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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 March 31, 2024
OR
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_logoa29.jpg
CARDLYTICS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware26-3039436
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
675 Ponce de Leon Ave. NE, Suite 4100AtlantaGeorgia30308
(Address of principal executive offices, including zip code)
(888)792-5802
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockCDLXNASDAQ
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 filerAccelerated filer
Non-accelerated filerSmaller 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 April 30, 2024, there were 48,783,041 shares outstanding of the registrant’s common stock, par value $0.0001.


CARDLYTICS, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
  Page
PART I.FINANCIAL INFORMATION 
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
PART II.OTHER INFORMATION 
Item 1.
Item 1A.
Item 2.
Item 6.

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.
We are subject to counterparty risk with respect to the Capped Calls.

1

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

2

CARDLYTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands, except par value amounts)
March 31, 2024December 31, 2023
Assets
Current assets:
Cash and cash equivalents$97,766 $91,830 
Accounts receivable and contract assets, net105,164 120,622 
Other receivables5,834 5,379 
Prepaid expenses and other assets9,491 6,097 
Total current assets218,255 223,928 
Long-term assets:
Property and equipment, net2,906 3,323 
Right-of-use assets under operating leases, net8,342 7,310 
Intangible assets, net32,218 35,003 
Goodwill277,202 277,202 
Capitalized software development costs, net27,005 24,643 
Other long-term assets, net3,023 2,735 
Total assets$568,951 $574,144 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$3,974 $4,425 
Accrued liabilities:
Accrued compensation8,091 11,662 
Accrued expenses4,317 9,587 
Partner Share liability35,536 48,867 
Consumer Incentive liability43,964 52,678 
Deferred revenue1,994 2,405 
Current operating lease liabilities2,079 2,127 
Current contingent consideration2,595 39,398 
Total current liabilities102,550 171,149 
Long-term liabilities:
Convertible senior notes, net227,870 227,504 
Long-term operating lease liabilities7,652 6,391 
Long-term deferred revenue51 67 
Long-term debt30,024 30,073 
Long-term contingent consideration1,667 4,162 
Total liabilities$369,814 $439,346 
Stockholders’ equity:
Common stock, $0.0001 par value—100,000 shares authorized, 48,174 and 39,728 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
$9 $9 
Additional paid-in capital1,331,628 1,243,594 
Accumulated other comprehensive income3,047 2,467 
Accumulated deficit(1,135,547)(1,111,272)
Total stockholders’ equity199,137 134,798 
Total liabilities and stockholders’ equity$568,951 $574,144 
See notes to the condensed consolidated financial statements

3

CARDLYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands, except per share amounts)

 Three Months Ended
March 31,
 20242023
Revenue$67,608 $64,331 
Costs and expenses:
Partner Share and other third-party costs30,543 33,384 
Delivery costs6,173 6,424 
Sales and marketing expense14,118 13,948 
Research and development expense13,048 11,564 
General and administration expense14,485 13,070 
Acquisition, integration and divestiture cost 1,723 
Change in contingent consideration5,817 (34,584)
Depreciation and amortization expense6,250 6,575 
Total costs and expenses90,434 52,104 
Operating (Loss) Income(22,826)12,227 
Other expense (income):
Interest expense, net(819)(8)
Foreign currency (loss) gain(630)1,389 
Total other (expense) income(1,449)1,381 
(Loss) Income before income taxes(24,275)13,608 
Net (Loss) Income$(24,275)$13,608 
Net (Loss) Income per share, basic$(0.56)$0.41 
Net (Loss) Income per share, diluted$(0.56)$0.40 
Weighted-average common shares outstanding, basic43,248 33,595 
Weighted-average common shares outstanding, diluted43,248 36,727 
See notes to the condensed consolidated financial statements

4

CARDLYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(Amounts in thousands)
 Three Months Ended
March 31,
 20242023
Net (Loss) Income$(24,275)$13,608 
Other Comprehensive (Loss) Income:
Foreign currency translation adjustments580 (1,274)
Total Comprehensive (Loss) Income$(23,695)$12,334 
See notes to the condensed consolidated financial statements

5

CARDLYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(Amounts in thousands)

Three Months Ended March 31, 2024:

  Additional
Paid-In
Capital
Accumulated
Other
Comprehensive Income
Accumulated
Deficit
Total
 Common Stock
 SharesAmount
Balance – December 31, 2023
39,728 $9 $1,243,594 $2,467 $(1,111,272)$134,798 
Exercise of common stock options3 — 5 — — 5 
Stock-based compensation— — 12,256 — — 12,256 
Settlement of restricted stock943 — — — — — 
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 — 48,322 — — 48,322 
Other comprehensive income— — — 580 — 580 
Net Loss— — — — (24,275)(24,275)
Balance – March 31, 2024
48,174 $9 $1,331,628 $3,047 $(1,135,547)$199,137 

Three Months Ended March 31, 2023:

  Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
(Loss) Income
Accumulated
Deficit
Total
 Common Stock
 SharesAmount
Balance – December 31, 202233,477 $9 $1,182,568 $5,598 $(976,570)$211,605 
Stock-based compensation— — 8,381 — — 8,381 
Settlement of restricted stock168 — — — — — 
Other comprehensive loss— — — (1,274)— (1,274)
Net Income— — — — 13,608 13,608 
Balance – March 31, 202333,645 $9 $1,190,949 $4,324 $(962,962)$232,320 















See notes to the condensed consolidated financial statements

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CARDLYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands)
 Three Months Ended
March 31,
 20242023
Operating activities
Net (Loss) Income$(24,275)$13,608 
Adjustments to reconcile net loss to net cash used in operating activities:
Credit loss expense (gain)1,570 (246)
Depreciation and amortization6,250 6,575 
Amortization of financing costs charged to interest expense445 407 
Amortization of right-of-use assets549 1,235 
Stock-based compensation expense10,985 7,968 
Change in contingent consideration5,817 (34,584)
Other non-cash expense (income), net667 (905)
Change in operating assets and liabilities:
Accounts receivable13,323 21,405 
Prepaid expenses and other assets(3,450)(369)
Accounts payable125 (1,691)
Other accrued expenses(7,634)(3,136)
Partner Share liability(13,291)(9,701)
Consumer Incentive liability(8,698)(10,630)
Net cash used in operating activities(17,617)(10,064)
Investing activities
Acquisition of property and equipment(651)(360)
Capitalized software development costs(4,096)(2,442)
Net cash used in investing activities(4,747)(2,802)
Financing activities
Proceeds from issuance of debt 30,000 
Settlement of contingent consideration(20,074) 
Principal payments of debt (4)
Proceeds from issuance of common stock48,634  
Deferred financing costs(239)(15)
Net cash provided by financing activities28,321 29,981 
Effect of exchange rates on cash, cash equivalents and restricted cash(21)176 
Net increase in cash, cash equivalents and restricted cash5,936 17,291 
Cash, cash equivalents, and restricted cash — Beginning of period91,830 121,985 
Cash, cash equivalents, and restricted cash — End of period$97,766 $139,276 





See notes to the condensed consolidated financial statements

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CARDLYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands)
Three Months Ended
March 31,
 20242023
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet:
Cash and cash equivalents$97,766 $139,194 
Restricted cash 82 
Total cash, cash equivalents and restricted cash — End of period$97,766 $139,276 
Supplemental schedule of non-cash investing and financing activities:
Cash paid for interest$1,862 $1,268 
Amounts accrued for property and equipment$98 $ 
Amounts accrued for capitalized software development costs$135 $ 
Issuance of common stock, net of issuance costs - Settlement Agreement (as defined below)$27,451 $ 

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.
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.
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.

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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 and long-term contingent consideration. Refer to 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.
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.
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.

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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 three months ended March 31, 2024 and 2023, we incurred no cost and a $1.7 million cost, respectively, 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. These costs are included in acquisition, integration and divestiture cost on our condensed consolidated statements of operations.
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.
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 March 31, 2024 are as follows (in thousands):
Cardlytics PlatformBridg PlatformConsolidated
Goodwill$159,429 $117,773 $277,202 
We have assessed the triggering events criteria along with related conditions and developments as of March 31, 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 March 31, 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.
2024 Acquired Intangibles
Acquired intangible assets subject to amortization as of March 31, 2024 were as follows:
Gross Carrying AmountAccumulated AmortizationNetWeighted Average Remaining Useful Life
(in thousands)(in years)
Developed technology64,070 (36,521)27,549 3.1
Merchant relationships25,915 (21,320)4,595 2.1
Total other intangible assets$89,985 $(57,841)$32,144 

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2023 Acquired Intangibles
Acquired intangible assets subject to amortization as of December 31, 2023 were as follows:
Gross Carrying AmountAccumulated AmortizationDivestiture of EntertainmentNetWeighted Average Remaining Useful Life
(in thousands)(in years)
Trade name$2,315 $(1,802)$(513)$ 0.0
Developed technology64,070 (33,838)(449)29,783 3.4
Merchant relationships25,915 (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 March 31, 2024 and 2023 was $2.8 million and $3.5 million, respectively.
As of March 31, 2024, we expect amortization expense in future periods to be as follows (in thousands):
Amount
2024 (remaining nine months)8,338 
202511,117 
20269,674 
20273,015 
Thereafter 
Total expected future amortization expense$32,144 
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 $37.6 million and $31.3 million during the three months ended March 31, 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.
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. This has occurred infrequently and has been immaterial in amount for each of the periods presented. 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.

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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
March 31,
 20242023
Cost per Served Sale$40,031 $39,270 
Cost per Redemption21,507 17,935 
Other695 1,825 
Cardlytics Platform Revenue$62,233 $59,030 
The Bridg platform
The Bridg platform 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
March 31,
 20242023
Bridg Platform Revenue$5,375 $5,301 

The following table summarizes contract balances from the Bridg platform (in thousands):
Contract Balance TypeConsolidated Balance Sheets LocationMarch 31, 2024December 31, 2023
Contract assets, currentAccounts receivable and contract assets, net$66 $41 
Total contract assets$66 $41 
Contract liabilities, currentDeferred Revenue$1,994 $2,204 
Contract liabilities, long-termLong-term deferred Revenue50 67 
Total contract liabilities$2,044 $2,271 
During the three months ended March 31, 2024, we recognized $2.0 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 March 31, 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 March 31, 2024, we had $35.8 million of remaining performance obligations, of which $12.1 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.

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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 TypeConsolidated Balance Sheets LocationMarch 31, 2024December 31, 2023
Operating lease assetsRight-of-use assets under operating leases, net$8,342 $7,310 
Finance lease assetsProperty and equipment, net5 14 
Total lease assets8,347 7,324 
Operating lease liabilities, currentCurrent operating lease liabilities2,079 2,127 
Operating lease liabilities, long-termLong-term operating lease liabilities7,652 6,391 
Finance lease liabilities, currentAccrued expenses9 10 
Total lease liabilities$9,740 $8,528 
7.     DEBT AND FINANCING ARRANGEMENTS
Our debt consists of the following (in thousands):
March 31, 2024December 31, 2023
Line of Credit$30,000 $30,000 
2020 Convertible Senior Notes, net227,870 227,504 
Total debt$257,870 $257,504 
Accrued interest is included within accrued expenses in our consolidated balance sheet. We had accrued interest related to our 2020 Convertible Senior Notes of less than $0.1 million and $0.9 million, respectively, as of March 31, 2024 and December 31, 2023.
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. The net proceeds from this offering were $222.7 million, after deducting the initial purchasers' discounts and commissions and the offering expenses payable by us. We used $26.5 million of the net proceeds to pay the cost of the capped call transactions described below.
On April 1, 2024 we issued convertible senior notes with an aggregate principal amount of $172.5 million bearing an interest rate of 4.25% due on April 1, 2029. The net proceeds from this offering were an estimated $166.8 million, after deducting the initial purchasers' discounts, commissions and the offering expenses payable by us. Subsequent to March 31, 2024, we used approximately $169.3 million, consisting of the net proceeds from the offering, together with cash on hand, to repurchase for cash approximately $183.9 million in aggregate principal amount of the 2020 Convertible Senior Notes. Refer to Note 13—Subsequent Events for further details.
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

14

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.
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 2020 Convertible Senior Notes were historically accounted for in accordance with FASB ASC Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the 2020 Convertible Senior Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument was computed using a discount rate of 6.50%, which was determined by estimating the fair value of a similar liability without the conversion option. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the respective term of the 2020 Convertible Senior Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the 2020 Convertible Senior Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values.
The net carrying amount of the liability component of the 2020 Convertible Senior Notes is as follows (in thousands):

March 31, 2024December 31, 2023
Principal$230,000 $230,000 
Minus: Unamortized issuance costs(2,130)(2,496)
Net carrying amount of the liability component$227,870 $227,504 


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Interest expense recognized related to the 2020 Convertible Senior Notes is as follows (in thousands):
Three Months Ended
March 31,
20242023
Contractual interest expense (due in cash)$575 $575 
Amortization of debt issuance costs365 365 
Total interest expense related to the 2020 Convertible Senior Notes$940 $940 
Effective interest rate1.64 %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 Note purchasers and certain other financial institutions. The Capped Calls are intended to reduce potential dilution to our common stock upon any conversion of 2020 Convertible Senior Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2020 Convertible Senior Notes, as the case may be. The Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives. The cost of $26.5 million incurred to purchase the Capped Calls was recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated balance sheet.
The Capped Calls each have 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 have an initial cap price of $128.51 per share, subject to certain adjustments.
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.
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.
As of March 31, 2024, we had borrowed $30.0 million, which we paid down subsequent to March 31, 2024. Interest on advances under the 2018 Line of Credit bore an interest rate equal to the prime rate plus 0.25%. During the three months ended March 31, 2024, we incurred approximately $0.7 million of interest expense associated with the 2018 Loan Facility. In addition, we are required to pay an unused line fee of 0.15% per annum on the average daily unused amount of the revolving commitment. As of March 31, 2024, we had $29.5 million of unused available borrowings under our 2018 Line of Credit. We believe we are in compliance with all financial covenants as of March 31, 2024.

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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 March 31, 2024, there were 41,539 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
March 31,
 20242023
Delivery costs$643 $568 
Sales and marketing expense3,141 3,053 
Research and development expense3,950 4,085 
General and administration expense3,251 262 
Total stock-based compensation expense$10,985 $7,968 
During the three months ended March 31, 2024 and 2023, we capitalized $1.3 million and $0.4 million of stock-based compensation expense for software development, respectively.
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 ValueWeighted-Average Remaining Contractual Term (in years)Unamortized Compensation Costs
(in thousands)
Unvested — December 31, 2023
5,485 $15.70 2.01$68,092 
Granted2,357 14.83 
Vested(941)9.44 
Forfeited(132)13.81 
Unvested — March 31, 2024
6,769 $16.31 1.92$89,251 
During the three months ended March 31, 2024, we granted 2,356,940 RSUs to employees and non-employee directors, which have vesting periods ranging from vesting immediately to vesting in four years.
Subsequent to March 31, 2024, we granted 205,300 RSUs to employees and non-employee directors, which have vesting periods of one to two years. Unamortized stock-based compensation expense related to these RSUs totaled $2.7 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").

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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.
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.

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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.
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.
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 contingent consideration for the acquisition of Bridg is composed of the payments per the Settlement Agreement. The fair value of cash equivalents and contingent consideration in connection with the Bridg acquisition are as follows (in thousands):
 March 31, 2024
 Level 1Level 2Level 3Total
Assets:
Cash equivalents
Money market funds$23,175 $ $ $23,175 
US Treasury Bills5,979   5,979 
Total cash equivalents at fair value$29,154 $ $ $29,154 
December 31, 2023
Level 1Level 2Level 3Total
Liabilities:
Current contingent consideration$ $ $39,398 $39,398 
Long-term contingent consideration  4,162 4,162 
Total liabilities$ $ $43,560 $43,560 

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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:
Three Months Ended
March 31,
20242023
Beginning balance$43,560 $104,121 
Decrease due to earnout settlement(45,114) 
Change in contingent consideration5,817 (34,584)
Reclassification due to remaining payments being fixed per Settlement Agreement(4,263) 
Ending balance$ $69,537 
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.
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 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 March 31, 2024, the contingent consideration is valued at $4.3 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.
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 have accrued $4.5 million for the Partner Share shortfall, included within Partner Share liability on our condensed consolidated balance sheet. We expect to pay this shortfall through June 30, 2024. As of March 31, 2024, we paid $2.4 million of our shortfall. During the three months ended March 31, 2023, we recognized $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.
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. Refer to Note 7—Debt and Financing Arrangements for further details. Subsequent to March 31, 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 13—Subsequent Events for further details.

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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
The computations of the numerators and denominators of diluted Net (Loss) Income per share are as follows (in thousands, except per share amounts):
 Three Months Ended
March 31,
 20242023
Numerator:
Net (Loss) Income, basic$(24,275)$13,608 
Plus: interest expense, net of tax attributable to assumed conversion of Convertible Senior Notes 940 
Net (Loss) Income, diluted$(24,275)$14,548 
Denominator:
Weighted-average common shares outstanding, basic43,248 33,595 
Plus: dilutive effect of assumed conversion of Convertible Senior Notes 2,701 
Plus: dilutive effect of assumed conversion of restricted stock units 144 
Plus: dilutive effect of assumed conversion of common stock options 2 
Plus: dilutive effect of assumed issuance of common stock pursuant to the ESPP 285 
Weighted-average common shares outstanding, diluted43,248 36,727 
Net (Loss) Income per share, basic$(0.56)$0.41 
Net (Loss) Income per share, diluted$(0.56)$0.40 
The following securities for the three months ended March 31, 2024 have been excluded from the calculation of diluted weighted-average common shares outstanding because the effect is anti-dilutive (in thousands):
 Three Months Ended
March 31,
 2024
Common stock options59 
Convertible Senior Notes2,701 
Unvested restricted stock units6,769 
Common stock issuable pursuant to the ESPP171 
12.     SEGMENTS
As of March 31, 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.

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The following tables provide information regarding the Cardlytics platform and the Bridg platform reportable segments (in thousands):
 Three Months Ended
March 31,
 20242023
Cardlytics platform
Revenue$62,233 $59,030 
Minus: Partner Share and other third-party costs30,412 33,175 
Adjusted Contribution$31,821 $25,855 
Bridg platform
Revenue$5,375 $5,301 
Minus: Partner Share and other third-party costs131 209 
Adjusted Contribution$5,244 $5,092 
Consolidated
Revenue$67,608 $64,331 
Minus: Partner Share and other third-party costs30,543 33,384 
Adjusted Contribution$37,065 $30,947 
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.
The following table presents a reconciliation of income (loss) before income taxes presented in accordance with GAAP to Adjusted Contribution (in thousands):
 Three Months Ended
March 31,
 20242023
Adjusted Contribution$37,065 $30,947 
Minus:
Delivery costs6,173 6,424 
Sales and marketing expense14,118 13,948 
Research and development expense13,048 11,564 
General and administration expense14,485 13,070 
Acquisition, integration and divestiture costs 1,723 
Change in contingent consideration5,817 (34,584)
Depreciation and amortization expense6,250 6,575 
Total other expense1,449 (1,381)
Income (loss) before income taxes$(24,275)$13,608 

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The following tables provide geographical information (in thousands):
 Three Months Ended
March 31,
 20242023
Revenue:
United States$62,534 $61,081 
United Kingdom5,074 3,250 
Total$67,608 $64,331 

March 31, 2024December 31, 2023
Property and equipment, net:
United States$2,832 $3,244 
United Kingdom74 79 
Total$2,906 $3,323 
Capital expenditures within the United Kingdom totaled less than $0.1 million for each period during the three months ended March 31, 2024 and 2023.
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 three months ended March 31, 2024 and 2023, our top five marketers accounted for 21% and 16% of our Revenue, respectively, with no marketer accounting for over 10%. As of March 31, 2024 and 2023, our top five marketers accounted for 21% 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 three months ended March 31, 2024 and 2023 our top three FI partners combined to account for over 90% and 70% 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.

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13.     SUBSEQUENT EVENTS
2024 Convertible Senior Notes
On April 1, 2024, we issued of $172.5 million principal amount of its 4.25% Convertible Senior Notes due in 2029 (the "2024 Convertible Senior Notes") in a private offering (the "Offering"), including the exercise in full of the initial purchasers' option to purchase up to an additional $22.5 million principal amount of 2024 Convertible Senior Notes. The net proceeds from this offering were an estimated $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, 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 the our common stock, $0.0001 par value per share, 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 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 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 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.
We used approximately $169.3 million, consisting of the net proceeds from the 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.

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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 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; anticipated payments under the Merger Agreement with Bridg; and anticipated Partner Share commitment shortfall payments. 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.
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 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.
Working with a marketer, we design a campaign that targets consumers 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 customers after they make qualifying purchases ("Consumer Incentives"). We report our Revenue on our consolidated statements of operations net of Consumer Incentives since we do not provide the goods or services that are purchased by customers from the marketers to which the Consumer Incentives relate.
We pay certain partners a negotiated and fixed percentage of our Billings to marketers less any Consumer Incentives that we pay to customers and certain third-party data costs ("Partner Share"). We report our Revenue gross of Partner Share. Partner Share costs are included in Partner Share and other third-party costs in our consolidated statements of operations, rather than as a reduction of Revenue, because we and not our partners act as the principal in our arrangements with marketers.
We run campaigns offering compelling Consumer Incentives to drive an expected rate of return on advertising spend for marketers. At times, we may collaborate with a partner to enhance the level of Consumer Incentives to their respective customers, funded by their Partner Share. We believe that these investments by our partners positively impact our platforms by making their customers more highly engaged with our platforms. However, these investments negatively impact our GAAP Revenue, which is reported net of Consumer Incentives.

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Non-GAAP Measures and Other Performance Metrics
We regularly monitor a number of financial and operating metrics in order to measure our current performance and estimate our future performance. Our metrics may be calculated in a manner different than similar metrics used by other companies.
Key Performance Metrics
 Three Months Ended
March 31,
in thousands except per user amounts20242023
Cardlytics MAUs168,539 158,149 
Cardlytics ARPU$0.40 $0.41 
Cardlytics Monthly Active Users ("MAUs")
We define MAUs as targetable customers that have logged in and visited online or mobile applications containing offers, opened an email containing an offer, or redeemed an offer from the Cardlytics platform during a monthly period. We then calculate a monthly average of these MAUs for the periods presented. We believe that MAUs is an indicator of the Cardlytics platform's ability to drive engagement and is reflective of the marketing base that we offer to marketers. Beginning as of September 30, 2023, we are reporting only the total number of unique targetable customers within each FI, which we have applied to our reporting for current and prior periods in this Form 10-Q.
 Three Months Ended March 31,Change
in thousands20242023#%
Cardlytics MAUs168,539 158,149 10,3907
During the three months ended March 31, 2024, Cardlytics MAUs increased by 10.4 million compared to the three months ended March 31, 2023 primarily driven by an increase in new MAUs.
Cardlytics Average Revenue per User ("ARPU")
We define ARPU as the total Revenue generated in the applicable period calculated in accordance with generally accepted accounting principles in the United States ("GAAP"), divided by the average number of MAUs in the applicable period. We believe that ARPU is an indicator of the value of our relationships with our FI partners with respect to the Cardlytics platform.
 Three Months Ended March 31,Change
 20242023$%
Cardlytics ARPU$0.40 $0.41 $(0.01)(2)
During the three months ended March 31, 2024, Cardlytics ARPU decreased by $0.01 compared to the three months ended March 31, 2023 as a result of a $3.3 million increase in Revenue and a 10.4 million increase in Cardlytics MAUs.
Non-GAAP Metrics
 Three Months Ended March 31,
in thousands20242023
Revenue$67,608 $64,331 
Billings$105,216 $95,626 
Gross Profit$30,892 $24,523 
Adjusted Contribution$37,065 $30,947 
Net (Loss) Income$(24,275)$13,608 
Adjusted EBITDA$226 $(6,091)
Adjusted Net Loss$(4,054)$(9,216)
Net cash used in operating activities$(17,617)$(10,064)
Free Cash Flow$(22,364)$(12,866)

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Definitions of Non-GAAP Measures
Billings
Billings represents the gross amount billed to customers and marketers for services in order to generate revenue. Cardlytics platform Billings is recognized gross of both Consumer Incentives and Partner Share. Cardlytics platform GAAP Revenue is recognized net of Consumer Incentives and gross of Partner Share. Bridg platform Billings is the same as Bridg platform GAAP Revenue.
We review Billings for internal management purposes. We believe Billings is an important indicator for the current health of the business because it directly represents our ability to bill customers for our services before any Consumer Incentives are paid. Nevertheless, our use of Billings has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Other companies, including companies in our industry that have similar business arrangements, may address the impact of Consumer Incentives differently. You should consider Billings alongside our other GAAP financial results.
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.
We use Adjusted Contribution extensively to measure the efficiency of our advertising platform, make decisions to manage advertising campaigns and evaluate our operational performance. We view Adjusted Contribution as an important operating measure of our financial results. We believe that Adjusted Contribution provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and Board of Directors. Adjusted Contribution should not be considered in isolation from, or as an alternative to, measures prepared in accordance with GAAP. Adjusted Contribution should be considered together with other operating and financial performance measures presented in accordance with GAAP. Also, Adjusted Contribution may not necessarily be comparable to similarly titled measures presented by other companies. Refer to Note 12 - Segments to our condensed consolidated financial statements for further details on our Adjusted Contribution by segment.
Adjusted EBITDA
Adjusted EBITDA represents our Net (Loss) Income before interest expense, net; depreciation and amortization; stock-based compensation expense; foreign currency loss (gain); acquisition, integration and divestiture costs; and change in contingent consideration; and, in applicable periods, certain other income and expense items, such as impairment of goodwill and intangible assets; loss on divestiture; restructuring and reduction of force; income tax benefit; and deferred implementation costs. We do not consider these excluded items to be indicative of our core operating performance. Of these items depreciation and amortization expense, stock-based compensation expense, and foreign currency loss (gain) are non-cash impacting. Notably, any impacts related to minimum Partner Share commitments in connection with agreements with certain partners are not added back to net income in order to calculate Adjusted EBITDA.
Adjusted EBITDA is a key measure used by management to understand and evaluate our core operating performance and trends and to generate future operating plans, make strategic decisions regarding the allocation of capital and invest in initiatives that are focused on cultivating new markets for our solution. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates comparisons of our operating performance on a period-to-period basis. Adjusted EBITDA is not a measure calculated in accordance with GAAP.
We believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. Nevertheless, use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are: (1) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (2) Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation and equity instruments issued to our partners; (3) Adjusted EBITDA does not reflect tax payments or receipts that may represent a reduction or increase in cash available to us; and (4) other companies, including companies in our industry, may calculate adjusted EBITDA or similarly titled measures differently, which reduces the usefulness of the metric as a comparative measure. Because of these and other limitations, you should consider Adjusted EBITDA alongside our net income and other GAAP financial results.

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Adjusted Net Loss
We define Adjusted Net Loss as our Net (Loss) Income before stock-based compensation expense; foreign currency loss (gain); acquisition, integration and divestiture costs; amortization of acquired intangibles; and change in contingent consideration; and, in applicable periods, certain other income and expense items, such as impairment of goodwill and intangible assets; loss on divestiture; restructuring and reduction of force; and income tax benefit. We define Adjusted Net Loss per share as Adjusted Net Loss divided by our weighted-average common shares outstanding, diluted.
Free Cash Flow
We define Free Cash Flow as net cash used in operating activities, plus acquisition of property and equipment and capitalized software development costs and, in applicable periods, acquisition of patents. We believe free cash flow is useful to measure the funds generated in a given period that are available for distribution or to sustain the business. We believe this supplemental information enhances stockholders' ability to evaluate our performance.
Results of Non-GAAP Measures
Billings
 Three Months Ended March 31,Change
in thousands20242023$%
Cardlytics Billings$105,216 $95,626 $9,590 10
During the three months ended March 31, 2024, Billings increased by $9.6 million compared to the three months ended March 31, 2023 primarily driven by a $7.0 million increase in net sales to existing marketers, an increase of $4.4 million in sales to new marketers, partially offset by $1.8 million loss due to the sale of Entertainment.
The following table presents a reconciliation of Billings to Revenue, the most directly comparable GAAP measure, for each of the periods indicated (in thousands):
 Three Months Ended
March 31,
 20242023
Consolidated
Revenue$67,608 $64,331 
Plus:
Consumer Incentives37,608 31,295 
Billings$105,216 $95,626 
Cardlytics platform
Revenue$62,233 $59,030 
Plus:
Consumer Incentives37,608 31,295 
Billings$99,841 $90,325 
Bridg platform
Revenue$5,375 $5,301 
Plus:
Consumer Incentives— — 
Billings$5,375 $5,301 

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Adjusted Contribution
The following table presents a reconciliation of Adjusted Contribution to gross profit, the most directly comparable GAAP measure, for each of the periods indicated (in thousands):
 Three Months Ended
March 31,
 20242023
Consolidated
Revenue$67,608 $64,331 
Minus:
Partner Share and other third-party costs30,543 33,384 
Delivery costs(1)
6,173 6,424 
Gross Profit30,892 24,523 
Plus:
Delivery costs(1)
6,173 6,424 
Adjusted Contribution$37,065 $30,947 
Cardlytics platform
Revenue$62,233 $59,030 
Minus:
Partner Share and other third-party costs30,412 33,175 
Delivery costs(1)
4,723 4,693 
Gross Profit27,098 21,162 
Plus:
Delivery costs(1)
4,723 4,693 
Adjusted Contribution$31,821 $25,855 
Bridg platform
Revenue$5,375 $5,301 
Minus:
Partner Share and other third-party costs131 209 
Delivery costs(1)
1,450 1,731 
Gross Profit3,794 3,361 
Plus:
Delivery costs(1)
1,450 1,731 
Adjusted Contribution$5,244 $5,092 
(1)Stock-based compensation expense recognized in consolidated delivery costs totaled $0.6 million for each of three months ended March 31, 2024 and 2023.

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Adjusted EBITDA
The following table presents a reconciliation of adjusted EBITDA to Net (Loss) Income, the most directly comparable GAAP measure (in thousands):
 Three Months Ended
March 31,
 20242023
Net (Loss) Income$(24,275)$13,608 
Plus:
Interest expense, net819 
Depreciation and amortization6,250 6,575 
Stock-based compensation expense10,985 7,968 
Foreign currency loss (gain)630 (1,389)
Acquisition, integration and divestiture costs— 1,723 
Change in contingent consideration5,817 (34,584)
Adjusted EBITDA$226 $(6,091)
The following table presents a reconciliation of adjusted EBITDA to Adjusted Contribution, the most directly comparable segment income measure, for each of the periods indicated (in thousands):
 Three Months Ended
March 31,
 20242023
Consolidated
Adjusted Contribution$37,065 $30,947 
Minus:
Delivery costs6,173 6,424 
Sales and marketing expense14,118 13,948 
Research and development expense13,048 11,564 
General and administration expense14,485 13,070 
Stock-based compensation expense(10,985)(7,968)
Adjusted EBITDA$226 $(6,091)
Cardlytics platform
Adjusted Contribution$31,821 $25,855 
Minus:
Delivery costs4,723 4,693 
Sales and marketing expense11,414 11,547 
Research and development expense11,115 10,327 
General and administration expense13,427 13,330 
Stock-based compensation expense(9,779)(8,103)
Adjusted EBITDA$921 $(5,939)
Bridg platform
Adjusted Contribution$5,244 $5,092 
Minus:
Delivery costs1,450 1,731 
Sales and marketing expense2,704 2,401 
Research and development expense1,933 1,237 
General and administration expense1,058 (260)
Stock-based compensation expense(1,206)135 
Adjusted EBITDA$(695)$(152)

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Adjusted Net Loss
The following table presents a reconciliation of Adjusted Net Loss to Net (Loss) Income, the most directly comparable GAAP measure, for each of the periods indicated (in thousands):
 Three Months Ended
March 31,
 20242023
Net (Loss) Income$(24,275)$13,608 
Plus:
Stock-based compensation expense10,985 7,968 
Foreign currency loss (gain)630 (1,389)
Acquisition, integration and divestiture costs— 1,723 
Amortization of acquired intangibles2,789 3,458 
Change in contingent consideration5,817 (34,584)
Adjusted Net Loss$(4,054)$(9,216)
Weighted-average number of shares of common stock used in computing Adjusted Net Loss per share:
Weighted-average common shares outstanding, diluted43,248 36,727 
Adjusted Net Loss per share, diluted$(0.09)$(0.25)
Free Cash Flow
The following is a reconciliation of free cash flow to the most comparable GAAP measure, net cash used in operating activities (in thousands):
Three Months Ended
March 31,
 20242023
Net cash used in operating activities$(17,617)$(10,064)
Plus:
Acquisition of property and equipment(651)(360)
Capitalized software development costs(4,096)(2,442)
Free Cash Flow$(22,364)$(12,866)
Components of Results of Operations
Revenue
We sell our Cardlytics platform solution by entering into agreements directly with marketers or their marketing agencies, generally through the execution of insertion orders. The insertion orders state the terms of the arrangement, the negotiated fee, payment terms and the fixed period of time of the campaign. We invoice marketers monthly based on the qualifying purchases of our partners' customers as reported by our partners during the month. We report our Revenue net of Consumer Incentives and gross of Partner Share and other third-party costs. The Bridg platform 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.
Cost and Expense
We classify our expenses into the following categories: Partner Share and other third-party costs; delivery costs; sales and marketing expense; research and development expense; general and administrative expense; and depreciation and amortization expense.

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Partner Share and Other Third-Party Costs
Partner Share and other third-party costs consist primarily of the Partner Share that we pay our partners, media and data costs and deferred implementation costs incurred pursuant to our agreements with certain partners. To the extent that we use a specific partners' customer's anonymized purchase data in the delivery of our solutions, we generally pay the applicable partner a Partner Share calculated based on the relative contribution of the data provided by the partner to the overall delivery of the services. We expect that our Partner Share and other third-party costs will increase in absolute dollars as a result of our Revenue growth.
Delivery Costs
Delivery costs consist primarily of personnel costs of our campaign, data operations and production support teams, including salaries, benefits, bonuses, stock-based compensation and payroll taxes. Delivery costs also include hosting costs, purchased or licensed software costs, outsourcing costs and professional services costs. As we continue to migrate our technology to the cloud, our delivery costs will increase in absolute dollars and if such anticipated Revenue growth does not occur, our delivery costs as a percentage of Revenue will be adversely affected. Over time, we expect delivery costs will decline as a percentage of Revenue.
Sales and Marketing Expense
Sales and marketing expense consists primarily of personnel costs of our sales, account management, marketing and analytics teams, including salaries, benefits, bonuses, commissions, stock-based compensation and payroll taxes. Sales and marketing expense also includes professional fees, marketing programs such as trade shows, marketing materials, public relations, sponsorships and other brand building expenses, as well as outsourcing costs, travel and entertainment expenses and company-funded consumer testing expenses for certain marketers that are not current customers. We expect that our sales and marketing expense will increase in absolute dollars as a result of hiring new sales representatives and as we invest to enhance our brand. Over time, we expect sales and marketing expenses will decline as a percentage of Revenue.
Research and Development Expense
Research and development expense consists primarily of personnel costs of our information technology ("IT") engineering, IT architecture and product development teams, including salaries, benefits, bonuses, stock-based compensation and payroll taxes. Research and development expense also includes outsourcing costs, software licensing costs, professional fees and travel expenses. We focus our research and development efforts on improving our solutions and developing new ones. We expect research and development expense to increase in absolute dollars as we continue to create new solutions and improve the functionality of our existing solutions.
General and Administrative Expense
General and administrative expense consists of personnel costs of our executive, finance, legal, compliance, IT support and human resources teams, including salaries, benefits, bonuses, stock-based compensation and payroll taxes. General and administrative expense also includes professional fees for external legal, accounting and consulting services, financing transaction costs, facilities costs such as rent and utilities, royalties, bad debt expense, travel expense, property taxes and franchise taxes. We expect that general and administrative expenses will increase on an absolute dollar basis but decrease as a percentage of Revenue as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business.
Acquisition, Integration and Divestiture Costs
Acquisition costs primarily represent diligence efforts, legal and advisory costs, broker fees and insurance premiums. Integration costs primarily represent integration-related employee compensation, advisory costs and travel costs. Divestiture costs primarily represent legal and other professional fees.
Change in Contingent Consideration
Our acquisition of Bridg included a component of contingent consideration to be paid to the sellers if certain performance levels were achieved by Bridg over a specific period of time. Contingent consideration is initially recorded at fair value on the acquisition date based, in part, on a range of estimated probabilities for achievement of these performance levels. The fair value is periodically adjusted as actual performance levels become known and updates are made to the estimated probabilities for future performance. A gain or loss is recognized in the income statement for fair value adjustments. If we make additional acquisitions, it is possible that we will incur gains or losses in the future due to the change in contingent consideration.
Depreciation and Amortization Expense
Depreciation and amortization expense includes depreciation of property and equipment over the estimated useful life of the applicable asset as well as amortization of acquired intangible assets, deferred patent costs and capitalized internal-use software development costs.

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Interest Expense, Net
Interest expense, net consists of interest incurred on our debt facilities, as well as related discount amortization and financing costs, partially offset by interest income on our cash balances.
Foreign Currency (Loss) Gain
Foreign currency (loss) gain consists primarily of gains and losses on foreign currency transactions.
Results of Operations
The following table presents our condensed consolidated statements of operations (in thousands):
 Three Months Ended
March 31,
 20242023
Revenue$67,608 $64,331 
Costs and expenses:
Partner Share and other third-party costs30,543 33,384 
Delivery costs6,173 6,424 
Sales and marketing expense14,118 13,948 
Research and development expense13,048 11,564 
General and administrative expense14,485 13,070 
Acquisition, integration and divestiture cost— 1,723 
Change in contingent consideration5,817 (34,584)
Depreciation and amortization expense6,250 6,575 
Total costs and expenses90,434 52,104 
Operating (Loss) Income(22,826)12,227 
Other expense:
Interest expense, net(819)(8)
Foreign currency (loss) gain(630)1,389