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DATE

Wednesday, Nov. 5, 2025, at 5 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Amit Gupta
  • Chief Financial Officer — Alexis DeSieno

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RISKS

  • The CFO stated, "our total billings were $89.2 million, a 20.3% decrease," directly attributing the decline to content restrictions from the largest FI partner.
  • Guidance projects a 26%–17% year-over-year decline in Q4 billings, reflecting ongoing and possibly intensifying content restrictions.
  • Amit Gupta described last month’s 30% workforce reduction as "difficult but necessary," signaling material operational restructuring that could affect execution or morale.

TAKEAWAYS

  • Total Billings -- $89.2 million in billings for Q3 2025, down 20.3% year over year, due to supply restrictions from the company’s largest FI partner.
  • Revenue -- Revenue was $52 million, down 22.4% from the prior year, driven by lower billings.
  • Consumer Incentives -- Consumer incentives were $37.2 million, a 17.2% reduction from the prior year.
  • US Revenue (excluding Bridge) -- Decreased 28% year over year in Q3 2024, due to lower billings and prior pricing adjustments.
  • UK Revenue -- Increased 22% year over year in Q3 2025, driven by higher billings and new merchant growth, including “a large athletic apparel brand.”
  • Bridge Revenue -- Down 15% year over year in Q3 2025, due to the loss of a major account in earlier quarters.
  • Adjusted Contribution -- Adjusted contribution was $30 million in Q3 2024, down 17.5%, but margin rose to a record 57.7%, up 3.5 percentage points, due to a favorable shift in partner mix.
  • Adjusted EBITDA -- Adjusted EBITDA was $3.2 million for Q3 2025, an improvement of $5 million from the prior year.
  • Operating Expenses (excl. SBC) -- Operating expenses (excluding stock-based compensation) were $26.8 million in Q3, an $11.4 million year-over-year reduction driven by staff cuts and optimization initiatives.
  • Free Cash Flow -- Free cash flow was negative $2.7 million for Q3 2024, improving $1.2 million from the previous year and up $700,000 sequentially.
  • Cash and Equivalents -- $44 million in cash and cash equivalents at the end of Q3 2025; a $46.1 million draw on the credit line was used to fully repay 2020 convertible notes.
  • Monthly Active Users (MQUs) -- 230.3 million MQUs in Q3 2025, a 21% increase, primarily driven by newly ramped FI partners.
  • Average Revenue per User (ACPU) -- Average Revenue per User (ACPU) was $0.11 in Q3 2025, a 31% decrease from the prior year, reflecting the effects of partner mix and content constraints.
  • Workforce Reduction -- A 30% reduction was announced, expected to deliver $26 million in annualized savings, following prior reductions of $16 million in May and $8 million in January, for a cumulative $50 million.
  • Q4 Guidance -- Billings: $86 million–$96 million; Revenue: $51.1 million–$59.1 million; Adjusted Contribution: $29 million–$35 million; Adjusted EBITDA: $900,000–$7.9 million; Billings expected to decline 26%–17% for Q4 2025.
  • UK Business -- Now includes all top five UK grocers, with new client wins and segment expansion.

SUMMARY

Cardlytics (CDLX 26.14%) management confirmed that top-line declines in Q3 2025 were directly caused by the largest FI partner’s content restrictions, but emphasized successful advertiser retention and new business signings within and outside the financial institution channel. The company highlighted rapid scaling with new FI partners, resulting in a 21% increase in MQUs in Q3 2025, and Significant operational restructuring included a 30% reduction in force, resulting in annualized cash savings of $26 million, while Q4 guidance anticipates continued revenue pressure but expects sustained positive adjusted EBITDA (non-GAAP). Strategic expansion into the Cardlytics Rewards Platform and UK market, plus new partnerships such as with OpenTable, were framed as future growth drivers, yet management does not project material financial impact from these until 2026.

  • The CFO stated Q4 operating expenses are projected to be $28 million or lower, excluding stock-based compensation and severance, reflecting a 19% year-over-year reduction.
  • Engagement-based pricing accounted for 100% of new business signed in Q3 2025.

INDUSTRY GLOSSARY

  • FI partner: Financial institution (typically banks or credit unions) that partners with Cardlytics to distribute advertiser offers via their digital channels.
  • MQUs: Monthly Active Users; Cardlytics’ measure of unique users active within a given month across its platform.
  • ACPU: Average revenue per user, calculated as total revenue divided by the number of monthly active users.
  • CRP: Cardlytics Rewards Platform, the network arm that allows Cardlytics to work with non-FI publisher partners for greater reach and advertiser diversification.
  • Bridge: Cardlytics’ customer data platform solution, offering analytics, identity resolution, and shopper behavior insights to advertisers and retailers.
  • ROAS: Return on ad spend; a metric evaluating revenue generated per dollar spent on advertising.
  • MMM: Marketing mix modeling, a statistical analysis technique for assessing the impact of various marketing tactics on sales.

Full Conference Call Transcript

Amit Gupta: Good evening, and thank you for joining us today. On our last call in August, we shared updates on the steady progress we've made across our key priorities, as well as the headwinds we would be facing starting Q3. As a reminder, these headwinds are stemming from our largest FI partner's decision to block our advertiser content from running on their channels. Overall, our Q3 billings results were in line with our expectations to other partners in our network as we actively work to shift volume and learn from our mitigation strategy.

For example, with one bank partner, we expect to soon add their debit and SMB portfolios to our program, which represents a significant opportunity to deepen engagement with their customers and expand our reach. We believe that strengthening consumer engagement is just as effective as adding new users, and we remain focused on doing this through new and innovative capabilities. For example, we recently ran a double days campaign where rewards were doubled on specific days to drive a sense of urgency. This campaign grew consumer engagement by approximately 15%. In addition, building on previous success with one of our larger bank partners, we are expanding category-level offers in Q4.

These offers reward customers for spending in a specific category rather than with a specific advertiser and have proven to be effective in driving engagement with our offers. We tested this in Q2 with gas and grocery, and in Q3, we took our learnings to the entertainment category. Once again, these campaigns have demonstrated that category-level offers are highly effective in creating a halo effect. 73% of consumers who redeemed a category-level offer also redeemed another offer. Due to the decision of our largest FI partner, approximately one-third of our total billing was set to be blocked, but we were able to mitigate a significant portion of the drop.

Because the rest of our network is more than 2.5 times larger than our largest FI partner alone, we can increase content shift to other banks with MQU capacity and also increased engagement with those bank customers. By doing more of this, we would be on the path to make up the billing shortfall with better margins. Turning to Cardlytics rewards platform, our network of non-FI publishers, we are excited to share positive momentum from last quarter. We signed three new partners in the US, including OpenTable, a global leader in restaurant technology. Through this partnership, we plan to help boost engagement and loyalty with OpenTable's large user base as part of their recently revamped loyalty program.

We look forward to sharing updates on when we expect to launch with OpenTable. For our other two CRP partners, we expect to launch in Q4 after testing and integration, which is currently underway. We see CRP as a significant growth opportunity. Not only does CRP allow us to meet more consumers where they are, but it can also help our traditional FI partners by enabling us to bring new advertisers and verticals to our platform. Additionally, we have seen an increase in our pipeline since last quarter as a result of customer loyalty becoming a more central focus in the market.

We believe Cardlytics is perfectly positioned to be a commerce media partner for leading companies looking to accelerate their advertising efforts while delivering value to their customers. Now moving on to our second pillar, strengthening and growing advertiser demand. Leading advertisers continue to recognize the unique value of our network and capabilities. While commerce media is undergoing a fundamental shift, advertisers have not lowered their standards. They continue to seek measurable outcomes and sophisticated capabilities to leverage different ad formats and micro-target customers. With our existing advertisers, we are building trust by continuing to build campaigns that deliver results. Of note, most advertisers have decided to stick with Cardlytics despite the supply changes with our largest FI partner.

In fact, for the partners that run product offers with Cardlytics, as well as a competitor program, we consistently hear that our incremental ROAS is superior. On the new business front, we signed pilots with iconic brands such as a large athletic apparel brand and a global hotel brand, and 100% of our new business was on engagement-based pricing. We have also been focused on winning back key accounts. Several notable brands, including a global coffee chain and a global discount grocer, have rejoined our network, which we believe underscores our ability to drive performance for our advertisers. One of the core value propositions of our platform is that we drive both online and in-store sales.

We have enhanced our geo-targeting capabilities over the last six months and implemented different reward amounts between online and offline purchases, as well as newer features like shop ad targeting, which targets users where they buy, not just where they live. Many auto, gas, and restaurant chains have used our multi-location reports to assess performance, identify top-performing locations, and inform franchise marketing efforts. Geotargeting also helps engagement with franchises that often have independent marketing budgets. Our UK business continues to show strength, with 22% revenue growth year over year this quarter. We were able to grow by just gas, restaurants, and retail, with all our top advertisers and closed a large number of new logos across grocery.

We are now working with all of the top five UK grocers, up from four previously, and ongoing recognition of the strength of our platform. And finally, last quarter, we added another localized content partner to expand our always-on third-party content for our publishers. We can now deliver nearly 10,000 local and regional offers, which we are now providing to our smaller banks that did not have local offers. Additionally, with our new partnership with OpenTable, not only will they be joining our platform as a publisher, but also as a content provider, bringing the restaurant partners to our network for the benefit of all our publishers.

We believe all these initiatives drive awareness and relevancy for the program and deepen engagement with consumers. Now turning to network performance. Building on the work we've done to modernize our tech stack, we continue to strengthen our engineering foundation to benefit our clients and improve internal productivity. While our models continue to become stronger, with higher predictability, we experienced some aberrations in July as supply changes began to take effect. These issues stabilized by the end of the quarter, and while they caused some choppiness in our margins, they are making our delivery model better at handling large-scale changes.

We are also advancing the integration of our measurement models with widely adopted industry standards, which we believe make it easier for our advertisers to evaluate performance across channels. Building on our efforts to ensure Cardlytics data is properly modeled in leading MMMs, we are now integrating with more partners to automatically feed our data into their dashboard. These changes help to retain our existing clients and we believe outperform other channels. The performance of our network remains strong, reinforced by the impact and efficiency of the campaigns delivered through our platform. With the investments we've made in our models, our platform continues to perform better for our advertisers and bank partners, with a 21% year-on-year improvement in ROYAL.

Last but not least, our bridge business in Q3, we saw continued interest in our identity resolution product, both from existing clients and new prospects, including a grocer that engaged Bridge to gain access to previously unavailable insights around shopper behavior. This will allow them to significantly enhance their ability to understand, engage, and target individuals, driving increased frequency, spend, and loyalty. I'm also pleased to share that we recently signed a two-year renewal with a large fast-food chain. On Ripple, we continue to make progress on both supply and demand. On the supply side, we added two new retailers to the Ripple network.

We also continued to grow our demand, which resulted in the second consecutive quarter of doubling our revenue. Before I turn it over to Alexis, I want to touch on the actions we took in Q3 to strengthen our financial foundation and sharpen operational focus. In September, we fully paid the $46 million remaining on our 2020 convertible notes. Last month, we took a difficult but necessary step in reducing our workforce to ensure we can continue to operate sustainably and preserve the long-term financial health of our company.

This latest reduction reflects a 30% decrease in our workforce, as well as reductions to third-party spend, real estate, and operations, and we expect these reductions to deliver annualized cash savings of $26 million. This follows prior reductions this year of $16 million in May and $8 million in January for a total of $50 million. We are deeply appreciative of the contributions of the colleagues who departed as part of these changes. As a leaner organization, we are now moving forward with more focus and discipline. Looking ahead, we are simplifying our strategic priorities. In 2026, we plan to further solidify our foundation and grow our commerce media platform.

We will focus on expanding our CRP partner cohort while strengthening our existing FI partnerships. To unlock increased advertiser budgets, we will lean into value propositions that are in demand and where we believe we can deliver a differentiated product, such as omnichannel performance. By doubling down on where we are best in the industry, we believe we can get back on a path to growth. I'll now turn it over to Alexis to discuss the financials. Thank you, Amit.

Alexis DeSieno: My comments will be year-over-year comparisons to 2024 unless stated otherwise. In the third quarter, we delivered billings as expected and surpassed the high end of our guidance for adjusted EBITDA. So we were at the low end of the range for revenue and adjusted contribution. In Q3, our total billings were $89.2 million, a 20.3% decrease. As expected, the content restrictions impacted the size of the budgets we could sell as a result of fewer consumers to whom we could serve offers. Despite this, we were able to retain the vast majority of our advertisers, which we believe demonstrates the value and incrementality that we drive for our advertisers.

Consumer incentives of $37.2 million were down from the prior year by 17.2%. And revenue decreased 22.4% to $52 million, driven by a decrease in billings. Our revenue to billings margin was 1.6 points lower than the prior year. This margin impact was partially due to strategic investments in certain advertisers to drive incremental ROAS, as well as a temporary overcorrection as a result of the supply changes to our network. We believe we have now normalized our ability to deliver on budget, and we are seeing our October billings margin trending higher than the Q3 average.

Looking at our segment revenue results, our US revenue excluding Bridge decreased 28% due to lower billings stemming from the content restrictions and pricing investments we previously discussed. In the UK, we saw 22% revenue growth driven by higher billings and increased supply. We grew billings across our top clients and saw a significant increase in billings from new merchants, including a large athletic apparel brand. Bridge revenue decreased 15% due to the loss of a major account in previous quarters. Adjusted contribution was $30 million, down 17.5% from the prior year. However, we expanded our margin as a percentage of revenue to 57.7%, an increase of 3.5 points due to a more favorable partner mix.

This margin is the highest we have experienced to date, driven primarily by the growth of our newest FI partners. Adjusted EBITDA was positive $3.2 million, an increase of $5 million. Total adjusted operating expenses, excluding stock-based compensation, came in at $26.8 million, a reduction of $11.4 million year over year due to the reduction in staff in May and the optimization of our cloud infrastructure. Operating expenses benefited from $5 million of one-time benefits, including from the ERC tax credit we received in September. In Q3, operating cash flow was positive $1.8 million. Free cash flow was negative $2.7 million, which was an improvement of $1.2 million from the prior year due primarily to our lower expense base.

Free cash flow improved from the previous quarter by $700,000. On the balance sheet, we ended Q3 with $44 million in cash and cash equivalents. During the quarter, we had a net draw of $46.1 million on our line of credit, which was used entirely to repay our remaining 2020 notes. In the third quarter, we had 230.3 million MQUs, an increase of 21%, driven by the full ramp of our newest FI partners. Excluding these partners, MQUs would have increased 3%. ACPU was 11¢, down 31% year over year as a result of content restrictions and as we ramp our newest FI partners. Now turning to our outlook for Q4.

For Q4, we expect billings between $86 million and $96 million, revenue between $51.1 million and $59.1 million, adjusted contribution between $29 million and $35 million, and adjusted EBITDA between $900,000 and $7.9 million. Our billings guidance represents a negative 26% to negative 17% decrease year over year. Despite this top-line weakness, we expect adjusted EBITDA to be positive for both the quarter and the full year. The primary driver of our expected billings decrease is a result of further content restrictions imposed by our largest FI partner. To mitigate this, we are focusing on several initiatives with our advertisers.

First, we are continuing to prove performance with top brands, which are already running at maximum capacity, which has helped us secure renewals in Q4 and 2026. We are also working to scale certain categories or brands that are not at capacity by leaning into alignment with our advertisers' measurement model. And lastly, our new business team is focused on signing new accounts and winning back key accounts. We expect to see continued incremental spend from our advertisers as many brands are starting holiday promotions earlier and want to benefit from budget add-ons based on consumer demand and performance.

Our priority remains replacing less supply through new partnerships, shifting volume to the rest of the network, and increasing engagement with our existing partners. To illustrate our progress in shifting volume to others, we continue to see positive trends with our newest large FI partner. We had almost three times as many advertisers on this partner's channels in Q3 than in Q1, which represents approximately half of our brand. We expect this momentum to continue and are already seeing October billings at. With this FI, our activation rate is two times the network average, approximately 50% higher than in Q3, and we believe our partnership is strong.

While we are excited about our newest partnership announced today, we are not assuming any material financial impact in 2025 from the Cardlytics rewards platform. CRP remains a key piece of our strategy for 2026, both to diversify supply and also to unlock demand as the industry moves loyalty programs and embedded rewards. In Q4, we plan to continue to grow in the UK, driven by continued success with our largest accounts and in attracting new advertisers to the platform. Revenue as a percentage of billings is expected to be in the low 60% range for Q4.

We are making strategic pricing decisions to drive incremental spend from our advertisers and to remain competitive in the market, which is funded by our higher margin bank mix. In fact, we expect adjusted contribution as a percentage of revenue to be in the mid to high 50% range. This continues to be among the highest we have seen due to the improved economics with our new and ramp bank partners and allows us to invest back into advertiser and consumer incentives to unlock incremental budgets and drive higher ROAS. Offers and more compelling rewards mean better engagement, and this leads to a higher likelihood of scale and retention with our advertisers.

Despite top-line weakness and strategic pricing decisions, we are keeping more of every dollar we make, and we remain focused on driving profitability. Our adjusted EBITDA guidance is a reflection of our reset operational cost base following the large reduction in force that we completed on October 1. For the fourth quarter, we expect operating expenses to be or below $28 million, excluding stock-based compensation and severance. This represents a reduction of 19% from the prior year. After adjusting for the $5 million in one-time benefits in Q3, this represents a $3 million to $4 million sequential improvement quarter over quarter in operating expenses and an additional $2 million of savings in capital expenses.

As a reminder, the $26 million in annualized savings that we are expecting in 2026 represents both operating and capitalized expenses, as well as the timing of certain other changes such as lease terminations. We remain committed to driving operational efficiency and will make further changes as needed. For now, we believe we have fully reset our cost base to reflect our new top-line reality while balancing the need to invest in both consumer engagement and supply diversification. Our guiding principle is to focus only on priorities that have a clear line of sight to driving revenue and that align with our goal of positive adjusted EBITDA in 2025 and 2026.

We are confident we can return to growth and achieve profitability once we get through the current headwinds. I'll now turn it back to Amit for closing remarks.

Amit Gupta: As we continue to navigate a challenging environment, we've taken decisive steps to reset our business, reduce our concentration risk, and set ourselves up for a financially healthy future. We remain confident in the fundamental strength of our commerce media platform, our partnerships, and our teams. By prioritizing the areas where we know we can win, we expect to deliver greater value to our advertisers, partners, shareholders, and consumers. I'll now turn it over to the operator to begin Q&A. Thank you.

Operator: Ladies and gentlemen, we will now begin the question and answer session. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. Thank you. And your first question comes from the line of Jacob Michael Stephan from Lake Street Capital Markets. Please go ahead.

Jacob Michael Stephan: Hey. Appreciate you guys taking the questions. Guess first, I just kind of wanted to touch on the billing margins commentary a bit. Maybe you can kind of help me piece this together when you think through kind of, you know, we saw a decrease in Q3, but it sounds like you're seeing better margins with your remaining FI partners. It sounds like it improved in October. Can you help me think through, you know, what the impact was in Q3 and, you know, overall, how you see these trending as we kind of enter '26?

Alexis DeSieno: No problem. Thanks for the question. So, yeah, there's two different types of margin. The billings to revenue margin, which you saw a little bit of a decrease in Q3. That was primarily all in July, where we were impacted by an abrupt change to our supply from our largest FI partner. It took a little bit of time to normalize that. And by the end of the quarter, we were, you know, back to normal in terms of our ability to deliver and had learned how to properly target from that point on. There's also a little bit of margin pressure in there from performance incentives or higher ROAS that we've been seeing.

We make strategic decisions to remain competitive, and this is normal practice in the market. So it's a little bit of both. The run rate in October is higher than what we saw in Q3, and so we expect that to continue. I would probably continue to model it in the low sixties. So that really was a blip from the July changes. And then just to touch on the bank mix piece, which is more what I look at when I talk about revenue to adjusted contribution. Or sorry, adjusted contribution to revenue margin. That was the highest that we've seen so far, even despite the lower billings margin. So we saw around 58% in Q3.

That's among the highest we've seen, and that's as a result of our newer partners with better economics taking share from our legacy partners, which are worse economics from a revenue share perspective. So it really highlights that it's unlocking our ability to invest more of that margin back into engagement and performance for our advertisers and our customers. And we're still able to keep more of every dollar we make from a contribution standpoint. Hopefully, that helps. And we should see the adjusted contribution margin continuing to improve or be stable around the high fifties?

Jacob Michael Stephan: Okay. Yeah. Very helpful. And then second question, more so on kind of the guidance. You know, there's roughly a $7 million range between the low end and high end of adjusted EBITDA. That's bigger than the range of adjusted contribution. What, I guess, what are the puts and takes that kind of get you to the higher end versus the lower end of that? And maybe talk a little bit about the overall cost base now.

Alexis DeSieno: Yeah. Very helpful. You're right. That is confusing at first look. Adjusted OpEx is really not a big range. It's only about $1 million. So all of this is slowing down from the range of the, you know, contribution and revenue guide. OpEx basically is $27 million to $28 million is what we're guiding on OpEx. And so the rest of it comes from really that top line. Top line and margin slowing down. Does that make sense?

Jacob Michael Stephan: Understood. Yeah. Yep. Totally. Appreciate it.

Operator: Thank you. Once again, should you have a question, please press star then the number one on your telephone keypad. Once again, that is star and one to ask a question. If you're using a speakerphone, please lift the handset before pressing any keys. That concludes our question and answer session. Ladies and gentlemen, this concludes today's call. Thank you for participating. You may all disconnect.