📝 Cardlytics $CDLX (#5) Update: Bridg Earnout Resolution

Outcome of the resolution regarding the earn out payment for the acquisition of Bridg

My dear fellow investors, the Bridg Resolution is upon us. 

Without intending to be too preachy, here is the outcome of the dispute that Cardlytics (cdlx) entered in Q3 2022.

Estimated expense before the statement put out on May 1st, 2023:

First payout:

Calculated April 2022. Varies with share price exclusively.

Payment of $126M. 

Dilution of 6% at $40 per share to pay $83M in stock and $43M in cash.

Second payout:

Calculated April 2023. Varies with ARR of Bridg year 1 customer revenues.

Payment of $68M (TBC).

Dilution of 14% at $5 per share (estimated) to pay $23M in stock and $45M in cash.

Dispute and summary:

45m+43m=$88m in cash 

Dilution of 19.99%

If the dispute is lost, then there is a bankruptcy scenario where the figure is just too large and cdlx has to liquidate. 

Estimated expense after the statement put out on May 1st, 2023:

First payout

Calculated April 2022. Net payment including ARR.

Payment of $208M. 

Dilution of 8.5% (10% without RSU) at $40 per share to pay $135M in stock and $73M in cash.

Second payout:

Payment of $0

FYI my estimated price for the equity raise was $5, but it would have been around $6-$6.5 (before the announcement)

Dispute and summary:

$73M in cash ($15M less in cash than before)

Total shares outstanding 33.6M + 6M RSU

Dilution of 8.5% (3.37M / 39.6M total)(11.5% less dilution than before)

Risk of bankruptcy 20% (baked into the price) --> 0%

I will expand on my thoughts once the company publishes its Q1 results on May 4th.