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What changed in Cardlytics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Cardlytics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+423 added−476 removedSource: 10-K (2024-03-14) vs 10-K (2023-03-01)

Top changes in Cardlytics, Inc.'s 2023 10-K

423 paragraphs added · 476 removed · 332 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

82 edited+8 added−16 removed35 unchanged
Biggest changeThe specific Partner Share percentage that we pay is based on whether we or Bank of America have secured the relevant marketer account and other marketer- and transaction-specific factors, provided that we are entitled to retain a minimum percentage of the monthly revenue subject to the GSA. 8 Table of Contents Agreements with Chase In May 2018, we entered into a Master Agreement and Schedule #1 to the Master Agreement (collectively, the “Master Agreement”) with Chase, pursuant to which we provide Chase with access to the Cardlytics platform.
Biggest changeAgreements with Chase In May 2018, we entered into a Master Agreement and Schedule #1 to the Master Agreement (collectively, the "Master Agreement") with Chase, pursuant to which we provide Chase with access to the Cardlytics platform. Under the Master Agreement, we provide Chase with access to the Cardlytics platform through November 2025.
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. The partners for the Bridg platform predominantly are merchants ("merchant data partners") that provide us with access to their POS data, including product-level purchase data.
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. The partners for the Bridg platform are predominantly merchants ("merchant data partners") that provide us with access to their POS data, including product-level purchase data.
Our technologies leverage proprietary algorithms, to process raw purchase data into normalized purchase history useful for marketing and analytics. Our Cardlytics platform also supports integration of data from third-party sources to enrich the intelligence that we provide. Further, we apply advanced analytics to continuously increase our intelligence capabilities and identify actionable behavior patterns for our marketers.
Our technologies leverage proprietary algorithms to process raw purchase data into normalized purchase history useful for marketing and analytics. The Cardlytics platform also supports integration of data from third-party sources to enrich the intelligence that we provide. Further, we apply advanced analytics to continuously increase our intelligence capabilities and identify actionable behavior patterns for our marketers.
We also have a dedicated partner sales team focused on expanding our network by both nurturing our existing relationships and cultivating new relationships with FI partners.
We also have a dedicated FI partner sales team focused on expanding our network by both nurturing our existing relationships and cultivating new relationships with FI partners.
We have registrations and/or pending applications for additional marks in the U.S. and other countries; however, we cannot assure you that any future trademark registrations will be issued for pending or future applications or that any registered trademarks will be enforceable or provide adequate protection of our proprietary rights.
We have registrations or pending applications for additional marks in the U.S. and other countries; however, we cannot assure you that any future trademark registrations will be issued for pending or future applications or that any registered trademarks will be enforceable or provide adequate protection of our proprietary rights.
The Cardlytics platform enables marketers to reach consumers in a secure, brand-safe, and digitally engaging environment, when they are thinking about their finances. We have access to consumers through both online and mobile channels and are increasingly reaching them through various other channels, including emails and real-time notifications. • Massive Reach Informed by Purchase Intelligence .
The Cardlytics platform enables marketers to reach consumers in a secure, brand-safe, and digitally engaging environment, at a time when they are thinking about their finances. We have access to consumers through both online and mobile channels and are increasingly reaching them through various other channels, including emails and real-time notifications. • Massive Reach Informed by Purchase Intelligence .
While we already work with many large marketers, our platforms currently capture only a small portion of their overall marketing spend. We intend to continue expanding our sales and marketing efforts to grow our share of advertising budgets from existing marketers and attract new brands, merchants and service providers both directly and through advertising agencies.
While we already work with many large marketers, we currently capture only a small portion of their overall marketing spend. We intend to continue expanding our sales and marketing efforts to grow our share of advertising budgets from existing marketers and attract new brands, merchants and service providers, both directly and through advertising agencies.
Our analytics makes our data actionable, enabling us to develop insights that marketers and partners rely on to make more informed business decisions and more meaningful customer connections. • Loyalty Tactics Beyond Loyalty Programs . The Bridg platform easily ingests POS data, allowing marketers to identify and reach previously unreachable customers.
Our analytics makes our data actionable, enabling us to develop insights that marketers and partners rely on to make more informed business decisions and create more meaningful customer connections. • Loyalty Tactics Beyond Loyalty Programs . The Bridg platform easily ingests POS data, allowing marketers to identify and reach previously unreachable customers.
The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 11 Table of Contents
The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 11
Agreements with Bank of America Our relationship with Bank of America is governed by a General Services Agreement ("GSA") pursuant to which we provide Bank of America with access to the Cardlytics platform and certain other related services, and a related Statement of Work, which grants Bank of America the right to use the software underlying the Cardlytics platform.
Agreements with Bank of America Our relationship with Bank of America is governed by a General Services Agreement pursuant to which we provide Bank of America with access to the Cardlytics platform and certain other related services, and a related Statement of Work (collectively, the "GSA"), which grants Bank of America the right to use the software underlying the Cardlytics platform.
We also license software from third parties for integration into our offerings, including open source software and other software available on commercially reasonable terms. We cannot assure you that such third parties will maintain such software or continue to make it available.
We also license software from third parties for integration into our offerings, including open-source software and other software made available on commercially reasonable terms. We cannot assure you that such third parties will maintain such software or continue to make it available.
Adding new marketers and increasing the potential incentives provided to our FI partners’ customers increases engagement within our FI partners’ digital channels. This, in turn, attracts more FI partners to our platforms, adding to our scale, and making our platforms more valuable to marketers. • Ability to Improve Marketing .
Adding new marketers and increasing the potential incentives provided to our FI partners' customers increases engagement within our FI partners' digital channels. This, in turn, attracts more FI partners to our platforms, adding to our scale, and making our platforms more valuable to marketers. 6 • Ability to Improve Marketing .
We believe that we are the only company with scale that leverages purchase data to enable marketing through FI partner channels at scale, although we believe we currently have competition from other companies that deliver similar solutions on a smaller scale.
We believe that we are the only company that leverages purchase data to enable marketing through FI partner channels at scale, although we believe we currently have competition from other companies that deliver similar solutions on a smaller scale.
A critical part of our strategy involves a design focused on gathering data without collecting, maintaining or using sensitive information, such as social security numbers, credit card numbers, financial account information or medical records. Our platforms are currently designed so that we do not receive or have access to any PII from our FI partners.
A critical part of our strategy involves a design focused on gathering data without collecting, maintaining or using sensitive personal data, such as social security numbers, credit card numbers, financial account information or medical records. Our platforms are designed so that we do not receive or have access to any PII from our FI partners.
We are the registered holder of a variety of domestic and international domain names that include cardlytics.com, dosh.com, bridg.com, entertainment.com and similar variations on those names. In order to protect our unpatented proprietary technologies and processes, we rely on trade secret laws and confidentiality agreements with our employees, consultants, financial institution partners, marketers, vendors and others.
We are the registered holder of a variety of domestic and international domain names that include cardlytics.com, dosh.com, bridg.com, and similar variations on those names. 9 In order to protect our unpatented proprietary technologies and processes, we rely on trade secret laws and confidentiality agreements with our employees, consultants, financial institution partners, marketers, vendors and others.
We believe the principal competitive factors in our industry include the following: • ability to leverage purchase data to inform marketing; • depth and breadth of relationships with partners, marketers and their agencies; • depth and breadth of, and access to, purchase data; • effectiveness in increasing return on advertising spend for marketers; • effectiveness in increasing marketing campaign performance for marketers and their agencies; • effectiveness in increasing partner customer engagement; • ability to maintain confidentiality and security of partner transaction data; • transparency into and measurement of marketing performance; • multi-channel capabilities; • pricing; • brand awareness and reputation; • ability to continue to innovate; and 9 Table of Contents • ability to attract, retain and develop leading-edge sales, account management, analytical and technical talent.
We believe the principal competitive factors in our industry include the following: • ability to leverage purchase data to inform marketing; • depth and breadth of relationships with partners, marketers and their agencies; • depth and breadth of, and access to, purchase data; • effectiveness in increasing return on advertising spend for marketers; • effectiveness in increasing marketing campaign performance for marketers and their agencies; • effectiveness in increasing partner customer engagement; • ability to maintain confidentiality and security of partner transaction data; • transparency into and measurement of marketing performance; • multi-channel capabilities; • pricing; • brand awareness and reputation; • ability to continue to innovate; and • ability to attract, retain and develop leading-edge sales, account management, analytical and technical talent.
ITEM 1. BUSINESS Overview 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 include online, mobile applications, email, and various real-time notifications (the "Cardlytics platform").
ITEM 1. BUSINESS Overview 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 provide compelling return on advertising spend due to our ability to influence likely buyers through our insights into consumer purchase data. This allows us to serve marketers at scale across a variety of industries, including retail, restaurant, travel and entertainment, direct-to-consumer, and grocery and gas.
We provide compelling return on advertising spend due to our ability to influence likely buyers, which we demonstrate through our insights into consumer purchase data. This allows us to serve marketers at scale across a variety of industries, including retail, restaurant, travel and entertainment, direct-to-consumer, and grocery and gas.
We believe our platforms transform purchase data into purchase intelligence, creating a disruptive opportunity to comprehensively address these challenges by enabling marketers to precisely measure how marketing drives both in-store and online sales through “closed loop-measurement.” Solutions The Cardlytics Platform Through the Cardlytics platform, marketers can deliver advertising content to customers that allows them to earn rewards, which are funded with a portion of the fees we collect from marketers.
We believe our platforms transform purchase data into purchase intelligence, creating a disruptive opportunity to comprehensively address these challenges by enabling marketers to precisely measure how marketing drives both in-store and online sales through "closed loop-measurement." Solutions The Cardlytics Platform Through the Cardlytics platform, marketers can deliver advertising content to customers that allows them to earn rewards, which are funded with a portion of the fees we collect from marketers.
Purchase Intelligence Purchase Data from our FI Partners Purchase data from our FI partners provides a secure view into where and when consumers are spending their money. The Cardlytics platform aggregates and analyzes purchase data without any personally identifiable information ("PII") leaving the FI or otherwise being made available to us.
Purchase Intelligence Purchase Data from our FI Partners Purchase data from our FI partners provides a secure view into where and when consumers are spending their money. The Cardlytics platform aggregates and analyzes purchase data without any personally identifiable information ("PII") leaving the FI partnersor otherwise being made available to us.
These customers frequently audit our practices and engage in detailed assessments of our infrastructure. 5 Table of Contents Our Ad Server and Ads Manager form the core of the Cardlytics platform. The Ad Server is responsible for targeting and presenting offers, which are developed and designed within the Ads Manager.
These customers frequently audit our practices and engage in detailed assessments of our infrastructure. 5 Our Ad Server and Ads Manager form the core of the Cardlytics platform. The Ad Server is responsible for targeting and presenting offers, which are developed and designed within the Ads Manager.
Further, advertising within FIs' digital channels requires deep technological integrations, which we believe increases the cost of switching or supporting multiple vendors and therefore increases partner loyalty to us. • Valuable Touchpoints with Customers of our FI Partners .
Further, advertising within FI Partners' digital channels requires deep technological integrations, which we believe increases the cost of switching or supporting multiple vendors and therefore increases partner loyalty to us. • Valuable Touchpoints with Customers of our FI Partners .
Additionally, the Cardlytics platform benefits customers and enhances their overall experience by showing them relevant advertisements tailored to their spending patterns and specific interests. We maintain similar platforms in both the United States ("U.S.") and United Kingdom ("U.K.").
Additionally, the Cardlytics platform benefits customers and enhances their overall experience by showing them relevant advertisements tailored to their spending patterns and specific interests. We maintain the Cardlytics platform in both the United States ("U.S.") and United Kingdom ("U.K.").
Today, our FI partners include Bank of America, National Association ("Bank of America"), JPMorgan Chase Bank, National Association (“Chase”) and Wells Fargo Bank, National Association (“Wells Fargo”), as well as many other national and regional financial institutions, financial technology companies and virtual-only banks.
Today, our FI partners include Bank of America, National Association ("Bank of America"), JPMorgan Chase Bank, National Association (“Chase”) and Wells Fargo Bank, National Association ("Wells Fargo"), as well as many other national and regional financial institutions, financial technology companies and virtual-only banks.
Third parties may in the future assert claims of infringement, misappropriation or other violations of intellectual property rights against us. They may also assert such claims against our partners, which we typically indemnify against such claims.
Third parties may in the future assert claims of infringement, misappropriation or other violations of intellectual property rights against us. They may also assert such claims against our partners, and we typically indemnify against such claims.
Patent and other intellectual property disputes are common in our industry and we have been involved in such disputes from time to time in the ordinary course of our business. Some companies, including some of our competitors, own large numbers of patents, copyrights and trademarks, which they may use to assert claims against us.
Patent and other intellectual property disputes are common in our industry and we have been involved in such disputes in the past in the ordinary course of our business. Some companies, including some of our competitors, own large numbers of patents, copyrights and trademarks, which they may use to assert claims against us.
The Ads Manager is hosted in our data centers behind our firewall and is used to create, manage and publish marketing campaigns to each FI partner's Ad Server. The Ads Manager also provides a majority of the functionality for managing configuration settings within each Ad Server and the transfer of data between Cardlytics and our partners.
Ads Manager is hosted in cloud data centers behind our firewall and is used to create, manage and publish marketing campaigns to each FI partner's Ad Server. Ads Manager also provides a majority of the functionality for managing configuration settings within each Ad Server and transferring data between Cardlytics and our FI partners.
The Bridg platform gives marketers the ability to leverage insight of their own POS transactional purchase data to better understand their customers, inform their marketing strategies and measure the impact of their marketing. 6 Table of Contents • Significant Scale with Marketers due to consumer insights and Compelling Return on Advertising Spend .
The Bridg platform gives marketers the ability to leverage insight of their own POS transactional purchase data to better understand their customers, inform their marketing strategies and measure the impact of their marketing. • Significant Scale with Marketers due to Consumer Insights and Compelling Return on Advertising Spend .
Our analytics makes our data actionable, enabling us to develop insights that marketers and partners rely on to make more informed business decisions and more meaningful customer connections.
Our analytics make our data actionable, enabling us to develop insights that marketers and partners rely on to make more informed business decisions and create more meaningful customer connections.
During 2022, the Cardlytics platform analyzed approximatel y $4.1 trillion in purchases across all categories, and geographies, both online and in-store. We have access to purchase data on the Cardlytics platform in the form of credit, debit, ACH and bill pay transactions. We provide marketers with the opportunity to leverage this unique data set to precisely reach millions of consumers.
During 2023, the Cardlytics platform analyzed approximatel y $4.7 trillion in purchases across all categories and geographies, both online and in-store. We have access to purchase data on the Cardlytics platform in the form of credit, debit, ACH and bill pay transactions. We provide marketers with the opportunity to leverage this unique data set to precisely reach millions of consumers.
Leveraging our powerful predictive analytics, we create compelling rewards that have the potential to drive deeper and more sustained use of the FI's digital channels, which we believe reduces customer attrition and increases use of the FIs’ credit and debit cards.
Leveraging our powerful predictive analytics, we create compelling rewards that have the potential to drive deeper and more sustained use of the FI's digital channels, which we believe reduces customer attrition and increases use of the FI partners’ credit and debit cards.
The data from the FI is anonymized so that it cannot be associated with any one individual. In the U.S., the Cardlytics platform ingests approximately one in every two debit and credit card transactions. This data allows us to serve relevant advertisements to our FI partners’ customers through our native bank advertising channel.
The data provided by the FI partner is anonymized so that it cannot be associated with any one individual. In the U.S., the Cardlytics platform ingests approximately one in every two debit and credit card transactions. This data allows us to serve relevant advertisements to our FI partners’ customers through our native bank advertising channel.
By assigning relevancy scores to each offer based on what customers are most likely to buy, our Cardlytics platform can present the most relevant offers earlier in customers’ mobile and online banking sessions. This increases the likelihood that customers activate, redeem, and earn more cash back on the things they care about most.
By assigning relevancy scores to each offer based on what customers are most likely to buy, our Cardlytics platform can present the most relevant offers more prominently in customers' mobile and online banking experiences. This increases the likelihood that customers activate, redeem, and earn more cash back on the things they care about most.
Each new partner increases the size of our data asset, increasing the value of the Cardlytics and Bridg platforms to both marketers and our existing partners, which we believe will drive growth. • Grow the Platform Through Integrations with Partners .
Each new partner increases the size of our data asset and addressable audience, increasing the value of the Cardlytics and Bridg platforms to both marketers and our existing partners, which we believe will drive growth. 7 • Grow the Platform Through Integrations with Partners .
The GSA and Statement of Work extends through July 31, 2025, and Bank of America may terminate the GSA and Statement of Work at any time upon 90 days’ written notice.
The GSA extends through July 31, 2025, and Bank of America may terminate the GSA at any time upon 90 days’ written notice.
As of December 31, 2022, we had eight issued patents relating to our software. We cannot assure you that our patents will give us the protection that we seek or that any such patents will not be challenged, invalidated, or circumvented. Our patents may not provide sufficiently broad protection and may not be enforceable in actions against alleged infringements.
As of December 31, 2023, we had sixteen issued patents relating to our software. We cannot assure you that our patents will give us the protection that we seek or that any such patents will not be challenged, invalidated, or circumvented. Our patents may not provide sufficiently broad protection and may not be enforceable in actions against alleged infringements.
We have registered, or are registering, the "Cardlytics," "Dosh," "Bridg" and "Entertainment" names and logos in the U.S. and certain other countries.
We have registered, or are registering, the "Cardlytics," "Dosh", "Bridg" and "Rippl" names and logos in the U.S. and certain other countries.
We also operate a customer data platform that utilizes point-of-sale ("POS") data, including product-level purchase data, to enable marketers, in a privacy-protective manner, to perform analytics and targeted loyalty marketing and also enable marketers to measure the impact of their marketing (the "Bridg 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").
Additionally, Bridg competes or may in the future compete against monoline companies that provide advertising and data solutions such as profile unification or marketing campaign management and analytics, as well as data provisioners, brokers and cooperatives that provide advertising analytics to clients.
Additionally, Bridg competes or may in the future compete against companies that provide advertising and data solutions such as profile unification or marketing campaign management and analytics, retail media networks, as well as data provisioners, brokers and cooperatives that provide advertising analytics to clients.
While we may successfully partner with a wide range of companies that are, to some extent, currently competitive to us, these companies may become more competitive to us in the future. As we introduce new solutions, as our existing solutions evolve and as other companies introduce new products and services, we are likely to face additional competition.
While we may successfully partner with a wide range of companies that are only moderately competitive to us, these companies may become more competitive to us in the future. As we introduce new solutions, as our existing solutions evolve and as other companies introduce new products and services, we are likely to face additional competition.
Bank of America may terminate the Master Agreement at any time upon 90 days’ written notice. The GSA will automatically renew for 12-month periods thereafter, unless terminated earlier in accordance with the terms of the GSA.
Chase may terminate the Master Agreement at any time upon 90 days' written notice. The Master Agreement will automatically renew for 12-month periods thereafter, unless terminated earlier in accordance with the terms of the Master Agreement.
Point-of-Sale Data from our Merchant Data Partners Using POS data from our merchant data partners and our proprietary bureau of offline identity information, the Bridg platform associates customer purchases with developed identifiers. We then build privacy-protective profiles that include product-level purchase history and hundreds of customer attributes to enable marketing and analytics.
Point-of-Sale Data from our Merchant Data Partners Using POS data from our merchant data partners and our proprietary bureau of offline identity information, the Bridg platform associates customer transactions with anonymized identifiers. We then build anonymized profiles that include product-level purchase history and hundreds of customer attributes to enable marketing and analytics.
We also partner with several of the largest bank processors and digital banking providers to help us reach customers of small and mid-sized FIs. 4 Table of Contents The Bridg Platform The Bridg platform is a customer data platform, that utilizes POS data from our merchant data partners, including product-level purchase data to enable marketers to perform analytics and targeted loyalty marketing in a privacy protected manner.
We also partner with several of the largest bank processors and digital banking providers to help us reach customers of small and mid-sized FI partners. 4 The Bridg Platform The Bridg platform is a customer data platform that utilizes POS data from our merchant data partners, including product-level purchase data to enable marketers to perform analytics and targeted loyalty marketing.
This allows marketers to utilize loyalty tactics across all of their customers and enjoy the same rich insights, targeted marketing capabilities, and closed loop measurement as digital brands. • World-Class Management Team with Unique Combination of Backgrounds and Experiences .
This allows marketers to utilize loyalty tactics across all of their customers and enjoy rich insights, targeted marketing capabilities, and closed loop measurement regardless of their digital presence. • World-Class Management Team with Unique Combination of Backgrounds and Experiences .
We also intend to grow our business with new marketers in newer industry verticals such as travel and entertainment, direct to consumer, and grocery and gas. We also intend to continue growing the footprint of the Bridg platform through both new and existing merchant data partners. • Continue to Innovate and Evolve our Platform .
We also intend to grow our business with new marketers in newer industry verticals such as travel and entertainment, direct-to-consumer, and grocery and gas. We also intend to continue growing the footprint of the Bridg platform through both new and existing merchant data partners. • Continue to Realize Synergies between the Cardlytics and Bridg Platforms.
Our team’s extensive experience across banking, technology and marketing is invaluable in our ability to forge relationships with FI partners and market and understand the technical complexities inherent in building platforms that are transforming and disrupting the marketing industry. Growth Strategies The principal components of our strategy include the following: • Grow our Business with Marketers .
Our team’s extensive experience across banking, technology and marketing is invaluable for our ability to forge relationships with FI partners and marketers and understand the technical complexities inherent in building platforms to transform and disrupt the marketing industry. Growth Strategies The principal components of our strategy include the following: • Grow our Business with Marketers .
Each industry team is led by an experienced sales manager and staffed with sales, sales support and service specialists who have deep domain knowledge and industry operating experience. We also have account managers that manage our customer relationships within each industry.
Each industry team is led by an experienced sales manager and staffed with sales, sales support and service specialists who have deep domain knowledge and industry operating experience. We also have account managers that manage our customer relationships within each industry and focus on deepening relationships with existing partners and expanding our network.
Since we are able to measure the impact marketing campaigns have on in-store and online sales, marketers can use our purchase intelligence to optimize their advertising efforts and increase their investment in the Cardlytics and Bridg platforms to enhance future campaigns.
Since we are able to measure the impact marketing campaigns have on in-store and online sales, marketers can use our purchase intelligence to optimize their advertising efforts with new or increased investment in the Cardlytics and Bridg platforms.
At the foundation of our DEI focus is our employee-led Special Interest Groups (“SIGs”). These groups facilitate learning and development, holistic wellness, professional connections, philanthropy, and raising awareness internally and externally for meaningful causes. Each group is sponsored by senior leaders in the organization. Cardlytics Connect, our newest SIG, focuses on our Black and Hispanic employees across the globe.
These groups facilitate learning and development, holistic wellness, professional connections, philanthropy, and raising awareness internally and externally for meaningful causes. Each group is sponsored by senior leaders in the organization. Cardlytics Connect, our newest SIG, focuses on our Black and Hispanic employees across the globe.
We have designed the Cardlytics platform to protect highly sensitive first-party data. Our proprietary, distributed architecture helps facilitate both the effective delivery of our solution and the protection of our FI partners customers’ PII. No PII is shared by FI partners with Cardlytics and the data is anonymized so that it cannot be associated with any one individual.
We have designed the Cardlytics platform to protect first-party data. Our proprietary, distributed architecture helps facilitate both the effective delivery of our solution and the protection of our FI partners' customers' PII. No PII is shared by FI partners with Cardlytics and the data received from FI partners is anonymized and cannot be associated with any known individual.
We generally pay our partners on the Cardlytics platform a Partner Share, which is a negotiated and fixed percentage of our billings to marketers less any Consumer Incentives that we pay to the partners’ customers and certain third-party data.
We generally pay our partners on the Cardlytics platform a Partner Share, which is a negotiated and fixed percentage of our billings to marketers less any Consumer Incentives that we pay to the partners' customers and certain third-party data providers. Our agreements with our FI partners generally include an automatic renewal feature.
Bridg Platform The Bridg platform was designed to comply with privacy laws and regulations throughout the U.S. The Bridg platform also has built-in privacy protections to ensure that data provided by clients is never sold or shared without their consent, and personal information relating to newly identified consumers is never shared with the clients.
The Bridg platform also has built-in privacy protections to ensure that data provided by clients is never sold or shared without their consent, and personal data relating to newly identified consumers is never shared with the clients.
At the same time, marketers gain more opportunities to get valuable content in front of the right audience. Privacy and Security Cardlytics Platform We have architected privacy and security into our systems and practices.
At the same time, marketers gain more opportunities to get valuable content in front of the right audience. Privacy and Security Cardlytics Platform We take privacy and security into account in the development and implementation of our systems and services.
Under the Master Agreement, we share billings that we generate from the sale of advertising within the Chase channel with Chase, subject to certain exceptions. The amounts that we pay to Chase in excess of Consumer Incentives are reflected as Partner Share.
Under the Master Agreement, we share billings that we generate from the sale of advertising within the Chase channel with Chase, subject to certain exceptions. The amounts that we pay to Chase in excess of Consumer Incentives are reflected as Partner Share. The specific billing share percentage that we pay is based on marketer- and transaction-specific factors.
We intend to continue to partner with other media platforms, marketing technology providers, merchant data providers and agencies that can utilize our platforms to serve a broad array of customers.
We intend to continue to partner with other media platforms, marketing technology providers, merchant data providers and agencies that can utilize our platforms to serve a broad array of customers. We intend to focus on continued technological integration of our platforms with those of other complementary market participants.
The Cardlytics ID is then used to assign offers, measure redemptions, and in limited cases, validate certain online purchases via anonymously linking to a consumer’s digital media presence. The Ad Server also receives engagement data, such as impressions and activations related to each Cardlytics ID.
The unique consumer ID is then used to assign offers, measure redemptions, and in limited cases, validate certain online purchases. The Ad Server also receives engagement data, such as impressions and activations, related to each unique consumer ID.
Advanced Analytics Capabilities The advanced analytics we apply to our unique purchase datasets are what transforms them into valuable purchase intelligence. We use sophisticated quantitative methods to quickly access our massive volumes of data and make sense of what has happened—and, importantly, what is likely to happen.
Advanced Analytics Capabilities The advanced analytics we apply to our unique purchase datasets are what transform them into valuable purchase intelligence. We use sophisticated quantitative methods to quickly access our massive volumes of data and make sense of past customer spend—and, importantly, predict future customer spend.
As of December 31, 2022, approximately 42% of our global workforce is made up of women and 42% people of color. A key component to our sustainability and success is talent development and learning. We are intentional in our efforts to provide all employees opportunities to grow.
As of December 31, 2023, our global workforce is made up of approximately 41% women and 44% people of color. A key component to our sustainability and success is talent development and learning. We are intentional in our efforts to provide all employees opportunities to grow, including manager development programming, which over 50 managers completed since the launch in 2022.
Our telephone number is (888) 798-5802. Our website address is www.cardlytics.com. Our common stock is listed on the Nasdaq Global Market under the symbol “CDLX.” “Cardlytics,” the Cardlytics logo and other trademarks or service marks of Cardlytics, Inc. appearing in this Annual Report on Form 10-K are the property of Cardlytics, Inc.
Our common stock is listed on the Nasdaq Global Market under the symbol "CDLX." "Cardlytics," the Cardlytics logo and other trademarks or service marks of Cardlytics, Inc. or its subsidiaries appearing in this Annual Report on Form 10-K are the property of Cardlytics, Inc.
Under the GSA, we share the revenue that we generate from the sale of advertising within the Bank of America channel with Bank of America, subject to certain exceptions. The amounts that we pay to Bank of America in excess of Consumer Incentives are reflected as Partner Share.
Under the GSA, we share the revenue that we generate from the sale of advertising within the Bank of America channel with Bank of America, subject to certain exceptions.
We believe integrating the Cardlytics and Bridg platforms has the potential to enable more effective media measurement (power promotional effectiveness across in-store and online channels), price and promotion optimization, more optimal partner relationships and further international expansion. • Drive Growth through Existing FI Partners .
We believe that further integrating the Cardlytics and Bridg platforms has the potential to enable more effective media measurement, price and promotion optimization, more optimal partner relationships and further international expansion. • Drive Growth through Existing FI Partners . We intend to increase customer adoption by improving the effectiveness of our FI partners’ digital channels.
Our ability to connect and support multiple banks as a single vendor provides network scale that would otherwise be impossible for a single bank to achieve.
We are generally the primary provider of native bank channel digital advertising to our FI partners. Our ability to connect and support multiple banks as a single vendor provides network scale that would otherwise be impossible for a single bank to achieve.
The acquisition of Bridg allows for synergies with the current Cardlytics platform by creating more relevant offers, and more targeted segments, that can drive higher redemptions, increase consumer engagement, and generate greater advertiser demand.
The power of Bridg allows for synergies with the current Cardlytics platform by creating more relevant offers, and more targeted segments, that can drive higher redemptions, increase consumer engagement, and generate greater advertiser demand. The SKU-level data allows us to bring receipt-level offers to our advertisers, enabling us to tailor promotions based on specific items and quantities.
None of our employees are covered by collective bargaining agreements. We believe our employee relations are good and we have not experienced any work stoppages. Human Capital Resources and Management Our company's mission is to make commerce smarter and rewarding for everyone, and we know this starts with investing in each of our employees.
Human Capital Resources and Management Our company's mission is to make commerce smarter and rewarding for everyone, and we know this starts with investing in each of our employees.
Employee equity is the cornerstone in our compensation philosophy along with comprehensive medical benefits, a positive work/life ratio, unlimited paid time off, health and wellness programs, and learning and development opportunities. Each year, with the help of outside experts, we evaluate each aspect of compensation and benefits to ensure they are in alignment with the market and our peers.
We encourage our employees to think and act like shareholders, and they are invested in our success. Employee equity is the cornerstone in our compensation philosophy along with comprehensive medical benefits, a positive work/life ratio, flexible paid time off, health and wellness programs, and learning and development opportunities.
Our partner-focused account management team is focused on deepening relationships with existing partners and expanding our network. We have dedicated sales teams responsible for establishing relationships with marketers and their agencies. Our sales teams are organized by industry, which include retail, restaurant, travel and entertainment, direct-to-consumer, grocery and gas.
Our marketing efforts are focused on increasing brand awareness for Cardlytics and Bridg through partnerships, public relations, industry events and publications. We have dedicated sales teams responsible for establishing relationships with marketers and their agencies. Our sales teams are organized by industry, which include retail, restaurant, travel and entertainment, direct-to-consumer, grocery and gas.
We intend to increase customer adoption by improving the effectiveness of our FI partners’ digital channels. We continually work with our FI partners to improve their customers’ user experience, increase customer awareness and leverage additional customer outreach channels like email and alerts.
We continually work with our FI partners to improve their customers’ user experience, increase customer awareness and leverage additional customer outreach channels like email and alerts. We believe this organic increase in our monthly active users will drive growth. • Expand the Network of Partners .
Under the Master Agreement, we provide Chase with access to the Cardlytics platform through November 2025. Chase may terminate the Master Agreement at any time upon 90 days’ written notice. The Master Agreement will automatically renew for 12-month periods thereafter, unless terminated earlier in accordance with the terms of the Master Agreement.
Bank of America has the right to approve all offers to be presented to Bank of America customers on the Cardlytics platform. Bank of America may terminate the GSA at any time upon 90 days’ written notice. The GSA will automatically renew for 12-month periods thereafter, unless terminated earlier in accordance with the terms of the GSA.
Our privacy and security standards have also been designed and implemented to meet the requirements of, and safeguard the reputations of, our partners and marketers, many of which are large, multinational corporations.
We only target marketing against anonymized data and/or data that has undergone processing such that it is only linked to anonymized identifiers. Our privacy and security standards have also been designed to meet the requirements of, and safeguard the reputations of, our partners and marketers, many of which are large, multinational corporations.
This mindset starts at the top, a significant part of our company goal of creating a “Great place where great people want to be.” DEI is embedded in each aspect of the talent lifecycle: attraction, recruitment, onboarding, development and retention. We build external relationships to ensure our talent pipelines are filled with candidates of diverse backgrounds.
A significant part of our company’s goal of creating a culture that promotes DEIB is embedded in each aspect of the talent lifecycle: attraction, recruitment, onboarding, development and retention. We build external relationships to ensure our talent pipelines are filled with candidates of diverse backgrounds. At the foundation of our DEIB focus is our employee-led Special Interest Groups ("SIGs").
The Ad Server interfaces with our FI partners' systems to receive anonymized purchase data, assign a unique consumer ID to each FI partners' customer, which we call a Cardlytics ID, and aggregate this purchase data.
Each FI partner's Ad Server is either hosted at the FI partner's data center behind the FI partner's firewall or hosted by us on behalf of the FI partner. The Ad Server interfaces with our FI partners' systems to receive anonymized purchase data, assign a unique consumer ID to each FI partners' customer, and aggregate this purchase data.
Competition The market for utilizing purchase intelligence to power marketing decisions is still emerging, and we believe we are one of the only companies that can provide purchase intelligence with the scale and the level of granularity that is equivalent to ours.
Our FI partner sales team helps drive adoption of our solution offerings and partners with FIs to develop curated content and enhancements to the user experience for FI partners’ customers to drive increased engagement with the Cardlytics Platform. 8 Competition The market for utilizing purchase intelligence to power marketing decisions is still emerging, and we believe we are one of the only companies that can provide purchase intelligence with the scale and the level of granularity that is equivalent to ours.
Headquartered in Atlanta, GA with additional offices in New York, NY; Palo Alto, CA; Los Angeles, CA; Austin, TX, Detroit, MI; Champaign, IL and London, U.K, our employees are a big part of what drives our exceptional desire to win and help our advertisers and partners win. Diversity, Equity, and Inclusion (“DEI”) is integrated in everything we do.
Headquartered in Atlanta, GA with additional offices in New York, NY; Menlo Park, CA; Los Angeles, CA; Champaign, IL and London, U.K, our employees are an essential part of all of our successes. Diversity, Equity, Inclusion, and Belonging ("DEIB") is integrated in everything we do.
As a purpose-driven company, we are focused on creating undeniable impact for partners while delivering real value to people, and our values reflect what drives our success. Our people and culture are our most valuable assets and greatest differentiators.
Each year, with the help of outside experts, we evaluate each aspect of compensation and benefits to ensure they are in alignment with the market and our peers. As a purpose-driven company, we are focused on creating undeniable impact for partners while delivering real value to people, and our values reflect what drives our success.
Many marketers tend to devote a significant portion of their marketing budgets to the fourth quarter of the calendar year to coincide with consumer holiday spending and reduce their marketing budgets in the first quarter of the calendar year. 10 Table of Contents Employees As of December 31, 2022, we had 501 full-time employees, including 63 in delivery, 200 in sales and marketing, 148 in research and development and 90 in general and administrative.
Many marketers tend to devote a significant portion of their marketing budgets to the fourth quarter of the calendar year to coincide with consumer holiday spending and reduce their marketing budgets in the first quarter of the calendar year.
We take initiative, are hungry to win, value transparency, and make it a priority to create a place where people want to be. Corporate Information Cardlytics, Inc. was initially incorporated under the laws of the State of Delaware in June 2008. Our principal executive offices are located at 675 Ponce de Leon Avenue NE, Suite 6000, Atlanta, Georgia 30308.
Corporate Information Cardlytics, Inc. was initially incorporated under the laws of the State of Delaware in June 2008. Our principal executive offices are located at 675 Ponce de Leon Avenue NE, Suite 4100, Atlanta, Georgia 30308. Our telephone number is (888) 798-5802. Our website address is www.cardlytics.com.
We believe this organic increase in our monthly active users will drive growth. • Expand the Network of Partners . We will continue to focus on growing our network of partners by integrating directly with FI partners, non-bank partners, merchant data partners and by opportunistically reselling our solution through financial processors and payment networks.
We will continue to focus on growing our network of partners by integrating with new FI partners, non-bank partners, and merchant data partners.
Sales and Marketing Our sales teams are focused on growing our share of advertising budgets from existing marketers and attracting new brands, merchants and service providers both directly and through advertising agencies. Our marketing efforts are focused on increasing brand awareness for Cardlytics and Bridg through partnerships, public relations, industry events and publications.
In June 2023, we entered into an amendment that increased the portion of advertiser billings that is retained by the Company. Sales and Marketing Our sales teams are focused on growing our share of advertising budgets from existing marketers and attracting new brands, merchants and service providers, both directly and through advertising agencies.
Further, as we seek to deploy the Bridg platform outside the U.S., we will utilize appropriate practices to ensure compliance with General Data Protection Regulation (“GDPR”) and other like data protection regimes. Competitive Strengths We have the ability to reach and influence real buyers at scale and measure the true impact of our campaigns on in-store and online sales.
Competitive Strengths We have the ability to reach and influence real buyers at scale and measure the true impact of our campaigns on in-store and online sales. We believe that the following strengths provide us with competitive advantages: • Significant Scale with FI Partners and Deeply Embedded Solution .
Sensitive data is subject to encryption, anonymization, or de-identification depending on the use case and risk profile. We enhance network security through measures such as network segmentation, firewalls and network and host-based intrusion detection at critical network aggregation and ingress/egress points. A cornerstone of our practices is transparency in data use and consumer choice.
We enhance our network security through measures such as network segmentation, firewalls and network and host-based intrusion detection at critical network aggregation and ingress/egress points. Bridg Platform The Bridg platform was designed to comply with applicable privacy laws and regulations.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn the U.S., the rules and regulations to which we, directly or contractually through our partners, or our marketers may be subject include those promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Health Insurance Portability and Accountability Act, the Gramm-Leach-Bliley Act and state cybersecurity, privacy and breach notification laws, as well as regulator enforcement positions and expectations reflected in federal and state regulatory actions, settlements, consent decrees and guidance documents.
Biggest changeWe, our FI partners, our marketers and other third parties whom we rely upon are subject to a number of data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy policies, contractual requirements, and other obligations relating to data privacy and security as well as laws and regulations regarding online services and the Internet generally. 29 In the U.S., the rules and regulations to which we, directly or contractually through our partners, or our marketers may be subject, include but are not limited to those promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Health Insurance Portability and Accountability Act, the Gramm-Leach-Bliley Act and state cybersecurity, privacy and breach notification laws, as well as regulator enforcement positions and expectations reflected in federal and state regulatory actions, settlements, consent decrees and guidance documents.
If an FI partner terminates its agreement with us, we would lose that FI as a source of purchase data and online banking customers.
If an FI partner terminates its agreement with us, we would lose that FI partner as a source of purchase data and online banking customers.
To the extent that our partners de-emphasize incentive programs, make incentive programs difficult to locate on their website and/or mobile applications and/or fail to provide a user interface that is appealing to partners' customers, partners' customers may be less likely to engage with the incentive programs, which could negatively impact the amount of fees that we are able to charge our marketer customers in connection with marketing campaigns, and, therefore, our revenue.
To the extent that our partners de-emphasize incentive programs, make incentive programs difficult to locate on their website or mobile applications or fail to provide a user interface that is appealing to partners' customers, partners' customers may be less likely to engage with the incentive programs, which could negatively impact the amount of fees that we are able to charge our marketer customers in connection with marketing campaigns, and, therefore, our revenue.
Larger marketers may themselves have a substantial amount of purchase data and they may also seek to augment their own purchase data with additional purchase, impression and/or demographic data acquired from third-party data providers, which may allow them to develop, individually or with partners, internal targeting and measurement capabilities.
Larger marketers may themselves have a substantial amount of purchase data and they may also seek to augment their own purchase data with additional purchase, impression or demographic data acquired from third-party data providers, which may allow them to develop, individually or with partners, internal targeting and measurement capabilities.
If we are unable to adapt our solutions to evolving trends in the marketing industry, if we are unable to properly identify and prioritize appropriate solution development projects or if we fail to develop and effectively market new solutions or enhance existing solutions to address the needs of existing and new marketers and partners, we may not be able to achieve or maintain adequate market acceptance and penetration of our solutions, and our solutions may become less competitive or obsolete.
If we are unable to adapt our solutions to evolving trends in the marketing industry, if we are unable to properly identify and prioritize appropriate solution development projects or if we fail to develop and effectively market new solutions or enhance existing solutions to address the needs of existing and new marketers and partners, we may not be able to achieve or maintain adequate market acceptance and penetration of our solutions, or our solutions may become less competitive or obsolete.
Our operating results depend in part on expanding our FI network to maintain and enhance the scale of our solutions. The length of time that it takes to add an FI partner to our network, from initial evaluation to integration into our network, varies substantially from FI to FI and may take several years.
Our operating results depend in part on expanding our FI partner network to maintain and enhance the scale of our solutions. The length of time that it takes to add an FI partner to our network, from initial evaluation to integration into our network, varies substantially from FI to FI and may take several years.
Bringing new FI partners into our network may impede our ability to accurately predict how certain marketing campaigns will perform, and thus may impede our ability to accurately forecast the performance of our network.
Bringing new FI partners into our network may impede our ability to accurately forecast the performance of our network. Bringing new FI partners into our network may impede our ability to accurately predict how certain marketing campaigns will perform, and thus may impede our ability to accurately forecast the performance of our network.
In September 2020, we issued convertible senior notes with an aggregate principal amount of $230.0 million bearing an interest rate of 1.00% due in 2025 (the "Notes"). The interest rate is fixed at 1.00% per annum and is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021.
In September 2020, we issued convertible senior notes with an aggregate principal amount of $230.0 million bearing an interest rate of 1.00% due on September 15, 2025 (the "Notes"). The interest rate is fixed at 1.00% per annum and is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021.
From time to time, legal action by us may be necessary to enforce our patents and other intellectual property rights, to protect our trade secrets, to determine the validity and scope of the intellectual property rights of others or to defend against claims of infringement or invalidity.
From time to time, legal action by us may be necessary to enforce our patents and other intellectual property rights, protect our trade secrets, determine the validity and scope of the intellectual property rights of others or defend against claims of infringement or invalidity.
An adverse outcome of a dispute may require us to: • pay substantial damages, including treble damages, if we are found to have willfully infringed a third-party’s patents or copyrights; • cease developing or selling solutions that rely on technology that is alleged to infringe or misappropriate the intellectual property of others; • expend additional development resources to attempt to redesign our solutions or otherwise develop non-infringing technology, which may not be successful; • enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights; and • indemnify our partners and other third parties.
An adverse outcome of a dispute may require us to: • pay substantial damages, including treble damages, if we are found to have willfully infringed a third party's patents or copyrights; • cease developing or selling solutions that rely on technology that is alleged to infringe or misappropriate the intellectual property of others; 32 • expend additional development resources to attempt to redesign our solutions or otherwise develop non-infringing technology, which may not be successful; • enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights; and • indemnify our partners and other third parties.
The recent growth in our business has placed, and is expected to continue to place, a significant strain on our managerial, administrative, operational and financial resources, as well as our infrastructure. We rely heavily on information technology ("IT") systems to manage critical functions such as data storage, data processing, matching and retrieval, revenue recognition, budgeting, forecasting and financial reporting.
The growth in our business has placed, and is expected to continue to place, a significant strain on our managerial, administrative, operational and financial resources, as well as our infrastructure. We rely heavily on information technology ("IT") systems to manage critical functions such as data storage, data processing, matching and retrieval, revenue recognition, budgeting, forecasting and financial reporting.
Acquisitions involve many risks, including the following: • an acquisition may negatively affect our business, financial condition, operating results or cash flows because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; • we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us; • an acquisition, whether or not consummated, may disrupt our ongoing business, divert resources, increase our expenses and distract our management; • an acquisition may result in a delay or reduction of purchases for both us and the company that we acquired due to uncertainty about continuity and effectiveness of solution from either company; • we may encounter difficulties in, or may be unable to, successfully sell any acquired products or solutions; • an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; • challenges inherent in effectively managing an increased number of employees in diverse locations; • the potential strain on our financial and managerial controls and reporting systems and procedures; • potential known and unknown liabilities associated with an acquired company; • our use of cash to pay for acquisitions would limit other potential uses for our cash; 26 Table of Contents • if we incur debt to fund such acquisitions, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; • the risk of impairment charges related to potential write-downs of acquired assets or goodwill in future acquisitions; and • to the extent that we issue a significant amount of equity or convertible debt securities in connection with future acquisitions, existing stockholders may be diluted and earnings (loss) per share may decrease (increase).
Acquisitions involve many risks, including the following: • an acquisition may negatively affect our business, financial condition, operating results or cash flows because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and disputes by third parties, including intellectual property claims and disputes, or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition; • we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us; • an acquisition, whether or not consummated, may disrupt our ongoing business, divert resources, increase our expenses and distract our management; • an acquisition may result in a delay or reduction of purchases for both us and the company that we acquired due to uncertainty about continuity and effectiveness of solution from either company; • we may encounter difficulties in, or may be unable to, successfully sell any acquired products or solutions; • an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions; • challenges inherent in effectively managing an increased number of employees in diverse locations; • potential strain on our financial and managerial controls and reporting systems and procedures; • potential known and unknown liabilities associated with an acquired company; • our use of cash to pay for acquisitions would limit other potential uses for our cash; 25 • if we incur debt to fund such acquisitions, such debt may subject us to material restrictions on our ability to conduct our business as well as financial maintenance covenants; • the risk of impairment charges related to potential write-downs of acquired assets or goodwill in future acquisitions; and • to the extent that we issue a significant amount of equity or convertible debt securities in connection with future acquisitions, existing stockholders may be diluted and earnings (loss) per share may decrease (increase).
An example of the type of international regulation to which we may be subject is the U.K.’s Privacy and Electronic Communications Regulations 2011 (“PECR”), which implements the requirements of Directive 2009/136/EC (which amended Directive 2002/58/EC), which is known as the ePrivacy Directive. The PECR regulates various types of electronic direct marketing that use cookies and similar technologies.
An example of the type of international regulation to which we may be subject is the U.K.’s Privacy and Electronic Communications Regulations 2011 ("PECR"), which implements the requirements of Directive 2009/136/EC (which amended Directive 2002/58/EC), which is known as the ePrivacy Directive. The PECR regulates various types of electronic direct marketing that use cookies and similar technologies.
Most marketers do business with us by placing insertion orders for particular marketing campaigns, either directly or through marketing agencies that act on their behalf. We often do not have any commitment from a marketer beyond the campaign governed by a particular insertion order, and we frequently must compete to win further business from a marketer.
Most marketers do business with us by placing insertion orders for particular marketing campaigns, either directly or through marketing agencies that act on their behalf. We often do not have any commitment from a marketer beyond the campaigns governed by a particular insertion order, and we frequently must compete to win further business from a marketer.
Our operating results could suffer due to: • lack of continued participation by FI partners in our network or our failure to attract new FI partners; • any decline in demand for the Cardlytics platform by marketers or their agencies; • failure by our FI partners to increase engagement with our solutions within their customer bases, improve their customers’ user experience, increase customer awareness, leverage additional customer outreach channels like email or otherwise promote our incentive programs on their websites and mobile applications, including by making the programs difficult to access or otherwise diminishing their prominence; • our failure to offer compelling incentives to our FI partners’ customers; 13 Table of Contents • FI partners may elect to use their Partner Share to fund their Consumer Incentives; • the introduction by competitors of products and technologies that serve as a replacement or substitute for, or represent an improvement over, the Cardlytics platform, or an FI partner’s decision to implement any existing or future product or technology of a competitor alongside, or in lieu, of the Cardlytics platform; • FI partners developing, or acquiring, their own technology to support purchase intelligence marketing or other incentive programs; • technological innovations or new standards that the Cardlytics platform does not address; and • sensitivity to current or future prices offered by us or competing solutions.
Our operating results could suffer due to: • lack of continued participation by FI partners in our network or our failure to attract new FI partners; • any decline in demand for the Cardlytics platform by marketers or their agencies; • failure by our FI partners to increase engagement with our solutions within their customer bases, adopt our new technology and products, improve their customers’ user experience, increase customer awareness, leverage additional customer outreach channels like email or otherwise promote our incentive programs on their websites and mobile applications, including by making the programs difficult to access or otherwise diminishing their prominence; • our failure to offer compelling incentives to our FI partners' customers; • FI partners may elect to use their Partner Share to fund their Consumer Incentives; 13 • the introduction by competitors of products and technologies that serve as a replacement or substitute for, or represent an improvement over, the Cardlytics platform, or an FI partner’s decision to implement any existing or future product or technology of a competitor alongside, or in lieu, of the Cardlytics platform; • FI partners developing, or acquiring, their own technology to support purchase intelligence marketing or other incentive programs; • technological innovations or new standards that the Cardlytics platform does not address; and • sensitivity to current or future prices offered by us or competing solutions.
The CCPA gives California residents expanded rights to request access to and deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA also increases the privacy and security obligations on entities handling personal information, which is broadly defined under the law.
The CCPA gives California residents expanded rights to request access to and deletion of their personal data, opt out of certain personal data sharing, and receive detailed information about how their personal data is used. The CCPA also increases the data privacy and security obligations on entities handling personal data, which is broadly defined under the law.
Changes in export or import laws or corresponding sanctions, may delay the introduction and sale of our products in international markets, or, in some cases, prevent the export or import of our products to certain countries, regions, governments, persons or entities altogether, which could adversely affect our business, financial condition and results of operations.
Changes in export or import laws or corresponding sanctions may delay the introduction and sale of our products in international markets, or, in some cases, prevent the export or import of our products to certain countries, regions, governments, persons or entities altogether, which could adversely affect our business, financial condition and 33 results of operations.
Such inaccurate predictions could result in marketing campaigns underperforming, which impacts the total fees we can collect from marketers, or over performing, which may result is us paying certain Consumer Incentives to consumers without adequate compensation from the marketers.
Such inaccurate predictions could result in marketing campaigns underperforming, which impacts the total fees we can collect from marketers, or over performing, which may result in us paying certain Consumer Incentives to consumers without adequate compensation from the marketers.
Fluctuations in the exchange rates between the U.S. dollar, British pound and Canadian dollar could result in the dollar equivalent of such revenue and expenses being lower, which could have a negative net impact on our reported operating results.
Fluctuations in the exchange rates between the U.S. dollar and British pound could result in the dollar equivalent of such revenue and expenses being lower, which could have a negative net impact on our reported operating results.
Our stock price could also be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and stockholder activism. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Our stock price could also be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and stockholder activism. 36 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Our ability to collect and use data may be restricted or prevented by a number of other factors, including: • the failure of our network or software systems, or the network or software systems of our partners; • decisions by our partners to restrict our ability to collect data from them (which decision they may make at their discretion) or to refuse to implement the mechanisms that we request to ensure compliance with our legal obligations or technical requirements; • decisions by our partners to limit our ability to use their purchase data outside of the applicable banking channel; • decisions by our partners’ customers to opt out of the incentive program or to use technology, such as browser settings, that reduces our ability to deliver relevant advertisements; • interruptions, failures or defects in our or our partners’ data collection, mining, analysis and storage systems; • changes in regulations impacting the collection and use of data; • changes in browser or device functionality and settings, and other new technologies, which impact our partners’ ability to collect and/or share data about their customers; and • changes in international laws, rules, regulations and industry standards or increased enforcement of international laws, rules, regulations, and industry standards.
Our ability to collect and use data may be restricted or prevented by a number of other factors, including: • the failure of our network or software systems, or the network or software systems of our partners; • decisions by our partners to restrict our ability to collect data from them (which decision they may be able to make at their discretion) or to refuse to implement the mechanisms that we request to ensure compliance with our technical requirements or legal obligations; • decisions by our partners to limit our ability to use their purchase data outside of the applicable banking channel; • decisions by our partners' customers to opt out of the incentive program or to use technology that reduces our ability to deliver relevant advertisements; • interruptions, failures or defects in our or our partners' data collection, mining, analysis and storage systems; • changes in regulations impacting the collection and use of data; • changes in browser or device functionality and settings, and other new technologies, which impact our partners’ ability to collect and/or share data about their customers; and • changes in international laws, rules, regulations and industry standards or increased enforcement of international laws, rules, regulations, and industry standards.
Under accounting principles, we have allocated the total purchase price of Dosh’s, Bridg’s and Entertainment's net tangible assets and intangible assets based on their fair values as of the date of the acquisitions, and we have recorded the excess of the purchase price over those fair values as goodwill.
Under accounting principles, we have allocated the total purchase price of Dosh's and Bridg's net tangible assets and intangible assets based on their fair values as of the date of the acquisitions, and we have recorded the excess of the purchase price over those fair values as goodwill.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue preferred stock without further stockholder action and with voting liquidation, dividend and other rights superior to our common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent, and limit the ability of our stockholders to call special meetings; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for director nominees; • establish that our board of directors is divided into three classes, with directors in each class serving three-year staggered terms; 36 Table of Contents • require the approval of holders of two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and restated bylaws or amend or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors and the ability of stockholders to take action by written consent or call a special meeting; • prohibit cumulative voting in the election of directors; and • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: 34 • authorize our board of directors to issue preferred stock without further stockholder action and with voting liquidation, dividend and other rights superior to our common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent, and limit the ability of our stockholders to call special meetings; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for director nominees; • establish that our board of directors is divided into three classes, with directors in each class serving three-year staggered terms; • require the approval of holders of two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and restated bylaws or amend or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors and the ability of stockholders to take action by written consent or call a special meeting; • prohibit cumulative voting in the election of directors; and • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum.
Current or future criminal capabilities, discovery of existing or new vulnerabilities in our systems and attempts to exploit those vulnerabilities or other developments may compromise or breach the technology protecting our systems.
Current or future criminal capabilities, discovery of existing or new vulnerabilities in our systems and attempts to exploit those vulnerabilities or other developments may compromise the technology protecting our systems.
As a result of such relationships and acquisitions, our current or potential competitors might be able to adapt more quickly to new technologies and customer needs, devote greater resources to the promotion or sale of their products and services, initiate or withstand substantial price competition, take advantage of other opportunities more readily or develop and expand their product and service offerings more quickly than we do.
As a result of such relationships and acquisitions, our current or potential competitors might be able to adapt more quickly to new technologies and customer needs, devote greater resources to the promotion or sale of their products and services, initiate or withstand substantial price competition, take advantage of other opportunities more readily or develop and expand their product and service offerings more quickly than we can.
Any success that we may experience in the future will depend in large part on our ability to, among other things: • maintain and expand our network of partners; • build and maintain long-term relationships with marketers and their agencies; • develop and offer competitive solutions that meet the evolving needs of marketers; • expand our relationships with partners to enable us to use their purchase data for new solutions; • improve the performance and capabilities of our solutions; • successfully expand our business; • successfully compete with other companies that are currently in, or may in the future enter, the markets for our solutions; • increase market awareness of our solutions and enhance our brand; • manage increased operating expenses as we continue to invest in our infrastructure to scale our business; and • attract, hire, train, integrate and retain qualified and motivated employees. 19 Table of Contents Any failure of our partners to effectively deliver and promote the online incentive programs that comprise the Cardlytics platform could materially and adversely affect our business.
Any success that we may experience in the future will depend in large part on our ability to, among other things: • maintain and expand our network of partners; • build and maintain long-term relationships with marketers and their agencies; • develop and offer competitive solutions that meet the evolving needs of marketers; • expand our relationships with partners to enable us to use their purchase data for new solutions; • improve the performance and capabilities of our solutions; • successfully expand our business; • successfully compete with other companies that are currently in, or may in the future enter, the markets for our solutions; • increase market awareness of our solutions and enhance our brand; • manage increased operating expenses as we continue to invest in our infrastructure to scale our business; and • attract, hire, train, integrate and retain qualified and motivated employees. 18 Any failure of our partners to effectively deliver and promote the online incentive programs that comprise the Cardlytics platform could materially and adversely affect our business.
The loss of Bank of America, Chase, Wells Fargo or any other significant FI partner would significantly harm our business, results of operations and financial conditions. 14 Table of Contents We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which would cause our stock price to decline.
The loss of Chase, Bank of America, Wells Fargo or any other significant FI partner would significantly harm our business, results of operations and financial conditions. 14 We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which would cause our stock price to decline.
If we are unable to maintain consistent revenue, revenue growth or billings growth, our stock price could be volatile, and it may be difficult for us to achieve and maintain profitability. We are dependent upon the Cardlytics platform. The majority of our revenue and billings during 2021 and 2022 were derived from sales of advertising via the Cardlytics platform.
If we are unable to maintain consistent revenue, revenue growth or billings growth, our stock price could be volatile, and it may be difficult for us to achieve and maintain profitability. We are dependent upon the Cardlytics platform. The majority of our revenue and billings during 2023 and 2022 were derived from sales of advertising via the Cardlytics platform.
Preparing for and complying with these obligations requires us to devote significant resources, which may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf. In addition, these obligations may require us to change or business model.
Preparing for and complying with these obligations requires us to devote significant resources, which may necessitate changes to our services, information technologies, systems, and practices and to the services, information, technologies, systems and practices of any third parties that process personal data on our behalf. In addition, these obligations may require us to change or business model.
As of December 31, 2021 and 2022, our top five marketers accounted for 19% and 18% of our accounts receivable, respectively, with no individual marketer representing over 10% as of the end of each period, respectively. We do not have material long-term commitments from most of these marketers.
As of December 31, 2023 and 2022, our top five marketers accounted for 19% and 18% of our accounts receivable, respectively, with no individual marketer representing over 10% as of the end of each period. We do not have material long-term commitments from most of these marketers.
The Dosh application enables consumers to accumulate non-monetary rewards (“Dosh Rewards”) within the application, which may be converted to U.S. dollars only when certain requirements are met. Dosh Rewards have no cash value but users are able to receive U.S. dollar payouts from Dosh based on Dosh Rewards provided that certain requirements are met.
The Dosh application enables consumers to accumulate non-monetary rewards ("Dosh Rewards") within the application, which may be converted to U.S. dollars only when certain requirements are met. Dosh Rewards have no cash value but users are able to receive U.S. dollar payouts from Dosh based on Dosh Rewards provided that certain requirements are met.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any "interested" stockholder for a period of three years following the date on which the stockholder became an "interested" stockholder.
No other partner accounted for over 10% of Partner Share during these periods. Our agreements with a substantial majority of our FI partners have three- to seven-year terms but are generally terminable by the FI partner on 90 days or less prior notice.
No other partner accounted for over 10% of Partner Share during these periods. Our agreements with a substantial majority of our FI partners have three- to seven-year terms but are generally terminable by the FI partner on 90 days or more prior notice.
Replacements for any of these third-party identifiers may not fit the needs of certain marketers or be available in a timely manner or under economically beneficial terms, or at all. Defects, errors or delays in our solutions could harm our reputation, which would harm our operating results.
Replacements for any of these third-party identifiers may not fit the needs of certain marketers or be available in a timely manner or under economically beneficial terms. Defects, errors or delays in our solutions could harm our reputation, which would harm our operating results.
In addition, under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended (the "Code"), if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited.
In addition, under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended (the "Code"), if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carry-forwards and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited.
The technology underlying our solutions may contain material defects or errors that can adversely affect our ability to operate our business and cause significant harm to our reputation. This risk is compounded by the complexity of the technology underlying our solutions and the large amounts of data that we leverage and process.
The technology underlying our solutions may contain material defects or errors that could adversely affect our ability to operate our business and cause significant harm to our reputation. This risk is compounded by the complexity of the technology underlying our solutions and the large amounts of data that we leverage and process.
Congress that contain provisions that would regulate how companies can use cookies and other tracking technologies to collect and utilize user information. Additionally, new legislation proposed or enacted in various other states will continue to shape the data privacy environment nationally.
Congress that contain provisions that would regulate how companies can use various tracking technologies to collect and utilize user information. Additionally, new legislation proposed or enacted in various states will continue to shape the data privacy environment nationally.
Further, we could be forced to expend significant financial and operational resources to protect against or in response to a security incident, including repairing system damage, increasing cybersecurity protection costs by deploying additional personnel and protection technologies, dealing with regulatory scrutiny, and litigating and resolving legal claims, all of which could divert resources and the attention of our management and key personnel away from our business operations.
Further, we could expend significant financial and operational resources to protect against or in response to a security incident, including repairing system damage, increasing cybersecurity protection costs by deploying additional personnel and protection 16 technologies, dealing with regulatory scrutiny, and litigating and resolving legal claims, all of which could divert resources and the attention of our management and key personnel away from our business operations.
If we are unable to attract, integrate and retain suitably qualified individuals who are capable of meeting our growing technical, operational and managerial requirements, on a timely basis or at all, our business will be adversely affected.
If we are unable to attract, integrate and retain suitably qualified individuals who are capable of meeting our growing technical, operational and managerial requirements, on a timely basis or at all, our business may be adversely affected.
We have spent the last several years and significant resources building out technology integrations with our partners to facilitate the delivery of incentive programs to our partners’ customers and measuring those customers subsequent in-store or digital spending.
We have spent the last several years and significant resources building out technology integrations with our partners to facilitate the delivery of incentive programs to our partners' customers and measure those customers subsequent in-store or digital spending.
Furthermore, if we make downward revisions of any publicly announced guidance, or if our publicly announced guidance of future operating results fails to meet expectations of securities analysts, investors or other interested parties, the price of our common stock would decline.
Furthermore, if we make downward revisions of any publicly announced guidance, or if our publicly announced guidance of future operating results fails to meet expectations of securities analysts, investors or other interested parties, the price of our common stock may decline.
We have experienced “ownership changes” under Code Section 382 in the past, and future changes in ownership of our stock, including by reason of future offerings, as well as other changes that may be outside of our control, could result in future ownership changes under Code Section 382.
We have experienced "ownership changes" under Code Section 382 in the past, and future changes in ownership of our stock, including by reason of future offerings, as well as other changes that may be outside of our control, could result in future ownership changes under Code Section 382.
Our senior management and key personnel are all employed on an at-will basis, which means that they could terminate their employment with us at any time, for any reason and without notice. The loss of any of our key management personnel could significantly delay or prevent the achievement of our development and strategic objectives and adversely affect our business.
Our U.S.-based senior management and key personnel are all employed on an at-will basis, which means that they could terminate their employment with us at any time, for any reason and without notice. The loss of any of our key management personnel could significantly delay or prevent the achievement of our development and strategic objectives and adversely affect our business.
Our federal NOLs generated in tax years beginning before January 1, 2018, are only permitted to be carried forward for 20 years under applicable U.S. tax law. Our federal NOLs generated in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOL carryforwards is limited to 80% of taxable income.
Our federal NOLs generated in tax years beginning before January 1, 2018, are only permitted to be carried forward for 20 years under applicable U.S. tax law. Our federal NOLs generated in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOL carry-forwards is limited to 80% of taxable income.
In addition, a failure by our partners to properly deliver or sufficiently promote marketing campaigns would reduce the efficacy of our solutions and impair our ability to attract and retain marketers and their agencies.
In addition, a failure by our partners to properly deliver or sufficiently promote marketing campaigns may reduce the efficacy of our solutions and impair our ability to attract and retain marketers and their agencies.
Bribery Act, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our software in certain foreign markets, and the risks and costs of non-compliance; • potential changes in a specific country’s or region’s political or economic climate, including the current hostilities between Russia and Ukraine; • heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of financial statements and irregularities in financial statements; • difficulties in repatriating or transferring funds from or converting currencies in certain countries; • cultural differences inhibiting foreign employees from adopting our corporate culture; • reduced protection for intellectual property rights in some countries and practical difficulties of enforcing rights abroad; and • compliance with the laws of foreign taxing jurisdictions and overlap of different tax regimes.
Bribery Act, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our products in certain foreign markets, and the risks and costs of non-compliance; • potential changes in a specific country's or region's political or economic climate, including the current hostilities between Russia and Ukraine and conflict in the Middle East; • heightened risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results, which may also result in restatements of financial statements or irregularities in financial statements; • difficulties in repatriating or transferring funds from or converting currencies in certain countries; • cultural differences inhibiting foreign employees from adopting our corporate culture; • reduced protection for intellectual property rights in some countries and practical difficulties of enforcing rights abroad; and • compliance with the laws of foreign taxing jurisdictions and overlap of different tax regimes.
Although we take precautions to prevent violations of these laws, our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in foreign jurisdictions. 35 Table of Contents Risks Related to Ownership of Our Common Stock The market price of our common stock has been and is likely to continue to be volatile.
Although we take precautions to prevent violations of these laws, our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in foreign jurisdictions. Risks Related to Ownership of Our Common Stock The market price of our common stock has been and is likely to continue to be volatile.
In addition, the failure of the data centers or other data-hosting solutions that we utilize to meet our capacity requirements could result in interruptions in the availability or functionality of our solutions or impede our ability to scale our operations.
In addition, the failure of the data-hosting solutions that we utilize to meet our capacity requirements could result in interruptions in the availability or functionality of our solutions or impede our ability to scale our operations.
In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital. 29 Table of Contents Transactions relating to our Notes may affect the value of our common stock.
In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital. 28 Transactions relating to our Notes may affect the value of our common stock.
The California Consumer Privacy Act (“CCPA”), which took effect on January 1, 2020, is an example of the trend towards increasingly comprehensive privacy legislation being introduced in the United States.
The California Consumer Privacy Act ("CCPA"), which took effect on January 1, 2020, is an example of the trend towards increasingly comprehensive privacy legislation being introduced in the United States.
Our ability to achieve and sustain profitability is based on numerous factors, many of which are beyond our control. We may never be able to generate sufficient revenue to achieve or sustain profitability. We operate in an emerging industry and future demand and market acceptance for our solutions is uncertain.
Our ability to achieve and sustain net income is based on numerous factors, many of which are beyond our control. We may never be able to generate sufficient revenue to achieve or sustain net income. We operate in an emerging industry and future demand and market acceptance for our solutions is uncertain.
Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes. In addition, at the state level, there may be periods during which the use of NOL carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes. In addition, at the state level, there may be periods during which the use of NOL carry-forwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
Any of the foregoing events could seriously harm our business, financial condition and operating results. 34 Table of Contents Our use of open source software could negatively affect our ability to sell our solutions and subject us to possible litigation. We use open-source software to deliver our solutions and expect to continue to use open-source software in the future.
Any of the foregoing events could seriously harm our business, financial condition and operating results. Our use of open-source software could negatively affect our ability to sell our solutions and subject us to possible litigation. We use open-source software to deliver our solutions and expect to continue to use open-source software in the future.
If an active market for our common stock is not sustained, it may be difficult for investors in our common stock to sell shares without depressing the market price for the shares or to sell the shares at all. 37 Table of Contents Future sales of our common stock in the public market could cause our share price to decline.
If an active market for our common stock is not sustained, it may be difficult for investors in our common stock to sell shares without depressing the market price for the shares or to sell the shares at all. Future sales of our common stock in the public market could cause our share price to decline.
For example, it could: • make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry, and • competitive conditions and adverse changes in government regulation; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; • place us at a disadvantage compared to our competitors who have less debt; • limit our ability to borrow additional amounts for funding acquisitions, for working capital, and for other general corporate purposes; and • make an acquisition of our company less attractive or more difficult.
For example, it could: • make us more vulnerable to adverse changes in the U.S. and worldwide economic climate; • negatively expose us to competitive conditions and adverse changes in government regulation; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; • place us at a disadvantage compared to our competitors who have less debt; • limit our ability to borrow additional amounts for working capital, funding future acquisitions, and other general corporate purposes; and • make an acquisition of our company less attractive or more difficult.
Additionally, our understanding of the impact of any given FI is subject to change at any time, as such understanding can be impacted by factors such as changes to an FI’s business strategy, changes to an FI’s user interface, or changes in the behavior or makeup of an FI's consumer base.
Additionally, our understanding of the impact of any given FI partner is subject to change at any time, as such understanding can be impacted by factors such as changes to an FI partner's business strategy, changes to an FI partner's user interface, or changes in the behavior or makeup of an FI partner's consumer base.
In addition, our business may be materially and adversely affected by weak economic conditions in the industries that we serve. We have historically generated a substantial majority of our revenue from marketers in the restaurant, brick and mortar retail, telecommunications and cable industries, and have recently entered new industries such as travel and entertainment, direct-to-consumer, grocery and gas.
In addition, our business may be materially and adversely affected by weak economic conditions in the industries that we serve. We have historically generated a substantial majority of our revenue from marketers in the restaurant, brick and mortar retail, telecommunications and cable industries, and have expanded into new industries such as travel and entertainment, direct-to-consumer, grocery and gas.
We have historically generated a substantial majority of our revenue from marketers in the restaurant, brick and mortar retail, telecommunications and cable industries, and have recently entered new industries such as travel and entertainment, direct-to-consumer, grocery and gas, and believe that our future success will depend, in part, on our ability to expand adoption of our solutions in new industries.
We have historically generated a substantial majority of our revenue from marketers in the restaurant, brick and mortar retail, telecommunications and cable industries, and have expanded into new industries such as travel and entertainment, direct-to-consumer, grocery and gas, and believe that our future success will depend, in part, on our ability to expand adoption of our solutions in new industries.
We leverage our FI partners’ purchase data and infrastructures to deliver our Cardlytics platform. We do not currently receive or have access to any personally identifiable information ("PII") from our FI partners, although we may obtain or have access to PII from our FI partners in the future as our business evolves.
We leverage our FI partners' purchase data and infrastructures to deliver our Cardlytics platform. We do not currently receive or have access to any PII from our FI partners, although we may obtain or have access to PII from our FI partners in the future as our business evolves.
Further, protection of our third-party data centers or other data-hosting solutions against damage or interruption from cyber-attacks, fire, flood, tornadoes, power loss, telecommunications or equipment failure or other disasters and events beyond our control is important to our continued success.
Further, protection of our data-hosting solutions against damage or interruption from cyber-attacks, fire, flood, tornadoes, power loss, telecommunications or equipment failure or other disasters and events beyond our control is important to our continued success.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including, but not limited to: government enforcement actions (e.g. investigations, fines, penalties, audits and inspections); litigation (including class-action claims); additional reporting requirements and/or oversight; bans on processing personal data; and orders to destroy or not use personal data.
If we or the third parties which we rely upon fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including, but not limited to: government enforcement actions (which could result in investigations, fines, penalties, audits and inspections), litigation (including class-action claims), additional reporting requirements and/or oversight, bans on processing personal data and orders to destroy or not use personal data.
If we fail to successfully promote and maintain our brand or incur substantial expenses in an unsuccessful attempt to promote and maintain our brand, we may fail to attract enough new marketers or partners or retain our existing marketers or partners and our business could suffer. 28 Table of Contents Risks Related to our Outstanding Convertible Senior Notes Servicing our debt may require a significant amount of cash.
If we fail to successfully promote and maintain our brand or incur substantial expenses in an unsuccessful attempt to promote and maintain our brand, we may fail to attract enough new marketers or partners or retain our existing marketers or partners and our business could suffer. 27 Risks Related to our Outstanding Convertible Senior Notes Servicing our debt may require a significant amount of cash.
In particular, the leadership of key management personnel is critical to the successful management of our company, the development of our solutions and our strategic direction. We do not maintain “key person” insurance for any member of our senior management team or any of our other key employees.
In particular, the leadership of key management personnel is critical to the successful management of our company, the development of our solutions and our strategic direction. We do not maintain "key person" insurance for any member of our senior management team or any of our other key employees.
If we are or become subject to limitations on our use of federal NOL carryforwards under IRC Section 382, our federal NOL carryforwards could expire unutilized or underutilized, even if we earn taxable income against which our federal NOL carryforwards could otherwise be offset.
If we are or become subject to limitations on our use of federal NOL carry-forwards under IRC Section 382, our federal NOL carry-forwards could expire unutilized or underutilized, even if we earn taxable income against which our federal NOL carry-forwards could otherwise be offset.
For all of these reasons, we may not be able to compete successfully against our current or future competitors. 21 Table of Contents If we fail to identify and respond effectively to rapidly changing technology and industry needs, our solutions may become less competitive or obsolete. Our future success depends on our ability to adapt and innovate.
For all of these reasons, we may not be able to compete successfully against our current or future competitors. 20 If we fail to identify and respond effectively to rapidly changing technology and industry needs, our solutions may become less competitive or obsolete. Our future success depends on our ability to adapt and innovate.
Although we may in the future decide to undertake foreign exchange hedging transactions to cover a portion of our foreign currency exchange exposure, we currently do not hedge our exposure to foreign currency exchange risks. 25 Table of Contents Our ability to use net operating losses and certain other tax attributes to offset future taxable income may be limited.
Although we may in the future decide to undertake foreign exchange hedging transactions to cover a portion of our foreign currency exchange exposure, we currently do not hedge our exposure to foreign currency exchange risks. 24 Our ability to use net operating losses and certain other tax attributes to offset future taxable income may be limited.
All of these industries have been negatively impacted by the pandemic and inflationary pressure and certain precautions taken to control the pandemic and inflationary pressure. We cannot predict the timing, strength or duration of any economic slowdown or recovery. In addition, we cannot predict the timing, strength or duration of any economic slowdown or recovery.
All of these industries have been negatively impacted by inflationary pressure and certain precautions taken to control inflationary pressure. We cannot predict the timing, strength or duration of any economic slowdown or recovery.
We are also reliant on our network of partners to promote their digital incentive programs, increase customer awareness and leverage additional customer outreach channels like email, all of which can increase customer engagement, as well as expand our network of partners.
We are also reliant on our network of partners to promote their digital incentive programs, increase customer awareness and leverage additional customer outreach channels like email, all of which can increase customer engagement.
Any failure to meet these demands may hamper the growth of our business and the attractiveness of our solutions. 20 Table of Contents Our ability to retain and increase sales of our solutions and attract new marketers and their agencies may be adversely affected by competitive offerings, marketing methods that are lower priced or perceived as more effective than our solutions, or a general continued reduction or decline in spending by marketers due to the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic.
Any failure to meet these demands may hamper the growth of our business and the attractiveness of our solutions. 19 Our ability to retain and increase sales of our solutions and attract new marketers and their agencies may be adversely affected by competitive offerings, marketing methods that are lower priced or perceived as more effective than our solutions, or a general continued reduction or decline in spending by marketers due to the global economic uncertainty and financial market conditions.
If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
If there is no lawful manner for us to transfer personal data from the EEA, the U.K., or other jurisdictions to the U.S., or if the requirements for a legally compliant transfer are 30 too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
Any such error, failure, malfunction, disruption or delay could result in damage to our reputation and could harm our business, financial condition and operating results. 22 Table of Contents Significant system disruptions, loss of data center capacity, or changes to our data hosting solutions could adversely affect our business, financial condition and operating results.
Any such error, failure, malfunction, disruption or delay could result in damage to our reputation and could harm our business, financial condition and operating results. 21 Significant system disruptions, loss of data center capacity, or changes to our data hosting solutions could adversely affect our business, financial condition and operating results.
We are in the process of updating our platforms. Any failure of, or delays in the performance (or in the case of the self-service tool, the rollout) of, our systems could cause service interruptions or impaired system performance. Such failures in our systems could cause us to fail to maximize our earning potential with respect to any given marketing campaign.
We are in the process of updating our platforms. Any failure or delays in the performance of our systems could cause service interruptions or impaired system performance. Such failures in our systems could cause us to fail to maximize our earning potential with respect to any given marketing campaign.
The actual or perceived failure by us, our customers, our partners, or other third parties upon whom we rely to comply with such obligations could lead to regulatory investigations or actions, litigation, disruptions of our business operations, loss of customers or sales, harm our reputation, result in significant expense, loss of revenue or profits, subject us to significant fines and liability or otherwise adversely affect our business.
The actual or perceived failure by us, our partners, or other third parties whom we rely upon to comply with such obligations could lead to regulatory investigations or actions, litigation (including class claims), mass arbitration demands, disruptions of our business operations, or loss of customers or sales, harm our reputation, result in significant expense or loss of revenue or profits, subject us to significant fines and liability or otherwise adversely affect our business.
Some of those key assumptions relate to the impact of COVID-19 and the associated economic uncertainty on our business and the timing and scope of economic recovery globally, which are inherently difficult to predict. Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance.
Some of those key assumptions relate to the impact of unfavorable macroeconomic conditions and the associated economic uncertainty on our business and the timing and scope of economic recovery globally, which are inherently difficult to predict. Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance.
We must also continue to manage our employees, operations, finances, research and development and capital investments efficiently in an environment where nearly all employees are working from home.
We must also continue to manage our employees, operations, finances, research and development and capital investments efficiently in an environment where many employees are working from home.
If we do not complete the migration, are not successful in completing a seamless migration, or fail to administer the cloud-hosting solution in a well-managed, secure and effective manner, we may experience unplanned service disruptions or unforeseen costs.
If we do not complete the migration in a seamless fashion or fail to administer the cloud-hosting solution in a well-managed, secure and effective manner, we may experience unplanned service disruptions or unforeseen costs.
The PECR also imposes sector-specific breach reporting requirements, but only as applicable to providers of particular public electronic communications services. Additional European Union member state laws of this type may follow. In the ordinary course of business, we may transfer personal data from Europe and other jurisdictions to the United States or other countries.
The PECR also imposes sector-specific breach reporting requirements, but these requirements only apply to providers of certain public electronic communications services. Additional European Union member state laws of this type may follow. In the ordinary course of business, we may transfer personal data from Europe and other jurisdictions to the United States or other countries.
Risks Related to our Business and Industry Unfavorable conditions, including inflationary pressure, in the global economy or the industries we serve could limit our ability to grow our business and negatively affect our operating results. General worldwide economic conditions have experienced significant instability in recent years including the recent global economic uncertainty and financial market conditions.
Risks Related to our Business and Industry Unfavorable conditions, including inflationary pressure, in the global economy or the industries we serve could limit our ability to grow our business and negatively affect our operating results. General worldwide economic conditions have created significant instability in recent years.
While we may successfully partner with a wide range of companies that are to some extent currently competitive to us, these companies may become more competitive to us in the future. As we introduce new solutions, as our existing solutions evolve and as other companies introduce new products and solutions, we are likely to face additional competition.
While we may successfully partner with a wide range of companies that are only moderately competitive to us, these companies may become more competitive to us in the future. As we introduce new solutions, as our existing solutions evolve and as other companies introduce new products and solutions, we are likely to face additional competition.
Factors that may impact our quarterly operating results include the factors set forth in this “Risk Factors” section, as well as the following: • our ability to attract and retain marketers and partners; • the amount and timing of revenue, operating costs and capital expenditures related to the operations and expansion of our business, particularly with respect to our efforts to attract new marketers and partners to our network; • the revenue mix revenue generated from our operations in the U.S. and U.K.; • the revenue mix generated from the operations of Cardlytics, Inc. and its subsidiaries; • decisions made by our FI partners to increase Consumer Incentives or use their Partners Share to fund their Consumer Incentives; 12 Table of Contents • changes in the economic prospects of marketers, the industries that we primarily serve, or the economy generally, which could alter marketers’ spending priorities or budgets; • the termination or alteration of relationships with our partners in a manner that impacts ongoing or future marketing campaigns; • reputational harm; • the amount and timing of expenses required to grow our business, including the timing of our payments of Partner Share and Partner Share commitments as compared to the timing of our receipt of payments from our marketers; • changes in demand for our solutions or similar solutions; • seasonal trends in the marketing industry; • competitive market position, including changes in the pricing policies of our competitors; • exposure related to our international operations and foreign currency exchange rates; • quarantine, private travel limitation, or business disruption in regions affecting our operations, stemming from actual, imminent or perceived outbreak of contagious disease, including the COVID-19 pandemic; • volatile recovery from the pandemic, including inflationary pressure; • other events or factors, including those resulting from war, such as the current hostilities between Russia and Ukraine or incidents of terrorism; • expenses associated with items such as litigation, regulatory changes, cyberattacks or security breaches; • the introduction of new technologies, products or solution offerings by competitors; • costs related to acquisitions of other businesses or technologies; and • our ability to maintain and grow our business in light of the global COVID-19 pandemic and precautions taken to reduce the risk of this virus.
Factors that may impact our quarterly operating results include the factors set forth in this "Risk Factors" section, as well as the following: • our ability to attract and retain marketers and partners; • the amount and timing of revenue, operating costs and capital expenditures related to the operations and expansion of our business, particularly with respect to our efforts to attract new marketers and partners to our network; • the revenue mix revenue generated from our operations in the U.S. and U.K.; • the revenue mix generated from the operations of Cardlytics and its subsidiaries; 12 • decisions made by our FI partners to increase Consumer Incentives or use their Partner Share to fund their Consumer Incentives; • changes in the economic prospects of marketers, the industries that we primarily serve, or the economy generally, which could alter marketers' spending priorities or budgets; • the termination or alteration of relationships with our partners in a manner that impacts ongoing or future marketing campaigns; • reputational harm; • the amount and timing of expenses required to grow our business, including the timing of our payments of Partner Share and Partner Share commitments as compared to the timing of our receipt of payments from our marketers; • changes in demand for our solutions or similar solutions; • seasonal trends in the marketing industry; • competitive market position, including changes in the pricing policies of our competitors; • exposure related to our international operations and foreign currency exchange rates; • quarantine, private travel limitation, or business disruption in regions affecting our operations, stemming from actual, imminent or perceived outbreak of contagious disease; • other events or factors, including those resulting from war, such as hostilities between Russia and Ukraine, and the current armed conflict in the Middle East, and incidents of terrorism; • expenses associated with items such as litigation, regulatory changes, cyberattacks or security breaches; • the introduction of new technologies, products or solution offerings by competitors; and • costs related to acquisitions of other businesses or technologies.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal executive offices are located in Atlanta, Georgia where we occupy a facility of approximately 77,000 square feet. Our lease expires in April 2025. We have additional offices in New York, NY; Palo Alto, CA; Austin, TX; Los Angeles, CA; Detroit, MI; Champaign, IL; and London, U.K.
Biggest changeITEM 2. PROPERTIES Our principal executive offices are located in Atlanta, Georgia, where we occupy a facility of approximately 17,000 square feet. Our lease expires in January 1, 2032, and we have the option to renew for an additional five-year period. We have additional offices in New York, NY; Menlo Park, CA; Los Angeles, CA; Champaign, IL; and London, U.K.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changePlease refer to Note 4—Business Combinations to our consolidated financial statements included elsewhere in this Form 10-K for further discussion. Other than this dispute, we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows.
Biggest changeWe are not presently a party to any other legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 39 Table of Contents PART II.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 39 PART II.
ITEM 3. LEGAL PROCEEDINGS From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are currently in a dispute with the Bridg Stockholder Representative regarding the amount of the First Anniversary Payment.
ITEM 3. LEGAL PROCEEDINGS From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.
Added
As part of the acquisition of Bridg, and pursuant to the terms of the Agreement and Plan of Merger dated as of April 12, 2021, as amended (the "Merger Agreement"), we agreed to make two earnout payments: the First Anniversary Payment Amount and the Second Anniversary Payment Amount, based on the First Anniversary ARR and the Second Anniversary ARR of Bridg, respectively .
Added
We were unable to reach an agreement with respect to the First Anniversary Payment Amount with the Stockholder Representative and submitted our dispute to an independent accountant as contemplated by the Merger Agreement. 38 On April 28, 2023, the independent accountant made its determination of the appropriate amount of the First Anniversary ARR, determining the First Anniversary ARR to be $23.2 million.
Added
After review of the determination by the independent accountant, we filed a verified complaint in the Delaware Court of Chancery in May 2023 seeking declaratory judgment that a certain portion of the independent accountant's determination related to the First Anniversary ARR be stricken as null and void.
Added
Subsequently, on January 25, 2024, we entered into a settlement agreement (the "Settlement Agreement") with the Stockholder Representative to resolve all outstanding disputes related to the Merger Agreement, including the First Anniversary Payment Amount, pursuant to which we agreed to pay $25 million in cash and issue 3.6 million shares of our common stock to the Stockholder Representative, inclusive of broker fees and transaction bonuses and to dismiss our verified complaint in the Delaware Court of Chancery.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph plots the changes in value of an initial $100 investment over the indicated time period, assuming all dividends are reinvested. The graph uses our initial public offering price on February 9, 2018 of $13.00 per share as the initial value of our common stock.
Biggest changeThe following performance graph compares the performance of our common stock with the performance of the Standard & Poor's 500 Stock Index and the Nasdaq Composite Index, from December 31, 2018 through December 31, 2023. The graph plots the changes in value of an initial $100 investment over the indicated time period, assuming all dividends are reinvested.
Because many of our shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Because many of our shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. Issuer Purchases of Equity Securities None.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the Nasdaq Global Market under the symbol “CDLX.” Holders of Record As of February 28, 2023, there were approximately 104 stockholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the Nasdaq Global Market under the symbol "CDLX." Holders of Record As of February 29, 2024, there were approximately 135 stockholders of record of our common stock.
Stock Performance Graph This performance graph shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of Cardlytics, Inc. under the Securities Act.
Stock Performance Graph This performance graph shall not be deemed "soliciting material" or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section and shall not be incorporated by reference into any filing of Cardlytics, Inc. under the Securities Act.
The stock price performance in this graph is not necessarily indicative of future stock price performance. 40 Table of Contents ITEM 6. [RESERVED]
The graph uses the closing price on December 31, 2018 of $10.83 per share as the initial value of our common stock. The stock price performance in this graph is not necessarily indicative of future stock price performance. ITEM 6. [RESERVED] 40
Removed
Recent Issuances of Unregistered Securities In connection with our acquisition of Entertainment, in January 2023 we issued 22,549 shares of our common stock to former equityholders of Entertainment who were “accredited investors,” as that term is defined in the Securities Act in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or “blue sky” laws.
Removed
Each of the Entertainment equityholders receiving shares as part of the acquisition represented that they were acquiring such shares for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.
Removed
Such shares have not been registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws. Issuer Purchases of Equity Securities None.
Removed
The following performance graph compares the performance of our common stock with the performance of the Standard & Poor's 500 Stock Index and the Nasdaq Composite Index, from February 9, 2018, the date our common stock commenced trading on the Nasdaq Global Market, through December 31, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table presents a reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP measure, for each of the periods indicated (in thousands): Year Ended December 31, 2020 2021 2022 Net loss $ (55,422) $ (128,565) $ (465,264) Plus: Interest expense, net 3,048 12,563 2,556 Depreciation and amortization 7,826 29,871 37,544 Stock-based compensation expense 32,396 50,264 44,686 Acquisition and integration costs (benefits) — 24,372 (2,874) Change in fair value of contingent consideration — 1,374 (128,174) Foreign currency (gain) loss (1,549) 1,267 6,376 Impairment of goodwill and intangible assets — — 453,288 Restructuring and reduction of force 1,323 713 8,139 Income tax benefit — (7,864) (1,446) Deferred implementation costs 4,598 3,785 — Adjusted EBITDA $ (7,780) $ (12,220) $ (45,169) 48 Table of Contents 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, 2020 Cardlytics Platform Bridg Platform Consolidated Adjusted contribution $ 82,182 $ — $ 82,182 Minus: Delivery costs 14,310 — 14,310 Sales and marketing expense 45,307 — 45,307 Research and development expense 17,532 — 17,532 General and administration expense 46,532 — 46,532 Stock-based compensation expense (32,396) — (32,396) Restructuring and reduction of force (1,323) — (1,323) Adjusted EBITDA $ (7,780) $ — $ (7,780) Year Ended December 31, 2021 Cardlytics Platform Bridg Platform Consolidated Adjusted contribution $ 121,675 $ 7,953 $ 129,628 Minus: Delivery costs 18,170 4,333 22,503 Sales and marketing expense 62,771 3,225 65,996 Research and development expense 35,393 2,711 38,104 General and administration expense 63,379 2,843 66,222 Stock-based compensation expense (47,223) (3,041) (50,264) Restructuring and reduction of force (713) — (713) Adjusted EBITDA $ (10,102) $ (2,118) $ (12,220) Year Ended December 31, 2022 Cardlytics Platform Bridg Platform Consolidated Adjusted contribution $ 122,981 $ 20,053 $ 143,034 Minus: Delivery costs 24,112 6,290 30,402 Sales and marketing expense 67,830 6,915 74,745 Research and development expense 47,579 6,856 54,435 General and administration expense 79,069 2,377 81,446 Stock-based compensation expense (43,490) (1,196) (44,686) Restructuring and reduction of force (8,139) — (8,139) Adjusted EBITDA $ (43,980) $ (1,189) $ (45,169) 49 Table of Contents Components of Results of Operations Revenue We sell our Cardlytics platform solution by entering into agreements directly with marketers or their marketing agencies, generally through the execution of insertion orders.
Biggest change(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 Minus: Deferred implementation costs 3,785 — 3,785 Adjusted Partner Share and other third-party costs $ 137,079 $ 409 $ 137,488 46 Adjusted EBITDA The following table presents a reconciliation of Adjusted EBITDA to Net Loss, the most directly comparable GAAP measure, for each of the periods indicated (in thousands): Year Ended December 31, 2023 2022 2021 Net Loss $ (134,702) $ (465,264) $ (128,565) Plus: Interest expense, net 2,336 2,556 12,563 Depreciation and amortization 26,460 37,544 29,871 Stock-based compensation expense 40,980 44,686 50,264 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 Impairment of goodwill and intangible assets 70,518 453,288 — Loss on divestiture 6,550 — — Restructuring and reduction of force — 8,139 713 Income tax benefit — (1,446) (7,864) Deferred implementation costs — — 3,785 Adjusted EBITDA $ 3,771 $ (45,169) $ (12,220) 47 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 Consolidated Adjusted Contribution $ 158,626 $ 143,034 $ 129,628 Minus: 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 Minus: 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 Minus: 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) 48 Adjusted Net Loss The following table presents a reconciliation of Adjusted Net Loss to Net Loss, the most directly comparable GAAP measure, for each of the periods indicated (in thousands): Year Ended December 31, 2023 2022 2021 Net Loss $ (134,702) $ (465,264) $ (128,565) Plus: Stock-based compensation expense 40,980 44,686 50,264 Foreign currency (gain) loss (3,304) 6,376 1,267 Acquisition, integration and divestiture (benefits) costs (6,313) (2,874) 24,372 Amortization of acquired intangibles 13,589 25,019 19,712 Change in fair value of contingent consideration 1,246 (128,174) 1,374 Impairment of goodwill and intangible assets 70,518 453,288 — Loss on divestiture 6,550 — — Restructuring and reduction of force — 8,139 713 Income tax benefit — (1,446) (7,864) Adjusted Net Loss $ (11,436) $ (60,250) $ (38,727) Weighted-average number of shares of common stock used in computing Adjusted net loss per share: Weighted-average common shares outstanding, diluted 36,488 33,419 32,202 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) Free Cash Flow The following is a reconciliation of free cash flow to the most comparable GAAP measure, net cash used in operating activities (in thousands): Year Ended December 31, 2023 2022 2021 Net cash used in operating activities $ (185) $ (53,904) $ (38,523) Plus: Acquisition of property and equipment (667) (1,171) (3,108) Acquisition of patents — (175) (133) Capitalized software development costs (11,725) (12,140) (9,323) Free Cash Flow $ (12,577) $ (67,390) $ (51,087) Components of Results of Operations Revenue We sell our Cardlytics platform solution by entering into agreements directly with marketers or their marketing agencies, generally through the execution of insertion orders.
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. The partners for the Bridg platform predominantly are merchants ("merchant data partners") that provide us with access to their POS data, including product-level purchase data.
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. The partners for the Bridg platform are predominantly merchants ("merchant data partners") that provide us with access to their POS data, including product-level purchase data.
Partner Share and Other Third-Party Costs Partner Share and other third-party costs consist primarily of the Partner Share that we pay our partners, media and data costs, deferred implementation costs incurred pursuant to our agreements with certain partners.
Partner Share and Other Third-Party Costs Partner Share and other third-party costs consist primarily of the Partner Share that we pay our partners, media and data costs and deferred implementation costs incurred pursuant to our agreements with certain partners.
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 and in the long-term following the date our consolidated financial statements were issued.
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.
Delivery costs also include hosting costs, purchased or licensed software costs, outsourcing costs and professional services costs. As we 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.
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.
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, deferred implementation costs, depreciation and amortization expense, stock-based compensation expense and change in fair value of contingent consideration.
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.
As part of this amendment, the former cash covenant, as described below, was removed and was replaced with a requirement to maintain a minimum level of adjusted contribution and a minimum adjusted cash of $25.0 million, which is reduced by eligible accounts receivable in excess of the loan capacity.
Additionally with this amendment, the former cash covenant, as described below, was removed and was replaced with a requirement to maintain a minimum level of Adjusted Contribution and a minimum adjusted cash of $25.0 million, which is reduced by eligible accounts receivable in excess of the loan capacity.
The 2018 Loan Facility includes customary representations, warranties and covenants (affirmative and negative), including restrictive covenants that prohibit mergers, acquisitions and dispositions of assets, incurrence of indebtedness and encumbrances on our assets and the payment or declaration of dividends; in each case subject to specified exceptions.
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.
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. 50 Table of Contents Acquisition and Integration Costs Acquisition costs primarily represent diligence efforts, legal and advisory costs, broker fees and insurance premiums.
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. 50 Acquisition, Integration and Divestiture Costs Acquisition costs primarily represent diligence efforts, legal and advisory costs, broker fees and insurance premiums.
For a discussion of the year ended December 31, 2021 compared to the year ended December 31, 2020, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2021.
For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022.
For a discussion of the year ended December 31, 2020, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Liquidity and Capital Resources" in our Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2021.
For a discussion of the year ended December 31, 2022, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Liquidity and Capital Resources" in our Annual Report on Form 10-K for the year ended December 31, 2021.
Recent Accounting Pronouncements Refer to Note 3—Accounting Standards to our consolidated financial statements for additional information.
Recent Accounting Pronouncements Refer to Note 3—Accounting Standards to our consolidated financial statements for additional information. 62
We work to accomplish this mission by operating an advertising platform within our own and our partners' digital channels, which include online, mobile applications, email, and various real-time notifications (the "Cardlytics platform").
We work to accomplish this mission by operating an advertising platform within our own and our partners' digital channels, which includes online, mobile applications, email and various real-time notifications (the "Cardlytics platform").
Income Taxes Income taxes are accounted for using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards.
Income Taxes Income taxes are accounted for using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carry-forwards.
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, deferred implementation costs, changes in the fair value of our contingent consideration, credit loss expense and income tax benefit.
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, credit loss expense and income tax benefit.
Investing Activities Our cash flows used for investing activities are primarily driven by our acquisitions of Dosh and Bridg, our investments in, and purchases of, property and equipment and costs to develop internal-use software. We expect that we will continue to use cash for investing activities as we continue to invest in and grow our business.
Investing Activities Our cash flows used in investing activities are primarily driven by our investments in, and purchases of, property and equipment and costs to develop internal-use software. We expect that we will continue to use cash for investing activities as we continue to invest in and grow our business.
Any lag between the timing of our payments to FI partners and our receipt of payment from marketers and their agencies can exacerbate our need for working capital during the first quarter of the calendar year. 59 Table of Contents Historical Cash Flows In this section, we discuss the activity of our cash flows for the year ended December 31, 2021 and the year ended December 31, 2022.
Any lag between the timing of our payments to FI partners and our receipt of payment from marketers and their agencies can exacerbate our need for working capital during the first quarter of the calendar year. 59 Historical Cash Flows In this section, we discuss the activity of our cash flows for the year ended December 31, 2023 and the year ended December 31, 2022.
On November 29, 2022 we amended our 2018 Loan Facility to modify the eligible account receivable to exclude UK accounts, reduce the ability to borrow up to 85% of the amount of our eligible accounts receivable to 50% and adjusted the required minimum level of adjusted contribution.
On November 29, 2022, we amended our 2018 Loan Facility to modify the eligible account receivable to exclude U.K. accounts, reduce the ability to borrow up to 85% of the amount of our eligible accounts receivable to 50% and adjusted the required minimum level of Adjusted Contribution.
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 and equity instruments issued to our FI 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.
Some of these limitations are as follows: (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.
We also operate a customer data platform that utilizes point-of-sale ("POS") data, including product-level purchase data, to enable marketers, in a privacy-protective manner, to perform analytics and targeted loyalty marketing and also enable marketers to measure the impact of their marketing (the "Bridg 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").
“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. Overview Our company's mission is to make commerce smarter and rewarding for everyone.
"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. Overview Our company's mission is to make commerce smarter and rewarding for everyone.
The change in our net operating assets and liabilities was primarily due to a $27.9 million increase in accounts receivable and contract assets, a $0.9 million decrease in other accrued expenses and a $9.1 million decrease in Partner Share liability, partially offset by a $13.2 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.
Integration costs primarily represent integration-related employee compensation, advisory costs, and travel costs. Change in Fair Value of Contingent Consideration Our acquisition of Bridg includes a component of contingent consideration to be paid to the sellers if certain performance levels are achieved by Bridg over a specific period of time.
Integration costs primarily represent integration-related employee compensation, advisory costs and travel costs. Divestiture costs primarily represent legal and other professional fees. Change in Fair Value of 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.
Adjusted contribution should not be considered in isolation from, or as an alternative to, measures prepared in accordance with GAAP. Adjusted contribution should be considered together with other operating and financial performance measures presented in accordance with GAAP. Also, adjusted contribution may not necessarily be comparable to similarly titled measures presented by other companies.
Adjusted Contribution should be considered together with other operating and financial performance measures presented in accordance with GAAP. Also, Adjusted Contribution may not necessarily be comparable to similarly titled measures presented by other companies.
The non-cash charges primarily related to stock-based compensation expense, depreciation and amortization expense, including the amortization of acquired intangible assets, amortization of right–of–use assets, deferred implementation costs, changes in the fair value of our contingent consideration, credit loss expense and income tax benefit.
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.
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. 51 Table of Contents Results of Operations The following table sets forth our consolidated statements of operations (in thousands): Year Ended December 31, 2020 2021 2022 Revenue $ 186,892 $ 267,116 $ 298,542 Costs and expenses: Partner Share and other third-party costs 109,308 141,273 155,507 Delivery costs 14,310 22,503 30,403 Sales and marketing expense 45,307 65,996 74,745 Research and development expense 17,532 38,104 54,435 General and administrative expense 46,532 66,222 81,446 Acquisition and integration costs (benefits) — 24,372 (2,874) Impairment of goodwill and intangible assets — — 453,288 Change in fair value of contingent consideration — 1,374 (128,174) Depreciation and amortization expense 7,826 29,871 37,544 Total costs and expenses 240,815 389,715 756,320 Operating loss (53,923) (122,599) (457,778) Other (expense) income: Interest expense, net (3,048) (12,563) (2,556) Foreign currency gain (loss) 1,549 (1,267) (6,376) Total other expense (1,499) (13,830) (8,932) Loss before income taxes (55,422) (136,429) (466,710) Income tax benefit — 7,864 1,446 Net loss $ (55,422) $ (128,565) $ (465,264) Comparison of Years Ended December 31, 2022 and 2021 In this section, we discuss the results of our operations for the year ended December 31, 2022 compared to the year ended December 31, 2021.
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. 51 Results of Operations The following table sets forth our consolidated statements of operations (in thousands): Year Ended December 31, 2023 2022 2021 Revenue $ 309,204 $ 298,542 $ 267,116 Costs and expenses: Partner Share and other third-party costs 150,578 155,507 141,273 Delivery costs 28,248 30,403 22,503 Sales and marketing expense 57,425 74,745 65,996 Research and development expense 51,352 54,435 38,104 General and administrative expense 58,810 81,446 66,222 Acquisition, integration and divestiture (benefits) costs (6,313) (2,874) 24,372 Change in fair value of contingent consideration 1,246 (128,174) 1,374 Impairment of goodwill and intangible assets 70,518 453,288 — Loss on divestiture 6,550 — — Depreciation and amortization expense 26,460 37,544 29,871 Total costs and expenses 444,874 756,320 389,715 Operating loss (135,670) (457,778) (122,599) Other income (expense): Interest expense, net (2,336) (2,556) (12,563) Foreign currency gain (loss) 3,304 (6,376) (1,267) Total other income (expense) 968 (8,932) (13,830) Loss before income taxes (134,702) (466,710) (136,429) Income tax benefit — 1,446 7,864 Net Loss $ (134,702) $ (465,264) $ (128,565) Comparison of Years Ended December 31, 2023 and 2022 In this section, we discuss the results of our operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The following table shows a summary of our cash flows for the periods presented (in thousands): Year Ended December 31, 2021 2022 Cash, cash equivalents and restricted cash at beginning of period $ 293,349 $ 233,562 Net cash used in operating activities (38,523) (53,904) Net cash used in investing activities (506,695) (15,760) Net cash received from financing activities 485,998 (39,987) Effect of exchange rates on cash, cash equivalents and restricted cash (567) (1,926) Cash, cash equivalents and restricted cash at end of period $ 233,562 $ 121,985 Operating Activities Historically, we have experienced negative operating cash flows, which reflects our investments to grow our business.
The following table shows a summary of our cash flows for the periods presented (in thousands): Year Ended December 31, 2023 2022 Cash, cash equivalents and restricted cash at beginning of period $ 121,985 $ 233,562 Net cash used in operating activities (185) (53,904) Net cash used in investing activities (10,062) (15,760) Net cash used in financing activities (20,026) (39,987) Effect of exchange rates on cash, cash equivalents and restricted cash 118 (1,926) Cash, cash equivalents and restricted cash at end of period $ 91,830 $ 121,985 Operating Activities Historically, we have experienced negative operating cash flows, which reflects our investments to grow our business.
Foreign Currency Loss Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) Foreign currency loss $ (1,267) $ (6,376) $ (5,109) 403 % % of revenue — % (2) % Foreign currency loss increased by $5.1 million during 2022 compared to 2021 primarily due to the decrease in the value of the British pound relative to the U.S. dollar. 56 Table of Contents Income Tax Benefit Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) Income tax benefit $ 7,864 $ 1,446 $ (6,418) n/a % of revenue 3 % — % Income tax benefit decreased by $6.4 million during 2022 compared to 2021 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.
Foreign Currency Gain (Loss) Year Ended December 31, Change in thousands 2023 2022 $ % Foreign currency gain (loss) $ 3,304 $ (6,376) $ 9,680 (152) % % of Revenue 1 % (2) % 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. dollar. 56 Income Tax Benefit Year Ended December 31, Change in thousands 2023 2022 $ % Income tax benefit $ — $ 1,446 $ (1,446) (100) % % of Revenue — % — % 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.
Liquidity and Capital Resources The following table summarizes our cash and cash equivalents, restricted cash, working capital, accounts receivable and contract assets, net and unused available borrowings (in thousands): December 31, 2021 2022 Cash and cash equivalents $ 233,467 $ 121,905 Restricted cash 95 80 Working capital (1) 31,375 1,098 Accounts receivable and contract assets, net 95 80 Unused available borrowings 50,000 60,000 (1) We define working capital as current assets less current liabilities.
Liquidity and Capital Resources The following table summarizes our cash and cash equivalents, restricted cash, working capital, accounts receivable and contract assets, net and unused available borrowings (in thousands): December 31, 2023 2022 Cash and cash equivalents $ 91,830 $ 121,905 Restricted cash — 80 Working capital (1) 52,779 1,098 Accounts receivable and contract assets, net 120,622 115,609 Unused available borrowings 16,688 60,000 (1) We define working capital as current assets less current liabilities.
We evaluate our goodwill for impairment annually during the fourth quarter and whenever events or changes in circumstances indicate that the fair value of a reporting unit is more likely than not less than the carrying amount. Our reporting units are one level below the operating segments at which level our segment management conducts regular reviews of the operating results.
We evaluate our goodwill for impairment annually during the fourth quarter and whenever events or changes in circumstances indicate that the fair value of a reporting unit is more likely than not less than the carrying amount.
Our operating cash flows also vary from quarter to quarter due to the seasonal nature of our marketers’ advertising spending. Many marketers tend to devote a significant portion of their marketing budgets to the fourth quarter of the calendar year to coincide with consumer holiday spending and reduce marketing spend in the first quarter of the calendar year.
Many marketers tend to devote a significant portion of their marketing budgets to the fourth quarter of the calendar year to coincide with consumer holiday spending and reduce marketing spend in the first quarter of the calendar year.
The intangible assets are evaluated whenever events or changes in circumstances indicated that we should estimate the fair value of our individual long-lived assets to determine if any impairment charges were present.
Valuation and Impairment of goodwill and intangible assets Intangible assets are recorded at fair value on the date of acquisition and amortized over their estimated useful lives. The intangible assets are evaluated whenever events or changes in circumstances indicated that we should estimate the fair value of our individual long-lived assets to determine if any impairment charges were present.
We performed a quantitative assessment for goodwill in our Cardlytics platform in the U.S. reporting unit and our Bridg platform reporting unit at June 30, 2022, which resulted in a goodwill impairment of $83.1 million recorded to our Bridg platform reporting unit.
The significant judgments in the discounted cash flow analysis for our Bridg platform included the selected discount rate and forecasts of future revenues and cash flows We performed a quantitative assessment for goodwill in our Cardlytics platform in the U.S. reporting unit and our Bridg platform reporting unit at June 30, 2022, which resulted in a goodwill impairment of $83.1 million recorded to our Bridg platform reporting unit.
The agreements 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 report our revenue net of Consumer Incentives and gross of Partner Share and other third-party costs.
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.
Operating activities used $38.5 million of cash in 2021, which reflected our net loss of $128.6 million, $96.7 million of which were non-cash charges, and a $6.7 million change in our net operating assets and liabilities.
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.
Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate or a significant d ecrease in expected cash flows.
Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate or a significant d ecrease in expected cash flows. Loss on Divestiture Loss on divestiture of businesses consists of loss on the sale of a business during the year ended December 31, 2023.
During 2021 we recognized $24.4 million of expense primarily due to the acquisitions of Dosh and Bridg. During 2022 we recognized a $2.9 million benefit primarily due to a reduction in our estimated broker fee related to the contingent consideration for the Bridg acquisition, partially offset by $0.1 million of costs incurred by the acquisition 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.
We have recorded a full valuation allowance related to our net deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets. 62 Table of Contents We recognize the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date, and then, only in an amount more likely than not to be sustained upon review by the tax authorities.
We recognize the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date, and then, only in an amount more likely than not to be sustained upon review by the tax authorities.
Refer to Note 4—Business Combinations to our condensed consolidated financial statements for additional information regarding the dispute. 57 Table of Contents 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, the continued market acceptance of our solutions and the extent of the impact of COVID-19 on the global economy.
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 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. On May 5, 2021, we completed the acquisition of Bridg.
We expect to incur additional operating losses as we continue our efforts to grow our business. 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.
As a result, timing of cash receipts from our marketers can significantly impact our operating cash flows for any period. Further, the timing of payment of commitments and implementation fees to our FI partners may also result in variability of our operating cash flows for any period.
Further, the timing of payment of commitments and implementation fees to our FI partners may also result in variability of our operating cash flows for any period. Our operating cash flows also vary from quarter to quarter due to the seasonal nature of our marketers’ advertising spending.
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.
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.
We view adjusted contribution as an important operating measure of our financial results. We believe that adjusted contribution provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors.
We believe that Adjusted Contribution provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Adjusted Contribution should not be considered in isolation from, or as an alternative to, measures prepared in accordance with GAAP.
All of our obligations under the 2018 Loan Facility are secured by a first priority lien on substantially all of our assets. The 2018 Loan Facility does not include any prepayment penalties. We believe we were in compliance with all financial covenants as of December 31, 2022.
All of our obligations under the 2018 Loan Facility are secured by a first priority lien on substantially all of our assets. 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.
A 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. Our remaining cash and cash equivalents are held in treasury obligation funds and money market accounts with six financial institutions, which we believe are of high credit quality.
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.
We are generally obligated to pay Consumer Incentives between one and three months following redemption, regardless of whether we have collected payment from a marketer or its agency. We are generally obligated to pay our FI partners’ Partner Share by the end of the month following our collection of payment from the applicable marketer or its agency.
Uses of Funds Our collection cycles can vary from period to period based on the payment practices of our marketers and their agencies. We are generally obligated to pay Consumer Incentives between one and four months following redemption, regardless of whether we have collected payment from a marketer or its agency.
Cost and Expense We classify our expenses into the following categories: Partner Share and other third-party costs; delivery costs; sales and marketing expense; research and development expense; general and administrative expense; and depreciation and amortization expense.
We recognize subscription revenue on a ratable basis over the contract term beginning on the date that our service is made available to the customer. 49 Cost and Expense We classify our expenses into the following categories: Partner Share and other third-party costs; delivery costs; sales and marketing expense; research and development expense; general and administrative expense; and depreciation and amortization expense.
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, 2023 2024 - 2025 2026 - 2028 Thereafter Total Convertible senior notes (1) $ 2,300 $ 4,600 $ 230,096 $ — $ 236,996 Finance leases (2) 39 50 — — 89 Operating leases (3) 5,087 3,605 599 — 9,291 Cash portion of contingent consideration (4) 67,290 — — — 67,290 Purchase obligations (5) 25,352 362 — — 25,714 Total $ 100,068 $ 8,617 $ 230,695 $ — $ 339,380 (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%.
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 Convertible senior notes (1) $ 2,300 $ 260,096 $ — $ — $ 262,396 Finance leases (2) 39 50 — — 89 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%.
This amendment also extended the maturity date of the 2018 Loan Facility from December 31, 2022 to April 29, 2024.
This amendment also extended the maturity date of the 2018 Loan Facility from December 31, 2022 to April 29, 2024, and further stated that if we had positive Adjusted EBITDA by December 31, 2023, we could extend the maturity date of the loan to April 29, 2025.
Delivery Costs Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) Delivery costs excluding stock-based compensation expense and restructuring and reduction of force $ 20,554 $ 25,860 $ 5,306 26 % Plus: Stock-based compensation expense 1,865 2,682 817 44 Restructuring and reduction of force 84 1,861 1,777 n/a Total delivery costs $ 22,503 $ 30,403 $ 7,900 35 % % of revenue 8 % 10 % Delivery costs increased by $7.9 million during 2022 compared to 2021.
Delivery Costs Year Ended December 31, Change in thousands 2023 2022 $ % Delivery costs excluding stock-based compensation expense and restructuring and reduction of force $ 25,821 $ 25,860 $ (39) — % Plus: Stock-based compensation expense 2,427 2,682 (255) (10) Restructuring and reduction of force — 1,861 (1,861) (100) Total delivery costs $ 28,248 $ 30,403 $ (2,155) (7) % % of Revenue 9 % 10 % Delivery costs decreased by $2.2 million during 2023 compared to the 2022 .
Sales and marketing expense excluding stock-based compensation and restructuring and reduction of force increased by $8.8 million primarily due to a $6.2 million increase due to costs from our acquired businesses, a $1.0 million increase in travel expenses, a $0.8 million increase in personnel costs associated with additional headcount, a $0.8 million increase in software licensing costs and a $0.3 million increase due to facility expense, offset by a $0.3 million decrease in professional fees. 53 Table of Contents Research and Development Expense Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) Research and development expense excluding stock-based compensation expense and restructuring and reduction of force $ 27,468 $ 39,573 $ 12,105 44 % Plus: Stock-based compensation expense 10,328 13,262 2,934 28 Restructuring and reduction of force 308 1,600 1,292 n/a Total research and development expense $ 38,104 $ 54,435 $ 16,331 43 % % of revenue 14 % 18 % Research and development expense increased by $16.3 million during 2022 compared to 2021.
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. 53 Research and Development Expense Year Ended December 31, Change in thousands 2023 2022 $ % Research and development expense excluding stock-based compensation expense and restructuring and reduction of force $ 34,960 $ 39,573 $ (4,613) (12) % Plus: Stock-based compensation expense 16,392 13,262 3,130 24 Restructuring and reduction of force — 1,600 (1,600) (100) Total research and development expense $ 51,352 $ 54,435 $ (3,083) (6) % % of Revenue 17 % 18 % Research and development expense decreased by $3.1 million during 2023 compared to 2022.
Revenue Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) Billings $ 394,075 $ 442,477 $ 48,402 12 % Consumer Incentives 126,959 143,935 16,976 13 % Revenue $ 267,116 $ 298,542 $ 31,426 12 % % of billings 68 % 67 % The $31.4 million increase in revenue during 2022 compared to 2021 was comprised of a $48.4 million increase in billings, offset by a $17.0 million increase in Consumer Incentives.
Revenue Year Ended December 31, Change in thousands 2023 2022 $ % Billings $ 453,426 $ 442,477 $ 10,949 2 % Consumer Incentives 144,222 143,935 287 — Revenue $ 309,204 $ 298,542 $ 10,662 4 % % of billings 68 % 67 % 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.
The Bridg platform generates revenue through the sale of subscriptions to our cloud-based customer-data platform and the delivery of professional services, such as implementation, onboarding and technical support in connection with each subscription. We recognize subscription revenue on a ratable basis over the contract term beginning on the date that our service is made available to the customer.
We report our revenue net of Consumer Incentives and gross of Partner Share and other third-party costs. The Bridg platform generates revenue through the sale of subscriptions to our cloud-based customer-data platform and the delivery of professional services, such as implementation, onboarding and technical support in connection with each subscription.
Change in fair value of contingent consideration Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) Change in fair value of contingent consideration $ 1,374 $ (128,174) $ (129,548) n/a % of revenue 1 % (43) % During 2021, we recognized $1.4 million of expense due to an increase in the fair value of contingent consideration related to our acquisition of Bridg.
Change in fair value of contingent consideration Year Ended December 31, Change in thousands 2023 2022 $ % Change in fair value of contingent consideration $ 1,246 $ (128,174) $ 129,420 (101) % % of Revenue — % (43) % 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.
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").
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").
Research and development expense excluding stock-based compensation and restructuring and reduction of force increased by $12.1 million primarily due to a $8.2 million increase in personnel costs associated with additional headcount, a $3.5 million increase due to costs from our acquired businesses, a $1.1 million increase in software licensing costs, a $0.2 million increase due to facility expense, a $0.2 million increase due to travel expenses and a $0.1 million increase due to incentive compensation, partially offset by a $1.2 million decrease in professional fees.
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.
Our impairment evaluation consists of a qualitative assessment. 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.
Our reporting units are one level below the operating segments at which level our segment management conducts regular reviews of the operating results. 61 Our impairment evaluation consists of a qualitative assessment. 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.
We believe that ARPU is an indicator of the value of our relationships with our FI partners with respect to the Cardlytics platform. Bridg Annualized Recurring Revenue ("ARR") Consistent with the Bridg merger agreement, we define ARR as the annualized GAAP revenue of the final month in the period presented for the Bridg platform.
We believe that ARPU is an indicator of the value of our relationships with our FI partners with respect to the Cardlytics platform.
Acquisition and integration costs (benefits) Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) Acquisition and integration costs (benefits) $ 24,372 (2,874) $ (27,246) n/a % of revenue 9 % (1) % Acquisition and integration costs (benefits) decreased by $27.2 million during 2022 compared to 2021.
Acquisition, integration and divestiture benefits Year Ended December 31, Change in thousands 2023 2022 $ % Acquisition, integration and divestiture (benefits) $ (6,313) (2,874) $ (3,439) 120 % % of Revenue (2) % (1) % Acquisition and integration benefits increased by $3.4 million during 2023 compared to 2022.
Depreciation and Amortization Expense Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) Depreciation and amortization expense $ 29,871 $ 37,544 $ 7,673 26 % % of revenue 11 % 13 % Depreciation and amortization expense increased by $7.7 million during 2022 compared to 2021 primarily driven by a full year of amortization of intangible assets related to the Dosh and Bridg acquisitions.
Depreciation and Amortization Expense Year Ended December 31, Change in thousands 2023 2022 $ % Depreciation and amortization expense $ 26,460 $ 37,544 $ (11,084) (30) % % of Revenue 9 % 13 % 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.
We can bypass the qualitative assessment for any period and proceed directly to the quantitative impairment test.
Otherwise, a quantitative impairment test is performed by comparing the 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.
Sales and Marketing Expense Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) Sales and marketing expense excluding stock-based compensation expense and restructuring and reduction of force $ 51,849 $ 60,671 $ 8,822 17 % Plus: Stock-based compensation expense 13,780 11,935 (1,845) (13) Restructuring and reduction of force 367 2,139 1,772 n/a Total sales and marketing expense $ 65,996 $ 74,745 $ 8,749 13 % % of revenue 25 % 25 % Sales and marketing expense increased by $8.7 million during 2022 compared to 2021.
Sales and Marketing Expense Year Ended December 31, Change in thousands 2023 2022 $ % Sales and marketing expense excluding stock-based compensation expense and restructuring and reduction of force $ 44,803 $ 60,671 $ (15,868) (26) % Plus: Stock-based compensation expense 12,624 11,935 689 6 Restructuring and reduction of force (2) 2,139 (2,141) (100) Total sales and marketing expense $ 57,425 $ 74,745 $ (17,320) (23) % % of Revenue 25 % 25 % Sales and marketing expense decreased by $17.3 million during 2023 compared to 2022.
General and Administrative Expense Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) General and administrative expense excluding stock-based compensation expense and restructuring and reduction of force $ 41,931 $ 62,168 $ 20,237 48 % Plus: Stock-based compensation expense 24,291 16,807 (7,484) (31) Restructuring and reduction of force — 2,471 2,471 n/a Total general and administrative expense $ 66,222 $ 81,446 $ 15,224 23 % % of revenue 25 % 27 % General and administrative expense increased by $15.2 million during 2022 compared to 2021.
General and Administrative Expense Year Ended December 31, Change in thousands 2023 2022 $ % General and administrative expense excluding stock-based compensation expense and restructuring and reduction of force $ 49,273 $ 62,168 $ (12,895) (21) % Plus: Stock-based compensation expense 9,537 16,807 (7,270) (43) Restructuring and reduction of force — 2,471 (2,471) (100) Total general and administrative expense $ 58,810 $ 81,446 $ (22,636) (28) % % of Revenue 19 % 27 % General and administrative expense decreased by $22.6 million during 2023 compared to 2022.
In addition, we are required to pay an unused line fee of 0.15% per annum on the average daily unused amount of the $60.0 million revolving commitment. Interest accrued on the 2018 Term Loan at an annual rate of interest equal to the prime rate minus 2.75%, or 2.00% at the date of repayment in September 2019.
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.
Our investing cash flows during these periods primarily consisted of funds used for the acquisitions of Dosh and Bridg, purchases of technology hardware and costs to develop internal-use software. 60 Table of Contents Financing Activities Our cash flows from financing activities have primarily been composed of 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.
Refer to Note 4—Business Combinations to our consolidated financial statements for additional disclosures related to our acquisitions and divestitures. 60 Financing Activities 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.
Refer to Note 10—Stock-based Compensation to our consolidated financial statements for additional information regarding the change in stock compensation expense.
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. Refer to Note 10—Stock-based Compensation to our consolidated financial statements for additional information regarding the change in stock compensation expense.
The impairment of goodwill and intangible assets resulted from a continued slowdown in the global economy and 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.
During 2022, we recognized $453.3 million of impairment of goodwill and intangible assets related to the Cardlytics and Bridg platforms. 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.
(2) Deferred implementation costs is excluded from adjusted Partner Share and other third-party costs as follows (in thousands): Year Ended December 31, 2022 Cardlytics Platform Bridg Platform Consolidated Partner Share and other third-party costs $ 154,204 $ 1,303 $ 155,507 Minus: Deferred implementation costs — — — Adjusted Partner Share and other third-party costs $ 154,204 $ 1,303 $ 155,507 47 Table of Contents Adjusted EBITDA Adjusted EBITDA represents our net loss before income tax benefit; interest expense, net; depreciation and amortization expense; stock-based compensation expense; foreign currency gain (loss); impairment of goodwill and intangible assets; deferred implementation costs; restructuring and reduction of force costs; acquisition and integration costs (benefits); and change in fair value of contingent consideration.
Refer to Note 15—Segments to our consolidated financial statements for further details on our Adjusted Contribution by segment. 43 Adjusted EBITDA Adjusted EBITDA represents our Net Loss before income tax benefit; 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; restructuring and reduction of force; income tax benefit; and deferred implementation costs.
We used $26.5 million of the net proceeds to pay the cost of capped call transactions (the "Capped Calls") related to the Notes. 2018 Loan Facility On April 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.
The table above does not include obligations under agreements that we can cancel without a significant penalty. 58 2018 Loan Facility 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.
Financing activities used $40.0 million in cash in 2022, consisting of $40.0 million used to repurchase shares of our common stock, partially offset by proceeds received in connection with the exercise of stock options. Financing activities provided $486.0 million in cash in 2021.
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.
Delivery costs excluding stock-based compensation and restructuring and reduction of force increased by $5.3 million primarily due to a $2.9 million increase in hosting-related IT costs, a $1.8 million increase due to costs from our acquired businesses , a $0.5 million increase in personnel costs associated with additional headcount and a $0.1 million increase due to facilities expense.
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 .
Year Ended December 31, 2020 2021 2022 (Amounts in thousands, except ARPU) Cardlytics MAUs 155,784 170,925 186,682 Cardlytics ARPU $ 1.20 $ 1.51 $ 1.55 Bridg ARR $ — $ 15,282 $ 23,129 Billings $ 263,355 $ 394,075 $ 442,477 Adjusted contribution $ 82,182 $ 129,628 $ 143,035 Adjusted EBITDA $ (7,780) $ (12,220) $ (45,169) Cardlytics Monthly Active Users ("MAUs") We define MAUs as targetable customers or accounts that have logged in and visited online or mobile applications containing offers from, opened an email containing offers from, or redeemed an offer from the Cardlytics platform during a monthly period.
Key Performance Metrics Year Ended December 31, in thousands except per user amounts 2023 2022 2021 Cardlytics MAUs 162,148 154,550 146,242 Cardlytics ARPU $ 1.91 $ 1.93 $ 1.83 Cardlytics Monthly Active Users ("MAUs") We define MAUs as targetable customers that have logged in and visited online or mobile applications containing offers, opened an email containing an offer, or redeemed an offer from the Cardlytics platform during a monthly period.
During the 2022, we received a benefit due to a reduction of the estimated contingent consideration and brokerage fee related to our Bridg acquisition partially offset by an impairment of goodwill.
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.
We use adjusted contribution extensively to measure the efficiency of our advertising platform, make decisions to manage advertising campaigns and evaluate our operational performance. Adjusted contribution is also used to determine the vesting of performance-based equity awards and is used to determine the achievement of quarterly and annual bonuses across our entire global employee base, including executives.
We use Adjusted Contribution extensively to measure the efficiency of our advertising platform, make decisions to manage advertising campaigns and evaluate our operational performance. We view Adjusted Contribution as an important operating measure of our financial results.
General and administrative expense excluding stock-based compensation and restructuring and reduction of force increased by $20.2 million primarily due to a $6.6 million increase due to costs from our acquired businesses, a $4.6 million increase in personnel costs associated with additional headcount, a $3.0 million increase in professional fees, $2.2 million increase in software licensing costs, a $1.0 million increase in bad debt related to our acquired businesses, a $0.7 million increase in our insurance premiums, a $0.5 million increase in marketing expenses, a $0.5 million increase in tax expense and a $1.1 million increase due to other expenses including travel, facility expense, professional development and professional fees. 54 Table of Contents Stock-based Compensation Expense The following table summarizes the allocation of stock-based compensation in the consolidated statements of operations (dollars in thousands): Year Ended December 31, Change 2021 2022 $ % Delivery costs $ 1,865 $ 2,682 $ 817 44 % Sales and marketing expense 13,780 11,935 (1,845) (13) Research and development expense 10,328 13,262 2,934 28 General and administrative expense 24,291 16,807 (7,484) (31) Total stock-based compensation expense $ 50,264 $ 44,686 $ (5,578) (11) % % of revenue 19 % 15 % Stock-based compensation expense decreased by $5.6 million during 2022 compared to 2021 primarily due to forfeitures of restricted stock units related to our reduction of force.
Stock-based Compensation Expense The following table summarizes the allocation of stock-based compensation in the consolidated statements of operations (dollars in thousands): Year Ended December 31, Change 2023 2022 $ % Delivery costs $ 2,427 $ 2,682 $ (255) (10) % Sales and marketing expense 12,624 11,935 689 6 Research and development expense 16,392 13,262 3,130 24 General and administrative expense 9,537 16,807 (7,270) (43) Total stock-based compensation expense $ 40,980 $ 44,686 $ (3,706) (8) % % of Revenue 13 % 15 % 54 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.
As of December 31, 2022, our demand deposit accounts earned up to a 0.50% annual rate of interest. As of December 31, 2022, we had $3.4 million in cash and cash equivalents in the U.K. While our investment in Cardlytics UK is not considered indefinitely invested, we do not plan to repatriate these funds.
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. As of December 31, 2023, we had $3.4 million in cash and cash equivalents in the U.K.
Consumer Incentives grew at a higher rate than billings during 2022 compared to 2021 primarily as a result of changes in advertiser mix and Consumer Incentives funded by partners through a reduction in Partner Share. 52 Table of Contents Costs and Expenses Partner Share and Other Third-Party Costs Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) Partner Share and other third-party costs: Adjusted Partner Share and other third-party costs $ 137,488 $ 155,507 $ 18,019 13 % Deferred implementation costs 3,785 — (3,785) (100) Total Partner Share and other third-party costs $ 141,273 $ 155,507 $ 14,234 10 % % of revenue 53 % 52 % Partner Share and other third-party costs increased by $14.2 million during 2022 compared to 2021 primarily due to increase in billings partially offset by an increase in Consumer Incentives funded by partner through a reduction of Partner Share.
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. 52 Costs and Expenses Partner Share and Other Third-Party Costs Year Ended December 31, Change in thousands 2023 2022 $ % Total Partner Share and other third-party costs $ 150,578 $ 155,507 $ (4,929) (3) % % of Revenue 49 % 52 % Partner Share and other third-party costs decreased by $4.9 million during 2023 compared to 2022.
Refer to Note 12—Fair Value Measurements to our consolidated financial statements for additional information regarding the contingent consideration. 55 Table of Contents Impairment of goodwill and intangible assets Year Ended December 31, Change 2021 2022 $ % (dollars in thousands) Impairment of goodwill and intangible assets $ — $ 453,288 $ 453,288 n/a % of revenue — % n/a During 2022, we recognized $453.3 million of impairment of goodwill and intangible assets related to the Cardlytics and Bridg Platform.
Impairment of goodwill and intangible assets Year Ended December 31, Change in thousands 2023 2022 $ % Impairment of goodwill and intangible assets $ 70,518 $ 453,288 $ (382,770) (84) % % of Revenue 23 % 152 % During 2023, we recognized $70.5 million of impairment of goodwill and intangible assets related to the Bridg platform.
Through December 31, 2022, we have incurred accumulated net losses of $976.6 million since inception, including losses of $55.4 million, $128.6 million and $465.3 million during 2020, 2021 and 2022, respectively. We expect to incur additional operating losses as we continue our efforts to grow our business.
While our investment in our operations in the U.K. is not considered indefinitely invested, we do not plan to repatriate these funds. Through December 31, 2023, we have incurred accumulated net losses of $1,111.3 million since inception, including net losses of $134.7 million, $465.3 million and $128.6 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 Minus: Deferred implementation costs 3,785 — 3,785 Adjusted Partner Share and other third-party costs $ 137,079 $ 409 $ 137,488 Year Ended December 31, 2022 Cardlytics Platform Bridg Platform Consolidated Revenue $ 277,185 $ 21,357 $ 298,542 Minus: Partner Share and other third-party costs 154,204 1,303 155,507 Delivery costs (1) 24,112 6,291 30,403 Gross profit 98,869 13,763 112,632 Plus: Delivery costs (1) 24,112 6,291 30,403 Deferred implementation costs (2) — — — Adjusted contribution $ 122,981 $ 20,054 $ 143,035 (1) Stock-based compensation expense recognized in consolidated delivery costs totaled $2.7 million during 2022.
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. 44 The following table presents a reconciliation of billings to revenue, the most directly comparable GAAP measure, for each of the periods indicated (in thousands): Year Ended December 31, 2023 2022 2021 Consolidated Revenue $ 309,204 $ 298,542 $ 267,116 Plus: Consumer Incentives 144,222 143,935 126,959 Billings $ 453,426 $ 442,477 $ 394,075 Cardlytics platform Revenue $ 285,425 $ 277,185 $ 258,754 Plus: Consumer Incentives 144,222 143,935 126,959 Billings $ 429,647 $ 421,120 $ 385,713 Bridg platform Revenue $ 23,779 $ 21,357 $ 8,362 Plus: Consumer Incentives — — — Billings $ 23,779 $ 21,357 $ 8,362 45 Adjusted Contribution The following table presents a reconciliation of Adjusted Contribution to gross profit, the most directly comparable GAAP measure, for each of the periods indicated (in thousands): Year Ended December 31, 2023 2022 2021 Consolidated Revenue $ 309,204 $ 298,542 $ 267,116 Minus: Partner Share and other third-party costs 150,578 155,507 141,273 Delivery costs (1) 28,248 30,403 22,503 Gross Profit 130,378 112,632 103,340 Plus: Delivery costs (1) 28,248 30,403 22,503 Deferred implementation costs (2) — — 3,785 Adjusted Contribution $ 158,626 $ 143,035 $ 129,628 Cardlytics platform Revenue $ 285,425 $ 277,185 $ 258,754 Minus: 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 Plus: Delivery costs (1) 21,447 24,112 18,111 Deferred implementation costs (2) — — 3,785 Adjusted Contribution $ 135,518 $ 122,981 $ 121,675 Bridg platform Revenue $ 23,779 $ 21,357 $ 8,362 Minus: 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 Plus: 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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+2 added−4 removed1 unchanged
Biggest changeForeign Currency Exchange Risk Both revenue and operating expense of Cardlytics UK Limited are denominated in British pounds, and we bear foreign currency risks related to these amounts.
Biggest changeRefer to Note 9—Debt and Financing Arrangements to our consolidated financial statements for additional disclosures related to our debt. Foreign Currency Exchange Risk Both revenue and operating expense of Cardlytics UK Limited are denominated in British pounds.
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 7.50%.
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, 2022 the prime rate was 7.5% and a 10% increase in the current prime rate would, for example, result in a $0.4 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%.
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%.
For example, if the average value of the British pound had been 10% higher relative to the U.S. dollar during the 2020, 2021 and 2022, our operating expense would have increased by $0.8 million, $1.0 million and $1.1 million, respectively. Our foreign currency risks related to expenses denominated in Indian rupees are insignificant.
For example, if the average value of the British pound had been 10% lower relative to the U.S. dollar during 2023, 2022 and 2021, our revenue would have decreased by $1.8 million, 2.3 million and 2.1 million, respectively.
Removed
Inflation Risk Historically, we do not believe that inflation has had a material effect on our business, financial condition or results of operations.
Added
We bear foreign currency risks related to the extent that any unfavorable fluctuation in the exchange rate between U.S. dollars and the British pound could result in an adverse impact to either revenue or expense.
Removed
However, over the last year there has been increased inflationary pressure, and we believe that inflationary pressure has the potential to negatively impact overall consumer spending and advertising budgets as a result of the impact on consumer spend. This could potentially impact our current business products and strategy.
Added
The overall impact to net loss would be partially mitigated by decreases in operating expense of $0.5 million, $1.1 million and $1.0 million in 2023, 2022 and 2021, respectively. 63
Removed
We will continue to monitor the impact of inflation in order to reduce its effects through pricing strategies, productivity improvements, and cost reductions. If advertising budgets were to become subject to significant inflationary pressures, we may not be able to fully offset the effects of lower demand through price increases.
Removed
Our inability or failure to do so could harm our business, financial condition and results of operations. 63 Table of Contents

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