Cardlytics, Inc.

Good day and thank you for standing by. Welcome to the Cardlytics third quarter 2024 financial results call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Nick Linton, Chief Legal and Privacy Officer. You're ready to go.

Good evening, and welcome to the Cardlytics third quarter 2024 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 fourth quarter of 2024, the rollout of new financial institution partners, and operational and 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 for our 10Q for the quarter ending September 30, 2024, 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, which you can find in the investor relations section of the Cardlytics website. Today's call is available via webcast and a replay will also be available on our website. On the call today, we have CEO Amit Gupta and CFO Alexis Diceno. Following their prepared remarks, we'll open it up for your questions. With that, I'll hand the call over to Amit.

Thanks, Nick, and thank you all for joining us today. As you all know, I stepped into my new role shortly after we released Q2 earnings. Over the last three months as CEO, I have spent time going deeper with our teams and hearing feedback from our advertisers and bank partners. And a few things have become clear. Our data continues to be our superpower. Our ability to see approximately 50% of U.S. cardholder transactions representing nearly 4.7 trillion in annual consumer spend is unparalleled in the industry. And this number will continue to grow as we onboard new partners. It has also become evident that card-linked offers, CLO, have evolved and are becoming a more important differentiator than a year ago. There have been new entrants to the CLO market, increased competition between financial institutions, and diversification in the way bank reward programs are run. Some of this is a tailwind due to more focus on CLO programs than ever before, which is good for us and the broader ecosystem. However, as we have seen these market dynamics changing, we have not reacted quickly enough. We rightfully have been focused on evolving our technology and platform from static to dynamic. But as we look to our North Star, driving consumer engagement and rewards, we need to be even more focused on the end consumer. We want to make it easier for our consumers to find and utilize our offers. This means continuing the work to improve our offer relevance in addition to diversifying the channels through which we are engaging with them. More importantly, we get consistent feedback that our platform is unique, not only because of our diverse set of advertisers, but also our innovative offer constructs that meet advertiser KPIs. We must continue to strengthen these key differentiators. We are staying true to our mission of making commerce more rewarding. We are in the business of helping consumers maximize their savings with the brands they love while also discovering new ones. And if we continue to build a more performant network, end consumers will benefit. And our bank partners and advertisers will also clearly see benefits of partnering with us. We have laid out our path to bring more value to consumers, which I will talk about shortly. We acknowledge we have been on this journey for several quarters. Now, we have narrowed our focus to the fundamentals of driving network performance. Our approach includes a renewed focus on all stakeholders, our bank partners, our advertisers, and consumers, as we continue to work towards our North Star. We also acknowledge the backdrop of a more challenging macroeconomic environment for some of our largest advertisers, but we see bright spots on the feedback we've heard from them. They continue to see the value of CLO programs. As one CMO of a large advertiser said to us, they see Cardlytics as a strategic partner rather than a transactional relationship. That CMO noted, that we successfully demonstrated the best incremental returns across their digital marketing channels. They are now looking to allocate more budget and integrate Cardlytics into their strategic plans for loyalty acquisition, audience identification, and category cross-sells into higher margin products. Looking forward, I have centered the team around four key pillars of our business. supply, demand, network performance, and bridge. First, we will work to increase our supply so we can reach more consumers and help them maximize savings, as well as diversify our revenue. We are broadening relationships with existing and new financial institutions in the U.S. and internationally. We are still on track to launch with a large financial institution in the U.S. before year-end. which will help expand our network and enable us to reach a larger audience to serve relevant offers. As expected, the initial launch of our partnership will involve testing with a small card member base and grow from there. We are also focused on engaging with potential new financial institution partners and other commerce platforms in the U.S. to continue to grow our supply and meet consumers where they are. In the UK, we continue to ramp up our partnership with Monzo and are in active conversations with new financial institution partners. We are focused on increasing our supply and expanding our UK footprint in 2025. Second, on the demand side, we are honing in on how we can drive more growth with our advertisers. We are focused on scaling our relationships with brands across core categories while exploring new advertiser verticals. The more diversified our advertiser base, the more rewards we'll bring to consumers. More than a quarter of our advertisers are now on the Insights Portal, a self-service portal powered by our unique purchase intelligence that offers market trends and competitive insights, empowering brands to make more informed business decisions. We expect to see increased interest and usage as more advertisers gain access to the portal. We see our insights on demand as a key differentiator and value add for brands and ultimately a driver of new and stickier relationships. Looking at our top line results, we had a solid quarter with budget growth. However, billings were down 2% excluding entertainment due to the ongoing challenges with delivery. which we'll cover in more detail. In the US, we saw continued growth in categories like travel and everyday spend. We were able to close some large upsells intra-quarter, which led to beating our original billings guidance. In the UK, we continued strong double-digit growth and saw the highest amount of consumer rewards in the history of our UK business. We signed 26 new brands which is an increase of 27%, and also strengthen our key partnerships with existing advertisers. To meet a diverse set of advertiser KPIs and reward consumers in new ways, we are continuing to develop new offer constructs. In addition to generalized brand-level offers, we can deliver offers with higher values for specific purchases based on product category, purchase channel, and store locations. We can also report on what products were purchased, which helps advertisers better understand the profitability of a campaign and tap into category-level marketing budgets. This quarter, we saw success with an everyday spend advertiser that ran SKU-level insights integrating both their own transaction data and Cardlytics data. As an example, these insights could help inform future campaigns for premium versus regular fuel and show not only what fuel grade was purchased, but also if customers were loyalty members and what other products were purchased in store. This helps advertisers drive regional growth and increase store level sales. We continue to test these kinds of offers and are working to automate them next year. We are encouraged to see consumers engaging more with these new ad formats, which we believe help differentiate our offers and open additional advertiser budgets. Moving on to our third pillar, our continued focus on enhancing the performance of our network and stabilizing our core platform. We continue to actively address the delivery challenges that we discussed last quarter. We've taken several measures including placing more stringent limits on campaigns, enhanced daily monitoring, and budget management improvements. We are also making improvements to our ads decisioning engine and seeing good initial results with our budget management tools. These are helping to adjust the pace at which serves are made based on campaign type, media fees, and targeting. We've made initial progress with improving delivery this quarter through these efforts. As we've said, some level of over and under delivery will always be inherent to any ad business, and we are working to get to a more stable place where these extremes are no longer a concern. We are working on automating our efforts to further narrow the bookends of delivery outcomes. We also want to continue optimizing for engagement as increasing rewards powers our flywheel. As part of our network enhancements and to help with stabilizing delivery, we also continue to work with our advertisers to shift to engagement-based pricing, which includes CPE, CPR, and CPT pricing models. We've seen strong interest from our new advertisers with 84% of new logos and 51% of all logos in the U.S. in Q3 on engagement-based pricing. We expect the majority of our advertisers to transition to engagement-based pricing by the end of next year, which should help us optimize campaign performance through faster engagement-based feedback. We're also making progress on the dynamic marketplace, which allows advertisers to see their campaign performance on a daily basis and make ongoing changes to their ROAS goals, fees, and budgets. This will lead to better performance of campaigns and higher retention of advertisers. We had 58 campaigns running on our dynamic marketplace in Q3, up from 20 the previous quarter. And regarding measurement, we are working with leading marketing measurement experts to appropriately integrate Cardlytics data into media mix models and help our advertisers understand the incremental impact of our CLO campaigns. This helps ensure that we can participate in industry standard measurement, making it easier for advertisers to measure our impact. Our fourth and final pillar is continuing to invest in Bridge and Ripple as a significant growth driver for our business. In October, we welcomed Enrique Munoz-Torres as our new general manager of Bridge, who is focusing on maximizing connectivity and further scaling our platform to address a larger suite of advertisers and retailers. Enrique led the advertising and search business at Yahoo and also brings a range of experience from Sunshine and Google. With Ripple, we continue to make progress in Q3. We reached our goal of 100 million active, unique shopper profiles ahead of schedule, making Ripple one of the largest networks of regional grocers and convenience stores in the U.S. These shoppers have been historically hard to reach, and Ripple presents a unique opportunity for CPG brands to engage with these shoppers at scale. We saw increased adoption of our syndicated and custom audiences of these shopper profiles from CPG brands and agency partners who find value in the ability to reach deterministic purchasers at the brand and product level. These four pillars continue to underpin what we believe is necessary to deliver maximum savings for our consumers, which we believe will help power our flywheel and drive growth in our business. We remain relentlessly focused on addressing our short-term challenges while also taking a deliberate approach on how we prioritize our initiatives moving forward. I'll now turn the call over to Alexis to discuss the financials.