Cardlytics, Inc.

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 2025, our capital structure, the rollout of new financial institution partners and the renewal of existing 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 factor section of our 10-K for the quarter and full year ending December 31st, 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 on 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 DiCieno. Following their prepared remarks, we'll open it up for your questions. With that, I'll hand the call over to Amit.

Good evening and thank you for joining our fourth quarter and full year 2024 earnings call. I'd like to start with a few thoughts on 2024. Overall, it was a transitional year for us as we navigated changes while staying focused on the growth levers we laid out for our business. We faced institutional challenges around network upgrades, changes in FI partner platforms, increased competition, as well as growth constraints with Bridge. When I took this role, I knew we had to get back to growth by building on our core strengths. I am clear-eyed about our challenges as well as our value proposition. Building on our leadership in the industry for more than 16 years, we are focused on strengthening our competitive mode to provide a truly differentiated commerce media platform for our partners and advertisers. We believe we have the best data set in the business. We see approximately $5.8 trillion of annual consumer spend. We partner with top financial institutions, which enable us to operate what we believe to be the leading financial media network in the U.S. Our north star of driving consumer engagement has not changed. However, we are refocusing our efforts on a turnaround plan to get us back to growth. As part of this, we divested or closed non-for businesses like DOSH and made decisions to reinvest in areas that will help us unlock more growth. For example, we are building up our partnerships, data engineering capabilities, and go to market efforts. We are also in the process of standing up a new office in Taiwan to take advantage of the high caliber local talent whose expertise is aligned with our growth priorities. Despite the challenges in 2024, we nevertheless made progress on a number of efforts that have set a good foundation to build upon this year. We diversified our business by scaling new FI partners and brought new advertisers onto our network. Growth of our UK business was a bright spot. We also saw continued growth in the everyday spend category, a particular strength of our business. Now, turning to Q4, we exceeded the high end of our guidance across all metrics. This was due to higher than expected pipeline wins and our continued efforts to improve delivery of our platform, which I'll cover in more detail. As I outlined on our last call, I'd like to share the projects we've made on each of our four key pillars of our turnaround plan. First, increasing our supply so that we can meet our consumers where they are. With our newest large FI partner in the U.S., Our offers are now reaching all eligible card members, and we are working to scale the volume of content we deliver to them. I am happy to share that we have also signed a new neobank partner in Q4, one of the fastest growing fintechs in the U.S. We have begun testing and expect to be at scale with them in record time by the end of Q1 this year. We are also focused on renewing agreements with our existing FI partners as card-linked offers continue to be an important component of bank loyalty programs. In the UK, we continue to see strong double-digit growth. In Q4, the growth was driven by an increase in Monzo supply and more consumer engagement with our offers. In addition to financial institutions, we are also engaging with new partners in other sectors who are expressing interest in our platform as a way to build and grow a loyalty program for their customers. I look forward to sharing more updates on this particular effort in the coming quarters. Second, strengthening and growing demand with our advertisers. Last quarter, we saw an increase in churn and reduced budgets with a small number of our large advertisers in the U.S., which were driven by organizational changes, broader macro factors, as well as our own platform changes. We are working to win back these advertisers while also adding new large brands that consumers know and love. Despite the churn, we continue to sign new brands across industries, which will scale over time as our network continues to perform. We have success in growing budgets through custom targeting. As an example, we are working with an advertiser in the home improvement category to expand their base of professional contractors. By using our unique purchase data, we identified and targeted these contractors based on their spending habits. driving incremental sales from this high-value, hard-to-reach customer segment. We are also responding quickly to our advertisers' requests for new features and tailored tech solutions to meet their unique needs. For example, we accelerated development of micro-targeting solutions by combining our core Cardlytics and bridge capabilities for the first time. We expect to soon begin testing a series of CPG offers from large retailers, and by using Bridges' product-level data, we believe this new offer construct will unlock CPG budgets and create new co-branded supply experiences between banks and merchants. In the UK, we saw strong growth in the everyday spend, retail, and travel industries. Much of this growth came from successful pilots with new advertisers, including a leading global airline and ride share service. We also continue to see strong uptake with our insights portal, with a 50% increase of brands using the portal as of the end of 2024. Based on this early success, we expect interest in our insights on demand to grow as we continue to roll out new dashboards. We know that access to the Insights Portal is another important reason why advertisers continue to spend with us, as we provide what we believe to be the most comprehensive set of consumer spend data across online and in-store channels. Moving on to our third pillar, our continued and relentless focus on building a high-performing network. In Q4, we sequentially improved delivery. We are consuming campaign budgets with more predictability and continue to drive engagement with offers. We have resolved many of the key issues that were contributing to the extremes seen in previous quarters and improved the efficiency of our platform. We are making incremental improvements to our budget management and projection model. We also continue to automate many of our efforts to improve predictability and performance and optimize for relevancy to drive further efficiency. To further optimize campaign performance through better visibility and quicker feedback, we continue to work with our advertisers to shift to engagement-based pricing models. In Q4, 61% of our advertisers in the U.S. were on engagement-based pricing, up from 51% in Q3. We remain on track to have the vast majority of our advertisers on engagement-based pricing by the end of this year. Looking ahead, we will focus on the initiatives that further strengthen our network, which is a key differentiator in the CLO market and cannot be easily replicated. Our value proposition remains one of a kind, and we will continue to build on our cutting-edge product and tech capabilities. And our final pillar, accelerating our growth in bridge. We saw a healthy pipeline of client interest for identity resolution heading into the new year. Although Q4 did not show the results we had hoped, we remain optimistic about growing our bridge revenue this year with new advertisers and continued product improvements, and have refocused our efforts on our go-to-market strategy. With Ripple, we now have over 110 million unique shopper profiles and continue to see strong performance with our audiences. Based on the initial client feedback, we will focus on increasing awareness with new advertisers and agencies to boost the adoption of our audiences. One area that I want to be clear on is our liquidity. We are very comfortable with our position and our ability to fund operations and pay off current debt obligations. While we exceeded our guidance in Q4, we are not satisfied with this performance and believe that our Q1 will represent the billing straw of our transitional period. We are setting the stage for 2025 to be a transformative year for the company, and we believe we are uniquely positioned to be a leader in commerce media. With Our ongoing product and tech stack innovation, expanding network, and potential to grow our flywheel, we are enthusiastic about capitalizing on our momentum. I'll now turn it over to Alexis to discuss the financials.

Thank you, Amit. I want to echo Amit's comments about the full year 2024. In our pursuit for rapid transformation and growth, we face some executional setbacks. Despite that, I remain confident in the unique value proposition that we offer to our bank partners and our advertisers. In full year 2024, our top line billings were negative 0.7% year over year, excluding the sale of entertainment, and annual adjusted EBITDA was $2.5 million, positive for the second time on a full year basis. We slightly reduced expenses while balancing investments for growth, took a series of steps to strengthen the balance sheet and settle an outstanding lawsuit we are committed to delivering sustainable profitability and free cash flow over time and believe this commitment requires balancing investments in growth and disciplined expense management turning to our specific fourth quarter results my comments will be year-over-year comparisons to the fourth quarter of 2023 excluding entertainment unless stated otherwise in q4 our total billings were $116.3 million, an 11.2% decrease. We beat our billings guidance primarily due to improvements in delivery and pipeline wins in the U.S., including from a number of national brands. Compared to Q4 2023, we had a reduction in a few key accounts as expected. However, we signed a large number of new brands in Q4, of which more than 90% were on engagement-based pricing. We continue to diversify our content with Q4 representing the highest number of total advertisers since 2022. 2024 was the biggest year we've had for new business, and that has laid the foundation for growth in 2025. We saw sequential progress in our continued efforts to stabilize our platform, and in Q4, we were able to deliver results for our advertisers with more accuracy and predictability, which we believe builds trust and unlocks future budgets. Consumer incentives decreased by 1.2% to $42.3 million and revenue decreased 16% to $74.0 million. We saw better rewards management reflected in our revenue to billings margins, which improved 3.7 points from the previous quarter. Looking at our segment revenue results, our US revenue decreased 19.9% due to lower billings and higher redemptions. In the UK, we saw the fourth consecutive quarter of double-digit revenue growth at 27.2% and the highest quarter of rewards to date. Bridge revenue declined 12.7% compared to the prior year due to the loss of key accounts in early 2024. Adjusted contribution was $40.7 million, down 12%. As a percentage of revenue, our adjusted contribution margin was 55%, up 2.5 points due to a more favorable partner mix. Adjusted EBITDA declined from $10.3 million to $6.4 million. Total adjusted operating expenses, excluding stock-based compensation, came in at $34.3 million, lower than the prior quarters due to a reduction in incentive compensation. We are maintaining cost discipline while making prudent decisions around long-term investments in our business. In Q4, operating cash flow was positive $3 million. Free cash flow was negative $1.5 million, a sequential improvement of $2.4 million from the prior quarter. On the balance sheet, we ended Q4 with $65.6 million in cash and cash equivalents and $60 million of unused available borrowings under our line of credit. This gives us over $100 million of liquidity as of the end of Q4 after accounting for a minimum cash covenant of $25 million. We made our first full payment of interest expense on our 2024 convertible note of approximately $4M, and subsequent to Q4, we paid $3M of the $5M in payments that remain for our settlement with SRS. Our M&Us were $167.3M for the fourth quarter, a decrease of 0.4%, driven primarily by winding down DOSH and a smaller FI partner. ARPU was 44 cents, down 16.7% as a result of increased consumer incentives. Now turning to our outlook for Q1. For Q1, we expect fillings between $91.5 and $94.5 million, revenue between $57 and $60 million, adjusted contribution between $30 and $32.5 million, and adjusted EBITDA between negative 7.5 and negative 4.0 million dollars. Our billings guidance represents negative 13 percent to negative 10 percent growth. As a reminder, Q1 is a seasonally weak quarter for the advertising industry as a whole, and our billings has historically increased sequentially on a quarterly basis throughout the year. From a pipeline standpoint, We are lapping reductions of a few key accounts versus Q1 of last year. But as I mentioned, some have returned to pilot with us in March. The remaining key accounts have reduced their budgets but continue to spend with us, especially in the restaurant and travel categories. We see strength in everyday spend, a category that continues to be a differentiator for us, as well as in direct-to-consumer and emerging brands. As Amit mentioned, our efforts to stabilize our platform are paying off. and we are delivering more predictable results for our advertisers. Under delivery of campaign budgets remains a drag in Q1, but we expect incremental improvements with continued refinements in targeting and ranking. As of late Q1, we have ramped with our newest large FI partner, and our offers are now reaching all eligible card members. We are working to scale the volume of content that we deliver to them. In the U.S., we expect Q1 to represent the trough in our performance. as we expect Q1 to be the lowest billings quarter and lowest growth rate in 2025. The UK continues to grow. We expect continued billings growth for the full year as we focus on increasing demand through high-quality advertisers in categories like rideshare and grocery. Bridge should return to positive growth this quarter as we lap the loss of a key account in Q1 of 2024. We expect to see accelerating growth from Bridge and Ripple in the second half of the year. Revenue as a percentage of billings is expected to be in the low 60% range for Q1, driven by increased engagement and better rewards management as we have made improvements to delivery. As a reminder, we continue to be focused on adjusted contribution, which we believe is the best indicator for our business. We are expecting adjusted contribution in the mid 30% range, consistent with recent mixed shift. As we scale new supply with more favorable revenue share, adjusted contribution should improve. Our adjusted EBITDA guidance primarily reflects the impact of our billings guidance. Operating expenses are expected to be sustained below $40 million, excluding stock-based compensation. While we will make strategic hiring decisions, we will continue to evaluate our costs as we monitor performance. For example, we have deprioritized non-core businesses in order to free up resources to focus on our core business and to facilitate investing in a cost-effective technology hub in Taiwan. For 2025, CapEx is expected to remain in the mid to high $4 million range per quarter. Free cash flow should sequentially improve with semi-annual payments of interest on a convertible note and our final payment of $2 million to SRS in June. For 2025, we are focused on delivering improved adjusted EBITDA sequentially through the year and positive adjusted EBITDA exiting the year based on improved execution in the U.S., continued growth in the U.K., and growth from bridge. We believe this can be enabled by sequential billings growth driven by a stabilized platform, delivering enhanced customer value, and greater diversification of our supply partners. To reiterate Amit's earlier points, we have comprehensively evaluated our cash needs and believe that our liquidity is sufficient. We remain confident in our ability to invest in our business while also satisfying all of our financial obligations, including the repayment of our outstanding convertible note. As we have proven so far, we are taking a disciplined approach to current-year investments, and we will invest only as top-line performance improves. We continuously evaluate options to further improve our liquidity and strengthen our balance sheet. I'll now turn it back to Amit for closing remarks.