Cardlytics (CDLX) Reports
Cardlytics (CDLX) reported Q4 2020 numbers this morning that surpassed revenue expectations by roughly 10% and missed modestly on earnings. Revenue was down 3.2% to $67.1 million (beating by $6.2 million) while adjusted EPS of -$0.05 missed by $0.02. Management gave 2021 guidance that called for revenue of $250 million to $275 million, which straddles consensus expectations of $260 million (up 40%). The report juiced the stock this morning sending it up as much as 13% before things settled down. As we approach the last hour of the trading day shares are up 6.5%.
Management also announced the acquisition of Dosh for $275 million. Dosh has developed a cash-back app that is deployed over consumer-facing financial platforms including Venmo, Ellevest and Betterment. As with Cardlytics’s platform, which is hosted inside financial institution platforms, Dosh tries to deliver the right offer to the right person at the right time. It appears to be a good addition as the consumers most likely using Dosh skew younger and may not rely as much on typical banking relationships with Cardlytics partners (JP Morgan, US Bank, Bank of America, Wells Fargo). And, in fact, even if they do the exposure via apps reaches customers regardless of who their main bank is. Dosh also collects some location data that Cardlytics’s platform doesn’t. We don’t know if the price paid was fair, or not.
Back to the main part of the business, management said billings have returned to pre-Covid levels and it is ramping up clients on the self-service ad platform. Business in the U.S. is strong, but in the U.K., where lockdowns won’t begin to unwind until spring, things are still quite slow.
Overall, it was a good quarter without any big surprises. Plenty here to warrant continuing to hold and evaluate for when to move back to buy. HOLD