Cardlytics, Inc.

Good afternoon, ladies and gentlemen, and welcome to the second quarter 2025 Carlytics, Inc. Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, August 6th of 2025. I would now like to turn the conference over to Nick Linton. Please go ahead.

Good evening and welcome to the Cardlytic second 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 third quarter of 2025, our capital structure, increasing our supply, the growth of new partners, advertiser churn, and operational and product initiatives. 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 our 10Q for the quarter ended June 30, 2025, 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 second quarter 2025 earnings call. Q2 marked another quarter of steady progress against our strategy. As I look back over the past year since stepping into the CEO role, we significantly improved the product and tech challenges facing us over past several quarters, diversified our ecosystem, and set a foundation for growth. With the work we've accomplished, we are now deepening our efforts in key areas that will be most critical for the next stage of our business. I'd like to share details on the progress we've made last quarter to advance our four business pillars. First, increasing and diversifying our supply to meet consumers where they are. Our publisher base is what makes our network unique, and growing and diversifying this foundation continues to be a top priority for us. We're focused on growing our partnerships with both financial institutions and merchants from other verticals. We are pleased with the early progress with our newest bank partners, and we have a robust pipeline of prospective FI and non FI partners in both the US and UK. We are not only focused on adding more publishers with large user bases, but also working with our bank partners to maximize user engagement with our offers. When our partners are fully committed to our shared goal of maximizing value for consumers, we see a substantial difference in results. As an example, we've been working with a top five bank partner who has been investing in their program and increasing their marketing and merchandising activities around cashback offers. And through these efforts, this partner is seeing a significant lift across key metrics, including a 92% increase in activations and a 48% increase in redemptions year over year. We plan to continue these efforts with several bank partners who are interested in working with us to increase engagement and bring more demand. Now turning to the retail side of our CLO network. On our last call, we announced the launch of the Cardlytics Rewards platform, which strategically diversifies our publisher base beyond FIs. We are now collecting data from our pilot, making refinements to the platform, and optimizing for the best consumer experience. In parallel, we are progressing many active conversations with leading merchants in the U.S. and U.K. We look forward to sharing more partner updates in due time. While we continue our efforts to expand our supply, we are also working through a notable change with our largest FI partner. This partner, who built their program with our offers over the last several years, has recently decided to restrict a large amount of content from running on their channels starting July 1st. While we expected some level of this, we did not anticipate brand restrictions at this scale. The implications are that this partner's users will likely receive significantly less content and less value. We have also heard from numerous advertisers that they are equally concerned about the negative impacts to the efficacy of their programs if restricted from running on the trusted and proven Cardlytics platform. This change is posing significant limitations for our business. Despite our attempts to find a better path forward for us and their customers, we are now focused on mitigating the impact of this bank's decision. First, we will continue to invest in efforts to meet consumers where they are, and we expect to increase and diversify our supply. Second, we are improving our relevancy and targeting tools, which we expect will allow us to shift our content to other publishers that are focused on leveraging the Cardlytics platform to deliver value to consumers. Third, Our shift to engagement-based pricing is helping advertisers see our platform as a real performance media ad format. Four, we are working with our advertisers to blend TBC reporting, incrementality results, and MMM readings for a more comprehensive view of performance, which we believe will continue to position Cardlytics as a trusted and a measurable growth channel. For clarity, the restrictions imposed by this bank are unique to this partner, as no other FI partner of ours has imposed restrictions of any similar magnitude, nor do we expect them to. In fact, our other bank partners are leaning into our platform to deliver more value to their users and are growing their share on our network. We are committed to ensuring that our business is sustainable and on a path to profitability. Alexis will discuss more about the financial impact these changes will have. We believe that our network capabilities are a real market differentiator that cannot be easily replicated. Competitors have generally not been successful in capturing budgets from advertisers with multi-unit chains or more sophisticated CLO needs. We hear this time and time again from our advertisers that only Cardlytics has the scale and ability to run the type of novel app formats that they want. Since these restrictions were imposed, we've seen negligible churn with our restricted brands. The vast majority of them have stayed on our platform so far. Now moving on to our second pillar, strengthening and growing advertiser demand. In light of supply limitations, Doubling down on demand is of utmost importance. Our UK business continued to show strong growth with the highest billings quarter in history, driven by strength in categories like everyday spend, subscription services, and retail. We signed over 20 new logos, about half of which are top 150 brands in the UK, and we are focused on growing these accounts and securing longer-term commitments. With more pressures on performance, we are helping our advertisers demonstrate results and working closely with them to develop longer-term CLO strategies. In the U.S., we also saw increased performance expectations from our advertisers. Advertiser churn was mostly concentrated in mid- to small-size brands, which have been more susceptible to budget reductions. We saw strength in everyday spend and specialty retail consistent with trends from the previous quarter. Travel and restaurant categories experienced softness in the first half of the year, as we've seen across the industry. We are encouraged by signing new top tier brands in the U.S. as well, including a leading ride share player, top retailer and national restaurant chain. These enterprise accounts are where we see the highest potential for growth and scaling in the second half of this year. In the light of the changes with our largest FI partner, we are focused on reinforcing our relationship with our top advertisers and ensuring their content is effectively delivered across our spectrum of publishers. We have reorganized our sales organization under our new chief business officer and are accelerating our go-to-market efforts with intensity. We have been seeing success with our vertical focus go-to-market initiatives, and we will enhance and expand on this strategy. We are also leading with proven performance, which remains a true differentiator in the market against our competitors. And while we diversify our supply, we are also adding new demand to our network. We expect to attract new brands and verticals to fuel our growth strategy with CRP. Furthermore, by aligning US and UK under one leader, we are able to work with leading brands and support their marketing spend across these markets continuously. Our third pillar, maximizing the performance of our network. We are seeing the benefits of our focused efforts to stabilize and optimize our platform over the past few quarters. Our network is performing effectively and efficiently, bringing more confidence to our partners and advertisers. As recently announced, we launched new dashboards within the Cardlytics Insights Portal to bring the full power of our network data to our advertisers. The new dashboards are focused on customer insights, which have historically been generated by our analytics team rather than self-serve and in real time. With the Insights Portal, our advertisers can access market data and customer intelligence on demand whenever they need them. One client noted, we are sharing these insights internally to highlight Cardlytics not just as a media partner, but a partner that provides real value to our business through data. Lastly, we continue to make progress with the migration to engagement-based pricing models, which are now implemented for 79% of our advertisers. In Q2, 96% of our new business ran on engagement-based pricing, reinforcing the fact that this pricing model is aligned with what our advertisers are looking for as it provides lower funnel signals that are valuable to them. Engagement-based pricing has also helped us compress deal cycles aligned with internal brand measurement models, and we believe it will make us more resistant to churn over time. And our final pillar, accelerating our growth in bridge. Last quarter, we saw strong and steady client interest for our identity resolution capability, including a long-term renewal with a high-end beauty brand. We also signed a new partnership with a popular restaurant chain that is using our advanced analytics and business intelligence for deeper customer insights. For Ripple, we're encouraged by the positive trends that helped us more than double our revenue quarter over quarter. We recently welcomed Hy-Vee Red Media to Ripple as our newest partner, which will further expand our current scale of over 140 million unique shopper profiles. Building on our efforts to scale supply over the past year, we are now continuing to focus on the demand side. In Q2, there has been strong traction with the adoption of our Ripple audiences across different platforms. In fact, we're seeing 10% growth week over week on Trade Desk alone. We are continuing to work with new and existing platform partners to accelerate this momentum and drive broader adoption and more revenue diversification. On our last call, I shared that we launched a pilot for CPG offers with one of our large retail clients and bank partners. I am pleased to report that initial results from this pilot are encouraging. Not only did we validate the feasibility of connecting our bridge and cardlytics data, the pilot demonstrated a positive impact on both shopper behavior and basket size. Among redeemers, we saw a 30% increase in the rate of baskets containing the specific product, as well as a 2% increase in basket size for transactions containing the product, and a 13% increase for all other transactions. Overall, we continue to move forward, taking a deliberate and thoughtful approach to growing our business. There are undoubtedly challenges that we did not anticipate a year ago, but we believe that over the medium term, the strategic shifts we initiated earlier this year will position us for profitable growth. We are operating efficiently and effectively, and we believe these shifts will ensure that we continue to deliver on our promise to our partners, advertisers, consumers and investors. I'll now turn it over to Alexis to discuss the financials.