What happened

Shares of advertising-technology company Cardlytics (CDLX 2.35%) sank to an all-time low on Wednesday after the company announced disappointing financial results for the third quarter of 2022. As of 1:20 p.m. ET, Cardlytics stock was down 43% for the session and down 96% from the high it reached in early 2021.

So what

Cardlytics partners with financial institutions to track real consumer spending and offer advertising opportunities to marketers. The company is paid when consumers make purchases, and it splits the money with its financial partners for providing the data.

In Q3, Cardlytics revenue was up 12% year over year to almost $73 million, and its monthly active users -- people making purchases through its financial partners -- were up 8% to 185 million. However, management noticed a slowdown in Q3 and expects the trend to continue in the fourth quarter.

Now what

Cardlytics' management noted that it lost a large marketing client from the restaurant industry during Q3. That's concerning for a small-cap company with concentration risk. For perspective, the top five marketers using the platform accounted for 29% of Cardlytics' revenue in 2021.

Management said it had already known it was losing a large client this quarter. However, it made another statement that might be more alarming: "I don't think we anticipated the broad slowdown that was going to occur in Q4." Investors never like uncertainty, and Cardlytics' management sounds pretty uncertain here about the near-term future.

Management is guiding for $80 million to $90 million in revenue next quarter, which would be flat at best. In fairness, the fourth quarter of 2021 was a record one for revenue, so it's a hard year-over-year comparison. But the company is clearly facing some headwinds.

On an encouraging final note, Cardlytics has $138.5 million in cash and equivalents, and the stock trades at just a small premium to that. Therefore, if it can manage to return to growth in 2023, shares are trading at an attractive valuation.