Cardlytics, Inc. — FY 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing, not a standalone fourth-quarter report; the supplied filing text does not provide clear Q4-only financial results.
Business context
Cardlytics operates a purchase-based advertising platform through financial institutions’ digital channels and, following its 2021 acquisition of Bridg, a customer data platform using merchants’ point-of-sale data. The company’s results remain predominantly driven by its Cardlytics platform. Its principal FI partners include Bank of America and JPMorgan Chase.
Key financial metrics
| Metric | FY 2021 | FY 2020 | Change |
|---|---|---|---|
| Revenue | $267.1 million | $186.9 million | +43% |
| Billings (non-GAAP) | $394.1 million | $263.4 million | +50% |
| Gross profit | $103.3 million | $63.3 million | +63% |
| Gross margin | 38.7% | 33.8% | +4.9 percentage points |
| Operating loss | $(122.6) million | $(53.9) million | Loss increased |
| Net loss | $(128.6) million | $(55.4) million | Loss increased |
| Adjusted EBITDA (non-GAAP) | $(12.2) million | $(7.8) million | Loss increased |
| Operating cash flow | $(38.5) million | $(7.6) million | Greater cash use |
Revenue was reported net of consumer incentives and gross of Partner Share. FY 2021 revenue comprised $258.8 million from Cardlytics and $8.4 million from Bridg. Consumer incentives were $127.0 million, up 66%. Cardlytics monthly active users averaged 170.9 million versus 155.8 million; Cardlytics ARPU was $1.51 versus $1.20. Bridg year-end ARR was $15.3 million.
At December 31, 2021, cash and cash equivalents were $233.5 million, working capital was $31.4 million (versus $304.3 million a year earlier), and accounts receivable and contract assets were $111.1 million. The company had $50.0 million of unused revolving credit availability. Its convertible notes had $230.0 million principal, 1.00% coupon and 2025 maturity; their net carrying amount was $184.4 million. FY 2021 investing cash use was $506.7 million, largely reflecting acquisitions.
Material changes and unusual items
- Revenue and billings rebounded from 2020, which had been adversely affected by COVID-19. Management cited recovery in consumer spending and client advertising budgets during 2021, while noting continued merchant labor and supply-chain disruptions.
- Cardlytics acquired Dosh in March 2021 for $277.6 million and Bridg in May for $578.9 million, including $230.9 million of acquisition-date contingent consideration for Bridg. Acquired businesses contributed approximately 8% of consolidated revenue from their acquisition dates through year-end.
- The company raised $484.0 million net through a March 2021 common-stock offering. Shares outstanding increased to 33.5 million at year-end from 27.9 million.
- Acquisition and integration costs were $24.4 million; acquired-intangible amortization contributed to depreciation and amortization rising to $29.9 million from $7.8 million. Stock-based compensation rose to $50.3 million from $32.4 million.
- Cash and cash equivalents declined by $59.8 million during 2021 despite the equity offering, reflecting substantial acquisition and operating cash use. The company reported an accumulated deficit of $522.6 million.
Outlook, risks and contingencies
- Management expects operating losses to continue for the foreseeable future, but stated that existing cash and cash equivalents were expected to fund operations and capital requirements for at least 12 months after issuance of the financial statements. The filing provides no specific revenue or earnings guidance.
- Bridg contingent consideration is performance-dependent and was valued at $232.3 million at year-end. The filing estimates $67.5 million of cash payments for the contingent consideration and $16.8 million of related broker fees, primarily due in 2022–2024. A separate $10.0 million minimum Partner Share commitment begins April 1, 2022.
- Key business risks include dependence on a limited number of FI partners, including Bank of America and Chase; marketer concentration and campaign-based contracts that generally lack long-term spending commitments; acquisition integration and execution; privacy and data-protection regulation; cybersecurity and platform reliability; and uncertainty from COVID-19 and broader economic conditions.
- The company identified a material weakness in controls over significant acquisitions, specifically oversight of third-party valuation specialists and review of valuation reports for goodwill, acquired intangibles, contingent consideration and assumed liabilities. Management concluded disclosure controls and internal control over financial reporting were ineffective; the auditor issued an adverse opinion on ICFR. The auditor nevertheless gave an unqualified opinion on the consolidated financial statements.
- Quarterly cash flows are seasonal: marketers often spend more in Q4 and less in Q1. The filing also notes exposure to foreign currency and interest-rate changes, and that Dosh rewards could raise regulatory or abandoned-property compliance risks.
Investor verification priorities
- Track remediation of the material weakness and whether acquisition valuations and related estimates are reviewed with effective controls.
- Verify Bridg’s ARR performance and the resulting timing, amount and cash/equity mix of contingent payments and broker fees.
- Assess whether revenue growth translates into improved operating cash flow and progress toward profitability, considering stock compensation and acquisition-related expenses.
- Monitor FI-partner renewals and concentration, marketer retention and spending, and the contribution of Bridg and Dosh to results.
- Review liquidity and refinancing or settlement capacity for the 2025 notes, alongside the $10.0 million Partner Share commitment and seasonal working-capital needs.