On August 7, 2024, Cardlytics Inc (CDLX, Financial) released its 8-K filing for the second quarter of 2024, revealing a mixed financial performance. The company, which operates a digital advertising platform within financial institutions' digital channels, reported a revenue of $69.6 million, falling short of the estimated $75.37 million. The earnings per share (EPS) stood at -$0.09, better than the estimated -$0.45.
Company Overview
Cardlytics Inc operates through two main segments: the Cardlytics platform in the U.S. and U.K., and the Bridg platform. The Cardlytics platform, which generates the majority of the revenue, operates a proprietary native bank advertising channel that enables marketers to reach consumers through their trusted and frequently visited online and mobile banking channels. The Bridg platform generates revenue through the sale of subscriptions to the cloud-based customer-data platform and the delivery of professional services like implementation, onboarding, and technical support. The company receives maximum revenue from the United States.
Performance and Challenges
Cardlytics Inc faced several challenges in Q2 2024. Revenue decreased by 9% year-over-year, or 7% excluding the Entertainment segment, which was sold in December 2023. The company attributed the revenue decline to slower-than-anticipated billings growth and higher consumer incentives. Despite these challenges, the company saw a 3% year-over-year increase in monthly active users (MAUs) to 165.5 million, although the average revenue per user (ARPU) decreased to $0.42 from $0.48 in the same period last year.
Financial Achievements
Despite the revenue decline, Cardlytics Inc managed to reduce its net loss significantly. The net loss for Q2 2024 was $4.3 million, or $0.09 per diluted share, compared to a net loss of $23.5 million, or $0.67 per diluted share, in Q2 2023. Adjusted EBITDA, a non-GAAP metric, improved to a loss of $2.3 million from a loss of $4.1 million in the same period last year. The company also reported net cash provided by operating activities of $4.4 million, although this was a decrease from $5.8 million in Q2 2023.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Revenue | $69.6 million | $76.7 million | -9% |
| Net Loss | $(4.3) million | $(23.5) million | -82% |
| Adjusted EBITDA | $(2.3) million | $(4.1) million | -44% |
| Net Cash from Operating Activities | $4.4 million | $5.8 million | -24% |
Balance Sheet and Cash Flow
As of June 30, 2024, Cardlytics Inc reported total assets of $534.4 million, down from $574.1 million as of December 31, 2023. The company's cash and cash equivalents stood at $71.2 million, a decrease from $91.8 million at the end of 2023. Total liabilities were $324.3 million, down from $439.3 million at the end of 2023, primarily due to a reduction in contingent consideration and convertible senior notes.
Commentary and Future Outlook
"We continue to believe in the significant growth opportunity as we invest to modernize our platform. We are making progress, but transitions like this take time and these near-term challenges do not change the long-term potential of this business," said Amit Gupta, incoming CEO of Cardlytics.
"While we observed strong growth in redemptions, our results were challenged by slower-than-anticipated billings growth coupled with higher consumer incentives," said Alexis DeSieno, CFO of Cardlytics.
Analysis
Cardlytics Inc's Q2 2024 performance highlights both the potential and the challenges the company faces. While the revenue decline and higher consumer incentives are concerning, the significant reduction in net loss and improvement in adjusted EBITDA are positive signs. The company's ability to maintain strong MAU growth indicates a robust user base, which is crucial for future revenue generation. However, the decrease in ARPU suggests that the company needs to find ways to better monetize its user base.
Overall, Cardlytics Inc's Q2 2024 earnings report presents a mixed picture. While there are challenges to address, the company's strategic investments and strong user engagement provide a foundation for future growth.
Explore the complete 8-K earnings release (here) from Cardlytics Inc for further details.
