Cardlytics, Inc. [CDLX] Filings

10-Q 1 cdlx-20240630.htm 10-Q cdlx-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

Commission File Number: 001-38386


CARDLYTICS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware		26-3039436
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
675 Ponce de Leon Ave. NE, Suite 4100	Atlanta	Georgia	30308
(Address of principal executive offices, including zip code)
(888)		798-5802
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CDLX	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2024, there were 49,840,104 shares outstanding of the registrant’s common stock, par value $0.0001.

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CARDLYTICS, INC.

QUARTERLY REPORT ON FORM 10-Q

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		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Operations (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)	5
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	44
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 6.	Exhibits	69
Signatures		70

RISK FACTORS SUMMARY

Our business is subject to a number of risks and uncertainties, including those risks discussed at-length in the section below titled "Risk Factors." These risks include, among others, the following:

Risks Related to our Business and Industry

•Unfavorable conditions, including inflationary pressure, in the global economy or the industries we serve could limit our ability to grow our business and negatively affect our operating results.

•Our quarterly operating results have fluctuated and may continue to vary from period to period, which could result in our failure to meet expectations with respect to operating results and cause the trading price of our stock to decline.

•We may not be able to sustain our revenue and billings growth rate in the future.

•We are dependent upon the Cardlytics platform.

•If we fail to identify and respond effectively to rapidly changing technology and industry needs, our solutions may become less competitive or obsolete.

•We are substantially dependent on Chase, Bank of America, Wells Fargo and a limited number of other FI partners.

•The market in which we participate is competitive, and we may not be able to compete successfully with our current or future competitors.

Risks Related to our Indebtedness

•Servicing our debt may require a significant amount of cash. We may not have sufficient cash flow from our business to pay our indebtedness, and we may not have the ability to raise the funds necessary to settle for cash conversions of the convertible notes or to repurchase convertible notes for cash upon a fundamental change, which could adversely affect our business and results of operations.

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Risks Related to Regulatory and Intellectual Property Matters

•We and our FI partners are subject to stringent and changing privacy and data security laws, rules, contractual obligations, self-regulatory schemes, government regulation, policies and other obligations related to data privacy and security. The actual or perceived failure by us, our customers, our partners, or other third parties whom we rely upon to comply with such obligations could lead to regulatory investigations or actions, litigation, disruptions of our business operations, loss of customers or sales, harm our reputation, result in significant expense, loss of revenue or profits, subject us to significant fines and liability or otherwise adversely affect our business.

•Failure to protect our proprietary technology and intellectual property rights could substantially harm our business, financial condition and operating results.

Risks Related to Ownership of our Common Stock

•The market price of our common stock has been and is likely to continue to be volatile.

•Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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CARDLYTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Amounts in thousands, except par value amounts)


	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	71,248	$	91,830

Accounts receivable and contract assets, net	102,671		120,622
Other receivables	4,696		5,379
Prepaid expenses and other assets	6,717		6,097
Total current assets	185,332		223,928
Long-term assets:
Property and equipment, net	3,084		3,323
Right-of-use assets under operating leases, net	7,459		7,310
Intangible assets, net	29,433		35,003
Goodwill	277,202		277,202
Capitalized software development costs, net	29,572		24,643
Other long-term assets, net	2,290		2,735
Total assets	$	534,372	$	574,144
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	4,866	$	4,425
Accrued liabilities:
Accrued compensation	5,490		11,662
Accrued expenses	6,772		9,587

Partner Share liability	33,719		48,867
Consumer Incentive liability	45,433		52,678
Deferred revenue	1,679		2,405
Current operating lease liabilities	2,279		2,127
Current contingent consideration	4,363		39,398
Total current liabilities	104,601		171,149
Long-term liabilities:
Convertible senior notes, net	212,885		227,504
Long-term operating lease liabilities	6,805		6,391
Long-term deferred revenue	30		67
Long-term debt	—		30,073
Long-term contingent consideration	—		4,162
Other long-term liabilities	17		—
Total liabilities	$	324,338	$	439,346
Stockholders’ equity:
Common stock, $0.0001 par value—100,000 shares authorized, 49,402 and 39,728 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	$	9	$	9
Additional paid-in capital	1,346,876		1,243,594
Accumulated other comprehensive income	2,953		2,467
Accumulated deficit	(1,139,804)		(1,111,272)
Total stockholders’ equity	210,034		134,798
Total liabilities and stockholders’ equity	$	534,372	$	574,144

See notes to the condensed consolidated financial statements

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CARDLYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Amounts in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue	$	69,636	$	76,701	$	137,244	$	141,032
Costs and expenses:
Partner Share and other third-party costs	33,258		39,170		63,801		72,554
Delivery costs	7,661		7,015		13,834		13,439
Sales and marketing expense	14,025		15,205		28,143		29,153
Research and development expense	13,470		14,847		26,518		26,411
General and administration expense	16,151		16,276		30,636		29,346
Acquisition, integration and divestiture benefit	162		(9,947)		162		(8,224)
Change in contingent consideration	(5,808)		11,258		9		(23,326)

Depreciation and amortization expense	6,529		7,200		12,779		13,775
Total costs and expenses	85,448		101,024		175,882		153,128
Operating Loss	(15,812)		(24,323)		(38,638)		(12,096)
Other (expense) income:
Interest expense, net	(1,561)		(574)		(2,380)		(582)
Foreign currency gain (loss)	99		1,389		(531)		2,778
Gain on debt extinguishment	13,017		—		13,017		—
Total other income	11,555		815		10,106		2,196
Loss before income taxes	(4,257)		(23,508)		(28,532)		(9,900)

Net Loss	$	(4,257)	$	(23,508)	$	(28,532)	$	(9,900)


Net Loss per share, basic and diluted	$	(0.09)	$	(0.67)	$	(0.62)	$	(0.29)

Weighted-average common shares outstanding, basic and diluted	49,056		34,880		46,168		34,241

See notes to the condensed consolidated financial statements

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CARDLYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

(Amounts in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net Loss	$	(4,257)	$	(23,508)	$	(28,532)	$	(9,900)
Other Comprehensive Loss:

Foreign currency translation adjustments	(94)		(1,281)		486		(2,555)
Total Comprehensive Loss	$	(4,351)	$	(24,789)	$	(28,046)	$	(12,455)

See notes to the condensed consolidated financial statements

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CARDLYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(Amounts in thousands)

Six Months Ended June 30, 2024:


				Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Common Stock
	Shares	Amount
Balance – December 31, 2023	39,728	$	9	$	1,243,594	$	2,467	$	(1,111,272)	$	134,798
Exercise of common stock options	3	—		5		—		—		5
Stock-based compensation	—	—		26,099		—		—		26,099
Settlement of restricted stock	1,929	—		—		—		—		—

Issuance of common stock, net of issuance costs - Settlement Agreement (as defined below)	3,592	—		27,451		—		—		27,451
Issuance of common stock, net of issuance costs - ATM Offering Program (as defined below)	3,908	—		48,151		—		—		48,151
Issuance of common stock pursuant to the 2018 ESPP (as defined below)	242	—		1,461		—		—		1,461
Termination of capped calls related to 2020 Convertible Senior Notes	—	—		115		—		—		115
Other comprehensive loss	—	—		—		486		—		486
Net Loss	—	—		—		—		(28,532)		(28,532)
Balance – June 30, 2024	49,402	$	9	$	1,346,876	$	2,953	$	(1,139,804)	$	210,034

Three Months Ended June 30, 2024:


				Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Common Stock
	Shares	Amount
Balance – March 31, 2024	48,174	$	9	$	1,331,628	$	3,047	$	(1,135,547)	$	199,137
Exercise of common stock options	—	—		—		—		—		—
Stock-based compensation	—	—		13,843		—		—		13,843
Settlement of restricted stock	986	—		—		—		—		—
Issuance of common stock, net of issuance costs	—	—		—		—		—		—

Issuance of common stock, net of issuance costs - ATM Offering Program (as defined below)	—	—		(171)		—		—		(171)
Issuance of common stock pursuant to the 2018 ESPP (as defined below)	242	—		1,461		—		—		1,461
Termination of capped calls related to 2020 Convertible Senior Notes	—	—		115		—		—		115
Other comprehensive loss	—	—		—		(94)		—		(94)
Net Loss	—	—		—		—		(4,257)		(4,257)
Balance – June 30, 2024	49,402	$	9	$	1,346,876	$	2,953	$	(1,139,804)	$	210,034

See notes to the condensed consolidated financial statements

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Six Months Ended June 30, 2023:


				Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Common Stock
	Shares	Amount
Balance – December 31, 2022	33,477	$	9	$	1,182,568	$	5,598	$	(976,570)	$	211,605

Exercise of common stock options	4	—		11		—		—		11
Stock-based compensation	—	—		20,676		—		—		20,676
Settlement of restricted stock	570	—		—		—		—		—

Issuance of common stock	2,755	—		15,171		—		—		15,171
Issuance of common stock pursuant to the 2018 ESPP (as defined below)	282	—		1,104		—		—		1,104

Other comprehensive loss	—	—		—		(2,555)		—		(2,555)
Net Loss	—	—		—		—		(9,900)		(9,900)
Balance – June 30, 2023	37,088	$	9	$	1,219,530	$	3,043	$	(986,470)	$	236,112

Three Months Ended June 30, 2023:


				Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Common Stock
	Shares	Amount
Balance – March 31, 2023	33,645	$	9	$	1,190,950	$	4,324	$	(962,962)	$	232,321
Exercise of common stock options	4	—		11		—		—		11
Stock-based compensation	—	—		12,294		—		—		12,294
Settlement of restricted stock	402	—		—		—		—		—
Issuance of common stock	2,755	—		15,171		—		—		15,171
Issuance of common stock pursuant to the 2018 ESPP (as defined below)	282	—		1,104		—		—		1,104
Other comprehensive loss	—	—		—		(1,281)		—		(1,281)
Net Loss	—	—		—		—		(23,508)		(23,508)
Balance – June 30, 2023	37,088	$	9	$	1,219,530	$	3,043	$	(986,470)	$	236,112

See notes to the condensed consolidated financial statements

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CARDLYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands)


	Six Months Ended June 30,
	2024		2023
Operating activities
Net Loss	$	(28,532)	$	(9,900)
Adjustments to reconcile net loss to net cash used in operating activities:
Credit loss expense	3,761		744
Depreciation and amortization	12,779		13,775
Amortization of financing costs charged to interest expense	850		819


Amortization of right-of-use assets	1,072		2,205
Gain on debt extinguishment	(13,017)		—
Stock-based compensation expense	23,629		19,707

Change in contingent consideration	9		(23,326)


Other non-cash expense (income), net	663		(3,147)



Change in operating assets and liabilities:
Accounts receivable	14,783		18,069
Prepaid expenses and other assets	(393)		430


Accounts payable	810		(2,046)
Other accrued expenses	(7,253)		(10,954)

Partner Share liability	(15,114)		269
Consumer Incentive liability	(7,234)		(10,958)
Net cash used in operating activities	(13,188)		(4,313)
Investing activities
Acquisition of property and equipment	(932)		(342)

Capitalized software development costs	(8,673)		(5,207)
Business acquisitions, net of cash acquired	202		—
Net cash used in investing activities	(9,403)		(5,549)
Financing activities
Proceeds from issuance of debt	—		30,000
Settlement of contingent consideration	(14,166)		(50,050)

Principal payments of the 2018 Line of Credit	(30,000)		(11)
Principal payments of 2020 Convertible Senior Notes	(169,291)		—
Proceeds from issuance of 2024 Convertible Senior Notes	172,500		—
Proceeds from termination of capped calls related to convertible notes	115		—
Proceeds from issuance of common stock	48,634		11
Deferred equity issuance costs	—		(45)
Equity issuance costs	(190)		—
Debt issuance costs	(5,568)		—
Net cash provided by (used in) financing activities	2,034		(20,095)
Effect of exchange rates on cash, cash equivalents and restricted cash	(25)		117
Net decrease in cash, cash equivalents and restricted cash	(20,582)		(29,840)
Cash, cash equivalents, and restricted cash — Beginning of period	91,830		121,985
Cash, cash equivalents, and restricted cash — End of period	$	71,248	$	92,145

See notes to the condensed consolidated financial statements

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CARDLYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands)


	Six Months Ended June 30,
	2024		2023
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:
Cash and cash equivalents	$	71,248	$	92,069
Restricted cash	—		76
Total cash, cash equivalents and restricted cash — End of period	$	71,248	$	92,145

Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,202	$	1,924
Amounts accrued for property and equipment	$	378	$	—
Amounts accrued for capitalized software development costs	$	150	$	—
Issuance of common stock, net of issuance costs - Settlement Agreement (as defined below)	$	27,451	$	—
Amounts accrued for debt issuance costs	$	354	$	—

See notes to the condensed consolidated financial statements

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CARDLYTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.OVERVIEW OF BUSINESS AND BASIS OF PRESENTATION

Cardlytics, Inc. ("we," "our," "us," the "Company," or "Cardlytics") is a Delaware corporation and was formed on June 26, 2008. Our company's mission is to make commerce smarter and rewarding for everyone. We work to accomplish this mission by operating an advertising platform within our own and our partners' digital channels, which includes online, mobile applications, email and various real-time notifications (the "Cardlytics platform"). We also operate a customer data platform that utilizes point-of-sale ("POS") data, including product-level purchase data, to enable marketers to perform analytics and targeted loyalty marketing and also measure the impact of their marketing (the "Bridg platform"). The partners for the Cardlytics platform are predominantly financial institutions ("FI partners") that provide us with access to their anonymized purchase data and digital banking customers. The partners for the Bridg platform are predominantly merchants ("merchant data partners") that provide us with access to their POS data, including product-level purchase data. By applying advanced analytics to the purchase data we receive, we make it actionable, helping marketers reach potential buyers at scale and measure the true sales impact of their marketing spend. We have strong relationships with leading marketers across a variety of industries, including retail, restaurant, travel and entertainment, direct-to-consumer, and grocery and gas. Using our purchase intelligence, we enable marketers to reach potential customers across our network of FI partners through their digital banking accounts and present them relevant offers to save money when they are thinking about their finances.

We also operate through (1) Dosh Holdings LLC, a wholly owned and operated subsidiary in the United States and (2) Cardlytics UK Limited, a wholly owned and operated subsidiary registered as a private limited company in England and Wales.

Unaudited Interim Results

The accompanying unaudited interim condensed consolidated financial statements and information have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The results for interim periods presented are not necessarily indicative of the results to be expected for the full year due to the seasonality of our business, which has been historically impacted by higher consumer spending during the fourth quarter. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included on our Annual Report on Form 10-K ("Annual Report") for the fiscal year ended December 31, 2023.

2024 Convertible Senior Notes

Equity Distribution Agreement

On January 29, 2024, we filed a shelf registration statement on Form S-3 with the SEC, which was declared effective by the SEC on February 9, 2024. This shelf registration statement, which includes a base prospectus, allows us to offer and sell up to a maximum aggregate offering amount of $100.0 million of our registered common stock, preferred stock, debt securities, warrants, or any combination of securities described in the prospectus in one or more offerings.

On March 18, 2024, we entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Evercore Group L.L.C., BofA Securities, Inc. and Cantor Fitzgerald & Co., as sales agents, pursuant to which we may issue and sell, from time to time, shares of our common stock up to a maximum aggregate offering amount of $50.0 million in "at-the-market" offerings (the "ATM Offering Program"). On March 18, 2024, we sold 3,907,600 shares of our common stock at a weighted average price per share of $12.80, for aggregate net proceeds of $48.3 million after deducting commissions and estimated offering expenses payable by us, pursuant to the Equity Distribution Agreement and completed the ATM Offering Program.

Divestitures

On December 7, 2023, we sold and transferred substantially all of the assets of HSP EPI Acquisition, LLC, a wholly-owned subsidiary ("Entertainment"), for $6.0 million in cash, subject to a combined $1.1 million held in escrow for indemnities and sales and use taxes, as well as customary post-closing adjustment. During the three months ended June 30, 2024, we received $0.2 million of cash from the escrow and recorded a $0.1 million divestiture expense associated with the net working capital adjustment.

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Contingent Consideration for the Acquisition of Bridg

As part of our acquisition of Bridg and pursuant to the terms of the Agreement and Plan of Merger dated as of April 12, 2021, as amended (the "Merger Agreement"), we agreed to make two earnout payments: the First Anniversary Payment Amount and the Second Anniversary Payment Amount, based on the First Anniversary ARR and the Second Anniversary ARR of Bridg (as defined in the Merger Agreement), respectively.

As of December 31, 2023, we had paid the First Anniversary Payment Amount consisting of $50.1 million of cash and 2,740,418 shares of our common stock to the Stockholder Representative, inclusive of brokerage fees and transaction bonuses and accounting for all true-ups and credits.

On January 25, 2024, we entered into a settlement agreement (the "Settlement Agreement") with the Stockholder Representative to resolve all outstanding disputes related to the Merger Agreement, pursuant to which we agreed to pay $25.0 million in cash and issue 3,600,000 shares of our common stock to the Stockholder Representative, inclusive of broker fees and transaction bonuses. Pursuant to the Settlement Agreement we paid the Stockholder Representative $20.0 million in cash on January 26, 2024 and we issued 3,600,000 shares of our common stock on February 1, 2024. The remaining cash payments related to the Settlement Agreement will be paid in two tranches with $3.0 million to be paid by January 31, 2025 and $2.0 million to be paid by June 30, 2025, which are presented in our consolidated balance sheet as current contingent consideration. Refer to Note 9—Fair Value Measurements and Refer to Note 10—Commitments and Contingencies for further information about the Bridg acquisition and related contingent consideration.

On June 10, 2024, PNC Financial Services Group, Inc., which acted as the paying agent in connection with payments made in connection with the Merger Agreement and the Settlement Agreement, notified us of a balance of approximately $5.9 million from a payment account related to the Merger Agreement and transferred the balance to us. We have recorded the $5.9 million as a gain that was realized during the quarter ended June 30, 2024. The gain is reflected as change in contingent consideration in the condensed consolidated statements of operation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the

consolidated financial statements. Significant items subject to such estimates and assumptions include revenue recognition, internal-use software development costs, stock-based compensation, allowance for doubtful accounts, valuation of acquired intangible assets of Bridg, valuation of contingent consideration for Bridg, valuation of long-lived assets, goodwill valuation, income tax including valuation allowance and contingencies. We base our estimates on historical experience and on assumptions that we believe are reasonable. Changes in facts or circumstances may cause us to change our assumptions and estimates in future periods and it is possible that actual results could differ from our current or revised future estimates.

Macroeconomic Considerations

Unfavorable conditions in the economy both in the United States and abroad may negatively affect the growth of our business and our results of operations. For example, macroeconomic events, including the changes in inflation, the U.S. Federal Reserve raising interest rates, disruptions in access to bank deposits or lending commitments due to bank failures, the Russia-Ukraine war and the Middle East conflict have led to economic uncertainty globally. Historically, during periods of economic uncertainty and downturns, businesses may slow spending on advertising, which may impact our business and our customers’ businesses.

The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed. For further discussion of the potential impacts of macroeconomic events on our business, financial condition and operating results, see the section titled "Risk Factors."

2. SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS

Significant Accounting Policies

There have been no changes to our significant accounting policies other than the standards adopted below. These unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with that used to prepare our audited annual consolidated financial statements for the year ended December 31, 2023, and include, in the opinion of management, all adjustments, consisting of normal recurring items, necessary for the fair statement of the condensed consolidated financial statements.

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Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280). The new standard requires enhanced disclosures about significant segment expenses and other segment items and requires companies to disclose all annual disclosures about segments in interim periods. The new standard also permits companies to disclose more than one measure of segment profit or loss, requires disclosure of the title and position of the Chief Operating Decision Maker, and requires companies with a single reportable segment to provide all disclosures required by Topic 280. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and companies are required to apply the ASU retrospectively to all periods presented. We are currently evaluating the impact that the adoption of this standard will have on our financial statements and related disclosures.

3. BUSINESS COMBINATIONS AND DIVESTITURES

Our historical acquisitions were accounted for as business combinations and the total purchase consideration of each was allocated to the net tangible and intangible assets and liabilities acquired based on their fair values on the acquisition dates with the remaining amounts recorded as goodwill.

During the six months ended June 30, 2024 and 2023 we realized an expense of $0.2 million and a gain of $9.9 million, respectively, primarily in connection with our acquisition of Bridg due to the changes in the estimated brokerage fees and transaction bonuses and accounting for all true-ups and credits related to the acquisition of Bridg.

Divestitures

On December 7, 2023, we sold and transferred substantially all of the assets of Entertainment, for $6.0 million in cash, subject to a combined $1.1 million held in escrow for indemnities and sales and use taxes, as well as customary post-closing adjustment. During the three months ended June 30, 2024, we received $0.2 million of cash from the escrow and recorded a $0.1 million divestiture expense associated with the net working capital adjustment.

4. GOODWILL AND ACQUIRED INTANGIBLES

Goodwill

Goodwill is tested annually for impairment, unless certain triggering events require an interim impairment analysis, including macroeconomic conditions, industry and market considerations, costs factors, overall financial performance, and other relevant entity-specific events and changes. These considerations are evaluated holistically to assess whether it is more likely than not that a reporting unit's carrying value exceeds its fair value. Our reporting units consist of the Cardlytics platform in the U.S., the Cardlytics platform in the U.K. and the Bridg platform. There is no goodwill recorded within the Cardlytics platform in the U.K.

There have been no changes to the carrying amounts of goodwill since December 31, 2023. The carrying amounts of goodwill as of June 30, 2024 were as follows (in thousands):


	Cardlytics Platform		Bridg Platform		Consolidated


Goodwill	$	159,429	$	117,773	$	277,202

We have assessed the triggering events criteria along with related conditions and developments as of June 30, 2024. We have determined that none of the conditions collectively constitute a triggering event. As such, we have determined that it is not more likely than not that the carrying values of our reporting units exceed their respective fair values, and an impairment test was not required as of June 30, 2024. However, future changes in assumptions or deterioration in market conditions could result in an impairment.

Acquired Intangibles

We evaluate the recoverability of our finite-lived intangible assets and other long-lived assets whenever events or substantive changes in circumstances indicate that the carrying amount may not be recoverable. Prior to the quantitative goodwill impairment test, we evaluated the recoverability of these long-lived assets for our asset groups. The evaluation is based on the cash flows generated by the underlying asset groups, including estimated future operating results, trends or other determinants of fair value. If the total of the expected future undiscounted cash flows were less than the carrying amount of the asset group, we would recognize an impairment charge to the extent the carrying amount of the asset group exceeded its estimated fair value.

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2024 Acquired Intangibles

Acquired intangible assets subject to amortization as of June 30, 2024 were as follows:


	Gross Carrying Amount		Accumulated Amortization		Net		Weighted Average Remaining Useful Life
	(in thousands)						(in years)

Developed technology	63,621		(38,305)		25,316		2.8
Merchant relationships	21,930		(17,887)		4,043		1.8


Total other intangible assets	$	85,551	$	(56,192)	$	29,359

2023 Acquired Intangibles

Acquired intangible assets subject to amortization as of December 31, 2023 were as follows:


	Gross Carrying Amount		Accumulated Amortization		Divestiture of Entertainment		Net		Weighted Average Remaining Useful Life
	(in thousands)								(in years)
Trade name	$	2,315	$	(1,802)	$	(513)	$	—	0.0
Developed technology	64,070		(33,838)		(449)		29,783		3.4
Merchant relationships	25,915		(16,784)		(3,985)		5,146		2.4


Total other intangible assets	$	92,300	$	(52,424)	$	(4,947)	$	34,929

Amortization expense of acquired intangibles during the three months ended June 30, 2024 and 2023 was $2.8 million and $3.4 million, respectively. Amortization expense of acquired intangibles during the six months ended June 30, 2024 and 2023 was $5.6 million and $6.9 million, respectively.

As of June 30, 2024, we expect amortization expense in future periods to be as follows (in thousands):


	Amount
2024 (remaining six months)	5,558
2025	11,117
2026	9,674
2027	3,010

Thereafter	—
Total expected future amortization expense	$	29,359

5. REVENUE

The Cardlytics platform

The Cardlytics platform is our proprietary native bank advertising channel that enables marketers to reach consumers through the FI partners' trusted and frequently visited digital banking channels. Working with the marketer, we design a campaign that targets customers based on their purchase history. The consumer is offered an incentive to make a purchase from the marketer within a specified period. We use a portion of the fees that we collect from marketers to provide these Consumer Incentives to our FI partners' customers after they make qualifying purchases ("Consumer Incentives"). Leveraging our powerful purchase intelligence platform, we are able to create compelling Consumer Incentives that have the potential to increase return on advertising spend for marketers and measure the effectiveness of the advertising. Consumer Incentives totaled $40.8 million and $32.7 million during the three months ended June 30, 2024 and 2023, respectively. Consumer Incentives totaled $78.4 million and $64.0 million during the six months ended June 30, 2024 and 2023, respectively. We pay certain partners a negotiated and fixed percentage of our Billings to marketers less any Consumer Incentives that we pay to partners’ customers and certain third-party data costs ("Partner Share"). Revenue on our consolidated statements of operation is presented net of Consumer Incentives and gross of Partner Share.

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The Cardlytics platform is priced predominantly in two ways: (1) Cost per Served Sale ("CPS"), and (2) Cost per Redemption ("CPR").

•CPS. Our primary pricing model is CPS. We generate Revenue by charging a percentage, which we refer to as the CPS Rate, of all purchases from the marketer by consumers who (1) are served marketing and (2) subsequently make a purchase from the marketer during the campaign period, regardless of whether consumers select the marketing and thereby becomes eligible to earn the applicable Consumer Incentive. We set CPS Rates for marketers based on our expectation of the marketer’s return on spend for the relevant campaign. Additionally, we set the amount of the Consumer Incentives payable for each campaign based on our estimation of our ability to drive incremental sales for the marketer. We seek to optimize the level of Consumer Incentives to retain a greater portion of Billings. However, if the amount of Consumer Incentives exceeds the amount of Billings that we are paid by the applicable marketer we are still responsible for paying the total Consumer Incentive. In some instances, we may also charge the marketer the Consumer Incentive, in which case the marketer determines the level of Consumer Incentive for the campaign.

•CPR. Under our CPR pricing model, marketers generally specify and fund the Consumer Incentive and pay us a separate negotiated, fixed marketing fee for each purchase that we generate. We generally generate Revenue if the consumer (1) is served marketing, (2) selects the marketing and thereby becomes eligible to earn the applicable Consumer Incentive, and (3) makes a qualifying purchase from the marketer during the campaign period. We set the CPR fee for marketers based on our estimation of the marketers’ return on spend for the relevant campaign..

The following table summarizes Revenue from the Cardlytics platform by pricing model (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost per Served Sale	$	40,506	$	49,435	$	80,537	$	88,705
Cost per Redemption	21,447		19,528		42,954		37,463
Other Revenue(1)	2,049		1,763		2,744		3,588
Cardlytics Platform Revenue	$	64,002	$	70,726	$	126,235	$	129,756

(1)Other Revenue during the three and six months ended June 30, 2024 primarily includes pricing models that do not relate to CPS and CPR, which includes proof-of-concept pricing models that we are exploring and hosting fees that we charge our FI partners to support the costs required to host our services. Other Revenue during the three and six months ended June 30, 2023 primarily consists of revenue from Entertainment.

The Bridg platform

The Bridg platform primarily generates Revenue through the sale of subscriptions to our cloud-based customer-data platform and the delivery of professional services, such as implementation, onboarding and technical support in connection with each subscription. We recognize subscription Revenue on a ratable basis over the contract term beginning on the date that our service is made available to the customer. For non-recurring services or transactional based fees dependent on system usage, Revenue is recognized as services are delivered. Our subscription contracts are generally 6 to 60 months in duration and are generally billed in advance on a monthly, quarterly or annual basis.

The following table summarizes Revenue from the Bridg platform (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023


Bridg Platform Revenue	$	5,634	$	5,975	$	11,009	$	11,276

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The following table summarizes contract balances from the Bridg platform (in thousands):


Contract Balance Type	Consolidated Balance Sheets Location	June 30, 2024		December 31, 2023
Contract assets, current	Accounts receivable and contract assets, net	$	91	$	41

Total contract assets		$	91	$	41

Contract liabilities, current	Deferred revenue	$	1,678	$	2,204
Contract liabilities, long-term	Long-term deferred revenue	29		67
Total contract liabilities		$	1,707	$	2,271

During the six months ended June 30, 2024, we recognized $1.7 million of Revenue related to amounts that were included in Deferred revenue as of December 31, 2023.

The following information represents the total transaction price for the remaining performance obligations as of June 30, 2024 related to contracts expected to be recognized over future periods. This includes Deferred revenue on our consolidated balance sheets and contracted amounts that will be invoiced and recognized as Revenue in future periods. As of June 30, 2024, we had $43.9 million of remaining performance obligations through June 2028, of which $19.9 million is expected to be recognized in the next twelve months, with the remaining amount recognized thereafter. The remaining performance obligations exclude future transaction revenue of variable consideration that are allocated to wholly unsatisfied distinct services that form part of a single performance obligation and meets certain variable allocation criteria.

6. LEASES

We have various non-cancellable operating and finance leases for our office spaces, data centers and operational assets with lease periods expiring between 2024 and 2032.

Lease assets and liabilities, net, are as follows (in thousands):


Lease Type	Consolidated Balance Sheets Location	June 30, 2024		December 31, 2023
Operating lease assets	Right-of-use assets under operating leases, net	$	7,459	$	7,310
Finance lease assets	Property and equipment, net	24		14
Total lease assets		7,483		7,324

Operating lease liabilities, current	Current operating lease liabilities	2,279		2,127
Operating lease liabilities, long-term	Long-term operating lease liabilities	6,805		6,391
Finance lease liabilities, current	Accrued expenses	7		10
Finance lease liabilities, long-term	Other long-term liabilities	19		—
Total lease liabilities		$	9,110	$	8,528

7. DEBT AND FINANCING ARRANGEMENTS

Our debt consists of the following (in thousands):


	June 30, 2024		December 31, 2023
Line of Credit	$	—	$	30,000
2024 Convertible Senior Notes, net	167,168		—
2020 Convertible Senior Notes, net	45,717		227,504
Total debt	$	212,885	$	257,504

Accrued interest is included within accrued expenses in our consolidated balance sheet. We had accrued interest related to our 2024 Convertible Senior Notes and 2020 Convertible Senior Notes of $2.0 million and $0.7 million, respectively, as of June 30, 2024 and December 31, 2023.

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2024 Convertible Senior Notes

On April 1, 2024, we issued $172.5 million principal amount of its 4.25% Convertible Senior Notes due in 2029 (the "2024 Convertible Senior Notes") in a private offering, including the exercise in full of the initial purchasers' option to purchase up to an additional $22.5 million principal amount of the 2024 Convertible Senior Notes. The net proceeds from this offering were $166.8 million, after deducting the initial purchasers' discounts, commissions and the offering expense payable by us. The 2024 Convertible Senior Notes were issued pursuant to, and are governed by, an indenture, dated as of April 1, 2024 ( the "2024 Indenture"), between us and U.S. Bank Trust Company, National Association, as Trustee.

The 2024 Convertible Senior Notes will accrue interest at a rate of 4.25% per annum, payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2024. The 2024 Convertible Senior Notes will mature on April 1, 2029, unless earlier converted or repurchased by us. Before January 2, 2029, noteholders will have the right to convert their 2024 Convertible Senior Notes only in the following circumstances: (i) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on June 30, 2024, if the last reported sale price per share of our common stock, exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (ii) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the "measurement period") if the trading price per $1,000 principal amount of 2024 Convertible Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the common stock on such trading day and the conversion rate on such trading day; (iii) upon the occurrence of certain corporate events or distributions on the common stock, as described in the 2024 Indenture; and (iv) at any time from, and including, January 2, 2029 until the close of business on the scheduled trading day immediately before the maturity date. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The initial conversion rate is 55.4939 shares of common stock per $1,000 principal amount of 2024 Convertible Senior Notes, which represents an initial conversion price of approximately $18.02 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a "Make-Whole Fundamental Change" (as defined in the 2024 Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

If a "Fundamental Change" (as defined in the 2024 Indenture) occurs, then, subject to a limited exception for certain cash mergers, noteholders may require us to repurchase their 2024 Convertible Senior Notes at a cash repurchase price equal to the principal amount of the 2024 Convertible Senior Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving us and certain de-listing events with respect to the common stock.

The net carrying amount of the liability component of the 2024 Convertible Senior Notes is as follows (in thousands):


	June 30, 2024
Principal	$	172,500
Minus:

Unamortized issuance costs	(5,332)
Net carrying amount	$	167,168

Interest expense recognized related to the 2024 Convertible Senior Notes is as follows (in thousands):


	Three Months Ended June 30,			Six Months Ended June 30,
	2024				2024
Contractual interest expense (due in cash)	$	1,812			$	1,812

Amortization of debt issuance costs	277				277
Total interest expense related to the 2024 Convertible Senior Notes	$	2,089			$	2,089
Effective interest rate	4.84		%		4.84		%

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2020 Convertible Senior Notes

On September 22, 2020, we issued convertible senior notes with an aggregate principal amount of $230.0 million bearing an interest rate of 1.00% due in September 2025 (the "2020 Convertible Senior Notes"), including the exercise in full of the initial purchasers' option to purchase up to an additional $30.0 million principal amount of the 2020 Convertible Senior Notes. The 2020 Convertible Senior Notes were issued pursuant to an indenture, dated September 22, 2020 (the "2020 Indenture"), between us and U.S. Bank National Association, as trustee.

During the quarter ended June 30, 2024, we used approximately $169.3 million, consisting of the net proceeds from the 2024 Convertible Senior Notes offering, together with cash on hand, to repurchase for cash approximately $183.9 million in aggregate principal amount of the 2020 Convertible Senior Notes, together with accrued and unpaid interest, in privately negotiated transactions below par and entered into concurrently with the pricing of the offering through one of the initial purchasers or one of its affiliates, as our agents. As a result of the extinguishment of the 2020 Convertible Senior Notes, we have recorded a gain of $13.0 million, which is recorded as a Gain on debt extinguishment on the condensed consolidated statement of operations.

The 2020 Convertible Senior Notes are general senior, unsecured obligations and will mature on September 15, 2025, unless earlier converted, redeemed or repurchased. The 2020 Convertible Senior Notes bear interest at a rate of 1.00% per year, payable semiannually in arrears on March 15 and September 15 of each year, which began on March 15, 2021. The 2020 Convertible Senior Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding June 15, 2025, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2020 (and only during such calendar quarter), if the last reported sale price of our common stock, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2020 Convertible Senior Notes on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the "measurement period") in which the trading price (as defined in the 2020 Indenture) per $1,000 principal amount of the 2020 Convertible Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of common stock and the conversion rate for the 2020 Convertible Senior Notes on each such trading day; (3) if we call such 2020 Convertible Senior Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events as set forth in the 2020 Indenture. The closing trading price of our common stock was not in excess of 130% of the conversion price for more than 20 trading days during the preceding 30 consecutive trading days as of December 31, 2023, and thus the 2020 Convertible Senior Notes are not convertible at the option of the holders during the quarter ending June 30, 2024 based on the stock price conditions. The 2020 Convertible Senior Notes may be convertible in the future if the stock price condition is satisfied during future measurement periods or if another conversion condition is satisfied. On or after June 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2020 Convertible Senior Notes may convert all or any portion of their 2020 Convertible Senior Notes at any time, regardless of the foregoing circumstances. Upon conversion, we may satisfy our conversion obligation by paying and/or delivering, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at our election, in the manner and subject to the terms and conditions provided in the 2020 Indenture.

The conversion rate for the 2020 Convertible Senior Notes is initially 11.7457 shares of common stock per $1,000 principal amount of 2020 Convertible Senior Notes, which is equivalent to an initial conversion price of approximately $85.14 per share of common stock. The conversion rate for the 2020 Convertible Senior Notes is subject to adjustment under certain circumstances in accordance with the terms of the 2020 Indenture. In addition, following certain corporate events that occur prior to the maturity date of the 2020 Convertible Senior Notes or if we deliver a notice of redemption in respect of the 2020 Convertible Senior Notes, we will, in certain circumstances, increase the conversion rate of the 2020 Convertible Senior Notes for a holder who elects to convert its 2020 Convertible Senior Notes in connection with such a corporate event or convert its notes called for redemption during the related redemption period (as defined in the 2020 Indenture), as the case may be.

We may redeem for cash all or any portion of the 2020 Convertible Senior Notes, at our option, prior to the 36th scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price for the 2020 Convertible Senior Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the 2020 Convertible Senior Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2020 Convertible Senior Notes. If we elect to redeem less than all of the 2020 Convertible Senior Notes, at least $75.0 million aggregate principal amount of 2020 Convertible Senior Notes must be outstanding and not subject to redemption as of the relevant redemption notice date.

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If we undergo a Fundamental Change (as defined in the 2020 Indenture), then, except as set forth in the 2020 Indenture, holders may require, subject to certain exceptions, us to repurchase for cash all or any portion of their 2020 Convertible Senior Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2020 Convertible Senior Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The net carrying amount of the liability component of the 2020 Convertible Senior Notes is as follows (in thousands):


	June 30, 2024		December 31, 2023
Principal	$	46,070	$	230,000
Minus:

Unamortized issuance costs	(353)		(2,496)
Net carrying amount of the liability component	$	45,717	$	227,504

Interest expense recognized related to the 2020 Convertible Senior Notes is as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Contractual interest expense (due in cash)	$	115		$	575		$	690		$	1,150

Amortization of debt issuance costs	73			365			438			730
Total interest expense related to the 2020 Convertible Senior Notes	$	188		$	940		$	1,128		$	1,880
Effective interest rate	1.64		%	1.64		%	1.64		%	1.64		%

Capped Call Transactions

In connection with the issuance of the 2020 Convertible Senior Notes, we entered into privately negotiated capped call transactions (the "Capped Calls") with an affiliate of one of the initial purchasers or the 2020 Convertible Senior Notes and certain other financial institutions. The Capped Calls are recorded in stockholders' equity and were not accounted for as derivatives.

The Capped Calls each had an initial strike price of $85.14 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2020 Convertible Senior Notes. The Capped Calls had an initial cap price of $128.51 per share, subject to certain adjustments. On May 29, 2024, we entered into agreements to terminate all remaining Capped Calls associated with the 2020 Convertible Senior Notes. The Capped Calls were separate transactions, entered into by the Company with the counterparties, and were not part of the terms of the 2020 Convertible Senior Notes. Cash proceeds from the termination of the Capped Calls totaled $0.1 million, which we received on June 3, 2024. The $0.1 million cash proceeds from the termination of the Capped Calls were recorded as a credit to additional paid in capital on our consolidated balance sheet.

2018 Loan Facility

In April 2022, we amended our loan facility with Pacific Western Bank (the "2018 Loan Facility") to increase the capacity of our asset-backed revolving line of credit (the "2018 Line of Credit") from $50.0 million to $60.0 million with an option to increase to $75.0 million upon syndication. This amendment also extended the maturity date of the 2018 Loan Facility from December 31, 2022 to April 29, 2024, and further stated that if we had positive Adjusted EBITDA by December 31, 2023, we could extend the maturity date of the loan to April 29, 2025. Additionally with this amendment, the former cash covenant, as described below, was removed and was replaced with a requirement to maintain a minimum level of Adjusted Contribution and a minimum adjusted cash of $25.0 million, which is reduced by eligible accounts receivable in excess of the loan capacity. In November 2022, we amended our 2018 Loan Facility to modify the eligible account receivable to exclude U.K. accounts, reduce the ability to borrow up to 85% of the amount of our eligible accounts receivable to 50% and adjusted the required minimum level of Adjusted Contribution. In February 2023, we amended our 2018 Loan Facility to remove and replace the former Adjusted Contribution covenant with a requirement to maintain a minimum level of Adjusted EBITDA. In May 2023, we amended our 2018 Loan Facility to modify the covenants related to the maximum amount of cash we are allowed to pay for the First Anniversary Payment Amount and Second Anniversary Payment Amount under the Merger Agreement. In February 2024, we amended our 2018 Loan Facility to increase the ability to borrow up to 75% of the amount of our eligible accounts receivable, adjusted the required minimum level of Adjusted EBITDA and increased the interest rate to the prime rate plus 0.25%. We also confirmed the extension of the maturity date of the loan to April 29, 2025.

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The 2018 Loan Facility includes customary representations, warranties and covenants (affirmative and negative), including restrictive covenants that prohibit mergers, acquisitions, dispositions of assets, incurrence of indebtedness, encumbrances on our assets and the payment or declaration of dividends, in each case subject to specified exceptions.

The 2018 Loan Facility also includes standard events of default, including in the event of a material adverse change. Upon the occurrence of an event of default, the lender may declare all outstanding obligations immediately due and payable and take such other actions as are set forth in the 2018 Loan Facility and increase the interest rate otherwise applicable to advances under the 2018 Line of Credit by an additional 3.00%. All of our obligations under the 2018 Loan Facility are secured by a first priority lien on substantially all of our assets. The 2018 Loan Facility does not include any prepayment penalties.

In April 2024, we repaid in full $30.0 million of the principal balance of the 2018 Line of Credit. Interest on advances under the 2018 Line of Credit bore an interest rate equal to the prime rate plus 0.25%. During the six months ended June 30, 2024, we incurred approximately $0.7 million of interest expense associated with the 2018 Loan Facility. In addition, we were required to pay an unused line fee of 0.15% per annum on the average daily unused amount of the revolving commitment. As of June 30, 2024, we had $60.0 million of unused available borrowings under our 2018 Line of Credit. We believe we are in compliance with all financial covenants as of June 30, 2024.

In July, we amended our 2018 Loan Facility, which increased the ability to borrow up to 85% of the amount of our U.S. eligible accounts receivable and 30% of the amount of our U.K. eligible accounts receivable, decreased our required minimum level of Adjusted EBITDA, and decreased the interest rate to prime rate plus 0.125%. The amendment also establishes a reserve in an amount equal to a percentage of the amount needed to retire the outstanding 2020 Convertible Notes. The amendment also includes extension of the maturity date of the loan to July 31, 2026.

8. STOCK-BASED COMPENSATION

Our 2018 Equity Incentive Plan ("2018 Plan") became effective in February 2018. Prior to the 2018 Plan, we granted awards under our 2008 Stock Plan ("2008 Plan"). Any awards granted under the 2008 Plan remain subject to the terms of our 2008 Plan and applicable award agreements, and shares subject to awards granted under our 2008 Plan that are forfeited, canceled or expired prior to vesting become available for use under our 2018 Plan. As of December 31, 2023, there were 961,558 shares of our common stock reserved for issuance under our 2018 Plan. The number of shares of our common stock reserved for issuance under our 2018 Plan will automatically increase on January 1 of each year through 2028 by 5% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year or a lesser number of shares determined by our Board of Directors. Accordingly, the number of shares of our common stock reserved for issuance under our 2018 Plan increased by 1,986,417 shares on January 1, 2024.

On July 18, 2022, our Board of Directors adopted the Cardlytics, Inc. 2022 Inducement Plan ("2022 Inducement Plan"). Our Board of Directors also adopted a form of stock option grant notice and agreement and a form of restricted stock unit grant notice and agreement for use with the 2022 Inducement Plan. We reserved a total of 1,500,000 shares of our Common Stock under the 2022 Inducement Plan. On January 18, 2023, our Board of Directors approved an amendment to the 2022 Inducement Plan to reserve an additional 350,000 shares of our common stock. On July 13, 2023, our Board of Directors approved an amendment to the 2022 Inducement Plan to reserve an additional 800,000 shares of our common stock. As of June 30, 2024, there were 3,039 shares available under the 2022 Inducement Plan.

The following table summarizes the allocation of stock-based compensation in the condensed consolidated statements of operations (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Delivery costs	$	721	$	565	$	1,364	$	1,133
Sales and marketing expense	2,903		3,751		6,044		6,804
Research and development expense	4,633		4,502		8,583		8,587
General and administration expense	4,387		2,921		7,638		3,183
Total stock-based compensation expense	$	12,644	$	11,739	$	23,629	$	19,707

During the six months ended June 30, 2024 and 2023, we capitalized $2.5 million and $1.0 million of stock-based compensation expense for software development, respectively.

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Restricted Stock Units

We grant restricted stock units ("RSUs") to certain employees and our non-employee directors. The following table summarizes changes in RSUs, inclusive of performance-based RSUs:


	Shares (in thousands)	Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Term (in years)	Unamortized Compensation Costs (in thousands)
Unvested — December 31, 2023	5,485	$	15.70	2.01	$	68,092
Granted	2,662	14.45
Vested	(1,929)	11.71
Forfeited	(221)	21.26
Unvested — June 30, 2024	5,997	$	16.23	1.71	$	77,885

During the six months ended June 30, 2024, we granted 2,661,766 RSUs to employees and non-employee directors, which have vesting periods ranging from vesting immediately to vesting in four years.

Subsequent to June 30, 2024, we granted 2,500 RSUs to employees and non-employee directors, which have a one year vesting period. Unamortized stock-based compensation expense related to these RSUs totaled less than $0.1 million.

Performance-based RSUs

In July 2022, we granted 100,990 PSUs which vest on the achievement of specific Revenue-based performance metrics ("2022 Bridg PSUs").

In March 2022 and August 2022, we granted 269,202 and 25,248 performance-based restricted stock units ("2022 PSUs"), respectively, consisting of three tranches. The first two tranches each represent 25% of the grant, and each vest upon the achievement of certain milestones related to the installation of our Ad Server at our FI Partners. 50% of the third tranche vests upon the achievement of a certain number of advertisers purchasing both the Cardlytics and Bridg platforms at a target incremental Billings amount over 2021, and the remaining 50% of the tranche vests six months after this target is achieved. In December 2022, the compensation committee of our Board of Directors certified that the first tranche's milestone related to the installation of our Ad Server at our FI partners had been achieved, which resulted in the immediate vesting of the first tranche representing 25% of the grant.

In September 2021, we granted 6,666 PSUs that have the same unmet vesting conditions of the 2020 PSUs, 6,667 PSUs which have the same unmet Revenue target vesting condition of the 2021 PSUs and 2020 PSUs which have the same unmet different Revenue target vesting condition of the 2021 PSUs as described below. As discussed below, we concluded that the achievement of the 2020 PSUs and 2021 PSUs is no longer probable and have reversed the previously recognized cumulative expense in the respective period in which the 2020 PSUs and 2021 PSUs were determined to no longer be achievable. As of April 1, 2024, the 2020 PSU was forfeited as the performance condition was not met during the performance period.

In July 2021, we granted 34,344 performance-based restricted stock units ("Bridg PSUs") that have performance-based vesting conditions based on the achievement of a minimum ARR target by the first anniversary of the Bridg acquisition. Vesting is tied to the percentage of the ARR target achieved during the specified period with 50% of the units vesting between 80% - 99.999% achievement and 100% of the units vesting upon 100% achievement. During 2023, the compensation committee of our Board of Directors certified the vesting of shares associated with the 50% attainment of the units based on the achieved annual run rate during the specified period.

In April 2021, we granted 110,236 performance-based restricted stock units ("2021 PSUs") consisting of two tranches. The first tranche consists of 55,118 units that have a performance-based vesting condition based on a minimum Revenue target over a trailing 12-month period. The units in this first tranche fully vest upon achievement. The second tranche consists of 55,118 units with a performance-based vesting condition based on a different minimum Revenue target over a trailing 12-month period. Half of the units in the second tranche vest upon achievement and the remaining units vest six months after the achievement date, subject to continued service. Each performance-based vesting condition within the two tranches must be achieved within four years of the grant date and are subject to certification by the compensation committee of our Board of Directors. During the year-ended December 31, 2023, we reassessed the likelihood of achieving the 2021 PSUs performance-based vesting condition and concluded that the achievement is no longer probable. As a result of the change in estimate, we have reversed the previously recognized cumulative expense associated with the 2021 PSUs since the grant date as a benefit to stock-based compensation during the year ended December 31, 2023.

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Additionally, in April 2021, we granted 10,000 performance-based restricted stock units that have the same unmet vesting condition as the 2020 PSUs based on a minimum ARPU target over a trailing 12-month period as described below.

In April 2020, we granted 476,608 performance-based restricted stock units ("2020 PSUs"), of which 443,276 units have a performance-based vesting condition based on a minimum average Revenue per user ("ARPU") target over a trailing 12-month period and 33,332 units have the same performance-based vesting conditions as those that unmet at the time under the 2019 PSUs described above. ARPU is a performance metric defined within Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations." The ARPU vesting condition must be achieved within four years of the grant date. Upon the vesting event, 50% of the award vests immediately, 25% of the award vests six months after achievement date and 25% of the award vests 12 months after the achievement date. During the year-ended December 31, 2022, we reassessed the likelihood of achieving the 2020 PSUs performance-based vesting condition and concluded the achievement is no longer probable. As a result of the change in estimate, we have recognized the cumulative expense associated with the 2020 PSUs from the grant date as a benefit to stock-based compensation during the year ended December 31, 2022. On April 1, 2024, the 2020 PSU was forfeited as the performance condition was not met during the performance period.

With the exception of the 2021 and 2022 PSUs, and any other PSUs tied to these vesting conditions, we believe that the achievement of all of the above referenced performance-based vesting conditions are probable before the awards' respective expiration dates.

Employee Stock Purchase Plan

Our 2018 Employee Stock Purchase Plan ("2018 ESPP") enables eligible employees to purchase shares of our common stock at a discount. Purchases are accomplished through participation in discrete offering periods. On each purchase date, participating employees purchase our common stock at a price per share equal to 85% of the lesser of the fair market value of our common stock on the first trading day of the offering period or the date of purchase.

As of December 31, 2023, 657,826 shares of common stock were reserved for issuance pursuant to our 2018 ESPP. Additionally, the number of shares of our common stock reserved for issuance under our 2018 ESPP will automatically increase on January 1 of each year, which began on January 1, 2019 and will continue through and including January 1, 2026, by the lesser of (i) 1% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year, (ii) 500,000 shares of our common stock or (iii) such lesser number of shares of common stock as determined by our Board of Directors. Accordingly, the number of shares of our common stock reserved for issuance under our 2018 ESPP increased by 397,283 shares on January 1, 2024. Shares subject to purchase rights granted under our 2018 ESPP that terminate without having been issued in full will not reduce the number of shares available for issuance under our 2018 ESPP. During the six months ended June 30, 2024, we issued 242,245 shares under the 2018 ESPP.

9. FAIR VALUE MEASUREMENTS

We record the fair value of assets and liabilities in accordance with ASC 820, Fair Value Measurement ("ASC 820"). ASC 820 defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.

In addition to defining fair value, ASC 820 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

The fair value of our reporting units was classified in Level 3 of the fair value hierarchy due to the significance of unobservable inputs developed using company-specific information. Refer to Note 4 - Goodwill and Acquired Intangibles for further details.

These levels are:

•Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

•Level 3 - unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability at fair value.

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Included in the fair value table are cash equivalents and contingent consideration. Cash equivalents are comprised of money market funds and U.S. treasury bills stated at amortized cost, which approximates fair value at the balance sheet dates, due to the short period of time to maturity. The fair value of cash equivalents are as follows (in thousands):


	June 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents
Money market funds	$	30,747	$	—	$	—	$	30,747
US Treasury Bills	14,895		—		—		14,895
Total cash equivalents at fair value	$	45,642	$	—	$	—	$	45,642

The contingent consideration for the acquisition of Bridg is composed of the payments per the Settlement Agreement. The fair value of contingent consideration in connection with the Bridg acquisition were as follows (in thousands):


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Liabilities:
Current contingent consideration	$	—	$	—	$	39,398	$	39,398
Long-term contingent consideration	—		—		4,162		4,162
Total liabilities	$	—	$	—	$	43,560	$	43,560

The following table shows a reconciliation of the beginning and ending fair value measurements of our contingent consideration, which we have valued using level 3 inputs:


	Six Months Ended June 30,
		2024		2023
Beginning balance		$	43,560	$	104,121
Decrease due to earnout settlement		(45,114)		(61,808)
Change in fair value of contingent consideration		$	5,817	(23,326)
Reclassification due to remaining payments being fixed per Settlement Agreement		(4,263)		—
Ending balance		$	—	$	18,987

As part of our acquisition of Bridg and pursuant to the terms of the Merger Agreement, we agreed to make two earnout payments: the First Anniversary Payment Amount and the Second Anniversary Payment Amount, based on the First Anniversary ARR and the Second Anniversary ARR of Bridg (as defined in the Merger Agreement), respectively.

On January 25, 2024, we entered into the Settlement Agreement with the Stockholder Representative to resolve all outstanding disputes related to the Merger Agreement, pursuant to which we agreed to pay $25.0 million in cash and issue 3,600,000 shares of our common stock to the Stockholder Representative, inclusive of broker fees and transaction bonuses. Pursuant to the Settlement Agreement we paid the Stockholder Representative $20.0 million in cash on January 26, 2024 and we issued 3,600,000 shares of our common stock on February 1, 2024. The remaining cash payments related to the Settlement Agreement will be paid in two tranches with $3.0 million to be paid by January 31, 2025 and $2.0 million to be paid by June 30, 2025, which are presented in our consolidated balance sheet as current and long-term contingent consideration.

As of June 30, 2024, the contingent consideration is valued at $4.4 million, exclusive of $0.3 million in broker fees and other costs, which is included in accrued expenses on our consolidated balance sheets. We determined the present value of the contingent consideration by discounting the future payments to be paid by January 31, 2025 and June 30, 2025. As the remaining payments are fixed as per the Settlement Agreement, the contingent consideration is no longer subject to ASC 820, Fair Value Measurement.

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10. COMMITMENTS AND CONTINGENCIES

Commitments

We had a minimum Partner Share commitment to a certain FI partner totaling $10.0 million over a 12-month period which ended on March 31, 2023. We had accrued $4.5 million for the Partner Share shortfall, included within Partner Share liability on our condensed consolidated balance sheet. As of June 30, 2024, we paid $3.4 million of our shortfall. During the six months ended June 30, 2024 and 2023, we recognized zero and $1.3 million of expected minimum Partner Share commitment shortfalls within Partner Share and other third-party costs on our condensed consolidated statement of operations. Subsequent to June 30, 2024, we paid $1.1 million of the remaining portion of our shortfall commitment.

Other Commitments

In January 2023, we renewed a cloud hosting arrangement guaranteeing an aggregated spend of $13.5 million over a 12 month period. In January 2024, we renewed our agreement guaranteeing an aggregated spend of $17.0 million each year over the next 36 month period.

We lease property and equipment under non-cancelable operating lease agreements. Refer to Note 6—Leases for further details. In September 2020, we issued convertible senior notes with an aggregate principal amount of $230.0 million bearing an interest rate of 1.00% due in September 2025. During the three months ended June 30, 2024, we partially paid down the 2020 Convertible Senior Notes and issued 2024 Convertible Senior Notes with an aggregate principal amount of $172.5 million bearing an interest rate of 4.25% due on April 1, 2029. Refer to Note 7—Debt and Financing Arrangements for further details.

Litigation

From time to time, we may become involved in legal actions arising in the ordinary course of business including, but not limited to, intellectual property infringement and collection matters. We make assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. We record a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, we accrue the best estimate within the range. If no amount within the range is a better estimate than any other amount, we accrue the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, we disclose the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, we disclose the nature and estimate of the possible loss of the litigation. We do not disclose information with respect to litigation where an unfavorable outcome is considered to be remote or where the estimated loss would not be material.

As part of the acquisition of Bridg, and pursuant to the terms of the Merger Agreement, we agreed to make two earnout payments: the First Anniversary Payment Amount and the Second Anniversary Payment Amount, based on the First Anniversary ARR and the Second Anniversary ARR of Bridg, respectively. We were unable to reach an agreement with respect to the First Anniversary Payment Amount with the Stockholder Representative and submitted our dispute to an independent accountant as contemplated by the Merger Agreement.

On April 28, 2023, the independent accountant made its determination of the appropriate amount of the First Anniversary ARR, determining the First Anniversary ARR to be $23.2 million. After review of the determination by the independent accountant, we filed a verified complaint in the Delaware Court of Chancery in May 2023 seeking declaratory judgment that a certain portion of the independent accountant's determination related to the First Anniversary ARR be stricken as null and void. Subsequently, on January 25, 2024, we entered into the Settlement Agreement with the Stockholder Representative to resolve all outstanding disputes related to the Merger Agreement, including the First Anniversary Payment Amount, pursuant to which we agreed to pay $25 million in cash and issue 3,600,000 shares of our common stock to the Stockholder Representative, inclusive of broker fees and transaction bonuses and to dismiss our verified complaint in the Delaware Court of Chancery.

We are not presently a party to any other legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Refer to Refer to Note 9—Fair Value Measurements for further information about the Bridg acquisition and related contingent consideration.

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11. EARNINGS PER SHARE

Diluted net loss per share is the same as basic net loss per share for the three and six months ended June 30, 2024 and 2023 because the effects of potentially dilutive items were anti-dilutive, given our net losses during these periods. The following securities as of June 30, 2024 and 2023 have been excluded from the calculation of diluted weighted-average common shares outstanding because the effect is anti-dilutive (in thousands):


	June 30,
	2024	2023

Common stock options	58	99
2020 Convertible Senior Notes	541	2,701
2024 Convertible Senior Notes	9,573	—
Unvested restricted stock units	5,997	7,473
Common stock issuable pursuant to the 2018 ESPP	69	84

12. SEGMENTS

As of June 30, 2024, we have three operating segments: the Cardlytics platform in the U.S., the Cardlytics platform in the U.K. and the Bridg platform, as determined by the information that our Chief Executive Officer, who we consider our chief operating decision maker ("CODM"), uses to make strategic goals and operating decisions. Our Cardlytics platform operating segments in the U.S. and U.K. represent our proprietary advertising channels and are aggregated into one reportable segment given their similar economic characteristics, nature of service, types of customers and method of distribution. Subsequent to the acquisition of Bridg, our CODM began reviewing Bridg's Revenue and operating expenses. Therefore, we consider the Bridg platform to be a separate operating segment. Our CODM allocates resources to, and evaluates the performance of, our operating segments based on Revenue and Adjusted Contribution. Our CODM does not review assets by operating segment for the purposes of evaluating performance or allocating resources.

The following tables provide information regarding the Cardlytics platform and the Bridg platform reportable segments (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cardlytics platform
Revenue	$	64,002	$	70,726	$	126,235	$	129,756
Minus: Partner Share and other third-party costs	32,865		39,086		63,277		72,261
Adjusted Contribution	$	31,137	$	31,640	$	62,958	$	57,495
Bridg platform
Revenue	$	5,634	$	5,975	$	11,009	$	11,276
Minus: Partner Share and other third-party costs	393		84		524		293
Adjusted Contribution	$	5,241	$	5,891	$	10,485	$	10,983
Consolidated
Revenue	$	69,636	$	76,701	$	137,244	$	141,032
Minus: Partner Share and other third-party costs	33,258		39,170		63,801		72,554
Adjusted Contribution	$	36,378	$	37,531	$	73,443	$	68,478

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Adjusted Contribution

Adjusted Contribution measures the degree by which revenue generated from our marketers exceeds the cost to obtain the purchase data and the digital advertising space from our partners. Adjusted Contribution demonstrates how incremental Revenue on our platforms generates incremental amounts to support our sales and marketing, research and development, general and administration and other investments. Adjusted Contribution is calculated by taking our total Revenue less our Partner Share and other third-party costs exclusive of deferred implementation costs, which is a non-cash cost. Adjusted Contribution does not take into account all costs associated with generating Revenue from advertising campaigns, including sales and marketing expenses, research and development expenses, general and administrative expenses and other expenses, which we do not take into consideration when making decisions on how to manage our advertising campaigns. Management views Adjusted Contribution as the most relevant metric to measure the financial performance as it reflects the dollars we keep after all of our partners are paid.

The following table presents a reconciliation of loss before income taxes presented in accordance with GAAP to Adjusted Contribution (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Adjusted Contribution	$	36,378	$	37,531	$	73,443	$	68,478
Minus:


Delivery costs	7,661		7,015		13,834		13,439
Sales and marketing expense	14,025		15,205		28,143		29,153
Research and development expense	13,470		14,847		26,518		26,411
General and administration expense	16,151		16,276		30,636		29,346
Acquisition, integration and divestiture benefit	162		(9,947)		162		(8,224)
Change in contingent consideration	(5,808)		11,258		9		(23,326)


Depreciation and amortization expense	6,529		7,200		12,779		13,775
Total other expense	(11,555)		(815)		(10,106)		(2,196)
Loss before income taxes	$	(4,257)	$	(23,508)	$	(28,532)	$	(9,900)

The following tables provide geographical information (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue:
United States	$	64,086	$	72,645	$	126,620	$	133,725
United Kingdom	5,550		4,056		10,624		7,307
Total	$	69,636	$	76,701	$	137,244	$	141,032


	June 30, 2024		December 31, 2023
Property and equipment, net:
United States	$	3,026	$	3,244
United Kingdom	58		79

Total	$	3,084	$	3,323

Capital expenditures within the United States totaled $0.8 million and zero for the six months ended June 30, 2024 and 2023, respectively. Capital expenditures within the United Kingdom totaled less than $0.1 million for each period during the six months ended June 30, 2024 and 2023.

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Concentrations of Risk

Cash and Cash Equivalents

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. A significant portion of our cash and cash equivalents are held in fully FDIC-insured money market accounts, demand deposit accounts and U.S. Treasury Bills that distribute funds, and credit risk, over a vast number of financial institutions. Our remaining cash and cash equivalents are held with six financial institutions, which are of high credit quality.

Marketers

Beginning in the period ending December 31, 2023, we define a marketer as a customer who has a distinct contractual relationship with us, rather than aggregating by parent company. We believe this is a more accurate representation for how marketing budgets are managed at our customer level. This methodology change in our aggregation impacts how we calculate our revenue and accounts receivable concentration and we changed the prior year presentation to be in conformity.

Our Revenue and accounts receivable are diversified among a large number of marketers segregated by both geography and industry. During the six months ended June 30, 2024 and 2023, our top five marketers accounted for 15% and 17% of our Revenue, respectively, with no marketer accounting for over 10%. As of June 30, 2024 and 2023, our top five marketers accounted for 15% and 16% of our accounts receivable, respectively, with no marketer accounting for over 10%.

FI Partners

Our business is substantially dependent on a limited number of FI partners. We require participation from our FI partners in the Cardlytics platform and access to their purchase data in order to offer our solutions to marketers and their agencies. We must have FI partners with a sufficient number of customers and levels of customer engagement to ensure that we have robust purchase data and marketing space to support a broad array of incentive programs for marketers. Our agreements with a substantial majority of our FI partners have terms of three to seven years but are generally terminable by the FI partner on 90 days or less prior notice. The agreements generally have auto-renewal provisions that allow for the agreements to extend past their originally contemplated end date, unless terminated earlier in accordance with the terms of the agreement. If an FI partner terminates its agreement with us, we would lose that FI partner as a source of purchase data and online banking customers.

During the six months ended June 30, 2024 and 2023 our top three FI partners combined to account for over 90% and 85% of the total Partner Share we paid to all partners, respectively, with the top FI partner representing over 50% for each period and the second and third largest FI partners representing over 15% and 10% of Partner Share, respectively. No other partner accounted for over 10% of Partner Share during these periods.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10–Q and (2) the audited consolidated financial statements and the related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2023 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC") on March 14, 2024.

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "project," "will," "would" or the negative or plural of these words or similar expressions or variations, and such forward-looking statements include, but are not limited to, statements with respect to our business strategy, plans and objectives for future operations, including our expectations regarding our expenses; continued enhancements of our platform and new product offerings; our future financial and business performance; and anticipated payments under the Merger Agreement with Bridg. The events described in these forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled "Risk Factors," set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other SEC filings. You should not rely upon forward-looking statements as predictions of future events. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

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Overview

Our company's mission is to make commerce smarter and rewarding for everyone. We work to accomplish this mission by operating an advertising platform within our own and our partners' digital channels, which includes online, mobile applications, email and various real-time notifications (the "Cardlytics platform"). We also operate a customer data platform that utilizes point-of-sale ("POS") data, including product-level purchase data, to enable marketers to perform analytics and targeted loyalty marketing and also measure the impact of their marketing (the "Bridg platform"). The partners for the Cardlytics platform are predominantly financial institutions ("FI partners") that provide us with access to their

Cardlytics, Inc. [CDLX] Filings
10-Q	[2024-08-07]
10-Q	[2024-05-08]
10-K	[2024-03-14]
10-Q	[2023-11-08]
10-Q	[2023-08-01]
10-Q	[2023-05-04]
10-K	[2023-03-01]
10-Q	[2022-11-01]
10-Q	[2022-08-02]
10-Q	[2022-05-02]
10-K	[2022-03-01]
10-Q	[2021-11-02]
10-Q	[2021-08-03]
10-Q	[2021-05-04]
10-K	[2021-03-01]
10-Q	[2020-11-02]
10-Q	[2020-08-04]
10-Q	[2020-05-11]
10-K	[2020-03-03]
10-Q	[2019-11-12]
10-Q	[2019-08-08]
10-Q	[2019-05-09]
10-K	[2019-03-05]
10-Q	[2018-11-13]
10-Q	[2018-08-14]
10-Q	[2018-05-10]
10-K	[2018-03-19]
S-1	[2018-01-12]