📝 Cardlytics $CDLX (#10) Major Shake-up!
New CEO, Disappointing Earnings, and a Long-Term Vision Realignment
My dear fellow Hermits 👋
Welcome back to 🧙♂️ The Hermit 🧙♂️
ICYMI:
📝 Company Updates: Cardlytics Dilution
💼 Hermit Portfolio: July Update
📈 Investment Thesis: Corticeira
If you haven’t yet, subscribe to get access to this post, and every new post
Update Q2 2024 Results
Cardlytics has announced its results for Q2 2024 with substantial changes to the company. This information is derived from the official announcements dated August 7, 2024, and is supported by data gathered from over five years of meticulous observation and analysis of the company. Special thanks to
for his rigorous work on this company.
Quick Introduction
I want to jump straight to the point, so here's what's up:
First, we'll discuss the two main factors affecting the stock price: management changes and the Q2 results / Q3 guidance.
Next, we'll delve into the proxies, catalysts, and leading indicators for these results (this requires substantial time and effort, but I'll provide the research conclusions).
Finally, we'll share insights on core product changes, pricing, product development, and the new management's focus
Financial highlights (bullet points) and comments on the Q&A from the Q2 earnings call.
Management Transition
Cardlytics is embarking on a new chapter with the appointment of Amit Gupta as CEO, effective August 16, 2024, w/ Jack Klinck remaining as Board Chair to ensure continuity. Amit Gupta, joined as COO and head of Bridge on January 2023 as the first C-level hire by Karim who had also recently taken over as CEO back in September 2022. This transition comes as Karim Temsamani steps down to “pursue other opportunities” (no idea what this means yet), and while the Board expresses gratitude for his contributions, it's clear that fresh leadership is eagerly anticipated.
This is likely due to the technological focus demanded by the company (and industry), and, of course, due to poor recent results. Bad results are not ideal, but we can endure them as long as the company is developing and expanding its moat, which seems to be the case.
Under Temsamani, Cardlytics has managed to restructure expenses, enhance capital efficiency, forge new partnerships (mainly Amex and Monzo), and launch Rippl, a retail media network. Particularly the focus has been shifted to improving automation and changing pricing from standard per redemption to a “fairer” per engagement. With pricing for engagement, the business model is closer to the multitouch attribution (MTA) that advertisers are used to, yet it can differentiate participation from redemption aka retaining the competitive advantage.
As Cardlytics continues its transformation, we should be cautiously optimistic about this leadership change and whether it will bring the stability and innovation needed to drive the company towards the end goal:
Becoming the credit card cashback standard for all banks
Q2 Results and Guidance
Next, let's consider the second factor influencing the stock price: results and guidance. In terms of billings, management missed the lower end of their guidance by 4%. However, looking at historical trends, results have typically met or even exceeded guidance (all in thousands USD):
Is this concerning? The answer is a resounding YES! But why is this the case?