Cardlytics, Inc.

At this time, all participants' lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If you wish to ask a question during that time, please press star and 1 on your telephone keypad. If at any time during the call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Wednesday, May 7, 2025. Now I would like to turn the call over to Nick Olynton, Chief Legal and Privacy Officer. Please go ahead.

Good evening, and welcome to the Cardlytics First Quarter 2025 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 second quarter of 2025, our capital structure, the rollout of new partners, and operational and product initiatives. For discussion on 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 our 10-Q for the quarter ending March 31, 2025, which has been filed with the SEC. Also during this call, we will discuss non-GAP measures of our performance. GAP 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 Dcno. 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 first quarter 2025 earnings call. I want to start our call with a few comments on the macro environment. As you're all acutely aware, we've seen a lot of headlines about volatility and declining consumer sentiment in the first quarter. Based on our purchase data, which represents approximately $5.8 trillion in spend annually, consumer spending is still strong. While there was some softness in February, we saw spending rebound in March and grow steadily in April. Our data showed strong growth across categories like auto, home improvement, e-commerce, and apparel, suggesting that consumers are front-running their purchases before tariffs take effect. We are keeping a close pulse on these fluctuations and how consumers are responding to market changes. Leading brands continue to spend with us, but overall advertisers have been more cautious with their budgets, given the macroeconomic uncertainty. While we expect this -and-see stance to continue, we are focused on leveraging the breadth and depth of our purchase intelligence to help our advertisers navigate this uncertainty. For example, we know that the airline industry has been facing headwinds and we've helped a large U.S. carrier bridge this gap. Seeing strong performance and incremental return, this advertiser scaled up to annualized budgets to re-engage their customers and deliver outside value. Now turning to our key business pillars. As I shared on our last call, we entered 2025 with continued focus on building momentum across our key pillars to maximize consumer engagement, which remains our North Star. Our four pillars, increasing supply, strengthening demand, optimizing our network, and growing bridge, continue to underpin our journey ahead to platformized card Linux. Let me explain what I mean by platformized. Building on our long-standing leadership in the financial media space, we continue to evolve our business to position ourselves as a differentiated commerce media platform. This means building an ecosystem that provides true multi-sided participation, flywheel network effects, seamless -and-play integration, and powerful data capabilities. I see these elements as hallmarks of a high-performing tech platform, and we are focusing on the initiatives that further strengthen our position. We believe we are the only platform with this level of scale and data which enables us to provide an array of rich and sophisticated solutions for our publishers and advertisers alike. I'll now share more details on our progress. First, increasing and diversifying our supply to meet consumers where they are. I want to start by addressing a frequently asked question about why we don't share more details on our partners. While we strive for transparency, our partners' requests and often the terms of our contracts limit what we can discuss publicly. We look forward to sharing more details, including the names of certain new partners in time and when permitted. With our newest large FI partner, we have launched with all eligible users and continue to scale the volume of our content. We are seeing strong engagement from this user base and are unlocking different consumer demographics with this partnership. We expect this partner to continue ramping the volume of our content throughout the year, which will enable us to deliver more offers featuring our high-quality brands to their customers. As of April, they are now one of our top five banks in terms of billings run rate. Our newest Neobank partner is now ramped up and live on our latest platform and our offers are reaching all their eligible card members with premium membership. We are encouraged by the strong redemption rate in this digital-only channel since the launch only a few weeks ago. Next, I'm excited to share that our vision to expand and diversify our network beyond financial institutions is now a reality. We recently signed our first non-FI partner agreement to run offers on a leading digital sports platform with friends and families now live and a full rollout expected in the coming weeks. We expect to bring additional partners on board soon and these non-FIs will make up our new Cardlytics Rewards Platform, or CRP. With CRP, any merchant with digital properties frequented by consumers can become a publisher partner, which opens the door for new verticals that expand our supply universe. This is an important step in the platformization of Cardlytics as we can now engage with merchants in a more strategic way. In addition, we have been investing in our tech stack to offer more plug and play opportunities for our publisher partners. Historically, our integrations with large banks have been highly custom and lengthy. With the work we've done to ease the implementation process, we were able to onboard our newest NeoBank partner in eight weeks and our first CRP partner in four weeks. We now offer an SDK, hosted solutions, and robust APIs so that most publishers can integrate and go live on our platform quickly. These turnkey solutions are especially beneficial for smaller banks that want to join our network with minimal lift and friction. We can also expect to see benefits of our tech improvements the next time we integrate with a large bank. And lastly, we recently shared that we will not be renewing our current agreement with Bank of America. We expect to continue providing uninterrupted service to them through early 2026. And all signs point to us continuing to partner together after that and delivering our offers to their customers through other means. Additionally, after the conclusion of our current agreement, we expect to fully sunset our legacy tech stack and devote all resources to our current platform. Furthermore, we expect no material impact to our financials and we will continue to invest in diversifying our supply. Second, strengthening and growing advertising demand. We are leaning into our core differentiators, which include more sophisticated capabilities like merchant location level data and multi-tier offers. These types of offer setups now account for nearly 10% of budgets and have proven effective in influencing behavior. Leading advertisers are using our capabilities to target specific areas of softness in their business and deliver more value to their customers. For example, airlines have used targeted receipt level offers to promote upgrades to premium seating or bookings to specific destinations. Gas brands have also leveraged these offers to boost premium fuel purchases. Leading retailers are using our capabilities to drive omnichannel behavior to deepen their customer relationships. We built on our momentum to drive new business and continue to add new brands to our platform. We've also expanded our integrations with additional third-party content providers, which allows our publisher partners to reap network benefits by accessing diverse content with high quality advertiser demand. In the UK, we had strong performance and growth in categories like travel and entertainment and restaurants, even as advertisers' overall marketing budgets shrunk. Looking ahead, we see opportunity for continued growth as brands shift their ad spend to direct marketing channels with proven results. We continue to see good traction with our Insights portal, with a 77% sequential increase in advertisers utilizing the portal in Q1. The portal has played a critical role in securing executive buy-in and contributed directly to high-value renewals. Leading data-driven brands are accessing the Insights portal on a daily basis and using Insights routinely in broader business decisions. As our client at Shake Shack said, quote, we are in the portal regularly pulling data to share across the leadership team. The competitive share, in particular, is very valuable for us, end quote. Third, our continued efforts to optimize and build a high-performing network. On our last call, I shared how we were making continued improvements to delivery. With these ongoing efforts, I am pleased to share that we believe delivery issues are now largely resolved. Improved budget management, projections, and rankings have helped our progress and we are making significant strides to automate these initiatives. To further maximize the performance of our network, we are working on a number of models designed to optimize for activations and redemptions by increasing relevancy and program participation. These models are showing early promising results and we will continue to fine-tune them. Our continued investments in data engineering are not only enhancing network effectiveness but are also providing solutions to address specific advertiser challenges. For example, we are leveling up geotargeting capabilities by matching spending patterns in different locations, enabling us to more precisely target consumers with offers in the areas they frequently visit and shop, not only where they live. Our shift to engagement-based pricing also continues to progress, with 74% of our advertisers on engagement-based pricing as of end of Q1, representing more than half of our billing. In our fourth and final pillar, accelerating our growth and bridge, we continue to see interest and a healthy pipeline for our identity resolution solution. In Q1, we expanded our relationship with a leading retailer and signed a top sporting goods chain, which further validates our core technology and growth potential. We are working with these clients to power their identity-driven marketing strategies and support their digital transformation goals. With Ripple, we now have more than 130 million unique shoppers across 11 retailers in the U.S. We are working to strengthen our revenue opportunities through custom audience campaign growth with CPG and agency clients. As mid-market and regional retail media networks gain prominence, our integrated solutions across bridge uniquely position us to power both sides of this evolving ecosystem, connecting retailers, brands, and shoppers with precision and measurable impact. Importantly, we continue to focus on integrating our skew-level data from bridge, which represents over 12 billion transactions per year with our Cardlytics purchase data. Last quarter, we mentioned we would begin testing a series of CPG offers from large retailers using both bridge and Cardlytics data. And I'm happy to share that we have just launched this pilot with a retailer and one of our bank partners and look forward to sharing updates on this effort. This pilot represents the first time we've been able to publish a CPG offer or leverage bridge data on our core Cardlytics platform. By continuing to lean into our core platform capabilities and differentiators, we have created a resilient platform that performs through different macro environments. To position ourselves for success, we are proactively taking control of our costs and ensuring our liquidity is in a good position. We recently extended the maturity of our line of credit to 2028 and also implemented a 15% reduction to our workforce earlier this week. I will let Alexis share more details on these actions. I'd like to thank all our teams for their hard work and resiliency as we make decisions to future-proof our company. Finally, I am excited to welcome Rory Mitchell, our new Chief Business Officer, to our leadership team. Rory joins us with more than 15 years of experience in commerce media and leading teams through critical business transformations. I look forward to his insights and fresh perspective as we continue our platformization journey. I will now turn it over to Alexis to discuss the financials.

Thank you, Emmett. For the first quarter, we performed above or at the top end of our guidance across all metrics. As a reminder, Q1 is a seasonally weak quarter for Cardlytics in terms of billings and free cash flow, and we also decommissioned the Dosh consumer app in late February. Turning to our specific first quarter results, my comments will be -over-year comparisons to the first quarter of 2024 unless stated otherwise. In Q1, our total billings were $97.6 million, a .3% decrease. We beat our billings guidance, driven primarily by pipeline wins in the U.S., and incremental improvement on delivery. On a category basis, we saw strengths in our core vertical, everyday spend, and in specialty retail, which grew 52%. The travel category declined as we saw budgets shrink from a few key accounts. We also continued to see high amounts of new business, with 96% of new brands on engagement-based pricing. Consumer incentives decreased by .1% to $35.7 million, and revenue decreased .4% to $61.9 million, driven by lower top-line billings in a category mix of advertisers. Our -to-billings margin remained flat to prior quarter, but down .8% versus prior year, due to pressures on advertiser performance. Looking at our segment revenue results. Our U.S. revenue excluding Bridge decreased .9% due to lower billings as previously discussed. In the U.K., we saw .6% revenue growth, driven by higher billings and increased supply. We signed 15 new brands in the U.K. this quarter, primarily indirect to consumer and retail categories. Bridge revenue increased .6% due to new client wins with two major retailers. Adjusted contribution was $32.4 million, down 12.5%. As a percentage of revenue, our adjusted contribution margin was 52.4%, down 2.4 points due to a less favorable partner mix. Adjusted EBITDA was negative $4.4 million, a decline of $4.6 million. Total adjusted operating expenses, excluding stock-based compensation, came in at $36.8 million, flat to the prior year. In Q1, operating cash flow was negative $6.7 million. Free cash flow was negative $10.8 million, an improvement of $11.6 million from the prior year, due to a reduction in incentive compensation payout related to 2024. Historically, the first quarter is the lowest from a cash flow standpoint, and we expect this to be the case in 2025. On the balance sheet, we ended Q1 with $52 million in cash and cash equivalents and $60 million of unused available borrowings under our line of credit. As previously announced, we extended the maturity date of our line of credit to April 2028 under the same financial terms. This gives us $87 million of liquidity as of the end of Q1 after accounting for a minimum cash covenant of $25 million. Lastly, in Q1, we paid $3 million to our settlement with SRS, with only $2 million remaining in June. This quarter, we are introducing a new metric, monthly qualified users, or MQUs, and retiring monthly active users, or MAUs. MQUs are defined as unique, targetable consumers that have made a transaction in a given month. They represent the pool of possible redeemers that we can monetize. We are making this change for a few reasons. First, this new metric allows us to be consistent across our publisher partners, as not all partners provide the data necessary for an equivalent MAU metric. MQUs also align more closely with our efforts to diversify supply across FI and non-FI partners. In the first quarter, we had 214.9 million MQUs, an increase of 12%, driven by the introduction of our newest large FI partner. Excluding this partner, MQUs would have been down 1% due to winding down the Dosh consumer app and a smaller partner. For comparability, MAUs excluding our newest large FI partner would have been 169.7 million, up 2% from prior quarter and up .7% from the prior year. In conjunction with MQU, we are introducing Adjusted Contribution per MQU, or ACPU, and will retire average revenue per user, or ARPU. ACPU will include Adjusted Contribution from the Cardlytics platform and Exclude Bridge. We continue to believe that Adjusted Contribution is a better indicator for our business than revenue, as it reflects the value we retain after rewards and partner share. ACPU reflects how efficiently we convert advertiser budgets to value the company can retain. In the first quarter, ACPU was down 24% -over-year as the MQU base of our newest large FI partner has not yet been fully monetized. Excluding this partner, ACPU would have been down 15%. For comparability, ARPU excluding this partner would have been 36 cents in Q1. We have provided an eight-quarter historical view of these two new non-GAAP KPIs in the 10-Q that we filed today. Now turning to our outlook for Q2. I want to acknowledge the macro environment and note that our wider range reflects the potential for a wider set of outcomes. For Q2, we expect Billings between $100 and $108 million, Revenue between $61 and $67 million, Adjusted Contribution between $32.5 and $36.5 million, and Adjusted EBITDA between $-4 and $1 million. Our Billings guidance represents a negative 9% to negative 2% decrease -over-year. There is still a large amount of caution among our advertisers leading to delays when committing to ad spending. On the flip side, macro uncertainty is providing an opportunity for insights-driven selling as there is interest in understanding U.S. consumer spending trends and industry impacts. From a pipeline standpoint, we are seeing traction with new logos. From a category standpoint, we see strength in everyday spend and specialty retail as we did in Q1. As many peers have noted, the travel and restaurant categories are seeing weakness, but we are in a unique position to help advertisers in these categories drive incrementality. As Amit mentioned, a few weeks ago, we signed a large annual commitment with the large U.S. carrier that had previously reduced spend with us in Q1. In Q2, we expect incremental improvements to delivery with a renewed focus on relevancy and program engagement. With our newest large FI partner, we are still in early stages of our partnership and continue to iterate on what works best to maximize value to their cardholders. While 100% of eligible customers are receiving offers, we continue to unlock additional content and have grown the number of our brands on their platform by 21% in the last month. We are encouraged by our recent run rate in Billings, which is now similar to one of our top five banks and there continues to be upside as this partner scales. Our newest NIO Bank partner is also included in our Q2 guidance at about half the Billings of our newest large FI partner. We are excited to launch the Cardlytics Rewards platform with our first non-FI partner in Q2. As this is our first non-FI partnership, we are not assuming any financial impact in 2025 and are hoping to learn from this launch. Revenue as a percentage of Billings is expected to be in the low 60% range for Q2 as well as for the full year. While we have largely solved over delivery, which historically has been a drag on this metric, we have seen performance pressures in this macro environment. We believe these pressures will continue and have made strategic decisions to drive incremental performance in Billings. We are expecting adjusted contribution as a percentage of revenue to be in the mid 50% range. Our guidance reflects no material change to mix from any of our partners. Adjusted contribution as a percentage of revenue should improve sequentially as we diversify our supply. Our adjusted EBITDA guidance primarily reflects our Billings guidance, coupled with the reduction in staff that we completed earlier this week. This reduction impacted approximately 15% of our workforce, which translates to $16 million in annualized savings compared to our Q1 run rate. A portion of this will be reinvested into our lower cost technology hub so we can continue to invest in key product areas. Operating expenses are expected to be sustained below $35 million per quarter, accounting for the net savings and excluding stock-based compensation. For 2025, capital expenditures are expected to reduce to the low $4 million range per quarter. Free cash flows should sequentially improve, including semiannual payments of our interest on our convertible note. We believe we have de-risked our business and that we have sufficient liquidity to satisfy 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 and will invest only as top-line performance improves. As a result, we have deprioritized or delayed certain product initiatives, divested non-core assets, and shifted resources to lower-cost geographies. We continue to invest in three main areas, including sales, diversifying our supply, including non-FI partners, and bridge. For the rest of the year, we are focused on delivering improved adjusted EBITDA sequentially through the year based on improved execution and continued responsible expense management. We believe this can be enabled by sequential billing growth driven by a stabilized platform, delivering enhanced advertiser value, and greater diversification of our supply partners. I'll now turn it back to Amit for closing remarks.

Thank you, Alexis. Before we move to Q&A, I want to underscore the journey we're on to platformize our company. Our expanding ecosystem, depth and breadth of our data, and ongoing tech investments put us in a unique position to become the preeminent commerce media platform.

Thank you, ladies and gentlemen. We will now begin the question and answer session. And if you wish to ask a question, please press star and 1 on your telephone keypad. You will hear a prompt that your hand has been raised. If you wish to cancel your request, please press star 2. Once again, star and 1 if you wish to ask a question. One moment please while we compile the Q&A roster. We now have our first question, and this comes from the line of Jacob Stefan from Lake Street. Your line is now open. Please go ahead.

I appreciate you taking the questions. Congrats on the quarter. I was hoping that maybe we could touch on ERP a bit more. Can you kind of help us think about what kind of opportunity does this represent on the non-FI side, maybe comparing it to the the FI side of the business? Is this market larger or is it kind of a nice complementary market to the current business?

Jacob, thank you for the question. I think it's a very good question to start the strong quarter. We've had Cardlytics Reward Platform or CRP, as we've mentioned, is a major step forward. It really allows us to frankly change the definition of a partner. And in this case, it will be a digital sports platform. That will be our first CRP partner. And it's congratulations to them that they are actually forward thinking and leaning with us and driving more value to their consumers. In terms of the magnitude, we definitely see this as a strong path forward. But we don't want to kind of get ahead of ourselves. We want to make sure that we continue to partner with some leading merchants and take the wrinkles out of the tech stack, so to speak, and the platform and then scale. And as soon as we have a better sense of, you know, once some of these wrinkles are taken out, we'll come back to you with the magnitude. But we're really excited about the potential, especially now our advertising partners can become publisher partners. And we also get to attract new partners where consumers frequent.

Got it helpful. And just to clarify, maybe, is this like a sports betting platform where maybe you're incentivizing consumers to make a bet at a certain point during the game? Or am I off on that?

Yeah, we, I think we can't say the partner, but it's not a sports betting platform. And it is a one of the larger or largest digital sports platform. But as I mentioned in my remarks, at times we're not able to, we want to share the names, but at times we're not able to share. But as soon as we can contractually, we'll come back and share that.

Let me chime in for a minute. I'm going to chime in for a minute, Alexis. Just two things, I think, to hit on. This really opens up anywhere you're using your app or website and logging in with a partner. And it's not just necessarily this one example that we're talking about, but you can think about anything that you're frequenting a lot in terms of an app or website. That's an opportunity to serve you and offer one of our cashback offers. So it really does open up the opportunities in terms of outside of the bank channels. And then it also does open up opportunities for advertisers that we can't currently work with. For example, financial services would not be something that we're putting onto our, you know, FI partners, but we could be advertising that category on these non-bank partners. So it seems like a diversification

benefit as well.

Could you repeat that?

Sorry if my audio is not good. It just offers additional diversification benefits on both the advertising side.

Okay. Got it. Just last one for me. You guys noted some positive consumer spending. I'm just kind of curious, is that up significantly from, you know, maybe last year this time where it truly is, you know, consumers kind of front running those tariffs? Or is it relatively stable with kind of last year's trends? Just curious.

Yeah, I think generally we think about it on a sequential quarter on quarter basis. So we've seen the spending growth continue to hold strong, Jacob. As you know, we see about $5.8 trillion of spend, so it's a large swath of consumer spend in the country and mostly in the everyday spend category, the spend is held strong. I think as I mentioned in my prepared remarks in areas of travel, we've seen some softness creep in. But right now, some of the signs point to some of this might be front running. But we'll keep a close eye on this and on these fluctuations and, you know, when the trends change, this is an area where we continue to partner with our advertising partners and other publisher partners to get them, to advise them so that they can stay ahead of these potential changing consumer patterns.

Okay, thank you. Appreciate all the color.

Thank you. And the next question comes from Luke Horton from Northland Capital Markets. Your line is now open. Please go ahead.

Yeah, hey guys, congrats on the quarter. Just wanted to touch back again on the CRP, the consumer rewards platform, just kind of the economics for Cardlytics with these new partners. Would this be comparable to what you're seeing on the other side of the business or is it early to tell or is it engagement based pricing? Does any sort of details there?

Yeah, I think most likely, again, thank you for the question. Most likely, it'll be, we're moving the platform towards an engagement based pricing model. So we'll see more and more engagement based pricing offers and ads on these platforms on CRP as well. Generally, in terms of economics, I think the great thing in this case is, you know, the nature of interaction is different. The consumer frequency and the consumer engagement is different. So we see the economics being pretty positive, both for us and our publisher partners. But in terms of nuances, I think we want to get a few rinse and repeats and a few data points in multiple partners and then we'll have a better sense of economics. But so far we see positive economics, both for us and our publishing partners.

Got it. Makes sense. And then just touching on the macro environment, kind of between the US and Europe. Any puts or takes there that you're seeing between geographies? I don't know if I missed it on the call, but I don't think I heard about the UK during the quarter.

Yeah, I think that's a fair question. I think in the US, as we said, the spend is largely holding strong. And in the UK as well, we don't see any major changes in the spend patterns enough to kind of cause us to advise our advertisers differently. So, so far, I think we're seeing the spend patterns being the same. As I mentioned in my prepared remarks, advertisers, some advertisers are in the wait and see environment, but they're actually continue to spend with us. And specifically hitting the areas where softness in their areas, which are softer in their business patterns.

OK, got it. Well, thank you guys for taking the questions and congrats again on the quarter. Thank you.

Thank

you.

Once again, as a reminder, for those who want to ask a question, please press star and one on your telephone keypad. And the next question comes from Robert Colbridge from Evercore. Your line is now open. Please go ahead.

All right. Thanks for taking our questions. A few, please. Just given that the macro uncertainty at the moment, just wondering how you're sort of internally assessing your billing space, your customer base at the moment. Whether you're looking by vertical exposure, customer tenure, so forth, and anything you maybe tell us about the low visibility that you have right now into Q2 and the rest of the year. And then secondly, on the Cardinology Rewards platform and the opportunity with the non-FI partners. Sorry, I'm not up to speed, but can you just maybe might be helpful to give a recap or an overview on the mechanics of things like redemption, how the spending is tracked, how the reward is delivered and so forth in this, in this non-FI channel. And then I have one quick follow up. Thank you.

Sure. Robert, let's I think let's get to both of your questions on the advertiser side. I think as we briefly alluded, advertisers have been cautious in some cases with their wadency approach. But, you know, the good good thing in this area, we can say even in the case of downturn or a slower economic environment, there are certain categories that are counter cyclical. So restaurant and retail advice advertisers typically tend to perform better because consumers are more prone to looking for deals and offers and their everyday spend more frequently. So typically we've seen those advertisers not only perform better, but the consumer engagement and redemption start to correspondingly increase. Generally, I think as I mentioned before, you know, in some cases where advertisers are seeing potential macro uncertainty, they are leaning in and they're actually working with us. So we gave example of one of our large US carrier airline carrier where they wanted to make sure that they secure like an annual level of capacity from our Cardlytics platform to make sure that they can continue to reach their customers and drive value to them. So there is some wait and see, but generally we are working with advertisers closely and taking more creative opportunities to them to make sure that they can continue to spend with us. So that's more on the advertiser and the macro impact side. On the CRP, I think they probably do the summary version and happy to discuss specific details as a follow up. It really allows us to redefine our partner ecosystem. So it allows us to expand our publishing supply from banks to non-bank merchants where consumers frequent on their digital properties. So as an example, we shared we're launching our CRP with a large digital sports marketing platform. And that's an example where their consumers will get the benefit of our offers and it gets them to drive deeper relationships and more value to their consumers. And for us, this is a credit to their engineering team and our team. We were able to onboard them within four weeks and we built a platform very quickly and we talked about it over the last earnings call and we're happy that we were launching them. We're launching this platform with them this quarter.

Thanks. The quick follow up is just on the partner mix and the impact on adjusted contribution in the quarter. I just wanted to ask for a little more detail. It looks like that's going to reverse in Q2, but I just wanted to check on that. Thank you.

Yep. Thank you for the question. You're right. So yeah, Q2 returning to 54% at the midpoint of our guide for adjusted contribution to revenue margin and expecting this for kind of the rest of the year. I think in Q1, this is really a matter of legacy bank mix and engagement shifts that happen for a variety of reasons, including content and engagement. And so we just had a little bit of a headwind there in terms of the content in Q1, but returning back to kind of the mid 50s for the rest of the year and especially sequentially improving as we continue to ramp our newest supply partners, both the SI and non-SI ones.

Great. Thank you.

Thank you. Thank you. And the next question comes from Jason Crair from Craig Allen. Your line is now open. Please go ahead.

Great. Thank you. This is Cal for Jason. And apologies if you guys have touched on any of this already. But, you know, just kind of given you guys are a little unique in over indexing towards daily spend advertisers, you know, just kind of curious how, you know, having those daily spend offers can play into, you know, being able to make a difference in the way that you're doing it. And both from an advertiser perspective, as far as kind of what you guys are hearing from those advertisers and, you know, how you would expect that to kind of play into a consumer, the current consumer environment.

Yeah, I think this is thank you for the question, Cal. I think this is a strong suit, right? I think the everyday spend and the everyday spend advertisers are definitely trust our platform a lot. And I think given the macro environment, some of these leading retailers are frankly leaning in and they are leveraging our platform and the superior capabilities to drive very targeted benefits and targeted behavior. So in some cases we see some of these advertisers actually drive leverage our platform to drive more omni-channel behaviors to specifically get deeper relationship with their customers. I'll also mention one of the CEOs of major retailers actually said not only are we looking to Cardlytics to actually weather through this uncertainty, but they are real estate acquisition is a big part of their growth journey. And they actually rely on our insights to help them understand what the right real estate decisions might be, even in these the potential macro uncertain environment that they have in front of us. So everyday spend is something that we feel very good about. And that's something that several of our bank partners and now some of the non-bank partners really benefit from.

Great. And then maybe just kind of building off of that answer there. You guys have kind of done a lot of work around the data and providing more holistic offering for some of your advertisers like you kind of alluded to there with the real estate. So in the event that we see some more macro pressure, do you think that could lead to maybe some more discovery of these different offerings that you have and kind of leaning in on these products that you've been bringing to market?

Actually that's a great question. And when I mentioned about the strength of the quarter, this is an area that we're investing. We're actually investing a lot in our models to make sure that our redemptions are stronger, our targeting is better. We're making sure that as we're presenting our presentment, it has significantly higher degree of relevancy. I think we shared an example where we're now able to do a specifically higher level of geo-targeting. Typically a typical notional spend pattern would be targeting where consumers live. But in large parts of the country we find consumer spend patterns almost mirror, if not are greater, in geos where they actually work and recreate and spend. And so we now can actually geo-target consumers not only where they live but also where they work and where they actually travel. So that's a great example in helping our advertisers to expand their reach. There are other areas where our models are also helping specific advertiser issues. So I think you're exactly right. We expect to continue to bring these new capabilities to the market so advertisers can reach their customers more actively and in a stronger format.

Great. Thank you very much.

Thank you. And we don't have any further questions at this time. This concludes our conference call for today. Thank you all for participating. You may now disconnect your lines.