Cardlytics, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Cartlytics' second quarter 2020 financial results call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your host, Chief Legal and Privacy Officer, Kurt Summers. Sir, please go ahead.

Good evening, and welcome to Cardlytics' second quarter 2020 financial results call. Before we begin, let me remind everyone that today's discussion will contain forward-looking statements based on our current assumptions, expectations, and beliefs, including expectations about future financial performance or results, the anticipated impact of key priorities on driving growth, the launch of U.S. Bank, growth in FIMAUs, or monthly active users, future ARPU, or average revenue per user, the evolution of our platform provides self-service and the potential related benefits to us and our clients, the impact of COVID-19 on our business and the economy as a whole, the impact of our rise, retain, and return strategy, and the sufficiency of our capital structure. for a discussion of the specific risk factors that could cause our actual results to differ materially from today's discussion. Please refer to the risk factors section of the company's 10-Q for the quarter ended June 30, 2020 that we filed earlier today and in subsequent periodic reports that we file with the Securities and Exchange Commission. Also during the call, we will discuss non-GAAP measures of our performance. GAAP financial reconciliations and supplemental financial information are provided in the press release issued today and the 8K that has been filed with the SEC. Today's call is available via webcast and a replay will be available for one week. You can find all of the information I've just described on the investor relations section of Cardlytics' website. Please note that a supplemental presentation to our second quarter results has also been posted to our investor relations website. Joining us on the call today is Cardlytics' leadership team, including CEO and co-founder, Lynn Lobey, and CFO, Andy Christensen. Following their prepared remarks, we'll open the call to your questions. With that, let me turn the call over to Lynn. Lynn?

Thanks, Kirk, and thank you to everyone for joining us on our second quarter 2020 earnings conference call. First, we want to provide an update on the effects of COVID-19 on our business. Cardlytics is doing its part to help ensure the health and safety of our employees and our community. Our employees are working from home, and we are evaluating opening our offices to them on a voluntary basis later this year. That said, we're monitoring current events and will adapt depending on the severity of the virus going forward. This is still a difficult time as an advertising business. While we saw signs of increased spend in the U.S. throughout the quarter, consumer spending in the U.K. and some of our key verticals, especially travel and dining, is still dramatically reduced year over year. Billings in these areas are down in a similar way. We are also continuously monitoring spend data to make sure we're prepared as a company for a potential second wave. Considering the impact of COVID-19, we delivered second quarter results that were in line with internal forecasts. We also saw month-over-month increases in absolute dollars throughout the quarter in all three metrics. Here are some of the numbers. Total billings for the second quarter were $39.5 million, down 46% year-over-year. Total revenue, which is equal to billings net of consumer incentive, was $28.2 million, a decline of 42%. and adjusted contribution with $12.4 million, down 43% year-over-year. Despite the unprecedented environment and the short-term impact to our results, we remain optimistic for the future. We continue to believe that our key long-term priorities of increasing the number of marketers working with us, bringing our solutions to new industries, evolving the Cardlytics platform, and demonstrating operating leverage in our business are fully achievable. Our clients are still facing severe swings in spend, both up and down, and our three-pronged strategy, rise, retain and return, discussed on the Q1's earning call, is continuing to produce positive results. Interestingly, we've seen some clients move from rise to retain over the past few months. One example is with an online grocer who we helped in Q1 as their sales rose. By sharing custom weekly reports in Q2, Cardlytics helped them quantify the competitive share of wallet loss they were experiencing with those same new customers. particularly among the heaviest customer segments. Our data uncovered that the most frequent customers were making approximately 50% of their online grocery transactions at other online competitors. These insights motivated our clients to invest more aggressively in our platform for the second half of 2020. We also had a new rise client so impressed with our results that they signed the longest advertising contract in Cardlytics history. This quarter, we want to provide several new metrics to help investors understand engagement and the advertising spend potential on the platform. This includes quarterly data on monthly average login days, offer activation rates across verticals, and campaign spend ratios across verticals. We believe this information shows that users are engaged with the platform and that we have significant headroom for revenue growth as we gain access to larger advertising budgets. You can find these metrics in the supplemental presentation located in our investor relations website. We continue to rapidly evolve and innovate our platform. Today we're really excited to announce that we're externally testing our new self-service platform with several advertisers and agency partners. This self-service ad platform allows campaigns to be created in less than two minutes and is the first step in democratizing the Cardlytics advertising opportunity for all marketers and agencies, big and small. Together with our first partner, Horizon Media, We launched Lint Chocolate as the first advertiser and campaign through the new platform. Horizon is the largest independent agency in the world, and this partnership paved the way for many more of their clients to now have access to Cardlytics and our premium channel. Additionally, together with VaynerMedia, another large and fast-growing agency partner, we've launched a client under their management. Their agency representative noted that the tool had, quote, snap-like simplicity but Google-level quality. Finally, direct clients like Forever 21 are also testing the self-service platform to execute campaigns across our channel and scale their business. We're excited about the strides we've made, and we see great opportunity for mutual benefit for our clients, direct or agencies. In addition to product advances, we're continuing to make investments in the right people to lead our organization into the future. Jessica Jensen, CMO of OpenTable and an experienced executive who's worked at several leading digital platforms, has recently joined our board of directors. And we've hired Farrell Hudzik and Pete Babies to lead our bank team and sales strategy and operation teams, respectively. We look forward to the impact each of these talented leaders will have on our platform. Moving to the bank side of our business, in Q2, we completed our Wells Fargo launch and surpassed 150 million FIMAUs. We believe this scale places us on equal footing with other major U.S. advertising platforms and provides a highly differentiated solution for marketers. We're extremely proud of our team for its work on Wells Fargo. Further, our launch preparations with U.S. Bank are going as planned, and we expect to launch them with our version one of the new user experience in the first half of 2021. On a final note, I want to address the events that have caused massive local and national protests over the past few months. Cardlytics as a company stands in unison with all people of color. We have a number of new company goals to support employees in the community including an initiative to run campaigns to support minority-owned businesses. We will continue engaging with our employees in our communities of color to learn how we can best support them. With that, I will turn it over to Andy.