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Cardlytics, Inc.  (NASDAQ:CDLX)
Q4 2018 Earnings Conference Call
March 05, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

(Starts Abruptly) Fourth Quarter and Full Year 2018 Financial Results Conference Call. Currently all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions)

At this time, I'd like to turn the call over to your host to Kirk Somers, Chief Legal and Privacy Officer. Please go ahead.

Kirk Somers -- Chief Legal and Privacy Officer

Good afternoon, and welcome to Cardlytics Fourth Quarter and Full Year 2018 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 projected 2019 first quarter financial results and operating metrics, business strategies, and other forward-looking topics such as anticipated growth in Direct with new and existing customers, including those from Chase and Wells Fargo, the reduction in average revenue per user, the growth in monthly active users, expansion in new verticals, including travel, entertainment, grocery and e-commerce, expanding marketing budgets, consolidating the US banking market for Purchase Intelligence data, improving marketer adoption, delivering sustained growth, expanding our media capabilities, reducing friction and increasing automation and buying Cardlytics Direct, FI investments in consumer incentives, future revenue and profitability, and average length of our contracts with marketers.

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 the company's 10-K filed today March 5, 2019, and in subsequent periodic reports that the company files with the Securities and Exchange Commission.

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 and the 8-K filed with the SEC today and in the company's 10-K, also filed. Today's call is available via webcast and a replay will be available for two weeks. You can find all of the information I've just described on our Investor Relations section of Cardlytics' website.

Joining us on the call today are Cardlytics' leadership team, including CEO and Co-Founder, Scott Grimes; COO and Co-Founder, Lynne Laube; and CFO, David Evans. Following their prepared remarks, we'll open the call for your questions.

With that, let me turn the call over to Scott Grimes, Cardlytics' CEO and Co-Founder. Scott?

Scott Grimes -- Co-Founder and Chief Executive Officer

Thanks, Kirk, and thank you to everyone for joining us in our fourth quarter and full year 2018 conference call. We've been a public company for just over one year and today we are excited to announce that we delivered strong fourth quarter results that exceeded guidance from our Q3 earnings call and are consistent with our results announced at January 14th.

Here are some highlights. Total revenue for the fourth quarter was $47.8 million and our core Cardlytics Direct revenue grew 23% year-over-year to $47.7 million. Our strong top line performance was driven by growth with existing marketers and from adding new marketers. Adjusted EBITDA in Q4 was a positive $300,000 and we added significant scale to Cardlytics Direct with 42% year-over-year growth in quarterly FI MAUs from $58.7 million to $83.2 million. Cardlytics Direct reached $99 million FI MAUs for the month of December 2018.

Our strong fourth quarter results capped off an exciting and transformational year for Cardlytics. Most notably, we have partnered with the three largest national banks in addition to many other financial institutions to deliver Cardlytics Direct to their customers. This is important to our marketing clients. We are very brand-safe privacy protected channel that profitably drives online and in-store sales with scale that is in line with other leading digital advertising solutions, and we believe we are well positioned to consolidate the US banking market for Purchase Intelligence, further strengthening our ability to drive, move the needle growth for brands across a range of verticals.

What's clear is that, during 2018, our team's efforts, along with our investments, built the foundation and the scale to support the opportunity to deliver sustained growth for years to come. In 2018, we've scaled our infrastructure and processes to serve $150 million FI MAUs to support our new national bank partners and future growth. And, in late Q4, the acceleration in the FI MAU growth began when Cardlytics Direct was made available to a large group of new customers from our most recent national bank clients. This step function increase in customer reach is the foundation for revenue growth, but it is important to understand that revenue per user lags FI MAU growth, consumers have to discover and learn to use our marketing. We have to secure larger budgets from current marketers and we have to bring new marketers in the channel. And we expect further MAU growth to come. We expect to reach 150 million FI MAUs by the end of 2019 based on completing both national bank launches. With this rapid FI MAU growth, we believe it will be 2021 before we bring ARPUs back to the levels that we achieve in 2018.

We know how to do this. New banks are launching with strong user experiences and we are consistently delivering strong return on the investments from our marketing clients. This provides the foundation to expand the breadth of marketers we serve and the amount they commit to our marketing solutions, but we are definitely not satisfied with just returning to 2018 ARPU.

Our native advertising channel can deliver a great deal more. We have important investments under way to position Cardlytics Direct as a strategic marketing platform. Over the next few years, we expect to enter new verticals about to and always an advertising model and expand our media capabilities to unlock the value of our proprietary native advertising channel.

Let me touch on a few highlights. We are bringing our capabilities to new verticals. We are now serving new clients in travel, entertainment, direct-to-consumer, e-commerce and grocery. While these relationships are new and modest in size, we believe it presents significant opportunity for us in 2019 and beyond. We've recently made key hires to help lead our sales effort in these new sectors, including a strategic leader to scale these growth verticals along with industry experts coming from travel and grocery.

In addition to expanding into new verticals, we are also making a multi-year investment to make Cardlytics Direct a questionless marketing tool and evolve to an always-on advertising solution.

In Q4, we delivered an important new capability to do this. As we grow budgets with our marketing clients, validating the return on their marketing spend has been a key point of purchase. This is because it often takes several months or clients to validate our reported results before launching a new campaign with us. To address this, we developed and launched a partnership with Nielsen to measure and validate the performance of our platform. This removes the key barrier for our marketers and accelerates their ability to scale their budgets with this. We are very pleased with the results of this initiative so far, but into 2019 we have several more brands under way to reduce the friction and increase the automation of the Cardlytics Direct buying process. Lynne will touch upon these -- about -- kind of few of these in her remarks.

In summary, as you look back in 2018, Lynne and I are extremely pleased with all that Cardlytics has accomplished over the past year. This is a testament to the strength and excellent execution of the entire Cardlytics team and we want to thank everyone for their hard work and their dedication. Looking ahead, we are excited about capitalizing on our significant growth opportunities in 2019 and beyond.

In 2018, we built the foundation and the scale to support our growth for many years. In 2019, we are focused on unlocking the value of the scale. We believe our scale, unique marketing and analytics capability and ongoing investments in our business will continue to deliver value to our marketing clients, our bank partners, and their customers and, of course, to our shareholders.

I'll now hand the call over to Lynne to provide greater detail into some of our recent accomplishments and our initiatives for 2019. Lynne?

Lynne Laube -- Co-Founder and Chief Operating Officer

Thanks, Scott. As Scott mentioned, I'd like to highlight a few success stories since the last the earnings call and provide an update on some of our 2019 initiatives. We've launched Chase mobile channels in November. We've seen strong initial engagement for the program and have been extremely pleased with the accommodation. We remain on target with both national bank launches in 2019. Once done, we expect to deliver marketing to a 150 million monthly active users.

At that point, we will analyze about one out of every two card swipes in the US. But, as a reminder, a national bank launch takes many months to scale and deliver results consistent with the network. We continue to invest in the partnership post-launch to ensure our customers and advertisers engaged in the platform. For example, we are allowing some advertisers have significant relationships with national bank to trial the network without cost for a period of time post-launch.

There is another exciting development with our national bank. Some are now taking a portion of the revenue we pay them and reinvesting it back into Cardlytics Direct. There are various ways they do this, including increasing the consumer incentive associated with an offer or rewarding purchases in a certain category like grocery or gas. This is a positive for bank partners and our advertisers. It drives increasing engagement and strengthens the return on marketers' investments.

Our progress with advertisers is equally exciting. This is especially important, because generally marketers will not budget for increased scale and so new customers are fully online. One of the key reasons ARPU growth lags MAU growth because of marketers media planning cycles. So early increases in commitments by marketers indicate how they are shifting budgets over time to Cardlytics Direct.

Let me give a couple of example. First, we've seen an increase in eight-digit client. In 2018, only one marketer invested over $10 million in total billings in Cardlytics Direct. In early 2019, we already have three clients with annual contract that exceeds $10 million in note. The number of marketers spending more than $1 million with Cardlytics Direct also grew significantly. This is probably the most important stat that highlights organizations that are learning how to leverage our channel.

In 2018, we had 34% increase in the number of marketers spending more than $1 million in billings in Cardlytics Direct when compared to 2017. As we enter new vertical from 2019, it creates even more opportunity to bring new brands into the channel.

Something we can uniquely do for marketers, help them understand how their customers spend with them and their competitors across all channels. We go beyond omni-channel and we identify the most valuable omni-channel customers. We help retailers understand exactly how valuable a customer is if they shop both online and in-store versus online-only or in-store. While marketers can see some of this themselves, we add a really important layer where else this customer shop? So the retailer is now able to see exactly how much headroom they have with very specific segments of customers, particularly those who are prone to switching among the brands. This knowledge help the marketers to develop a more robust omni-channel strategy. And, of course, with Cardlytics Direct, they can activate these strategy at the customer level.

For example, we're working with a leading retailer who is launching a grocery pick-up service. With Purchase Intelligence, we identify customer segments that have the purpose to do shop with this retailer but are spending with other online grocery stores. We then promote the new grocery service to pick-up to these customers, shift market share to the retailer and measure the return of the marketing investment. Cardlytics Direct ability to drive and observe in-store and online sale makes it a powerful tool for executing omni-channel strategy.

We also continue to work on eliminating the friction in the buying process, which has contributed to advertise egoism (ph). Our validation partnership with Nielsen is working. In just a few months, we've had several marketers increase the maximum amount they will spend with us and another major retailer for the use of our channel across the corporation, because the third-party can validate our results are real and excellent.

In Q4, we also rolled out proprietary technology that laid heart of this foundation for an always-on automated buying and self-service solution. While marketers leverage Cardlytics Direct as a single digital advertising channel, we internally operates the channel by reaching consumers through online, mobile and in our touch points across many banks. Each of these banks and each of these touch points perform differently. The technology we launched in Q4 allow us to more easily and automatically direct how media is distributed across these various touch points. It's a critical tool as we simultaneously optimize campaign revenue and return on assets (ph) and as we're growing the number of average consumers in the channel, it enables us to increasingly automate and optimize these processes, thereby reducing cost and enabling always-on campaign acquisition.

As Scott mentioned, we could not be more excited about the future of Cardlytics. The investments we made in scaling our platform and our ongoing initiatives (technical difficulty) fully recognizing the ARPU potential of our business are exciting. This will take time, but the foundation is laid and now all we have to do is execute.

With that, I will turn it over to David.

David Evans -- Chief Financial Officer and Head of Corporate Development

Thanks, Lynn. Total revenue for the fourth quarter was $47.8 million. Revenue within our core Cardlytics Direct business was $47.7 million, representing a 23% year-over-year growth rate over the fourth quarter 2017. Our US Direct business was up 26% year-over-year in Q4 and our UK Direct business were 11% at constant currency.

For the full year, total revenue was $150.7 million, an increase of approximately 16% over 2017. For our core Direct, revenue of $149.3 million was up 22% over the prior year. Average FI MAUs grew approximately 42% from 58.7 million in the fourth quarter 2017 to 83.2 million in Q4 2018. Consistent with our recent commentary, we expect the FI MAU growth continue to grow this year, driven by the national bank launches, providing additional tailwind into 2020.

Our fourth quarter 2018 ARPU was $0.57, down 14% from $0.66 in the fourth quarter of 2017, primarily reflecting the impact of rapid growth in average FI MAUs. Full year 2018 ARPU was $2.30 compared with $2.23 in 2017.

As we've discussed, new MAUs have a maturation period before they reach their ARPU potential. We expect this dynamic to play out for the foreseeable future going forward, especially in 2019 where material FI MAU growth from national bank launches to cause a decrease in ARPU. As Scott mentioned earlier, we would expect to return to more normalized historical levels of ARPU in 2021 with revenues in excess of $300 million coupled with consistent profitability. Longer term, we continue to believe this ramp in FI MAU supports our revenue growth.

Total adjusted contribution profit was $22.1 million in the fourth quarter of 2018, up from $17.4 million in the fourth quarter of 2017. For the full year 2018, adjusted contribution in profit was $69.5 million, up from $58.7 million in 2017, and Cardlytics Direct adjusted contribution profit was $69.4 million, up 26% from $55.2 million in 2017.

Adjusted EBITDA was a positive $300,000 in the fourth quarter of 2018 compared to a $500,000 gain in the fourth quarter 2017. Our fourth quarter adjusted EBITDA was above our prior guided -- primarily due to the revenue outperformance in the quarter and to a lesser extent coming in under budget on bank implementation consensus.

For full year 2018, our adjusted EBITDA loss was negative $6.6 million, an improvement from a negative $7.2 million loss in 2017. We ended the quarter with $59.9 million in cash compared to $67.8 million in cash at the end of Q3 2018. Our cash balance includes, approximately, $20 million of restricted cash. We ended the quarter with $3.3 million in availability on our AR facility.

I'd also like to talk about a few positive trends we've seen thus far in 2019. We are seeing positive trends in the number of marketers who are spending more with us. Additionally, already this year, we have seen the average contracts' length increase by over 50% for our larger marketers, demonstrating our continued push to move marketers to longer-term contracts. We believe that these proof points position us well to continue growing and expanding existing advertiser budgets as well as sign new material notable advertising clients in the coming months and years.

Now turning to our 2019 guidance. While we have gone to great lengths to analyze Chase's impact on revenue and are very pleased with the results so far, we are still in the very early stages of measuring our performance and analyzing what the steady state will look like. Adding to that, while we are still on target for a Wells launch in 2019, precise timing remains fluid and modeling the impact to our 2019 results is therefore difficult.

These two significant factors create a wide range of possible scenarios for our 2019 results and, as a result, we are offering our full year 2019 guidance into our Q1 earnings release, we will have more experience with the expanded network and have an opportunity to analyze the new data and gain greater visibility. We will continue to provide quarterly guidance throughout 2019 and begin to provide guidance for adjusted contribution, which I'll explain shortly.

For the first quarter, we currently expect revenue to be between $34.5 million and $36.5 million. We expect adjusted EBITDA loss for the first quarter to be between negative $6.5 million and negative $5.5 million. We expect adjusted contribution for the first quarter to be between $15.5 million and $16.5 million. Our decision to guide adjusted contribution stems from the complexity and nuances surrounding our network of FI partners. As Lynne mentioned, we will always drive to ensure the successful launch of the national bank partner and in doing so will encourage and adopt various activities to ensure customers and advertisers engage with the platform. As we continue to monitor the effects, we've seen new developments take place, when in particular that impacts our GAAP revenue.

Our banking partners are embracing our program by reinvesting more of their FI shares into the program in the form of larger consumer incentives and attractive offers. We're referring to these as enhanced consumer incentives. Therefore, there can be a shift of dollars into consumer incentive from FI share. And, as you recall, our GAAP revenues, billings less consumer incentive, so while this does depress our revenue, it is important to understand that this has a netting effect to adjusted contribution and adjusted EBITDA.

Longer term, we believe this has a very positive effect on improving engagement and the stickiness of Cardlytics Direct with consumers. Therefore, providing adjusted contribution guidance, provides a better view as it relates to the performance of our business.

Separately, to help remodeling and as we've previously discussed, we currently expect FI should share commitment shortfall in 2019 to be between $5 million and $6 million. We expect this accrual to begin in the second quarter of 2019, in which case we would anticipate the shortfall in the 12 months thereafter.

With that, I'll hand it back over to Scott for his closing remarks before we open the call to your questions. Scott?

Scott Grimes -- Co-Founder and Chief Executive Officer

Thanks, David. 2018 really was a transformational year for Cardlytics. Cardlytics Direct is a brand, say, precision targeted, native advertising channel that profitably grows in-store and online revenues for advertisers adding scale comparable to other digital marketing solutions. I've spent a lot of time with our marketing clients over the past quarter. It is really exciting to see how we are one of the most important tools in their marketing mix.

In addition, our larger marketers increasingly rely on our analytics and insights to support their business overall. As we expand our client roster, we can really have an impact on the effectiveness in commerce going forward. David is exactly right, we are laser-focused on growing our marketer clients and budgets to achieve 2018 ARPUs at $2.30, once again in 2021. But, importantly, we will achieve these ARPU levels with a customer reach of 150 million FI MAUs delivered by adding two new national banks to Cardlytics Direct.

And we believe we are making the investments now to sustain strong growth well beyond 2021 by developing richer media capabilities, entering new verticals and evolving to a questionless always-on business model. Lynne and I are really proud of what our team accomplished in 2018 and we are confident in their ability to achieve our goals going forward.

With that, I'll open up the call for your questions. Thank you.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from Doug Anmuth from J.P. Morgan. Please go ahead.

Daniel -- J.P. Morgan -- Analyst

Hi. This is Daniel on for Doug. Thanks for taking our question. I appreciate the color you guys provided on your Q1 guide and the fact that you guys are pushing out 2019 guide to 1Q because of uncertainties, but I mean 1Q guide is a little bit -- does signal some piece out on from 4Q level, but can you talk a little bit more about the drivers behind that? And how that could potentially compare to your full-year number? Just any color would be appreciated there. And then secondly on Chase, I realized the stir early, but can you talk about -- talk a little bit more about that, the performance of that channel and your progress toward activating outlook Chase channel beyond apps that you launched in 4Q?

Scott Grimes -- Co-Founder and Chief Executive Officer

Yup. Hey, Daniel, this is Scott Grimes. First of all, thanks for joining in the call. Appreciate it. Let me touch on both of those questions. One of the things that is that we -- a number that we don't guide on is our overall billings and what we are seeing right now are very -- are billings in line with what you guys would have expected and what we've expected, and a lot of the noise that makes it appear like a deceleration in Q1 is actually good news, it's similar things that David touched on both in terms of our FI reinvesting there, FI share into consumer incentives and also some of the work we're doing to bring some big advertisers into the network and the reason we believe both of those things are good news is, when we're making those investments it's causing two things to happen.

First, it's causing customers to engage with the channel sooner and more aggressively. And then, second, a lot of why we're making these investments with advertisers is, we have some very important large advertisers into the network for the very first time. We are doing that without media fees, but we are doing that to secure these and to let these advertisers testing network, to see the return on their network and, hopefully, become very large advertisers over the next year or two as we work with them.

So as much as you're seeing as anything. It does taken some fairly bold actions as part of the launch to really sort of set this channel up for great performance over the next decade and by simply Chase watching, then David, I'll let you to talk to the specifics, we're really pleased with the Chase launch. We have seen customer engagement levels certainly beyond expectations. We are seeing advertiser performance in the channel at levels that we hope to achieve the overall -- we're still very much in the middle of launching. I don't want to speak more to individual banks, but we are tracking in a way that gives us a lot of confidence -- in a way that gives us a lot of confidence of how to channel or perform with 150 million MAUs online over the next few years. Okay, David, do you want to add to that?

David Evans -- Chief Financial Officer and Head of Corporate Development

Yeah. Sure, Scott. Thanks. I think you'd asked a little bit of question. I'm sorry -- I think you asked a question about the sequential decline, that's usually fairly typical with the business, obviously, going from Q4 to Q1. So that's nothing of surprise there. Scott touched on a little bit. I think as I look at -- I think, Doug may be one of the few guys out there that kind of have billings number out there for Q1. We're not that far off from that, but, as Scott mentioned, there is a couple of things that we're doing to ensure a very strong bank launch here in this quarter, some of that is through the enhanced consumer incentive route, which has a netting effect. There are other things that we are doing that will compress all the numbers a little bit that you will see in the Q1 guide as well. But, again, I think all of this comes down to ensuring that we have a very successful launch with Chase.

On that same front, Scott made a couple of comments around some of the positive trends we're seeing. We're seeing longer contract terms, we're seeing more million dollar budgets in the pipeline, so a lot of good sound bites down the quarter so far.

Daniel -- J.P. Morgan -- Analyst

Got it. I appreciate the color. Thank you.

Operator

Thank you. Our next question comes from Tim Willi from Wells Fargo. Please go ahead.

Timothy Willi -- Wells Fargo Securities -- Analyst

Hi. Thanks. Good afternoon. A couple of questions. First, if I remember correctly, you had said that SunTrust is a customer. I'm curious, is BB&T currently a customer or is there any comment you can make around that?

Scott Grimes -- Co-Founder and Chief Executive Officer

Hey, Tim. This is Scott Grimes, and thanks for joining the call today. The answer is yes, BB&T and SunTrust are both customers. They both are great bank partners and we're really glad they are in the network and I'm sure they'll continue to think about the program as they drive the consolidation over the next couple of years.

Timothy Willi -- Wells Fargo Securities -- Analyst

Okay. And then another question I had was going back to Lynne's comments about the mark-to-market or is that you signed up in the billings, did that exceed expectations? Was it more in line with what you were thinking? I'm sort of curious how that played out versus your expectation for signing up and expanding budgets?

Lynne Laube -- Co-Founder and Chief Operating Officer

Yeah. So are you specifically referring to the increase in marketer spending $1 million?

Timothy Willi -- Wells Fargo Securities -- Analyst

Yeah, that and I think even the eight-digit ones where (multiple speakers) one to three.

Lynne Laube -- Co-Founder and Chief Operating Officer

Yeah. That not only exceeded our expectations specifically in the ones that are spending more than $1 million, that is nearly double the increase that we saw 2016 to 2017 versus the increase 2017 to 2018, so significant acceleration in the number of new logos that are spending enough dollars in the channel that they are taking it seriously. We know that they usually have to spend between $0.5 million and $1 million to get a really good read on the channel. So we are very excited about that. It is a very good early sign of what is to come. Same thing with the eight-digit clients. We went from one to three. So obviously, we're all small numbers, a significant increase and we are continuing to really push on signing large deals, annual plus level contracts with advertisers once they understand the power of the channel. It is a good predictor of what is to come.

Scott Grimes -- Co-Founder and Chief Executive Officer

As you know, Tim, just to add to what Lynne said, advertisers sort of don't really budget for the volume until they know it's real, because they don't want to run the risk of not spending their money and we, of course, launched in the middle of the Christmas season, which is really busy time for advertisers. I've been with a ton of CMOs over the past couple of months, right, well, January and February, and when you go in there and we can talk about how we can really move the needle and drive growth in their business with the scale we have, it's very different discussion. So while it's hard for you guys to see in Q1 results, what we can tell you from where we sit, walking them with a scale now and where the scale is going to be over the short period and what is that to their business, it's a higher level discussion and a much more backlog discussion. So we're pretty bullish on what we said.

Timothy Willi -- Wells Fargo Securities -- Analyst

Great. And I had one last one and I'll hop off. But sort of on the topic of the bigger contracts, is there a discussion at all about any kind of incremental customization or scope that would have an impact around near-term profitability and margin targets? I mean it's all good long-term, so we're on board with that. I just want to make sure we're not missing something around scalability if you really start to see big contracts like this really start to gain momentum.

David Evans -- Chief Financial Officer and Head of Corporate Development

This is David, Tim. It's a good question. And certainly there's a couple of things that are going to help drive operating leverage. One is just the size of the contract. The incremental effort that goes into running a significantly larger contract is minimal relative to this -- to being able to go out and secure a larger deal. The other piece is part of what Scott and Lynne talked about in there at the beginning and the outset here is around reducing some of the friction and we are making some headway there and that will only help paint a picture for better operating leverage in the future as well.

Timothy Willi -- Wells Fargo Securities -- Analyst

Great. That's all I had. Thanks so much.

David Evans -- Chief Financial Officer and Head of Corporate Development

Thanks, Tim.

Operator

Thank you. Our next question comes from Andy Hargreaves from KeyBanc. Please go ahead.

Andy Hargreaves -- KeyBanc Capital Markets Inc. -- Analyst

Thanks. So qualitatively, everything sounds pretty good, but the just general revenue has been lower than what we expected, say, a year or 18 months ago. So I'm wondering if you can comment at all, is there user engagement that, sort of, existing banks not lived up to your expectation with different product changes with the bank, so can you just comment on what sort of the gap is between what we thought a year ago and where we are right now?

Scott Grimes -- Co-Founder and Chief Executive Officer

Yeah. So, Andy, I'll think it at a high level and then David and Lynne add to this. For the overwhelming majority of our advertisers, MAU growth user engagement is not the constraint to the growth, the constraint is the number of advertisers that are in the network and besides of budgets that we're securing from this. And that's one of the reasons ramp in the scale is so important is because, we know, especially in the digital world, advertisers buy scale. We are now a few months into -- given them that kind of level of scale that they really want and so when I think about where we end up in 2021, it, to me, is simply a function of how many advertisers are in the channel, how big of way are they using the channel, which is why we focused so much on bringing the million-dollar advertisers in because we know those are kind of might (ph) land and understand that's the land and then the expand is how quickly can we get them from a seven-digit budget to an eight-digit budget.

David Evans -- Chief Financial Officer and Head of Corporate Development

And, Andy, it's a good question. I think it's something worth reiterating. I think back to a large part of the conversation we talked about the IPO and what the long-term plan look like five to six years out, which would be 2023 and what that looks like is, call it, $0.5 billion business with 20% EBITDA margin. I am -- as I look at our model today, I'm right on track. We are right on track with what exactly what we said we're going to do and it's partly why we alluded to returning to normalized ARPU levels by 2021. Just by looking at the model and you assume something north of $2 on ARPU and $150 million in MAU, we're now consistently profitable and we're now somewhere around $300 million of revenue, which then gets us directly on track with what we talked about at the IPO.

Scott Grimes -- Co-Founder and Chief Executive Officer

It just positioned to really keep accelerating growth.

Andy Hargreaves -- KeyBanc Capital Markets Inc. -- Analyst

And then just a follow-up on sort of the add-facing sales side, you guys have made a couple of hires, it sounds like, can you comment on what the total size of that sales forces is and where you would like to get as you try to land more advertisers and bigger budgets?

David Evans -- Chief Financial Officer and Head of Corporate Development

Yeah. I mean, Scott alluded this a little bit. I mean, so much of what we are doing is elevating the dialog with our advertisers. When you're talking about making the ask that we're talking about from six-figure to seven-figure to eight-figure, you could imagine that the dialog changes and therefore as we think about our sales force and our go-to-market that naturally has to evolve as well. We have made three or four significant hires at the senior ranks in the sales force, we probably have a couple more to go. As we laid out in November, we laid out a pretty specific game plan for, call it, six to eight months. We are right on track. We still have some things that we still need to go and execute on, but as I sit here today, everything is as we laid it out.

Andy Hargreaves -- KeyBanc Capital Markets Inc. -- Analyst

Okay. Thanks.

Operator

Thank you. Our next question comes from Nat Schindler from Bank of America. Please go ahead.

Nathaniel Schindler -- Bank of America Merrill Lynch -- Analyst

Yeah. Hi, guys. Can you just walk me through a little bit the process, the typical or at least the historical and I know it's not a whole lot behavior as a new advertiser comes on and how they work with the system early and how they evolve?

Lynne Laube -- Co-Founder and Chief Operating Officer

Yeah, Nat, this is Lynne. Let me take a shot at that. Our typical new advertiser is going to always start with the test IO, but test IO is usually 45 days in length. What we have seen pre versus post national -- the latest national bank launch is that IO side has gone up. So in the past that was maybe in the couple of hundred thousand dollars range and now we're seeing it in the $0.5 million to $1 million range, simply because they are really wanting to make sure they understand the full scale and potential of the network. That -- after the 45-day IO run, it usually takes another 45 to 90 days for the results to be sort of processed and absorbed by the organization, embedded and validated for lack of a better term and, as Scott has mentioned, our Nielsen partnership is really helping with that and also accelerating that timeline a little bit. And then it just depends on where we are in their annual or biannual media buying processes, most advertisers budget once a year with a kind of mid-year course correction and their fiscal year's can often be different than typical December to January year-end. So depending on where we are in the budgeting cycles, it can take another couple of months for us to get to a point where they're ready to actually put us in as a line item. So while we are excited by the number of new logos that are in the channel, we still kind of reiterate it's going to take six months on average, maybe longer, nine months, for new logos to start significantly expanding their spends. And as we mentioned in the very beginning, these new logos also don't tend to test until they actually see the volume is really there. So that is why the staffs that we introduced about what's worth -- what we're seeing with new logos with $1 million budget and with eight-digit budgets in January are really important precursors of what's to come.

Nathaniel Schindler -- Bank of America Merrill Lynch -- Analyst

Okay. Just -- can you walk me through a little bit historically, why have some of your advertisers -- is that you had for quite a while committed in guys and others haven't, what were the -- what was the differences between a star (technical difficulty) and a smaller (technical difficulty).

Scott Grimes -- Co-Founder and Chief Executive Officer

One of the really important part is making sure that we connect with the analytics organization in the client and I think where we work best with our bigger advertisers is when our analytic team is embedded with their analytic team, they really understood the return on our advertising investment. The highest level, I'd say, really believe, like, for every dollar they are paying as we're giving them $5, it's real incremental revenue back and I think every day we are getting better and better at doing that. I think the other thing that really drives the adoption by advertisers is when they use our analytics as part of their broader business, that's awesome and we are just frankly, simply more top of mind and more (technical difficulty) part of the market that (technical difficulty) we mix (ph) and why it's so important as we focus on things like taking the friction out of the process, enabling self-service, to make it just easier to use, all that is just part of what we do every day.

Nathaniel Schindler -- Bank of America Merrill Lynch -- Analyst

Okay. Thank you.

Scott Grimes -- Co-Founder and Chief Executive Officer

Thanks, Nat.

Operator

Thank you. Our next question comes from Matt Trusz from G.research. Please go ahead.

Matthew Trusz -- G.research -- Analyst

Good morning. Thank you. I'm sorry. Good afternoon. Thank you for taking the questions. So to tie-up the discussion on market or budgets, as we see here in March, how big does your marketer budgets for the full year given the dynamic timing of the ramp? And how much flexibility is there generally for them to go up and down over the next six to nine months?

Scott Grimes -- Co-Founder and Chief Executive Officer

Yes. That's a great question, Matt. What would add to this be, it's one thing that we're trying to find is marketing budgets for the first half of the year were set probably late half of the year or early last half of the year in 2018. So there are some flexibility in those, but those are largely nailed down. That being said that, we -- in the back half of 2019, we think there's a lot of ability to go in growth budgets, but they tend to operate in about a six-month cycle. So you get in there and you test, you prove the scale and you're working to get that budget increase the next six months, and that's a journey, because every time a marketer is shifting significant dollars to us, it probably means they're moving it out of -- another one of their digital channels, so they don't do that as a step function versus a series of increments over time.

One of the six-digit clients that was talking about, they have been working with us -- with the eight-digit clients -- when the eight-digit clients, Lynne was speaking to, started working with five years ago, it's been about $250,000 that for here, yet today they're spending significantly more but that took several years of growing that budget.

Lynne Laube -- Co-Founder and Chief Operating Officer

But the flip side is, another one of those eight-digit clients that I was referring to went from sort of zero to eight digits in about a year and a half. So we are seeing that the sales cycle is accelerating from where it was, sort of, pre-significant scale, but I still think it is wise to assume that the sales cycle is going to take, as I said, sort of six months to nine months depending on where you are in their media planning cycles from when they do that initial $502 million IO.

Scott Grimes -- Co-Founder and Chief Executive Officer

And it's why we speak of accelerating growth, because we know we're putting the foundation in place right now with a series of testing and we understand the rate at which we can go and grow that overtime.

Matthew Trusz -- G.research -- Analyst

Got it. Thank you. And then can you just discuss which product innovations are highest priority or most impactful for you in 2019? Thanks, again.

Scott Grimes -- Co-Founder and Chief Executive Officer

Yup. We -- it's -- the broad set of capability is around taking the friction out of the buying process. And if you sort of mapped out how organizations buy, there's a series of touch points starting from how they do their media mix modeling, how they set their media strategy, how they actually execute the media and how they report on it. And so, we have a whole series of initiatives going against those different touch points, which by the way is a couple of years of work to get from -- to where we are today to where we want to be and each quarter we'll talk to you about how we're releasing against that schedule.

Matthew Trusz -- G.research -- Analyst

Thank you.

Scott Grimes -- Co-Founder and Chief Executive Officer

Thank you.

Operator

Thank you. (Operator Instructions) Our next question comes from Youssef Squali from SunTrust. Please go head.

Sagar Vachhani -- SunTrust Robinson Humphrey -- Analyst

Hi. This is Sagar on for Youssef. I just want to make sure I got a couple of numbers correct. First that December had 99 million MAUs and second that there were -- there was no timeline associated with that 150 million number? And also similar (technical difficulty) can there be revenue noise with Wells Fargo when that starts ramping similar to what we're seeing now to ensure a good experience for advertisers? And, lastly, can you expand on that $5 million to $6 million number you gave around the FI shortfall commitment?

David Evans -- Chief Financial Officer and Head of Corporate Development

Yeah, sure. I got four questions. So we do may ask you to repeat this. The first on Wells...

Scott Grimes -- Co-Founder and Chief Executive Officer

Wells is 99 million.

David Evans -- Chief Financial Officer and Head of Corporate Development

Yup. So on Wells you talk about any change in their revenue outlook. I think what you would see there is just a change in campaign consumption more than anything and an adjustment from that. As I sit here today to again 99.3 million in December, 150 million MAUs by the end of this next year, we've got plenty of headroom to go out and run campaigns and consume budgets. It just changes and adjust how we go about doing that with regards to the timing of the Wells rollout. The $5 million to $6 million shortfall that is something I know we've been talking about ad nauseam and apologies for that for the last three quarters or so, that particular bank will start in the second quarter, so we'll start that accrual of that $5 million to $6 million, that won't be due until 12 months later, so April-ish of 2020. But that is correct, and I think those are the four questions...

Sagar Vachhani -- SunTrust Robinson Humphrey -- Analyst

Yeah. That's perfect. Yeah. And I just want to make sure that $5 million to $6 million basically you're seeing three quarters this year and one quarter next year?

David Evans -- Chief Financial Officer and Head of Corporate Development

That's right. Three quarter of (multiple speakers) this year and then one quarter in 2020.

Sagar Vachhani -- SunTrust Robinson Humphrey -- Analyst

Okay. Got it. Thanks.

David Evans -- Chief Financial Officer and Head of Corporate Development

Yup.

Operator

I show no further questions in the queue at this time. I would like to turn the call over to Scott Grimes, CEO and Co-Founder, for closing remarks. Please go ahead.

Scott Grimes -- Co-Founder and Chief Executive Officer

Thank you. Awesome, everybody. We really appreciate you joining in the call today. Hopefully, you hear the excitement in our voices about -- we had a great Q4 and we were really excited how we ended the year. And, more importantly, we really think 2018 laid the foundation for sustained and accelerating growth for many years to come and we are just at the very beginning of that journey, but we're really excited internally about how we're positioned and we're really excited about how our marketing clients are thinking about exactly how they incorporate and how they run their business to drive their sustained long-term growth. So, once again, thanks for joining in the call and we look forward to talking to you again next quarter.

Operator

Thank you, ladies and gentleman for attending today's conference. This concludes the program. You may all disconnect. Good day.

Duration: 45 minutes

Call participants:

Kirk Somers -- Chief Legal and Privacy Officer

Scott Grimes -- Co-Founder and Chief Executive Officer

Lynne Laube -- Co-Founder and Chief Operating Officer

David Evans -- Chief Financial Officer and Head of Corporate Development

Daniel -- J.P. Morgan -- Analyst

Timothy Willi -- Wells Fargo Securities -- Analyst

Andy Hargreaves -- KeyBanc Capital Markets Inc. -- Analyst

Nathaniel Schindler -- Bank of America Merrill Lynch -- Analyst

Matthew Trusz -- G.research -- Analyst

Sagar Vachhani -- SunTrust Robinson Humphrey -- Analyst

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