You've joined Cardlytics' Second Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and the instructions will be given at that time. As a reminder, this conference may be recorded. I would now like to turn the call over to your host, Mr. Kirk Somers.

Good afternoon, and welcome to Cardlytics second quarter financial results call. Before we begin, let me remind everyone that today’s discussion will contain forward-looking statements including projected 2018 third quarter and full-year financial results and operating metrics, 2019 preliminary growth expectations, business strategies, and other forward-looking topics such as anticipated growth in the Cardlytics Direct business with expanded credit card purchases and new and existing customers including those from JPMorgan Chase and Wells Fargo. Growth in monthly average users and in new verticals including travel, entertainment, e-commerce, grocery, and luxury retail, expanding market budgets, improving market adoption and customer engagement and anticipated investments in the sales and marketing and R&D in preparation for the launch of two national bank partners. Actual results and timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements and reported results should not be considered as an indication of future performance. Please note that these forward-looking statements made during this conference call speak only as of today's date and Cardlytics undertakes no obligation to update them to reflect subsequent events or circumstances other than to the extent required by law. For a discussion of the specific Risk Factors that could cause our actual results to differ materially from today's discussion please refer to our financial results press release in the Risk Factors section of our Form 10-Q, filed May 10, 2018, and in subsequent periodic reports that we filed with the Securities and Exchange Commission. Also during this call, we'll discuss non-GAAP measures of our performance. GAAP financial reconciliations and supplemental financial information are provided in the press release issued today and the 8-K filed with the SEC. Today's call is available via webcast and a replay will be available for two weeks. You can find all of the information I’ve just described on the Investor Relations section of Cardlytics’ website. Joining us on the call today are Cardlytics leadership team, including CEO and Co-Founder, Scott Grimes; COO and Co-Founder, Lynne Laube; and CFO, David Evans. Following their prepared remarks, we’ll open the call to your questions. With that said, let me send it over to Scott Grimes, Cardlytics' CEO and Co-Founder. Scott?

Thanks Kirk. Thank you to everyone for joining us on our second quarter earnings conference call. We are pleased to report another solid quarter which outperformed our expectations for both revenue and adjusted EBITDA. In today's call, we’ll discuss our second quarter 2018 results, provide you with an update on some new business developments, and discuss our plans for the remainder of 2018. We want to briefly touch on 2019. Total revenue for the quarter was $35.6 million. Our core Cardlytics direct revenue grew 21% year-over-year to $35.1 million primarily reflecting continued growth with new and existing markers and early entry into new verticals. Our adjusted EBITDA for the quarter was $2.2 million loss compared with a loss of $2.8 million in the prior year period. David will discuss additional details around our revenue and adjusted EBITDA along with other financial and operating metrics later in his prepared remarks. As we discussed in our last few calls, we are increasingly confident in our ability to drive substantial MAU growth by consolidating the U.S. banking market for Purchase Intelligence. Today, I'm pleased to announce that after completing a successful pilot with Wells Fargo, we recently signed an agreement with Wells Fargo for a national launch of Cardlytics Direct across their digital banking channels. Based on the Nielsen Reports published in February and April 2018, Wells Fargo is the largest debit card issuer in the United States and their cards produced $446 billion in debit and credit purchases annually. As we discussed last quarter, we are investing across Cardlytics to support a step function increase in MAUs. We are currently expanding our technology, our infrastructure, and our operations to support 150 million or more MAUs in the United States. We expect to see significant MAU growth in the first half of 2019…

Thank you. As Scott mentioned, we're pleased to announce our agreement to launch Cardlytics Direct nationally with Wells Fargo, more broadly we are really excited about our team’s work to nationally expand Cardlytics Direct with the addition of two national banks. As you know, our marketers, it's crucially important to able to target likely buyers at scale with the anticipated launch of the two banks the scale of our channel expects growth substantially in the coming year and both existing and new marketing clients are responding well to the anticipated launch. Marketers continue to leverage purchase intelligence to better understand the rapidly changing dynamics of their business and view these insights to drive better business outcome. We’re also seeing strong momentum as we enter new vertical. As we launch new credit portfolios, we will be able to reach fluent customers at scale. In particular the majority of purchases in the travel, entertainment and luxury, retail verticals are on the credit card, large credit card portfolios win fluent customers. Debit card portfolios reach more price sensitive for money. Importantly all customers frequently access their bank’s digital channels to manage their finance. In addition, we are working closely with our bank partners to enhance our payment datas to provide even more value for marketers. Increasingly we are receiving purchase data in real time. This allows us to create engaging new experience for customers. In the next few quarters, we'll able to target customers based not only on where they purchase but the time of data in need of purchase. This is really important as many of our retail and restaurant clients want to drive traffic during summer time. As I mentioned earlier, marketers are finding new ways to use purchase intelligence to influence business outcomes. In Q2, we have many of our restaurant clients understand how their customers are using restaurant delivery services. These insights help them to understand how to transform their business in the rapidly changing restaurant industry. We help them understand markets where they need to build alternative services to compete and who they need to partner with to drive increased delivery sales. And of course as restaurant develop new offerings, we can profitably introduce them to exactly the right customers at Cardlytics Direct. With Purchase Intelligence, we are also helping new luxury marketers understand the price sensitivity of different segments of their customers and the propensity to shutdown markets. With Cardlytics Direct, luxury marketers spend against a lot of these customers while preventing the cannibalization of higher profitable less price sensitive customers. Our marketers continue to find new ways to do Purchase Intelligence that fundamentally changes how they think about certain segments of new customers and aspects of their business. Now I'll turn the call over to David to walk you through our second quarter results and updated guidance.

Thanks, Lynne. Revenue within our Core Cardlytics Direct business was $35.1 million representing a 21% year-over-year growth from the second quarter of 2017. Total revenue for the second quarter was $35.6 million representing an increase of 8% from the second quarter of 2017. Revenue from other platform solutions was approximately $0.5 million reflecting the de-emphasis of this business as we focus on launching new national banks as we discussed on our first quarter call. I’d like to point out that our UK operations have also been performing very well, Q2 2018 revenue in the UK grew 22% constant currency. Also year-to-date first half Cardlytics Direct grew 26% versus the first half 2017. Our second quarter Core Cardlytics Direct revenue growth reflects continued growth of new marketers, improved engagement and enhancement with our bank, and monitor year-over-year in MAUs. MAUs grew 9% over the second quarter of 2017 from $53.7 million to $58.8 million while our MAUs remained relatively flat compared to first quarter of 2018, we still have ample headroom to grow MAUs within our existing bank relationships and have demonstrated our ability to show outpaced ARPU growth. We're continuously working with all of our bank partners to ensure they have the latest and greatest engagement pickups. Consistent with Scott and Lynne’s commentary, we expect significant MAU growth in the first half of 2019 and continuing into 2020 as we launch Wells Fargo and Chase. Our second quarter 2018 ARPU was $0.60, up 11% from $0.54 in the second quarter of 2017 reflecting continuing momentum with our marketer base. Our year to-date ARPU was a $1.14, up 13% from $1.01 in the first half of 2017, highlighting our ability to enhance the monetization of our MAU base. Total adjusted contribution profit was $16.2 million in the second quarter, up 8%…

Thanks David. We're really pleased with the performance our team has delivered since going public in February. With the addition of two new national banks, we are now positioned to deliver great value to the majority of bank customers in the United States and to consolidate Purchase Intelligence in the United States. We will be able to bring powerful new insights to our marketing partners and with these insights, we can deliver profitable sales growth, at scale, both in-store and online through our trusted, brand safe, fraud free Cardlytics Direct needed advertising channel. With that, I’ll open the call up to your questions. Thank you.

Thank you. [Operator Instructions]. And our first question is from Andy Hargreaves with KeyBanc Capital.

Hi, thanks. I have for you a couple; try to want to just do. Just on the 2019 and 2020 outlook, I wonder if you could clarify a little more was the suggestion that you would see acceleration in 2019 and 2020 meaning both of those years would infinitely be higher than 2018 or that we would literally see acceleration in 2019 and then another year of acceleration in 2020. And then I wanted just probably a question for Lynne on the advertiser side, can you just comment on sort of what retention has been so far and then you mentioned the new areas just wondering sort of what pipeline there is and sort of how long it would take for those to start have an impact? Thanks.

Hey thanks this is David. Thanks for dialing in. We appreciate it, on the accelerating revenue growth comment it's the latter of your question I think what's important to note and it was the reason why I wanted in the prepared remarks is really around the timing of the banks and certainly as you think about two large banks like Wells and Chase there will be associated budgets that we're going to be going out trying to capture to fulfill the MAU growth that we experience there and so that was part of the comment was to say that we would experience accelerating growth in 2019 and then we would accelerate off of 2019 and 2020.

And this is Lynne. On the retention side with advertisers, we don't report on any of those specific metrics. I do think our growth rate sort of somewhat speak for themselves there but we do penetrate new verticals based on where and how we see the most transaction data and where we can be the most valuable to those advertisers. So as we are adding these new portfolios, we're seeing different types of purchase which is particularly convenient for us to go attract new verticals and we're seeing very, very high initial engagements with those verticals. I really can't speak to the retention in those obviously since we’re just engaging.

We're developing the vertical is definitely a multiyear effort not a single year effort.

Yes.

Yes. And then maybe just one last one for David just sort of a technical question, on the SPC there's obviously a management component of it but it was higher than at least I thought for all of the categories or should we expect sort of something closer to what we've seen the first half this year going forward for stock comp or is it going to be and will revert more to the last year?

We had because when you think about when the management issues were put in place. We obviously did not know about Chase or the timing around Wells and so therefore we had a timeline for accruing those expenses. Obviously now that we have signed them both in the first year we had a little bit of a catch-up quarter and so that's why you see the large number this quarter and then that will continue at a slightly smaller level but at least up and until we reach those thresholds for MAUs which is part of prepared remarks based on the amount of significant growth we expect in the first half of next year. We're accruing towards that with that stock-based comp does that help?

Thank you. Yes.

So the timeline got compressed, in other words, right you got a three year and a five year and then those three and five years got compressed because of the number of MAUs that we expect to see coming on over the next 12 month or so.

Thank you. Our next question is from Youssef Squali with SunTrust.

All right, thank you very much. Two quick questions from me, can you speak to again one over the MAU has been flat Q4 2017 understandably we should see an acceleration going forward these two huge wins but from your existing businesses or existing FI relationships just trying to those have effectively being cat-cow and all of the growth you’re expecting is going to be coming from the relationships or is there may be something that kind of a -- kind of such an advantage you from being able to add MAUs to these existing FI relationships. And then on the Wells Fargo rollout, if you can just may be help us understand the cadence at least as far as we understand, I know it’s early but just how should we be thinking about the cadence of the rollout over the next six to 12 months, just to see how we reflect that in our models? Thank you.

Hey Youssef, this is Scott. Thanks for the questions. Let me speak to the MAUs a couple of points that you should be aware of here. We've always start if you there's a lot of noise between MAUs quarter-to-quarter and so looking at quarter-to-quarter changes is not terribly productive versus the year-over-year I think is more telling and I believe we saw about 9% MAU growth year-over-year. The second point is really important is we've obviously have our implementation teams working to launching two very large banks, so our implementation efforts have been much more focused on bringing the new banks online and frankly tapping into additional MAUs into existing banks. But rest assured there's a ton of MAU dry powder even in the existing networks as we’re just investing into two more what I call kind of step function MAUs areas right now.

Yes, and MAU as a reminder. MAU growth is always going to be spiky because even with existing banks it requires extending into a new channel or a major new UI upgrade and so that literally gets turned on overnight and then there is a spike, if we are not focused on new channels or new upgrades with existing MAUs, that particular quarter you’re not going to see growth because you won't see one of those spikes. And then I’ll answer your Wells Fargo question, obviously we don’t talk about any individual bank and timing, I do think it is reasonable to assume that both Chase and Wells would deploy in some type of phase roll-out way it could be by geography, it could also be by channel, I think both options are being explored but I would expect that from the initial roll-out to having us fully deployed nationally across all of the bank digital channels, I would expect that to be at least 12 months process unless and until we tell you otherwise.

Another thing, I would point on -- point to with regards to MAU and Scott touched on this a little bit, I mean we are going to be far more budget constrained here over the next 12, 24 months than we are MAU constrained. We’ve got plenty of real estate as we sit here today with regards to deploy our product and that’s only got to be magnified pretty significantly over the 12 or 18 months, so we are much more focused on making sure that we are going out and capturing --

Advertising budget.

Advertising budgets.

Thank you. Our next question is from Douglas Anmuth with JPMorgan.

Great, thanks for taking the questions, congratulations guys on the Wells signing. Just first, can you talk a little bit about the timing of investments just related to Chase and Wells, it sounds like you didn’t spend as much as you expected in 2Q, if you could just kind of layout a little more how that plays out over the rest of the year and then just remind us on the overall investment levels required for those two? And then secondly just I guess digging deeper into your comments on 2019 and perhaps 2020 as well, could you just help us understand ARPU trajectory a little bit more as you’re building MAUs and kind of the lag time involved there in terms of monetization? Thanks.

You bet. So with regards to the investment spend, it was similar from the Q1 call, we talked about $14 million to $16 million investment trajectory for the launch of both Wells and Chase. Some of that obviously we had started to deploy to some degree. I think with all things being considered it's always a process in trying to get banks launch especially when they’re two largest in the country and so we did start to make some investments in the second quarter, I had put it in a couple million dollar range but there were also other investments that were pending per the Wells contract and so that was the purpose of the accelerate in the press releases in that, now that's been signed here as of late, I would expect some of those investments to accelerate between now and the rest of the year-end. So I would say we're kind of a third of the way through that projection. We're obviously learning a lot as we go through all of this. We're seeing some efficiencies and some of the redeployment of some of the resources that were in our platform business and so from an efficiency standpoint, I feel good about how the capital is being deployed as to whether we'll get those that entire call it two-thirds of the rest of that piece between now and the years TBD but yes I still feel like -- I still feel pretty good the range I gave you before. And then the second question was on ARPU, look I think as it relates to ARPU there will be "spiky step change" with regards to MAU growth, so you should expect ARPU to decline along with that and the hope is obviously that as we go out and continue to acquire ad budgets the ARPU will revert back to the levels that we see today and then hopefully improve over time.

And David I just to be crystal clear the constraint for Cardlytics growth in 2019 and 2020 is strictly the rate at which we can see clearly new advertisers and grow advertising budgets, we have all the MAUs we need for our growth, so really is all around the rate which we ramp our advertising business.

Yes, but I would expect obviously stating the obvious I would expect a slight decline in ARPU just given the magnitude of the impact of MAU growth going into 2019.

Just a quick follow-up there just as you're talking about the constraint around ramping the advertiser business, do you feel like you’re positioned right now just in terms of feet on the street sales force size and how you're kind of going to market there?

Yes, I’ll answer and I will let Scott and Lynne chime in as well, I mean certainly as we look at the number of heads across the organization engineering, R&D implementations and sales and marketing it's a pretty good size and we're making our way through that and so we have all the feet on the street that we'd like to have no are we making good progress, yes. And so I would expect here over the next three to four months to have everybody in place.

Yes and just add a little more color to that, I think we're well staffed for existing verticals. We are obviously staffing up and learning on some of the new verticals that we talked about earlier and so we're not quite where we want to be there and those will take a little bit more time but I think existing verticals are well staffed and very aware of what's coming and have significant proposals in front of them.

Thank you. [Operator Instructions]. And our next question is from Matt Trusz with Gabelli & Company.

Good afternoon, thank you for taking my questions. I was just wondering can you all elaborate on any of the ways in which you’ve seen your talks with these advertisers change or accelerate recently few obviously IPO or due to the Chase and Wells announcement and then can you just talk a little bit about your ability to start selling advertising verticals now ahead of the uncertain launch time with the banks and how long you would take those relationships to ramp to something meaningful?

Hey Matt, thanks for the question. The tough line I think the discussions with advertisers have been really good, the advertisers especially in the digital world wanted by scale, we have good scale now but our good scale becoming great scale and we can really move the needle in the businesses and you take that combined with the unique things that we offer at advertisers which is a really great way to make sure you’re targeting the right customers, the ability to close loop and returning their advertising to the penny and where digital channels drives people into stores not just online. So you think that and the scale and I think it's being really, really well received. So we're pretty excited about, Lynne do you want to add?

Yes, I would just add to your point about how we penetrate them prior to launches, we actually receive several months at least several months in advance of launching any bank a full record of all their transaction data going back many, many months upwards of 12 months and we use that to measure to the penny of the exact opportunity. Obviously, we’re much better doing that in verticals we have experience, so we can literally say this is the new amount of opportunity that these launches will present to you in verticals we have less experience, we still have all that data that we're using to better understand just what the size of the opportunity is, the response rates are little less clear but our ability to go to advertisers many months before the launch and say this is what you could consume in this channel and these are the return on assets that we could deliver to you measures very precisely as high.

Great, thanks for the color. And then just a follow-up on the ARPU discussion as far as implications of especially Chase you add credit card mix, is there any difference in long-term monetization potential of credit, I guess specifically I’m asking is there difference in how a credit card user engage with their digital channel versus debit card? Thank you.

Historically our debit card users were our most valuable consumers that has changed pretty dramatically over the past few years as we have learned how to get similar levels of engagement with credit. So we look at both credit and debit today as most very valuable. What you will see is credit is more impactful in certain verticals, in fact it’s the verticals we’re investing in travel, entertainment, e-commerce, e-commerce is almost purely credit card and the luxury brands and so one of the key reasons we decided to make the investments in these new verticals is we now think we will be bringing them to scale that we can bring really good solutions to those advertisers. So it’s important more from a mix of the advertising area we can serve in and difference in how cards perform.

Thank you. And sir, I'm not showing any other question in the queue. I would like to turn the call back to Scott Grimes for his final remarks.

We are really excited about the quarter, it’s a great quarter. The team is very started about the scale we're going to bringing inline the first half of next year and so we'll get back to work but we appreciate everybody time today.

And ladies and gentlemen, with that we close our conference. You may all disconnect. Have a wonderful day.