What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-12 compared with 2024-03-14 · 188 added, 242 removed, 452 unchanged (49% of the section changed)

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"Risk Factors" and "Special Note Regarding Forward-Looking Statements" in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Our company's mission is to make commerce smarter and rewarding for everyone.

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 ("POS") data, including product-level purchase data, to enable marketers to perform analytics and targeted loyalty marketing and also measure the impact of their marketing (the "Bridg platform").

We operate a commerce media platform that is designed to make commerce smarter and rewarding for everyone.

At the core of our commerce media platform is the financial media network that we run within our partners' digital channels, which includes online and mobile applications (the "Cardlytics platform").

Additionally we operate an identity resolution platform that utilizes point-of-sale ("POS") data, including product-level purchase data, to enable advertisers to perform analytics and targeted loyalty marketing and also measure the impact of their marketing (the "Bridg platform").

The partners for the Cardlytics platform are predominantly financial institutions ("FI partners") that provide us with access to their anonymized purchase data and digital banking customers.

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By applying advanced analytics to the purchase data we receive, we make it actionable, helping marketers reach potential buyers at scale and measure the true sales impact of their marketing spend.

We have strong relationships with leading marketers across a variety of industries, including retail, restaurant, travel and entertainment, direct-to-consumer, and grocery and gas.

Working with a marketer, we design a campaign that targets consumers 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 customers after they make qualifying purchases ("Consumer Incentives").

We report our revenue on our consolidated statements of operations net of Consumer Incentives since we do not provide the goods or services that are purchased by customers from the marketers to which the Consumer Incentives relate.

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

We have strong relationships with leading marketers across a variety of industries, including everyday spend, specialty retail, restaurant, travel and entertainment.

Working with an advertiser, we design a campaign that targets consumers based on their purchase history.

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

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

We report our Revenue on our consolidated statements of operations net of Consumer Incentives since we do not provide the goods or services that are purchased by customers from the advertisers to which the Consumer Incentives relate.

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

We report our Revenue gross of Partner Share.

Partner Share costs are included in Partner Share and other third-party costs in our consolidated statements of operations, rather than as a reduction of revenue, because we and not our partners act as the principal in our arrangements with marketers.

Partner Share costs are included in Partner Share and other third-party costs in our consolidated statements of operations, rather than as a reduction of Revenue, because we and not our partners act as the principal in our arrangements with advertisers.

We run campaigns offering compelling Consumer Incentives to drive an expected rate of return on advertising spend for marketers.

At times, we may collaborate with a partner to enhance the level of Consumer Incentives to their respective customers, funded by their Partner Share.

We believe that these investments by our partners positively impact our platforms by making their customers more highly engaged with our platforms.

We believe that these investments by our partners positively impact our platform by making their customers more highly engaged with our platforms.

However, these investments negatively impact our GAAP Revenue, which is reported net of Consumer Incentives.

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We believe that MAUs is an indicator of the Cardlytics platform's ability to drive engagement and is reflective of the marketing base that we offer to marketers.

Beginnging as of September 30, 2023, we are reporting only the total number of unique targetable customers within each FI, which we have applied to our reporting for current and prior periods in this Annual Report.

We report only the total number of unique targetable customers within each FI.

Year Ended December 31, Change Year Ended December 31, Change

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Cardlytics MAUs 166,943 162,148 4,795 3 162,148 154,550 7,598 5

Cardlytics MAUs increased by 7.6 million during 2023 compared to 2022 primarily driven by an increase in new MAUs (41% of total growth) and lapsed customers returning (59% of total growth).

Cardlytics MAUs increased by 8.3 million during 2022 compared to 2021, primarily driven by an increase in new or lapsed customers logging in and visiting online or mobile applications containing offers, opening an email containing an offer or redeeming an offer from the Cardlytics platform.

Cardlytics MAUs increased by 4.8 million during 2024 compared to 2023, primarily driven by organic growth of the existing FI partners in the U.K.

and a new FI Partner in the U.K.

Cardlytics MAUs increased by 7.6 million during 2023 compared to 2022, primarily driven by organic growth of the existing FI partners in the U.K.

and a new FI Partner in the U.K.

Cardlytics Average Revenue per User ("ARPU")

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Cardlytics ARPU $ 1.67 $ 1.91 (0.24) (13) $ 1.91 $ 1.93 (0.02) (1)

Cardlytics ARPU decreased by $0.02 during 2023 compared to 2022 as a result of a $10.7 million increase in revenue and a 7.6 million increase in Cardlytics MAUs.

Cardlytics ARPU increased by $0.10 during 2022 compared to 2021 as a result of a $31.4 million increase in revenue and an 8.3 million increase in Cardlytics MAUs.

Cardlytics ARPU decreased by $0.24 during 2024 compared to 2023 as a result of a $21.3 million increase in Consumer Incentives due to changes to our targeting and ranking system that led to higher engagement.

Cardlytics ARPU decreased by $0.02 during 2023 compared to 2022 as a result of a $0.3 million increase in Consumer Incentives due to changes to our targeting and ranking system that led to higher engagement.

Non-GAAP Metrics

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Adjusted Contribution measures the degree by which revenue generated from our marketers exceeds the cost to obtain the purchase data and the digital advertising space from our partners.

Adjusted Contribution demonstrates how incremental revenue on our platforms generates incremental amounts to support our sales and marketing, research and development, general and administration and other investments.

Adjusted Contribution is calculated by taking our total revenue less our Partner Share and other third-party costs exclusive of deferred implementation costs, which is a non-cash cost.

Adjusted Contribution demonstrates how incremental Revenue on our platforms generates incremental amounts to support our sales and marketing, research and development, general and administrative and other investments.

Adjusted Contribution is calculated by taking our total Revenue less our Partner Share and other third-party costs.

Adjusted Contribution does not take into account all costs associated with generating Revenue from advertising campaigns, including sales and marketing expenses, research and development expenses, general and administrative expenses and other expenses, which we do not take into consideration when making decisions on how to manage our advertising campaigns.

Management views Adjusted Contribution as the most relevant metric to measure the financial performance as it reflects the dollars we keep after all of our partners are paid.

We use Adjusted Contribution extensively to measure the efficiency of our advertising platform, make decisions to manage advertising campaigns and evaluate our operational performance.

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Adjusted EBITDA

Adjusted EBITDA represents our Net Loss before income tax benefit;

interest expense, net;

Adjusted EBITDA represents our Net Loss before interest expense, net;

depreciation and amortization;

stock-based compensation expense;

acquisition, integration and divestiture (benefits) costs;

change in fair value of contingent consideration;

foreign currency (gain) loss;

impairment of goodwill and intangible assets;

loss on divestiture;

foreign currency loss (gain);

gain on debt extinguishment;

acquisition, integration and divestiture costs (benefits);

change in contingent consideration;

impairment of goodwill and intangible assets, loss on divestiture;

restructuring and reduction of force;

income tax benefit;

and deferred implementation costs.

income tax benefit and, in applicable periods, certain other income and expense items, such as deferred implementation costs.

We do not consider these excluded items to be indicative of our core operating performance.

The items that are non-cash include foreign currency gain (loss), impairment of goodwill and intangible assets, loss on divestiture, deferred implementation costs, depreciation and amortization, stock-based compensation expense and change in fair value of contingent consideration.

Notably, any impacts related to minimum Partner Share commitments in connection with agreements with certain FI partners are not added back to net loss in order to calculate Adjusted EBITDA.

Of these items depreciation and amortization expense, stock-based compensation expense, gain on debt extinguishment, impairment of goodwill and intangible assets and foreign currency loss (gain) are non-cash impacting.

Notably, any impacts related to minimum Partner Share commitments in connection with agreements with certain partners are not added back to net loss in order to calculate Adjusted EBITDA.

Adjusted EBITDA is a key measure used by management to understand and evaluate our core operating performance and trends and to generate future operating plans, make strategic decisions regarding the allocation of capital and invest in initiatives that are focused on cultivating new markets for our solution.

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Nevertheless, use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP.

Some of these limitations are as follows:

Some of these limitations are:

(1) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

(2) Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation;

(3) Adjusted EBITDA does not reflect tax payments or receipts that may represent a reduction or increase in cash available to us and (4) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces the usefulness of the metric as a comparative measure.

(2) Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation and equity instruments issued to our partners;

(3) Adjusted EBITDA does not reflect tax payments or receipts that may represent a reduction or increase in cash available to us;

and (4) other companies, including companies in our industry, may calculate adjusted EBITDA or similarly titled measures differently, which reduces the usefulness of the metric as a comparative measure.

Because of these and other limitations, you should consider Adjusted EBITDA alongside our net loss and other GAAP financial results.

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We define Adjusted Net Loss as our Net Loss before stock-based compensation expense;

foreign currency (gain) loss;

acquisition, integration and divestitures costs (benefits);

foreign currency loss (gain);

acquisition, integration and divestiture costs (benefits);

amortization of acquired intangibles;

change in fair value of contingent consideration;

change in contingent consideration;

impairment of goodwill and intangible assets;

gain on debt extinguishment;

loss on divestiture;

restructuring and reduction of force;

and income tax benefit.

and income tax benefit, in applicable periods, certain other income and expense items.

We define Adjusted Net Loss per share as Adjusted Net Loss divided by our weighted-average common shares outstanding, diluted.

Free Cash Flow

We define Free Cash Flow as net cash provided by (used in) operating activities, plus acquisition of property and equipment, acquisition of patents and capitalized software development costs.

We believe free cash flow is useful to measure the funds generated in a given period that are available to invest in the business.

We define Free Cash Flow as net cash used in operating activities, plus acquisition of property and equipment, capitalized software development costs and acquisition of patents.

We believe free cash flow is useful to measure the funds generated in a given period that are available for distribution or to sustain the business.

We believe this supplemental information enhances stockholders' ability to evaluate our performance.

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Billings $ 443,840 $ 453,426 (9,586) (2) $ 453,426 $ 442,477 10,949 2

Billings increased by $10.9 million during 2023 compared to 2022, primarily driven by an increase of $32.8 million in sales to new marketers, offset by a $21.9 million net decrease in sales to existing marketers.

Billings increased by $48.4 million during 2022 compared to 2021, primarily driven by a $6.9 million increase in sales to existing marketers and an increase of $41.5 million in sales to new marketers.

Billings decreased by $9.6 million during 2024 compared to 2023, primarily driven by an increase of $45.7 million in sales to new marketers, offset by a $55.3 million net decrease in sales to existing marketers.

Billings increased by $10.9 million during 2023 compared to 2022, primarily driven by an increase of $32.8 million in sales to new marketers, offset by a $21.9 million decrease in sales to existing marketers.

The following table presents a reconciliation of billings to revenue, the most directly comparable GAAP measure, for each of the periods indicated (in thousands):

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29,643 28,248 30,403

Deferred implementation costs (2)

Adjusted Contribution $ 150,537 $ 158,626 $ 143,035

Cardlytics platform

Revenue $ 285,425 $ 277,185 $ 258,754

Partner Share and other third-party costs 149,907 154,204 140,864

Delivery costs (1)

21,447 24,112 18,111

Gross Profit 114,071 98,869 99,779

Delivery costs (1)

21,447 24,112 18,111

Deferred implementation costs (2)

Adjusted Contribution $ 135,518 $ 122,981 $ 121,675

Bridg platform

Revenue $ 23,779 $ 21,357 $ 8,362

Partner Share and other third-party costs 671 1,303 409

Delivery costs (1)

6,801 6,291 4,392

Gross Profit 16,307 13,763 3,561

Delivery costs (1)

6,801 6,291 4,392

Adjusted Contribution $ 23,108 $ 20,054 $ 7,953

(1) Stock-based compensation expense recognized in consolidated delivery costs totaled $2.4 million, $2.7 million and $1.9 million during 2023, 2022 and 2021, respectively.

(2) Deferred implementation costs is excluded from Adjusted Partner Share and other third-party costs as follows (in thousands):

Year Ended December 31, 2021

Cardlytics Platform Bridg Platform Consolidated

Partner Share and other third-party costs $ 140,864 $ 409 $ 141,273

Deferred implementation costs 3,785 — 3,785

Adjusted Partner Share and other third-party costs $ 137,079 $ 409 $ 137,488

(1) Stock-based compensation expense recognized in delivery costs totaled $2.7 million, $2.4 million and $2.7 million during 2024, 2023 and 2022, respectively.

Adjusted EBITDA

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Stock-based compensation expense 40,367 40,980 44,686

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

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

Acquisition, integration and divestiture costs (benefits) 161 (6,313) (2,874)

Change in contingent consideration 210 1,246 (128,174)

Foreign currency loss (gain) 1,269 (3,304) 6,376

Impairment of goodwill and intangible assets 131,595 70,518 453,288

Gain on debt extinguishment (13,017) — —

Loss on divestiture — 6,550 —

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Income tax benefit — — (1,446)

Deferred implementation costs — — 3,785

Adjusted EBITDA $ 2,523 $ 3,771 $ (45,169)

The following table presents a reconciliation of Adjusted EBITDA to Adjusted Contribution, the most directly comparable segment income measure, for each of the periods indicated (in thousands):

Year Ended December 31,

2023 2022 2021

Adjusted Contribution $ 158,626 $ 143,034 $ 129,628

Delivery costs 28,248 30,402 22,503

Sales and marketing expense 57,425 74,745 65,996

Research and development expense 51,352 54,435 38,104

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

Stock-based compensation expense (40,980) (44,686) (50,264)

Restructuring and reduction of force — (8,139) (713)

Adjusted EBITDA $ 3,771 $ (45,169) $ (12,220)

Cardlytics platform

Adjusted Contribution $ 135,518 $ 122,981 $ 121,675

Delivery costs 21,447 24,112 18,170

Sales and marketing expense 48,671 67,830 62,771

Research and development expense 45,746 47,579 35,393

General and administration expense 56,542 79,069 63,379

Stock-based compensation expense (37,782) (43,490) (47,223)

Restructuring and reduction of force — (8,139) (713)

Adjusted EBITDA $ 894 $ (43,980) $ (10,102)

Bridg platform

Adjusted Contribution $ 23,108 $ 20,053 $ 7,953

Delivery costs 6,801 6,290 4,333

Sales and marketing expense 8,754 6,915 3,225

Research and development expense 5,606 6,856 2,711

General and administration expense 2,268 2,377 2,843

Stock-based compensation expense (3,198) (1,196) (3,041)

Restructuring and reduction of force — — —

Adjusted EBITDA $ 2,877 $ (1,189) $ (2,118)

Adjusted Net Loss

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Stock-based compensation expense 40,367 40,980 44,686

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

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

Foreign currency loss (gain) 1,269 (3,304) 6,376

Acquisition, integration and divestiture costs (benefits) 161 (6,313) (2,874)

Amortization of acquired intangibles 9,810 13,589 25,019

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

Change in contingent consideration 210 1,246 (128,174)

Impairment of goodwill and intangible assets 131,595 70,518 453,288

Gain on debt extinguishment (13,017) — —

Loss on divestiture — 6,550 —

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Weighted-average common shares outstanding, diluted 48,361 36,488 33,419

Adjusted weighted-average common shares outstanding, diluted 36,488 33,419 32,202

Adjusted Net Loss per share attributable to common stockholders, diluted $ (0.31) $ (1.80) $ (1.20)

Adjusted Net Loss per share, diluted $ (0.39) $ (0.31) $ (1.80)

Free Cash Flow

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The insertion orders state the terms of the arrangement, the negotiated fee, payment terms and the fixed period of time of the campaign.

We invoice marketers monthly based on the qualifying purchases of our partners' customers as reported by our partners during the month.

We generally invoice marketers monthly based on the qualifying purchases of our partners' customers as reported by our partners during the month or based on the engagement of our partners' customers with our offers during the month.

We report our Revenue net of Consumer Incentives and gross of Partner Share and other third-party costs.

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To the extent that we use a specific partners' customer's anonymized purchase data in the delivery of our solutions, we generally pay the applicable partner a Partner Share calculated based on the relative contribution of the data provided by the partner to the overall delivery of the services.

We expect that our Partner Share and other third-party costs will increase in absolute dollars as a result of our revenue growth.

We expect that our Partner Share and other third-party costs will fluctuate over time in connection with changes in our revenue.

Delivery Costs

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

As we continue to migrate our technology to the cloud, our delivery costs will increase in absolute dollars and if such anticipated revenue growth does not occur, our delivery costs as a percentage of revenue will be adversely affected.

As we continue to migrate our technology to the cloud, we expect our delivery costs will increase in absolute dollars and if such anticipated Revenue growth does not occur, our delivery costs as a percentage of Revenue will be adversely affected.

Over time, we expect delivery costs will decline as a percentage of Revenue.

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Sales and marketing expense also includes professional fees, marketing programs such as trade shows, marketing materials, public relations, sponsorships and other brand building expenses, as well as outsourcing costs, travel and entertainment expenses and company-funded consumer testing expenses for certain marketers that are not current customers.

We expect that our sales and marketing expense will increase in absolute dollars as a result of hiring new sales representatives and as we invest to enhance our brand.

We expect that our sales and marketing expense will increase in absolute dollars over time as a result of hiring new sales representatives and as we invest to enhance our brand.

Over time, we expect sales and marketing expenses will decline as a percentage of Revenue.

Research and Development Expense

Research and development expense consists primarily of personnel costs of our information technology ("IT") engineering, IT architecture and product development teams, including salaries, benefits, bonuses, stock-based compensation and payroll taxes.

Research and development expense consists primarily of personnel costs of our IT engineering, IT architecture and product development teams, including salaries, benefits, bonuses, stock-based compensation and payroll taxes.

Research and development expense also includes outsourcing costs, software licensing costs, professional fees and travel expenses.

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General and administrative expense also includes professional fees for external legal, accounting and consulting services, financing transaction costs, facilities costs such as rent and utilities, royalties, bad debt expense, travel expense, property taxes and franchise taxes.

We expect that general and administrative expenses will increase on an absolute dollar basis but decrease as a percentage of revenue as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business.

Acquisition, Integration and Divestiture Costs

We expect that general and administrative expenses will decrease over time as a percentage of Revenue as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business.

Acquisition, Integration and Divestiture Costs (Benefit)

Acquisition costs primarily represent diligence efforts, legal and advisory costs, broker fees and insurance premiums.

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Divestiture costs primarily represent legal and other professional fees.

Change in Fair Value of Contingent Consideration

Change in Contingent Consideration

Our acquisition of Bridg included a component of contingent consideration to be paid to the sellers if certain performance levels were achieved by Bridg over a specific period of time.

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A gain or loss is recognized in the income statement for fair value adjustments.

If we make additional acquisitions, it is possible that we will incur gains or losses in the future due to the change in the fair value of contingent consideration.

If we make additional acquisitions, it is possible that we will incur gains or losses in the future due to the change in contingent consideration.

Impairment of goodwill and intangible assets

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Foreign currency gain (loss) consists primarily of gains and losses on foreign currency transactions.

Income Tax Benefit

We have generated losses before income taxes in the U.S., U.K.

and most U.S.

state income tax jurisdictions.

We have generated historical net losses and recorded a full valuation allowance against our net deferred tax assets, and we expect to maintain a full valuation allowance in the near term.

Realization of any of our net deferred tax assets depends upon future earnings, the timing and amount of which are uncertain.

For the periods presented, income tax benefit represents the release of a portion of our valuation allowance in connection with deferred tax liabilities arising from our acquisitions of Dosh and Bridg.

Gain on Debt Extinguishment

Gain on debt extinguishment is associated with debt extinguishment including the write off of the unamortized debt issuance costs.

These are primarily non-cash and are associated with debt payment transactions which are non-recurring.

Results of Operations

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General and administrative expense 56,482 58,810 81,446

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

Acquisition, integration and divestiture costs (benefits) 161 (6,313) (2,874)

Change in contingent consideration 210 1,246 (128,174)

Impairment of goodwill and intangible assets 131,595 70,518 453,288

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Interest expense, net (5,553) (2,336) (2,556)

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

Foreign currency (loss) gain (1,269) 3,304 (6,376)

Gain on debt extinguishment 13,017 — —

Total other income (expense) 6,195 968 (8,932)

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Net Loss (189,304) (134,702) (465,264)

Net loss per share, basic and diluted $ (3.91) $ (3.69) $ (13.92)

Weighted-average common shares outstanding, basic and diluted 48,361 36,488 33,419

Comparison of Years Ended December 31, 2024 and 2023

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% of Billings 63 % 68 %

The $10.7 million increase in revenue during 2023 compared to 2022 was comprised of a $10.9 million increase in billings, offset by a $0.3 million increase in Consumer Incentives.

During 2023, our Consumer Incentives grew at a lower rate than billings, due changes in FI partner mix and pricing, as well as a one-time benefit of $2.2 million related to rewards in a prior period.

The $30.9 million decrease in Revenue during 2024 compared to 2023 was comprised of a $9.6 million decrease in Billings and a $21.3 million increase in Consumer Incentives.

In 2024, Consumer Incentives grew faster than Billings, due to higher engagement and a one-time $2.2 million rewards benefit that we realized in 2023.

Costs and Expenses

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% of Revenue 46 % 49 %

Partner Share and other third-party costs decreased by $4.9 million during 2023 compared to 2022.

In 2023, we recognized $1.3 million of our expected minimum Partner Share commitment shortfall compared to $3.2 million in 2022.

The balance in Partner Share and other third-party costs decreased by $3.0 million during 2023 compared to 2022 due to negotiated terms with FI share partners.

Partner Share and other third-party costs decreased by $22.8 million during 2024 compared to 2023 , partially due to a decrease of $1.3 million from a Partner Share commitment shortfall accrual in 2023 that did not reoccur in 2024 .

Excluding this shortfall commitment, the balance in Partner Share and other third-party costs decreased by $21.5 million .

The decrease is primarily driven by lower top line billings, a renegotiation of terms with a certain FI Partner and changes in Partner Share mix.

Delivery Costs

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in thousands 2024 2023 $ %

Delivery costs excluding stock-based compensation expense and restructuring and reduction of force $ 25,821 $ 25,860 $ (39) — %

Delivery costs excluding stock-based compensation expense $ 26,963 $ 25,821 $ 1,142 4 %

Stock-based compensation expense 2,680 2,427 253 10

Restructuring and reduction of force — 1,861 (1,861) (100)

Total delivery costs $ 29,643 $ 28,248 $ 1,395 5 %

% of Revenue 11 % 9 %

Delivery costs decreased by $2.2 million during 2023 compared to the 2022 .

Delivery costs expense excluding stock-based compensation and restructuring and reduction of force decreased by less than $0.1 million during 2023 compared to 2022 , due to a $3.9 million decrease in headcount, offset by a $3.9 million increase in hosting costs related to migrating certain data and applications to a cloud computing environment .

Total delivery costs increased by $1.4 million during 2024 compared to 2023 .

Delivery costs excluding stock-based compensation increased by $1.1 million during 2024 compared to 2023 , driven by a $2.3 million increase in data storage, partially offset by $0.5 million reduction in desktop software licenses, a $0.5 million reduction in data center expenses, and a $0.2 million reduction in staff expense.

Sales and Marketing Expense

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in thousands 2024 2023 $ %

Sales and marketing expense excluding stock-based compensation expense and restructuring and reduction of force $ 44,803 $ 60,671 $ (15,868) (26) %

Sales and marketing expense excluding stock-based compensation expense $ 42,632 $ 44,801 $ (2,169) (5) %

Stock-based compensation expense 10,017 12,624 (2,607) (21)

Restructuring and reduction of force (2) 2,139 (2,141) (100)

Total sales and marketing expense $ 52,649 $ 57,425 $ (4,776) (8) %

% of Revenue 19 % 19 %

Sales and marketing expense decreased by $17.3 million during 2023 compared to 2022.

Sales and marketing expense excluding stock-based compensation and restructuring and reduction of force decreased by $15.9 million primarily due to a $10.7 million decrease in headcount , a $2.4 million decrease in marketing events, a $1.8 million decrease in professional fees, a $0.5 million decrease in facility expense, a $0.3 million decrease in software licensing costs and a $0.2 million decrease in travel expenses.

Total sales and marketing expenses decreased by $4.8 million during 2024 compared to 2023.

Sales and marketing expenses excluding stock-based compensation decreased by $2.2 million during 2024 compared to 2023 primarily due to a $2.2 million decrease in staff expenses, mostly related to the divestiture of entertainment in December 2023, a $0.3 million decrease in training, dues and subscriptions expenses, and a $0.3 million decrease in travel and entertainment, partially offset by a $0.5 million increase in marketing events and a $0.1 million increase in software licenses.

Research and Development Expense

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in thousands 2024 2023 $ %

Research and development expense excluding stock-based compensation expense and restructuring and reduction of force $ 34,960 $ 39,573 $ (4,613) (12) %

Research and development expense excluding stock-based compensation expense $ 34,650 $ 34,960 $ (310) (1) %

Stock-based compensation expense 14,957 16,392 (1,435) (9)

Restructuring and reduction of force — 1,600 (1,600) (100)

Total research and development expense $ 49,607 $ 51,352 $ (1,745) (3) %

% of Revenue 18 % 17 %

Research and development expense decreased by $3.1 million during 2023 compared to 2022.

Research and development expense excluding stock-based compensation and restructuring and reduction of force decreased by $4.6 million primarily due to a $5.9 million decrease in headcount, a $1.5 million increase in capital development and a $0.5 million tax benefit, partially offset by a $2.4 million increase in non staff software licensing and data storage costs related to operations and a $0.9 million increase in professional fees.

Total research and development expenses decreased $1.7 million in 2024 compared to 2023.

Research and development expenses excluding stock-based compensation decreased by $0.3 million during 2024 compared to 2023, primarily due to a $0.8 million decrease in professional fees, a $0.3 million decrease in administrative expenses, and a $0.2 million decrease in staff expenses partially offset by a $1.0 million increase in data storage and data center expense.

General and Administrative Expense

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in thousands 2024 2023 $ %

General and administrative expense excluding stock-based compensation expense and restructuring and reduction of force $ 49,273 $ 62,168 $ (12,895) (21) %

General and administrative expense excluding stock-based compensation expense $ 43,769 $ 49,273 $ (5,504) (11) %

Stock-based compensation expense 12,713 9,537 3,176 33

Restructuring and reduction of force — 2,471 (2,471) (100)

Total general and administrative expense $ 56,482 $ 58,810 $ (2,328) (4) %

% of Revenue 20 % 19 %

General and administrative expense decreased by $22.6 million during 2023 compared to 2022.

General and administrative expense excluding stock-based compensation and restructuring and reduction of force decreased by $12.9 million primarily due to a $4.0 million decrease in software licensing costs, a $4.0 million decrease in headcount, a $1.0 million reduction in professional fees, a $0.8 million tax benefit, a $0.7 million reduction in bad debt, a $0.7 million reduction in other administrative expense, a $0.5 million reduction in training expenses and a $0.5 million reduction in marketing events, partially offset by a $0.7 million increase in our insurance premiums.

Total general and administrative expenses decreased by $2.3 million during 2024 compared to 2023 .

General and administrative expense excluding stock-based compensation decreased by $5.5 million during 2024 compared to 2023 , primarily due to a $4.0 million decrease in software licenses and data storage related to our transition to the cloud and the divestiture of Entertainment, a $3.8 million decrease in professional fees, a $1.2 million decrease in staff expenses and a $1.2 million decrease in lease expenses, partially offset by a $4.3 million increase in bad debt and a $0.4 million increase in travel and entertainment expense.

Stock-based Compensation Expense

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% of Revenue 15 % 13 %

Stock-based compensation expense decreased by $3.7 million during 2023 compared to 2022 primarily driven by the reversal of the 2021 PSUs and higher forfeitures related to executive departures that occurred in 2023.

In 2022, we recorded a benefit related to the reversal of the 2020 PSUs.

We believe that both the 2020 PSUs and 2021 PSUs are no longer likely to vest.

Stock-based compensation expense decreased by $0.6 million during 2024 compared to 2023.

In 2024, we reversed the expense associated with the 2022 PSUs, the second tranche of the 2022 Bridg PSUs, and the restricted share awards related to the departure of a key executive.

In 2024, we also granted restricted share awards to a key executive.

In 2023, we reversed the expense associated with the 2021 PSUs and restricted share awards related to certain executive departures.

Refer to Note 10—Stock-based Compensation to our consolidated financial statements for additional information regarding the change in stock compensation expense.

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% of Revenue — % (2) %

Acquisition and integration benefits increased by $3.4 million during 2023 compared to 2022.

During 2024, we recognized a $0.1 million expense associated with the net working capital adjustment related to the divestiture of Entertainment.

During 2023, we incurred a $6.8 million benefit due to a reduction of brokerage fee related to the reduction of our estimate of contingent consideration related to the First Anniversary Payment Amount to Bridg, partially offset by a $0.5 million expense due to the divestiture of Entertainment.

During 2022 we recognized a $2.9 million benefit primarily due to a reduction of brokerage fee related to the reduction of our estimate of contingent consideration related to the First Anniversary Payment Amount to Bridg, partially offset by $0.1 million of expense incurred by the acquisition of Entertainment.

Refer to Note 4—Business Combinations to our consolidated financial statements for additional information regarding these acquisitions.

Change in fair value of contingent consideration

Change in contingent consideration

Year Ended December 31, Change

in thousands 2024 2023 $ %

Change in fair value of contingent consideration $ 1,246 $ (128,174) $ 129,420 (101) %

Change in contingent consideration $ 210 $ 1,246 $ (1,036) (83) %

% of Revenue — % — %

During 2023 and 2022, we recognized a $1.2 million loss and $128.2 million gain, respectively, in the fair value of contingent consideration due to the change in value owed to the former Bridg shareholders.

During 2024, the change in contingent consideration was a $0.2 million expense as a result of the $6.1 million loss related to the change of contingent consideration to the former Bridg shareholders, almost entirely offset by the $5.9 million gain we recognized due to the Settlement Agreement.

During 2023 we realized a $1.2 million expense primarily due to the change in contingent consideration to the former Bridg shareholders.

Refer to Note 12—Fair Value Measurements to our consolidated financial statements for additional information regarding the contingent consideration.

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During 2024, we recognized $131.6 million of impairment of goodwill and intangible assets related to the Bridg platform.

During 2022, we recognized $453.3 million of impairment of goodwill and intangible assets related to the Cardlytics and Bridg platforms.

During 2023, we recognized $70.5 million of impairment of goodwill and intangible assets related to the Bridg platform.

The impairment of goodwill and intangible assets resulted from a continued slowdown in the economy, decreased consumer spend, and a sustained decline in our stock price.

Refer to Note 5—Goodwill and Acquired Intangibles to our condensed consolidated financial statements for additional information regarding the goodwill impairment.

Refer to Note 5—Goodwill and Acquired Intangibles to our consolidated financial statements for additional information regarding the goodwill impairment.

Loss on divestiture

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Loss on divestiture $ — $ 6,550 $ (6,550) n/a

% of Revenue 2 % n/a

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.

% of Revenue — % 2 %

On December 7, 2023 we sold and transferred substantially all of the assets of HSP EPI Acquisition, LLC ("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 statement of operations.

Refer to Note 4—Business Combinations to our condensed consolidated financial statements for additional information regarding the loss on divestiture.

Refer to Note 4—Business Combinations to our consolidated financial statements for additional information regarding the loss on divestiture.

Depreciation and Amortization Expense

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% of Revenue 9 % 9 %

Depreciation and amortization expense decreased by $11.1 million during 2023 compared to 2022, primarily due to our impairment of intangible assets in the fourth quarter of 2023.

Depreciation and amortization expense decreased by $0.8 million during 2024 compared to 2023, primarily due to a decrease in fixed assets.

Interest Expense, Net

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% of Revenue (2) % (1) %

Interest expense, net decreased by $0.2 million during 2023 compared to 2022 primarily as a result of an increase in interest income, which is driven by higher interest rates on our money market and direct deposits account, and partially offset by additional interest expense resulting from the borrowing of $30.0 million against our 2018 Line of Credit during the year ended December 31, 2023.

Foreign Currency Gain (Loss)

Interest expense, net increased by $3.2 million during 2024 compared to 2023 primarily due to an increase in our interest expense related to our 2024 Convertible Senior Notes, partially offset by repayment of our 2018 Line of Credit.

Refer to Note 9—Debt and Financing Arrangements to our consolidated financial statements for additional information regarding the 2024 Convertible Senior Notes.

Foreign Currency (Loss) Gain

Year Ended December 31, Change

in thousands 2024 2023 $ %

Foreign currency gain (loss) $ 3,304 $ (6,376) $ 9,680 (152) %

Foreign currency (loss) gain $ (1,269) $ 3,304 $ (4,573) (138) %

% of Revenue — % 1 %

Foreign currency gain (loss) was $3.3 million during 2023 compared to foreign currency loss of $6.4 million during 2022, primarily due to the decrease in the value of the British pound relative to the U.S.

Income Tax Benefit

Foreign currency loss was $1.3 million during 2024 compared to a gain of $3.3 million during 2023, primarily due to the change in the value of the British pound relative to the U.S.

Gain on Debt Extinguishment

Year Ended December 31, Change

in thousands 2024 2023 $ %

Income tax benefit $ — $ 1,446 $ (1,446) (100) %

Gain on debt extinguishment $ 13,017 $ — $ 13,017 n/a

% of Revenue 5 % — %

Income tax benefit was $1.4 million during 2022 due to the release of a portion of our valuation allowance in connection with deferred tax liabilities arising from our acquisitions of Dosh and Bridg.

There was no income tax benefit in 2023.

Gain on debt extinguishment was $13.0 million during 2024 compared to zero during 2023, due to the aggregated payment towards the 2020 Convertible Senior Notes in April 2024.

Refer to Note 9—Debt and Financing Arrangements to our consolidated financial statements for additional information regarding the 2020 Convertible Senior Notes.

Liquidity and Capital Resources

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Cash and cash equivalents $ 65,594 $ 91,830

Restricted cash — 80

Working capital (1)

29,028 52,779

Accounts receivable and contract assets, net 103,252 120,622

Unused available borrowings (2)

60,000 16,688

(1) We define working capital as current assets less current liabilities.

See our consolidated financial statements for further details regarding our current assets and current liabilities.

(2) As part of our amended and restated Loan and Security Agreement, we are required to maintain a minimum unrestricted cash of $25.0 million in demand deposit accounts.

Our cash and cash equivalents are available for working capital purposes.

We do not enter into investments for trading purposes, and our investment policy is to invest any excess cash in short-term, highly liquid investments that limit the risk of principal loss.

A significant majority of our cash and cash equivalents are held in fully FDIC-insured demand deposit accounts that distribute funds, and credit risk, over a vast number of financial institutions.

Although the Company deposits cash with high credit-quality financial institutions, its deposits, at times, may exceed federally insured limits.

The Company believes no significant concentration risk exists with respect to its cash or cash equivalents.

As of December 31, 2023, our demand deposit accounts earned an approximately 5.0% annual rate of interest.

Currently, a significant portion of our cash and cash equivalents are held in fully FDIC-insured money market accounts, demand deposit accounts and U.S.

Treasury Bills.

As of December 31, 2024, our money market account and our U.S.

Treasury Bills had earned approximately 4.3% and 4.5% annual rate of interest, respectively.

As of December 31, 2024, we had $4.1 million in cash and cash equivalents in the U.K.

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While our investment in our operations in the U.K.

is not considered indefinitely invested, we do not plan to repatriate these funds.

is not considered indefinitely invested, we do not have any current plans to repatriate these funds.

Through December 31, 2024, we have incurred accumulated net losses of $1,300.6 million since inception, including net losses of $189.3 million, $134.7 million and $465.3 million during 2024, 2023 and 2022, respectively.

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We have historically financed our operations and capital expenditures through convertible note financings, private placements of our redeemable convertible preferred stock, public offerings of our common stock as well as lines of credit and term loans.

As part of our acquisition of Bridg, Inc.

("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 Amount 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 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 3,600,000 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.

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

Our other future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, our merger and acquisition efforts, the continued expansion of sales and marketing activities, the enhancement of our platforms, the introduction of new solutions and the continued market acceptance of our solutions.

We expect to continue to incur operating losses for the foreseeable future and may require additional capital resources to continue to grow our business.

We believe that current cash and cash equivalents will be sufficient to fund our operations and capital requirements for at least the next 12 months following the date our consolidated financial statements were issued and in the long-term.

However, if our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be materially and adversely impacted.

In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all.

Sources of Material Cash Requirements

The following table summarizes our material cash requirements for future periods (in thousands):

Material Cash Requirements Due by the Year Ended December 31,

2024 2025 - 2026 2027 - 2029 Thereafter Total

2020 Convertible Senior Notes

$ 2,300 $ 260,096 $ — $ — $ 262,396

Finance leases (2)

Operating leases (3)

2,225 3,531 1,170 3,394 10,320

Cash portion of contingent consideration (4)

5,000 — — — 5,000

Partner share commitments (5)

3,300 — — — 3,300

Purchase obligations (6)

29,716 38,768 — — 68,484

Total $ 42,580 $ 302,445 $ 1,170 $ 3,394 $ 349,589

(1) Convertible senior notes were issued on September 22, 2020 and have an aggregate principal amount of $230.0 million bearing interest of 1.00%.

(2) Finance leases represent principal and interest payments.

(3) Operating lease obligations represent future minimum lease payments under our non-cancelable operating leases with an initial term in excess of one year.

(4) On January 25, 2024, we entered into 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.

This amount represents the remaining portion to be paid out according to the terms of the Settlement Agreement, inclusive of broker fees and transaction bonuses.

(5) We had a minimum Partner Share commitment to a certain FI partner totaling $10.0 million over a 12-month period which ended on March 31, 2023 and resulted in an accrual of $4.5 million for the Partner Share shortfall as of that date.

The Partner Share shortfall is included within Partner Share liability on our condensed consolidated balance sheet.

As of December 31, 2023, we paid our shortfall of $1.2 million and will pay the remaining installments on a quarterly basis over the next three quarters.

During the years ended December 31, 2023 and 2022, we recognized $1.3 million and $3.2 million, respectively, of expected minimum Partner Share commitment shortfalls within Partner Share and other third-party costs on our condensed consolidated statements of operations.

(6) Purchase obligations include all legally binding contracts such as hardware, software, licenses and service contracts.

Purchase orders that are not binding agreements are excluded from the table above.

The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts.

The table above does not include obligations under agreements that we can cancel without a significant penalty.

On September 22, 2020, we issued convertible senior notes with an aggregate principal amount of $230.0 million bearing an interest rate of 1.00% due on September 15, 2025 (the "2020 Convertible Senior Notes"), including the exercise in full of the initial purchasers' option to purchase up to an additional $30.0 million principal amount of the 2020 Convertible Senior Notes.

The 2020 Convertible Senior Notes were issued pursuant to an indenture, dated September 22, 2020 between us and U.S.

Bank National Association, as trustee.

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

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

Refer to Note 9—Debt and Financing Arrangements to our consolidated financial statements for additional information regarding the contingent consideration.

On April 1, 2024, we partially paid down the 2020 Convertible Senior Notes at prices below par and issued the 2024 Convertible Senior Notes (as defined below) with an aggregate principal amount of $172.5 million bearing an interest rate of 4.25% due on April 1, 2029 as described below.

The remaining portion not paid down on the 2020 Convertible Senior Notes are due on September 15, 2025.

Other Commitments

In January 2024, we renewed our cloud hosting arrangement guaranteeing an aggregated spend of $17.0 million each year over a 36-month period.

As of December 31, 2024 we have paid $19.4 million towards our cloud hosting arrangement guarantee.

Sources of Funds

Equity Distribution Agreement

On January 29, 2024, we filed a shelf registration statement on Form S-3 with the SEC, which was declared effective by the SEC on February 9, 2024.

This shelf registration statement, which includes a base prospectus, allows us to offer and sell up to a maximum aggregate offering amount of $100.0 million of our registered common stock, preferred stock, debt securities, warrants, or any combination of securities described in the prospectus in one or more offerings.

On March 18, 2024, we entered into an equity distribution agreement (the "Equity Distribution Agreement") with Evercore Group L.L.C., BofA Securities, Inc.

and Cantor Fitzgerald & Co., as sales agents, pursuant to which we may issue and sell, from time to time, shares of our common stock up to a maximum aggregate offering amount of $50.0 million in "at-the-market" offerings (the "ATM Offering Program").

On March 18, 2024, we sold 3,907,600 shares of our common stock at a weighted average price per share of $12.80 , for aggregate net proceeds of $48.3 million after deducting commissions and estimated offering expenses payable by us, pursuant to the Equity Distribution Agreement and completed the ATM Offering Program.

2024 Convertible Senior Notes

On April 1, 2024, we issued $172.5 million in principal amount of our 4.25% Convertible Senior Notes due in 2029 (the "2024 Convertible Senior Notes" and together with the 2020 Convertible Senior Notes, the "Notes") in a private offering, including the exercise in full of the initial purchasers' option to purchase up to an additional $22.5 million principal amount of 2024 Convertible Senior Notes.

The net proceeds from the offering were $166.8 million, after deducting the initial purchasers' discounts, commissions and the offering expenses payable by us.

The 2024 Convertible Senior Notes were issued pursuant to, and are governed by, an indenture, dated as of April 1, 2024, between us and U.S.

Bank Trust Company, National Association, as trustee.

We used $169.3 million, consisting of the net proceeds from the offering, together with cash on hand, to repurchase for cash $183.9 million in aggregate principal amount of the 2020 Convertible Senior Notes, together with accrued and unpaid interest, in privately negotiated transactions below par and entered into concurrently with the pricing of the offering through one of the initial purchasers or one of its affiliates, as our agents.

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.

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

On December 30, 2020, we amended our 2018 Loan Facility to increase the capacity of our Line of Credit, from $40.0 million to $50.0 million.

This amendment also extended the maturity date of the 2018 Loan Facility from May 14, 2021 to December 31, 2022.

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.

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

As of December 31, 2023, interest on advances under the 2018 Line of Credit bore an interest rate equal to the prime rate of 8.50%.

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, which remains unchanged in the most recent amendment.

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 includes customary representations, warranties and covenants (affirmative and negative), including restrictive covenants that prohibit mergers, acquisitions, dispositions of assets, incurrence 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.

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.

In April 2024, we repaid in full $30.0 million of the principal balance of the 2018 Line of Credit.

Interest on advances under the 2018 Line of Credit bore an interest rate equal to the prime rate plus 0.25%.

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

In July 2024, we amended our 2018 Loan Facility, which increased the ability to borrow up to 85% of the amount of our U.S.

eligible accounts receivable and 30% of the amount of our U.K.

eligible accounts receivable, decreased our required minimum level of Adjusted EBITDA, and decreased the interest rate to prime rate plus 0.125%.

The amendment also establishes a reserve in an amount equal to a percentage of the amount needed to retire the outstanding 2020 Convertible Notes.

The amendment also includes extension of the maturity date of the loan to July 31, 2026.

In September 2024, we entered into an amended and restated Loan and Security Agreement, which amended and restated the original Loan and Security Agreement to consolidate the original agreement and all subsequent amendments thereto into a single document.

During the year ended December 31, 2024, we incurred $0.7 million of interest expense associated with the 2018 Loan Facility.

As of December 31, 2024, we had $60.0 million of unused available borrowings under our 2018 Line of Credit.

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Net cash used in investing activities (18,746) (10,062)

Net cash used in financing activities (20,026) (39,987)

Net cash provided by (used in) financing activities 1,444 (20,026)

Effect of exchange rates on cash, cash equivalents and restricted cash (110) 118

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Operating activities used $8.8 million of cash in 2024, which reflected our net loss of $189.3 million, $196.3 million of which were non-cash charges, and a $15.8 million change in our net operating assets and liabilities.

The non-cash charges primarily related to stock-based compensation expense, depreciation and amortization expense (including the amortization of acquired intangible assets) impairment of goodwill and intangible assets, amortization of right-of-use assets, changes in the fair value of our contingent consideration, and credit loss expense.

The non-cash charges primarily related to stock-based compensation expense, depreciation and amortization expense (including the amortization of acquired intangible assets), impairment of goodwill and intangible assets, amortization of right-of-use assets, changes in contingent consideration, and credit loss expense.

The change in our net operating assets and liabilities was primarily due to a $12.5 million increase in accounts receivable and contract assets, a $6.6 million decrease in other accrued expenses, and a $7.1 million decrease in our Consumer Incentive liability, partially offset by a $1.4 million decrease in prepaid expense and other assets and a $16.4 million increase in Partner Share liability.

Operating activities used $0.2 million of cash in 2023, which reflected our net loss of $134.7 million, $148.0 million of which were non-cash charges, and a $13.5 million change in our net operating assets and liabilities.

The change in our net operating assets and liabilities was primarily due to a $4.5 million increase in accounts receivable and contract assets, a $9.5 million decrease in other accrued expenses and a $1.7 million decrease in Partner Share liability, partially offset by a $1.4 million increase in our Consumer Incentive liability.

The change in our net operating assets and liabilities was primarily due to a $7.7 million increase in accounts receivable and contract assets, a $7.5 million decrease in other accrued expenses, and a $1.4 million decrease in our Consumer Incentive liability, partially offset by a $2.5 million decrease in prepaid expense and other assets and a $0.4 million increase in Partner Share liability.

Investing Activities

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Our investing cash outflows during these periods primarily consisted of funds used for the purchases of technology hardware and costs to develop internal-use software.

Additionally, in 2023, we had cash inflows of $2.3 million related to proceeds from divestitures, net of cash divested and in 2022, we had cash outflows of $2.3 million related to business acquisitions, net of cash acquired.

Additionally, in 2024 and 2023, we had cash inflows of $0.6 million and $2.3 million, respectively, related to proceeds from divestitures, net of cash divested.

Refer to Note 4—Business Combinations to our consolidated financial statements for additional disclosures related to our acquisitions and divestitures.

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Our cash flows used in financing activities have primarily been composed of contingent consideration payments to Bridg, repurchasing shares of our common stock, offset by borrowings and repayments under our debt facilities, proceeds from the issuance of common stock and payments for costs related to debt issuances and equity offerings.

Financing activities provided $1.4 million in cash in 2024, which consisted of aggregated net proceeds of $166.8 million from issuance of our 2024 Convertible Senior Notes offering ($172.5 million gross proceeds from the issuance of the 2024 Convertible Senior Notes offset by $5.6 million in debt issuance costs) and $48.6 million proceeds from the issuance of common stock, partially offset by $199.3 million principal payment of debt ($169.3 million related to the repurchase of 2020 Convertible Senior Notes and $30.0 million related to pay down of the 2018 Line of Credit) and $14.2 million paid in cash related to the settlement agreement with the Stockholder Representative to resolve all outstanding disputes related to the Merger Agreement, inclusive of brokerage fees and transaction bonuses and accounting for all true-ups and credit.

Financing activities used $20.0 million in cash in 2023, consisting of $50.1 million paid for the First Anniversary Payment, partially offset by $30.0 million borrowed under our 2018 Line of Credit.

Financing activities used $40.0 million in cash in 2022, consisting of $40.0 million used to repurchase shares of our common stock.

Critical Accounting Estimates

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Refer to the notes to our consolidated financial statements for additional information.

Business Combinations

We estimate the fair value of assets acquired and liabilities assumed in a business combination.

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed.

While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement.

Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired technology, useful lives, and discount rates.

Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain.

During the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

On the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.

Fair Value of Contingent Consideration

When required by GAAP, assets and liabilities are reported at fair value on our consolidated financial statements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Valuation and Impairment of Goodwill and Intangible Assets

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If this assessment indicates that the fair value of the reporting unit is not more likely than not less than the carrying amount, goodwill is not considered impaired.

Otherwise, a quantitative impairment test is performed by comparing the fair value of a reporting unit to its carrying value, including goodwill.

Otherwise, a quantitative impairment test is performed by comparing the estimated fair value of a reporting unit to its carrying value, including goodwill.

We can bypass the qualitative assessment for any period and proceed directly to the quantitative impairment test.

If the carrying value of the net assets associated with the reporting unit exceeds the fair value of the reporting unit, goodwill is considered impaired and the impairment will be determined as the amount by which the reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

We assessed the triggering events criteria along with related conditions and developments as of September 30, 2024, and we concluded that we had a triggering event as a result of a sustained decline in our stock price during the three months ended September 30, 2024.

We, therefore, performed a quantitative impairment test as of September 30, 2024, and determined that the carrying value of the Bridg platform exceeded its fair value.

As such, we recognized a goodwill impairment of $117.8 million for the Bridg platform.

We performed our annual goodwill impairment test in the fourth quarter of 2024 and concluded that there was no impairment associated with the Cardlytics platform in the U.S.

As of December 31, 2024, there was no remaining goodwill associated with the Bridg platform.

We performed our annual impairment test as of October 1, 2023 and determined that the carrying value of the Bridg platform exceeded its fair value, and accordingly, we recognized goodwill impairment of $70.5 million.

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Changes in market conditions, laws and regulations, and key assumptions made in future quantitative assessments, including forecasted revenues and expected cash flows, competitive factors and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an additional impairment charge.

Internal-Use Software Development Costs

Capitalized software development costs consist of costs incurred in the development of internal-use software, primarily associated with the development and enhancement of our Cardlytics platform and Bridg platform.

We capitalize the costs of software developed or obtained for internal use in accordance with ASC Topic 350-40, Internal Use Software .

We begin to capitalize our costs upon completion of the preliminary project stage.

We consider the preliminary project stage to be complete and the application development stage to have begun when preliminary development efforts are successfully completed, management has authorized and committed project funding and it is probable that the project will be completed, and the software will be used as intended.

These costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally estimated to be three years.

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

Significant judgement includes deciding if a project is eligible for capitalization, determining whether the incurred costs are directly associated with the project, and evaluating the current stage of the project’s development.

During 2024, 2023 and 2022, we capitalized development costs for improvements to our platforms, including our Ads Manager and Ad Server, totaling $22.9 million, $14.6 million and $12.8 million, respectively.

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

18 unchanged sentences

Interest Rate Risk

The interest rate under the 2018 Line of Credit is variable.

Interest on advances under the 2018 Line of Credit bears an interest rate of the prime rate of 8.50%.

As of December 31, 2023, the prime rate was 8.50% and a 10% increase in the current prime rate would, for example, result in a $0.5 million annual increase in interest expense if the maximum borrowable amount under the 2018 Line of Credit were outstanding for an entire year.

The interest rate on the Notes is fixed at 1.00%.

The interest rates under the 2018 Line of Credit are variable.

Interest on advances under the 2018 Line of Credit bears an interest rate of the prime rate of 8.50% plus 0.25%.

In July 2024, we amended our 2018 Loan Facility, which decreased the interest rate to prime rate plus 0.125%.

As of December 31, 2024, the prime rate was 8.50% and a 10% increase in the current prime rate would, for example, result in a $0.5 million annual increase in interest expense if the maximum amount under the 2018 Line of Credit was outstanding for an entire year.

The interest rate on the 2020 Convertible Senior Notes is fixed at 1.00%.

On April 1, 2024, we issued the 2024 Convertible Senior Notes bearing an interest rate of 4.25%.

Refer to Note 9—Debt and Financing Arrangements to our consolidated financial statements for additional disclosures related to our debt.

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis