Greetings, and welcome to the Cardlytics Q1 2021 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to your host, Kirk Somers, Chief Legal and Privacy Officer. Thank you, sir. You may begin.

Good evening, and welcome to Cardlytics first quarter 2021 financial results call. Before we begin, let me remind everyone that today's discussion will contain forward-looking statements based on our current assumptions, expectations and beliefs, including expectations about future financial performance or results, including our financial guidance and cash position for the second quarter and full-year of 2021, our ability to achieve key long-term priorities, the launch of additional functionality buy banks, including U.S. Bank, growth in MAUs or monthly active users, the return to year-over-year growth, the launch of our new user experience, the new technology infrastructure, the increase in ARPU or average revenue per user, the impact of COVID-19 on our business and the economy as a whole, including the stabilization of the economy and potential improvements in the economy, the sufficiency of our capital structure, continued momentum in 2021, and the closing and anticipated benefits of our acquisition of Dosh Holdings, Inc. and Bridg Inc. For a discussion of the specific factors that could cause our actual results to differ materially from today's discussion, please refer to the Risk Factors section of the company's 10-Q for the quarter year ended March 31, 2020, and in the subsequent periodic reports that we file with the Securities and Exchange Commission. Also during this call, we will 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 that has been filed with the SEC. Today's call is available via webcast, and a replay will be available for one week. You can find all of the information I've just described on the Investor Relations section of Cardlytics website. Please note that a supplemental presentation to our first quarter results has also been posted to our Investor Relations website. Joining us on the call today is Cardlytics leadership team, including CEO and Co-Founder, Lynne Laube; and CFO, Andy Christiansen. Following their prepared remarks, we'll open the call to your questions. With that, let me turn the call over to Lynne. Lynne?

Thanks, Kirk. And thank you to everyone for joining us on our first quarter 2021 earnings conference call. We had a strong start to the year with Q1 billings and total revenue exceeding expectations even before adding contributions from Dosh in March. Our results reflect the continued positive trajectory in our business. While we're still experiencing impacts from COVID. We are encouraged by the momentum we're seeing in the US. However, U.S travel and our UK business continue to be significantly impacted by the pandemic and related lockdown. Before moving to our results, I'd like to briefly address our recent acquisitions. We are integrating Dosh and making solid progress on combining the two organizations. We are pleased with the team and the capabilities and are already seeing our acquisition thesis come to light. We're also pleased to say that we expect to close the Bridg acquisition in May. We believe the Bridg acquisition has the potential to be transformational given its technology and unique position in the customer data platform or CDT market. I want to reiterate a few strategic points on both acquisitions for our investors. We expect the Bridg and Dosh acquisitions will first once integrated allow Cardlytics to utilize few data to provide product level offers from CPGs, grocers and wider retail. Second, accelerate the next generation consumer experience with consumer engagement features. And finally provide a lightweight platform to attract new partners in the neo-bank and non-FI industries. We're very pleased with the early progress and results from Dosh already. Now let's turn to some highlights from the first quarter. Total billings were $76.3 million, up 13% year-over-year. Total revenue, which is equal to billings net of consumer incentive was $53.2 million, an increase of 17% from Q1 2020, and adjusted contribution was $24.3 million, up…

Thank you, Lynne. We were extremely pleased with our results in Q1, which marked our return to year-over-year growth. Our existing business including the results of Dosh exceed our expectations. Before diving further into our results, I wanted to discuss our cash and liquidity position at the end of Q1, which includes our equity offering in the Dosh acquisition and where we expect to be following the close of Bridg. We ended Q1 with $614 million in cash and cash equivalents, compared to $293 million at the end of 2020. We expect to have over $215 million cash on a pro forma basis, after the Bridg acquisition, which we expect to close later this month. In addition, our loan facility, a 50 million remains undrawn at this time. Our balance sheet liquidity remains extremely strong following the Bridg deal. While we are always evaluating our capital structure, we see no immediate need to raise additional funds. Now turning to our Q1 performance. We’ll saw the usual seasonal decline from Q4 to Q1. Q1 landed at the high end of expectations before taking into account the partial month contribution from the Dosh acquisition. These strong results came despite the ongoing challenging environment in the UK to district COVID-19 lockdowns and continued limitations and travel. As we mentioned earlier, we saw strength in several industry verticals. What's also encouraging is the growing number of clients in our channel since the onset of the pandemic. While most of our new accounts are relatively small budgets, the increase in advertisers reflects the pivot we made in Q2 of 2020. And those will for a long-term health of the platform. As mentioned before, we believe the self service capabilities of our new platform will accelerate this trend overtime and give us a more scalable solution…

Thanks, Andy. Q1 was a great start to the year. We're looking forward to executing on our plan and acquisition integration for the rest of 2021. With that, I'll open up your call for questions.

[Operator Instructions]. Our first question comes from line of Aaron Kessler with Raymond James. Please proceed with your question.

Any updates on the self-serve platform. I think you started to roll that out at best and begin to get some feedback there. And then on kind of the new FY platform at a U.S. Bank, one of the large platform, how do you think that could impact kind of conversion rates or monetization, and what you would expect there? May finally quickly on the guidance change for a full year, maybe what's the change on organic versus kind of including efforts for Dosh? Thank you.

Hey, Aaron. So, yes, I'll take the U.S. Bank question first. So, they are fully rolled out with that -- with our new ad server. They are not fully rolled out with the new user stream that is going to be coming over multiple quarters. So, as we talked about in the call, they got modules that are API based and they deploy different modules based on where they are in the rollout [indiscernible] still very focused on modules that are helping customers find the program and educate them on how to use them. And then overtime, they're going to incorporate more of the modules that are a little bit more focused on different kinds of contents, different kinds of experience that we try to train these customers from scratch how to use our program across a wider variety of offer features overtime. But that's what you're seeing now is sort of the first module, over multiple quarters, they will be rolling out more modules. So, that's on bang. I apologize. I forgot your second question.

Just kind of based on the self-serve platform as well.

I mean, if you try to talk about everything every time, but self-serve continues to go incredibly well. It being rollout now with multiple agencies. We are so committed to giving you billings numbers from agencies starting in Q3 of 2021 this year, and you'll be able to see how it's growing by looking at actual results.

And these are some estimates for kind of Dosh from without how you should we think about that?

Our increase in guidance, certainly a big portion of that is attributed to the three quarters of the year, we're going to gain from the Dosh acquisition. But I do want to make sure that everyone understands we had quite a bit of strengths in Q1 and it might certainly give us a lot more confidence that we're going to be on a nice trajectory, and the core business is doing quite well. So, I think there's some amount of a small amount of this does relate to the strength in the core business. There are some pieces though, they're all giving us a little bit of pause, like I mentioned, where in the UK, right, they're still just now emerging from their lockdown. And I think that there's a little bit of risk there as to how uneven that may be. But I still feel pretty comfortable with the core business will be at lastly in the UK, and we're going to be on track for a full year. So, it is largely Dosh.

So, maybe just finally, the share count has to think about that for remainder of the year?

Share counts, so, we obviously, the significant jump in share count here in Q1 was the 3.9 million share sale that we had, without needing any additional funds for the foreseeable future, I definitely don't think there's going to be any need to raise funds through offerings. So, I think it's a fairly muted increase. Now, if you recall [indiscernible] have performance based awards we've been issuing over the last several years for executives, the timing in which those will hit does remain a little bit uncertain. It's really that much less shares that we're talking about with some of the equity offerings that are out there. So, we'll see some lumpiness later in the year perhaps.

Our next question comes from the line of Jason Kreyer with Craig-Hallum. Please proceed with your question.

Just in regards to the U.S Bank ad server, from a consumer experience perspective, is a U.S Bank consumer experiencing anything really different than though like a Wells Fargo or Chase or being a consumer? Or is it just those modules at this point in, really the consumer experience changes with the new platform rollout?

The new platform, they are on the new platform, the new platform is API driven, they have only chosen to take a few of the API's for their initial deployment of the experience. And those API's are almost exclusively focused on education. So from that perspective is very different. You will see anything like that in the other banks in terms of these education modules. But in terms of the actual ultra content right now, and the different types of content that we hope to display overtime, they're going to look very, very similar. I think we've discussed this before but U.S Bank, ultimately, it's going to be somewhere in the neighborhood of 4 million to 6 million MAUs. It's not enough to truly get the scale of significantly different types of offer contracts and offer properties, if you will. So, we're really focused on educating the consumer we're focused on there's some richer imagery and so from that perspective, it looks very different than the other banks. But the real meaningful change as they search incorporates different types of offer constructs and offer experiences. That's going to be multiple quarters. And as I discussed, we've got other large banks committing to the deployment of this new ad server in the back half of this year, which means, they'll be doing the same type of thing going into Q1 and Q2 of next year, and that's when we'll start to have the scale to really be able to drive a different kinds of experiences in advertising content into the channel. Does that helps?

That does help. I appreciate you. It was kind of straightening that out for me. As a follow-up or maybe a couple of follow-ups here. But if you can give any color just on the cadence of what you've seen over the last 6 weeks to 8 weeks, you're lapping some volatility from the pandemic. So, just kind of wondering how things have trended there and then any specific vertical commentary as you've lap that. I guess I had one on travel. We started to see some resurgence in advertising in travel. I don't know if you guys have seen that or not, or have any perspective on that.

I'll comment and then I'll throw it over to Andy as well, much of our -- was because of strong increase of consumer spend that we saw in March. We didn't see it in January of February, but we saw in March, and that's why we came in at sort of the high end of our guide was really in the last three weeks. So, we are seeing it picked back up fairly materially in a lot of categories. We still haven't seen it pick back up as much as you would hope in travel that it is changing in April. But for the Q1, travel was still very, very suppressed. But saw nice recovery on a lot of the other verticals in last two weeks in March. Andy, anything you would add?

That's right. We are starting to see a slight uptick in terms of in travel. But it's not nearly as meaningful. It's not the rebound we're looking for.

Either not the droids you're looking for. May the force be with you, Andy.

Our next question comes from the line of Tim Willi from Wells Fargo. Please proceed with your question.

Andy, two quick housekeeping and I have a couple about the business. Just to make sure, interest expense on a go forward should it be around 500,000 a quarter is that about right post offering – post paydown and redemption of convertible and everything?

We're paying 1% on that. So that's about right. 2.3 million on that per year.

Okay, perfect. And then the other one was, I noticed in the add backs this quarter. I think it was 998,000 for acquisition intangible, along with the merger charge. I know the charge you sort of add that back hard to predict those, is that $998,000 numbers sort of a way to think about one month of amortized to Dosh or is that sort of some kind of one-time accounting treatment, that's not really going to be part of the income statement on a go-forward basis, right?

You're absolutely right, it's the former. It'll be the amortization under the quarter intangibles going forward. So, you're right, it's just a partial month or 25 days of amortization on those intangibles.

And you will free to add back that as I'm assuming for adjusted EBITDA in net income, just want to make sure the adjustments of the models?

We added that as discrete add backs in our non-GAAP net loss as we discussed in our press release. We already add back depreciation amortization in our adjusted EBITDA calculation. So it is reflected there as well. We don't add that [indiscernible] so you'd see a difference there.

Okay. And then just going to back to the business, I can appreciate the UK and everybody sort of, I think, understand what's going on in Europe. I mean, then last year you talked about, I remember the exact verbiage of the strategy which your U.S customers and retain rise. And there are three words put together about how you're going to market to bring people back onto the platform and get them going again. And I guess I'm curious as we looked at like the UK, and maybe progress that had been made, but then sort of, maybe how to get shelved for a little bit with their lockdowns is, does the UK. Do you feel like sort of ultimately, sort of comes back by the U.S? Is there something about culturally or their banking industry that we shouldn't think about how the U.S has come back so quickly, that that's how the UK should play out once restrictions continue to run their course any thoughts about how it will play out versus what we've seen in North America?

It's a good question, and I don't know that I have the exact answer. Here's what I would say the rise, retain return strategy with a multi quarter strategy for us, as you know, and I would now describe to U.S as fully as the return part of that strategy, right, we're covering [Indiscernible] most of the verticals, we just have traveled, still a little muted, but we're fully in the return element of that strategy. But that's been almost a full-year. So, I am cautiously optimistic that the UK will go through rise, retain return in a very quick period, when they open back up because they have the advantage of opening back up with hopefully, most people vaccinated and so I think it will just be very accelerated, but only time will tell there is nothing that I see that's fundamentally different about how this impacts thinking or retail or anything like that in the UK. That would argue something different than that sort of hypothesis.

[Operator instructions] Our next question comes from Doug Anmuth with J.P. Morgan. Please proceed with your question.

The first one, I had as a follow up to the rise and retain the RR strategy. To speaker is like consumer marketers within core within the rise and retain category and like any other behaviors have changed out the world or advertise U.S post are to be open? And how should we think about like the behavior of the customers and marketers within that category going forward? Are you expecting any reversion back to pre-pandemic levels? Or do you think that some of the things that you had in 2020 will be sustainable. And then as a follow-up, you talk about auction immigration going well, but just curious if there's anything you learn, you have now that you're a part of your family?

So, on the three R strategy, as you'd like to call it, which is like CP three, may the force be with you. I think that sorry, guys, I just got no apologies. I think the direct-to-consumer the rise in the direct-to-consumer vertical, I think it's fair to say it's just become a very, very powerful vertical, I think both in terms of consumer demand for those types of products and just being a really good channel to drive that. I think that is absolutely here to stay. I think the other thing that I can clearly say with remarkable confidence that it's here to say is online grocery, we just seen a massive shift in demand there, and we have not seen it start to ship back. I will say, in every other vertical, we've seen it start to shipped back to in-store purchases. I don't know, if it's going to go back to the exact mix, it was pre-pandemic. But they're all going backwards to meaning that the height of the online spend for those verticals ads has now gone less, and they're buying more in-store with the exception of those two categories, beauty, which obviously doesn't have an in-store component and an online grocery. So, to be determined, I don't think consumer spend is ever going to go quite back to the level that it was before. But I think for many of our more traditional verticals, restaurant and retail, it's not going to be, if it was at 90% before, 90% or 80%, it's not going to stay at 40%, just to give you some directional numbers. Does that make sense?

And with that, we have reached the end of our question-and-answer session. And I would like to turn the floor back to management for closing remarks.

Well, everyone, thank you for your time. Hopefully we were able to answer questions and we look forward to continued conversations with many investors over the next couple of days. Appreciate it.

This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.