optimistic about 2025, anticipating improved operational execution and contributions from Ripple [52] Other Important Information - The company is transitioning to engagement-based pricing, with 38% of total billings in Q3 utilizing this model [67] - The initial launch of a new financial institution partner will involve testing with a small card member base before scaling [15][76] - The company ended Q3 with $67 million in cash and cash equivalents, and $60 million of unused borrowings under its line of credit [43] Q&A Session Summary Question: Key drivers of under-delivery and plans to address them - Management discussed various strategies to address under-delivery, including better forecasting and testing different reward amounts [56] Question: Contrasting Q3 and Q4 performance - Management noted that while Q3 showed success, Q4 is impacted by the absence of large accounts from the previous year, although underlying advertiser spending remains strong [62] Question: Updates on engagement-based pricing - Management confirmed that engagement-based pricing is gaining traction, with a significant portion of new advertisers opting for this model [68] Question: Future revenue normalization and impact of new bank partner - Management refrained from providing specific guidance for 2025 but expressed optimism about the gradual scaling of the new bank partner's impact [76]