Cardlytics(CDLX)2023-08-02 00:57Financial Data and Key Metrics - Adjusted EBITDA improved by 5.7 million [5] - Billings increased 1.6% year-over-year to 76.7 million, while adjusted contribution rose 6.8% to 6 million, in line with expectations [6] - Adjusted EBITDA loss narrowed to 15.8 million in Q2 2022 [14] - Cash and cash equivalents stood at 139.2 million at the end of Q1 2022 [35] - MAUs increased 4.6% year-over-year to 188.1 million, while ARPU remained flat at 67 billion [29] - Travel spend growth slowed to 1% year-over-year, while restaurant and retail spend grew 1% and declined 3%, respectively [55] - California accounted for 16% of multiline retail spend, followed by Texas at 11% and Florida at 9% [54] Strategic Initiatives and Industry Competition - The company is transitioning to a product-led organization, with a focus on new ad server, user experience, and cloud migration initiatives [24] - Chase is now 100% live on the new user experience, with other major U.S. banks expected to migrate by mid-2024 [9][24] - The company is diversifying its business, with retail media network pilots receiving positive feedback from major CPG brands [27] - The company is investing in new capabilities, such as target return on spending pricing pilots, which are expected to improve financial efficiency in the long term [12] Management Commentary on Operating Environment and Future Outlook - The near-term economy and advertising environment remain uncertain, but the company is focused on long-term success [13] - The company expects to achieve positive operating cash flow and adjusted EBITDA on an annual basis starting in 2024 [35] - Consumer confidence increased for the third consecutive month in July, reaching its highest level in two years, despite softening labor markets and declining inflation [31] - The company expects some variability in quarter-to-quarter results but remains committed to achieving consistent growth and profitability [34][56] Other Important Information - The company renegotiated contracts and implemented cost optimizations across AWS and Snowflake, improving efficiency [7] - The company is in discussions with multiple top 20 U.S. banks and fintechs, with confidence in signing at least one major partner by the end of 2023 [8] - The company launched its first campaign with receipt-level reporting, which is expected to drive incremental demand from CPGs and retailers [11] - The company paid 7 million of unused available borrowings under its line of credit at the end of Q2 [60] Q&A Session Summary Question: How did ad budgets progress throughout the quarter across core verticals? - Consumer spending slowed overall, with retail spend down 3% and travel spend up slightly, impacting advertising budgets [39] - Despite consumer slowdown, some areas like travel and restaurants are showing positive trends for the company [40] Question: What are the expectations for ad budgets in the back half of the year? - The company expects some choppiness but sees positive signs from clients looking to drive additional spend in the back half of the year [41] Question: What new products or services are encouraging bank partners to renegotiate contracts? - The company is focused on providing tech and services that meet partner needs, such as receipt-level offers and target return on spending pricing pilots [43][44] Question: How are product improvements manifesting in the numbers? - Product improvements, such as UI changes and new product constructs, are driving engagement and activation, with early signs of impact in the numbers [45][46] Question: What assumptions are behind the EBITDA guidance for Q3? - The EBITDA guidance assumes continued discipline in expenses and cautious optimism about the advertising market, with potential for improvement as new products scale [70][74] Question: What has been the impact of Chase being fully rolled out on the new user experience? - Chase's full rollout has led to improved engagement, activations, and redemptions, signaling positive changes in the business [68][73]