7 unchanged sentences
By applying advanced analytics to this aggregation of purchase data, we make it actionable, helping marketers identify, reach and influence likely buyers at scale, and measure the true sales impact of their marketing spend.
−Removed: We have strong relationships with leading marketers across a variety of industries, including national and regional restaurant and retail chains, large providers of cable satellite television and wireless services, and increasingly, travel and hospitality, grocery, e-commerce, and luxury brands.
−Removed: Using our purchase intelligence presents customers with offers to save money at a time when they are thinking of their finances.
−Removed: We have historically derived substantially all of our revenue from sales of Cardlytics Direct.
−Removed: Cardlytics Direct is our proprietary native bank advertising channel that enables marketers to reach consumers through the FIs' trusted and frequently visited digital banking channels.
+Added: We have strong relationships with leading marketers across a variety of industries, including retail, restaurant, travel and entertainment, telecommunications, subscription services, direct to consumer, and grocery.
+Added: Using our purchase intelligence, we present customers with offers to save money at a time when they are thinking of their finances.
Working with a marketer, we design a campaign that targets consumers based on their purchase history.
1 unchanged sentence
We use a portion of the fees that we collect from marketers to provide these consumer incentives to our FIs’ customers after they make qualifying purchases ("Consumer Incentives").
−Removed: We report our revenue on our condensed consolidated statements of operations net of Consumer Incentives since we do not provide the goods or services that are purchased by our FIs’ customers from the marketers to which the Consumer Incentives relate.
+Added: 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 our FIs’ customers from the marketers to which the Consumer Incentives relate.
We generally pay our FI partners a negotiated and fixed percentage of our billings to marketers less any Consumer Incentives that we pay to the FIs’ customers and certain third-party data costs ("FI Share").
5 unchanged sentences
However, these investments negatively impact our GAAP revenue, which is reported net of Consumer Incentives.
−Removed: Billings represents the gross amount billed to marketers and is reported gross of both Consumer Incentives and FI Share.
−Removed: Adjusted contribution represents our revenue, which is reported net of Consumer Incentives, less our adjusted FI Share and other third-party costs.
−Removed: We believe these non-GAAP measures, alongside our GAAP revenue, provides useful information to investors for period-to-period comparisons of our core business and in understanding and evaluating our results of operations in the same manner as our management and board of directors.
+Added: Revenue, which is reported net of Consumer Incentives and gross of FI Share and other third-party costs, was $210.4 million and $186.9 million for December 31, 2019 and 2020, respectively, representing a decline of 11%.
+Added: Billings, a non-GAAP measure that represents the gross amount billed to marketers and is reported gross of both Consumer Incentives and FI Share, was $316.1 million and $263.4 million for December 31, 2019 and 2020, respectively, representing a decline of 17%.
+Added: Gross profit, which represents revenue less FI Share and other third-party costs and less delivery costs, was $79.5 million and $63.3 million for December 31, 2019 and 2020, respectively, representing a decline of 20%.
+Added: Adjusted contribution, a non-GAAP measure that represents our revenue less our adjusted FI Share and other third-party costs, was $95.2 million and $82.2 million for December 31, 2019 and 2020, respectively, representing a decline of 14%.
Billings and adjusted contribution are further defined under the heading "Non-GAAP Measures and Other Performance Metrics" below.
−Removed: Revenue (reported net of Consumer Incentives and gross of FI Share and other third-party costs) was $150.7 million and $210.4 million for December 31, 2018 and 2019 , respectively, representing a growth rate of 40% .
−Removed: Billings was $219.0 million and $316.1 million for December 31, 2018 and 2019 , respectively, representing a growth rate of 44% .
−Removed: Adjusted contribution was $69.5 million and $95.2 million for December 31, 2018 and 2019 , respectively, representing a growth rate of 37% .
+Added: We believe these non-GAAP measures, alongside our GAAP revenue and GAAP gross profit, provide useful information to investors for period-to-period comparisons of our core business and in understanding and evaluating our results of operations in the same manner as our management and board of directors.
The following table summarizes our results (dollars in thousands):
−Removed: Year Ended December 31,
−Removed: Year Ended December 31,
+Added: Year Ended December 31, Change Year Ended December 31, Change
+Added: 2018 2019 $ % 2019 2020 $ %
+Added: Billings $ 218,980 $ 316,053 $ 97,073 44 % $ 316,053 $ 263,355 $ (52,698) (17) %
Consumer Incentives 68,296 105,623 37,327 55 105,623 76,463 (29,160) (28)
+Added: Revenue 150,684 210,430 59,746 40 210,430 186,892 (23,538) (11)
Adjusted FI Share and other third-party costs (1)(2)
+Added: 81,234 115,211 33,977 42 115,211 104,710 (10,501) (9)
Adjusted contribution (2)
−Removed: Adjusted FI Share and other third-party costs excludes a non-cash equity expense included in FI Share and amortization of deferred FI implementation costs, as detailed below in our reconciliation of GAAP gross profit to adjusted contribution.
+Added: 69,450 95,219 25,769 37 95,219 82,182 (13,037) (14)
+Added: Delivery costs 10,632 12,893 2,261 21 12,893 14,310 1,417 11
+Added: Non-cash equity expense included in FI Share 2,519 — (2,519) n/a — — — n/a
+Added: Deferred FI implementation costs (3)
+Added: 1,618 2,869 1,251 77 2,869 4,598 1,729 60
+Added: Gross profit $ 54,681 $ 79,457 $ 24,776 45 % $ 79,457 $ 63,274 $ (16,183) (20) %
+Added: (1) Adjusted FI Share and other third-party costs excludes a non-cash equity expense included in FI Share and deferred FI implementation costs, as detailed below in our reconciliation of GAAP gross profit to adjusted contribution.
(2) Adjusted FI Share and other third-party costs and adjusted contribution include the impact of a $0.8 million gain during 2018 related to the renewal of our agreement with an FI partner, which contains certain amendments that are retroactively applied as of January 1, 2018.
+Added: (3) Deferred FI implementation costs for the year ended December 31, 2020 includes the impact of a $0.7 million write off related to certain platform features.
During 2018, 2019 and 2020, our net loss was $53.0 million, $17.1 million and $55.4 million, respectively.
1 unchanged sentence
During 2018, 2019 and 2020, our net loss includes stock-based compensation expense of $26.8 million, $15.9 million and $32.4 million, respectively.
−Removed: In 2017 , our net loss also includes a $5.0 million non-cash gain related to the change in fair value of convertible promissory notes.
−Removed: In 2018 , our net loss also includes a $6.8 million non-cash expense related to the change in fair value of our warrant liabilities, a $2.5 million non-cash expense related to the vesting of warrants issued to an FI partner that accelerated upon our IPO, a $0.9 million loss on extinguishment of debt and a $0.8 million gain related to the renewal of our agreement with an FI partner.
−Removed: Today, our FI partners include Bank of America, National Association ("Bank of America"), JPMorgan Chase Bank, National Association (“Chase”) and Wells Fargo Bank, National Association (“Wells Fargo”) in the U.S.
−Removed: and Lloyds Bank plc (“Lloyds”) and Santander UK plc (“Santander”) in the U.K., as well as many other national and regional financial institutions, including several of the largest bank processors and digital banking providers to reach customers of small and mid-sized FIs.
−Removed: Wells Fargo began a phased launch of our platform in the fourth quarter of 2019 that will continue into the first half of 2020.
−Removed: As the amount of revenue that we can generate from marketers with respect to Cardlytics Direct is primarily a function of the number of active users on our FI partners’ digital banking platforms, we believe that the number of monthly active users ("FI MAUs") contributed by any FI partner is indicative of our level of dependence on such FI partner.
−Removed: During 2017 , 2018 and 2019 , Bank of America contributed 51%, 47% , and 26% of our average FI MAUs, respectively.
−Removed: Chase contributed 9% and 47% of our average FI MAUs in 2018 and 2019 , respectively.
−Removed: We anticipate that Chase, Bank of America and, once the phased launch is complete, Wells Fargo will contribute a significant portion of our average FI MAUs for the foreseeable future.
+Added: In 2018, our net loss also includes a $6.8 million non-cash expense related to the change in fair value of our warrant liabilities and a $2.5 million non-cash expense related to the vesting of warrants issued to an FI partner that accelerated upon our IPO.
+Added: Acquisition of Dosh
+Added: On February 26, 2021, we entered into an Agreement and Plan of Reorganization (the “Merger Agreement”) with DOSH Holdings, Inc., a Delaware corporation (“Dosh”), BSPEARS MERGER SUB I, INC., a Delaware corporation and our wholly owned subsidiary (“Merger Sub 1”), BSPEARS MERGER SUB II, LLC, a Delaware limited liability company and our wholly owned subsidiary (“Merger Sub 2”), and certain other parties named therein.
+Added: The Merger Agreement provides for Merger Sub 1 to merge with and into Dosh ( “Merger 1”), with Dosh surviving Merger 1 as our wholly owned subsidiary, immediately followed by the merger of Dosh with and into Merger Sub 2, with Merger Sub 2 surviving Merger 2 as our wholly owned subsidiary, subject to the terms and conditions set forth in the Merger Agreement.
+Added: Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof, at the closing, we are required to pay the former equityholders of Dosh (other than former holders of unvested options to purchase Dosh’s common stock) (collectively, the “Dosh Equityholders”) consideration of $275.0 million, consisting of, and subject to adjustment with respect to, the following:
+Added: (A) an amount in cash equal to $150.0 million, subject to adjustments and subject to escrows;
+Added: and (B) $125.0 million million of shares of our common stock at an agreed-upon price of $136.33 per share.
+Added: In addition, we will assume the unvested options held by the holders of unvested options to purchase Dosh’s common stock and issue up to $8.0 million in our performance stock units to certain key Dosh executives.
+Added: The Merger Agreement contains customary representations, warranties, covenants and indemnities of each of us and Dosh.
+Added: During the period from the date of the Merger Agreement to the closing, we and Dosh have agreed to carry on their respective businesses in the ordinary course and consistent with past practices and have agreed to certain other operating covenants.
+Added: The closing of the Mergers is subject to the satisfaction or waiver of a number of customary closing conditions in the Merger Agreement, including, among others, the absence of certain governmental restraints and the absence of a material adverse effect on Dosh.
+Added: The Merger Agreement may be terminated prior to the closing date by mutual written agreement of us and Dosh.
+Added: In addition, the Merger Agreement may be terminated by either we or Dosh in certain circumstances, including if the Acquisition has not been closed on or before May 31, 2021, or if the other party has materially breached any representation, warranty, covenant, obligation or agreement such that certain of the conditions to closing cannot be satisfied.
+Added: Our FI partners include Bank of America, National Association ("Bank of America"), JPMorgan Chase Bank, National Association (“Chase”) and Wells Fargo Bank, National Association (“Wells Fargo”), as well as many other national and regional financial institutions, including several of the largest bank processors and digital banking providers to reach customers of small and mid-sized FIs.
+Added: Wells Fargo began a phased launch of our platform in the fourth quarter of 2019 that was completed in the second quarter of 2020.
+Added: For December 31, 2019 and 2020, our average FI monthly active users ("FI MAUs") were 122.6 million and 155.8 million and our average Cardlytics platform revenue per user ("ARPU") was 1.72 and 1.20, respectively.
+Added: FI MAU and ARPU are performance metrics defined under the heading "Non-GAAP Measures and Other Performance Metrics" below.
+Added: The increase in FI MAUs is largely due to Wells Fargo completing their phased launch in the second quarter of 2020 and Chase launching our Cardlytics platform for its online banking channel in the second quarter of 2019.
+Added: We expect U.S.
+Added: Bank to begin a phased launch of the Cardlytics platform in the first half of 2021, which will also impact FI MAU growth.
+Added: We expect a continued increase in FI MAUs year over year as a result of the launch of Wells Fargo and U.S.
+Added: Over time, we expect year-over-year increases in ARPU as both consumer spending and the advertising budgets of our clients recover from the negative impacts of the COVID-19 pandemic.
FI Partner Commitments
2 unchanged sentences
During 2018, development payments to a certain FI partner totaled $9.3 million which was partially offset by recoveries through FI Share payment reductions of $4.6 million in 2019.
+Added: During 2020, one of our FI partners notified us of plans to end the use of certain platform features prior to the end of our contractual arrangement with the FI partner.
+Added: As a result, we wrote off deferred FI implementation costs totaling $0.7 million to FI Share and other third-party costs on our consolidated statements of operation.
We have an FI Share commitment to a certain FI partner totaling $10.0 million over a 12-month period following the completion of certain milestones by the FI partner, which were not met as of December 31, 2020.
−Removed: The timing of the completion of the milestones is uncertain;
−Removed: however, we do not currently believe the FI partner will complete the milestones in 2020.
−Removed: Any expected shortfall will be accrued during the 12-month period following the completion of the milestones.
+Added: Any expected shortfall penalty will be accrued during the 12-month period following the completion of the milestones.
+Added: Impacts of COVID-19 Pandemic
+Added: We remain focused on supporting our marketers, FIs partners, employees and communities during the COVID-19 pandemic.
+Added: The impact of COVID-19 on the global economy and on our business continues to be a fluid situation.
+Added: We responded quickly to adopt a virtual corporate strategy to enable all of our employees to work productively from home, guard the health and safety of our team, support our marketers and FI partners, mitigate risk and maximize our financial performance.
+Added: We are focused on ensuring continuity for our marketers and FI partners.
+Added: Revenue for the year ended December 31, 2020 was unfavorably affected by the COVID-19 pandemic and its impact on both consumer discretionary spending and marketers' ability to spend advertising budgets on our solution.
+Added: Revenue during the second quarter of 2020 was significantly affected by the COVID-19 pandemic and its negative impact on both consumer spending and marketers' ability to spend advertising budgets on our solution.
+Added: During the third and fourth quarters of 2020, we saw a recovery of both consumer spending as well as the advertising budgets of our clients.
+Added: Due to continuing uncertainty regarding the severity and duration of the impacts of COVID-19 on the global economy, we will continue to monitor this situation and the potential impacts to our business .
+Added: The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on industry events, and its effect on consumer spending, our marketers, FI partners, suppliers and vendors and other parties with whom we do business, all of which are uncertain and cannot be predicted at this time.
+Added: To the extent possible, we are conducting business as usual, with necessary or advisable modifications to employee travel, employee work locations, and cancellation of marketing events.
+Added: We will continue to actively monitor the rapidly evolving situation related to COVID-19 and may take actions that alter our business operations, including those that may be required by federal, foreign, state or local authorities, or that we determine are in the best interests of our employees, marketers, FI partners, suppliers, vendors and stockholders.
+Added: At this point, the extent to which the COVID-19 pandemic may impact our business, results of operations and financial condition is uncertain.
+Added: See “Risk Factors” for further discussion of the adverse impacts of the COVID-19 pandemic on our business.
Non-GAAP Measures and Other Performance Metrics
2 unchanged sentences
Year Ended December 31,
+Added: 2018 2019 2020
(Amounts in thousands, except ARPU)
+Added: FI MAUs 65,012 122,586 155,784
+Added: ARPU $ 2.30 $ 1.72 $ 1.20
+Added: Billings $ 218,980 $ 316,053 $ 263,355
Adjusted contribution (1)
+Added: $ 69,450 $ 95,219 $ 82,182
Adjusted EBITDA (1)
+Added: $ (6,595) $ 6,052 $ (7,780)
(1) Adjusted contribution and Adjusted EBITDA includes the impact of a $0.8 million gain during 2018 related to the renewal of our agreement with an FI partner, which contains certain amendments that are retroactively applied as of January 1, 2018.
2 unchanged sentences
We then calculate a monthly average of these FI MAUs for the periods presented.
−Removed: We believe that FI MAUs is an indicator of our and our FI partners’ ability to drive engagement with Cardlytics Direct and is reflective of the marketing base that we offer to marketers through Cardlytics Direct.
+Added: We believe that FI MAUs is an indicator of our and our FI partners’ ability to drive engagement with the Cardlytics platform and is reflective of the marketing base that we offer to marketers through the Cardlytics platform.
Average Revenue per User
−Removed: We define ARPU as the total Cardlytics Direct 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 FI MAUs in the applicable period.
−Removed: We believe that ARPU is an indicator of the value of our relationships with our FI partners with respect to Cardlytics Direct.
+Added: We define ARPU as the total Cardlytics platform 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 FI MAUs in the applicable period.
+Added: We believe that ARPU is an indicator of the value of our relationships with our FI partners with respect to the Cardlytics platform.
Billings represents the gross amount billed to marketers for advertising campaigns in order to generate revenue.
8 unchanged sentences
Year Ended December 31,
+Added: 2018 2019 2020
+Added: Revenue $ 150,684 $ 210,430 $ 186,892
Consumer Incentives 68,296 105,623 76,463
+Added: Billings $ 218,980 $ 316,053 $ 263,355
Adjusted Contribution
1 unchanged sentence
Adjusted contribution demonstrates how incremental marketing spend on our platform generates incremental amounts to support our sales and marketing, research and development, general and administration and other investments.
−Removed: Adjusted contribution is calculated by taking our total revenue less our FI Share and other third-party costs exclusive of a non-cash equity expense and amortization of deferred FI implementation costs, which are non-cash costs.
+Added: Adjusted contribution is calculated by taking our total revenue less our FI Share and other third-party costs exclusive of a non-cash equity expense and deferred FI implementation costs, which are non-cash costs.
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.
6 unchanged sentences
Also, adjusted contribution may not necessarily be comparable to similarly titled measures presented by other companies.
−Removed: Refer to Note 15—Segments to our condensed consolidated financial statements for further details on our adjusted contribution by segment.
−Removed: The following table presents a reconciliation of adjusted contribution to revenue, the most directly comparable GAAP measure, for each of the periods indicated (in thousands):
+Added: Refer to Note 16—Segments to our consolidated financial statements for further details on our adjusted contribution by segment.
+Added: 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):
Year Ended December 31,
+Added: 2018 2019 2020
+Added: Revenue $ 150,684 $ 210,430 $ 186,892
FI Share and other third-party costs (1)
+Added: 85,371 118,080 109,308
Delivery costs (2)
+Added: 10,632 12,893 14,310
Gross profit (1)
+Added: 54,681 79,457 63,274
Delivery costs (2)
+Added: 10,632 12,893 14,310
Non-cash equity expense included in FI Share (3)
−Removed: Amortization of deferred FI implementation costs (3)
+Added: Deferred FI implementation costs (3)
+Added: 1,618 2,869 4,598
Adjusted contribution (1)
+Added: $ 69,450 $ 95,219 $ 82,182
(1) FI Share and other third-party costs, gross profit and adjusted contribution include the impact of a $0.8 million gain during 2018 related to the renewal of our agreement with an FI partner, which contains certain amendments that are retroactively applied as of January 1, 2018.
(2) Stock-based compensation expense recognized in delivery costs totaled $0.6 million, $0.7 million and $1.2 million during 2018, 2019 and 2020, respectively.
−Removed: Non-cash equity expense included in FI Share and amortization of deferred FI implementation costs are excluded from adjusted FI Share and other third-party costs as follows (in thousands):
+Added: (3) Non-cash equity expense included in FI Share and deferred FI implementation costs are excluded from adjusted FI Share and other third-party costs as follows (in thousands):
Year Ended December 31,
+Added: 2018 2019 2020
FI Share and other third-party costs $ 85,371 $ 118,080 $ 109,308
Non-cash equity expense included in FI Share 2,519 — —
−Removed: Amortization of deferred FI implementation costs
+Added: Deferred FI implementation costs (1)
+Added: 1,618 2,869 4,598
Adjusted FI Share and other third-party costs $ 81,234 $ 115,211 $ 104,710
+Added: (1) Deferred FI implementation costs for the year ended December 31, 2020 includes the impact of a $0.7 million write off related to certain platform features.
Adjusted EBITDA
3 unchanged sentences
stock-based compensation expense;
−Removed: foreign currency (gain) loss;
−Removed: amortization of deferred FI implementation costs;
+Added: foreign currency gain;
+Added: deferred FI implementation costs;
costs associated with financing events;
loss on extinguishment of debt;
+Added: restructuring costs;
change in fair value of warrant liabilities, net;
−Removed: change in fair value of convertible promissory notes;
and a non-cash equity expense recognized in FI Share.
We do not consider these excluded items to be indicative of our core operating performance.
−Removed: The items that are non-cash include change in fair value of warrant liabilities, change in fair value of convertible promissory notes, foreign currency (gain) loss, amortization of FI implementation costs, depreciation and amortization expense, stock-based compensation expense and a non-cash equity expense included in FI Share.
+Added: The items that are non-cash include change in fair value of warrant liabilities, Other (expense) income, net, deferred FI implementation costs, depreciation and amortization expense, stock-based compensation expense and a non-cash equity expense included in FI Share.
Notably, any impacts related to minimum FI Share commitments in connection with agreements with certain FI partners are not added back to net loss in order to calculate adjusted EBITDA.
11 unchanged sentences
Year Ended December 31,
+Added: 2018 2019 2020
+Added: $ (53,042) $ (17,144) $ (55,422)
Income tax benefit — — —
2 unchanged sentences
Stock-based compensation expense 26,790 15,851 32,396
−Removed: Foreign currency (gain) loss
−Removed: Amortization of deferred FI implementation costs
+Added: Foreign currency (loss) gain 1,172 (781) (1,549)
+Added: Deferred FI implementation costs 1,618 2,869 4,598
Costs associated with financing events 118 123 —
Loss on extinguishment of debt 924 51 —
+Added: Restructuring costs — — 1,323
Change in fair value of warrant liabilities 6,760 — —
−Removed: Change in fair value of convertible promissory notes
Non-cash equity expense included in FI Share 2,519 — —
Adjusted EBITDA (1)
+Added: $ (6,595) $ 6,052 $ (7,780)
(1) Net loss and adjusted EBITDA include the impact of a $0.8 million gain during 2018 related to the renewal of our agreement with an FI partner, which contains certain amendments that are retroactively applied as of January 1, 2018.
Components of Results of Operations
−Removed: We have historically derived substantially all of our revenue from sales of Cardlytics Direct.
We sell our solutions by entering into agreements directly with marketers or their marketing agencies, generally through the execution of insertion orders.
11 unchanged sentences
FI Share and Other Third-Party Costs
−Removed: FI Share and other third-party costs consist primarily of the FI Share that we pay our FI partners, media and data costs, the amortization of deferred implementation costs incurred pursuant to our agreements with certain FI partners and a $2.5 million non-cash expense in 2018 related to the vesting of warrants issued to an FI partner that accelerated upon the consummation of our IPO.
+Added: FI Share and other third-party costs consist primarily of the FI Share that we pay our FI partners, media and data costs, deferred implementation costs incurred pursuant to our agreements with certain FI partners and a $2.5 million non-cash expense in 2018 related to the vesting of warrants issued to an FI partner that accelerated upon the consummation of our IPO.
To the extent that we use a specific FI customer’s anonymized purchase data in the delivery of our solutions, we pay the applicable FI partner an FI Share calculated based on the relative contribution of the data provided by the FI partner to the overall delivery of the services.
25 unchanged sentences
Change in fair value of warrant liabilities represents adjustments to the fair value of certain warrants to purchase either preferred or common stock based upon changes in the fair value of the underlying stock.
−Removed: Change in Fair Value of Convertible Promissory Notes Including Related Parties
−Removed: Change in fair value of convertible promissory notes represents adjustments to the fair value of our convertible promissory notes as a result of our election of the fair value option.
−Removed: In May 2017, these convertible promissory notes converted into shares of our redeemable convertible preferred stock.
−Removed: Other Income (Expense), Net
−Removed: Other income (expense), net consists primarily of gains and losses on foreign currency transactions and expenses recorded in connection with the extinguishment of debt.
+Added: Other (Expense) Income, Net
+Added: Other (expense) income, net consists primarily of gains and losses on foreign currency transactions and expenses recorded in connection with the extinguishment of debt.
We have generated losses before income taxes in the U.S., U.K.
8 unchanged sentences
Year Ended December 31,
+Added: 2018 2019 2020
+Added: Revenue $ 150,684 $ 210,430 $ 186,892
Costs and expenses:
10 unchanged sentences
Change in fair value of warrant liabilities, net (6,760) — —
−Removed: Change in fair value of convertible promissory notes
−Removed: Change in fair value of convertible promissory notes—related parties
−Removed: Other income (expense), net
+Added: Other (expense) income, net (2,101) 729 1,549
Total non-operating (expense) income (12,125) 181 (1,499)
1 unchanged sentence
Income tax benefit — — —
+Added: Net loss $ (53,042) $ (17,144) $ (55,422)
The following table sets forth our consolidated statements of operations expressed as a percentage of revenue (percentages may not sum due to rounding):
Year Ended December 31,
+Added: 2018 2019 2020
+Added: Revenue 100 % 100 % 100 %
Costs and expenses:
10 unchanged sentences
Change in fair value of warrant liabilities, net (4) — —
−Removed: Change in fair value of convertible promissory notes
−Removed: Change in fair value of convertible promissory notes—related parties
−Removed: Other income (expense), net
+Added: Other (expense) income, net (1) — 1
Total non-operating (expense) income (8) — (1)
1 unchanged sentence
Income tax benefit — — —
+Added: Net loss (35) % (8) % (30) %
Comparison of Year Ended December 31, 2019 and 2020
−Removed: Year Ended December 31,
+Added: In this section, we discuss the results of our operations for the year ended December 31, 2019 compared to the year ended December 31, 2020.
+Added: For a discussion of the year ended December 31, 2018 compared to the year ended December 31, 2019, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2019.
+Added: Year Ended December 31, Change
+Added: 2019 2020 $ %
(dollars in thousands)
−Removed: Revenue by solution:
−Removed: Cardlytics Direct
−Removed: Other Platform Solutions
−Removed: Total revenue
−Removed: Revenue increased by $59.7 million in 2019 compared to 2018 , primarily due to a $61.1 million increase in revenue generated from sales of Cardlytics Direct.
−Removed: Of this increase, $13.1 million related to sales of Cardlytics Direct to new marketers, while $48.0 million related to increased sales of Cardlytics Direct to existing marketers.
+Added: Revenue $ 210,430 $ 186,892 $ (23,538) (11) %
+Added: The $23.5 million decrease in revenue during 2020 compared to 2019 was comprised of a $42.5 million decrease in sales to existing marketers, partially offset by a $19.0 million increase in sales to new marketers.
+Added: Revenue during the second quarter of 2020 was significantly affected by the COVID-19 pandemic and its negative impact on both consumer spending and marketers' ability to spend advertising budgets on our solution.
+Added: During the third and fourth quarters of 2020, we saw a recovery of both consumer spending as well as the advertising budgets of our clients.
+Added: Due to continuing uncertainty regarding the severity and duration of the impacts of COVID-19 on the global economy, we will continue to monitor this situation and the potential impacts to our business.
Costs and Expenses
FI Share and Other Third-Party Costs
−Removed: Year Ended December 31,
+Added: Year Ended December 31, Change
+Added: 2019 2020 $ %
(dollars in thousands)
−Removed: FI Share and other third-party costs by solution:
−Removed: Cardlytics Direct
−Removed: Renewal of FI partner agreement
−Removed: Total Cardlytics Direct
−Removed: Other Platform Solutions
−Removed: Other components of FI Share and other third-party costs:
−Removed: Non-cash equity expense included in FI Share
−Removed: Amortization of deferred FI implementation costs
+Added: FI Share and other third-party costs:
+Added: Adjusted FI Share and other third-party costs $ 115,211 $ 104,710 $ (10,501) (9) %
+Added: Deferred FI implementation costs 2,869 4,598 1,729 60
Total FI Share and other third-party costs $ 118,080 $ 109,308 $ (8,772) (7) %
−Removed: Cardlytics Direct FI Share and other third-party costs, excluding the impact of the gain related to the renewal of our agreement with an FI partner, increased by $34.5 million during 2019 compared to 2018 primarily due to increased revenue from sales of Cardlytics Direct.
−Removed: Included in the renewal of our agreement with an FI partner are certain amendments that are retroactively applied as of January 1, 2018, which resulted in a $0.8 million gain during 2018 , which reduced FI Share and other third-party costs on our consolidated statement of operations.
−Removed: Warrants to purchase shares of common stock vested upon the completion of our IPO in February 2018, resulting in a non-cash expense of $2.5 million based on the vesting-date fair value of our common stock underlying these warrants.
−Removed: Since the performance conditions were directly related to revenue-producing activities, we recognized this non-cash expense in FI Share and other third-party costs on our consolidated statement of operations.
−Removed: Refer to Note 11—Fair Value Measurements to our consolidated financial statements for additional information regarding the valuation of the warrants that vested upon the consummation of our IPO.
−Removed: Agreements with certain FI partners require us to fund the development of specific enhancements.
−Removed: Amortization of deferred FI implementation costs increased by $1.3 million during 2019 compared to 2018 primarily due to an increase in the value of enhancements placed in service by our FI partners.
+Added: % of revenue 56 % 58 %
+Added: FI Share and other third-party costs decreased by $8.8 million during 2020 compared to 2019 primarily due to decreased revenue from sales of the Cardlytics platform.
+Added: Deferred FI implementation costs increased by $1.7 million during the 2020 compared to the 2019 primarily due to a write off of deferred FI implementation costs totaling $0.7 million relating to the discontinued use of certain platform features.
+Added: We believe the near-term fluctuations in revenue caused by the economic impact of COVID–19 would also result in similar percentage fluctuations in adjusted FI Share and other third-party costs in future periods.
Delivery Costs
−Removed: Year Ended December 31,
+Added: Year Ended December 31, Change
+Added: 2019 2020 $ %
(dollars in thousands)
Delivery costs $ 12,893 $ 14,310 $ 1,417 11 %
−Removed: Delivery costs increased by $2.3 million during 2019 compared to 2018 primarily due to a $1.3 million increase in personnel costs associated with additional headcount to host Cardlytics Direct for certain new FI partners, a $0.9 million increase in hosting-related IT costs and a $0.1 million increase in stock-based compensation expense.
+Added: % of revenue 6 % 8 %
+Added: Delivery costs increased by $1.4 million during 2020 compared to 2019 primarily due to a $0.7 million increase in hosting-related IT costs, a $0.5 million increase in stock-based compensation expense and a $0.2 million increase in personnel costs associated with additional headcount to host the Cardlytics platform for certain new FI partners.
Sales and Marketing Expense
−Removed: Year Ended December 31,
+Added: Year Ended December 31, Change
+Added: 2019 2020 $ %
(dollars in thousands)
Sales and marketing expense $ 43,828 $ 45,307 $ 1,479 3 %
−Removed: Sales and marketing expense increased by $2.0 million during 2019 compared to 2018 primarily due to a $6.3 million increase in personnel costs associated with additional headcount, a $0.5 million increase in event hosting and sponsorship, a $0.2 million increase in software licensing fees and a $0.1 million increase in outsourcing costs, offset by a $5.1 million decrease in stock-based compensation expense.
+Added: % of revenue 21 % 24 %
+Added: Sales and marketing expense increased by $1.5 million during 2020 compared to 2019 primarily due to a $5.6 million increase in stock-based compensation expense, partially offset by a decrease of $3.0 million in incentive compensation and a $1.1 million decrease in travel and entertainment expense.
Research and Development Expense
−Removed: Year Ended December 31,
+Added: Year Ended December 31, Change
+Added: 2019 2020 $ %
(dollars in thousands)
Research and development expense $ 11,699 $ 17,532 $ 5,833 50 %
−Removed: Research and development expense decreased by $4.5 million during 2019 compared to 2018 primarily due to a $2.5 million decrease in stock-based compensation expense, a $0.4 million decrease in recruiting fees and a $0.1 million decrease in other expense, offset by a $2.0 million increase in capital development and $0.5 million increase in personnel costs.
+Added: % of revenue 6 % 9 %
+Added: Research and development expense increased by $5.8 million during 2020 compared to 2019 primarily due to a $3.1 million increase in stock-based compensation expense, a $3.0 million increase in personnel costs associated with additional headcount, a $0.9 million increase in professional fees, partially offset by a $1.0 million decrease in personnel costs due to higher capitalization and a $0.2 million decrease in travel and entertainment.
General and Administrative Expense
−Removed: Year Ended December 31,
+Added: Year Ended December 31, Change
+Added: 2019 2020 $ %
(dollars in thousands)
General and administration expense $ 36,720 $ 46,532 $ 9,812 27 %
−Removed: General and administrative expense increased by $2.5 million during 2019 compared to 2018 primarily due to a $1.8 million increase in personnel costs associated with additional headcount, a $1.6 million increase in software licensing fees, a $1.2 million increase in insurance premiums, a $0.7 million increase in professional fees, a $0.3 million increase in travel costs and $0.3 million increase in other costs such as facility costs and non-income based taxes, offset by a $3.4 million decrease in stock-based compensation expense.
+Added: % of revenue 17 % 25 %
+Added: General and administrative expense increased by $9.8 million during 2020 compared to 2019 primarily due to a $7.4 million increase in stock-based compensation expense, a $1.7 million increase in software licensing costs, a $0.9 million increase in professional fees, a $0.5 million increase in facility costs, partially offset by a $0.7 million decrease in travel and entertainment.
Stock-based Compensation Expense
The following table summarizes the allocation of stock-based compensation in the consolidated statements of operations (dollars in thousands):
−Removed: Year Ended December 31,
+Added: Year Ended December 31, Change
+Added: 2019 2020 $ %
Delivery costs $ 711 $ 1,181 $ 470 66 %
3 unchanged sentences
Total stock-based compensation expense $ 15,851 $ 32,396 $ 16,545 104 %
−Removed: Stock-based compensation expense decreased by $10.9 million during 2019 compared to 2018 primarily due to an decrease in expense relating to performance-based restricted stock units ("PSUs").
−Removed: During 2019, we recognized $7.6 million of expense related to PSUs compared to $18.6 million of expense in 2018.
−Removed: All performance conditions associated with the 2018 PSUs, as defined below, were achieved in 2018, resulting in the recognition of all stock-based compensation expense related to the awards.
+Added: % of revenue 8 % 17 %
+Added: Stock-based compensation expense increased by $16.5 million during 2020 compared to 2019 primarily due to an increase in expense relating to RSUs.
+Added: During 2020, we recognized $19.0 million of expense related to RSUs compared to $4.4 million of expense in 2019 due to a change in mix between RSUs and PSUs and increased hiring activity throughout the organization.
+Added: We also recognized $4.1 million of expense related to RSUs that were granted in lieu of cash-based incentive compensation.
Depreciation and Amortization Expense
−Removed: Year Ended December 31,
+Added: Year Ended December 31, Change
+Added: 2019 2020 $ %
(dollars in thousands)
Depreciation and amortization expense $ 4,535 $ 7,826 $ 3,291 73 %
−Removed: Depreciation and amortization expense increased by $1.3 million during 2019 compared to 2018 due to an increase in hosting related computer equipment.
+Added: % of revenue 2 % 4 %
+Added: Depreciation and amortization expense increased by $3.3 million during 2020 compared to 2019 primarily due to additional hardware and software placed in service in 2020 and the suspension of certain development efforts that resulted in a $1.0 million write off of capitalized internal-use software development costs during the first quarter of 2020.
Interest Expense, Net
−Removed: Year Ended December 31,
+Added: Year Ended December 31, Change
+Added: 2019 2020 $ %
(dollars in thousands)
2 unchanged sentences
Interest expense, net $ (548) $ (3,048) $ (2,500) 456 %
−Removed: Interest expense, net decreased by $2.7 million during 2019 compared to 2018 primarily due to the lower interest rates under our current loan facility compared to our prior facility.
−Removed: Interest income increased $0.1 million during 2019 compared to 2018 due to increased cash deposits subsequent to our IPO in 2018 and our public equity offering in 2019.
−Removed: Change in Fair Value of Warrant Liabilities
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: Change in fair value of warrant liabilities
−Removed: Change in fair value of warrant liabilities reflect the changes in the value of our redeemable convertible preferred stock and common stock.
−Removed: Refer to Note 11—Fair Value Measurements to our consolidated financial statements for additional information regarding the valuation of our warrant liabilities.
+Added: % of revenue — % (2) %
+Added: Interest expense, net increased by $2.5 million during 2020 compared to 2019 primarily driven by an increase in interest expense related to the Notes, partially offset by a decrease in the amount outstanding on our 2018 Line of Credit and 2018 Term Loan.
+Added: Interest income decreased $0.4 million during 2020 compared to 2019 due to moving cash into fully FDIC-insured demand deposit accounts, which have lower interest rates.
Other (Expense) Income, Net
−Removed: Year Ended December 31,
+Added: Year Ended December 31, Change
+Added: 2019 2020 $ %
(dollars in thousands)
−Removed: Foreign currency (loss) gain
+Added: Foreign currency gain $ 781 $ 1,549 $ 768 98 %
Loss on extinguishment of debt (51) — 51 (100)
1 unchanged sentence
Other (expense) income, net $ 729 $ 1,549 $ 820 112 %
−Removed: The change in other (expense) income, net was primarily due to an increase in the value of the British pound relative to the U.S.
−Removed: During 2018 , we also recognized a $0.9 million loss on extinguishment of debt related to the unamortized discount and unamortized debt issuance costs associated with our prior line of credit and prior term loan.
−Removed: Comparison of Year Ended December 31, 2017 and 2018
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: Revenue by solution:
−Removed: Cardlytics Direct
−Removed: Other Platform Solutions
−Removed: Total revenue
−Removed: Revenue increased by $20.3 million in 2018 compared to 2017, primarily due to a $26.9 million increase in revenue generated from sales of Cardlytics Direct.
−Removed: Of this increase, $7.1 million related to sales of Cardlytics Direct to new marketers, while $19.8 million related to increased sales of Cardlytics Direct to existing marketers.
−Removed: Revenue from Other Platform Solutions during 2017 consisted substantially of revenue from sales of our Other Platform Solutions delivered as a managed service, which was discontinued as in July 2017.
−Removed: Costs and Expenses
−Removed: FI Share and Other Third-Party Costs
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: FI Share and other third-party costs by solution:
−Removed: Cardlytics Direct
−Removed: Renewal of FI partner agreement
−Removed: Total Cardlytics Direct
−Removed: Other Platform Solutions
−Removed: Other components of FI Share and other third-party costs:
−Removed: Non-cash equity expense included in FI Share
−Removed: Amortization and impairment of deferred FI implementation costs
−Removed: Total FI Share and other third-party costs
−Removed: Cardlytics Direct FI Share and other third-party costs, excluding the impact of the gain related to the renewal of our agreement with an FI partner, increased by $13.5 million during 2018 compared to 2017 primarily due to increased revenue from sales of Cardlytics Direct.
−Removed: Included in the renewal of our agreement with an FI partner are certain amendments that are retroactively applied as of January 1, 2018, which resulted in a $0.8 million gain during 2018, which reduced FI Share and other third-party costs on our consolidated statement of operations.
−Removed: Other Platform Solutions FI Share and other third-party costs decreased during 2018 as we discontinued delivering Other Platform Solutions as a managed service as of July 31, 2017.
−Removed: Warrants to purchase shares of common stock vested upon the completion of our IPO in February 2018, resulting in a non-cash expense of $2.5 million based on the vesting-date fair value of our common stock underlying these warrants.
−Removed: Since the performance conditions were directly related to revenue-producing activities, we recognized this non-cash expense in FI Share and other third-party costs on our consolidated statement of operations.
−Removed: Refer to Note 11—Fair Value Measurement to our consolidated financial statements for additional information regarding the valuation of the warrants that vested upon the consummation of our IPO.
−Removed: Delivery Costs
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: Delivery costs
−Removed: Delivery costs increased by $3.6 million during 2018 compared to 2017 primarily due to a $2.5 million increase in personnel costs associated with additional headcount to host Cardlytics Direct for certain new FI partners, a $0.6 million increase in hosting-related IT costs, a $0.4 million increase in stock-based compensation expense and a $0.1 million increase in professional fees.
−Removed: Sales and Marketing Expense
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: Sales and marketing expense
−Removed: Sales and marketing expense increased by $10.0 million during 2018 compared to 2017 primarily due to a $7.5 million increase in stock-based compensation expense, a $2.0 million increase in personnel costs associated with additional headcount, a $0.1 million increase in recruiting fees, a $0.1 million increase in travel costs and $0.1 million increase in software costs.
−Removed: Research and Development Expense
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: Research and development expense
−Removed: Research and development expense increased by $4.1 million during 2018 compared to 2017 primarily due to a $3.1 million increase in stock-based compensation expense, a $1.0 million increase in personnel costs associated with higher research and development headcount, a $0.3 million increase in recruiting fees and a $0.1 million increase in IT costs, partially offset by a $0.5 million decrease in outsourcing costs.
−Removed: General and Administrative Expense
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: General and administrative expense
−Removed: General and administrative expense increased by $14.1 million during 2018 compared to 2017 primarily due to a $10.6 million increase in stock-based compensation expense, a $0.9 million increase in personnel costs associated with higher general and administrative headcount, a $0.8 million increase in software license fees, a $0.9 million increase in professional fees, a $0.6 million in increase in insurance premiums, a $0.1 million increase in travel costs and $0.1 million increase in other costs such as facility costs and non-income based taxes.
−Removed: Stock-based Compensation Expense
−Removed: The following table summarizes the allocation of stock-based compensation in the consolidated statements of operations (in thousands):
−Removed: Year Ended December 31,
−Removed: Delivery costs
−Removed: Sales and marketing expense
−Removed: Research and development expense
−Removed: General and administrative expense
−Removed: Total stock-based compensation expense
−Removed: Stock-based compensation expense increased by $21.6 million during 2018 compared to 2017 primarily due to the recognition of expense totaling $18.6 million relating to the 2018 PSUs.
−Removed: All performance conditions associated with the 2018 PSUs were achieved in 2018, resulting in the recognition of all stock-based compensation expense related to the awards.
−Removed: The remaining $3.0 million increase in expense is largely attributed to changes in equity compensation strategies subsequent to our IPO.
−Removed: Depreciation and Amortization Expense
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: Depreciation and amortization expense
−Removed: Depreciation and amortization expense increased by $0.3 million during 2018 compared to 2017 due to an increase in hosting related computer equipment and our suspension of efforts to obtain certain patents, resulting in the write off of deferred patent costs in 2018.
−Removed: Interest Expense, Net
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: Interest expense
−Removed: Interest income
−Removed: Interest expense, net
−Removed: Interest expense, net decreased by $5.0 million during 2018 compared to 2017 primarily due to the conversion of our convertible promissory notes into shares of our redeemable convertible preferred stock in May 2017 and lower interest rates under our new loan facility.
−Removed: Interest income increased $0.6 million during 2018 compared to 2017 due to increased cash deposits subsequent to our IPO.
−Removed: Change in Fair Value of Warrant Liability
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: Change in fair value of warrant liability
−Removed: Change in fair value of warrant liabilities reflect the changes in the value of our redeemable convertible preferred stock and common stock.
−Removed: Refer to Note 11—Fair Value Measurements to our consolidated financial statements for additional information regarding the valuation of our warrant liabilities.
−Removed: Change in Fair Value of Convertible Promissory Notes
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: Change in fair value of convertible promissory notes
−Removed: Change in fair value of convertible promissory notes reflects the change in the value of our convertible promissory notes, which was driven by periodic valuations.
−Removed: In May 2017, these convertible promissory notes converted into shares of our redeemable convertible preferred stock.
−Removed: Refer to Note 11—Fair Value Measurements to our consolidated financial statements for additional information regarding the valuation of our convertible promissory notes.
−Removed: Change in Fair Value of Convertible Promissory Notes—Related Parties
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: Change in fair value of convertible promissory notes—related parties
−Removed: Change in fair value of convertible promissory notes reflects the change in the value of our convertible promissory notes, which was driven by periodic valuations.
−Removed: In May 2017, these convertible promissory notes converted into shares of our redeemable convertible preferred stock.
−Removed: Refer to Note 11—Fair Value Measurements to our consolidated financial statements for additional information regarding the valuation of our convertible promissory notes.
−Removed: Other Income (Expense), Net
−Removed: Year Ended December 31,
−Removed: (dollars in thousands)
−Removed: Foreign currency gain (loss)
−Removed: Loss on extinguishment of debt
−Removed: Other expense
−Removed: Other income (expense), net
−Removed: Other income (expense), net decreased $3.4 million during 2018 compared to 2017 primarily due to a decrease in the value of the British pound relative to the U.S.
−Removed: During 2018, we also recognized a $0.9 million loss on extinguishment of debt related to the unamortized discount and unamortized debt issuance costs associated with the 2016 Line of Credit and 2016 Term Loan, as defined in Note 6—Debt .
−Removed: Quarterly Results of Operations
−Removed: We have prepared the below quarterly financial data on the same basis as the audited consolidated financial statements included in this Annual Report.
−Removed: In our opinion, the quarterly financial data reflects all adjustments, consisting only of normal recurring adjustments that we consider necessary for a fair presentation of this data.
−Removed: This quarterly financial data should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report.
−Removed: Our historical results are not necessarily indicative of the results to be expected in the future.
−Removed: The following table sets forth our unaudited quarterly consolidated statements of operations data for each of our eight most recently completed quarters (in thousands, except per share amount):
−Removed: Three Months Ended
−Removed: Revenue by solution:
−Removed: Cardlytics Direct
−Removed: Other Platform Solutions
−Removed: Total revenue
−Removed: Costs and expenses:
−Removed: FI Share and other third-party costs
−Removed: Delivery costs (1)
−Removed: Sales and marketing expense (1)
−Removed: Research and development expense (1)
−Removed: General and administration expense (1)
−Removed: Depreciation and amortization expense
−Removed: Total costs and expenses
−Removed: Operating loss
−Removed: Non-operating (expense) income:
−Removed: Interest expense, net
−Removed: Change in fair value of warrant liability, net
−Removed: Other income (expense), net
−Removed: Total non-operating (expense) income
−Removed: Loss before income taxes
−Removed: Income tax benefit
−Removed: Net (loss) income
−Removed: Adjustments to the carrying value of redeemable convertible preferred stock
−Removed: Net loss attributable to common stockholders
−Removed: Net loss per share attributable to common stockholders, basic
−Removed: Net loss per share attributable to common stockholders, diluted
−Removed: Includes stock-based compensation expense as follows (in thousands):
−Removed: Three Months Ended
−Removed: Delivery costs
−Removed: Sales and marketing expense
−Removed: Research and development expense
−Removed: General and administration expense
−Removed: Total stock-based compensation expense
−Removed: Quarterly Trends
−Removed: Our revenue has generally increased over the past eight quarters, driven primarily by increased sales to new marketers and increased sales to existing marketers.
−Removed: Our revenue also varies from quarter to quarter due to the seasonal nature of our marketers’ advertising spending.
−Removed: Many marketers tend to devote a significant portion of their marketing budgets to the fourth quarter of the calendar year to coincide with consumer holiday spending and reduce marketing spend in the first quarter of the calendar year.
−Removed: Costs and Expenses and Non-operating (Expense) Income
−Removed: FI Share and other third-party costs are directly related to the amount of revenue that we generate, and therefore increased as our revenue increased.
−Removed: Our increased operating expenses reflect increases in headcount, increases in stock-based compensation expense, investments related to the implementation and hosting of new FI partners and costs associated with being a publicly traded company.
−Removed: Fluctuations in total non operating (expense) income were primarily driven by changes in the fair value of our warrant liability, foreign currency gains and losses and a $0.9 million loss on extinguishment of debt in the second quarter of 2018.
−Removed: Segment Information
−Removed: We have two reportable segments:
−Removed: Cardlytics Direct and Other Platform Solutions, as determined by the information that both our Chief Executive Officer and President and Chief Operating Officer, who we consider our chief operating decision makers, use to make strategic goals and operating decisions.
−Removed: Our Cardlytics Direct segment represents our proprietary native bank advertising channel.
−Removed: Our Other Platform Solutions segment represents solutions that enable marketers and marketing service providers to leverage the power of purchase intelligence outside the banking channel.
−Removed: In early 2018, we began a strategic shift to focus the majority of our efforts and resources to support the growth of Cardlytics Direct.
−Removed: As a result, we do not expect to generate substantial, if any, revenue from Other Platform Solutions for the foreseeable future.
+Added: % of revenue — % 1 %
+Added: The change in foreign currency gain was primarily due to the decrease in the value of the British pound relative to the U.S.
+Added: During 2019, we also recognized a less than $0.1 million loss on extinguishment of debt related to the unamortized discount and unamortized debt issuance costs associated with our prior line of credit and prior term loan.
Critical Accounting Policies
7 unchanged sentences
Revenue Recognition
+Added: Our revenue generated from our platform consist of transaction-based fees made up of a significant volume of low-dollar transactions, sourced from multiple databases.
+Added: The processing and recording of revenue is highly automated and is based on contractual terms with marketers, FIs, and other parties.
+Added: Because of the nature of our transaction-based fees, we use automated systems to process and record our revenue transactions
We determine revenue recognition through the following steps:
7 unchanged sentences
We consider a contract to exist when a campaign, which typically lasts 45 days, is published to an FI partner under the terms of an insertion order.
−Removed: With respect to our Cardlytics Direct service, our performance obligation is to offer incentives to FIs' customers to make purchases from the marketer within a specified period.
+Added: With respect to our Cardlytics platform, our performance obligation is to offer incentives to FIs' customers to make purchases from the marketer within a specified period.
This performance obligation is a series that represents a stand ready obligation to provide a targeted campaign for the marketer to FIs' customers.
−Removed: Cardlytics Direct fees represent variable consideration that is resolved when FIs' customers make qualifying purchases during the marketing campaign term.
+Added: The Cardlytics platform fees represent variable consideration that is resolved when FIs' customers make qualifying purchases during the marketing campaign term.
Subsequent to a qualifying purchase, the associated fees are generally not subject to refund or adjustment unless the fees from the marketing campaign exceed a contractual maximum (marketer budget).
We have not constrained our revenue because adjustments have historically been immaterial and given the short duration of our marketing campaigns, any adjustments are recognized during the period of the marketing campaign.
−Removed: We recognize revenue for Cardlytics Direct fees over time using the right to invoice practical expedient because the amount billed is equal to the value delivered to marketers through qualified purchases by FIs' customers during that period.
+Added: We recognize revenue for the Cardlytics platform fees over time using the right to invoice practical expedient because the amount billed is equal to the value delivered to marketers through qualified purchases by FIs' customers during that period.
Consumer Incentives
30 unchanged sentences
We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.
−Removed: Fair Value Assumptions
−Removed: Stock-based Compensation
−Removed: We measure and recognize compensation expense based on the estimated fair value of the award on the grant date.
−Removed: The fair value is recognized as expense over the requisite service period, which is generally the vesting period of the respective award, on a straight-line basis when the only condition to vesting is continued service.
−Removed: We recognize the fair value of awards that contain performance conditions based upon the probability of the performance conditions being met.
−Removed: Expense for awards with performance conditions are estimated and adjusted on a quarterly basis based upon our assessment of the probability that the performance condition will be met.
−Removed: We recognize the fair value of awards that contain market conditions over the derived service period.
−Removed: Forfeitures are accounted for when they occur.
−Removed: Refer to Note 7—Stock-based Compensation for additional information regarding our specific award plans and estimates and assumptions used to determine fair value.
−Removed: The determination of the grant date fair value of options using an option pricing model is affected principally by our estimated common stock fair value and requires management to make a number of other assumptions, including the expected life of the option, the volatility of the underlying stock, the risk-free interest rate and expected dividends.
−Removed: The assumptions used in our Black-Scholes option-pricing model represent management’s best estimates at the time of grant.
−Removed: These estimates are complex, involve a number of variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective.
−Removed: If any assumptions change, our stock-based compensation expense could be materially different in the future.
−Removed: Convertible Promissory Notes
−Removed: The redemption features included in the terms of our convertible promissory notes were determined to be derivative liabilities due to a significant discount within the redemption features for the note holders.
−Removed: Embedded derivatives that are not clearly and closely related to the host contract are required to be bifurcated and recorded at fair value unless the fair value option is elected on the host contract.
−Removed: Under the fair value option, bifurcation of the embedded derivative is not necessary as all related gains (losses) on the host contract and derivative will be reflected in the consolidated statements of operations.
−Removed: We elected the fair value option for our convertible promissory notes and changes in fair value of our convertible promissory notes are included in change in fair value of convertible promissory notes on our consolidated statements of operations.
−Removed: To determine the fair value of our convertible promissory notes, we utilized key assumptions from the PWERM, as shown above.
−Removed: Under this method, we considered the redemption features of the convertible promissory notes, as described in Note 6—Debt to our consolidated financial statements appearing elsewhere in this Annual Report, to determine the fair value under discrete future outcomes, including IPO and non-IPO scenarios.
−Removed: We weighted the fair values based on the estimated probability of each scenario to determine the overall fair value of the convertible promissory notes as of the balance sheet date.
−Removed: Refer to Note 11—Fair Value Measurements to our consolidated financial statements for additional information on our valuation methodology.
−Removed: Preferred Stock Warrants
−Removed: We derived the fair value of the preferred stock warrants using key assumptions from the PWERM, as shown above, and an interpolation methodology that considered the timing of future potential liquidity events, changes to our forecasted financial results and changes in the valuation of comparable companies to determine the fair value of the warrants to purchase shares of our Series B-R redeemable convertible preferred stock and Series D-R redeemable convertible preferred stock.
−Removed: Refer to Note 11—Fair Value Measurements to our consolidated financial statements for additional information on our valuation methodology.
−Removed: Common Stock Warrants
−Removed: To determine the fair value of our common stock warrants issued in connection with our Series G preferred stock financing, we utilized a Monte Carlo simulation, which allows for the modeling of complex securities and evaluates many possible outcomes to forecast the stock price of the company post-IPO.
−Removed: As part of the valuation, we considered various scenarios related to the pricing, timing and probability of an IPO.
−Removed: Refer to Note 11—Fair Value Measurements to our consolidated financial statements for additional information on our valuation methodology.
Recent Accounting Pronouncements
4 unchanged sentences
Restricted cash 129 110
−Removed: Accounts receivable, net
Working capital (1)
−Removed: Total debt (including capital leases)
+Added: 117,329 304,317
+Added: Accounts receivable, net 81,452 81,249
+Added: Total debt (2)
Unused available borrowings 40,000 50,000
1 unchanged sentence
See our consolidated financial statements for further details regarding our current assets and current liabilities.
−Removed: Our unrestricted cash and cash equivalents as of December 31, 2019 are available for working capital purposes.
−Removed: Restricted cash primarily represents deposits held in an account controlled by our lender as additional security for our payment obligations under our 2018 Loan Facility.
+Added: (2) Total debt as of December 31, 2020 includes finance leases liabilities and convertible senior notes, which is presented net of unamortized issuance costs of $5.4 million and unamortized debt discount of $50.6 million.
+Added: Our cash and cash equivalents are available for working capital purposes.
We do not enter into investments for trading purposes, and our investment policy is to invest any excess cash in short-term, highly liquid investments that limit the risk of principal loss.
−Removed: therefore, our cash, cash equivalents and restricted cash are held in demand deposit accounts upon which we earn up to a 1.4% annual rate of interest.
+Added: A majority of our cash and cash equivalents are held in fully FDIC–insured demand deposit accounts that distribute funds, and credit risk, over a vast number of financial institutions.
+Added: Our remaining cash and cash equivalents are held in treasury obligation funds and money market accounts with three financial institutions, which we believe are of high credit quality.
+Added: As of December 31, 2020, our demand deposit accounts earned up to a 0.50% annual rate of interest.
As of December 31, 2020, we had $3.9 million in cash and cash equivalents in the U.K.
−Removed: While our investment in Cardlytics UK Limited is not considered indefinitely invested, we do not plan to repatriate these funds.
+Added: While our investment in Cardlytics UK is not considered indefinitely invested, we do not plan to repatriate these funds.
Through December 31, 2020, we have incurred accumulated net losses of $394.1 million since inception, including losses of $53.0 million, $17.1 million and $55.4 million during 2018, 2019 and 2020, respectively.
1 unchanged sentence
We have historically financed our operations and capital expenditures through convertible note financings, private placements of our redeemable convertible preferred stock, public offerings of our common stock as well as lines of credit and term loans.
−Removed: Through December 31, 2019 , we have received net proceeds of $196.2 million from the issuance of preferred stock and convertible promissory notes and net proceeds of $127.1 million from public equity offerings.
−Removed: Our historical uses of cash have primarily been to fund our operating losses and working capital needs.
−Removed: During 2018, scheduled development payments to a certain FI partner totaled $9.3 million , which was offset by recoveries through FI Share payment reductions of $4.6 million in 2019.
−Removed: Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the continued expansion of sales and marketing activities, the enhancement of our platform, the introduction of new solutions and the continued market acceptance of our solutions.
+Added: Through December 31, 2020, we have received net proceeds of $222.7 million from the issuance of convertible senior notes, net proceeds of $196.2 million from the issuance of preferred stock and convertible promissory notes and net proceeds of $127.1 million from public equity offerings.
+Added: Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the continued expansion of sales and marketing activities, the enhancement of our platform, the introduction of new solutions, the continued market acceptance of our solutions and the extent of the impact of COVID-19 on our operational and financial performance.
We expect to continue to incur operating losses for the foreseeable future and may require additional capital resources to continue to grow our business.
We believe that current cash and cash equivalents will be sufficient to fund our operations and capital requirements for at least the next 12 months following the date our consolidated financial statements were issued.
+Added: However, if our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be materially and adversely impacted.
In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all.
Sources of Funds
+Added: 2020 Convertible Senior Notes
+Added: 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 2025 (the "Notes").
+Added: The net proceeds from this offering were $222.7 million, after deducting the initial purchasers' discounts and commissions and the estimated offering expenses payable by us.
+Added: We used $26.5 million of the net proceeds to pay the cost of capped call transactions (the "Capped Calls") described under the Financing Activities section below.
Proceeds from Issuance of Common Stock
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During 2018, 2019 and 2020, we also received $2.0 million, $29.7 million and $10.2 million in proceeds from the exercise of options and warrants to purchase shares of common stock, respectively.
−Removed: Series G Preferred Stock Financing
−Removed: In May 2017, we sold an aggregate of 346,334 shares of our Series G redeemable convertible preferred stock, including to certain of our existing stockholders, at a price of $34.48 per share for aggregate gross proceeds of approximately $11.9 million .
−Removed: Refer to Note 9—Redeemable Convertible Preferred Stock for additional information regarding the Series G Stock financing.
−Removed: Existing Stockholder Notes
−Removed: During 2016, we issued unsecured convertible promissory notes to certain of our existing stockholders with an aggregate principal amount of $27.0 million ("Existing Stockholder Notes").
−Removed: Refer to Note 9—Redeemable Convertible Preferred Stock for additional information regarding the Series G Stock financing and the transactions that resulted in the conversion of the Existing Stockholder Notes into shares of our Series G’ Stock.
2018 Loan Facility
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We used the entire $20.0 million in proceeds from the 2018 Term Loan and an advance of $27.4 million under the 2018 Line of Credit to repay all outstanding obligations under our prior line of credit and term loan.
−Removed: On May 14, 2019, we amended our 2018 Loan Facility to increase the capacity of the 2018 Line of Credit from $30.0 million to $40.0 million and decrease the capacity of our 2018 Term Loan from $20.0 million to $10.0 million .
+Added: On May 14, 2019, we amended our 2018 Loan Facility to increase the capacity of our Line of Credit, from $30.0 million to $40.0 million, and decrease the capacity of our 2018 Term Loan from $20.0 million to $10.0 million.
This amendment also extended the maturity date of the 2018 Loan Facility from May 21, 2020 to May 14, 2021.
We repaid $10.0 million of the principal balance of the 2018 Term Loan upon the execution of the amendment in May 2019 and repaid the remaining $10.0 million principal balance in September 2019.
+Added: On September 17, 2020, we amended our 2018 Loan Facility to allow for the issuance of the Notes.
+Added: On December 30, 2020, we amended our 2018 Loan Facility to increase the capacity of our Line of Credit, from $40.0 million to $50.0 million.
+Added: This amendment also extended the maturity date of the 2018 Loan Facility from May 14, 2021 to December 31, 2022.
As of December 31, 2020, we had $50.0 million of unused borrowings available under our 2018 Line of Credit.
−Removed: The 2018 Loan Facility contains moving trailing 12-month billing covenants, which range from $210.0 million to $255.0 million , during the term of the facility.
−Removed: The moving 12-month billings covenant was $240.0 million for December 2019.
−Removed: The 2018 Loan Facility also requires us to maintain a total cash balance plus liquidity under the 2018 Line of Credit of not less than $5.0 million .
+Added: Prior to the December 2020 amendment, the 2018 Loan Facility contained moving trailing 12-month billing covenants, which ranged from $210.0 million to $255.0 million, during the term of the facility.
+Added: The former terms of the 2018 Loan Facility also required us to maintain a total cash balance plus liquidity under the 2018 Line of Credit of not less than $5.0 million.
+Added: Effective with the December 2020 amendment, the former billings and liquidity covenants were removed and were replaced with a requirement to maintain a cash to funded senior debt ratio under the 2018 Line of Credit of 1.25:1.00.
Under the 2018 Loan Facility relating to the 2018 Line of Credit, we are able to borrow up to the lesser of $50.0 million or 85% of the amount of our eligible accounts receivable.
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Our collection cycles can vary from period to period based on the payment practices of our marketers and their agencies.
−Removed: We are generally obligated to pay Consumer Incentives with respect to our Cardlytics Direct solution between one and three months following redemption, regardless of whether we have collected payment from a marketer or its agency.
+Added: We are generally obligated to pay Consumer Incentives between one and three months following redemption, regardless of whether we have collected payment from a marketer or its agency.
We are generally obligated to pay our FI partners’ FI Share by the end of the month following our collection of payment from the applicable marketer or its agency.
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Historical Cash Flows
+Added: In this section, we discuss the activity of our cash flows for the year ended December 31, 2019 and the year ended December 31, 2020.
+Added: For a discussion of the year ended December 31, 2018, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Liquidity and Capital Resources" in our Annual Report on Form 10-K for the year ended December 31, 2019.
The following table shows a summary of our cash flows for the periods presented (in thousands):
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Cash, cash equivalents and restricted cash at beginning of period $ 59,870 $ 104,587
−Removed: Net cash (used in) provided by operating activities
+Added: Net cash provided by (used in) operating activities 11,457 (7,598)
Net cash used in investing activities (11,020) (10,117)
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Given the seasonal nature of our marketer's advertising spending and our continued investment in our business, we may experience periods of negative operating cash flows from operations.
+Added: Operating activities used $7.6 million of cash in 2020, which reflected our net loss of $55.4 million, $51.6 million of which were non-cash charges, and a $3.8 million change in our net operating assets and liabilities.
+Added: The non-cash charges primarily related to stock-based compensation expense, depreciation and amortization expense, amortization of right–of–use assets, deferred FI implementation costs and bad debt expense.
+Added: The change in our net operating assets and liabilities was primarily due to a $2.4 million increase in accounts receivable, a $1.2 million decrease in other accrued expenses and a $4.5 million decrease in FI Share liability, partially offset by a $4.4 million increase in our Consumer Incentive liability.
+Added: These changes were primarily a result of significantly lower sales during 2020, primarily caused by the COVID–19 pandemic, compared to 2019.
Operating activities provided $11.5 million of cash in 2019, which reflected our net loss of $17.1 million offset by $24.0 million of non-cash charges and a $4.6 million change in our net operating assets and liabilities.
−Removed: The non-cash charges primarily related to stock-based compensation expense, depreciation and amortization expense and amortization of deferred FI implementation costs.
+Added: The non-cash charges primarily related to stock-based compensation expense, depreciation and amortization expense and deferred FI implementation costs.
Changes in our net operating assets and liabilities were significantly impacted by the growth of the business as reflected by increases in revenue, Consumer Incentives and FI Share.
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Other changes in our net operating assets and liabilities include a $2.2 million increase in prepaid expenses and other assets, offset by a $5.6 million increase in accounts payable and accrued expenses.
−Removed: Operating activities used $19.0 million of cash in 2018, which reflected growth in revenue, offset by continued investment in our operations.
−Removed: Cash used in operating activities reflected our net loss of $53.0 million, an $8.4 million payment of paid-in-kind interest on our 2016 Line of Credit and 2016 Term Loan, as defined in Note 6—Debt , that were extinguished in May 2018 and a $3.4 million change in our net operating assets and liabilities, partially offset by $45.8 million of non-cash charges.
−Removed: The non-cash charges primarily related to stock-based compensation expense, depreciation and amortization expense, the change in fair value of our warrant liabilities, non-cash interest expense and a non-cash expense related to the vesting of warrants upon completion of our IPO in February 2018.
−Removed: The change in our net operating assets and liabilities was primarily due to a $9.4 million increase in accounts receivable resulting from increased sales from 2018 compared to 2017 and a $2.3 million increase in prepaid expenses and other assets, offset by a $3.7 million increase in FI Share liability and a $4.2 million increase in Consumer Incentive liability also resulting from increased sales from 2018 compared to 2017 and a $4.2 million increase in accounts payable and accrued expenses.
−Removed: Additionally, we paid $3.9 million in FI implementation costs, net of the amounts recovered through reductions in FI Share.
−Removed: Operating activities used $22.1 million of cash in 2017, which reflected growth in revenue, offset by continued investment in our operations.
−Removed: Cash used in operating activities reflected our net loss of $19.6 million and a $14.2 million change in our net operating assets and liabilities, partially offset by non-cash charges of $11.8 million.
−Removed: The non-cash charges primarily related to depreciation and amortization expense, accretion of debt discount charged to interest expense, and stock-based compensation expense, offset by a gain related to change the change in fair value of convertible promissory notes.
−Removed: The change in our net operating assets and liabilities was primarily due to a $10.9 million increase in deferred FI Implementation costs, a $7.5 million increase in accounts receivable resulting from increased sales from 2017 compared to 2016 and a $1.4 million increase in accounts payable and accrued expenses, offset by increases in FI Share liability and Consumer Incentive liability also resulting from increased sales from 2017 compared to 2016.
Investing Activities
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We expect that we will continue to use cash for investing activities as we continue to invest in and grow our business.
−Removed: Investing activities used cash totaling $1.6 million , $7.3 million and $11.0 million , in 2017 , 2018 and 2019 , respectively.
+Added: Investing activities used cash totaling $11.0 million and $10.1 million, in 2019 and 2020, respectively.
Our investing cash flows during these periods primarily consisted of purchases of technology hardware and the capitalization of costs to develop internal-use software.
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Financing activities provided $206.4 million in cash in 2020.
+Added: Our financing activities during this period primarily consisted of $223.1 million of net proceeds from our issuance of the Notes, of which we used $26.5 million to purchase the Capped Calls and proceeds from the exercise of options to purchase shares of common stock.
+Added: The Capped Calls are intended to reduce potential dilution to our common stock upon any conversion of Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be.
+Added: Financing activities provided $44.2 million in cash in 2019.
We raised net proceeds of $61.3 million from our public equity offering and received $29.7 million in proceeds from the exercise of options and warrants to purchase shares of common stock.
We also reduced our outstanding borrowings under our 2018 Line of Credit by $26.7 million and 2018 Term Loan by $20.0 million.
−Removed: Financing activities provided $65.2 million in cash in 2018.
−Removed: Our financing activities during this period primarily consisted of net proceeds from our IPO of $70.4 million (gross proceeds of $75.7 million less underwriting discounts and commissions of $5.3 million) and proceeds from the exercise of options to purchase shares of common stock of $1.9 million, partially offset by a net $4.4 million use of cash related to our refinancing in May 2018, payments of equity offering costs of $1.9 million and a $0.8 million repayment under our 2018 Line of Credit.
−Removed: Financing activities provided $21.8 million in cash in 2017.
−Removed: Our financing activities during this period consisted primarily of the issuance of $11.9 million of redeemable convertible preferred stock, $5.0 million of borrowings under our 2016 Term Loan and $7.5 million of borrowings under our 2016 Line of Credit, as defined in Note 6—Debt , partially offset by equity offering costs of $2.7 million.
Contractual Obligations and Commitments
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Less than 1 Year
−Removed: (2021 and 2022)
−Removed: (2023 and 2025)
−Removed: Capital leases (1)
+Added: (2021) 1 to 3 Years
+Added: (2022 - 2023) 3 to 5 Years
+Added: (2024 - 2026) More than
+Added: (thereafter) Total
+Added: Convertible senior notes (1)
+Added: $ 2,159 $ 4,600 $ 234,696 $ — $ 241,455
+Added: Finance leases (2)
+Added: $ 13 $ — $ — $ — $ 13
Operating leases (3)
+Added: 5,097 7,373 2,418 — 14,888
Purchase obligations (4)
−Removed: Capital leases represent principal and interest payments.
+Added: 3,484 3,141 — — 6,625
+Added: Total $ 10,753 $ 15,114 $ 237,114 $ — $ 262,981
+Added: (1) Convertible senior notes includes total interest due of $11.5 million.
+Added: (2) Finance leases represent principal and interest payments.
(3) Operating lease obligations represent future minimum lease payments under our non-cancelable operating leases with an initial term in excess of one year.
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We have a minimum FI Share commitment with a certain FI partner totaling $10.0 million over a 12-month period following the completion of certain milestones, which were not met as of December 31, 2020.
−Removed: Any expected shortfall will be accrued during the 12-month period following the completion of the milestones.
−Removed: Also, unrecognized tax benefits totaled $(0.4) million as of December 31, 2019 .
The table above does not include these obligations.
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dollar during the 2018, 2019 and 2020, our operating expense would have increased by $1.2 million, $1.4 million and $0.8 million, respectively.
−Removed: Our foreign currency risks related to expenses denominated in Indian rupees is insignificant.
+Added: Our foreign currency risks related to expenses denominated in Indian rupees are insignificant.
Inflation Risk
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.