Image source: The Motley Fool.

DATE

Wednesday, Aug. 5, 2026 at 5:00 p.m. ET

CALL PARTICIPANTS

• Chief Legal Officer - Chris Cheng
• Chief Executive Officer - Amit Gupta
• Chief Financial Officer - David Evans

TAKEAWAYS

• Revenue -- $36.9 million, reflecting a 36% decrease compared to the second quarter of 2025.
• Billings -- $65.5 million, declining 34% year over year due to previously announced changes in financial institution partner relationships.
• Adjusted Contribution -- $21.3 million, falling 32% year over year from $31.3 million.
• Adjusted EBITDA -- $1.7 million, compared to $3.0 million in the prior year period.
• Net Loss -- $14.9 million, increasing from $9.3 million in the second quarter of 2025.
• GAAP Net Loss Per Share -- $1.50 from continuing operations, representing a wider loss compared to $1.15 in the second quarter of 2025.
• Non-GAAP Adjusted Net Loss Per Share -- $0.81, compared to $0.60 in the prior year period.
• Monthly Qualified Users (MQUs) -- 185.4 million, a 17% decrease year over year resulting from restructured bank partner agreements.
• Adjusted Contribution Per User (ACPU) -- $0.11, down from $0.14 in the second quarter of 2025.
• United Kingdom Revenue -- Increased over 10% year over year, showing resilience in the region according to management.
• Active Advertisers -- Grew 18% quarter over quarter, driven by new logo volume and improved retention.
• New Logo Volume -- Increased 59% quarter over quarter, indicating the strongest signal of new business growth in the period.
• Growing Advertisers -- Those increasing their billings with the company grew 42% as management focused on measurement and scaling.
• Advertiser Churn -- Improved 50% by advertiser count and 88% by dollar impact.
• Adjusted Operating Expenses -- $19.6 million, a 31% decrease year over year driven by headcount reductions and cloud infrastructure optimization.
• Operating Cash Flow -- Negative $8.6 million, compared to positive $1.2 million in the second quarter of 2025.
• Free Cash Flow -- Negative $10.7 million, compared to negative $3.4 million in the prior year period.
• Q3 2026 Billings Guidance -- $61 million to $67 million, which management noted aligns with historical quarterly trends.
• Q3 2026 Revenue Guidance -- $34 million to $39 million.
• Q3 2026 Adjusted EBITDA Guidance -- Zero to $3 million, representing comparable performance to the second quarter.
• U.S. Consumer Spend Growth -- Rebounded to 3.6% year over year in June from 2.3% in May, led by lower-spend households.
• Quick Service Restaurant Spend -- Rose 3.3% year over year, though management attributed the increase entirely to menu inflation.
• Liquidity -- $28 million in cash and cash equivalents at quarter end, with $20 million available on a credit facility.

Need a quote from a Motley Fool analyst? Email [email protected]

RISKS

• CFO Evans stated, "We will continue to see tough comps year-over-year until Q1 2027 when we anniversary the previously discussed changes in our bank partner relationships," explaining the ongoing impact of restructured financial institution agreements.
• CEO Gupta noted that in the quick-service restaurant sector "real demand was flat," with spend increases driven by inflation while market share migrated to delivery services.
• CFO Evans noted that the third quarter 2026 billings guidance midpoint of $64 million is lower than the second quarter result of $65.5 million, though he stated the range is historically consistent.

SUMMARY

Cardlytics, Inc. (CDLX +10.24%) reported second quarter results within guidance ranges for revenue and adjusted contribution as management focused on organizational stabilization following a reset earlier in the year. The company reported improvements in advertiser churn and growth in new business billings, while continuing to experience year-over-year declines in total revenue and monthly qualified users due to restructured bank partner agreements. Management stated that the business is prioritizing cost containment and self-sustainability, with plans to integrate artificial intelligence to enhance campaign efficiency and provide deeper spending insights to advertisers.

• CEO Gupta stated that rewards programs are shifting toward "merchant-funded, locally relevant models" as card issuers seek to replace traditional points-based rewards.
• Management reported that AI-driven campaign publishing has reduced the time required to build U.S. ad campaigns by approximately 50% compared to the prior year.
• CFO Evans noted that the company is "laser-focused on free cash flow" and expects it to converge with adjusted EBITDA following previous cost reduction efforts.
• The company expanded its partnership with Monzo in July 2026 to power personalized spend-based cashback rewards for the bank's customer base in the United Kingdom.
• CEO Gupta noted that proprietary data showed U.S. consumer spend growth rebounded to 3.6% year over year in June, with lower-spend households driving the increase.
• A new personalization capability allows bank partners to use APIs to offer tailored reward values to specific customer segments, including high-tier or at-risk users.

INDUSTRY GLOSSARY

• ACPU: Adjusted Contribution Per User, measuring efficiency in converting marketer budgets into value generated by customer engagement.
• CRP: Cardlytics Rewards Platform, the company's proprietary advertising channel integrated into bank digital environments.
• FI Share: The portion of revenue shared with financial institution partners for access to their data and cardholders.
• Merchant-funded rewards: Promotions where the advertiser, rather than the bank or card issuer, pays for the consumer's cashback or reward.
• MQUs: Monthly Qualified Users, defined as targetable customers who made a transaction using an account with a partner bank during a given month.
• Purchase Intelligence: The analysis of transaction data to drive targeted, personalized offers and marketing decisions.
• QSR: Quick Service Restaurant, a category of dining including fast-food establishments.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us, and welcome to the Q2 2026 Cardlytics, Inc. Earnings Conference Call. [Operator Instructions] I will now hand the call over to Chris Cheng, Chief Legal Officer. Chris, please go ahead.

Chris Cheng: Good evening, and welcome to the Cardlytics Second Quarter 2026 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 expectations around our future financial performance and results, including for the third quarter of 2026, our capital structure and operational and product initiatives. For a discussion on 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 our 10-Q for the quarter ending June 30, 2026, which has been filed with the SEC. Also during our call, we will discuss non-GAAP measures of our performance.

GAAP financial reconciliations and supplemental financial information are provided in the press release issued today, which you can find on the Investor Relations section of the Cardlytics website. Today's call is available via webcast, and a replay will also be available on our website. On the call today, we have CEO, Amit Gupta; and CFO, David Evans. Following their prepared remarks, we'll open it up for your questions. With that, I'll hand the call over to Amit.

Amit Gupta: Good evening, and thank you for joining us. The second quarter showed clear progress against our strategic priorities. The investments we made earlier this year in our people, advertiser business and tech platform are starting to deliver. We remain focused on the same priorities we've talked about all year, deepening our bank partnerships and expanding our publisher network, driving incremental revenue for advertisers through our purchase intelligence and continuing to invest in our tech platform that differentiates us. As we've stated in the past, 2026 has been and is a year of execution. The biggest takeaway from Q2 is that we are beginning to see the results of the reset.

Our advertiser growth is accelerating, churn is improving materially and supply has stabilized. Starting with our network and supply. Rewards programs across the industry are shifting toward merchant-funded, locally relevant models, and we are at the center of that shift. We are partnering with industry leaders to define how this evolves industry-wide, particularly as AI adoption accelerates. The shift is happening across the industry. At their Investor Day this year, one of the country's largest card issuers said they are shifting more towards merchant-funded offers than expensive points-based rewards. The reason is simple: consumers want offers that are more relevant and personalized.

On CRP, market interest remains strong, and our pilot partners already live on our platform are giving us positive feedback. The proposition is resonating. Our focus now is executing well for those early partners while we continue conversations to bring new ones onto the platform. We continue to grow with our existing bank partners, and we're in active discussions with new ones. Several long-standing FI partners, along with some newer ones, have asked us to expand our card-linked offers program to additional portfolios, a direct result of the value we are driving for their cardholders and the top-of-wallet behavior it creates.

One of our major bank partners recently agreed to temporarily reduce their FI share as a show of good partnership to accelerate co-development and innovation in their program. We've seen this play out in concrete outcomes this quarter. In one recent bank-funded program, we tested extra rewards for cardholders who made 2 redemptions in a month with an even higher reward for 3. As a result of this program, we saw total redemptions go up 105%. First-time redeemers were up 113% and merchant-funded redemption spend increased 78%. This shows the Cardlytics flywheel delivering for all 3 sides of our business: consumers, bank partners and advertising merchants. We are also continuing to grow our local third-party offers.

They are now live across 4 major banks and drive nearly 5,000 redemptions a day. They get strong engagement because they are highly relevant to consumers locally and billings are up 20% since the start of the year. We expect to lean into these even more in the second half. In the U.K., Cardlytics expanded our role in providing offers for Monzo, one of the fastest-growing banks in the U.K. Starting July 2026, Cardlytics now powers more card-linked offers for Monzo's U.K. customers, delivering personalized spend-based cashback rewards directly within the Monzo app.

The partnership expands Cardlytics U.K. reach by building on its extensive network of agencies and partners, giving brands direct access to Monzo's highly engaged, digitally native customer base. The partnership reflects growing demand among leading U.K. financial institutions for data-driven, frictionless rewards solutions. Across our FI and CRP conversations, we're hearing the same themes consistently from market leaders. The strength of our tech platform, the scale of our merchant network and the size of value we can deliver to their consumers sets us apart. Turning to our advertiser base. Q2 advertiser base demonstrated growth both quarter-over-quarter and year-over-year. Active advertisers grew 18% quarter-over-quarter and billings grew 11% alongside it. New logo volume was the strongest signal, up 59% quarter-over-quarter.

Total new business billings for this group grew 17% year-over-year. And our largest new logo this quarter was more than 100% higher than our largest new logo a year ago. Growing advertisers, those increasing their billings with us, grew 42%. Churn improved across the board, down 50% by advertiser count and 88% by dollar impact. That growth comes down to 2 things: measurement and scaling, proving results quickly with new advertisers and making it easy for them to scale immediately. One large national restaurant brand piloted with us in Q2 and has already re-signed to the max potential.

A home services brand piloted with a single location and before the pilot even wrapped, expanded to 7 others and is now also at our maximum tier across their full portfolio. In the U.K., billings are up 10% year-over-year, and we saw a great example this quarter of what our purchase intelligence can do for our advertisers. Some of our restaurant clients thought their sales were slowing because the whole category was shrinking. Our data showed that wasn't the case. The category was flat and their customers were still eating out but increasingly ordering through third-party delivery services.

We got ahead of the trend and proactively adjusted look-back periods to reflect shifting market dynamics, capturing customers during their normal dormancy windows before spend moved out of the category. This ensured we sustained advertiser investment even in a category under real budget and margin pressure. We are seeing the same pattern here in the U.S. Quick service spend grew 3.3% year-over-year, but almost all of that was menu inflation. Real demand was flat. It's not just this quarter, QSR's share of restaurant spend has been shrinking year-over-year since 2024, while delivery keeps picking up the difference, up more than 18% this quarter alone. People aren't ordering less quick service food that spend is just shifting to delivery.

One QSR brand saw this play out directly. They knew their purchase frequency trailed key competitors and assumed they were losing customers out of the category. Our data showed those customers hadn't left, they migrated to other brands, mirroring that same category-wide shift. That insight moved their strategy from broad acquisition to retention and reengagement. And purchase frequency among those reengaged customers came in stronger than across their broader base. That's the value we deliver, not just what's happening, but the action that drives growth. Our everyday spend data shows resilience in gas and convenience, up 11.1% year-over-year even as discretionary dining growth flattens. That same purchase intelligence extends beyond category level trends into the broader economy.

Our data shows that the U.S. consumer spend growth rebounded to 3.6% year-over-year in June, up from 2.3% in May. Contrary to popular opinion, lower spend households are driving this recent growth. We often see shifts like these before they show up in broader economic data, and sophisticated advertisers take advantage of these broader trends as they plan their marketing efforts with us. Now on to our technology platform. Last year, we invested in cleaning up our tech debt and building an AI-forward tech stack. Now that these investments are behind us, we are now operating more efficiently and moving faster. We are also continuing to put AI to work across the platform.

We recently launched new AI capabilities that automatically pull industry and brand-level spending insights from our purchase data. Leading advertisers are using these insights to benchmark their performance and understand broader consumer trends, utilizing them in marketing decisions and beyond. We launched an AI-driven campaign publishing engine that automates core setup and configuration workflows within our advertiser platform. Operating with human-in-the-loop oversight, this capability significantly reduces time to market for advertiser campaigns while driving long-term operating efficiencies across our sales and ad operations teams. In the U.S., we're building ad campaigns in about half the time we were a year ago, while still hitting our internal targets 99.4% of the time.

We are also building new capabilities that let banks personalize rewards for their own customer segments. Banks can tell us through our APIs which customers they consider high tier or at risk of churning, and our platform can make personalized decisions on reward values, offer ranking and bank-funded offers tailored specifically to those groups. We expect to begin testing this with one of our bank partners soon. We're developing token-based solutions that make our market-leading offers protocol embeddable across different partner experiences. This will allow us to extend our reach and meet more consumers wherever they are. Now looking forward, Q2 showed that our plan is working, and our core business is getting stronger.

As we move into Q3, our focus is on solidifying that foundation. We want to continue building supply, growing our advertiser base, improving retention and scaling the capabilities we've invested in across our platform. We expect Q3 to be another quarter of execution and strengthening the core business while we continue laying the foundation for renewed growth. We are starting to see early benefits of the hard work done earlier this year to reset the company while being fully aware of the challenges that come with being a small public company. Our focus remains on disciplined, urgent execution against our strategic priorities. Before I turn it over to David, I want to welcome Chris Cheng to Cardlytics.

Chris joined us earlier this week as our Chief Legal Officer and brings more than 20 years of legal experience from some of the leading technology companies. Chris, we are excited to have you on the team, and thank you for jumping right in and helping lead us through the call tonight. David, over to you.

David Evans: Thank you, Amit. As we talked about on our last earnings call, our core focus and strategic plan we set up at the beginning of the year was to level set around sequential growth and self-sustainability. We are pleased to announce that we were within our guide for billings, revenue and adjusted contribution, and exceeded the high end of our guide for adjusted EBITDA. This performance was driven by continued advertiser growth that's building a healthier revenue base while also demonstrating a keen eye to cost containment in the quarter. Turning to Q2 results. For awareness, all comparisons to prior year will be presented excluding Bridg, which we divested in Q1 of this year.

Bridg-specific results can be found in the 10-Q. Also, the comments will be year-over-year comparisons to the second quarter of 2025, unless stated otherwise. In Q2, our billings were $65.5 million, a 34% decrease year-over-year. We will continue to see tough comps year-over-year until Q1 2027 when we anniversary the previously discussed changes in our bank partner relationships. Over the course of the year, we have seen supply stabilize and our advertiser base increase. Q2 revenue was $36.9 million, a 36% decrease year-over-year. As Amit mentioned, our U.K. business remains a standout performer, with Q2 revenue increasing over 10% year-over-year. Q2 adjusted contribution was $21.3 million, a 32% decrease year-over-year.

We materially increased our adjusted contribution as a percentage of revenue to 57.7% from 54% in the prior year. Q2 adjusted EBITDA was positive $1.7 million compared to $3 million in the second quarter of 2025. Q2 adjusted operating expenses were $19.6 million, a decrease of 31% from prior year. This was largely due to reduction in force actions taken in the second half of 2025 and optimization of our cloud infrastructure. Q2 operating cash flow was negative $8.6 million compared to $1.2 million in the prior year. Free cash flow was negative $10.7 million compared to negative $3.4 million year-over-year.

From a liquidity perspective and on the balance sheet, we ended Q2 with $28 million in cash and cash equivalents, and approximately $20 million available on our credit facility. Our continued laser focus on free cash flow and where we are making investments to support our near- and medium-term efforts to continue to grow our business in a self-sustainable manner remains our clear priority. We see free cash flow trending in the right direction and converging closer to adjusted EBITDA going forward. Our MQUs for the quarter were $185 million, down from $224 million a year ago due to the previously discussed changes in our bank partner relationships. Now turning to our outlook for Q3 2026.

For Q3, we expect billings between $61 million and $67 million. Revenue between $34 million and $39 million. Adjusted contribution between $20 million and $23 million. And adjusted EBITDA between 0 and positive $3 million. Our guidance represents comparable performance in Q3 versus Q2, as our business solidifies and matures around the investments made earlier this year. This is largely consistent with our historical quarterly trends when adjusted for unusual events. We are laser-focused on executing against our core competencies to drive growth in 2026. I'll now turn it back to Amit for closing remarks.

Amit Gupta: To wrap up, our second quarter results reflect the execution we committed to at the start of the year. We are focused on the fundamentals and market feedback confirms the importance of the Cardlytics platform in delivering value to consumers, bank partners and advertisers. A big thank you to our Cardlytics team for their extraordinary commitment, and to our bank partners and advertisers for their continued collaboration and trust. I'll now turn it over to the operator to begin Q&A.

Operator: [Operator Instructions] Your first question comes from the line of Jason Kreyer with Craig-Hallum Capital Group.

Thomas Emmel: This is Thomas on for Jason. Maybe first, Amit, can you give some color on what you're seeing in the broader consumer landscape and consumer utilization of offers?

Amit Gupta: Yes, Jason (sic) [ Thomas ], thank you for the question. Overall, we see the consumer -- the U.S. consumer spend getting stronger, especially over the slight slump in the quarter during the month of May. So we -- strengthening happening there. In QSR, I think as we mentioned in the prepared remarks, while the demand is flat, but there are increases in the QSR sector due to menu inflation, we see uptick in gas and multi-line retail. And then discretionary spending is up in pockets in certain segments of the U.S. consumer base and certain segments in the U.K. consumer base.

Thomas Emmel: Great. Maybe one for David. Can you talk about where you're at with the cost structure? You've done some work rightsizing the organization, now you've got Bridg removed, and you are delivering sequential growth. Just trying to gain some perspective on where things are like from a headcount perspective and where OpEx goes from here.

David Evans: Absolutely. So as I've mentioned in the past, a lot of the investments that Amit mentioned in the beginning of the year, we see that now being level set and kind of flowing through the model, if you will. We don't anticipate any additional OpEx or cap dev in the business going forward. We'll have needs occasionally from time to time in and around headcount, but I would expect on a more, kind of, broader base to kind of see headcount, kind of, staying the same, if that helps answer your question.

Operator: Our next question comes from the line of [ Sam Nach ] with Lake Street Capital Markets.

Unknown Analyst: Congrats on the quarter. I just had a question about -- it sounds like the overall 2026 plan is quarter-over-quarter sequential growth. But Q3 billings guidance, which is $64 million, it's below Q2 at [ $65.5 million ]. Could you give color on [indiscernible] that is and if it's travel, hospitality pushout or has the pipeline [indiscernible] or just some general color around...

David Evans: Sure. You're cutting in and out there, Sam. I don't know if that was on my end or your end. Can you hear me okay?

Unknown Analyst: I can.

David Evans: Okay. Good. Yes, it's a fair question. A couple of things that I would say there. And Amit, obviously, feel free to jump in. We will and are guiding to some sequential growth on the EBITDA side but hear you on the Q3 piece, and that is and continues to be kind of a focus for us. We do see growth throughout the rest of the year, and that is an important thing to make sure that we keep in mind. And we make the comment earlier around a lot of this is really consistent with what we've seen in prior years with regards to the relationship between Q2 and Q3.

So there's not a whole lot of concern per se. We touched a little bit on new business. We've seen new business really taking off in a nice way. And just as we sit here at this point in time in the quarter, that's kind of where we land from a guide perspective, but I'm also very optimistic that we're seeing a lot of goodness out there that gives us confidence in seeing growth throughout the rest of this year, regardless of, kind of, how we think about Q3, if that helps answer your question. But it's a fair point and question.

Amit Gupta: Yes. And I think, Sam, that's a good point. The trajectory, if you think about the overall arc for the year, we wanted to make sure that the business is on a strong footing, and we feel very good about the business is strong. And I think as we've mentioned previously, as David just mentioned as well, as we go into Q3, not only is it historically aligned with how we've performed before, but it also solidifies our base of investments that we've made before and they start to come to fruition. And the most important part is it helps us lay the groundwork for future growth, and that's what we're excited about.

And we're seeing that both on the bank partner supply side and on the advertiser side as well.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Amit Gupta for closing remarks.

Amit Gupta: Thank you for the questions today. And I just want to convey a huge thanks again to our stellar Cardlytics team, our amazing bank partners and advertisers that really put a lot of trust to help grow their businesses with us and really make the Cardlytics flywheel work for everyone, especially for the everyday consumer across U.S. and U.K. So we're excited about that, and we're looking forward to the rest of the year that we're laying a foundation for growth over time. So thank you again.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.