Cardlytics’ Earnings Call: Growth Amid Challenges

Cardlytics, Inc. ((CDLX)) has held its Q3 earnings call. Read on for the main highlights of the call.

Cardlytics, Inc. recently held its earnings call, revealing a mixed sentiment among its stakeholders. The company is optimistic about its growth prospects through new partnerships and strong UK market performance. However, it faces significant challenges due to content restrictions and a notable decline in billings and revenue.

Expansion of CRP Partnerships

Cardlytics announced the signing of three new CRP partners, including OpenTable. This expansion is seen as a significant growth opportunity, allowing the company to reach more consumers and unlock new advertiser verticals. The partnerships are expected to enhance Cardlytics’ market presence and drive future growth.

UK Revenue Growth

The UK market has been a bright spot for Cardlytics, with a 22% year-over-year increase in revenue. This growth is attributed to higher billings and an increase in supply, showcasing the company’s strong performance in this region.

Improved Adjusted EBITDA

Despite facing top-line challenges, Cardlytics reported a positive adjusted EBITDA of $3.2 million, marking an increase of $5.0 million compared to the previous year. This improvement highlights the company’s ability to manage costs effectively and improve its financial health.

High Adjusted Contribution Margin

Cardlytics achieved its highest adjusted contribution margin to date at 57.7%. This was driven by a favorable partner mix and improved economics with new financial institution partners, reflecting the company’s strategic focus on enhancing profitability.

Strategic Cost Reductions

In a bid to streamline operations, Cardlytics executed significant cost reductions, including a 30% workforce reduction. These measures are expected to result in annualized cash savings of $26 million, demonstrating the company’s commitment to improving operational efficiency.

Significant Decrease in Billings

The company experienced a 20.3% decline in total billings, down to $89.2 million. This decrease was primarily due to content restrictions imposed by a major financial institution partner, which has been a significant headwind for Cardlytics.

Revenue Decline

Revenue fell by 22.4% to $52.0 million, largely driven by the decrease in billings. This decline underscores the challenges Cardlytics faces in maintaining its revenue streams amidst external constraints.

Challenges with Largest FI Partner

Content restrictions from Cardlytics’ largest financial institution partner have impacted its ability to sell larger budgets. Approximately one-third of total billings are expected to be blocked, posing a significant challenge for the company.

ACPU Decline

The average consumer price unit (ACPU) decreased by 31% year-over-year, influenced by content restrictions and the ramping of new financial institution partners. This decline highlights the challenges in maintaining pricing power in the current environment.

Forward-Looking Guidance

Looking ahead, Cardlytics provided guidance for Q4 2025, expecting billings between $86 million and $96 million and adjusted EBITDA ranging from $0.9 million to $7.9 million. The company plans to diversify its supply and increase engagement through strategic partnerships, such as the addition of OpenTable to its platform. Cost-saving measures, including a 30% workforce reduction, are expected to yield $26 million in annual savings. For 2026, Cardlytics aims to solidify its foundation and grow its commerce media platform, with a focus on returning to growth and profitability.

In summary, Cardlytics’ earnings call presented a mixed outlook, with promising growth opportunities through new partnerships and strong UK market performance. However, significant challenges remain due to content restrictions and declining billings and revenue. The company’s strategic initiatives and cost-saving measures are expected to support its path to recovery and future growth.