Shares of advertising technology (adtech) company Cardlytics (CDLX 6.26%) absolutely skyrocketed on Friday after reporting its financial results for the fourth quarter of 2023. As of 10:15 a.m. ET, Cardlytics stock is up 51% and up more than 240% over the past year.

Cardlytics is bucking the market's narrative

For Cardlytics, I believe the market was overly pessimistic about its long-term prospects. For perspective, the stock traded at book value earlier this year -- highly unusual for a tech stock. And prior to the Q4 earnings report yesterday afternoon, it traded at just 1 times its trailing sales, which is quite inexpensive.

When a tech stock trades this cheap, it indicates that the market doesn't believe in the company's long-term prospects. But investors are rethinking Cardlytics today. The company generated Q4 revenue of $89 million, which was at the high end of its guidance and capped off a record year.

To be clear, Cardlytics' financial results weren't necessarily great. Full-year revenue was only up 4% year over year. And it had a net loss of $135 million. However, the majority of this loss was the result of moving past some bad acquisitions.

By contrast, Cardlytics' adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were almost $4 million, compared to an adjusted EBITDA loss of $45 million in 2022. That's not an impressive number in isolation, but it is a huge improvement.

In short, Cardlytics bucked Wall Street's doom-and-gloom narrative by growing and returning to adjusted profitability.

What's next for Cardlytics?

Cardlytics partners with financial institutions to evaluate consumer behavior and provide insights to advertisers. For the upcoming first quarter of 2024, management believes it will generate revenue of $70 million to $73 million, which is a 9% to almost 14% jump from the prior-year period. That would represent its best growth rate in over a year.

Moreover, Cardlytics expects to breakeven on an adjusted EBITDA basis in Q1. Therefore, the company still has more work to do to stimulate growth and improve profitability. But it's definitely moving in the right direction.