What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-14 compared with 2023-03-01 · 315 added, 423 removed, 1053 unchanged (41% of the section changed)

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• 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.

Contingent Consideration – Refer to Notes 2, 4, and 12 to the consolidated financial statements

Critical Audit Matter Description

The Company acquired Bridg in the prior year, which included contingent consideration as part of the total purchase consideration.

Auditing the Company's accounting for the contingent consideration was complex due to the estimation utilized in the Company's determination of the fair value of the contingent consideration, which was valued at $104.1 million as of December 31, 2022.

The significant estimation was primarily due to the complexity of the valuation methodology used by management to measure the fair value of the contingent consideration and the sensitivity of the fair value to the significant underlying assumptions.

In order to determine the fair value of the contingent consideration, the Company simulated forecasted annual recurring revenue ("ARR") using revenue volatility from comparable market data.

The Company then determined the appropriate discount rate for the assumed cash component and used a Monte Carlo simulation for the assumed stock component.

The assumptions used in preparing this model include estimates such as revenue volatility, revenue discount rate, weighted average cost of capital, and the Company’s common stock volatility.

The assumptions utilized in the model require substantial judgment and could have a material impact on the amount of contingent consideration expense recorded in any given period.

As contingent consideration is recorded as a liability it is remeasured using a fair value methodology consistent with the one described above and it will continue to be remeasured until the dates of settlement.

As of December 31, 2022, the remeasurement is relevant for the Second Anniversary Payment date.

We identified contingent consideration as a critical audit matter because of the judgement surrounding forecasted ARR and the complexity of the valuation methodology used to value the contingent consideration.

This required a high degree of auditor judgment and an increased extent of effort, including the need for us to involve professionals with valuation expertise.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures as of December 31, 2022, related to the Bridg contingent consideration included the following, among others:

• We tested operating effectiveness of controls around management’s review of third-party specialist’s report, calculation and reconciliation of the estimated liability to the general ledger, and management’s review of forecasted ARR.

• We tested the forecasted ARR used in the model by comparing the projections to historical results, third party industry projections, and the Company’s internal contracted backlog.

• We evaluated management’s ability to accurately forecast revenues by comparing actual results to management’s historical forecasts of revenue.

• With the assistance of our valuation specialists, we evaluated the valuation methodology and independently recalculated the estimated fair value of the contingent consideration to compare to the Company's recorded amount.

Goodwill – Certain Reporting Units – Refer to Note 5 to the consolidated financial statements

Goodwill – Certain Reporting Units – Refer to Note 2 and Note 5 to the consolidated financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair values of its reporting units, including the Cardlytics platform in the U.S.

reporting unit and the Bridg platform reporting unit, to their respective carrying values as of both June 30, 2022 and October 1, 2022.

reporting unit and the Bridg platform reporting unit, to their respective carrying values as October 1, 2023.

The Company used a combination of valuation methodologies including the income approach, and to a lesser extent the market approach, to estimate fair value at each reporting date.

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Changes in these assumptions could have a significant impact on either the fair values of the reporting units, the amount of any goodwill impairment charge, or both.

The Company performed an interim impairment test for goodwill as of June 30, 2022 due to a sustained decline in its stock price.

The Company recognized a goodwill impairment charge of $83.1 million in the second quarter of 2022 as the fair value of the Bridg platform reporting unit was determined to be less than its respective carrying value.

The Company performed its annual goodwill impairment assessment as of October 1, 2023.

As a result of a continued slowdown in the global economy and decreased consumer spend, which resulted in further declines in the Company’s stock price, the Company recognized a goodwill impairment charge of $46.3 million for the Cardlytics platform in the U.S.

reporting unit and $266.8 million for the Bridg platform reporting unit, as the fair value for each respective reporting unit was determined to be less than its respective carrying value.

The total goodwill impairments were $396.2 million for the year ended December 31, 2022.

The goodwill balance was $352.7 million as of December 31, 2022, of which $164.4 million was allocated to the Cardlytics platform in the U.S.

As a result of the continued slowdown in the global economy and decreased consumer spend, which resulted in further declines in the Company’s stock price, the Company recognized a goodwill impairment charge of $70.5 million for the Bridg platform reporting unit, as the fair value of the reporting unit was determined to be less than its carrying value.

No impairment charge was recorded for the Cardlytics platform in the U.S.

reporting unit.

The consolidated goodwill balance was $277.2 million as of December 31, 2023, of which $159.4 million was allocated to the Cardlytics platform in the U.S.

reporting unit, and $117.8 million was allocated to the Bridg platform reporting unit.

We identified valuation of goodwill for Cardlytics platform in the U.S.

reporting unit and Bridg platform reporting unit as a critical audit matter because of the significant judgments made by management to estimate the fair values of these reporting units.

We identified valuation of goodwill for the Cardlytics platform in the U.S.

reporting unit and the Bridg platform reporting unit as a critical audit matter because of the significant judgments made by management to estimate the fair values of this specific reporting unit.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the selection of the discount rate and forecasts of future revenues and cash flows for the Cardlytics platform in the U.S.

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Convertible senior notes, net 227,504 226,047

Long-term debt 30,073 —

Long-term deferred revenue 67 334

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Long-term contingent consideration 4,162 —

Other long-term liabilities 4,550 —

Total liabilities 439,346 479,631

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General and administration expense 58,810 81,446 66,222

Acquisition and integration costs (benefits) — 24,372 ( 2,874 )

Acquisition, integration and divestiture (benefits) costs ( 6,313 ) ( 2,874 ) 24,372

Change in fair value of contingent consideration 1,246 ( 128,174 ) 1,374

Impairment of goodwill and intangible assets 70,518 453,288 —

Loss on divestiture 6,550 — —

Depreciation and amortization expense 26,460 37,544 29,871

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Operating loss ( 135,670 ) ( 457,778 ) ( 122,599 )

Other (expense) income:

Other income (expense):

Interest expense, net ( 2,336 ) ( 2,556 ) ( 12,563 )

Foreign currency gain (loss) 3,304 ( 6,376 ) ( 1,267 )

Total other expense ( 1,499 ) ( 13,830 ) ( 8,932 )

Total other income (expense) 968 ( 8,932 ) ( 13,830 )

Loss before income taxes ( 134,702 ) ( 466,710 ) ( 136,429 )

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(Amounts in thousands)

Year Ended December 31, 2023:

Capital Accumulated

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Exercise of common stock options 10 — 54 — — 54

Exercise of common stock warrants 9 — — — — —

Stock-based compensation — — 43,466 — — 43,466

Issuance of common stock under the ESPP 59 — 2,837 — — 2,837

Issuance of restricted stock 2,930 — — — — —

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

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

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

Issuance of common stock 2,755 — 15,171 — — 15,171

Issuance of common stock under the ESPP 556 — 2,335 — — 2,335

Other comprehensive income — — — ( 3,131 ) — ( 3,131 )

Net loss — — — — ( 134,702 ) ( 134,702 )

Balance – December 31, 2023 39,728 $ 9 $ 1,243,594 $ 2,467 $ ( 1,111,272 ) $ 134,798

Year Ended December 31, 2022:

Capital Accumulated

Comprehensive

Income (loss) Accumulated

Deficit Total

Shares Amount

Balance – December 31, 2021 33,534 $ 9 $ 1,212,823 $ 486 $ ( 522,618 ) $ 690,700

Cumulative effect upon adoption of ASU — — (51,417) — 11,312 (40,105)

Exercise of common stock options 23 — 418 — — 418

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Issuance of restricted stock 986 — — — — —

Issuance of common stock 3,850 1 484,048 — — 484,049

Common stock to be issued for the acquisition of Dosh 916 — 117,349 — — 117,349

Fair value of assumed Dosh options attributable to pre-combination service — — 3,593 — — 3,593

Fair value of assumed Bridg options attributable to pre-combination service — — 841 — — 841

Common stock to be issued for the acquisition of Entertainment 173 — 11,937 — — 11,937

Issuance of common stock under the ESPP 167 — 1,997 — — 1,997

Repurchase and cancellation of common stock (1,406) — (40,000) — — (40,000)

Other comprehensive loss — — — 5,112 — 5,112

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Balance – December 31, 2022 33,477 $ 9 $ 1,182,568 $ 5,598 $ ( 976,570 ) $ 211,605

Cumulative effect upon adoption of ASU 2020-06 — $ — $ (51,417) $ — $ 11,312 $ (40,105)

See notes to the consolidated financial statements

CARDLYTICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands)

Year Ended December 31, 2021:

Capital Accumulated

Comprehensive

Income (loss) Accumulated

Deficit Total

Shares Amount

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

Exercise of common stock options 141 — 2,155 — — 2,155

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Issuance of restricted stock 724 — — — — —

Common stock to be issued for the acquisition of Entertainment 173 — 11,937 — — 11,937

Issuance of common stock 3,850 1 484,048 — — 484,049

Common stock to be issued for the acquisition of Dosh 916 — 117,349 — — 117,349

Fair value of assumed Dosh options attributable to pre-combination service — — 3,593 — — 3,593

Fair value of assumed Bridg options attributable to pre-combination service — — 841 — — 841

Issuance of common stock under the ESPP 42 — 3,184 — — 3,184

Repurchase and Cancellation of common stock ( 1,406 ) — ( 40,000 ) — — ( 40,000 )

Other comprehensive income — — — 5,112 — 5,112

Other comprehensive loss — — — 678 — 678

Net loss — — — — ( 128,565 ) ( 128,565 )

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Impairment of goodwill and intangible assets 70,518 453,288 —

Loss on divestiture 6,550 — —

Accretion of debt discount and non-cash interest expense — — 9,513

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Business acquisitions, net of cash acquired — ( 2,274 ) ( 494,131 )

Proceeds from divestitures, net of cash divested 2,330 — —

Net cash used in investing activities ( 10,062 ) ( 15,760 ) ( 506,695 )

Financing activities

Proceeds from issuance of debt 30,000 — —

Principal payments of debt ( 31 ) ( 35 ) —

Proceeds from issuance of convertible senior notes, net of issuance costs paid of $6,900 223,100 — —

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

Proceeds from issuance of common stock 55 379 486,388

Settlement of contingent consideration ( 50,050 ) — —

Repurchase of common stock — ( 40,000 ) —

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Debt issuance costs — ( 174 ) ( 200 )

Net cash received from (used in) financing activities 206,430 485,998 ( 39,987 )

Net cash (used in) received from financing activities ( 20,026 ) ( 39,987 ) 485,998

Effect of exchange rates on cash, cash equivalents and restricted cash 118 ( 1,926 ) ( 567 )

Net increase (decrease) in cash, cash equivalents and restricted cash 188,762 ( 59,787 ) ( 111,577 )

Net decrease in cash, cash equivalents and restricted cash ( 30,155 ) ( 111,577 ) ( 59,787 )

Cash, cash equivalents, and restricted cash — Beginning of period 121,985 233,562 293,349

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("we," "our," "us," the "Company," or "Cardlytics") is a Delaware corporation and was formed on June 26, 2008.

We operate an advertising platform within our own and our partners' digital channels, which includes online, mobile applications, email, and various real-time notifications (the "Cardlytics platform").

We work to accomplish this mission by operating an advertising platform within our own and our partners' digital channels, which includes online, mobile applications, email and various real-time notifications (the "Cardlytics platform").

We also operate a customer data platform that utilizes point-of-sale data, including product-level purchase data, to enable marketers, in a privacy-protective manner, to perform analytics and targeted loyalty marketing and to measure the impact of their marketing (the "Bridg platform").

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

We also operate through (1) Dosh Holdings, LLC, a wholly owned and operated subsidiary in the United States, (2) HSP EPI Acquisition, LLC ("Entertainment"), a wholly owned and operated subsidiary in the United States, (3) Cardlytics UK Limited, a wholly owned and operated subsidiary registered as a private limited company in England and Wales, and (4) Cardlytics Services India Private Limited, a wholly owned and operated subsidiary registered as a private limited company in India.

We also operate through (1) Dosh Holdings, LLC, a wholly owned and operated subsidiary in the United States and (2) Cardlytics UK Limited, a wholly owned and operated subsidiary registered as a private limited company in England and Wales.

Stock Repurchases

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We received total net proceeds of $ 484.0 million after deducting underwriting discounts and commissions of $ 16.3 million and offering costs of $ 0.2 million.

During 2020 and 2021, we received $10.2 million and $2.2 million, respectively, 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 9—Debt and Financing Arrangements for further details.

Divestitures and Acquisitions

On December 7, 2023, we sold and transferred substantially all of the assets of Entertainment for $6.0 million in cash, subject to a combined $1.1 million held in escrow for indemnities and sales and use taxes, as well as customary post-closing adjustment.

The resulting loss on sale of $ 6.6 million is recorded within "Loss on divestiture" within the consolidated statements of operations.

On January 7, 2022, we purchased Entertainment for $ 13.0 million in equity at an agreed-upon price of $66.52 per share, subject to $ 1.1 million of fair value adjustments based upon the close date, and $ 2.3 million in cash, subject to $ 0.4 million of adjustments, for an acquisition date fair value of $ 14.6 million.

On May 5, 2021, we completed the acquisition of Bridg for purchase consideration of $ 578.9 million.

On May 5, 2021, we completed the acquisition of Bridg, Inc.

("Bridg") for purchase consideration of $ 578.9 million.

The purchase consideration consisted of a $ 350.0 million cash purchase price, subject to $ 2.8 million of adjustments and escrows, and contingent consideration with an initial fair value of $ 230.9 million related to additional potential future payments.

The potential payment within 30 days of the first anniversary of the acquisition (the "First Anniversary Payment") will be equal to 20 times the difference between the U.S.

annualized recurring revenue ("ARR"), based on the month preceding the first anniversary and $ 12.5 million.

The potential payment within 30 days of the second anniversary of the acquisition (the “Second Anniversary Payment”) will be equal to 15 times the difference between the ARR for customers as of the first anniversary based on the month preceding the second anniversary, and the prior ARR at the first anniversary.

The Second Anniversary Payment is subject to a specified cap.

At least 30% of the First Anniversary Payment and the Second Anniversary Payment will be in cash, with the remainder to be paid in cash or our common stock, at our option.

If we choose to pay a portion of the First Anniversary Payment or Second Anniversary Payment in our common stock, the number of shares will be determined by dividing the amount of the payment by the trailing 20-day volume-weighted average price ending on the first anniversary date or second anniversary date, as applicable.

We also assumed unvested options to purchase Bridg’s common stock and attributed $ 0.8 million of their fair value to the pre-combination service period.

ARR is a performance metric defined within Item 2.

"Management's Discussion and Analysis of Financial Condition and Results of Operations".

Refer to Note 4—Business Combinations for further information.

On March 5, 2021, we completed the acquisition of Dosh Holdings, Inc.

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In addition, we assumed unvested options to purchase Dosh’s common stock and attributed $ 3.6 million of their fair value to the pre-combination service period.

Refer to Note 4—Business Combinations for further information.

Contingent Consideration for the Acquisition of Bridg

As part of our acquisition of Bridg and pursuant to the terms of the Agreement and Plan of Merger dated as of April 12, 2021, as amended (the "Merger Agreement"), we agreed to make two earnout payments:

the First Anniversary Payment Amount and the Second Anniversary Payment Amount, based on the First Anniversary ARR and the Second Anniversary ARR of Bridg, respectively.

As of December 31, 2023, we had paid the First Anniversary Payment consisting of $ 50.1 million of cash and 2,740,418 shares of our common stock to the Stockholder Representative, inclusive of brokerage fees and transaction bonuses and accounting for all true-ups and credits.

On January 25, 2024, we entered into a settlement agreement (the "Settlement Agreement") with the Stockholder Representative to resolve all outstanding disputes related to the Merger Agreement, pursuant to which we agreed to pay $25.0 million in cash and issue 3,600,000 shares of our common stock to the Stockholder Representative, inclusive of broker fees and transaction bonuses.

Pursuant to the Settlement Agreement we paid the Stockholder Representative $20 million in cash on January 26, 2024 and we issued 3.6 million shares of our common stock on February 1, 2024.

The remaining cash payments related to the Settlement Agreement will be paid in two tranches with $3.0 million to be paid by January 31, 2025 and $2.0 million to be paid by June 30, 2025, which is presented in our consolidated balance sheet as long-term contingent consideration.

Refer to Note 12—Fair Value Measurements and Note 13—Commitments and Contingencies for further information about the Bridg acquisition and related contingent consideration.

SIGNIFICANT ACCOUNTING POLICIES

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Restructuring and Reduction of Force

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

This plan 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.

As a part of our integration efforts with our acquired companies, we continued to evaluate the optimal structure of the combined organization.

As a result, during the year ended December 31, 2021 we recognized $ 1.2 million in severance and medical benefits related to our acquisitions.

These charges are reflected on our consolidated statement of operations within acquisition and integration costs.

Additionally, during the year ended December 31, 2021, we recognized $0.8 million of severance and medical benefits charges related to internal restructuring.

These charges are reflected on our consolidated statement of operations as follows:

$ 0.1 million in delivery costs, $ 0.4 million in sales and marketing expense, and $ 0.3 million in research and development expense.

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

During 2022, we initiated a strategic reduction of our forces in our U.S., U.K., and India operations, including the planned closure of our Indian office.

As a result, during 2022, we initiated a strategic reduction of our workforce in our U.S., U.K., and India operations, including the planned closure of our Indian office.

We also began a strategic shift within our organization to migrate certain data and applications to a cloud computing environment.

As part of these initiatives, we recognized severance and medical benefit costs of $ 8.1 million.

These charges are reflected on our condensed consolidated statement of operations as follows:

These charges are reflected on our condensed consolidated statements of operations as follows:

$ 1.9 million in delivery costs, $ 2.1 million in sales and marketing expense, $ 1.6 million in research and development expense and $ 2.5 million in general and administrative expense.

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

We plan to close our Indian office by the end of 2022.

As of December 31, 2022 , the remaining costs that have been incurred related to our restructuring and reduction of force but not yet paid are $2.4 million.

We closed our India office as of December 31, 2022.

As of December 31, 2022, the remaining costs that have been incurred related to our restructuring and reduction of force but not yet paid were $2.4 million.

T hese fees were paid in full in 2023.

During the year ended December 31, 2021, we recognized $ 1.2 million in severance and medical benefits related to our acquisitions.

These charges are reflected on our consolidated statements of operations within acquisition and integration costs.

Additionally, during the year ended December 31, 2021, we recognized $0.8 million of severance and medical benefits charges related to internal restructuring.

These charges are reflected on our consolidated statements of operations as follows:

$0.1 million in delivery costs, $0.4 million in sales and marketing expense, and $0.3 million in research and development expense.

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

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 (expense) income, net in the accompanying consolidated statements of operations.

We recorded a foreign currency (gain) loss totaling $( 1.6 ) million, $ 1.3 million and $ 6.4 million in 2020, 2021 and 2022, 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 income (expense), net in the accompanying consolidated statements of operations.

We recorded a foreign currency gain totaling $ 3.3 million in 2023 and a loss totaling $ 6.4 million and $ 1.3 million in 2022 and 2021, respectively.

Partner Share and Other Third-Party Costs

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Unfavorable conditions in the economy both in the United States and abroad may negatively affect the growth of our business and our results of operations.

For example, macroeconomic events, including the COVID-19 pandemic, rising inflation, the U.S.

Federal Reserve raising interest rates and the Russia-Ukraine war, have led to economic uncertainty globally.

For example, macroeconomic events, including the changes in inflation, the U.S.

Federal Reserve raising interest rates, disruptions in access to bank deposits or lending commitments due to bank failures, the Russia-Ukraine war and the Middle East conflict have led to economic uncertainty globally.

Historically, during periods of economic uncertainty and downturns, businesses may slow spending on advertising, which may impact our business and our customers’ businesses.

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For further discussion of the potential impacts of macroeconomic events on our business, financial condition and operating results, see the section titled "Risk Factors."

Revenue for the year ended December 31, 2020 was unfavorably affected by the COVID-19 pandemic and its impact on both consumer discretionary spending and marketers' ability to spend advertising budgets on our solutions.

During the year ended December 31, 2021, we saw continued recovery of both consumer spending as well as the advertising budgets of our clients;

however, many merchants continued to be impacted by labor shortages and disruptions in their supply chains.

During the year ended December 31, 2022, we saw increasing pressure on consumer spending as well as the advertising budgets of our clients due to rising inflation.

Due to continuing uncertainty regarding the severity and duration of the impacts of macroeconomic events on the global economy, we will continue to monitor this situation and the potential impacts to our business.

Business Combinations

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These considerations are evaluated holistically to assess whether it is more likely than not that a reporting unit's carrying value exceeds its fair value.

During 2022 we recorded an intangible asset impairment of $56.4 million.

During the year ended December 31, 2023, we reduced our intangible asset balance by $ 4.9 million related to the divestiture of Entertainment.

During the year ended December 31, 2022, we recorded an intangible asset impairment of $ 56.4 million.

Refer to Note 5—Goodwill and Acquired Intangibles for additional information.

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Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate or a significant d ecrease in expected cash flows.

No impairment charges were recorded during 2020 and 2021.

During 2022 we recorded impairment charges of $ 396.2 million.

During the year ended December 31, 2023, we recorded impairment charges of $ 70.5 million.

We also reduced our goodwill balance by $ 5.0 million related to the divestiture of Entertainment.

During the year ended December 31, 2022, we recorded impairment charges of $ 396.2 million.

No impairment charges were recorded during 2021.

The decline in the fair values of the Bridg platform reporting unit below its carrying values at October 1, 2023 and 2022 and June 30, 2022 and the Cardlytics platform in the U.S below its carrying value at October 1, 2022 resulted from a continued slowdown in the economy and decreased consumer spend, and a sustained decline in our stock price.

Refer to Note 5—Goodwill and Acquired Intangibles for additional information.

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• determination of the transaction price;

• allocation of the transaction price to the performance obligation(s) in the contract and

• allocation of the transaction price to the performance obligation(s) in the contract;

• recognition of revenue when or as the performance obligation(s) are satisfied.

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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 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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If the up-front implementation fee is not distinct, revenue is deferred until the date the customer commences use of our services, at which point the up-front implementation fee is recognized ratably over the life of the customer arrangement.

For contracts that contain multiple performance obligations, which include combinations of subscriptions to our cloud-based services and related professional services, we account for individual services as a separate performance obligation if they are distinct.

For contracts that contain multiple performance obligations, which include combinations of subscriptions to our cloud-based services and related professional services, we account for each individual service as a separate performance obligation if they are distinct.

The service is distinct if the service is separately identifiable from other items in the arrangement and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

If these criteria are not met, the promised services are accounted for as a combined performance obligation.

The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring products or services to the customer.

The fee is determined based on the consideration to which we will be entitled in exchange for transferring products or services to the customer.

We include any fixed charges within our contracts as part of the total transaction price.

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As a practical expedient, we do not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of services is expected to be one year or less.

Many of our contracts with customers contain some component of variable consideration;

Many of our contracts with customers contain some component of variable fee;

however, the constraint will generally not result in a reduction in the estimated transaction price for most forms of variable consideration.

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The recognition period will consider expected customer lives and whether the asset relates to services transferred under a specific anticipated contract.

As of December 31, 2022, there are no contract costs subject to capitalization.

Accounts Receivable

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Intangible assets, excluding those acquired from our business combinations, are recorded at cost and consist of costs incurred for software patent applications.

As of December 31, 2022, we had eight issued patents relating to our software.

We received approval for three patents in 2013, one patent in 2018, three patents in 2021 and one patent in 2022 and began amortizing the costs of obtaining these patents over the estimated remaining lives of the patents.

As of December 31, 2023, we had sixteen issued patents relating to our software.

We received approval for four patents in 2013, one patent in 2018, three patents in 2021, five patent in 2022 and three patents in 2023 and began amortizing the costs of obtaining these patents over the estimated remaining lives of the patents.

If a patent application is rejected or if we abandon efforts to obtain a new patent, all deferred patent costs are expensed immediately.

Deferred patent costs related to patents for which we have not yet obtained approval totaled $ 0.1 million and $ 0.1 million as of December 31, 2023 and 2022, respectively.

In connection with our annual goodwill and intangible asset impairment assessment in the fourth quarter of 2022, we recorded an impairment of $0.7 million related to our software patent applications, which is included in the impairment of goodwill and intangible assets line item in the consolidated statement of operations.

Based on deferred patent costs as of December 31, 2023, the related amortization expense will be less than $0.1 million in each of the next five years.

Intangible assets are as follows (in thousands):

Deferred patent costs, gross $ 647 $ 102

Less accumulated amortization ( 85 ) —

Deferred patent costs, net $ 562 $ 102

Internal-Use Software Development Costs

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During 2023, 2022 and 2021, we capitalized development costs for improvements to our platforms, including our Ads Manager and Ad Server, totaling $14.6 million, $12.8 million and $10.1 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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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.

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 fair values.

Amortization of debt issuance costs included in interest expense, net totaled $1.6 million, $1.6 million and $1.0 million in 2023, 2022 and 2021, respectively.

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

Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards.

Valuation allowances are provided when we determine that it is more likely than not that all of, or a portion of, deferred tax assets will not be utilized in the future.

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and over fifteen years if incurred in a foreign jurisdiction.

This new requirement caused us to utilize significant federal and state tax net operating loss carryforwards in the current year.

The depreciation and amortization deferred income taxes line above was updated to include these capitalized research and development expenses for December 31, 2022.

This new requirement caused us to utilize significant federal and state tax net operating loss carry-forwards in the current year.

The depreciation and amortization deferred income taxes line was updated to include these capitalized research and development expenses for the year ended December 31, 2023.

We recognize the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date, and then, only in an amount more likely than not to be sustained upon review by the tax authorities.

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Recently Adopted Accounting Pronouncements

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.

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, 2022 we adopted 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.

On January 1, 2022 we adopted Accounting Standards Update ("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.

Upon adoption, we recorded a decrease in accumulated deficit of $11.3 million, an increase to long-term debt of $40.2 million and a decrease to additional paid in capital of $51.5 million.

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

BUSINESS COMBINATIONS

In October 2021, the Financial Accounting Standardx Board ("FASB") issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which require an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.

Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with Topic 606, at fair value on the acquisition date.

ASU 2020-08 is effective for annual reporting periods beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption of the amendments is permitted, including adoption in an interim period.

On January 1, 2022, we early adopted this standard with no material impact to our financial statements.

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.

GAAP, as it removes the requirement to bifurcate our Convertible Senior Notes (the "Notes") into a separate liability and equity component.

As a result, it more closely aligns the effective interest rate with the coupon rate of the Notes.

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

On January 1, 2022, we adopted this standard using the modified retrospective method which allowed for a cumulative-effect adjustment to the opening balance sheet without restating prior periods.

As we did not elect the fair value option in the process, the Notes, net of issuance costs, are accounted for as a single liability measured at amortized cost.

Upon adoption, we recorded a decrease in accumulated deficit of $ 11.3 million, an increase to long-term debt of $ 40.2 million and a decrease to additional paid in capital of $ 51.5 million.

Refer to Note 9, "Debt and Financing Arrangements" for further information about the Notes.

BUSINESS COMBINATIONS AND DIVESTITURES

Our acquisitions were accounted for as business combinations and the total purchase consideration of each was allocated to the net tangible and intangible assets and liabilities acquired based on their fair values on the acquisition dates with the remaining amounts recorded as goodwill.

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Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.

During the years ended December 31, 2021 and December 31, 2022 we incurred $ 24.4 million of costs and $ 2.9 million of benefit in connection with our acquisitions, respectively.

The benefit was due to a reduction of the estimated brokerage fee related to our reduced estimate of contingent consideration related to our Bridg acquisition.

These costs (benefits) are included in acquisition and integration costs (benefit) on our condensed consolidated statements of operations and primarily represent legal, accounting and broker fees.

During the years ended December 31, 2023 and December 31, 2022, we incurred $ 6.3 million and $ 2.9 million of benefit in connection with our acquisitions and divestitures, respectively.

During the year ended December 31, 2023, the benefit is primarily due to a reduction of the estimated brokerage fee related to our reduced estimate of contingent consideration related to our Bridg acquisition, offset by the expense related to the divestiture of Entertainment.

During the year ended December 31, 2022, the benefit is primarily due to a reduction of the estimated brokerage fee related to our reduced estimate of contingent consideration related to our Bridg acquisition.

These benefits are included in acquisition, integration and divestitures (benefit) costs on our condensed consolidated statements of operations and primarily represent legal, accounting and broker fees.

The results of Entertainment have been included in the consolidated financial statements since its date of acquisition.

For the year ended December 31, 2021, Dosh and Bridg's combined revenue included in the consolidated statement of operations were approximately 8% of consolidated revenue.

For the year ended December 31, 2022, Entertainment's combined revenue included in the consolidated statement of operations was approximately 3% of consolidated revenue, respectively.

Due to the continued integration of the combined businesses, it was impractical to determine the earnings.

For the acquisitions of Dosh, Bridg and Entertainment, as applicable, the estimated fair values of merchant relationships, partner relationships, and the card-linked subscriber base were determined using the replacement cost method and lost profits, as applicable, which required us to estimate the costs to recreate an asset of equivalent utility at prices available at the time of the valuation analysis and the lost profits over the period of time to recreate the asset.

For the years ended December 31, 2023 and December 31, 2022, Entertainment's combined revenue included in the consolidated statements of operations was approximately 2% and 3% of consolidated revenue, respectively.

As a result of the partial integration of Entertainment, it was impractical to determine the earnings.

For the acquisition of Entertainment, as applicable, the estimated fair values of merchant relationships and partner relationships base were determined using the replacement cost method and lost profits, as applicable, which required us to estimate the costs to recreate an asset of equivalent utility at prices available at the time of the valuation analysis and the lost profits over the period of time to recreate the asset.

Trade names were valued using the "relief-from-royalty" approach.

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Developed technology for Entertainment was valued using the replacement cost method, which required us to estimate the costs to recreate an asset of equivalent utility at prices available at the time of the valuation analysis.

Developed technology for Dosh and Bridg was valued using the excess earnings method, an income approach.

Under the excess earnings method, the fair value of an intangible asset is equal to the present value of the asset’s projected incremental after-tax cash flows (excess earnings) remaining after deducting the market rates of return on the estimated value of contributory assets (contributory charge) over its remaining useful life.

During the year ended December 31, 2022 we recognized a goodwill impairment of $ 396.2 million and an intangible asset impairment of $56.4 million.

Refer to Note 5—Goodwill and Acquired Intangibles for further details.

Acquisition of Entertainment

Divestiture and Acquisition of Entertainment

The resulting loss on sale of $ 6.6 million is recorded within "Loss on divestiture" within the statement of operations.

On January 7, 2022, we completed the acquisition of Entertainment for purchase consideration of $ 14.6 million, as presented below (in thousands):

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Merchant relationships 8,300 4.0

Acquisition of Bridg

On May 5, 2021, we completed the acquisition of Bridg for purchase consideration of $ 578.9 million, as presented below (in thousands):

Cash paid to common and preferred stockholders, warrant holders and vested option holders $ 337,166

Cash paid to extinguish acquiree debt 1,949

Cash paid to settle pre-acquisition liabilities and acquiree deal-related costs 8,012

Fair value of contingent consideration 230,921

Fair value of assumed options attributable to pre-combination service 841

Total purchase consideration $ 578,889

The following table presents the purchase consideration allocation recorded on our consolidated balance sheet as of the acquisition date (in thousands):

Cash and cash equivalents $ 1,630

Accounts receivable and other assets 1,989

Intangible assets 64,700

Goodwill 538,271

Accounts payable and other liabilities ( 20,694 )

Deferred tax liabilities ( 7,007 )

Total purchase consideration $ 578,889

The goodwill was primarily attributed to the value of future growth expected for the Bridg platform and of synergies created with our current and future offerings.

Goodwill is not expected to be deductible for income tax purposes.

The following table presents the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (dollars in thousands):

Fair Value Useful life (in years)

Trade name $ 200 2.0

Developed technology 53,500 6.0

Merchant relationships 11,000 5.0

As a part of this acquisition, we have agreed to make a First Anniversary Payment equal to 20 times the annualized recurring revenue ("ARR"), based on the month preceding the anniversary, less $12.5 million, and a Second Anniversary Payment equal to 15 times the ARR for customers as of the first anniversary based on the month preceding the second anniversary, less the prior ARR at the first anniversary.

The Second Anniversary Payment is subject to a specified cap.

Refer to Note 12—Fair Value Measurements for further discussion.

As of December 31, 2022, the First Anniversary Payment has not been made and an agreement regarding the amount of the First Anniversary Payment has not been reached.

Per the terms of the Agreement and Plan of Merger, we delivered the First Earnout Statement within thirty days of the end of the First Earnout Period.

We subsequently agreed to extend the Stockholder Representative's review period.

During the third quarter, we received an Earnout Objection Notice from the Stockholder Representative that alleges a material understatement of the First Anniversary Payment amount.

We are continuing the dispute-resolution process specific to the First Anniversary Payment outlined in the Agreement and Plan of Merger, which was filed with the Securities and Exchange Commission as Exhibit 10.1 to a Form 8-K on November 18, 2022.

Acquisition of Dosh

On March 5, 2021, we completed our acquisition of Dosh for purchase consideration of $ 277.6 million, as presented below (in thousands):

March 5, 2021

Cash paid to common and preferred stockholders, warrant holders and vested option holders $ 136,626

Cash paid to extinguish acquiree debt 16,574

Cash paid to settle pre-acquisition liabilities and acquiree deal-related costs 3,463

Fair value of common stock transferred 117,354

Fair value of assumed options attributable to pre-combination service 3,593

Total purchase consideration $ 277,610

The following table presents the purchase consideration allocation recorded on our consolidated balance sheet as of the acquisition date (in thousands):

March 5, 2021

Cash and cash equivalents $ 7,323

Accounts receivable and other assets 6,146

Intangible assets 80,000

Goodwill 205,690

Accounts payable and other liabilities ( 4,146 )

Consumer Incentive liability ( 15,101 )

Deferred tax liabilities ( 2,302 )

Total purchase consideration $ 277,610

The goodwill was primarily attributed to the value of synergies created with our current and future offerings and of future growth expected from the labor force of Dosh.

Goodwill is not expected to be deductible for income tax purposes.

During the fourth quarter of 2021, we recorded a measurement period adjustment of $1.5 million of additional fair value of developed technology.

During the fourth quarter of 2021, we recorded a measurement period adjustment to our income tax provision resulting in $2.3 million of additional goodwill.

Refer to Note 11—Income Taxes for further details.

The following table presents the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (dollars in thousands):

Fair Value Useful life (in years)

Trade name $ 2,500 3.0

Developed technology 37,500 6.0

Merchant relationships 21,000 5.0

Partner relationships 2,000 7.0

Card-linked subscriber user base $ 17,000 5.0

Pro forma consolidated results of operations

The following unaudited pro forma financial information presents combined results of operations for the period presented as if the acquisition of Entertainment had been completed on January 1, 2021 and the acquisitions of Dosh and Bridg had been completed on January 1, 2020.

The following unaudited pro forma financial information presents combined results of operations for the period presented as if the acquisitions of Bridg and Dosh had been completed on January 1, 2021.

The pro forma information includes adjustments to depreciation expense for property and equipment acquired, to amortize expense for the intangible assets acquired, and to eliminate the acquisition transaction expenses recognized in the period.

The pro forma financial information is for informational purposes only and is not necessarily indicative of the consolidated results of operations of the combined business had the acquisitions actually occurred on January 1, 2021 and January 1, 2020, respectively, or the results of future operations of the combined business.

The pro forma financial information is for informational purposes only and is not necessarily indicative of the consolidated results of operations of the combined business had the acquisitions actually occurred on January 1, 2021 or the results of future operations of the combined business.

For instance, planned or expected operational synergies following the acquisition are not reflected in the pro forma information.

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GOODWILL AND ACQUIRED INTANGIBLES

The changes in the carrying amount of goodwill for the year ended December 31, 2022 are as follows (in thousands):

Goodwill is tested annually for impairment, unless certain triggering events require an interim impairment analysis, including macroeconomic conditions, industry and market considerations, costs factors, overall financial performance, and other relevant entity-specific events and changes.

These considerations are evaluated holistically to assess whether it is more likely than not that a reporting unit's carrying value exceeds its fair value.

Our reporting units consist of the Cardlytics platform in the U.S., the Cardlytics platform in the U.K.

and the Bridg platform .

There is no goodwill recorded within the Cardlytics platform in the U.K.

The changes in the carrying amount of goodwill for the years ended December 31, 2023, 2022 and 2021 are as follows (in thousands):

Cardlytics Platform, U.S.

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Balance as of December 31, 2022 $ 164,430 $ 188,291 $ 352,721

Goodwill additions 205,690 536,826 742,516

Goodwill impairment — ( 70,518 ) ( 70,518 )

Divestiture of Entertainment ( 5,001 ) — ( 5,001 )

Balance as of December 31, 2023 $ 159,429 $ 117,773 $ 277,202

Cardlytics Platform, U.S.

Bridg Platform Consolidated

Balance as of December 31, 2021 $ 205,690 $ 536,826 $ 742,516

Goodwill additions 5,062 — 5,062

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Balance as of December 31, 2022 $ 164,430 $ 188,291 $ 352,721

These considerations are evaluated holistically to assess whether it is more likely than not that a reporting unit's carrying value exceeds its fair value.

Our reporting units consist of the Cardlytics platform in the U.S., the Cardlytics platform in the U.K.

and the Bridg platform .

There is no goodwill recorded within the Cardlytics platform in the U.K.

As a result of the sustained decline in our stock price, we determined that it was necessary to perform an interim impairment test for goodwill as of June 30, 2022.

As a result of our interim impairment test, we determined that the carrying value of the Bridg platform, which is comprised entirely of an acquired business, exceeded its fair value, and consequently, we recognized a goodwill impairment of $83.1 million, with $455.1 million of goodwill remaining .

As a result, the Bridg platform reporting unit had a fair value that is equal to carrying value as of the June 30, 2022 valuation date.

The methods of determining fair value of the reporting units at June 30, 2022 included a combination of the discounted cash flow method under the income approach, and to a lesser extent the market approach.

Cardlytics Platform, U.S.

Bridg Platform Consolidated

Balance as of December 31, 2020 $ — $ — $ —

Goodwill additions 205,690 536,826 742,516

Balance as of December 31, 2021 $ 205,690 $ 536,826 $ 742,516

We performed our annual impairment test as of October 1, 2023 and determined that the carrying value of the Bridg platform, which is comprised entirely of an acquired business exceeded its fair value, and we recognized a goodwill impairment of $70.5 million.

On December 7, 2023, we sold and transferred substantially all of the assets of Entertainment, and as a result, we reduced goodwill by $ 5.0 million, which is the amount of goodwill attributed to Entertainment.

The reduction of goodwill is included as part of the determination of the Loss on Divestiture of $ 6.6 million in the consolidated statements of operations.

In 2022, as a result of the sustained decline in our stock price, we determined that it was necessary to perform an interim impairment test for goodwill as of June 30, 2022.

As a result of our interim impairment test, we determined that the carrying value of the Bridg platform exceeded its fair value, and consequently, we recognized a goodwill impairment of $83.1 million, with $455.1 million of goodwill remaining.

As a result, the Bridg platform reporting unit had a fair value that is equal to its carrying value as of the June 30, 2022 valuation date.

We performed our annual impairment test as of October 1, 2022 and determined that the carrying value of both the Cardlytics platform in the U.S.

and the Bridg platform exceeded their respective fair values, and we recognized goodwill impairment of $313.1 million.

The decline in the fair values of both the Cardlytics platform in the U.S.

and the Bridg platform reporting units below their respective carrying values resulted from a continued slowdown in the global economy and decreased consumer spend, and a sustained decline in our stock price.

The method of determining fair values of the reporting units at October 1, 2022 was the discounted cash flow method under the income approach, and to a lesser extent the market approach.

The decline in the fair values of the Bridg platform reporting unit below its carrying values at October 1, 2023, October 1, 2022 and June 30, 2022 and the Cardlytics platform in the U.S below its carrying value at October 1, 2022 resulted from a continued slowdown in the economy and decreased consumer spend, and a sustained decline in our stock price.

The method of determining fair values of the reporting units at October 1, 2023, October 1, 2022 and June 30, 2022 was the discounted cash flow method under the income approach, and to a lesser extent the market approach.

The most significant assumptions utilized in the determination of the estimated fair of the Bridg platform and the Cardlytics platform in the U.S.

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Our discount rate may be impacted by adverse changes in the macroeconomic environment and volatility in the equity and debt markets.

Acquired Intangibles

We evaluate the recoverability of our finite-lived intangible assets and other long-lived assets whenever events or substantive changes in circumstances indicate that the carrying amount may not be recoverable.

Prior to the quantitative goodwill impairment test, we evaluated the recoverability of these long-lived assets for our asset groups.

The evaluation is based on the cash flows generated by the underlying asset groups, including estimated future operating results, trends or other determinants of fair value.

If the total of the expected future undiscounted cash flows were less than the carrying amount of the asset group, we would recognize an impairment charge to the extent the carrying amount of the asset group exceeded its estimated fair value.

2023 Acquired Intangibles

Acquired intangible assets subject to amortization as of December 31, 2023 were as follows:

Cost Accumulated Amortization Net Weighted Average Remaining Useful Life

Gross Carrying Amount Accumulated Amortization Divestiture of Entertainment Net Weighted Average Remaining Useful Life

(in thousands) (in years)

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Merchant relationships 25,915 ( 16,784 ) ( 3,985 ) 5,146 2.4

Partner relationships 2,000 ( 235 ) 1,765 6.2

Card-linked subscriber user base 17,000 ( 2,798 ) 14,202 4.2

Total other intangible assets $ 92,300 $ ( 52,424 ) $ ( 4,947 ) $ 34,929

Amortization expense of acquired intangibles for the twelve months ended December 31, 2021 was $19.7 million.

Prior to the quantitative goodwill impairment test, we evaluated the recoverability of these long-lived assets for our asset groups.

The evaluation is based on the cash flows generated by the underlying asset groups, including estimated future operating results, trends or other determinants of fair value.

Amortization expense of acquired intangibles for the year ended December 31, 2023 was $13.6 million.

2022 Acquired Intangibles

In connection with our annual goodwill impairment assessment, in the fourth quarter of 2022, we also recorded impairments of intangible assets that are included in our Cardlytics platform in the U.S.

segment, which primarily related to developed technology and customer relationship intangible assets from a previous acquisition.

These intangible asset impairments totaled $56.4 million and are included in the impairment of goodwill and intangible assets line item in the consolidated statement of operations.

These intangible asset impairments totaled $ 56.4 million and are included in the impairment of goodwill and intangible assets line item in the consolidated statements of operations.

Our impairment analysis at October 1, 2022 incorporated revised forecasts that took into account the continued slowdown in the global economy and decreased consumer spend during the quarter and expected impacts of these disruptions on our results in the near term.

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Acquired intangible assets subject to amortization as of December 31, 2022 were as follows:

Cost Accumulated Amortization Impairments of Intangible Assets Net Weighted Average Remaining Useful Life

Gross Carrying Amount Accumulated Amortization Impairments of Intangible Assets Net Weighted Average Remaining Useful Life

(in thousands) (in years)

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Total other intangible assets $ 154,500 $ ( 44,732 ) $ ( 56,395 ) $ 53,373

Amortization expense of acquired intangibles for the twelve months ended December 31, 2022 was $25.0 million.

Amortization expense of acquired intangibles for the year ended December 31, 2022 was $25.0 million.

2021 Acquired Intangibles

Acquired intangible assets subject to amortization as of December 31, 2021 were as follows:

Cost Accumulated Amortization Net Weighted Average Remaining Useful Life

(in thousands) (in years)

Trade name $ 2,700 $ ( 753 ) $ 1,947 2.1

Developed technology 91,000 ( 11,026 ) 79,974 5.3

Merchant relationships 32,000 ( 4,900 ) 27,100 4.2

Partner relationships 2,000 ( 235 ) 1,765 6.2

Card-linked subscriber user base 17,000 ( 2,798 ) 14,202 4.2

Total other intangible assets $ 144,700 $ ( 19,712 ) $ 124,988

Amortization expense of acquired intangibles for the year ended December 31, 2021 was $19.7 million.

As of December 31, 2023, we expect amortization expense in future periods to be as follows (in thousands):

2024 $ 11,117

Total expected future amortization expense $ 34,929

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.

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

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

The consumer is offered an incentive to make a purchase from the marketer within a specified period.

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").

We use a portion of the fees that we collect from marketers to provide these Consumer Incentives to our FI partners' customers after they make qualifying purchases ("Consumer Incentives").

Leveraging our powerful purchase intelligence platform, we are able to create compelling Consumer Incentives that have the potential to increase return on advertising spend for marketers and measure the effectiveness of the advertising.

During 2020, 2021 and 2022, Consumer Incentives totaled $ 76.5 million, $ 127.0 million and $ 143.9 million, respectively.

During the years ended December 31, 2023, 2022 and 2021, Consumer Incentives totaled $ 144.2 million , $ 143.9 million and $ 127.0 million, respectively.

We pay certain partners a negotiated and fixed percentage of our billings to marketers less any Consumer Incentives that we pay to partners’ customers and certain third-party data costs ("Partner Share").

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Year Ended December 31,

2023 2022 2021

Subscription revenue $ 23,779 $ 21,190 $ 8,207

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We have various non-cancellable operating and finance leases for our office spaces, data centers and operational assets with lease periods expiring between 2023 and 2032.

During the year ended December 31, 2021, we recognized additional right-of-use assets and lease liabilities related to our operating leases of $ 5.1 million and $ 5.5 million , respectively.

This includes $ 1.8 million of new lease agreements related to data center expansion, $0.6 million related to the renewal or modification of pre-existing data center lease agreements, $ 0.4 million of new lease agreements related to office space expansion and $ 0.9 million related to the renewal or modification of pre-existing office space lease agreements.

Additionally, right-of-use assets and lease liabilities of $ 1.4 million and $ 1.8 million , respectively, were recorded related to the acquisitions of Dosh and Bridg and assumption of their existing lease agreements.

Refer to Note 4—Business Combinations for further information.

During the year ended December 31, 2022, we recognized additional right-of-use assets and lease liabilities of $2.5 million related to new lease agreements and lease modifications for office space.

During the year ended December 31, 2023 and December 31, 2022, we recognized additional right-of-use assets and lease liabilities of $2.7 million and $2.5 million, respectively, related to new lease agreements and lease modifications for office space.

During the year ended December 31, 2023, there were no impairments on any of our leases.

During the year ended December 31, 2022, we incurred an impairment of $0.9 million to the right-of-use-assets as a result of decommissioning our data centers and the closure of our office in India.

During the year ended December 31, 2021, we incurred an impairment of $ 0.6 million to the right-of-use assets under operating leases, related to the discontinued use of office space lease obtained during the Dosh acquisition.

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Refer to Note 15—Segments for more information on our operating segments.

During the year ended December 31, 2022, we incurred an impairment of $0.9 million to the right-of-use-assets as a result of decommissioning our data centers and the planned closure of our office in India.

During the year ended December 31, 2023 and 2022, respectively, we made cash payments of $ 4.5 million and $ 8.2 million for operating leases which are included in cash flows received from (used in) operating activities in our consolidated statement of cash flows.

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Total lease liabilities $ 8,518

Amended Lease Agreement

On April 3, 2023, we amended the lease terms of our office located in Atlanta, Georgia.

The amended lease agreement provides for our relocation to a different unit in the same building, reducing the square footage of our office from approximately 77,000 to 17,000.

The transfer of control and right of use ("ROU") for the lease commenced on December 14, 2023, and as such, the corresponding right of use asset and lease liability associated with the lease is reflected in our consolidated balance sheet as of December 31, 2023.

As part of the amended lease agreement, we will receive a discount on our current space through the remainder of 2023, which will result in a reduction of minimum lease payments of $0.4 million and a reduction in expense of $0.2 million in 2023.

Additional future reductions in minimum lease payments and lease expense in the new lease total $1.9 million and $0.7 million , respectively, through the term of our original lease agreement, which was set to terminate on April 2025.

The amended lease agreement will terminate on January 1, 2032, and we have the option to renew for an additional five-year period.

PROPERTY AND EQUIPMENT

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Property and equipment, net $ 3,323 $ 5,916

Depreciation expense was $ 5.6 million, $ 6.7 million and $ 5.4 million in 2020, 2021 and 2022, respectively.

Depreciation expense was $ 3.7 million, $ 5.4 million and $ 6.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.

DEBT AND FINANCING ARRANGEMENTS

Our debt consists of the following (in thousands):

Line of Credit 30,000 —

Convertible senior notes, net $ 227,504 $ 226,047

Total debt 257,504 226,047

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

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2020 Convertible Senior Notes

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

On September 22, 2020, we issued Notes with an aggregate principal amount of $ 230.0 million bearing an interest rate of 1.00 % due on September 15, 2025, 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.

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Principal $ 230,000 $ 230,000

Unamortized debt discount ( 41,098 ) —

Unamortized issuance costs ( 2,496 ) ( 3,953 )

Net carrying amount of the liability component $ 227,504 $ 226,047

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

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):

Contractual interest expense (due in cash) $ 2,300 $ 2,300

Amortization of debt discount 9,513 —

Amortization of debt issuance costs 1,461 1,461

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2018 Loan Facility

On May 21, 2018, we entered into a Loan and Security Agreement with Pacific Western Bank (the “Lender”) consisting of a $ 30.0 million asset–based revolving line of credit ("2018 Line of Credit") and a $ 20.0 million term loan ("2018 Term Loan") (collectively, the “2018 Loan Facility”).

On May 21, 2018, we entered into a Loan and Security Agreement with Banc of California, N.A.

(the "Lender"), formerly known as Pacific Western Bank, consisting of a $ 30.0 million asset–based revolving line of credit ("2018 Line of Credit") and a $ 20.0 million term loan ("2018 Term Loan") (collectively, the "2018 Loan Facility").

We used the entire $ 20.0 million in proceeds from the 2018 Term Loan and an advance of $ 27.4 million under the 2018 Line of Credit to repay all outstanding obligations under our prior line of credit and term loan.

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On April 29, 2022, we amended our 2018 Loan Facility to increase the capacity of our Line of Credit from $50.0 million to $60.0 million with an option to increase to $75.0 million upon syndication.

This amendment also extended the maturity date of the 2018 Loan Facility from December 31, 2022 to April 29, 2024.

As part of this amendment, the former cash covenant, as described below, was removed and was replaced with a requirement to maintain a minimum level of adjusted contribution and a minimum adjusted cash of $25.0 million, which is reduced by eligible accounts receivable in excess of the loan capacity.

This amendment also extended the maturity date of the 2018 Loan Facility from December 31, 2022 to April 29, 2024, and further stated that if we had positive Adjusted EBITDA by December 31, 2023, we could extend the maturity date of the loan to April 29, 2025.

Additionally with this amendment, the former cash covenant, as described below, was removed and was replaced with a requirement to maintain a minimum level of Adjusted Contribution and a minimum adjusted cash of $25.0 million, which is reduced by eligible accounts receivable in excess of the loan capacity.

On November 29, 2022, we amended our 2018 Loan Facility to modify the eligible account receivable to exclude UK accounts, reduce the ability to borrow up to 85% of the amount of our eligible accounts receivable to 50 % and adjusted the required minimum level of Adjusted Contribution.

On February 16, 2023, we amended our 2018 Loan Facility to remove and replace the former Adjusted Contribution covenant with a requirement to maintain a minimum level of Adjusted EBITDA.

As of December 31, 2022, we had $60.0 million of unused borrowings available under our 2018 Line of Credit.

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 $60.0 million or 50 % of the amount of our eligible accounts receivable.

Interest on advances under the 2018 Line of Credit bears an interest rate equal to the prime rate of 7.50 % as of December 31, 2022.

In addition, we are required to pay an unused line fee of 0.15 % per annum on the average daily unused amount of the $60.0 million revolving commitment.

Interest accrued on the 2018 Term Loan at an annual rate of interest equal to the prime rate minus 2.75 %, or 2.00 % at the date of repayment in September 2019.

The 2018 Loan Facility includes customary representations, warranties and covenants (affirmative and negative), including restrictive covenants that prohibit mergers, acquisitions and dispositions of assets, incurrence of indebtedness and encumbrances on our assets and the payment or declaration of dividends;

in each case subject to specified exceptions.

On May 3, 2023, we amended our 2018 Loan Facility to modify the covenants related to the maximum amount of cash we are allowed to pay for the First Anniversary Payment Amount and Second Anniversary Payment Amount under the Merger Agreement.

On February 9, 2024, we amended our 2018 Loan Facility to increase the ability to borrow up to 75% of the amount of our eligible accounts receivable, adjusted the required minimum level of Adjusted EBITDA and increased the interest rate to the prime rate plus 0.25%.

We also confirmed the extension of the maturity date of the loan to April 29, 2025 based on our positive Adjusted EBITDA result.

The 2018 Loan Facility includes customary representations, warranties and covenants (affirmative and negative), including restrictive covenants that prohibit mergers, acquisitions, dispositions of assets, inccurrence of indebtedness, encumbrances on our assets and the payment or declaration of dividends, in each case subject to specified exceptions.

The 2018 Loan Facility also includes standard events of default, including in the event of a material adverse change.

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The 2018 Loan Facility does not include any prepayment penalties.

We believe we were in compliance with all financial covenants as of December 31, 2022.

During the year ended December 31, 2023, we borrowed $30.0 million against our 2018 Line of Credit.

Interest on advances bears an interest rate equal to the prime rate of 8.50% as of December 31, 2023.

During the year ended December 31, 2023, we incurred approximately $2.1 million of interest expense associated with the 2018 Loan Facility.

In addition, we are required to pay an unused line fee of 0.15% per annum on the average daily unused amount of the revolving commitment, which remains unchanged in the most recent amendment.

As of December 31, 2023, we had $16.7 million of unused available borrowings under our 2018 Line of Credit.

We believe we are in compliance with all financial covenants as of December 31, 2023.

Future Payments

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

Years Ending December 31, Convertible Senior Notes

Years Ending December 31, Debt

Total debt $ 260,000

STOCK-BASED COMPENSATION

On July 18, 2022, our board of directors adopted the Cardlytics, Inc.

2022 Inducement Plan ("2022 Inducement Plan").

Our board of directors also adopted a form of stock option grant notice and agreement and a form of restricted stock unit grant notice and agreement for use with the 2022 Inducement Plan.

We reserved a total of 1,500,000 shares of our Common Stock under the 2022 Inducement Plan.

On January 18, 2023, our board of directors approved an amendment to the 2022 Inducement Plan to reserve an additional 350,000 shares of our common stock.

On July 13, 2023, our board of directors approved an amendment to the 2022 Inducement Plan to reserve an additional 800,000 shares of our common stock.

As of December 31, 2023, there were 239,722 shares available under the 2022 Inducement Plan.

Our 2018 Equity Incentive Plan ("2018 Plan") became effective in February 2018.

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Additionally, the 2018 Plan provides for the grant of performance cash awards.

On July 18, 2022, our Board adopted the Cardlytics, Inc.

2022 Inducement Plan ("2022 Inducement Plan").

Our Board also adopted a form of stock option grant notice and agreement and a form of restricted stock unit grant notice and agreement for use with the 2022 Inducement Plan.

We reserved a total of 1,500,000 shares of our Common Stock under the 2022 Inducement Plan.

On January 18, 2023, our Board approved an amendment to the Inducement Plan to reserve an additional 350,000 shares of our common stock.

The following table summarizes the allocation of stock-based compensation on the consolidated statements of operations (in thousands):

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This amount was settled in January 2022.

Common Stock Options

The term of each option to purchase shares of our common stock pursuant to the 2018 Plan is set by our board of directors or a committee thereof.

Option awards are generally granted with an exercise price not less than the fair value per share of our common stock at the grant date.

Option awards generally vest over four years and expire 10 years following the date of grant.

A summary of common stock option activity under our 2018 Plan is as follows (in thousands, except per share amounts):

Shares Weighted-Average

Exercise Price

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

(in thousands)

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

Exercised ( 106 ) 19.11 $ 9,710

Cancelled ( 1 ) 22.16

Outstanding - December 31, 2021 406 $ 25.17

Exercised ( 16 ) 23.77 $ 335

Cancelled ( 31 ) 23.60

Outstanding - December 31, 2022 359 $ 25.37 1.10 $ —

Exercisable - December 31, 2022 359 $ 25.37 1.10 $ —

(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, 2022, the aggregate intrinsic value represents the total pre-tax intrinsic value based on the $ 5.78 closing price of our common stock as reported on the Nasdaq Global Market on December 31, 2022 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 2020, 2021 and 2022 was approximately $2.3 million, $0.5 million and zero, respectively.

All stock option awards outstanding under our 2018 Plan have vested as of December 31, 2022.

Common Stock Options from Bridg Acquisition

In connection with the acquisition of Bridg, each unvested option to purchase shares of Bridg common stock outstanding as of the acquisition date was converted to unvested options to purchase shares of our common stock.

These awards were granted under the Ecinity, Inc.

2012 Equity Incentive Plan ("Bridg Plan") and were separately registered with the Securities and Exchange Commission on Form S-8 on August 3, 2021.

The maximum aggregate number of shares of our common stock that may be issued upon exercise of these awards is 21,797 shares, and we do not expect to grant any additional awards under the Bridg Plan.

The converted awards retain the same terms and conditions as the awards granted by Bridg prior to the acquisition.

The awards have remaining vesting periods ranging from less than one year to four years.

The following table summarizes changes in common stock options from the Bridg acquisition:

(in thousands) Weighted-Average Exercise Price Weighted Average Contractual Life (in years) Aggregate Intrinsic Value

(in thousands) (1)

Options outstanding — December 31, 2020 — $ —

Assumed 22 8.46

Exercised ( 4 ) 8.53 $ 318

Options outstanding — December 31, 2021 18 8.45 9.35 $ 1,023

Exercised ( 2 ) 8.61 $ 87

Forfeited (11) 8.37

Canceled (2) 8.28

Options outstanding — December 31, 2022 3 8.67 8.35 $ —

Exercisable — December 31, 2022 3 $ 8.72 8.35 $ —

(1) For options exercised during the period, 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, 2022, the aggregate intrinsic value represents the total pre-tax intrinsic value based on the $ 5.78 per share closing price of our common stock as reported on the Nasdaq Global Market on December 31, 2022, 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 the twelve months ended December 31, 2022 was $ 0.1 million.

As of December 31, 2022, unamortized stock-based compensation expense related to unvested common stock options was $ 0.1 million, and the weighted-average period over which such stock-based compensation expense will be recognized was 1.4 years.

The acquisition date fair value of the converted options was determined using the Black-Scholes options pricing model.

The fair value identified was then allocated between pre-combination service, attributed to purchase consideration net of a 20% anticipated forfeiture rate, and post-combination service, to be recognized as stock-based compensation expense over the remaining vesting term.

The Black-Scholes options pricing model is affected by the estimated fair value of our common stock as well as the following significant inputs:

Value of Common Stock $ 106.34

Expected Term 7.0

Volatility 56.6 %

Risk-free interest rate 1.1 %

Exercise Price $6.54 - 9.81

Dividend Rate — %

Common Stock Options from Dosh Acquisition

In connection with the acquisition of Dosh, each unvested option to purchase shares of Dosh common stock outstanding as of the acquisition date was converted to unvested options to purchase shares of our common stock.

These awards were granted under the Dosh Holdings, Inc.

2017 Stock Incentive Plan ("Dosh Plan") and were separately registered with the Securities and Exchange Commission on Form S-8 on April 9, 2021.

The maximum aggregate number of shares of our common stock that may be issued upon exercise of these awards is 104,098 shares, and we do not expect to grant any additional awards under the Dosh Plan.

The converted awards retain the same terms and conditions as the awards granted by Dosh prior to the acquisition.

The awards have remaining vesting periods ranging from less than one year to four years.

The following table summarizes changes in common stock options from the Dosh acquisition:

(in thousands) Weighted-Average Exercise Price Weighted Average Contractual Life (in years) Aggregate Intrinsic Value

(in thousands) (1)

Options outstanding — December 31, 2020 — $ —

Assumed 104 3.06

Exercised ( 30 ) 3.06 $ 2,492

Forfeited ( 44 ) 3.06

Options outstanding — December 31, 2021 30 3.06 9.15 $ 1,847

Exercised ( 5 ) 3.06 $ 230

Forfeited ( 7 ) 3.06

Options outstanding — December 31, 2022 18 3.06 8.18 $ 46

Exercisable — December 31, 2022 9 $ 3.06 8.18 $ 24

The total fair value of options vested during the twelve months ended December 31, 2022 was $ 0.9 million.

As of December 31, 2022, unamortized stock-based compensation expense related to unvested common stock options was $ 0.8 million, and the weighted-average period over which such stock-based compensation expense will be recognized was 1.37 years.

The acquisition date fair value of the converted options was determined using the Black-Scholes options pricing model.

The Black-Scholes options pricing model is affected by the estimated fair value of our common stock as well as the following significant inputs:

March 5, 2021

Value of Common Stock $ 128.06

Expected Term 7.0

Volatility 54.6 %

Risk-free interest rate 1.1 %

Exercise Price $ 3.06

Dividend Rate — %

Restricted Stock Units

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Vested ( 2,947 ) 19.51

Forfeited/canceled ( 286 ) 23.34

Forfeited ( 1,084 ) 31.66

Unvested - December 31, 2023 5,485 $ 15.70 2.01 $ 68,092

(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, 2021 2,294 $ 60.58

Granted 6,182 24.74

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Unvested - December 31, 2022 5,956 $ 25.43 2.93 $ 116,941

(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, 2020 2,434 $ 32.49

Granted 975 106.24

Vested ( 724 ) 32.51

Forfeited ( 1,536 ) 59.94

Forfeited/canceled ( 391 ) 51.54

Unvested - December 31, 2021 2,294 $ 60.58 2.80 $ 106,468

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The aggregate intrinsic value based on the $ 9.21 closing price of our common stock as reported on the Nasdaq Global Market on December 31, 2023 of unvested RSUs is $ 50.5 million as of December 31, 2023.

Subsequent to December 31, 2022, we granted 527,308 RSUs to employees, which have annual vesting periods ranging from two to four years.

Subsequent to December 31, 2023, we granted 275,780 RSUs to employees, which have annual vesting periods ranging from one to two years.

The unamortized stock-based compensation expense related to all RSUs granted subsequent to December 31, 2023 is $ 1.9 million.

Performance-based Restricted Stock Units

In July 2022, we granted 100,990 PSUs which vest on the achievement of specific revenue-based performance metrics ("2022 Bridg PSUs").

In March 2022 and August 2022, we granted 269,202 and 25,248 performance-based restricted stock units ("2022 PSUs"), respectively, consisting of three tranches.

The first two tranches each represent 25% of the grant, and each vest upon the achievement of certain milestones related to the installation of our Ad Server at our FI Partners.

50% of the third tranche vests upon the achievement of a certain number of advertisers purchasing both the Cardlytics and Bridg platforms at a target incremental billings amount over 2021, and the remaining 50% of the tranche vests six months after this target is achieved.

In December 2022, the compensation committee of our board of directors certified that the first tranche's milestone related to the installation of our Ad Server at our FI partners had been achieved, which resulted in the immediate vesting of the first tranche representing 25% of the grant.

In September 2021, we granted 6,666 PSUs which have the same unmet vesting conditions of the 2020 PSUs, 6,667 PSUs which have the same unmet revenue target vesting condition of the 2021 PSUs and 6,667 PSUs which have the same unmet different revenue target vesting condition of the 2021 PSUs as described below.

As discussed below, we concluded that the achievement of the 2020 PSUs and 2021 PSUs is no longer probable and have reversed the previously recognized cumulative expense in the respective period in which the 2020 PSUs and 2021 PSUs were determined to no longer be achievable.

In July 2021, we granted 34,344 performance-based restricted stock units ("Bridg PSUs") which have performance-based vesting conditions based on the achievement of a minimum ARR target by the first anniversary of the Bridg acquisition.

Vesting is tied to the percentage of the ARR target achieved during the specified period with 50% of the units vesting between 80% - 99.999% achievement and 100% of the units vesting upon 100% achievement.

During 2023, the compensation committee of our board of directors certified the vesting of shares associated with the 50% attainment of the units based on the achieved annual run rate during the specified period.

In April 2021, we granted 110,236 performance-based restricted stock units ("2021 PSUs") consisting of two tranches.

The first tranche consists of 55,118 units that have a performance-based vesting condition based on a minimum revenue target over a trailing 12-month period.

The units in this first tranche fully vest upon achievement.

The second tranche consists of 55,118 units with a performance-based vesting condition based on a different minimum revenue target over a trailing 12-month period.

Half of the units in the second tranche vest upon achievement and the remaining units vest six months after the achievement date, subject to continued service.

Each performance-based vesting condition within the two tranches must be achieved within four years of the grant date and are subject to certification by the compensation committee of our board of directors.

During the year-ended December 31, 2023, we reassessed the likelihood of achieving the 2021 PSUs performance-based vesting condition and concluded that the achievement is no longer probable.

As a result of the change in estimate, we have reversed the previously recognized cumulative expense associated with the 2021 PSUs since the grant date as a benefit to stock-based compensation during the year ended December 31, 2023.

Additionally, in April 2021, we granted 10,000 performance-based restricted stock units which have the same unmet vesting condition as the 2020 PSUs based on a minimum ARPU target over a trailing 12-month period as described below.

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 unmet at the time 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.

During the year-ended December 31, 2022, we reassessed the likelihood of achieving the 2020 PSUs performance-based vesting condition and concluded the achievement is no longer probable.

As a result of the change in estimate, we have recognized the cumulative expense associated with the 2020 PSUs from the grant date as a benefit to stock-based compensation during the year ended December 31, 2022.

During 2019, we granted 1,252,500 performance-based RSUs ("2019 PSUs").

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In December 2021, the compensation committee of our board of directors certified that the target growth rate for Adjusted Contribution during a trailing 12-month period had been achieved resulting in the immediate vesting of 50% of the related PSU tranche.