Cardlytics, Inc.

Good day, and thank you for standing by. Welcome to Catalytic's Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are on the listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Nick Linson, Chief Legal and Privacy Officer. Please go ahead.

Good evening, and welcome to the Cardalytics fourth quarter and full year 2023 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 regarding our future financial performance and results, including for the first quarter of 2024, and various product initiatives and improvements. 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-K for the year ended December 31st, 2023, which has been filed with the SEC. Also during this 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 in the 8-K 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 the information I have just described in the investor relations section of the Cardlytics website. Please note that a supplemental presentation to our fourth quarter and full year results has also been posted on our investor relations website. Joining us on the call today is Cardlytics CEO Karim Temsamani and CFO Alexis Ticino. Following their prepared remarks, we'll open the call to your questions. With that said, Let me turn the call over to Karim.

Thank you, Nick. Good evening, and thank you for joining our Q4 2023 earnings call. I would first like to reflect on 2023 as a whole. We started the year in a difficult position financially, with the SRS dispute presenting a significant challenge for the company. I'm glad we not only resolved the SRS dispute, but also finished the year with positive annual adjusted EBITDA of $3.8 million. This is the first time since 2019 that we ended the year with positive adjusted EBITDA. In 2023, we also made fundamental changes to our cost structure, including renegotiating partner contracts and right-sizing our expenses. And we made key hires for tech, product, sales, and leadership teams. All these efforts and results are a great foundation for us to continue to improve our business. With the SRS dispute resolved and our cost structure rebalanced, we can now fully focus on execution and growth, as well as addressing our capital needs. I am delighted to add that we have just signed a large new banking partner as per the 8K we filed within the last hour. Q1 is off to a good start, and we're expecting 12 to 16% spillings growth when we exclude entertainment, which we sold in Q4. Alexis will provide further details on our financial performance later in the call. Aside from our finances, we are making progress across our operational team. Our sales teams in the US and UK are driving stronger growth and bringing advertisers back to the platform. As I mentioned, our bank partner team has just signed a large new bank partner in the US, and we continue to have promising discussions with additional banks in the US and the UK. Our product and engineering teams are continuing to launch new products that improve the experience of our bank partners and their customers, as well as provide more options for advertisers. Let me provide more specifics on our progress. we continue to obsess about the outcomes we create for our banking partners, customers, and tech adoption is a foundational part of creating these outcomes. A new technology provides us the ability to run the network better, surface more relevant offers to bank customers, and roll out new products more quickly. All these are great drivers for engagement, new content, and growth. We continue to make progress on tech adoption, with almost 80% of our network traffic now on AWS. Bank partners that are on AWS have the ability to adopt our Ads Decision Engine, or ADEs, and we are in discussions with the remaining banks who have not yet migrated to AWS. We've mentioned that ADE will be a powerful driver for improvements over time. by allowing us to interface with banks in real time, enhance audience segmentation and offer relevance, and improve dynamic targeting. So far, we are already on our third version of ADE. 80% of our network is now on ADE, with 40% of our network on the latest version. For those banks on ADE, we have seen a 23% increase in redemption. compared to a 9% increase across the whole network. We saw this trend continue in January, and we are confident that subsequent versions of ADE will continue to improve redemption numbers. I focus on the impact of ADE on redemptions because we view driving redemptions as our North Star, as they provide the best outcome for our banks, their customers, and our advertisers. And because the best way to increase redemption is to increase engagement, we have focused on four key pillars to drive more engagement with our platform. The first key pillar is content and insights. We are continuously aiming to improve the quality and variety of content on the network. We pride ourselves on being a high-quality, in-demand advertising solution for well-known large brands. We are seeing growth from existing advertisers and are additionally seeing advertisers return that had previously left our network. The strength of our business resides in our insights. Most competitive analysis focus on scan data from a limited number of retailers or a subset of cart types. Our data provides the most comprehensive scope across channels, cards, and geography, making our insights highly differentiated. However, historically, it's been a manual process for our teams to pull this data. We're fixing this. We plan to deliver an automated dashboard by the end of 2024 that will provide advertisers with a snapshot of their performance against industry benchmarks. This dashboard will give advertisers a self-serve view of the market summary for their category. We'll let them visualize competitor activity, showcasing revenue, transactions, and customer growth across different brands. Lastly, we will offer a customer-centric data set showing brand affinity, new customer, and churn benchmark. This is just the beginning of a growing list of insights use cases that we'll be exposing over time. As we productize more of these insights, we will also free up time from our analytics team to provide custom, highly nuanced and actionable insights for our largest advertisers and bank partners. We believe this is a highly differentiated offering that will enable us to reduce churn and increase budgets over time. The second key pillar is giving merchants customizable tools to optimize campaigns and offers. I wanted to highlight the success we had recently with a receipt-level offer test we did with a major US airline. As a reminder, receipt-level offers are offers tailored to a specific product category or item. In this case, the airline wanted to promote a higher cashback reward for flights that departed within the month, as they were experiencing softer than expected booking demand in the low season. To the airline's delight, 45% of ticket purchases in the campaign were for the targeted time period and allow us to close a renewal with the client just days later for campaigns that run the following month. This is one example of how price initiatives are driving more targeted growth for advertisers and delighting their customers. The third key pillar is making offers easier to discover and use. With several of our banks, we are testing different placements for the core widget, call out button, new entry points, and alerts. All of these are at low volumes, but we have already shown a strong ability to increase engagement with the program. As an example, when one of our bank partners started placing offers on the line item transaction in customer's bank statement, We saw an activation rate for those offers that was five times higher than the typical activation rate. The fourth key pillar is a differentiated offering for each bank. A tech and size of network enables us to create differentiated offering, such as featured offers, increased curations, and proximity offers. We are also allowing enrichment and customization of the offer experience. For example, we launched a unique event the week leading up to the Super Bowl called The Big Game with one of our bank partners. The Big Game targeted cardholders of that bank with featured cashback deals for all of their party supply needs across multiple advertisers. This is the first of many 2024 initiatives where we will leverage existing advertisers to target customers with unique tentpole events to increase engagement with the bank's rewards platform. With these four pillars in mind, we are building a best-in-class platform with flexible platform APIs, a deep understanding of merchant data, a top-tier targeting and decisioning engine, and a rich, highly differentiated user experience with a fantastic source of content and insights. All of this is hosted in the cloud and fully flexible. Moving to Bridge. First party data is the foundation for the cookie-free world of marketing and Bridge continues to serve the leading retailers, QSRs, and entertainment businesses. helping them to better understand the customers by expanding and enriching their first party data. For instance, we are helping one of the fastest growing grocers enhance their inventory management strategies by analyzing purchasing data. A partnership with a large fast food restaurant allows them to grow their loyal customers by delivering hyper-targeted promotions. Ripple, a retail media and data network that we recently launched, provides CPGs and other brands flexibility in building sophisticated audiences, seamless access to a national footprint, and user-friendly tools that empower them to gain valuable insights, drive substantial incremental sales, and accurately measure the impact of the campaign. Over the last few months, Several leading retailers, including Wegmans and Giant Eagle, have joined the Ripple platform, which translates to a national footprint of around 70 million profiles actively being loaded onto the platform. This has sparked interest from leading CPGs who have started running test campaigns, and this gives us great confidence that our strategy will pay off. With our cost structure rebalanced, we can now dedicate our time to returning to the higher growth rate we should expect from this business. Our Q4 results and projected Q1 progress give us confidence that we can do this. And just as I said last quarter, we are in the midst of a transformation that will spur growth. In addition to adding a new large banking partner, we're working towards a broader and deeper data set. more sophisticated audience targeting, better analytics and reporting, and a variety of ad formats that will drive increased engagement. As we move past the core transformation that needed to happen in the business, our belief in our long-term growth prospects continues to strengthen. Now, I'll hand it over to Alexis to discuss our financial results.