Cardlytics, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This annual filing reports full-year results, not standalone fourth-quarter results. Cardlytics operates a bank-channel advertising platform and the Bridg customer-data platform; revenue is reported net of consumer incentives.
Financial performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $309.2 million | $298.5 million |
| Billings (non-GAAP) | $453.4 million | $442.5 million |
| Gross profit | $130.4 million | $112.6 million |
| Gross margin | 42.2% | 37.7% |
| Operating loss | $135.7 million | $457.8 million |
| Net loss | $134.7 million | $465.3 million |
| Adjusted EBITDA (non-GAAP) | $3.8 million | $(45.2) million |
| Cash from operating activities | $(0.2) million | $(53.9) million |
| Free cash flow (non-GAAP) | $(12.6) million | $(67.4) million |
Revenue increased 4%, while billings grew 2%. Cardlytics platform revenue was $285.4 million, up from $277.2 million; Bridg revenue was $23.8 million, up from $21.4 million. Cardlytics monthly active users rose 5% to 162.1 million, while ARPU decreased 1% to $1.91. Gross margin improved as Partner Share and other third-party costs fell 3% to $150.6 million and operating expenses declined.
The net loss remained substantial and included $70.5 million of goodwill and intangible-asset impairment and a $6.6 million loss on divestiture. FY2022’s much larger loss included $453.3 million of impairment charges and a $128.2 million gain from remeasuring Bridg contingent consideration. Adjusted EBITDA excludes specified items and is not a GAAP measure.
Liquidity, debt and cash flow
- Year-end cash and cash equivalents were $91.8 million, down from $121.9 million. Working capital was $52.8 million, versus $1.1 million in 2022.
- Total debt was $257.5 million: $230.0 million principal on 1.00% convertible notes due September 2025 and $30.0 million drawn on the revolving credit facility. The revolver bore an 8.50% prime rate at year-end; $16.7 million of availability remained.
- Management said existing cash was expected to fund operations and capital requirements for at least 12 months after issuance of the financial statements, while also expecting operating losses to continue and noting that additional financing may be needed.
- Operating cash use improved sharply, but free cash flow remained negative, including $11.7 million of capitalized software development costs. Cash declined in part from $50.1 million paid toward the Bridg earnout, partly offset by $30.0 million borrowed on the revolver.
Material developments, outlook and risks
- On January 25, 2024, Cardlytics settled disputes over Bridg acquisition earnout payments for $25 million cash and 3.6 million shares. It paid $20 million in January and issued the shares in February; remaining cash installments of $3 million and $2 million are due by January and June 2025, respectively.
- Cardlytics sold substantially all Entertainment assets in December 2023 for $6.0 million cash, subject to escrow and adjustments, recording a $6.6 million loss. It also amended its Atlanta lease, reducing office space from about 77,000 to 17,000 square feet.
- The company reported no formal financial guidance in the provided filing text. Management expects continued operating losses and describes growth plans spanning marketer sales, partner-network expansion, and closer integration of Cardlytics and Bridg.
- Key risks include reliance on a small number of financial-institution partners, particularly Chase, Bank of America and Wells Fargo; the top three accounted for over 85% of Partner Share in 2023. Most partner agreements may be terminated on 90 days’ notice. Marketer budgets may contract amid economic weakness, and advertising spending is seasonal, typically stronger in the fourth quarter.
- Further risks include privacy and cybersecurity regulation, service or data interruptions, competition, foreign-exchange exposure, and the ability to service or refinance debt. The company reported a full valuation allowance against net deferred tax assets and potential limits on use of tax-loss carryforwards.
- The 2023 financial statements received an unqualified audit opinion, and management and the auditor reported effective internal control over financial reporting. Revenue automation and goodwill valuation were identified as critical audit matters.
Investor verification priorities
- Track whether revenue and billings growth accelerates and whether Cardlytics ARPU stabilizes, alongside monthly active users and platform-level results.
- Assess whether positive Adjusted EBITDA is sustainable and translates into positive operating cash flow and free cash flow after capitalized software costs.
- Verify cash use and funding needs around the Bridg settlement, remaining contingent payments, and the $230 million notes due in 2025; review revolver availability, covenants and borrowing costs.
- Monitor FI-partner concentration, renewal and termination terms, and the contribution of the new partner announced in March 2024.
- Review assumptions supporting Bridg valuations and future impairment tests, given the recurring impairments and sensitivity to revenue forecasts and discount rates.