Cardlytics (CDLX) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Chief Legal Officer - Chris Cheng
• Chief Executive Officer - Amit Gupta
• Chief Financial Officer - David Evans

TAKEAWAYS

• Billings -- $57.2 million, a 32% decrease year over year.
• Revenue -- $32.9 million, representing a 30% decline from the prior year reflecting lower advertiser spend and technical issues in the U.K.
• Adjusted Contribution -- $19.4 million, a 24% decrease year over year resulting from lower billing volumes.
• Adjusted Contribution Margin -- 59% of revenue, an increase from 54.4% in the prior year driven by cost optimizations and a leaner business model.
• Adjusted EBITDA -- $0.4 million, down from $3.3 million in the third quarter of 2025.
• Net Loss -- $8.9 million, an improvement from a loss of $72.7 million in the previous year.
• GAAP Net Loss Per Share -- $1.26, compared to $13.14 per share in the third quarter of 2025.
• Non-GAAP Adjusted Net Loss Per Share -- $1.03, compared to $0.58 per share in the prior year.
• MQUs -- 186.6 million, a 19% year-over-year reduction following shifts in bank partner relationships.
• ACPU -- $0.10, compared to $0.11 in the third quarter of 2025.
• Adjusted Operating Expenses -- $19 million, a 14% decrease driven by prior workforce reductions and cloud infrastructure optimization.
• Free Cash Flow -- negative $1.6 million, an improvement from negative $2.7 million year over year.
• Cash and Cash Equivalents -- $29.9 million as of Sept. 30, 2026.
• New Business Billings -- grew 25% compared to the second quarter of 2026.
• Advertiser Vertical Mix -- restaurant, gas, and grocery advertisers comprised 29% of the active advertiser base.
• U.S. Consumer Spending -- rose 10% year over year based on internal purchase intelligence data.
• Gas and Convenience Spending -- rose 27% year over year, driven by higher fuel prices.
• Travel Segment Growth -- travel spend grew 17% year over year, while the number of active travel advertisers increased by more than 50%.
• U.K. Billings -- declined 4% year over year, primarily due to technical disruptions at one bank partner.
• Q4 Billings Guidance -- $63 million to $69 million, representing sequential growth of 10% to 20%.
• Q4 Revenue Guidance -- $35 million to $39 million for the upcoming quarter.
• Q4 Adjusted EBITDA Guidance -- negative $1 million to positive $2 million.
• Boosted Rewards Test -- resulted in a 13% billing increase among participating test groups.
• Electronics Retailer Campaign -- nearly tripled in billings during the third quarter after ramping from a second quarter launch.

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RISKS

• Gupta stated, "Macro pressure weighed on advertiser budgets, particularly in grocery, and in some industries, budgets contracted or moved to other formats," explaining the third quarter performance shortfall.
• Gupta noted that a technical disruption at one U.K. bank partner "reduced our billings and caused offers not to get served to their consumers for a long stretch of time" during the third quarter.
• Evans stated that management is "actively evaluating any and all options as it pertains to improving our balance sheet and cash flow going forward," indicating a focus on long-term liquidity.

SUMMARY

Cardlytics, Inc. (NASDAQ:CDLX) reported third quarter financial results that fell below previous guidance, citing a combination of technical challenges with a bank partner and macroeconomic pressures on advertiser budgets. Management emphasized a shift in strategy toward diversifying its supply network through the Cardlytics Rewards Platform, which expands the company's reach into nonbank verticals such as telecom, online media, and travel. Following the divestiture of its Bridg business in the first quarter of 2026, the company has focused on reducing its cost structure to improve contribution margins and achieve positive adjusted EBITDA. Management projected a return to sequential growth in the fourth quarter, supported by increased engagement programs from major bank partners and the integration of new advertising partners.

• Gupta reported that the company signed four new partners for its rewards platform, including Yahoo and VodafoneThree, to expand its supply network beyond traditional financial institutions.
• Management noted that more than half of the consumers linking cards through the rewards platform are from outside the existing bank network, providing access to new consumer segments.
• Gupta indicated that holiday shoppers are distributing purchases across the entire season, leading the company and its retail partners to invest in marketing earlier than in previous years.
• The company launched the Cardlytics Demand Index to provide aggregated privacy-safe insights on consumer spending based on its verified purchase data set.
• CEO Gupta stated that the company plans to integrate its offer network into AI shopping agents to serve relevant rewards at the point of purchase.

INDUSTRY GLOSSARY

• CRP: Cardlytics Rewards Platform, a solution for advertisers to engage consumers through nonbank digital channels such as telecom and travel platforms.
• MQUs: Monthly Qualified Users, targetable customers who have transacted using an account with a financial institution partner.
• ACPU: Adjusted Contribution Per User, a metric measuring the efficiency of converting marketer budgets into engagement value.
• Open Banking: A system providing third-party access to financial data through application programming interfaces to enable new financial services.
• Verified Redemptions: Sales results confirmed through direct transaction data rather than inferred or estimated metrics.
• Bridg: A customer data solution for processing point-of-sale information that Cardlytics divested in early 2026.
• Cardlytics Demand Index: A data tool providing privacy-safe insights into consumer spending patterns across the company's network.

Full Conference Call Transcript

Operator: I will now hand the conference over to Chris Cheng, Chief Legal Officer. Chris, please go ahead.

Chris Cheng: Good evening, and welcome to the Cardlytics Third Quarter 2026 Financial Results Call. Before we begin, let me remind everyone that today's discussion will contain forward-looking statements based on our current assumptions, expectations, and beliefs, including expectations around our future financial performance and results, including for the fourth quarter of 2026, our capital structure, and operational and product initiatives. For discussion on the specific risk factors that could cause our actual results to differ materially from today's discussion, please refer to the risk factors section of our 10-Q for the quarter ending September 30, 2026, which has been filed with the SEC. Also, during our call, we will discuss non-GAAP measures of our performance.

GAAP financial reconciliations and supplemental financial information are provided in the press release issued today, which you can find on the Investor Relations section of the Cardlytics website. Today's call is available via webcast, and a replay will also be available on our website. On the call today, we have CEO Amit Gupta and CFO David Evans. Following their prepared remarks, we'll open it up for your questions. With that, I'll hand the call over to Amit.

Amit Gupta: Good evening, and thank you for joining us. Q3 was another quarter of execution against our priorities, deepening our bank partnerships, expanding our publisher network, driving incremental revenue for our advertisers, and investing in our technology platform that differentiates us. Billings and revenue were down from Q2, and we came in below our guidance. We experienced some sluggishness in the third quarter. One of our bank partners in the U.K. had issues unrelated to us that reduced our billings and caused offers not to get served to their consumers for a long stretch of time. Macro pressure weighed on advertiser budgets, particularly in grocery, and in some industries, budgets contracted or moved to other formats.

We don't view this as a signal for Q4. David will take you through the details in a few moments. What encourages us is that we are building for the next stage of growth. New brands are coming onto the platform at a faster pace each quarter, and we are expanding our publisher network with new CRP partners. Starting with our network and supply, we have signed three new CRP partners this quarter. We welcomed Yahoo to our publisher network and will start by bringing offers to Yahoo Mail users. Through Yahoo Mail's primary ad unit, users can link a card, browse personalized offers, and earn Yahoo cashback automatically on their purchases they are already making.

This puts CRP in front of millions of consumers on one of the largest platforms globally, and we expect the experience to roll out over the next few months. In the U.K., we recently signed a partnership with VodafoneThree for Three mobile customers to use Cardlytics on the Three+ Rewards app. VodafoneThree is the U.K.'s largest mobile network operator, serving the fixed and mobile market, formed following the merger of Vodafone UK and Three UK. We will start with launching offers with Three+, with plans to bring it to VeryMe in the future. This partnership also marks three firsts for Cardlytics in the U.K.: our first open banking partner at scale, our first U.K.

CRP partner outside of financial institutions, and our first to offer rewards as a credit off the phone bill. We also announced a partnership with Rove, a universal airline mile program built for Gen Z and Millennials. Rove members can link a card and earn Rove Miles through personalized offers on top of the miles they already earn through flights, hotels, and shopping. The offers experience will roll out later in Q4 to all Rove users. Since the end of the quarter, we have also signed a fourth CRP partner, Coupert, a loyalty platform that will bring our offers to its users in the U.S. and U.K. through its website, browser extension, and mobile app.

Each of these partners sits outside the traditional banking across telecom, online media, travel, and cashback verticals. Together, we see CRP gaining traction and our supply diversifying to new surfaces beyond banks. It also expands who we reach. More than half of the cards consumers link through CRP come from outside our existing bank network, so each partner brings us consumers we could not see before. We continue to have positive conversations with other potential bank and non-bank partners, and we look forward to sharing more as these launches roll out and we see an impact in 2027. On the bank side, several of our largest partners are investing heavily in Q4 to promote their programs and boost engagement.

That includes bank-funded offers, bonus redemption days, boosted rewards, and sweepstakes. Turning to our advertiser base. Despite the challenges we noted in some of our existing accounts, we continue to be encouraged by growth we see in new business. New business billings grew 25% from Q2. The advertisers that launched with us in Q2 ramped quickly, with this cohort's billing up 58% in Q3, and 70% of them renewed with new budgets, so those advertisers are valuing the Cardlytics channel. Over half of the advertisers that launched with us in Q2 billed more in Q3, including a national electronics retailer that nearly tripled. Every day spend is a growing part of our advertiser base.

Restaurant, gas, and grocery advertisers now make up 29% of our active advertisers. Advertisers are still watching their budgets closely, but they know Q4 is an important quarter, and we expect that to show up in our results. We are bringing them new ad formats and new programs, and as I said earlier, our bank partners are investing alongside us. Our purchase intelligence also shows that the consumer is still spending. We saw U.S. consumer spending grew 10% compared with the third quarter of last year. Shoppers made 7% more purchases, and the average transaction size was about 3% larger compared to Q3 2025. Spend on gas and convenience also grew 27% because of higher fuel prices.

Travel spend grew 17% in the same time period. We see that in our advertiser base too, with the number of active travel advertisers up more than 50% from a year ago, including new airline, hotel, cruise, and online travel agency logos. Travel brands come to us for verified redemptions and because we can deliver revenue within a set window, which helps them hit specific goals like Q4 targets. We plan to bring verified redemptions to other industries such as retail. in the U.K., billings were down 4% year-over-year. As mentioned earlier, the decline primarily came from a technical disruption at one of our bank partners, which reduced billings during the quarter. Underneath that, our advertiser base was healthy.

We saw growth across our top 10 advertisers, and retail grew about 5%. Our U.K. data shows a change in shopper behavior versus last year. Instead of concentrating purchases around the deepest discount days like Black Friday, shoppers are making more considered purchases spread across the whole holiday season. In response, new and existing retail partners are investing earlier and more steadily instead of timing their spend around seasonal spikes. Now to our technology platform. We launched the ability for banks to set custom reward tiers. A bank can now offer a higher reward multiplier to encourage customers to move up to a higher account tier.

We worked with one of our bank partners to extend our program to a broader part of its customer base. We also tested boosted rewards for customers who had not redeemed an offer in more than six months. In early tests across bank partners, billing rose 13% in the test groups. We are finalizing the plan to expand it. We scaled our AI insights agent and expanded our industry outlook reports to seven sectors, including quick service restaurants, grocery, and travel. The agent now produces this content across hundreds of brands with very little engineering effort, which lets our sales team build custom campaigns for advertisers quickly and with minimal effort.

Advertisers tell us our share of wallet insights change how they plan. That's the concept behind our newly released Cardlytics Demand Index. It is designed to turn our network's verified purchase data into aggregated privacy-safe insights on consumer spending. Our goal is to give advertisers more confidence in how they plan and add a better view of consumer health to the broader economic conversation. Finally, as consumers begin shopping through AI agents, we plan to bring our offer network into those experiences. We are designing our technology so AI shopping agents can become a new type of publisher in our network, showing consumers relevant offers at the point of purchase and tying those offers to verified redemptions.

Looking ahead, with VodafoneThree, Yahoo, Rove, and Coupert signed, we are excited about growth in CRP, and we are focused on launching these partners successfully and carrying that momentum into 2027. We expect to return to sequential growth in Q4. David will take you through our financials. With that, I'll turn it over to him.

David Evans: Thank you, Amit. As Amit mentioned, we experienced some sluggishness in the third quarter, but we don't view it as a signal for what we're seeing coming in Q4, and it's not indicative of how we will move forward given momentum from advertisers and supply partners. Turning to Q3 results. For awareness, all comparisons to prior year will be presented excluding Bridg, which we divested in Q1 of this year. Bridg-specific results can be found in the 10-Q. Also, the comments will be year-over-year comparisons to the third quarter of 2025 unless stated otherwise. In Q3, our billings were $57.2 million, a 32% decrease year-over-year.

We will continue to see tough comps year-over-year until Q1 2027, when we anniversary the previously discussed changes in our bank partner relationships. Over the course of the year, we have seen supply stabilize. Q3 revenue was $32.9 million, a 30% decrease year-over-year. Q3 Adjusted Contribution was $19.4 million, a 24% decrease year-over-year. We materially increased our Adjusted Contribution as a percentage of revenue to 59% from 54.4% in the prior year. Our Q3 Adjusted EBITDA was positive $0.4 million compared to $3.3 million in the third quarter of 2025. Q3 adjusted operating expenses were $19 million, a decrease of 14% from prior year.

This was largely due to reduction in force actions taken in the second half of 2025 and optimization of our cloud infrastructure. Q3 Free Cash Flow was negative $1.6 million compared to negative $2.7 million year-over-year. From a liquidity perspective and on the balance sheet, we ended Q3 with $29.9 million in cash and cash equivalents and approximately $10.4 million available on our credit facility. We remain focused on Free Cash Flow with investments targeted at driving near and medium-term growth that is self-sustaining. We see Free Cash Flow trending in the right direction and converging closer to Adjusted EBITDA going forward.

We are laser-focused on the balance sheet and are actively evaluating any and all options as it pertains to improving our balance sheet and cash flow going forward. Our MQUs for the quarter were 187 million, down from 230 million a year ago due to the previously discussed changes in our bank partner relationships. That is, however, up 1.2 million from the end of the second quarter. Now turning to our outlook for Q4 2026. For Q4, we expect billings between $63 million and $69 million, revenue between $35 million and $39 million, Adjusted Contribution between $20 million and $23 million, and Adjusted EBITDA between negative $1 million and positive $2 million.

Our guidance represents 10%-20% growth in billings quarter-over-quarter and a return to sequential growth. We remain focused on executing against our priorities as we close out the year and build towards 2027. I will now turn it back to Amit for closing remarks.

Amit Gupta: To wrap up, Q3 slowed our recovery due to tighter advertiser budgets and issues on the bank side that were unrelated to us. The fundamentals haven't changed. The new advertisers coming onto the platform and the partners signing on tell us Cardlytics platform is delivering value to consumers, our partners, and advertisers. I'll now turn it over to the operator to begin Q&A.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jason Kreyer with Craig-Hallum. Jason, your line is open.

Jason Kreyer: Great. Thank you, guys. Wondering if we can parse out some of the commentary that created a little bit of headwind in the quarter. The issues in U.K. seem largely one-time and poised to reverse themselves, so maybe you can just give a concept on timing when that gets better. But some of the issues you'd highlighted, like in groceries and other verticals, again, maybe we can dive into that a little bit more. That created headwinds in Q3. Does that persist into Q4? Can some of this stuff persist into next year? Just looking for more color there.

Amit Gupta: Greg, thanks so much. Sorry, Jason Kreyer, thanks so much for the question. We appreciate it. I think just the two-part on the bank issue that we experienced in U.K., very much a one-time, one-off issue. They were going through a change in their infrastructure that led to this. We very much see this as a one-off and happy to share that our teams worked and collaborated quite actively to make sure that not only does it not happen again, but just hardening the systems overall. On your second part of the question around grocery, again, I think these are combination of cyclical and a few advertiser-related issues that we saw.

We don't see this as a recurring pattern, definitely not in 2027. As you saw, our Q4 growth from, there's a sequential growth that we see. Furthermore to address this, we're also bringing new ad formats to some of these grocer verticals that allows them to share and spend the budget in different ways, which they want to. So we see this more as a one-time effect in this quarter, and that's why we said we don't see this as a signal for Q4 at this time.

Jason Kreyer: Thank you. As we kind of compare and contrast CLO versus CRP solutions, I'm curious if you can talk about how different is the purchase history that you're obtaining that allows you to show targeted offers, and maybe if there's any difference in your ability to tie an offer to actually utilization at a POS?

Amit Gupta: Yeah. I think the way I would suggest we think about CRP is simply an extension of the surface area where we're publishing the offer. The core experience is quite analogous, whether it's on a bank experience or a bank surface or a non-bank surface, Jason Kreyer. So, there's less kind of pull and push about differences in the actual purchase history. The purchase history that we get from a non-bank CRP partner is quite similar in that we use that data to target, because the core, the secret sauce is very much about relevance and targeting, and it's not a kind of one of those spray and pray.

So, we're very much continue to be in the lower end of the performance funnel, and whether it's served on a CRP surface or a bank surface, it continues to be a targeted performance advertising funnel. There's less kind of differences there. The other thing that CRP brings to us, as I mentioned in the prepared remarks, it gets us access to consumers that we may not see from a current banking partner network footprint. It allows us to grow the footprint with a similar experience.

Jason Kreyer: Very helpful. I'm going to sneak in one more. You talked a lot. You're clearly looking beyond FIs to find additional supply. Just wondering if you can talk about what areas would represent maybe the most promise as you look to expand?

Amit Gupta: I think simply put, we want to meet consumers where they are. None of this expansion in beyond banks changes our strength of relationship or our focus with banks. Bank partners continue to be paramount to us, our first priority, and as you mentioned, we continue to have more conversations with other bank partners who we hope to welcome to the network soon. But in addition, this is allowing CRP funnel allows us to meet consumers beyond banks. In terms of which verticals, you've heard us talk about Yahoo and Vodafone and Rove. Frankly, it's less specific on verticals.

We want to be where consumers are, where consumers are in the fast frequency purchase patterns, because that's where they can actually get more and more value from our offers. And we're excited about bringing newer budgets that might meet the requirements of the new publisher partners. Hopefully, the way we think about it's about getting access to more consumers. More advertisers can now publish their ads on the Cardlytics network, and they get the benefit of having one stop to get a larger access of consumers across banks and non-banks.

Jason Kreyer: Great. Thank you for taking my questions.

Operator: We have reached the end of our Q&A portion. I will now turn the call back to Amit Gupta for closing remarks.

Amit Gupta: Thank you again for joining. As we share, we continue to see progress with our bank and CRP partners. Our gratitude to all the stakeholders that help grow our ecosystem so we can deliver more value to the end consumer. We are excited about what lies ahead, and we will be back soon. Thank you.

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

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