Thank you for standing by, and welcome to the Third Quarter 2022 Cardlytics, Inc., Earnings Conference Call. I will now hand the conference over to Nick Lynton. Please go ahead.

Good evening, and welcome to Cardlytics third quarter 2022 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 about our future financial performance and results, our ability to achieve our key long-term priorities, our future growth, adding new partners, advertisers, and content to the network, the timeline and benefits of our ad server and cloud migration initiatives, our timelines for achieving positive adjusted EBITDA and positive free cash flow, our cost reduction initiatives, and the Bridg earn-out payments. For a discussion of 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 the company’s 10-Q for the quarter ended September 30, 2022, which has been filed with the SEC. Also during this 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 and the 8-K that has been filed with the SEC. Today’s call is available via webcast and a replay will be available for one week. You can find the information I have just described in the Investor Relations section of the Cardlytics website. Please note that a supplemental presentation to our third quarter results has also been posted to our Investor Relations website. Joining us on the call today is Cardlytics’ CEO, Karim Temsamani, and CFO, Andy Christiansen. Following their prepared remarks, we’ll open the call to your questions. With that said, let me turn the call over to Karim.

Good evening, and thank you for joining our Q3 2022 earnings call. I am excited to have joined Cardlytics after spending 12 years at Google and nearly four years at Stripe. I’ve spent my first 60 days in the business with our leaders, key members, and banks, and I feel energized about the clear and immense opportunity to build a scale and financially robust business. The strength of our data to partnerships with leading banks and fintechs, combined with the growing customer base of advertisers and agencies, leads me to believe that Cardlytics can become the leading purchase intelligence and incentives platform with the right vision and execution. Later in the call, I will expand on these observations and the state of our business. First though, let’s go through the Q3 results and key highlights. We delivered double-digit growth despite the fierce challenges present in the economy. This growth was fueled by solid performance in travel and entertainment, while we grew greater than 100% in retail, which was supported by both new and existing client growth. Here are the numbers. Billings increased 12% year-over-year to $110.4 million. Revenue increased 12% year-over-year to $72.7 million. Adjusted contribution increased 11% year-over-year to $35.1 million. Bridg revenues increased 86% year-over-year to $5.4 million. Agency grew greater than 85% this quarter year-over-year and excluding the large client mentioned over the past two quarters, our core Catalytics revenue growth was 30% year-over-year. I am also excited to say that we made significant progress on our key platform enhancement initiatives this quarter. We are proud to announce that four banks are connected to our ad server, including one of our largest banks. We now have connected greater than 50% of our MAUs in the U.S. server which surpasses the goal we set for the year. We expect to connect more partners in the coming months and our goal is to help all our bank partners upgrade to a new ad server by the end of 2023. We are also rapidly migrating our bank partners to the cloud and made significant progress in the quarter. We believe we can migrate nearly all of our banks by Q1 of next year, which places us well ahead of our Q3 2023 goal. I personally want to congratulate the team on the progress in delivering the ad server and cloud migration to our partners. Both are initiatives in realizing our long-term strategic goals. The next step for the banks that have moved is to launch the new user experience and we have already received firm commitments from one of our largest banks to release by Q1 of 2023. As a reminder, banks must incorporate the new capabilities into their UX upgrade cycles, but we are working harder than ever to influence this timing to increase the value of their program. This will allow us to enable new capabilities such as enhanced imagery as well as new product offerings for our partners and advertisers. Additionally, these enhancements lay the foundation to optimize campaign performance, pricing, and ultimately provide the differentiation our partners need to better serve their customers. We view these developments as strong signals that our bank partners are committed and truly value our relationship. I look forward to providing more positive updates from our bank team in the coming quarters. On a related note, we are taking steps to increase our MAU base by signing new partners. We are in discussions with multiple top-20 U.S. banks and several high-upside fintechs. While these conversations are early, our pipeline to increase MAUs over the next two years is strong. Expanding these relationships will further diversify our partner concentration while providing advertisers with further scale to accomplish their marketing goals. We will continue to update you as we make progress on these potential partnerships. We’ve also made enhancements to advertising content. As we mentioned in prior quarters, the team has been hard at work in bringing third-party content to our platform through various pilots and proof-of-concepts. In Q3, we fully enabled the ability to bring in external content to our platform and delivered over 600 local offers across the United States. We are expecting scale to thousands of local offers with our banking partners over the coming quarters. Let me turn to market strength. This should be no surprise that consumers are increasingly being impacted by high inflation and rising interest rates. For the first time since Q4 of 2020, the year-over-year growth in basket size exceeded the growth of transaction frequency. We saw a higher basket size across all key verticals. But the highest increases were within gas and travel. While household spending increased 9% year-over-year, it decreased 2% from Q2 2022. The sequential quarterly decline in household spending was seen across all our key verticals. Gas and travel were both down 6%, entertainment was down 3%, retail was down 2% and restaurant and grocery were both down 1%. These data matter as what we are hearing from our clients across all our verticals and is consistent with trends we identified last quarter. Outside of the impacts of the large restaurant clients exiting our channel, the primary reason we saw reduced budget in Q3 was due to a recessionary environment impacting consumer demand. While we have performed well year-to-date, we believe these trends will impact our business moving forward. In response, we are cautiously guiding Q4 billings to be between $120 million and $132 million. With this in mind, we are doing everything in our power to exceed this range. We are also highly encouraged by the strong pipeline we have for 2023. Our goals of delivering sustainable positive adjusted EBITDA by Q2 2023 and positive free cash flow by Q3 2023 will be more challenging in a difficult auto market. But we are committed to remaining on track by making the necessary steps to lower our costs. A key priority in my first two months has been to evaluate the status of our current cost structure in a challenging environment and we have already identified several areas of additional cost savings. Andy will provide more details in his remarks. Now let me discuss our results and the macroeconomic environment. I want to lay out key learnings from my first sixty days at Cardlytics. It’s very clear to me that Cardlytics achieves what many thought impossible on the advertising platform that delivers positive outcomes for consumers, banks, and advertisers. Since the IPO, we’ve extended our reach to enter the three largest banks in the U.S., increased customer loyalty as value for our bank partners, and improved our sales while diversifying our customer base. And we are well on our way to delivering the newest service with our largest bank partners, which will provide better experiences for consumers, more engagement for our partners, and unlock broader advertising opportunities. We truly have a large opportunity in front of us. That said, I have identified several areas that we must improve to successfully execute on this next phase of the business. First, we are good partners to banks, but we must obsess over achieving their goals and providing value to the customers. Banks are the most important assets of our business. The only way to create strong outcomes for Cardlytics is to create stronger outcomes for our partners. Second, I believe Cardlytics can better optimize the monetization of its assets to support long-term profitable growth across the business. We are already thinking about various revenue models that better leverage our capabilities, analytics, and the idiosyncrasies of the verticals we serve. Third, Bridg, Dosh, and entertainment are great assets and we must integrate, invest, and scale them faster. Our combined value proposition is much more powerful than just showing in our Cardlytics alone. By doing this, we will become more important to current and future bank partners, open the doors to new offer constructs, enhance the measurement capabilities and deliver more content from the longer tail of advertisers. Fourth, to maintain a competitive position and drive long-term value, we must continue to upgrade our asset stack and be relentlessly focused on operational excellence. The ad server and cloud migration focus reflect this. But our operational processes are overly time-consuming. Improvements in efficiency and automation will unlock the vast opportunity ahead of us and allow us to profitably grow the business. Fifth, we must remain hyper-focused on profitability to deliver on the goals promised to our investors. The ability to control our destiny will fuel our growth strategy and ultimately be a key step in becoming the leading purchase intelligence and incentives platform. I see tremendous opportunity to scale Cardlytics profitably by layering in best-in-class systems, technologies, and processes. We will be faster, more agile, data-driven, ambitious, and accountable. In turn, we can make commerce smarter and more relevant for everyone. My number one priority in the short term is to protect our balance sheet against the possibility of a long-term recession. With a more resilient expense base and responsible internal investments, the good news is that through hard work, these key areas are firmly within our control to change. With that, I will hand it over to Andy to provide more details on our results and financial strategy.

Thank you, Karim. Our results this quarter were in line with our expectations given our clients’ growing concerns about the economy. High inflation and rising interest rates are still pressuring consumers, and the lack of consensus around the length and severity of recession has left advertisers uncertain; we’ve seen this uncertainty since the onset of the pandemic. Even with these issues, we delivered double-digit year-over-year growth. Billings grew 12% to $110.4 million, revenue grew 12% to $72.7 million, and adjusted contribution grew 11% to $35.1 million. Bridg revenue grew 86% year-over-year. Geographically, U.S. revenue grew 13% year-over-year, while UK revenues decreased 1% in U.S. dollars but increased 3% on a constant currency basis. Customer concentration has improved dramatically over the past year as our top five customers accounted for 20% of revenue this quarter, compared to 35% in Q3 of 2021. This will remain a key focus as we continue to grow and expand our advertiser base. Before we dive into adjusted EBITDA, I want to provide an update on our profitability goals and balance sheet. As Karim said, given the weakening digital advertising market, we have been evaluating areas of additional cost savings beyond the $15 million of annualized savings we discussed last quarter. We’ve expanded this program to reduce annualized operating expenses by at least an additional $20 million. We are moving rapidly to realize these savings and expect them to begin positively impacting results early next year. Moving to our balance sheet, we ended Q3 with $138.6 million in cash and cash equivalents compared to $157.1 million at the end of Q2. During Q2, we used $14.4 million of cash in operating activities, used $3.3 million for software development and capital expenditures, and realized an $800,000 unfavorable impact from a strengthening U.S. dollar. Our $15 million loan facility still remains undrawn. Regarding the Bridg earnout that is not for 2022, it is being disputed. It is currently in the resolution process outlined in the merger agreement and it will remain unpaid until it’s resolved. While the dispute is unfortunate, we are confident in our position and we will vigorously defend it. We still expect the first earnout, inclusive of broker fees and transaction bonuses, will be $126.4 million, requiring a minimum cash payment of $43.5 million. We expect the second earnout, inclusive of fees and bonuses, to be $69.5 million, requiring a minimum cash payment of $24.9 million in 2023. Adjusted EBITDA was a loss of $12.7 million this quarter, compared to a loss of $5.2 million in Q3 of 2021. As we mentioned last quarter, we did not expect the cost savings announced last quarter to have an immediate impact on adjusted EBITDA. We were able to realize some of our cost savings in Q3, and we’ll be able to fully realize the benefits by Q1 of 2023. As Karim mentioned earlier, we have begun our migration to the cloud. We continue to estimate total incremental hosting costs of $7 million to $10 million during the migration, of which we have incurred over $2 million so far. We’ve made great progress in the migration and expect to be fully migrated ahead of our goal of Q3 2023. M&A use of $184.7 million, an increase of 8% year-over-year. Our organic growth rate was slightly above our long-term expectations of low- to mid-single-digit growth. ARPU during the second quarter was $0.36, which is flat year-over-year. Additionally, I want to briefly comment on engagement rates in the U.S. Just like last quarter, our activations have increased meaningfully 72% year-over-year, and our searches have increased 82% year-over-year, slightly pressuring activation rates across the majority of our key verticals. We had 33.1 million shares outstanding at the end of Q3, compared with 32.9 million at the end of Q2. The weighted average shares outstanding during the quarter were 33 million, above Q3 of 2022 and 2021. Now turning to guidance. As Karim mentioned earlier, uncertainty among our advertising clients increased in Q3, we are seeing even more reductions and delays in overall ad spending so far in October. The large restaurant client mentioned in prior quarters exited the platform in Q4. With that in mind, for Q4, we expect billings of between $120 million and $132 million, revenue of between $80 million and $90 million, adjusted contribution of between $38 million and $44 million, and a low to mid-single-digit adjusted EBITDA loss. As I mentioned previously, the cost savings we announced last quarter have just started impacting our results. We are prepared to expand this program to serve with a lower operating cost and reach our financial goals in 2023. Additionally, we expect Bridg to continue growing at a faster rate than the core Cardlytics business, which will have a favorable impact on the overall margin profile of the company. The current environment presents many challenges to advertising platforms, but it also presents opportunities. Q4 is a seasonal high point due to the importance of the holiday season to marketers, and in most years, we see unplanned budgets materialize in the quarter. We are concerned that this dynamic may not exist this year, given the current market headwinds. As a result, we have not accounted for any unspent ad budgets in our guidance. On a positive note, our pipeline for 2023 looks large as it has ever been at this time of the year. There is a wide range of outcomes for Q4, but our highest priority remains meeting our profitability goals next year. Additionally, our plans for the business will focus on profitable growth that will position us to maximize the value of our assets. With that, I’ll turn it back over to Karim.

To everyone listening, thank you for your support. I believe Cardlytics can drive better business outcomes for partners and advertisers while making every transaction a delightful and rewarding experience for consumers. We are already making headway on improvements in the key areas identified and I am looking forward to iterating on this improvement quarter after quarter. While the economy may be uncertain, I believe there is inherent resiliency in platforms that prove a return on ad spend, and I am positive that we can grow profitably. There is a large opportunity ahead of us, and we will be disciplined in Q4 and beyond as we prioritize our goals and position the company well for the next ten years. With that, I will open the call to questions.

Our first question comes from Kyle Peterson with Needham & Co. Your line is now open.

There are some of the user trends regarding billings and revenue. I know there are some moving pieces with that large restaurant client, but how should we think about the puts and takes between, call it, breadth versus depth of where you guys are seeing the ad budgets? A lot of your usual suspects are still in the platform, just reducing levels, and it’s more stop and go, or have some guys exited full-on together, and what is left is still spending at a normal pace? Just trying to piece together the mix of breadth versus depth here.

This is Andy. I think what we are seeing is several marketers pull back in budgets. Not everybody is leaving, but we are not seeing an influx of customers exiting the channel. There is not a lot of pressure out there. We are signing larger deals, long-term deals, but we see that pretty widely. Now, there is some additional churn this quarter that we are anticipating just because of the market headwinds that we see. One thing I will say though is we do have a very strong pipeline, both for Q4 and for next year. I think what we are seeing is advertisers not taking a pause and reevaluating things in this current economic environment. We’ve looked at our pipeline and I see a very healthy pipeline, and we fully expect to see a resumption of our growth over the next couple of quarters. But we are seeing a combination of some pullbacks in ad budgets and some leads in general.

Got it. That’s helpful. And then, maybe just trying to think through some of your expense run rate here and how we should think about it in the current environment? Kind of the second quarter in a row you guys have called out some cost-saving initiatives here. How should we think about where your cash expenses should be over the next couple of quarters here, just so we can think about use of cash and the balance sheet here for the next handful of quarters?

Like I said, we implemented our cost savings last quarter for annualized savings of $15 million. We are evaluating further savings on top of that. The actions we decide to take will be made to ensure that we have solid liquidity and reach profitability aligned with our goals of being EBITDA positive in Q2 and positive cash flow in Q3, as we can control our destiny. Certainly, there is a lot of uncertainty regarding growth rates over the next several quarters. That’s why we are taking these steps now just to make sure that we are really mindful of expenses because ultimately, that is what we have full control over.

Alright. That’s good to hear. Thanks, guys.

Your next question comes from the line of Doug Anmuth with JPMorgan. Your line is now open.

Hi, this is Wesley for Doug. Thanks for taking my questions. Just kind of thinking back to last quarter when you guys guided 10% to 15% second-half growth. I believe you had contemplated a deteriorating macro environment. So I guess it would be helpful if you could walk us through the quarter and kind of what you saw; it seems like it’s a bit lower in the second half now based on 3Q results and your 4Q guidance. So just wondering what you are seeing there. I guess, just as a follow-up, I believe there was a proposal laid out by Chase and Bank of America for the large advertising partner, and just wondering if there is any progress on that front.

Hey, thanks. From a growth perspective, the low-budget headwind that we are facing is certainly due to the large restaurant clients who left the platform, but there is a lot of disruption in the ad market, and we are just not immune to that. While we normalized for the loss of that large client, we reached 30% this quarter. But I think we are dealing with what's before—a significant pause by advertisers, which was not accepted. We knew from public information in Q1 of this year that that large client was in the exit channel. However, I don’t think we anticipated the broad slowdown that would occur in Q4. This was certainly worse than what we expected, but again, I feel really good about the size of the pipeline that we have and what we are trying to guide for the quarter. It’s awfully difficult to anticipate the positive seasonality trends that we typically see in Q4. Normally, we expect budgets to materialize unplanned in the quarter, but with the current headwinds, it’s not prudent for us to say that those types of things will show up again. That captures the largest delta between our expectations and how Q4 is shaping up.

Yes. Enough. Thank you.

Your next question comes from the line of Jason Kreyer with Craig-Hallum. Your line is now open.

Hey, this is Kyle here for Jason. I wanted to ask about the M&A use ramping up. If you could talk about the learnings with that process and how coming ahead of schedule enhances the long-term opportunity here for Cardlytics.

We're really happy to report that we’ve got over 50% of the M&A connected to the ad server. When you look forward to next year, we anticipate that by the end of 2023, pretty late in the year, we’ll see some positive momentum. We have said that in several years since we launched something significant for our bank partners, who are really excited about this. It’s going to take, obviously, a couple of quarters as not only do we get the ad server installed, there are additional steps needed. The banks need to evolve their user experience and incorporate the capabilities that we unlock in order to offer these new things to their bank customers. So, it will take a couple of quarters for these initiatives to bear fruit, but we are really happy to see that progression. We do expect all of our bank partners to adopt this next year, and then we’ll be able to show an impact as a result.

Perfect. Thanks. And then just real quick, Karim, coming in here, just kind of wondering about your thoughts on the progression towards profitability. I know you guys have talked about implementing further cost-cutting measures. Just kind of curious how that’s tracking so far and what you think the potential of that moving forward.

Thanks for the question. It’s pretty clear to me that we have a very large opportunity with this company. As I mentioned in my opening remarks, I think there are several areas where we need to improve to ensure that we have a long-term profitable business. I mentioned the importance of obsessing over our banking partners and ensuring that we have the right level of relationship and the right level of product offering with them. Obviously, as Andy just mentioned, this is one of the key components of that. I think we have an opportunity to better optimize the monetization of our assets and capabilities. We are undergoing a strategic process to unlock the power of Cardlytics. I believe that we can integrate, scale, and invest in the acquisitions we made in recent years, and I am focused on that as well, alongside upgrading our tech stack and emphasizing operational excellence. All of these things are critical for Cardlytics, but they must be underpinned to help this business turn a profit. I have been very much focused over the last two months on discussing with the teams how we can provide greater scale to our operations and rationalize areas where we are spending more money than we should. This will ensure that we have a solid foundation to continue investing in the future of the business in the areas I mentioned.

Perfect. Thank you.

We have no further questions in the queue. This concludes today’s conference call. Thank you for your participation. You may now disconnect.