What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-01 compared with 2020-03-03 · 487 added, 338 removed, 775 unchanged (52% of the section changed)

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Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ (Deficit) Equity

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Cardlytics, Inc.

and subsidiaries (the "Company") as of December 31, 2018 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders’ (deficit) equity, and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2019 and 2020, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2021, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We believe our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or in the accounts or disclosures to which it relates.

Revenue – Refer to Note 4 to the consolidated financial statements

Critical Audit Matter Description

The Company’s revenue generated from its Cardlytics platform consists of transaction-based fees made up of a significant volume of low-dollar transactions, sourced from multiple databases.

The processing and recording of revenue is highly automated and is based on contractual terms with marketers, FIs, and other parties.

Because of the nature of the Company’s transaction-based fees, the Company uses automated systems to process and record its revenue transactions.

We identified revenue as a critical audit matter because the Company’s systems to process and record revenue are highly automated.

This required an increased extent of effort, including the need for us to involve professionals with expertise in information technology (IT), to identify, test, and evaluate the Company’s systems, software applications, and automated controls.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s systems to process revenue transactions included the following, among others:

• With the assistance of our IT specialists, we:

◦ Identified the relevant systems used to process revenue transactions and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.

◦ Performed testing of initial system set-up and monitoring controls, system interface controls, automated controls, and data monitoring controls within the relevant revenue streams, as well as the controls designed to ensure the accuracy and completeness of revenue.

• We tested internal controls within the relevant revenue business processes, including those in place to reconcile the information from various systems to the Company’s general ledger.

• For a sample of revenue transactions, we performed detail transaction testing by agreeing the amounts recognized to source documents and testing the mathematical accuracy of the recorded revenue.

/s/ DELOITTE & TOUCHE LLP

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Property and equipment, net 14,290 13,865

Right-of-use assets under operating leases, net — 10,764

Intangible assets, net 389 447

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Other long-term assets, net 1,706 1,786

Total assets $ 224,313 $ 422,537

Liabilities and stockholders' equity

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Deferred revenue 1,127 349

Current portion of long-term debt

Current operating lease liabilities — 4,718

Current finance lease liabilities 24 13

Total current liabilities 78,401 81,274

Long-term liabilities:

Convertible senior notes, net — 174,011

Deferred liabilities 2,632 —

Long-term debt, net of current portion

Long-term operating lease liabilities — 9,381

Long-term finance lease liabilities 13 —

Other long-term liabilities — 679

Total liabilities 81,046 265,345

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Additional paid-in capital 480,578 551,429

Accumulated other comprehensive income

Accumulated other comprehensive income (loss) 1,312 ( 192 )

Accumulated deficit ( 338,631 ) ( 394,053 )

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Year Ended December 31,

2018 2019 2020

Revenue $ 150,684 $ 210,430 $ 186,892

Costs and expenses:

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Change in fair value of warrant liabilities, net ( 6,760 ) — —

Change in fair value of convertible promissory notes

Change in fair value of convertible promissory notes—related parties

Other income (expense), net

Other (expense) income, net ( 2,101 ) 729 1,549

Total non-operating (expense) income ( 12,125 ) 181 ( 1,499 )

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Income tax benefit — — —

Net loss ( 53,042 ) ( 17,144 ) ( 55,422 )

Adjustments to the carrying value of redeemable convertible preferred stock ( 157 ) — —

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Year Ended December 31,

Other comprehensive (loss) income:

2018 2019 2020

Net loss $ ( 53,042 ) $ ( 17,144 ) $ ( 55,422 )

Other comprehensive income (loss):

Foreign currency translation adjustments 926 ( 680 ) ( 1,504 )

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CARDLYTICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands)

Capital Accumulated

Comprehensive

Balance – December 31, 2016

Exercise of common stock options

Stock-based compensation

Issuance of common stock warrants

Deemed dividend related to beneficial conversion feature

Beneficial conversion feature of Series G stock

Conversion of convertible notes

Accretion of redeemable stock

Other comprehensive loss

Income (loss) Accumulated

Deficit Total

Shares Amount

Balance – December 31, 2017 3,439 $ — $ 58,693 $ 1,066 $ ( 268,445 ) $ ( 208,686 )

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Other comprehensive income — — — 926 — 926

Net loss — — — — ( 53,042 ) ( 53,042 )

Balance – December 31, 2018 22,466 $ 7 $ 371,463 $ 1,992 $ ( 321,487 ) $ 51,975

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Other comprehensive loss — — — ( 680 ) — ( 680 )

Net loss — — — — ( 17,144 ) ( 17,144 )

Balance – December 31, 2019 26,547 $ 8 $ 480,578 $ 1,312 $ ( 338,631 ) $ 143,267

Exercise of common stock options 467 — 10,176 — — 10,176

Exercise of common stock warrants 9 — — — — —

Stock-based compensation — — 32,872 — — 32,872

Issuance of restricted stock 779 — — — — —

Issuance of ESPP 59 — 2,837 — — 2,837

Issuance of convertible notes — — 51,416 — — 51,416

Purchases of capped calls — — ( 26,450 ) — — ( 26,450 )

Other comprehensive loss — — — ( 1,504 ) — ( 1,504 )

Net loss — — — — ( 55,422 ) ( 55,422 )

Balance – December 31, 2020 27,861 $ 8 $ 551,429 $ ( 192 ) $ ( 394,053 ) $ 157,192

See notes to the consolidated financial statements

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Year Ended December 31,

2018 2019 2020

Operating activities

Net loss $ ( 53,042 ) $ ( 17,144 ) $ ( 55,422 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Credit loss expense 130 1,201 1,196

Depreciation and amortization 3,282 4,535 7,826

Amortization of financing costs charged to interest expense 282 95 312

Amortization of right-of-use asset — — 3,766

Accretion of debt discount and non-cash interest expense 2,326 — 2,486

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Change in the fair value of warrant liabilities, net 6,760 — —

Change in the fair value of convertible promissory notes

Change in the fair value of convertible promissory notes - related parties

Other non-cash (income) expense, net

Amortization of deferred FI implementation costs

Other non-cash expense (income), net 4,641 ( 570 ) ( 1,003 )

Amortization and impairment of deferred FI implementation costs 1,618 2,869 4,598

Settlement of paid-in-kind interest ( 8,353 ) — —

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Principal payments of debt ( 52,581 ) ( 46,698 ) ( 23 )

Proceeds from issuance of convertible senior notes — — 223,100

Purchase of capped calls related to convertible senior notes — — ( 26,450 )

Proceeds from issuance of common stock 72,334 91,216 10,185

Proceeds from issuance of Series G preferred stock

Equity issuance costs ( 1,949 ) ( 196 ) —

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Effect of exchange rates on cash, cash equivalents and restricted cash ( 246 ) 101 47

Net (decrease) increase in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash 38,608 44,717 188,762

Cash, cash equivalents, and restricted cash — Beginning of period 21,262 59,870 104,587

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Year Ended December 31,

2018 2019 2020

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet:

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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.

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 and wireless services, and increasingly, travel and hospitality, grocery, e-commerce and luxury brands.

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.

Using our purchase intelligence presents customers with offers to save money at a time when they are thinking of their finances.

On May 4, 2012, we formed Cardlytics UK Limited (“Cardlytics UK”), a wholly-owned subsidiary registered as a private limited company in England and Wales.

Cardlytics UK was a party to a collaboration agreement whereby 50 % of its income and losses are shared with Aimia EMEA Limited (“Aimia”).

Cardlytics, Inc.

obtained full control of Cardlytics UK in June 2016 upon the termination of the cooperation agreement in exchange for convertible promissory notes of the Company.

Refer to Note 6—Debt for additional information.

We also operate in India through Cardlytics Services India Private Limited, a wholly-owned and operated subsidiary registered as a private limited company in India.

We also operate in the U.K.

through Cardlytics UK Limited ("Cardlytics UK"), a wholly-owned and operated subsidiary registered as a private limited company in England and Wales, and in India through Cardlytics Services India Private Limited, a wholly-owned and operated subsidiary registered as a private limited company in India.

Reverse Stock Split

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Subsequent to the closing of the IPO, there were no shares of preferred stock or warrants to purchase shares of redeemable convertible preferred stock outstanding.

The consolidated financial statements as of December 31, 2017 , including share and per share amounts, do not give effect to the IPO or conversion of the redeemable convertible preferred stock, as the IPO and such conversions were completed subsequent to December 31, 2017 .

Upon the completion of our IPO, our amended and restated certificate of incorporation authorized us to issue up to 100,000,000 shares of common stock, $ 0.0001 par value per share, and 10,000,000 shares of preferred stock, $ 0.0001 par value per share, all of which shares of preferred stock are undesignated.

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During 2018, 2019 and 2020, we 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.

2020 Convertible Senior Notes

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").

Refer to Note 7—Debt and Financing Arrangements for further details

SIGNIFICANT ACCOUNTING POLICIES

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Actual results could differ from these estimates.

Significant items subject to such estimates and assumptions include revenue recognition, internal-use software development costs, income taxes, stock-based compensation, income tax valuation allowance, contingencies and changes in fair value of our convertible promissory notes, preferred stock warrants and common stock warrants.

Significant items subject to such estimates and assumptions include revenue recognition, internal-use software development costs, income taxes, stock-based compensation, income tax valuation allowance, contingencies and changes in fair value of our preferred stock warrants and common stock warrants.

We base our estimates on historical experience and also on assumptions that we believe are reasonable.

Changes in facts or circumstances may cause us to change our assumptions and estimates in future periods and it is possible that actual results could differ from our current or revised future estimates.

Restructuring

During the first quarter of 2020, we began a strategic shift within our organization to increase productivity and optimize performance.

This plan has resulted in severance and medical benefits totaling $1.3 million during the year ended December 31, 2020.

We recognize these costs when the extent of our actions is determined and the costs can be estimated.

These charges are reflected on our consolidated statement of operations for the year ended December 31, 2020, as follows:

$1.1 million in sales and marketing expense, $0.1 million in general and administrative expense and $0.1 million in research and development expense.

Severance and medical benefits of $0.9 million have been paid to former employees through December 31, 2020.

Foreign Currency

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The effect of these translation adjustments is reported in a separate component of stockholders’ deficit titled accumulated other comprehensive income.

We are also subject to gains and losses from foreign currency denominated transactions and the remeasurement of foreign currency denominated balance sheet accounts, both of which are included in other income (expense), net in the accompanying consolidated statements of operations.

We recorded foreign currency (gains) losses totaling $( 1.3 ) million and $ 1.2 million and $( 0.8 ) million in 2017 , 2018 and 2019 , respectively .

We are also subject to gains and losses from foreign currency denominated transactions and the remeasurement of foreign currency denominated balance sheet accounts, both of which are included in other (expense) income, net in the accompanying consolidated statements of operations.

We recorded a foreign currency loss (gain) totaling $1.2 million, $(0.8) million and $(1.6) million in 2018, 2019 and 2020, respectively.

FI Share and Other Third-Party Costs

With respect to Cardlytics Direct, 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").

FI Share and other third-party costs consist primarily of the FI Share that we pay our FI partners, media and data costs, and the amortization of implementation costs incurred pursuant to our agreements with certain FI partners, any incremental costs due to FIs as part of FI Share commitments, as well as a non-cash expense related to the vesting of warrants issued to an FI partner that accelerated upon the consummation of our IPO.

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").

FI Share and other third-party costs consist primarily of the FI Share that we pay our FI partners, media and data costs, and deferred FI implementation costs incurred pursuant to our agreements with certain FI partners, any incremental costs due to FIs as part of FI Share commitments, as well as a non-cash expense 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.

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Delivery costs also include hosting facility costs, internally developed and purchased or licensed software costs, outsourcing costs and professional services costs.

Impacts of COVID-19 Pandemic

The COVID–19 pandemic resulted in a global slowdown of economic activity that decreased demand for a broad variety of goods and services and consumer discretionary spending, including spending by consumers with our marketers, and such decreased demand is likely to continue.

Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment.

Actual results could differ from those estimates and any such differences may be material to our financial statements.

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.

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.

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.

Accounts Receivable

Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts, determined based on the probability of future collection.

Accounts receivable are carried at the original invoiced amount less an allowance for credit losses (formerly allowance for doubtful accounts), determined based on the probability of future collection.

When we become aware of circumstances that may decrease the likelihood of collection, we record a specific allowance against amounts due, which reduces the receivable to the amount that we believe will be collected.

For all other accounts receivable, we determine the adequacy of the allowance based on historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with specific accounts.

The following table presents changes in the allowance for doubtful accounts (in thousands):

For all other accounts receivable, we determine the adequacy of the allowance for credit losses based on historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with specific accounts.

The following table presents changes in the allowance for credit losses (in thousands):

Year Ended December 31,

2018 2019 2020

Beginning balance $ 105 $ 169 $ 255

Bad debt expense

Credit loss expense 130 1,201 1,196

Write-offs, net of recoveries ( 66 ) ( 1,115 ) ( 864 )

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Costs incurred in the preliminary project stage and post-implementation operation stages are expensed as incurred and recorded in research and development expense on our consolidated statements of operations.

During 2017 , 2018 and 2019 , we capitalized development costs for enhancements to our offer management system as well as the implementation of a new billing system totaling $0.4 million , $ 1.6 million and $2.6 million , respectively.

During 2018, 2019 and 2020, we capitalized the implementation of a new billing system as well as development costs for enhancements to our offer management system totaling $1.6 million, $2.6 million and $4.3 million, respectively.

During the first quarter of 2020, we redesigned certain elements of this project and wrote off development costs totaling $1.0 million recognized in depreciation and amortization expense on our consolidated statement of operations.

Capitalized software development costs are as follows (in thousands):

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Costs incurred to obtain lines of credit are capitalized and included in other long-term assets on our consolidated balance sheets and amortized ratably over the term of the arrangement.

Costs incurred to obtain loans for which we have elected the fair value option are expensed upon the issuance of the loan and recorded within general and administrative expense on our consolidated statements of operations.

As described in Note 6—Debt , we entered into a 2018 Loan Facility in 2018 and deferred $ 0.1 million of debt issuance costs associated with obtaining the 2018 Loan Facility and deferred $ 0.1 million of unamortized debt issuance costs attributed to our 2016 Line of Credit and 2016 Term Loan.

As described in Note 7—Debt and Financing Arrangements, we entered into a 2018 Loan Facility in 2018 and deferred $ 0.1 million of debt issuance costs associated with obtaining the 2018 Loan Facility and deferred $ 0.1 million of unamortized debt issuance costs attributed to our 2016 Line of Credit and 2016 Term Loan.

We recognized a $ 0.9 million loss on extinguishment of debt related to the unamortized discount and unamortized debt issuance costs associated with our 2016 Term Loan and 2016 Line of Credit.

This expense is included within other income (expense), net on our consolidated statements of operations and is presented in other non-cash expenses on our consolidated statement of statement of cash flows.

This expense is included within other (expense) income, net on our consolidated statements of operations and is presented in other non-cash expenses on our consolidated statements of cash flows.

Further, as described in Note 7—Debt and Financing Arrangements, on September 22, 2020, we issued convertible senior notes with an aggregate principal amount of $ 230.0 million bearing an interest rate of 1.00 % due in 2025 (the “Notes”), including the exercise in full of the initial purchasers’ option to purchase up to an additional $30.0 million principal amount of the Notes.

The net proceeds from this offering were $ 222.7 million, after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by us.

In accounting for the $7.3 million issuance costs related to the Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values.

Amortization of debt issuance costs included in interest expense, net totaled $0.3 million, $0.1 million and $0.3 million in 2018, 2019 and 2020, respectively.

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Debt issuance costs, net $ 117 $ 35

Deferred debt issuance costs related to our term loans included in debt are as follows (in thousands):

Deferred debt issuance costs related to our Notes included in debt are as follows (in thousands):

Debt issuance costs, gross $ — $ 5,596

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Future amortization of debt issuance costs is as follows (in thousands):

Years Ending December 31,

Years Ending December 31, Amortization

Total $ 5,414

Deferred Offering Costs

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Year Ended December 31,

2018 2019 2020

Beginning balance $ 3,144 $ — $ —

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The fair values for these assets are evaluated when events or changes in circumstances indicate the carrying value may not be recoverable.

Convertible Promissory Notes

The redemption features included in the terms of the convertible promissory notes were determined to be derivative liabilities as a result of a significant discount within the redemption features for the note holders.

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.

Under the fair value option, bifurcation of the embedded derivative is not necessary as all related gains or losses on the host contract and derivative will be reflected on the consolidated statements of operations.

We elected the fair value option for the convertible promissory notes upon their issuance.

The convertible promissory notes are measured at fair value using unobservable inputs that required a high level of judgment, and are therefore classified as Level 3.

In May 2017, we issued and sold shares of Series G redeemable convertible preferred stock, which resulted in the conversion of the convertible promissory notes into either shares of our common stock or shares of our Series G’ Stock.

Refer to Note 11—Fair Value Measurements for additional information regarding the valuation of the convertible promissory notes.

Refer to Note 12—Fair Value Measurements for information regarding the fair value of our financial instruments.

Income taxes are accounted for using the asset and liability method.

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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.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was signed into law making significant changes to the Internal Revenue Code of 1986, as amended (“IRC”).

Changes include, but are not limited to, a corporate tax rate decrease to 21% effective for tax years beginning after December 31, 2017.

This change in tax rate resulted in a reduction in our net U.S.

deferred tax assets, which was fully offset by a reduction in our valuation allowance.

The other provisions of the Tax Act, including the one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings, did not have a material impact on our financial statements.

ACCOUNTING STANDARDS

Recently Adopted Accounting Pronouncements

On January 1, 2019, we early adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) , using the modified retrospective method, as permitted under ASU 2014-09.

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) to increase the transparency and comparability among organizations as it relates to lease assets and lease liabilities, by requiring lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months, with exceptions.

Effective January 1, 2020, we early adopted this guidance using a modified retrospective approach, which was required for all leases that exist at or commence after the date of the initial application with an option to use certain practical expedients.

We have elected to use these practical expedients, which allow us to treat all components of our leases as a single component, not to reassess lease classification or whether an arrangement is or contains a lease and not to reassess its initial accounting for direct lease costs.

During the first quarter of 2020, we recorded right-of-use assets of $ 10.3 million, lease liabilities of $ 13.5 million and eliminated deferred rent liabilities of $3.2 million.

These amounts represent right-of-use assets of $7.4 million, lease liabilities of $10.6 million and deferred rent liabilities of $3.2 million as of the adoption date of ASU 2016-02 and right-of-use assets and lease liabilities of $2.9 million, respectively, for office space entered into during the quarter.

The adoption of this guidance did not have a significant impact on our consolidated statements of operations or cash flows.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which is intended to provide more decision-useful information about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

ASU 2016-13 revises the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses on financial instruments, including, but not limited to, available for sale debt securities and accounts receivable.

In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses , and in April 2019, the FASB issued ASU No.

2019-04, C odification Improvements to Topic 326, Financial Instruments – Credit Losses , Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments .

These ASUs provide supplemental guidance and clarification to ASU 2016-13 and must be adopted concurrently with the adoption of ASU 2016-13, cumulatively referred to as “Topic 326.” Effective January 1, 2020, we adopted this guidance.

The adoption of this guidance did not have a material effect on our consolidated financial statements.

On January 1, 2020, we adopted ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement , to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license.

The adoption of this guidance did not have a material effect on our consolidated financial statements.

On January 1, 2020, we adopted ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract , which addresses the accounting for implementation, setup and other upfront costs incurred in a hosting arrangement.

The adoption of this guidance did not have a material effect on our consolidated financial statements.

On January 1, 2019, we early adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , using the modified retrospective method, as permitted under ASU 2014-09.

The adoption of ASU 2014-09 did not result in a material change in the timing or amount of revenue recognized, nor did it result in the capitalization of incremental contract costs.

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Recently Issued Accounting Pronouncements

In April 2015, the FASB issued ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

If a cloud computing arrangement includes a license to internal-use software, then the software license is accounted for by the customer in accordance with Subtopic 350-40.

This generally means that an intangible asset is recognized for the software license and, to the extent that the payments attributable to the software license are made over time, a liability also is recognized.

If a cloud computing arrangement does not include a software license, the entity should account for the arrangement as a service contract.

This generally means that the fees associated with the hosting element (service) of the arrangement are expensed as incurred.

For public entities, this ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

For non-public entities, this ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.

Early adoption is permitted, including adoption in any interim period, for all entities.

We have made the election to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act, and therefore we will be required to adopt this ASU for annual reporting periods beginning after December 15, 2020.

We early adopted this ASU on January 1, 2020 on a prospective basis.

We do not expect the adoption to have a material effect on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which supersedes ASC Topic 840, Leases .

The ASU does not significantly change the lessees’ recognition, measurement and presentation of expenses and cash flows from the previous accounting standard.

The ASU requires lessees to recognize a lease liability for payments and a right of use asset representing the right to use the leased asset during the term on operating lease arrangements.

Lessees are permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of twelve months or less.

Lessors’ accounting under the ASU is largely unchanged from the previous accounting standard.

In addition, the ASU expands the disclosure requirements of lease arrangements.

In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) - Targeted Improvements , which provides the option of applying the requirements of the new lease standard in the period of adoption with no restatement to comparative periods.

For public entities, Leases (Topic 842) is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

In November 2019, the FASB issued ASU 2019-10, Leases (Topic 842) , making the effective date of Leases (Topic 842) for non-public entities effective for annual periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.

Early adoption is permitted.

Although we are currently evaluating the impact of this guidance on our consolidated financial statements, we expect that most of our operating lease commitments will be recognized as operating lease liabilities and right-of-use assets upon adoption of the new guidance.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion Options (“Subtopic 470-20”) and Derivatives and Hedging—Contracts in Entity’s Own Equity (“Subtopic 815-40”) , which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity.

ASU 2020-06 also improves and amends the related Earnings Per Share guidance for both Subtopics.

The ASU is part of the FASB's simplification initiative, which aims to reduce unnecessary complexity in U.S.

ASU 2020-06 will be effective for annual reporting periods beginning after December 15, 2021.

Early adoption is permitted, but not before annual reporting periods beginning after December 15, 2020.

We are currently evaluating the impact of the new guidance on our consolidated financial statements.

We have generated revenue through the sale of two categories of solutions that leverage our intelligence platform:

(1) our proprietary native banking channel, Cardlytics Direct, and (2) our Other Platform Solutions.

We have generated substantially all of our revenue from sales of Cardlytics Direct since inception.

(1) our proprietary native banking channel, the Cardlytics platform, and (2) our Other Platform Solutions.

We have generated substantially all of our revenue from sales of the Cardlytics platform since inception.

Our Other Platform Solutions enabled marketers and marketing service providers to leverage the power of purchase intelligence outside the bank channel.

We have shifted the majority of our efforts and resources to support the growth of Cardlytics Direct.

We have shifted the majority of our efforts and resources to support the growth of the Cardlytics platform.

As a result, we have not and do not expect to generate substantial, if any, revenue from Other Platform Solutions for the foreseeable future.

Cardlytics Direct

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.

The Cardlytics Platform

The Cardlytics platform is our proprietary native bank advertising channel that enables marketers to reach consumers through the FIs' trusted and frequently visited digital banking channels.

Working with the marketer, we design a campaign that targets customers based on their purchase history.

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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").

Cardlytics Direct is priced predominantly in two ways:

The Cardlytics platform is priced predominantly in two ways:

(1) Cost per Served Sale (“CPS”), and (2) Cost per Redemption (“CPR”).

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Year Ended December 31,

2018 2019 2020

Cost per Served Sale $ 101,087 $ 143,754 $ 131,045

Cost per Redemption 43,389 63,295 53,838

Other 6,208 3,381 2,009

Revenue $ 150,684 $ 210,430 $ 186,892

Revenue Recognition

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.

The processing and recording of revenue is highly automated and is based on contractual terms with marketers, FIs, and other parties.

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:

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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.

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.

With respect to our Cardlytics platform service, 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.

Cardlytics Direct fees represent variable consideration that is resolved when FIs' customers make qualifying purchases during the marketing campaign term.

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.

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.

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

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Costs to fulfill a contract include immaterial costs to set up a campaign that we expense as incurred due to the short-term nature of our marketing campaigns

Effective January 1, 2020, we early adopted ASU 2016-02, Leases (Topic 842) .

This standard requires us to recognize a right-of-use asset and a lease liability for all leases with an initial term in excess of twelve months.

The asset reflects the present value of unpaid fixed lease payments coupled with initial direct costs, prepaid lease payments, and lease incentives.

The amount of the lease liability is calculated as the present value of unpaid fixed lease payments.

We evaluate each of our lease and service arrangements at inception to determine if the arrangement is, or contains, a lease and the appropriate classification of each identified lease.

A lease exists if we obtain substantially all of the economic benefits of and have the right to control the use of an asset for a period of time.

Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease agreement.

Lease costs are recognized as expense on a straight-line basis over the lease term.

We consider a termination or renewal option in the determination of the lease term when it is reasonably certain that we will exercise that option.

We adopted ASU 2016-02 using a modified retrospective approach and did not restate comparative periods.

We elected to take the package of practical expedients allowing us to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases.

We have elected to account for all components in a contract as part of the single lease component to which they are related.

Significant assumptions and judgments in calculating the right-of-use assets and lease liability include the determination of the applicable borrowing rate for each lease.

Because our leases generally do not provide a readily determinable implicit interest rate, we use an incremental borrowing rate to measure the lease liability and associated right-of-use asset at the lease commencement date.

The incremental borrowing rate used is a fully collateralized rate that considers our credit rating, market conditions and the term of the lease at the lease commencement date.

During the first quarter of 2020, we recorded right-of-use assets of $ 10.3 million, lease liabilities of $ 13.5 million and eliminated deferred rent liabilities of $ 3.2 million.

As of the adoption date, our office and data center leases have remaining lease terms ranging from one to six years.

During 2020, we recorded additional right-of-use assets and lease liabilities of $1.0 million for data center equipment leases entered into during the year.

We also renewed certain data center lease agreements resulting in a lease modification and the recognition of additional right-of-use assets and lease liabilities of $ 2.2 million.

During 2020, we made cash payments of $4.0 million for operating leases which are included in cash flows (used in) provided by operating activities in our consolidated statement of cash flows.

The following table summarizes activity related to our leases (in thousands):

December 31, 2020

Operating lease expense $ 4,078

Variable lease expense 847

Short-term lease expense 232

The following table presents our weighted average borrowing rate and weighted average lease term:

December 31, 2020

Weighted average borrowing rate 3.4 %

Weighted average remaining lease term (years) 3.25

The following table summarizes future maturities of lease liabilities as of December 31, 2020 (in thousands):

Total lease payments 14,888

Imputed interest 789

Total operating lease liabilities $ 14,099

The following table summarizes future payments for operating leases as of December 31, 2019, prior to our adoption of ASU 2016-02 (in thousands):

Minimum Lease

Thereafter 611

Total $ 12,872

PROPERTY AND EQUIPMENT

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Property and equipment, net $ 14,290 $ 13,865

Assets acquired under capital leases, included within computer equipment, are as follows (in thousands):

Capital lease assets, gross

Assets acquired under finance leases, included within computer equipment, are as follows (in thousands):

Finance lease assets, gross $ 1,096 $ 557

Less accumulated depreciation ( 1,067 ) ( 548 )

Capital lease assets, net

Finance lease assets, net $ 29 $ 9

Depreciation expense was $ 3.0 million, $ 4.0 million and $ 5.6 million in 2018, 2019 and 2020, respectively.

DEBT AND FINANCING ARRANGEMENTS

Our debt consists of the following (in thousands):

Lines of credit

Capital leases

Convertible senior notes, net $ — $ 174,011

Finance leases 37 13

Total debt 37 174,024

Less current portion of long-term debt ( 24 ) ( 13 )

Long-term debt, net of current portion $ 13 $ 174,011

We had no accrued interest in debt as of December 31, 2018 and 2019 , respectively.

Paid-in-kind interest related to the convertible promissory notes is recognized in interest expense, net on our consolidated statements of operations and totaled $ 1.7 million during 2017 .

Accrued interest is included within accrued expenses in our consolidated balance sheet.

We had no accrued interest on debt as of December 31, 2019 and $0.6 million of accrued interest as of December 31, 2020.

2020 Convertible Senior Notes

On September 22, 2020, we issued convertible senior notes with an aggregate principal amount of $ 230.0 million bearing an interest rate of 1.00 % due in 2025 (the “Notes”), including the exercise in full of the initial purchasers’ option to purchase up to an additional $30.0 million principal amount of the Notes.

The Notes were issued pursuant to an indenture, dated September 22, 2020 (the “Indenture”), between us and U.S.

Bank National Association, as trustee.

The Notes are general senior, unsecured obligations and will mature on September 15, 2025, unless earlier converted, redeemed or repurchased.

The Notes bear interest at a rate of 1.00 % per year, payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021.

The Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding June 15, 2025, only under the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2020 (and only during such calendar quarter), if the last reported sale price of our common stock, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price for the Notes on each applicable trading day;

(2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of common stock and the conversion rate for the Notes on each such trading day;

(3) if we call such Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date;

or (4) upon the occurrence of specified corporate events as set forth in the Indenture.

On or after June 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Notes may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances.

Upon conversion, we may satisfy our conversion obligation by paying and/or delivering, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at our election, in the manner and subject to the terms and conditions provided in the Indenture.

We currently intend to settle the principal amount of the Notes with cash.

The conversion rate for the Notes will initially be 11.7457 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $ 85.14 per share of common stock.

The conversion rate for the Notes is subject to adjustment under certain circumstances in accordance with the terms of the Indenture.

In addition, following certain corporate events that occur prior to the maturity date of the Notes or if we deliver a notice of redemption in respect of the Notes, we will, in certain circumstances, increase the conversion rate of the Notes for a holder who elects to convert its Notes in connection with such a corporate event or convert its notes called for redemption during the related redemption period (as defined in the Indenture), as the case may be.

We may not redeem the Notes prior to September 20, 2023.

We may redeem for cash all or any portion of the Notes, at our option, on or after September 20, 2023 and prior to the 36th scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130 % of the conversion price for the Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100 % of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

No sinking fund is provided for the Notes.

If we elect to redeem less than all of the Notes, at least $75.0 million aggregate principal amount of Notes must be outstanding and not subject to redemption as of the relevant redemption notice date.

If we undergo a Fundamental Change (as defined in the Indenture), then, except as set forth in the Indenture, holders may require, subject to certain exceptions, us to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving us after which the Notes become automatically due and payable.

The following events are considered “events of default” under the Indenture:

• default in any payment of interest on any Note when due and payable and the default continues for a period of 30 days;

• default in the payment of principal of any Note when due and payable at its stated maturity, upon optional redemption, upon any required repurchase, upon declaration of acceleration or otherwise;

• failure by us to comply with our obligation to convert the Notes in accordance with the Indenture upon exercise of a holder’s conversion right, and such failure continues for three business days;

• failure by us to give a fundamental change notice, notice of a make-whole fundamental change or notice of a specified corporate event, in each case when due and such failure continues for one business day;

• failure by us to comply with its obligations in respect of any consolidation, merger or sale of assets;

• failure by us to comply with any of our other agreements in the Notes or the Indenture for 60 days after written notice of such failure from the trustee or the holders of at least 25% in principal amount of the Notes then outstanding;

• default by us or any of our significant subsidiaries (as defined in the Indenture) with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $35,000,000 (or its foreign currency equivalent), in the aggregate of us and/or any such significant subsidiary, whether such indebtedness now exists or shall hereafter be created, (i) resulting in such indebtedness becoming or being declared due and payable prior to its stated maturity date or (ii) constituting a failure to pay the principal of any such indebtedness when due and payable (after the expiration of all applicable grace periods) at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, and in the cases of clauses (i) and (ii), such acceleration shall not have been rescinded or annulled or such failure to pay or default shall not have been cured or waived, or such indebtedness is not paid or discharged, as the case may be, within 30 days after written notice to us by the trustee or to us and the trustee by holders of at least 25% in aggregate principal amount of the Notes then outstanding in accordance with the Indenture;

• certain events of bankruptcy, insolvency or reorganization of us or any of our significant subsidiaries.

If certain bankruptcy and insolvency-related events of default with respect to us occur, the principal of, and accrued and unpaid interest on, all of the then outstanding Notes shall automatically become due and payable.

If an event of default with respect to the Notes, other than certain bankruptcy and insolvency-related events of default with respect to us, occurs and is continuing, the trustee by notice to us or the holders of at least 25% in principal amount of the outstanding Notes by notice to us and the trustee, may, and the trustee at the request of such holders shall, declare the principal of, and accrued and unpaid interest on, all of the then-outstanding Notes to be due and payable.

Notwithstanding the foregoing, the Indenture provides that, to the extent we so elect, the sole remedy for an event of default relating to certain failures by us to comply with certain reporting covenants in the Indenture will, for the first 365 days after the occurrence of such event of default, consist exclusively of the right to receive additional interest on the Notes at a rate equal to 0.25% per annum of the principal amount of the Notes outstanding for each day during the first 180 days after the occurrence of such an event of default and 0.50% per annum of the principal amount of the Notes outstanding from the 181st day to, and including, the 365th day following the occurrence of such event of default, as long as such event of default is continuing (in addition to any additional interest that may accrue as a result of a registration default (as set forth in the Indenture).

The Indenture provides that we shall not consolidate with or merge with or into, or sell, convey, transfer or lease all or substantially all of the consolidated properties and assets of our subsidiaries, taken as a whole, to, another person (other than any such sale, conveyance, transfer or lease to one or more of our direct or indirect wholly owned subsidiaries), unless:

(i) the resulting, surviving or transferee person (if not us) is a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and such corporation (if not us) expressly assumes by supplemental indenture all of our obligations under the Notes and the Indenture;

and (ii) immediately after giving effect to such transaction, no default or event of default has occurred and is continuing under the Indenture.

The net proceeds from this offering were $ 222.7 million, after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by us.

We used $ 26.5 million of the net proceeds to pay the cost of the capped call transactions described below.

The Notes are accounted for in accordance with FASB ASC Subtopic 470-20, Debt with Conversion and Other Options .

Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument.

The carrying amount of the liability component of the instrument was computed using a discount rate of 6.50%, which was determined by estimating the fair value of a similar liability without the conversion option using Level 3 inputs.

The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument.

The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the respective term of the Notes using the effective interest rate method.

The equity component is recorded in Additional Paid-in Capital and is not remeasured as long as it continues to meet the conditions for equity classification.

In accounting for the issuance costs related to the Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values.

The net carrying amount of the liability component of the Notes is as follows (in thousands):

December 31, 2020

Principal $ 230,000

Unamortized debt discount ( 50,610 )

Unamortized issuance costs ( 5,379 )

Net carrying amount of the liability component $ 174,011

The net carrying amount of the equity component of the Notes is as follows (in thousands):

December 31, 2020

Proceeds allocated to the conversion options (debt discount) $ 53,096

Issuance costs ( 1,680 )

Net carrying amount of the equity component $ 51,416

Interest expense recognized related to the Notes is as follows (in thousands):

December 31, 2020

Contractual interest expense (due in cash) $ 626

Amortization of debt discount 2,486

Amortization of debt issuance costs 217

Total interest expense related to the Notes $ 3,329

Capped Call Transactions

In connection with the issuance of the Notes, we entered into privately negotiated capped call transactions (the "Capped Calls") with an affiliate of one of the initial Note purchasers and certain other financial institutions.

The Capped Calls are intended to reduce potential dilution to our common stock upon any conversion of 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.

The Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives.

The cost of $ 26.5 million incurred to purchase the Capped Calls was recorded as a reduction to additional paid-in capital in the accompanying consolidated balance sheet.

The Capped Calls each have an initial strike price of $85.14 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes.

The Capped Calls have an initial cap price of $128.51 per share, subject to certain adjustments.

2018 Loan Facility

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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.

On September 17, 2020, we amended our 2018 Loan Facility to allow for the issuance of the Notes.

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.

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.

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.

The moving 12-month billings covenant was $ 240.0 million for December 2019.

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 .

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.

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.

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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This expense is included within other income (expense), net in our consolidated statements of operations and is presented in other non-cash expenses on our consolidated statement of statement of cash flows.

Convertible Promissory Notes

During 2016, we issued unsecured convertible promissory notes to existing stockholders and Aimia with an aggregate principal amount of $50.7 million .

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.

We elected the fair value option for the convertible promissory notes and changes in fair value of the convertible promissory notes are included in change in fair value of convertible promissory notes on our consolidated statements of operations.

Refer to Note 11—Fair Value Measurements for additional information regarding the valuation of the convertible promissory notes.

Existing Stockholder Notes

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").

In May 2017, we issued and sold shares of Series G redeemable convertible preferred stock, which resulted in the conversion of the Existing Stockholder Notes into shares of our Series G’ Stock.

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.

During 2016, we issued to Aimia unsecured convertible promissory notes (“Aimia EMEA Notes”), in an aggregate principal amount of $18.0 million .

In consideration for our outstanding obligations to Aimia Inc.

at the time we terminated our U.K.

cooperation agreement, we issued to Aimia an unsecured convertible promissory note (“Outstanding Obligation Note”) in an aggregate principal amount of approximately $5.7 million .

Both the Aimia EMEA Notes and the Outstanding Obligation Note (collectively the “Aimia Notes”) were convertible into shares of our capital stock, depending on certain triggering events.

In the event we completed an equity financing in which we received proceeds in excess of $10.0 million , the Aimia EMEA Notes were to automatically convert into shares of our common stock and the Outstanding Obligation Note was to automatically convert into shares of the same series of our capital stock as the investors in the financing.

In connection with the Series G Stock financing, the Aimia EMEA Notes converted into 801,329 shares of common stock.

Refer to Note 9—Redeemable Convertible Preferred Stock for additional information of the Series G Stock financing and the transactions that resulted in the conversion of the Aimia EMEA Notes into shares of our common stock and the conversion of the Outstanding Obligation Note into shares of our Series G’ Stock.

Future Payments

Aggregate future payments of principal and interest due upon maturity are as follows (in thousands):

Years Ending December 31,

Capital leases

Aggregate future payments of principal due upon maturity are as follows (in thousands):

Years Ending December 31, Finance leases Convertible Senior Notes

2021 $ 13 $ —

2025 — 230,000

Total debt $ 13 $ 230,000

STOCK-BASED COMPENSATION

In May 2017, our board of directors and stockholders approved an increase in the total number of shares of common stock issuable under our 2008 Stock Plan ("2008 Plan") from 3,120,000 to 3,495,000 shares.

In January 2018, our board of directors and stockholders approved an increase in the total number of shares of common stock issuable under our 2008 Plan to 4,020,000 shares.

In January 2018, our board of directors and stockholders approved an increase in the total number of shares of common stock issuable under our 2008 Stock Plan ("2008 Plan") to 4,020,000 shares.

Our board of directors has adopted and our stockholders have approved our 2018 Equity Incentive Plan ("2018 Plan").

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Year Ended December 31,

2018 2019 2020

Delivery costs $ 633 $ 711 $ 1,181

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Total stock-based compensation expense $ 26,790 $ 15,851 $ 32,396

During 2017 , 2018 and 2019 , we capitalized less than $ 0.1 million of stock-based compensation expense for software development.

During 2018, 2019 and 2020, we capitalized less than $ 0.1 million, less than $ 0.1 million and $0.5 million, respectively, of stock-based compensation expense for software development.

Common Stock Options

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A summary of common stock option activity is as follows (in thousands, except per share amounts):

Weighted-Average

Shares Weighted-Average

Exercise Price

Weighted Average Contractual Life (in years)

Aggregate Intrinsic Value (1)

Per Share Weighted Average Contractual Life (in years) Aggregate Intrinsic Value (1)

(in thousands)

Outstanding - December 31, 2017 2,514 $ 18.42

Granted 29 24.24

Exercised ( 357 ) 6.25

Forfeited ( 197 ) 24.10

Cancelled ( 215 ) 16.60

Outstanding - December 31, 2018 1,774 $ 20.55

Granted 39 20.64

Exercised ( 716 ) 16.84

Forfeited ( 31 ) 23.95

Cancelled ( 66 ) 22.37

Outstanding - December 31, 2019 1,000 $ 22.99

Exercised ( 467 ) 21.78 $ 29,523

Forfeited ( 19 ) 27.83

Cancelled ( 1 ) 21.89

Outstanding - December 31, 2020 513 $ 23.91 5.67 $ 61,009

Exercisable - December 31, 2020 480 $ 23.72 5.62 $ 57,126

The aggregate intrinsic value represents the total pre-tax intrinsic value based on the $ 62.86 closing price of our common stock as reported on the Nasdaq Global Market on December 31, 2019 that would have been received by option holders had all in-the-money options been exercised on that date.

(1) For options exercised during the year, the aggregate intrinsic value represents the total pre-tax intrinsic value received by option holders based on the closing price of our common stock as reported on the Nasdaq Global Market on the exercise date.

For options outstanding and exercisable at December 31, 2020, the aggregate intrinsic value represents the total pre-tax intrinsic value based on the $ 142.77 closing price of our common stock as reported on the Nasdaq Global Market on December 31, 2020 that would have been received by option holders had all in-the-money options been exercised on that date.

The total fair value of options vested during 2018, 2019 and 2020 was approximately $ 6.0 million, $ 4.8 million and $2.3 million respectively.

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All stock option awards outstanding as of December 31, 2020 are expected to vest.

During 2017, we granted 799,129 options to purchase shares of our common stock to employees with a weighted-average exercise price of $23.78 per share.

We determined that a retrospective valuation of the fair value of our common stock on each grant date in 2017 was appropriate for financial reporting purposes.

In connection with the preparation of our retrospective valuation, we noted that the fair value of our common stock, as determined by contemporaneous third-party valuations, was $ 24.48 per share on December 31, 2016, $ 27.68 per share on February 28, 2017, $ 30.44 per share on May 15, 2017 and $ 24.24 per share on September 30, 2017.

The changes in fair value of our common stock primarily resulted from the dilutive effect of our Series G Stock financing, the timing of future potential liquidity events, changes to our forecasted financial results and changes in the valuation of comparable companies.

We derived the fair value of our common stock on December 31, 2017 using a similar interpolation methodology and determined the fair value of our common stock to be $ 26.74 per share.

We determine the grant date fair value of options using the Black-Scholes option pricing model, which is affected by the estimated fair value of our common stock as well as the following significant inputs:

Year Ended December 31,

Weighted-average grant date fair value

Significant inputs:

Value of common stock

$24.60 - $28.16

Expected term

Risk-free interest rate

Restricted Stock Units

We grant restricted stock units ("RSUs") to employees and our non-employee directors.

A summary of RSU activity, inclusive of performance-based RSUs, is as follows (in thousands, except per share amounts):

Weighted-Average

Grant Date Fair Value Per Share

Weighted-Average Remaining Contractual Term (in years)

Unamortized Compensation Costs

The following table summarizes changes in RSUs, inclusive of performance-based RSUs:

(in thousands) Weighted-Average

Grant Date Fair Value Per Share Weighted-Average Remaining Contractual Term (in years) Unamortized Compensation Costs

(in thousands)

Unvested - December 31, 2017 — $ —

Granted 1,309 20.58

Vested ( 850 ) 21.93

Forfeited/canceled ( 78 ) 17.97

Unvested - December 31, 2018 381 $ 18.11

Granted 1,978 17.78

Vested ( 486 ) 14.97

Forfeited/canceled ( 132 ) 18.92

Unvested - December 31, 2019 1,741 $ 18.55

Expected to Vest

Granted 1,758 43.07

Vested ( 779 ) 28.56

Forfeited ( 286 ) 23.34

Unvested - December 31,2020 2,434 $ 32.49 2.80 $ 61,630

Service-based Restricted Stock Units

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As of December 31, 2019, there was approximately $ 20.4 million of unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted-average period of 3.1 years.

The aggregate intrinsic values based on the $ 62.86 closing price of our common stock as reported on the Nasdaq Global Market on December 31, 2019 of unvested RSUs is $ 109.5 million and RSUs expected to vest is $ 89.8 million as of December 31, 2019 .

During 2020, we granted 1,233,617 RSUs to employees, executives, and our non-employee directors, which have annual vesting periods ranging from one to four years.

During 2020, we granted 47,690 immediately vesting RSUs to employees in lieu of cash-based incentive compensation.

As of December 31, 2020, there was approximately $ 61.6 million of unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted-average period of 2.8 years.

The aggregate intrinsic value based on the $ 142.77 closing price of our common stock as reported on the Nasdaq Global Market on December 31, 2020 of unvested RSUs is $ 347.5 million as of December 31, 2020.

Subsequent to December 31, 2020, we granted 52,322 RSUs to employees, which have annual vesting periods ranging from one to four years.

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Performance-based Restricted Stock Units

During 2018, we granted two separate tranches of performance-based RSUs ("2018 PSUs"), each to receive 437,500 shares of common stock, to employees.

During 2018, we granted two separate tranches of performance-based RSUs ("2018 PSUs"), each to receive 437,500 shares of common stock, to executives.

The vesting of the 875,000 2018 PSUs was contingent upon the completion of our IPO and includes other performance-based conditions.

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The vesting conditions of each of the four tranches must be achieved within four years of the grant date.

Upon a vesting event, 50 % of the related tranche vests immediately, 25 % of the related tranche vests six months after achievement date and 25 % of the related tranche vests 12 months after the achievement date.

Adjusted EBITDA and adjusted contribution are performance metrics defined within "Management's Discussion and Analysis of Financial Condition and Results of Operations." During 2019, the Compensation Committee of our Board of Directors certified that the targets for both the average closing price of our common stock and adjusted EBITDA were achieved resulting in the immediate vesting of 50% of each related PSU tranche.

Upon a vesting event, 50 % of the related tranche vests immediately, 25 % of the related tranche vests six months after the achievement date and 25 % of the related tranche vests 12 months after the achievement date.

Adjusted EBITDA and adjusted contribution are performance metrics defined within Item 2.

"Management's Discussion and Analysis of Financial Condition and Results of Operations." In August and November 2019, the compensation committee of our board of directors certified that the target minimum trailing 30-day average closing price of our common stock and target minimum cumulative adjusted EBITDA over a trailing 12-month period, respectively, were achieved resulting in the immediate vesting of 50% of the related PSU tranches.

In February 2020, 25% of the 30-day average closing price of our common stock PSU tranche vested upon the six-month anniversary of the tranche's achievement date and the remaining 25% of the tranche vested in August 2020 upon the twelve-month anniversary of the tranche's achievement date.

In May 2020, 25% of the adjusted EBITDA tranche vested upon the six-month anniversary of the tranche's achievement date, and the remaining 25% of the tranche vested in November 2020 upon the twelve-month anniversary of the tranche's achievement date.

In April 2020, we granted 476,608 performance-based restricted stock units ("2020 PSUs"), of which 443,276 units have a performance-based vesting condition based on a minimum average revenue per user ("ARPU") target over a trailing 12-month period and 33,332 units have the same performance-based vesting conditions as those that remain unmet under the 2019 PSUs described above.

ARPU is a performance metric defined within Item 2.

"Management's Discussion and Analysis of Financial Condition and Results of Operations." The ARPU vesting condition must be achieved within four years of the grant date.

Upon the vesting event, 50% of the award vests immediately, 25% of the award vests six months after achievement date and 25% of the award vests 12 months after the achievement date.

Restricted Securities Units

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Upon issuance, the restricted securities units were indexed to the 2016 convertible promissory notes.

As a result of the Series G Stock financing, the restricted securities units became indexed to our Series G’ Stock upon conversion of the convertible promissory notes.

As a result of the Series G Stock financing in 2017, the restricted securities units became indexed to our Series G’ Stock upon conversion of the 2016 convertible promissory notes.

Upon the consummation of our IPO in February 2018, the restricted securities units became indexed to our common stock.

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Employee Stock Purchase Plan

Our board of directors has adopted and our stockholders have approved our 2018 Employee Stock Purchase Plan ("2018 ESPP").

Our board of directors adopted and our stockholders have approved our 2018 Employee Stock Purchase Plan ("2018 ESPP").

Our 2018 ESPP became effective on February 8, 2018, the date our registration statement in connection with our IPO was declared effective and enables eligible employees to purchase shares of our common stock at a discount.

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Year Ended December 31,

2018 2019 2020

Domestic $ ( 48,897 ) $ ( 13,464 ) $ ( 42,613 )

Foreign ( 4,145 ) ( 3,680 ) ( 12,809 )

Loss before income taxes $ ( 53,042 ) $ ( 17,144 ) $ ( 55,422 )

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Year Ended December 31,

2018 2019 2020

Federal $ — $ — $ —

Total current — — —

Federal 6,896 1,326 23,062

State 1,264 622 3,744

Foreign 916 222 1,713

Change in uncertain tax positions ( 105 ) 598 ( 117 )

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Income tax benefit $ — $ — $ —

The current income tax (expense) for the year ended December 31, 2019 excludes Indian income tax expense of less than $0.1 million .

(1) The current income tax (expense) during 2019 and 2020 excludes Indian income tax expense of less than $0.1 million and $0.3 million, respectively.

The following table summarizes the significant differences between the U.S.

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Year Ended December 31,

2018 2019 2020

Tax benefit at federal statutory rate 21.00 % 21.00 % 21.00 %

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Net operating loss carry-forwards $ 64,348 $ 92,387

Allowance for doubtful accounts

Allowance for credit losses

Depreciation and amortization ( 1,321 ) ( 13,601 )

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Valuation allowance ( 70,231 ) ( 85,991 )

Net long-term deferred tax liability

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was signed into law making significant changes to the IRC.

Changes include, but are not limited to, a corporate tax rate decrease to 21% effective for tax years beginning after December 31, 2017 .

This change in tax rate resulted in a reduction in our net U.S.

deferred tax assets, which was fully offset by a reduction in our valuation allowance.

Net long-term deferred tax asset $ — $ —

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law.

Key provisions of the CARES Act include one-time payments to individuals, strengthened unemployment insurance, additional health-care funding, loans and grants to certain businesses, and temporary amendments to the Internal Revenue Code.

The corporate income tax provisions of the CARES Act include allowing the carryback of NOLs generated in recent tax years, temporary removal of the 80% NOL usage limitation put in place under the Tax Cuts and Jobs Act ("TCJA"), temporary favorable adjustments to the business interest expense limitation calculated under Sec.

163(j), and the acceleration of refundable AMT credits.

We believe that the corporate income tax provisions of the CARES Act will not have a materially beneficial impact on the Company.

Due to the Company’s history of losses, there is no potential for the carryback of NOLs.

The temporary removal of the 80% income limitation on NOL usage has no impact as the Company generated a taxable loss for 2020 and has substantial NOLs generated in years prior to the enactment of the TCJA not subject to this 80% limitation.

The changes to Sec.

163(j) are not expected to have a beneficial impact as the Company’s interest expense is limited under Sec.

163(j) due to taxable losses rather than the 30% ATI limit enacted under the TCJA.

The Company did take advantage of payroll tax deferrals under the CARES Act and as a result has established a $0.8 million deferred tax asset for nondeductible payroll tax accruals that are being deferred to the December 31, 2021 and December 31, 2022 payment dates.

We have generated historical net losses and recorded a full valuation allowance against our net deferred tax assets.

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Year Ended December 31,

2018 2019 2020

Beginning balance $ ( 58,649 ) $ ( 67,463 ) $ ( 70,231 )

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Change in foreign currency 157 — —

Convertible debt additional paid-in capital tax adjustment - valuation allowance impact — — 12,642

Other changes 909 862 ( 2,043 )

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federal net operating loss carry forwards that will begin to expire in the 2028 tax year.

Additionally, we have $ 90.5 million and $ 98.4 million of gross state net operating loss carry-forwards as of December 31, 2018 and 2019 , respectively that will also begin to expire in the 2028 tax year.

Additionally, we have $ 98.4 million and $ 155.8 million of gross state net operating loss carry-forwards as of December 31, 2019 and 2020, respectively that will expire between the 2021 and 2040 tax years for states that do not have indefinite carry-forward periods for net operating losses generated in recent years.

Ownership changes, as defined by IRC Section 382, may limit the amount of net operating losses that a company may utilize to offset future taxable income and taxes payable.

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Year Ended December 31,

2018 2019 2020

Beginning balance $ 678 $ 783 $ 185

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REDEEMABLE CONVERTIBLE PREFERRED STOCK

Upon the consummation of our IPO, all of the outstanding shares of redeemable convertible preferred stock were automatically converted into shares of common stock.

Upon the consummation of our IPO in 2018, all of the outstanding shares of redeemable convertible preferred stock were automatically converted into shares of common stock.

Refer to Note 1—Nature of Operations for additional information regarding our IPO.

A summary of the change in carrying amount of the outstanding redeemable convertible preferred stock is as follows (in thousands):

Series G’ Stock

Series G Stock

Series G’ Stock Series G Stock

Shares Amount Shares Amount

Balance — December 31, 2017 1,296 $ 44,672 346 $ 5,110

Conversion of preferred stock to common stock

Accretion of redeemable convertible preferred stock — — — 108

Balance — December 31, 2018

Series F/F-R Stock

Series E/E-R Stock

Series D/D-R Stock

Conversion of preferred stock to common stock (1,296) (44,672) (346) (5,218)

Balance — December 31, 2018 — $ — — $ —

Accretion of redeemable convertible preferred stock

Series F-R Stock Series E-R Stock Series D-R Stock

Shares Amount Shares Amount Shares Amount

Balance — December 31, 2017 1,199 58,449 795 $ 29,972 1,396 $ 32,728

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Balance — December 31, 2018 — $ — — $ — — $ —

Series C/C-R Stock

Series B/B-R Stock

Series A/A-R Stock

Balance — December 31, 2016

Accretion of redeemable convertible preferred stock

Series C-R Stock Series B-R Stock Series A-R Stock

Shares Amount Shares Amount Shares Amount

Balance — December 31, 2017 1,508 $ 18,366 2,247 $ 5,288 1,857 $ 1,852

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Balance — December 31, 2018 — $ — — $ — — $ —

During 2016, we issued convertible promissory notes to our founders and the existing holders of our redeemable convertible preferred stock.

Shares of redeemable convertible preferred stock held by investors that participated in the financing were exchanged for shares of replacement preferred stock.

Replacement shares were issued for 1,856,998 shares of Series A Stock, 2,246,744 shares of Series B Stock, 1,507,906 shares of Series C Stock, 1,395,936 shares of Series D Stock, 795,027 shares of Series E Stock and 1,198,637 shares of Series F Stock.

These replacement shares have rights and preferences equal to their corresponding original series and are designated as Series A-R Stock, Series B-R Stock, Series C-R Stock, Series D-R Stock, Series E-R Stock and Series F-R Stock.

Shares of redeemable convertible preferred stock held by investors that did not participate in the financing were converted to common stock and consisted of 12,375 shares of Series A Stock, 2,121 shares of Series B Stock and 397,515 shares of Series E Stock.

In February 2017, we amended and restated our certificate of incorporation reducing the authorized number of shares of our redeemable convertible preferred stock to 82,683,212 and canceled Series A Stock, Series B Stock, Series C Stock, Series D Stock, Series E Stock and Series F Stock.

Pursuant to our convertible promissory note financing, these series of preferred stock were either exchanged for shares of replacement preferred stock with rights and preferences equal to their corresponding original series or converted to common stock.

Series G Stock Financing

In May 2017, we amended and restated our certificate of incorporation and increased the authorized number of shares of our common stock to 83,000,000 and increased the authorized number of shares of our redeemable convertible preferred stock to 96,131,002 .

In May 2017, we issued and sold, for aggregate consideration of $ 11.9 million , an aggregate of 346,334 shares of Series G redeemable convertible preferred stock, par value $ 0.0001 per share with a stated price of $ 34.4758 per share (“Series G Stock”), and warrants to purchase shares of our common stock.

Issuance costs incurred in connection with the sale of Series G Stock totaled $ 0.1 million .

Conversion of Convertible Promissory Notes into Series G’ Stock

In connection with the Series G Stock financing in May 2017, the Existing Stockholder Notes and the Outstanding Obligation Note converted into 1,295,746 shares of Series G’ redeemable convertible preferred stock, par value $ 0.0001 per share (“Series G’ Stock”), at a price per share of $ 27.58 .

The Series G’ Stock carried a stated dividend of $ 2.758 per annum, payable quarterly when, as, and if declared by our board of directors.

These dividends were noncumulative in nature.

The Series G’ Stock was entitled to certain anti-dilution protections.

Common Stock Warrants Issued in Connection with the Series G Stock Financing

In connection with the Series G Stock financing, we issued warrants to purchase an aggregate number of shares of common stock equal to the product obtained by multiplying 346,334 by a fraction, the numerator of which is the difference between $ 68.9516 and the volume weighted average closing price of our common stock over the 30 trading days (or such lesser number of days as our common stock has been traded on the Nasdaq Global Market) prior to the date on which such warrants vest and become exercisable and the denominator of which is such volume weighted average closing price, which warrants vested and became exercisable on August 8, 2018, which was 180 days following the date of our IPO, at an exercise price of $ 0.0004 per share.

In connection with the Series G Stock financing in May 2017, we issued warrants to purchase an aggregate number of shares of common stock equal to the product obtained by multiplying 346,334 by a fraction, the numerator of which is the difference between $ 68.9516 and the volume weighted average closing price of our common stock over the 30 trading days (or such lesser number of days as our common stock has been traded on the Nasdaq Global Market) prior to the date on which such warrants vest and become exercisable and the denominator of which is such volume weighted average closing price, which warrants vested and became exercisable on August 8, 2018, which was 180 days following the date of our IPO, at an exercise price of $ 0.0004 per share.

In August 2018, we issued warrants to purchase 792,434 shares of common stock at an exercise price of $ 0.0004 per share to the cash investors of our Series G financing, pursuant to our Series G stock purchase agreement.

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Refer to Note 12—Fair Value Measurements for additional information regarding the valuation of the warrants issued in connection with the Series G Stock financing.

Beneficial Conversion Feature

The aggregate proceeds of $ 11.9 million from the Series G Stock financing were first allocated to the warrants to purchase shares of our common stock, which qualify as liabilities under ASC 480 and are recorded at fair value, with the residual value of $ 4.5 million allocated to our Series G Stock.

As a result of this allocation, Series G Stock was determined to contain a beneficial conversion feature with an intrinsic value of $ 6.1 million .

The amount assigned to the beneficial conversion feature was limited to the $ 4.5 million residual value allocated to Series G Stock and is classified as a component of additional paid-in capital.

During 2017, we recorded a deemed dividend of $ 4.5 million related to the beneficial conversion feature, which is reflected below net loss to arrive at net loss available to common stockholders.

At any time on or after May 4, 2022, upon written request of the holders of not less than 66 2/3% of the shares of redeemable convertible preferred stock then-outstanding, voting together as a single class on an as-converted to common stock basis, we were required to redeem all outstanding shares of redeemable convertible preferred stock in eight quarterly installments.

The Series A-R Stock, Series B-R Stock, Series C-R Stock, Series D-R Stock, Series E-R Stock, Series F-R Stock, Series G Stock and Series G’ Stock were redeemable at prices equal to $ 1.00 , $ 2.3567 , $ 12.2686 , $ 23.64 , $ 37.7344 , $ 58.40 , $ 34.4758 and $ 34.4758 per share, plus any declared or accumulated but unpaid dividends, respectively.

To the extent that we had insufficient funds to redeem all outstanding shares of redeemable convertible preferred stock, we were required to first redeem shares of Series G Stock and Series G’ Stock, then shares of Series F/F-R Stock, then shares of Series E/E-R Stock, then shares of Series D/D-R Stock, then shares of Series C/C-R Stock and then shares of Series B/B-R Stock and Series A/A-R Stock pari passu , in each case on a pro rata basis among the holders thereof.

To the extent that we had insufficient funds to redeem all outstanding shares of redeemable convertible preferred stock, we were required to first redeem shares of Series G Stock and Series G’ Stock, then shares of Series F-R Stock, then shares of Series E-R Stock, then shares of Series D-R Stock, then shares of Series C-R Stock and then shares of Series B-R Stock and Series A-R Stock pari passu , in each case on a pro rata basis among the holders thereof.

The redeemable convertible preferred stock carrying amount was increased by periodic accretions, using the interest method, so that the carrying amount would equal the redemption amount at May 4, 2022.

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The holders of our redeemable convertible preferred stock also had the right, at any time, to convert any or all of their shares into such number of shares of common stock as is determined by dividing $ 1.00 in the case of Series A-R Stock, $ 2.3567 in the case of the Series B-R Stock, $ 12.2686 in the case of Series C-R Stock, $ 23.64 in the case of Series D-R Stock, $ 37.7344 in the case of Series E-R Stock, $ 50.0568 in the case of Series F-R Stock, and $ 34.4758 in the case of Series G Stock and Series G’ Stock by the applicable conversion price.

The initial conversion price was $ 1.00 in the case of Series A-R Stock, $ 2.3567 in the case of the Series B-R Stock, $ 2.3567 in the case of Series C-R Stock, $ 23.64 in the case of Series D-R Stock, $ 37.7344 in the case of Series E-R Stock, $ 50.0568 in the case of Series F-R and $ 34.4758 in the case of Series G Stock and Series G’ Stock.

The initial conversion price was $ 1.00 in the case of Series A-R Stock, $ 2.3567 in the case of the Series B-R Stock, $ 2.3567 in the case of Series C-R Stock, $ 23.64 in the case of Series D-R Stock, $ 37.7344 in the case of Series E-R Stock, $ 50.0568 in the case of Series F-R Stock and $ 34.4758 in the case of Series G Stock and Series G’ Stock.

If, at any time following the initial issuance of shares of Series G Stock, we had issued any additional shares of capital stock without consideration or for a consideration per share less than the then-effective conversion price for our redeemable convertible preferred stock, the conversion price for all series of outstanding redeemable convertible preferred stock would have been subject to adjustment.

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A summary of common stock warrant activity, exclusive of the common stock warrants issued in connection with our Series G financing is as follows (in thousands, except per share amounts):

Weighted-average

Shares Weighted-average

exercise price

Warrants Outstanding - December 31, 2017 600 $ 8.11

Warrants Outstanding - December 31, 2017

Granted 644 23.64

Exercised ( 349 ) 4.69

Redeemable convertible preferred stock warrants converted to common stock warrants 110 12.16

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Warrants Outstanding - December 31, 2018 867 21.89

Exercised ( 821 ) 21.89

Forfeited/canceled ( 34 ) 21.29

Warrants Outstanding - December 31, 2019 12 23.64

Performance-based warrants to purchase 644,365 shares of our Series E Stock, which were converted to common stock warrants, vested upon the completion of our IPO in February 2018.

These warrants are not included within this table in periods prior to their vesting.

In June 2017, we issued our lender additional warrants to purchase 17,500 shares of common stock at a price of $ 27.68 per share.

During 2017 , warrants to purchase shares of redeemable convertible preferred stock held by parties that did not participate in the Existing Stockholder Note financing were converted to common stock warrants.

As a result, fully vested warrants to purchase 12,500 shares of our Series A Stock at an exercise price of $ 1.00 per share, fully vested warrants to purchase 25,000 shares of our Series B Stock at an exercise price of $ 2.36 per share and unvested performance-based warrants to purchase 644,365 shares of our Series E Stock at an exercise price of $ 23.64 per share were converted to common stock warrants.

The performance-based warrants to purchase 644,365 shares of our Series E Stock, which were converted to common stock warrants, vested upon the consummation of our IPO in February 2018 as discussed in Note 12—Related Parties .

The conversion date fair value of the Series A Stock warrants and Series B Stock warrants, which were converted to common stock warrants, was reclassified from redeemable convertible preferred stock warrant liability to additional paid-in capital.

Exercised ( 9 ) 23.64

Forfeited/canceled ( 3 ) 23.64

Warrants Outstanding - December 31, 2020 — $ —

The performance-based warrants to purchase 644,365 shares of our common stock vested upon the consummation of our IPO in February 2018 as discussed in Note 13—Related Parties.

The conversion date fair value of the Series A Stock warrants and Series B Stock warrants, which were converted to common stock warrants upon our IPO, was reclassified from redeemable convertible preferred stock warrant liability to additional paid-in capital.

See Note 12—Fair Value Measurements for more information.

All common stock warrants outstanding at December 31, 2019 were net exercised in January 2020.

FAIR VALUE MEASUREMENTS

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December 31, 2017

Preferred stock warrants (1)

Common stock warrants (1)

Level 1 Level 2 Level 3 Total

Preferred stock warrant liabilities (1)

$ — $ — $ 2,285 $ 2,285

Common stock warrant liabilities (1)

— — 7,945 7,945

Total liabilities $ — $ — $ 10,230 $ 10,230

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Instruments Recorded at Fair Value Using Level 3 Inputs

Our redeemable convertible preferred stock warrants, common stock warrants issued in connection with the Series G Stock financing and our convertible promissory notes are measured and recorded at fair value on a recurring basis using Level 3 inputs.

The table below provides a roll forward of the changes in fair value of Level 3 financial instruments (in thousands):

Balance at December 31, 2016

Fair value of convertible promissory notes at issuance

Conversion of convertible promissory notes to Series G’ preferred stock

Accrued interest on convertible promissory notes

Issuance of common stock warrants

Changes in fair value

Balance at December 31, 2017

Our redeemable convertible preferred stock warrants and common stock warrants issued in connection with the Series G Stock financing are measured and recorded at fair value on a recurring basis using Level 3 inputs.

The carrying amount of the liability component of the Convertible Senior Notes was determined by estimating the fair value of a similar liability without the conversion option using Level 3 inputs.

See Note 7—Debt and Financing Arrangements for additional information about the Convertible Senior Notes.

The table below provides a roll forward of the changes in fair value of our preferred stock warrant and common stock warrant financial instruments (in thousands):

Warrant Liabilities Common

Warrant Liabilities

Balance at December 31, 2017 $ 2,285 $ 7,945

Conversion of convertible promissory notes to common stock

Conversion of redeemable convertible preferred stock warrants to common stock warrants ( 1,736 ) —

Issuance of common stock warrants ( 549 ) 7,309

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Balance at December 31, 2018 $ — $ —

In valuing our instruments recorded at fair value using Level 3 inputs, our board of directors determined the equity value of our business generally using a combination of the income approach and the market approach valuation methods.

Prior to our IPO, in valuing our instruments recorded at fair value using Level 3 inputs, our board of directors determined the equity value of our business generally using a combination of the income approach and the market approach valuation methods.

The income approach estimates value based on the expectation of future cash flows that a company will generate, such as cash earnings, cost savings, tax deductions and the proceeds from disposition.

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Multiples of revenue are calculated for these transactions and then applied to the business being valued, after reduction by an appropriate discount.

Once an equity value was determined, beginning January 1, 2017, we utilized probability-weighted expected return method (“PWERM”) to allocate the overall value of equity to the various share classes.

Once an equity value was determined, we utilized probability-weighted expected return method (“PWERM”) to allocate the overall value of equity to the various share classes.

The PWERM relies on a forward-looking analysis to predict the possible future value of a company.

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The projected equity value relied upon in the PWERM scenario was based on (i) guideline IPO transactions involving companies that were considered broadly comparable to us and (ii) our expectation of the pre-money valuation that we needed to achieve to consider an IPO as a viable exit strategy.

The following table summarizes key assumptions used in the PWERM for estimating the fair value of our redeemable convertible preferred stock warrant liability:

Year Ended December 31,

Cost of debt applicable to convertible promissory notes

Cost of equity applicable to convertible promissory notes

Weighted-average cost of capital applicable to preferred stock warrants

Discount for lack of marketability

Risk-free interest rate

Preferred Stock Warrants

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A summary of our preferred stock warrants is as follows (in thousands, except per share amounts):

Preferred Series

Preferred Series Grant

date Expiration

date Exercise

price December 31, 2017

Series B-R 2/26/2010 2/25/2020 $ 2.36 59

Series D-R 9/21/2012 9/20/2022 $ 23.64 38

Series D-R 9/21/2012 9/20/2022 $ 23.64 13

Total preferred stock warrants 110

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The decrease in the fair value of the warrants to purchase Series B-R Stock and Series D-R Stock primarily resulted from the timing of future potential liquidity events, changes to our forecasted financial results and changes in the valuation of comparable companies.

Warrant liabilities related to redeemable convertible preferred stock were zero as of December 31, 2018, 2019 and 2020.

Common Stock Warrants

In June 2017, we issued our lender additional warrants to purchase 17,500 shares of common stock at a price of $ 27.68 per share.

The fair value of the warrants issued in June 2017 were calculated to be $ 0.3 million .

We determined the grant date fair value of these common warrants using the Black-Scholes option pricing model, which is affected by the estimated fair value of our common stock as well as the following significant inputs:

(issued June 2017)

Weighted-average grant date fair value

Significant inputs:

Value of common stock

Expected term

Risk-free interest rate

Dividend yield

Common Stock Warrants Issued in Connection with the Series G Stock Financing

In connection with the Series G Stock financing in 2017, we issued warrants to purchase an aggregate number of shares of common stock equal to the product obtained by multiplying 346,334 by a fraction, the numerator of which is the difference between $ 68.9516 and the volume weighted average closing price of our common stock over the 30 trading days (or such lesser number of days as our common stock has been traded on the Nasdaq Global Market) prior to the date on which such warrants vest and become exercisable and the denominator of which is such volume weighted average closing price, which warrants vested and became exercisable on August 8, 2018, which was 180 days following the date of our IPO, at an exercise price of $ 0.0004 per share.

To determine the fair value of our common stock warrant liability issued in connection with our Series G 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.

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The warrants had a valuation of $ 15.3 million upon issuance and were subsequently exercised, resulting in the issuance of 792,434 shares of our common stock.

As a result of change in fair value of the common stock warrant liability, we recognized non-cash losses of $ 0.5 million and $ 7.3 million in 2017 and 2018 , respectively.

Convertible Promissory Notes

Refer to Note 9—Redeemable Convertible Preferred Stock for additional information of the Series G Stock financing and the transactions that resulted in the conversion of the convertible promissory notes into shares of our Series G’ Stock.

The redemption features included in the terms of the convertible promissory notes were determined to be derivative liabilities due to a significant discount within the redemption features for the note holders.

We elected the fair value option for the Existing Stockholder Notes and Aimia Notes, therefore direct costs and fees associated with the issuance were recognized in earnings as incurred and were not deferred.

To determine the fair value of our convertible promissory notes, we utilized key assumptions from the PWERM, as shown above.

Under this method, we considered the redemption features of the convertible promissory notes, as described in Note 6—Debt for additional information, to determine the fair value under discrete future outcomes, including IPO and non-IPO scenarios.

Under certain non-IPO scenarios, holders of the convertible promissory notes were due to receive two times preference on the outstanding principal amount.

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.

As a result of change in fair value of the common stock warrant liability, we recognized a non-cash loss of $ 7.3 million in 2018.

Performance-based Warrants Issued to FIS

In May 2013, we granted 10 -year performance-based warrants to purchase up to 644,365 shares of Series E Stock at an exercise price of $ 23.64 per share.

Since FIS did not participate in the convertible promissory note financing, their warrants to purchase preferred stock were converted to warrants to purchase common stock.

Since FIS did not participate in the convertible promissory note financing in 2016, their warrants to purchase preferred stock were converted to warrants to purchase common stock.

The warrants vested upon the completion of our IPO in February 2018 resulting in a non-cash expense of $ 2.5 million.

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Value of common stock $ 13.00

Expected term

Expected term 5.3 years

Volatility 50 %

Risk-free interest rate 2.0 %

Dividend yield — %

RELATED PARTIE S

Series G / Series G’

In May 2017, we issued and sold, for aggregate consideration of $ 11.9 million , an aggregate of 346,334 shares of our Series G Stock and warrants to purchase shares of our common stock.

In connection with the issuance of our Series G Stock, the principal and accrued interest under convertible promissory notes converted into an aggregate of 1,295,746 shares of our Series G’ redeemable convertible preferred stock and 801,329 shares of our common stock.

The following table summarizes the participation in the foregoing transactions by our directors, executive officers and holders of more than 5 % of any class of our capital stock as of the date of such transactions (in thousands):

Related Party

Entities affiliated with Aimia, Inc.

RELATED PARTIES

Common Stock Warrants Issued in Connection with the Series G Stock Financing

The warrants had a valuation of $ 15.3 million upon issuance and were subsequently exercised, resulting in the issuance of 792,434 shares of our common stock.

The following table summarizes the participation in the common stock warrants issued in connection with the Series G Stock financing by our directors, executive officers and holders of more than 5 % of any class of our capital stock as of the date of such transactions (in thousands):

Related Party Warrants to

Entities affiliated with Polaris Venture Partners (1)

Canaan VIII L.P.

Entities affiliated with Discovery Capital (4)

Entities affiliated with Mark A.

Consists of 159,207 shares of Series G’ redeemable convertible preferred stock issued to Aeroplan Holdings Europe Sàrl, 223,020 shares of Series G’ redeemable convertible preferred stock issued to Aimia EMEA Limited and 801,329 shares of common stock issued to Aimia EMEA Limited.

Consists of 27,988 shares of Series G redeemable convertible preferred stock purchased by Polaris Venture Partners V, L.P.

(“PVP V”), 205,020 shares of Series G’ redeemable convertible preferred stock issued to PVP V, 64,038 warrants to purchase common stock issued to PVP V, 545 shares of Series G redeemable convertible preferred stock purchased by Polaris Venture Partners Entrepreneurs’ Fund V, L.L.

(“PVP EF V”), 3,995 shares of Series G’ redeemable convertible preferred stock issued to PVP EF V, 1,247 warrants to purchase common stock issued to PVP EF V, 191 shares of Series G redeemable convertible preferred stock purchased by Polaris Venture Partners Founders’ Fund V, L.P.

(“PVP FF V”), 1,404 shares of Series G’ redeemable convertible preferred stock issued to PVP FF V, 438 warrants to purchase common stock issued to PVP FF V, 280 shares of Series G redeemable convertible preferred stock purchased by Polaris Venture Partners Special Founders’ Fund V, L.P.

(“PVP SFF V”), 2,050 shares of Series G’ redeemable convertible preferred stock issued to PVP SFF V and 641 warrants to purchase common stock issued to PVP SFF V.

John Klinck 13

David Adams 7

(1) Consists of 64,038 warrants to purchase common stock issued to Polaris Venture Partners V, L.P.

("PVP V"), 1,247 warrants to purchase common stock issued to Polaris Venture Partners Entrepreneurs’ Fund V, L.P.

(“PVP EF V”), 438 warrants to purchase common stock issued to Polaris Venture Partners Founders’ Fund V, L.P.

(“PVP FF V”), and 641 warrants to purchase common stock issued to Polaris Venture Partners Special Founders’ Fund V, L.P.

(“PVP SFF V”).

Polaris Venture Management Co.

is a general partner of each of PVP V, PVP EF V, PVP FF V and PVP SFF V and may be deemed to have the sole voting and dispositive power over the shares held by PVP V, PVP EF V, PVP FF V and PVP SFF V.

Bryce Youngren, a member of our board of directors, is a Managing Partner of Polaris Partners and may be deemed to share voting and dispositive power over the shares held by PVP V, PVP EF V, PVP FF V and PVP SFF V.

Bryce Youngren, an active member of our board of directors at the time of transaction, is a Managing Partner of Polaris Partners and may be deemed to share voting and dispositive power over the shares held by PVP V, PVP EF V, PVP FF V and PVP SFF V.

Balen, a member of our board of directors, is a managing member of Canaan Partners VIII LLC, the general partner of Canaan VIII L.P.

Balen does not have voting or investment power over any shares held directly by Canaan VIII L.P.

Consists of 95,272 shares of Series G’ redeemable convertible preferred stock issued to Discovery Opportunity Master Fund, Ltd.

and 11,072 shares of Series G’ redeemable convertible preferred stock issued to Discovery Global Focus Master Fund, Ltd.

Consists of 15,045 shares of Series G’ redeemable convertible preferred stock issued to TTP Fund II, L.P., 29,005 shares of Series G redeemable convertible preferred stock purchased by TTV Ivy Holdings, LLC, 66,365 warrants to purchase common stock issued to TTV Ivy Holdings, LLC, 5,801 shares of Series G redeemable convertible preferred stock purchased by Mr.

Johnson, and 13,273 warrants to purchase common stock issued to Mr.

(3) Consists of 66,365 warrants to purchase common stock issued to TTV Ivy Holdings, LLC, and 13,273 warrants to purchase common stock issued to Mr.

TTV Capital is a provider of management services to TTP GP II, LLC, which is a general partner of TTP Fund II, L.P.

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The warrants were exercisable subject to the attainment of certain milestones related to the number of active accounts for which our solutions have been enabled with accelerated vesting upon an IPO.

Since FIS did not participate in the convertible promissory note financing, their warrants to purchase preferred stock were converted to warrants to purchase common stock.

Since FIS did not participate in the convertible promissory note financing in 2016, their warrants to purchase preferred stock were converted to warrants to purchase common stock.

The warrants 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.

Since the performance conditions were directly related to revenue-producing activities, we recognized this expense in FI Share and other third-party costs on our consolidated statement of operations.

This expense is presented in other non-cash expenses on our consolidated statement of statement of cash flows.

This expense is presented in other non-cash expenses on our consolidated statement of cash flows.

Refer to Note 12—Fair Value Measurements for additional information regarding the valuation of the performance-based warrants issued to FIS.

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Amounts paid to FI partners are included in deferred FI implementation costs on our consolidated balance sheets the earlier of when paid or earned and are amortized over the remaining term of the related contractual arrangements.

Amortization is included in FI Share and other third-party costs on our consolidated statements of operations and is presented in amortization of deferred FI implementation costs on our consolidated statement of cash flows.

Amortization and impairment is included in FI Share and other third-party costs on our consolidated statements of operations and is presented in amortization and impairment of deferred FI implementation costs on our consolidated statement of cash flows.

Certain of these agreements provide for future reductions in FI Share due to the FI partner.

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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.

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.

As a result, we recognized a write off of deferred FI implementation costs totaling $0.7 million in FI Share and other third-party costs on our consolidated statements of operations.

The following table presents changes in deferred FI implementation costs (in thousands):

2018 2019 2020

Beginning balance $ 13,625 $ 15,877 $ 8,383

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Recoveries through FI Share ( 5,380 ) ( 4,625 ) —

Amortization ( 1,618 ) ( 2,869 ) ( 3,915 )

Impairment — — ( 683 )

Ending balance $ 15,877 $ 8,383 $ 3,785

Payments to FI partners for enhancements not yet placed in service totaled $ 1.0 million as of December 31, 2020.

Future amortization, based on the amounts earned as of December 31, 2019 , exclusive of amounts expected to be recovered, is as follows (in thousands):

Years Ending December 31,

Future amortization, based on the amounts earned as of December 31, 2020, is $ 2.8 million in 2021.

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.

Any expected shortfall will be accrued during the 12-month period following the completion of the milestones.

Operating Leases

We lease property and equipment under non-cancelable operating lease agreements expiring on various dates through April 2026.

For leases that contain rent escalation or rent concession provisions, we record the total rent expense during the lease term on a straight-line basis over the term of the lease.

On our consolidated balance sheets, the current portion of deferred rent is included in accrued liabilities and the long-term portion is included within deferred liabilities.

Rent expense during 2017 , 2018 and 2019 totaled $ 3.0 million , $ 3.0 million and $ 3.0 million , respectively.

In August 2013, we entered into a lease of 130 months for our new corporate headquarters in Atlanta, Georgia.

The facility was delivered to us in July 2014 and provides 76,880 square feet of office space.

The lease contains a $ 3.8 million tenant improvement allowance that is included in deferred rent and amortized as a reduction to rent expense over the lease term.

Minimum lease payments under the agreement total $ 16.0 million .

The lease is secured by an irrevocable letter of credit issued by our lender, which totaled $0.5 million as of December 31, 2019.

In May 2019, we entered into a lease of 36 months for an office in Victoria, London to provide 5,000 square feet of office space.

Minimum lease payments under the agreement total £3.8 million .

As of December 31, 2019 , future minimum lease payments under non-cancellable operating leases are as follows (in thousands):

Years Ending December 31,

Minimum Lease

Any expected shortfall penalty will be accrued during the 12-month period following the completion of the milestones.

Other Commitments

We lease property and equipment under non-cancelable operating lease agreements.

Refer to Note 5—Leases for further details.

In September 2020, we issued convertible senior notes with an aggregate principal amount of $ 230.0 million bearing an interest rate of 1.00 % due in 2025.

Refer to Note 7—Debt and Financing Arrangements for further details.

From time to time, we may become involved in legal actions arising in the ordinary course of business including, but not limited to, intellectual property infringement and collection matters.

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The following securities have been excluded from the calculation of diluted weighted-average common shares outstanding because the effect is anti-dilutive (in thousands):

Redeemable convertible preferred stock

2018 2019 2020

Common stock options 1,774 1,000 513

Common stock warrants 867 12 —

Common stock warrants issuable pursuant to Series G Stock financing

Redeemable convertible preferred stock warrants

Convertible Senior Notes — — 2,701

Restricted stock units 381 1,741 2,434

Restricted securities units

Common stock issuable pursuant to the ESPP 36 7 4

As of December 31, 2020, we have three operating segments:

Cardlytics Direct in the U.S.

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.

Our Cardlytics Direct operating segments in the U.S.

the Cardlytics platform in the U.S.

and Other Platform Solutions, as determined by the information that our Chief Executive Officer, who we consider our chief operating decision-maker, uses to make strategic goals and operating decisions.

Our Cardlytics platform operating segments in the U.S.

represent our proprietary native bank advertising channels and are aggregated into one reportable segment given their similar economic characteristics, nature of service, types of customers and method of distribution.

Prior to the year ended December 31, 2020, we referred to the Cardlytics platform as Cardlytics Direct.

Our Other Platform Solutions enabled marketers and marketing service providers to leverage the power of purchase intelligence outside the bank channel.

We have shifted the substantial majority of our efforts and resources to support the growth of Cardlytics Direct.

We have shifted the substantial majority of our efforts and resources to support the growth of Cardlytics platform.

As a result, we no longer generate revenue from Other Platform Solutions and do not expect to generate revenue from Other Platform Solutions for the foreseeable future.

Revenue can be directly attributable to each segment.

With the exception of a non-cash equity expense and the amortization of deferred FI implementation costs, FI Share is also directly attributable to each segment.

Our chief operating decision makers allocate resources to, and evaluate the performance of, our operating segments based on revenue and adjusted contribution.

With the exception of a non-cash equity expense and deferred FI implementation costs, FI Share is also directly attributable to each segment.

Our chief operating decision maker allocates resources to, and evaluate the performance of, our operating segments based on revenue and adjusted contribution.

The accounting policies of each of our reportable segments are the same as those described in the summary of significant accounting policies.

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Year Ended December 31,

Cardlytics Direct:

2018 2019 2020

Cardlytics platform:

Adjusted contribution (2)

$ 69,364 $ 95,219 $ 82,182

FI Share and other third-party costs (1)(2)

79,959 115,211 104,710

Revenue $ 149,323 $ 210,430 $ 186,892

What changed 10-K

Item 8. Financial Statements and Supplementary Data