Cardlytics ($CDLX): Q1 Earnings Analysis (Research Note #254)

Notes, thoughts, and details following CDLX’s Q1 earnings.

In the following CDLX Research Note, I go in depth reviewing CDLX’s Q1 earnings and the related updates provided on the call.

One of the larger items was regarding the higher-than-expected redemptions leading to lower-than-guided revenue. Not only is this getting addressed via changes in the pricing model, but this higher engagement level could lead to both higher billings in the future and serve as a catalyst for further decreases in rev share (which can have a material impact, as seen with Chase).

And then on top of this growth in billings and retention of billings, you still have the upcoming high incremental contribution from AmEx onboarding soon with no rev share (and NOLs to offset taxable income).

I go into more detail on these items, as well as many more aspects related to earnings, within the post below. I also provide an overall picture of CDLX’s current position + items I am still looking to see from CDLX, both from an investment perspective, in the final section.

Specifically, I go over each of the following items within the CDLX Research Note below:

1. Q1 Results

   1. Actual vs Guidance

   2. Pricing and Timing Mismatch with Redemptions

   3. Reasons for Higher Redemptions

   4. Campaigns Not Coming Through (with names)

   5. How the Q1 Numbers Fit Together

   6. Categories

   7. Top Accounts

2. Guidance

   1. Q2 Guidance (vs expectations)

   2. Q2 Guidance Spread Between Low vs High End

   3. Billings Split

   4. High or Low End of Q2 Guidance More Likely to Actually Materialize

   5. FY Guidance

   6. Operating Expenses

   7. New and Lapsed Advertisers

3. AmEx Update and Details

   1. No Rev Share with AmEx

   2. Trade Name, Alerts, UI / UX, Notifications

4. Monzo Update

5. Potential New Banking Partners

6. More Rev Share Changes

   1. Signal of Lower Rev Share in the Future

   2. Possible End States for Rev Share for CDLX

   3. Possible Next Bank to Lower Rev Share

7. Bridg / Rippl Updates

8. AWS / ADE / New User Experience Updates

9. Advertiser Dashboard + Self Service

10. Changes with Placement and User Experience

11. Balance Sheet and Shares Outstanding

12. Free Cash Flow

13. Growth Areas

14. Investment Perspective

    1. CDLX’s Current Position

    2. What I’m Still Looking For