Cardlytics (CDLX) Q1 2026 Earnings Transcript

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DATE

Thursday, May 7, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Amit Gupta
• Chief Financial Officer — David Evans
• Operator

TAKEAWAYS

• Billings -- $58.1 million from continued operations, reflecting a 37% decrease year over year; total billings including Bridg were $62.3 million.
• Revenue -- $34.3 million from continued operations, a 39% decrease year over year; total revenue including Bridg was $38.5 million.
• U.K. Performance -- U.K. revenue increased over 21% year over year, with "all of the U.K.'s largest grocers" served on the platform.
• Adjusted Contribution -- $19.7 million from continued operations, a 28% decrease year over year; total adjusted contribution including Bridg was $23.3 million.
• Adjusted Contribution Margin -- Set a record high at 60.6%, though management noted this will decline after the Bridg divestiture.
• Adjusted EBITDA -- Positive $0.2 million from continued operations, compared to negative $4.1 million year over year; total inclusive of Bridg was negative $2.2 million.
• Adjusted Operating Expenses -- $19.5 million from continued operations, a 38% reduction year over year; total adjusted operating expenses including Bridg were $25.5 million, mainly due to workforce reductions and cloud optimization.
• Operating Cash Flow -- Negative $5.6 million, compared with negative $6.7 million in the prior year period.
• Free Cash Flow -- Negative $7.9 million, an improvement from negative $10.8 million year over year.
• Cash and Equivalents -- $35.7 million at quarter end; proceeds from the post-quarter sale of PAR shares further improved liquidity and reduced credit facility debt.
• Monthly Quantified Users (MQUs) -- 197 million for the quarter, reflecting Bank of America's exit in January.
• Average Contribution per User (ACPU) -- $0.10, down 21.3% year over year.
• Q2 2026 Guidance -- Billings projected between $61 million and $67 million, revenue between $35 million and $40 million, adjusted contribution between $20 million and $23 million, and adjusted EBITDA between negative $2.7 million and positive $1.3 million.
• Sequential Growth -- Guidance reflects sequential increases of 10% in billings, 9% in revenue, and 9% in adjusted contribution versus Q1 (excluding Bridg contributions).
• Client Retention -- "Despite the departure of Bank of America... we were able to retain the vast majority of our clients."
• Operational Efficiency -- CEO Gupta stated the company can "operate efficiently with a lower cost basis and still deliver on our stated business objectives."
• Platform Expansion -- Three live Cardlytics Rewards Platform (CRP) partners as of quarter end, with further supply growth and larger partner discussions ongoing.
• New Advertiser Adoption -- New enterprise advertisers praised "measurement, network reach and technology forward platform capabilities," leading to "meaningful year-on-year pipeline growth."
• Vertical Performance -- Telecom, gas, and convenience sectors performed well; a discount grocer's campaign is on pace to become a top 10 advertiser in the U.S. this year.
• Technology Initiatives -- AI-driven platform features, such as the newly released Insights agent and campaign data sync with impact.com, increased speed and adoption measurement visibility for advertisers.
• Workforce and Cost Actions -- Year-over-year reduction in force and cloud infrastructure optimization cited as drivers of lower expenses.
• Bridg Transaction -- The transaction closed successfully, with divestiture proceeds redeployed into liquidity and debt reduction.

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RISKS

• Management reported "budget pressure in the travel and hospitality sectors with approvals being delayed or pushed into future quarters," explicitly linking macro events to pipeline softness in these verticals.
• Adjusted contribution margin is expected to "come down in future quarters due to the divestiture of Bridg," potentially reducing profitability ratios.
• Year-over-year billings, revenue, adjusted contribution, and ACPU each declined by double digits, primarily reflecting the loss of Bank of America and supply constraints.
• Free cash flow and operating cash flow remained negative, despite improvements from prior year levels.

SUMMARY

A pronounced year-over-year contraction in key metrics was driven by the loss of Bank of America and ongoing supply pressures, with Cardlytics (NASDAQ:CDLX) reporting declines of 37% in billings, 39% in revenue, and 28% in adjusted contribution. Despite these declines, positive sequential trends and record adjusted contribution margin were achieved, supported by aggressive cost control and improved operational efficiency. U.K. operations posted over 21% revenue growth amid strong advertiser sentiment, and Cardlytics rolled out significant technology enhancements, including AI-driven reporting tools and infrastructure modernization. Management reiterated its commitment to sequential growth and self-sustainability throughout 2026, citing strong client retention excluding Bank of America and expanded partnerships within core and new verticals.

• After quarter end, all PAR shares from the Bridg transaction were liquidated, and proceeds were used to pay down credit facility debt, further bolstering the cash position.
• The Cardlytics Rewards Platform (CRP) counted three live partners with ongoing supply growth; larger partner discussions are underway but not yet closed.
• Advertiser feedback supported platform and analytics differentiation, with a U.S. discount grocer set to become a top 10 customer.
• Management cited delayed travel and hospitality sector budgets as an explicit macro-driven headwind impacting near-term revenue pipeline.

INDUSTRY GLOSSARY

• Billings: Total value of media purchased by advertisers on the platform, prior to revenue-sharing deductions and adjustments.
• MQUs (Monthly Quantified Users): The number of unique users engaging with Cardlytics-powered offers within the platform during the period.
• ACPU (Average Contribution per User): Adjusted contribution divided by monthly quantified users, reflecting per-user profitability.
• CRP (Cardlytics Rewards Platform): A proprietary rewards and incentive marketing platform that enables partners to offer card-linked offers to customers.
• Bridg: A customer data and analytics platform acquired and later sold by Cardlytics, providing transaction-level insights for loyalty marketing.

Full Conference Call Transcript

Amit Gupta: Good evening, and thank you for joining us. As I mentioned on our last call, 2026 is a year of execution for us. Our performance in Q1 reinforces our confidence that we can operate efficiently with a lower cost basis and still deliver on our stated business objectives. Our strategic priorities remain consistent. First, expanding our reach by deepening collaborations with bank partners and integrating new publishers into our network; second, driving incremental revenue growth for our advertisers by leveraging our advanced algorithmic and geo-centric capabilities; and third, continuing to invest in our technology platform to further differentiate our offering and improve operational efficiency.

We are also benefiting from the addition of experienced go-to-market and FI-facing leaders who are helping us elevate our performance across several key areas. Let me start with our network and supply. After a prolonged period, we are pleased to report that our supply has stabilized and many of our existing FI partners are actively engaging with us to co-develop growth opportunities. For example, building on strong program performance and positive customer response, we will onboard new cardholder portfolios with one of our larger FI partners later this year. This momentum reflects the strength of our advertising content, the quality of our platform and the collaboration between our FI partners and our internal teams.

Additionally, we are partnering with banks to better market and enhance reward amounts being paid out to their customers. In the case of one of our newer neobanks, the Double Days program continues to be a lever for increased consumer engagement and drove 0.25 million new activators during the event. We are expanding similar incentive programs with other FI partners. These engagement-focused programs tend to be adopted first by our newer banks, shifting more volume to these banks and leading to a more favorable revenue margin overall. Our push to meet new customers where they are continues. We continue to see interest in the Cardlytics Rewards Platform or CRP, from partners across multiple industries.

We currently have three live CRP partners. And while still early, we are seeing month-over-month supply growth. We are also in discussions with larger partners about implementing CRP, and we'll share more as we make progress. Turning to our advertiser base. In Q1, we received a strong signal from our cohort of new enterprise advertisers that they valued our measurement, network reach and technology forward platform capabilities over our competitors. Our focus on new business is translating into meaningful year-on-year pipeline growth, and we expect it to be impactful in our U.S. business throughout the year. In Q1, we saw strong performance from the telecom, gas, and convenience verticals.

One of the fastest-growing discount grocers following a successful Q1 campaign and strong iROAS performance is renewing in Q2 and is on track to become a top 10 advertiser for us this year. Several leading advertisers in our channel prefer the quality of our analytics and the reach of our network and have decided to consolidate CLO spend with Cardlytics despite the supply constraints. This has been a recurring narrative amongst our clients and reinforces the value that our multi-FI network can provide. To augment our measurement capabilities, we are adding new measurement partners to our network to support advertisers with their preferred measurement model of choice.

At the same time, we continue to invest in offer performance and ad ranking. Optimization experiments in Q1 are driving higher activation and redemption rates, and we're seeing double-digit growth in redeemers across banks with stable supply. Feedback from advertisers continues to reinforce that we outperform other alternatives. Our U.K. business continues to deliver outstanding results with Q1 revenue surging over 21% year-over-year. This momentum highlights our omnichannel strength, particularly with the restaurant and retail sectors. We are proud to have served all of the U.K.'s largest grocers on our platform during the quarter. In the U.K., advertiser sentiment remains strong as we diversify our footprint.

This allows partners to rely on Cardlytics as a single destination for high-quality relevant content for their card members. Turning back to the U.S. Due to macro events, we are seeing some budget pressure in the travel and hospitality sectors with approvals being delayed or pushed into future quarters. Overall, with supply stabilizing and execution improving, we believe we are well positioned for sequential growth. Turning to our technology platform. The work we did in 2025, particularly in data and AI is now delivering measurable impact. Our engineering efforts are improving both speed and efficiency across the platform. For example, our newly released Insights agent delivers weekly unique advertiser reports synthesizing macroeconomic data, industry trends and Cardlytics-specific insights.

Our new campaign data sync infrastructure, starting with impact.com enables our sales team to share performance data with measurement partners for advertiser accounts in minutes rather than days. We standardized on a unified agentic development environment with common AI skills and MCP servers, giving our engineers AI-assisted tooling across the full development life cycle. We are now tracking development productivity metrics to measure adoption and scale these games. Now looking forward, with the Bridg transaction successfully closed, we are now fully aligned around our core platform with improved financial flexibility and the ability to move faster. Our focus remains on disciplined urgent execution against our strategic priorities. I'll now turn it over to David to discuss the financials.

David Evans: Thank you, Amit. As we talked about on our last earnings call, our core focus and strategic plan we set up for 2026 is quarterly sequential growth and self-sustainability. We are pleased to announce Q1 numbers that are above the midpoint of the guide across all metrics, including for the Q1 Bridg results. Our Q2 guide further represents and supports quarterly sequential growth. We have also taken another step towards self-sustainability since acquiring and quickly selling the PAR shares we received in consideration for the divestiture of the Bridg business, further improving our state of liquidity and balance sheet. Turning to Q1 results.

For awareness, I will speak first to results and year-over-year comparisons from continued operations, which exclude Bridg results, followed by Q1 numbers that are inclusive of the Bridg operations, given these totals were included in our Q1 guidance. Bridg specific results can be found in the 10-Q and the earnings release. Also, the comments will be year-over-year comparisons to the first quarter of 2025, unless stated otherwise. In Q1, our billings were $58.1 million, a 37% decrease year-over-year. Total billings, inclusive of Bridg Results was $62.3 million.

Despite the departure of Bank of America in January, we were able to retain the vast majority of our clients and are seeing results of our focus on driving new business to the platform. Q1 revenue was $34.3 million, a 39% decrease year-over-year. Total revenue, inclusive of Bridg results was $38.5 million. As Amit mentioned, our U.K. business remains a standout performer with Q1 revenue increasing over 21% year-over-year. Q1 adjusted contribution was $19.7 million, a 28% decrease year-over-year. Total Q1 adjusted contribution, inclusive of Bridg results was $23.3 million. Despite year-over-year decline, we continue to expand our revenue margin or adjusted contribution as a percentage of revenue to 60.6%, our highest on record.

However, we do expect this to come down in future quarters due to the divestiture of Bridg. Q1 adjusted EBITDA was positive $0.2 million compared to negative $4.1 million in the first quarter of 2025. Total Q1 adjusted EBITDA, inclusive of Bridg results was negative $2.2 million. This improvement in adjusted EBITDA underscores our ability to execute towards our goals with a lower expense base. Q1 adjusted operating expenses was $19.5 million, a decrease of 38% from prior year. Total Q1 adjusted operating expenses, inclusive of Bridg was $25.5 million. This was largely due to reduction in force actions taken in 2025 and optimization of our cloud infrastructure.

Q1 operating cash flow was negative $5.6 million compared to negative $6.7 million in the prior year. Free cash flow was negative $7.9 million compared to negative $10.8 million year-over-year, an improvement of $2.9 million. On the balance sheet, we ended Q1 with $35.7 million in cash and cash equivalents. Subsequent to the quarter closing, we liquidated all the PAR shares we received in connection with the Bridg sale. We used the proceeds to reduce the amount owed under our credit facility and improve our cash position. Our MQUs for the quarter were $197 million, accounting for the loss of Bank of America in January. ACPU for the quarter was $0.10, down 21.3% year-over-year.

Now turning to our outlook for Q2 2026. All comparisons to prior year and prior quarters will exclude Bridg. For Q2, we expect billings between $61 million and $67 million, revenue between $35 million and $40 million, adjusted contribution between $20 million and $23 million and adjusted EBITDA between negative $2.7 million and positive $1.3 million. Our guidance represents quarterly sequential growth of 10%, 9% and 9% for billings, revenue and adjusted contribution, respectively, and excluding Bridg numbers in Q1 for comparison purposes. We continue to be committed to delivering sequential growth for the remainder of 2026.

Our adjusted EBITDA guide further represents our belief in our ability to execute at a lower expense base, and we remain committed to driving operational efficiencies. We are laser-focused on executing against our core competencies to drive sequential growth in 2026. I will now turn it back to Amit for closing remarks.

Amit Gupta: We're moving forward with a stronger foundation to operate the leading purchase intelligence platform. Our team is heads down executing on our strategic priorities to deliver value for our advertisers, partners, shareholders and end consumers. I'll now turn it over to the operator to begin Q&A.

Operator: [Operator Instructions] There are no questions at this time. I will now turn the call back to Amit for closing remarks.

David Evans: I'm not sure if Amit is coming through, but I can jump in here for closing remarks. I would reiterate for all of our listeners that as we stated at the beginning, we are executing against the plan that we set forth at the beginning of the year, which is to operate through 2026 showing sequential growth as well as being able to show and perform with self-sustainability. Amit, if you are back on, you want to have any other closing remarks or otherwise, we can conclude the call. But Amit, I'll turn it to you if you can hear us.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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